annual reports 2010

An

nu

al Re

po

rts 20

10

I V

on

tob

el Gro

up

Annual Reports 2010

Consolidated AccountsVontobel Holding AG

Von

tobe

l Gro

up

Vontobel Group, Annual Reports 2010 1

Key figures 2

Shareholders’ letter 4

Vontobel Group 9

Sustainability 12

Review of business activities 22

Information relating to Corporate Governance 37

Consolidated financial statements 63

Vontobel Holding AG 157

Information for shareholders 168

Where to find us 169

Annual Reports 2010

2 Vontobel Group, Annual Reports 2010

9095

100110110115120125130

Vontobel Holding AG registered share (TR)Source: Bloomberg

01-01-2010 30-06-2010

Performance of Vontobel Holding AG registered share (indexed)

31-12-2010

Swiss Performance Index (SPI)

Ratios 31-12-10 31-12-09 31-12-08 31-12-07 31-12-06

Return on shareholders’ equity (ROE) (%)1 9.8 9.7 8.1 19.2 21.6

Cost2/income ratio (%) 78.3 79.1 80.6 67.0 63.9

Equity ratio (%) 8.2 8.4 8.8 8.0 8.8

1 Group net profit as a percentage of average equity based on monthly figures, both without minority interests

2 Operating expense, excl. value adjustments, provisions and losses

Share data 31-12-10 31-12-09 31-12-08 31-12-07 31-12-06

Basic earnings per share (CHF)1 2.31 2.17 1.78 4.14 4.00

Diluted earnings per share (CHF)1 2.26 2.12 1.74 4.06 3.95

Equity per share outstanding at balance sheet date (CHF) 23.67 23.31 21.73 22.50 20.16

Dividend per share (CHF) 1.40 2 1.40 1.20 2.00 2.00

Price/book value per share 1.5 1.3 1.0 2.4 2.6

Price/earnings per share 15.4 13.6 12.4 13.2 13.2

Share price at balance sheet date (CHF) 35.60 29.55 22.00 54.75 52.70

High (CHF) 36.50 38.00 54.90 77.30 55.65

Low (CHF) 26.75 15.30 19.40 49.35 38.00

Market capitalization (CHF mns) 2,262.0 1,881.0 1,387.0 3,457.3 3,364.2

Undiluted weighted average number of shares 63,918,532 63,973,581 63,481,890 63,637,178 63,985,995

1 Basis: weighted average number of shares

2 As per proposal submitted to the General Meeting

Share information

Par value CHF 1.00

Stock exchange listing SIX Swiss Exchange

ISIN CH001 233 554 0

Security number 1 233 554

Reuters VONTZn.S

Bloomberg VONN SW

Telekurs VONN

BIS capital ratios 31-12-10 31-12-09 31-12-08 31-12-07 31-12-06

Tier 1 capital ratio (%) 21.8 20.9 18.4 21.4 22.9

Total risk weighted positions (CHF mns) 5,689.8 5,894.9 5,292.0 6,281.1 4,947.7

Risk ratio1 31-12-10 31-12-09 31-12-08 31-12-07 31-12-06

Average Value at Risk market risk (CHF mns) 19.65 4.41 6.64 8.44 8.64

1 Average Value at Risk 12 months. Historical simulation Value at Risk; 99% confidence level; 1-day holding period; 4-year historical observation period. The system was altered at the start of the year 2010 as part of the further development of risk modelling. Based on these enhancements, issuer-specific credit spread risks are now included in the calculation. As a result, risk measurements have increased although the positions remain the same. The figures for the prior years have not been adjusted. Value at Risk for positions in the Financial Products division of the Investment Banking business unit.

Ratings 31-12-10 31-12-09 31-12-08

Moody’s Rating Bank Vontobel AG A1 A1 A1

Standard & Poor’s Rating Bank Vontobel AG A+ A+ A+


Key figures

Income statement 31-12-10 31-12-09 31-12-08 31-12-07 31-12-06

CHF mns CHF mns CHF mns CHF mns CHF mns

Total operating income 830.2 785.0 756.0 991.0 840.2

Operating expense 657.1 633.1 618.7 667.6 538.7

Group net profit 147.3 138.3 113.0 268.3 259.5

of which allocated to minority interests (0.5) (0.6) 0.2 4.6 3.4

of which allocated to the shareholders of Vontobel Holding AG 147.8 138.9 112.8 263.7 256.1

Segments (pre-tax income) 31-12-10 31-12-09 31-12-08 31-12-07 31-12-06


Private Banking 48.5 21.2 51.0 83.1 73.8

Investment Banking 115.5 147.1 77.5 181.4 194.6

Asset Management 50.6 31.5 76.3 86.3 71.1

Corporate Center (41.5) (47.9) (67.5) (27.4) (38.0)

Balance sheet 31-12-10 31-12-09 31-12-08 31-12-07 31-12-06


Total assets 18,301.6 18,081.4 15,531.8 17,992.1 14,952.0

Shareholders’ equity (excl. minority interests) 1,503.9 1,483.6 1,369.9 1,421.1 1,287.0

Due from customers 1,427.0 1,005.4 666.0 813.1 692.0

Due to customers 4,925.7 4,594.4 3,594.2 2,061.2 1,785.6

Structured products issued 9,344.0 9,292.7 8,496.6 11,136.7 8,915.7

Assets under management1 31-12-10 31-12-09 31-12-08 31-12-07 31-12-06

CHF bns CHF bns CHF bns CHF bns CHF bns

Total assets under management 78.6 75.2 62.4 79.52 71.2

of which under discretionary management 45.9 42.8 37.3 49.7 45.6

of which under non-discretionary management 32.7 32.4 25.1 29.82 25.6

Net new money 5.5 2.1 3.9 5.8 4.5

1 Calculation in accordance with Table Q of the guidelines issued by the Swiss Financial Market Supervisory Authority (FINMA) concerning accounting standards for financial institutions and Vontobel Group internal guidelines.

2 Adjusted for reclassifications

Custody assets 31-12-10 31-12-09 31-12-08 31-12-07 31-12-06

CHF bns CHF bns CHF bns CHF bns CHF bns

Custody assets 40.4 39.2 36.1 46.21 37.1


Headcount (full time equivalents) 31-12-10 31-12-09 31-12-08 31-12-07 31-12-06

Number of employees Switzerland 1,097.6 1,119.1 1,093.4 1,049.7 981.9

Number of employees abroad 248.5 242.0 226.3 204.4 168.6

Total number of employees 1,346.1 1,361.1 1,319.7 1,254.1 1,150.5


Shareholders’ letter

Dear shareholders and clients

At the end of 2009 – in the middle of the financial and economic crisis – various

scenarios were formulated regarding the future development of the global economy;

they ranged from a rapid economic recovery to a protracted recession of the kind

previously witnessed in Japan. Events in 2010 demonstrated that an entirely different

outcome is also possible. The real economy proved many macroeconomists wrong

and evolved in a way that few had predicted. An unexpectedly strong upturn was fol-

lowed by months of major uncertainty. The debt crisis and euro crisis left some EU

countries in a precarious position. The imponderabilities in the markets triggered

high levels of volatility, significantly weakening the US dollar and the euro on the one

hand but driving up the value of the Swiss franc on the other – in reflection of Swit-

zerland's stability – with negative consequences for the domestic economy. The

climate of uncertainty in the markets also caused bank clients to adopt a passive

approach and dampened the performance of wealth and asset managers across the

industry.

In addition to these economic effects, political factors and regulatory changes had an

equally large impact on the performance of the banking sector in the period under

review. It is imperative for the Swiss financial centre to compete successfully in the

international arena and to regain the trust of clients and investors. Initial agreements

have now been reached regarding the introduction of a flat-rate withholding tax.

This represents an important milestone for the financial centre and we believe that

the approach that is being defined will prove an acceptable solution for private

clients.



The Vontobel Group delivered a good performance in the financial year 2010 in this

challenging operating environment. The dynamic first half of the year was followed

by a slow third quarter and a slight upturn in the final part of 2010. This translated

into a net profit of CHF 147.3 mn for the full year, which represents a very solid re-

sult.

An important feature of the results is the significant increase in the profit contribu-

tion generated by the wealth and asset management business. Both Private Banking

and Asset Management reported an impressive growth in profits. The strategic direc-

tion we have taken in recent years is proving effective. The Investment Banking busi-

ness unit achieved an appealing result, although not fully in line with the very strong

figures for the previous year. The main highlight in the year under review was the

very pleasing inflow of new money recorded by Vontobel. In particular, this reflects

Asset Management’s successful asset gathering in Asia, Italy and the Middle East. In

addition, the product lines managed in the US according to the Value approach pro-

duced a strong performance and inflow of new money. The growth of our presence

in Private Banking through the opening of new branches met with a positive response

from clients and attracted a large volume of new assets. Together with our high level

of advisory expertise – which was confirmed by the findings of an extensive client

survey in 2010 – we have thus succeeded in creating a strong basis for future growth.

Investment Banking experienced a significant level of demand for its structured prod-

ucts and the Vontobel Group maintained its leading position in the increasingly com-

petitive Swiss derivatives market. This business unit once again demonstrated its skill

and expertise with the successful launch of the deritrade® issuing platform in Ger-

many. As a result of our continued high level of capital expenditure, the Group’s

return on equity and cost/income ratio fell slightly short of our mid-term targets.

Capital adequacy remains a key topic in the finance industry. In autumn 2010, the

central bank chiefs and financial supervisory authorities of 27 countries agreed on a

global increase in capital and liquidity standards within the framework of Basel III.

The Vontobel Group has retained a high level of financial flexibility despite the tighter

regulations being implemented both in Switzerland and internationally. Our company

has a tradition of maintaining a strong capital base, which is an expression of our

conservative risk profile. At the end of 2010, our capital amounted to 21.8% of risk-

weighted positions.

Ensuring that shareholders gain an appropriate share of our company’s profits is one

of the cornerstones of our corporate policy. Based on this principle and the stable de-

velopment of our earnings, the Board of Directors of Vontobel Holding AG will pro-

pose the distribution of a dividend of CHF 1.40 per share – unchanged from the pre-

vious year – to the General Meeting of Shareholders.

The Organizational Regulations of Vontobel Holding AG prescribe a maximum age

limit of 70 years for the incumbent members of the Board of Directors. This age limit

also applies to the Chairman of the Board of Directors, Dr Urs Widmer, who will step

down at the forthcoming General Meeting of Shareholders. The Board of Directors

conducted intensive discussions regarding the appointment of his successor and will



propose to the General Meeting of Shareholders that the incumbent CEO of the

Vontobel Group, Herbert J. Scheidt, be appointed as the new Chairman of the Board

of Directors of Vontobel Holding AG and Bank Vontobel AG. Dr Zeno Staub has been

named as the new CEO. He is currently Head of the Asset Management business unit

and has held various senior management positions within the Vontobel Group since

2001. Zeno Staub will assume his new function on 4 May 2011, following the General

Meeting of Shareholders.

The success of our company is driven primarily by the performance and expertise of

our managers and employees. Without them, we would be unable to perform our

complex activities or to deliver on our ambitious targets. In 2010, our daily opera-

tions and numerous business projects placed significant demands on our employees.

They have accomplished a great deal and have helped to advance our business in

many areas. We would like to take this opportunity to thank them for the considera-

ble dedication they have shown.

We also wish to thank our shareholders for their confidence in our strategy and our

ability to execute it successfully. Our aim in 2011 is to continue to pursue our growth

initiatives in a targeted manner – with a focus on the German market as well as our

international sales activities in Asset Management – while strictly managing costs.

We remain committed to using the capital entrusted to us by our shareholders in a

prudent and efficient manner.

Vontobel successfully navigated the severe financial crisis but was unable to emerge

from this challenging environment completely unscathed. There are signs that unsta-

ble economic developments could once again affect our business in 2011. Neverthe-

less, we remain confident about the future of our business in view of the solidity,

independence, integrity and strong client focus of the Vontobel Group. We develop

effective concepts and solutions for our clients and strive to build long-term relation-

ships with them based on our motto “Performance creates trust”. In brief: Vontobel’s

strategy is in place and we have defined the future course of our business. Our goal

in 2011 is to systematically realize our potential!

Dr Urs Widmer Herbert J. Scheidt

Chairman of the Board of Directors Chief Executive Officer



Changes in the Board of Directors

Dr Urs Widmer will step down at the forthcoming General Meeting of Shareholders

after reaching the maximum age limit prescribed in the Organizational Regulations of

Vontobel Holding AG. As a member of the Board of Directors since 2003 and its

Chairman since the General Meeting of Shareholders in 2005, Urs Widmer has been

instrumental in shaping the strategy of the Vontobel Group and in defining the direc-

tion it has taken. The entire Vontobel Group has great respect for Urs Widmer’s

achievements and owes him sincere thanks for the enormous commitment he has

shown. The Board of Directors is highly appreciative of his exceptional contribution

to the company and his dedication during his tenure as Chairman and a member of

the Board. With his entrepreneurial foresight, Urs Widmer has played a decisive part

in ensuring the successful long-term development of the Vontobel Group.

Dr Wolfhard Graetz will also step down as a member of the Board of Directors at the

forthcoming General Meeting of Shareholders. He has been closely associated with

the Vontobel Group for many years. Wolfhard Graetz successfully managed various

areas of Asset Management and Private Banking from 1988 to 1999. He was respon-

sible for the strategic and operational realignment of Tardy, de Watteville & Cie SA in

Geneva (later Banque Vontobel Genève SA) as its Chairman and subsequently as its

CEO. He has been contributing his expertise as a member of the Board of Directors of

the Vontobel Group since 1997 and has supported Urs Widmer in his capacity as

Vice-Chairman since April 2005. We owe considerable thanks to Wolfhard Graetz for

his significant contribution and tireless efforts on behalf of our company.

At the General Meeting of Shareholders of 3 May 2011, Clara Streit will be proposed

for election to the Board of Directors. Born in Syracuse, New York, Clara Streit stud-

ied Economics at the University of St. Gallen before joining the international consult-

ing firm McKinsey & Company at the age of 23. She became a Senior Partner in

2003. During her many years in the field of consulting, she has acquired a vast knowl-

edge of the finance industry as well as extensive international expertise. With her

impressive professional track record and international background, Clara Streit will be

a valuable addition to our Board of Directors.

The Board of Directors would also like to express its thanks to CEO Herbert J. Scheidt

for having successfully driven the strategic realignment and growth of the Vontobel

Group over the last eight years. With his in-depth experience in the field of interna-

tional banking and his proven management style – reflecting both his strategic ap-

proach and strong conceptual abilities – he is the ideal candidate to succeed Urs Wid-

mer as Chairman of the Board of Directors. Herbert J. Scheidt embodies Vontobel's

core values and will guarantee continuity and reliability as well as ensuring the suc-

cess of the company. The Board of Directors is convinced that under his leadership,

the Vontobel Group will continue to flourish – thus benefiting all our our sharehold-

ers, clients and employees.

Bruno Basler, Chairman of the NCC, on behalf of the Board of Directors


Vontobel Group

The Vontobel Group offers the unique combination of the tradition and solidity of an

independent, internationally-oriented Swiss private bank and the innovative strength

of an active international asset manager. Our integrated business model with the three

business units Private Banking, Investment Banking and Asset Management ensures

close cooperation and allows us to successfully pool our expertise and resources for

the benefit of our clients and cooperation partners. Each day, around 1,400 Vontobel

employees around the world create sustained added value for our clients. Whether

they are in the heart of Zurich, in New York or Dubai – teams in 19 international loca-

tions identify trends and formulate innovative investment strategies and products

everywhere that our clients are based.

Performance creates trust

At the Vontobel Group, the relationship with our clients is founded on performance

and trust. This is one reason why many of these relationships continue from one gen-

eration to the next. We want to achieve a performance that inspires our clients with

confidence each time we serve them. We focus on areas of business of which we

have an expert knowledge and we earn the trust of our clients by delivering on our

promises.

How we position ourselves

Vontobel is an internationally-oriented Swiss private bank. We specialize in asset

management for sophisticated private and institutional clients. Vontobel’s core com-

petence is centred around Private Banking, Investment Banking and Asset Manage-

ment, all for the benefit of its clients and cooperation partners in all areas of asset

management.

Our benefits for clients, employees and shareholders

Our integrated business model, with its three core competencies Private Banking, –

Investment Banking and Asset Management, allows us to combine know-how and

resources in the best interests of our clients and cooperation partners.

We are an attractive and fair employer. –

As a long-term-oriented company we aim to offer our shareholders sustainable –

growth of the company’s value.

We strongly support social and cultural causes. –

We measure our success on the basis of mutually agreed benchmarks and report –

regularly on our performance.

Our ambition

We offer outstanding service quality. –

We are both objective-oriented and flexible in our work. –

We are experts in the development of tailored solutions. –

We communicate openly and transparently. –

We are the bank with short decision paths. –

Our Company

Key messages in ourMission Statement


Vontobel Group

Trust is at the core of our business

We know that our success and the loyalty of our clients and cooperation partners –

depend on the trust placed in us on a daily basis. And we know just what a precious

and fragile gift this is. Which is why we are so careful with it.

We are a solid, independent partner. –

We have integrity. –

We are discrete and respect other privacy. –

We are transparent. –

Our principles

Our solid reputation and the confidence accorded us are built upon a daily balance

between the quest for profit, the willingness to take risks and the principles of

responsible management. Our medium-term bank strategy is the embodiment of this

mission statement. It determines our operational aims, the measures taken to achieve

them and the responsibilities set out.

Our strategy is founded on

Independence –

This is derived from our stable family shareholder base and its commitment to the

independence of the Vontobel Group as well as from the preservation of our solid

capital base. The prevention of conflicts of interest enhances our long-term stabil-

ity.

The business units Private Banking, Investment Banking and Asset Management –

The integrated business model with our core competencies in wealth and asset

management and investment banking enables us to achieve a balanced value gen-

eration on a Group level.

Our focus on specific client segments and markets while taking account of Group –

synergies

Our clear growth strategy that is pursued prudently through organic growth, –

cooperation agreements and acquisitions

Medium-term targets

Assets under management CHF 100 bns

Growth in net new money to exceed market growth

Return on equity (ROE) >10% while maintaining a solid capital base

Cost/income ratio 65%–75%

Strategy


Vontobel Group

The Vontobel brand

A good corporate name is today more important than ever before in determining the

success of a company. Banks are therefore investing increasingly in their brands,

which serve as a valuable guide for clients when selecting a financial partner.

Our corporate identity is a decisive factor in achieving a uniform corporate image and

presence both internally and externally. Within our company, the Vontobel brand

provides us with a clear sense of identity. Our brand is conveyed externally through

the systematic application of our corporate design, which guarantees a consistent

overall presence in our communication with the market. Vontobel employees have a

key role to play in this context by acting as the primary ambassadors for our brand in

their contact with clients and business partners. Their conduct and performance are

key in determining the way Vontobel is perceived in the public arena. Our claim “Per-

formance creates trust” is a powerful and unique expression of our brand promise.

We have a clearly defined brand structure. At company level, we operate as the Von-

tobel Group with our three business units Private Banking, Investment Banking and

Asset Management. At the next level, the visual presence of Harcourt Investment

Consulting, Vontobel Swiss Wealth Advisors and Vontobel Financial Products reflects

the Vontobel brand. In the area of structured products, the derinet® portal (www.de-

rinet.com) offers interested investors a range of information on these instruments. In

addition, the electronic sales platform deritrade® provides customized solutions for

our institutional clients in Switzerland and Germany.

We are committed to continuously developing Vontobel’s strong corporate brand in

order to increase the loyalty of our clients, business partners and shareholders.

During the year under review, our strategic marketing activities focused on the tar-

geted further development of the Vontobel brand. Acting from a position of strength,

we want to carefully refine our brand and to further accentuate its positioning within

the company’s business strategy based on our corporate values and qualities. In ad-

dition, we have set ourselves the goal of measuring the success of our strategic and

operational marketing activities even more regularly and systematically in the future.

This will enable us to use the available marketing resources more effectively and effi-

ciently and to successfully support the business units’ client activities. Well-estab-

lished brands can become an important factor determining business success. We are

therefore very pleased that Vontobel achieved a top-five ranking in the Swiss bank

brand ratings published by the business magazine Bilanz.

Brand strategy


Sustainability at the Vontobel Group

In 2010, small but significant steps were achieved in international efforts to promote

a greater commitment to sustainability principles. At the end of the International

Year of Biodiversity, the UN General Assembly decided to establish the Intergovern-

mental Science Platform on Biodiversity and Ecosystem Services (IPBES), which will

address scientific questions regarding the economic value of biodiversity in the same

way that the IPCC examines matters relating to climate change. The Climate Change

Conference in Cancún ended with an agreement being reached on important meas-

ures that will lay the foundations for future climate negotiations. In addition, the

community of states pledged their support for a World Bank climate fund that will

promote the transfer of technologies to developing countries. These are just two

examples to show that sustainability issues figure high on the political agenda and

will thus also remain of paramount importance for the private sector. These develop-

ments confirm that the Vontobel Group is adopting the right approach by taking

greater account of sustainability issues in all areas of its business.

Sustainability is enshrined in Vontobel’s principles

As an independent Swiss private bank with a strong family shareholder base, the

Vontobel Group is committed to sustainable business management. It understands

that stability, financial success and responsibility go hand in hand and it applies this

knowledge in every area of its work. For generations, the bank has been committed

to operating in an ethical and far-sighted manner.

Vontobel Group’s sustainability guidelines

Principle

1. Vontobel is committed to the principle of sustainable development.

Clients

2. When advising our clients, we focus on their long-term satisfaction.

3. We are responding to a growing demand among clients by offering innovative invest-

ment services that take account of the opportunities and risks related to sustainability.

Shareholders and external stakeholders

4. As an organization with a long-term focus, we generate sustained increases in the value of our company for our shareholders through measures that include the consideration of environmental and social issues.

5. Together with our charitable foundations and through the personal commitment of each

individual, Vontobel strives to create social and cultural added value.

6. We engage in an active dialogue with the public about sustainability issues.

Employees

7. We are an attractive and fair employer.

8. We make our employees aware of the opportunities and risks relating to sustainability on

a continuous basis.

Environment

9. We reduce the environmental impacts of our business activities as far as possible, thus

also making a contribution towards climate protection.

Implementation

10. We set specific sustainability targets and ensure that we have appropriate management structures and processes in place to facilitate the continuous improvement of our performance.



Vontobel Group’s revised Business Code sets out the principles and practices that the

Board of Directors expects employees to observe in their daily work. It reaffirms the

basic values that enable Vontobel to act as a reliable partner to its clients, share-

holders, employees, business partners, the authorities and the general public. In its

Business Code, Vontobel pledges to operate ethically, responsibly and with integrity

when dealing with its stakeholders.

Since the Vontobel Group purchases a large number of products and services from

external partners – ranging from cleaning services and IT equipment to the design

and production of printed materials – it is important for its sustainability principles to

also be considered at this level. In 2010, the Sustainability Committee therefore

approved sustainable purchasing guidelines that will be defined in detail for specific

areas and product groups. The guidelines will prescribe the environmental and social

standards that Vontobel expects its business partners to observe.

Sustainable added value for clients

As a wealth and asset manager, Vontobel believes that the consideration of sustaina-

bility aspects in the field of investing is an essential part of a comprehensive sustain-

ability strategy. The signing of the Principles for Responsible Investment (PRI) by

Vontobel at the start of 2010 represents an important milestone in this context.

These Principles, which were issued by the United Nations Environment Programme

(UNEP) Finance Initiative and the UN Global Compact, set out a range of possible

actions to facilitate the increased incorporation of environmental, social and govern-

ance issues in the areas of wealth and asset management. By becoming a signatory to

the Principles for Responsible Investment, the Vontobel Group has demonstrated its

commitment not only to offering special sustainability products but also to taking

greater account of sustainability aspects in all areas of investing.

The first step was taken in Asset Management with the adjustment of the investment

process for global equity funds that are managed by Vontobel in Zurich. Sustainabil-

ity criteria are now systematically incorporated into the financial analysis and thus

form an important part of the assessment of the opportunities and risks relating to

companies. In addition, financial analysts and sustainability analysts work together

to define minimum sustainability criteria for each sector. During this process, the

financial analysts can draw on various sources of external data, thus providing clear

added value in their analyses.

Vontobel’s offering of innovative sustainable investment products enables clients to

invest in future-oriented themes and to thus achieve a financial return while contrib-

uting towards sustainable development. The main focus of the offering is on prod-

ucts in the Global Change Investing line that address diverse aspects of global change

via different approaches.

The Global Responsibility funds invest in companies across all sectors and apply a

range of sustainability criteria during the selection process. In addition to the four

existing regional funds, Global Responsibility International Equity – a global portfolio

that takes account of sustainability criteria – was launched in 2010. The Global



Responsibility funds reported a total volume of CHF 276 mn of assets under manage-

ment at the end of 2010. The following table provides an overview of the perform-

ance of the different funds. All Global Responsibility funds bear the Eurosif trans

parency logo, which guarantees that investors are fully informed about the

investment process as well as the fund criteria (Global Responsibility International

Equity will be included in the next round). In addition, Vontobel manages sustainabil-

ity funds with a volume of CHF 2,011 mn of assets on behalf of cooperation partners

such as Raiffeisen. Through its participation in responsAbility, an organization spe-

cializing in social investments and microfinance investing, Vontobel also supports the

provision of microfinance funds and other innovative financial products.

Sustainable investment funds

managed by Vontobel

Fund class Performance

2010

Vontobel Global Responsibility Asia (ex Japan) Equity Equity fund 18.9%

Vontobel Global Responsibility International Equity Equity fund 15.0%

Vontobel Global Responsibility US Equity Equity fund 11.1%

Vontobel Global Responsibility European Equity Equity fund 9.2%

Vontobel Global Responsibility Swiss Equity Equity fund 5.7%

Raiffeisen Futura Swiss Stock Equity fund 7.2%

Raiffeisen Futura Global Stock Equity fund (6.9%)

Raiffeisen Futura Global Bond Bond fund 3.5%

Raiffeisen Futura Swiss Franc Bond Bond fund 2.5%

Raiffeisen Multi Asset Class Futura Investment target fund (1.3%)

Raiffeisen Pension Invest Futura 50 Investment target fund 1.2%

Raiffeisen Pension Invest Futura 30 Investment target fund 0.4%

Harcourt Belair (Lux) Sustainable Alternatives SRI Fund of hedge funds 0.2%

In addition to the sustainability funds, a range of theme funds from the Global Trend

family are available that focus on various key trends such as the restructuring of the

energy system, the more efficient use of resources and the supply of clean technolo-

gies. At the end of 2010, the three Vontobel funds Global Trend New Power, Global

Trend Future Resources and Global Trend Clean Technology reported total assets

under management of CHF 527 mn.

Theme funds managed by Vontobel

Fund class Performance

2010

Vontobel Global Trend Future Resources Equity fund 29.9%

Vontobel Global Trend Clean Technology Equity fund 14.6%

Vontobel Global Trend New Power Equity fund 6.2%

Vontobel offers private clients a type of asset management portfolio that takes

account of sustainability criteria and is diversified broadly across various asset classes.

Three different investment strategies are available. Unlike other forms of portfolio

management, all of the investments undergo a clearly defined sustainability review.

This gives investors the opportunity to participate in the success of sustainable com-

panies and to combine their personal values with their investment activities.



Once each quarter, the new magazine “blue” provides private clients with compelling

insights into topics that go beyond the world of investing. What does security mean?

What is our relationship with time? How are our lives affected by constant change?

The publication explores these and other questions from different perspectives in a

series of specialist articles and interviews with experts. Lateral thinkers are also

invited to express their opinions, thus presenting the topic from a new angle and

encouraging readers to challenge established views.

In October 2010, clients from Switzerland, Germany and Austria were invited to par-

ticipate in a survey about the advisory and service quality offered by Vontobel Private

Banking. Over 90% of the participating private banking clients indicated that they

were generally satisfied – with around 70% stating that they were either very or

extremely satisfied. The survey also revealed that Bank Vontobel’s image is rated very

positive by its clients. The valuable client input from the survey will be used as a basis

to achieve ongoing improvements in service and advice.

Investment Banking offers a variety of structured products that focus on sustainabil-

ity themes. In 2010, for example, Vontobel launched its Renewable Energies II basket

that enables investors to participate in 10 different wind and solar energy stocks.

Sustainable investments 2010 2009 2008

Volume of sustainable investments (CHF mns) 4,066 3,176 1,928

Share of sustainable investments (in % of AuM)1 4.8% 3.6% 3.1%

1 Excluding volume of structured products

The volume of sustainable investments managed by the Vontobel Group rose by

28% compared to the previous year. Measured as a proportion of total assets under

management, this corresponded to an increase of 1.2 percentage points, underlin-

ing the growing importance of sustainable investing for both private and institu-

tional clients.

Clients who wish to use part of their wealth to promote worthwhile causes can lend

their support to projects that focus on social issues, culture, ecology, education and

medicine through Bank Vontobel’s charitable foundation. In 2010, the foundation

made a significant donation to the non-profit organization “Die Sozialfirma AG” to

help establish a new branch – “Baum und Grün” – which employs teams of people

with and without disabilities who perform gardening work for standard rates of pay.

The organization is designed to help people with disabilities to find employment.

The research project “Biodiversity in the Landscape” run by the Research Institute

of Organic Agriculture in Frick is committed to promoting the use of mixed cultiva-

tion and to thus reducing the use of pesticides in order to promote biodiversity. The

foundation has provided a substantial donation to support the project throughout

the period from its launch 2008 through to its completion in 2011.



Diverse benefits for our stakeholders

The following key figures illustrate how the Vontobel Group’s business activities gener-

ate added value for its shareholders and the general public.

External stakeholders 2010 2009 2008

Added value (CHF mns)1 572.0 551.2 504.3

Tax liability (CHF mns)2 30.2 16.5 27.5

Dividends paid (CHF mns) 90.2 77.4 128.5

1 Operating income less depreciation of fixed assets and intangible assets2 Includes profit tax, capital gains tax and other taxes and contributions

Value creation has increased compared to the previous year. The growth in profit has

led to a marked increase in both tax contributions and dividends.

The Vontobel Group is involved in various organizations that promote a more

sustainable approach to business within the finance industry. For example, it is a

member of The Sustainability Forum Zurich (TSF), an international network that aims

to increase the importance assigned to sustainability principles within the financial

markets by cultivating a forward-looking dialogue between key players in the indus-

try. Zeno Staub, Head of Vontobel Asset Management, has been the President of TSF

since the start of 2010. In the year under review, the annual Sustainability Leadership

Symposium organized by TSF was dedicated to the topic “Financing the transition to

a low carbon economy”.

In 2010, a local branch of the Forum for Sustainable Investments was established in

Switzerland. Vontobel has assumed the role of Chairman of the Swiss organization,

thus helping to shape its activities and to educate investors and the general public

about sustainable investing. In March 2010, the Forum for Sustainable Investments

Switzerland presented a Swiss market study about the renewed increase in the

volume of sustainable investments and organized various events on current topics

relating to this field.

As a founding member of the Climate Foundation Switzerland, Vontobel once again

lent its support to several climate protection projects conducted by Swiss small and

medium-sized enterprises (SMEs) in 2010. With the support of the Climate Founda-

tion, a mill in Dambach installed a new heating system that converts its own biomass

waste into process steam, thus saving gas equivalent to over 3,000 megawatt-hours

each year and reducing the mill’s volume of CO2 emissions by 650 metric tons. Other

projects that have received support include the construction of a new production

plant equipped with a heating pump and waste heat recovery system, as well as the

installation of an energy screen in the greenhouse of a garden centre to reduce the

extent to which the structure cools down at night.



Charitable donations 2010 2009 2008

Donations and gifts (CHF mns) 0.8 0.1 0.4

Dividends to charitable foundations (CHF mns) 13.7 11.8 19.6

Dividends to charitable foundations, contributions and donations (in % of profit) 9.8% 8.6% 17.7%

It is not only financial contributions that are beneficial: knowledge is also a valuable

asset. A number of Vontobel employees share their financial expertise with others by

giving talks and presentations at training events held internally or by external organ-

izations. The Vontobel Group believes it has a duty to make its financial know-how

available to employees as well as to broader sections of society in order to create

greater public understanding of complex financial market issues and to raise aware-

ness of their importance for the Swiss economy.

Focus on employees

Vontobel assigns considerable importance to the provision of attractive working con-

ditions for its employees. This includes promoting a healthy work/life balance. For

example, the conditions for maternity leave and paternity leave that it grants to work-

ing parents exceed the statutory minimum. After completing six years of service,

female employees benefit from six months of maternity leave on full pay, while mem-

bers of staff who have been with the company for a shorter period of time are enti-

tled to four months of maternity leave. Fathers are granted five days of paternity

leave. Vontobel has, for many years, been a member of Childcare Service, an organi-

zation that advises parents on childcare issues and runs a group of nurseries. In July

2010, Vontobel also became a member of the kcc group (kid’s care concept), thus

providing its employees with a further childcare option. The kcc group offers families

holistic care solutions for children. Wherever possible from an operational perspec-

tive, Vontobel endeavours to meet requests for part-time working arrangements from

employees, including members of middle management. The following table shows

how many Vontobel employees work on a part-time basis:

Proportion of males/females in part-time positions in 2010

Number

of women Proportion of women

Number of men

Proportion of men

Total number

Proportion of total

20 – 49% 21 4% 5 1% 26 2%

50 – 79% 70 14% 27 3% 97 7%

80 – 99% 68 14% 28 3% 96 7%

100% 336 68% 863 93% 1,199 84%

Total 495 100% 923 100% 1,418 100%

The proportion of female employees at Vontobel who work on a part-time basis in-

creased by two percentage points to a total of 32% compared to the previous year.

This demonstrates Vontobel’s willingness to offer solutions that help employees to

combine their professional and family commitments.



Actively promoting health and wellbeing in the workplace is an important aspect of

Vontobel’s focus on employees. For example, the company regularly offers free influ-

enza immunizations to members of staff. Employees can enjoy a healthy meal each

day in the staff restaurant at Vontobel’s head office. The restaurant is operated by

SV-Service, which pursues a comprehensive sustainability strategy as well. In addi-

tion, fresh fruit is offered to employees in the workplace on a daily basis.

Employee diversity in terms of gender, age and nationality is a key factor determining

a company’s success. A high level of attention was assigned to this issue when devel-

oping internal training programs for the current year, including a new seminar on the

topic of diversity. The following table illustrates the proportion of men and women at

different levels of management, as well as the various nationalities represented within

the company.

Proportion of males/females at different levels of management in 2010

Number of

women Proportion of

women Number of

men Proportion of

men

Employee 187 55% 152 45%

Middle management 222 47% 255 53%

Senior management 86 14% 510 86%

Group Executive Management 0 0% 6 100%

Total 495 35% 923 65%

Board of Directors 1 12% 7 88%

Nationalities of employees 31-12-10 31-12-09 Number in % Number in %

Switzerland 995 70 1,003 70

Germany 152 11 154 11

Austria 57 4 59 4

Italy 58 4 59 4

USA 49 3 39 3

Spain 16 1 17 1

France 13 1 17 1

United Kingdom 22 2 16 1

Other 56 4 63 5

Total 1,418 100 1,427 100

Seniority structure 31-12-10 31-12-09

Number in % Number in %

Up to 1 year 215 15 135 10

1 to 5 years 588 41 661 46

5 to 10 years 309 22 342 24

10 to 20 years 207 15 184 13

20 to 30 years 84 6 90 6

More than 30 years 15 1 15 1

Total 1,418 100 1,427 100



31-12-10 31-12-09

Age structure Number in % Number in %

Up to 20 years old 22 2 24 2

20 to 30 years old 165 12 164 11

30 to 40 years old 485 34 476 33

40 to 50 years old 470 33 485 34

50 to 60 years old 228 16 227 16

More than 60 years old 48 3 51 4

Total 1,418 100 1,427 100

Continuous training and development enables employees to remain abreast of the

constant changes in the company’s operating environment. Vontobel therefore offers

them both internal training programs and the opportunity to attend external courses.

A range of attractive apprenticeships enable young people to embark on a career in

this fascinating industry. At the same time, Vontobel benefits from the fact that it

thus gains access to a pool of well-qualified young people whom it can subsequently

offer a permanent position within the bank. The rate of staff turnover depends on

various factors; when viewed over time, it indicates that employees are essentially

satisfied with their work at Vontobel.

Turnover and training 2010 2009 2008

Fluctuation rate (in %) 9.3 1 8.62 10.2

Training costs (CHF 1,000) 2,167 1,777 2,154

Training costs (CHF/FTE) 1,528 1,306 1,656

Number of trainees 21 22 19

1 Excluding staff changes resulting from the acquisition of Commerzbank (Schweiz) AG 2 Excluding staff changes resulting from a cost-cutting exercise

In 2010, training expenditure returned to 2008 levels after being reduced in 2009 in

line with the performance of the business. The majority of apprentices who com-

pleted their training were replaced by new apprentices.

Changes in employee behaviour also enable Vontobel to significantly increase its

contribution towards building a stable society and preserving an intact environment.

Vontobel therefore conducts various initiatives to raise employee awareness of social

and environmental issues.

During the “Energy Weeks” event, Vontobel organized a wide variety of initiatives –

and supplied information to educate employees about simple ways in which energy

savings can be realized on a daily basis, thus helping to protect the climate. These

activities focused on electricity consumption, mobility and nutrition. The event at-

tracted a high level of interest and inspired lively discussions on this topic.

In summer 2010, Vontobel participated in the “Bike to Work” campaign for the –

second time. This initiative encourages employees to cycle to work instead of tak-

ing the car or public transport. Numerous teams of Vontobel employees registered

to take part in the campaign once again.



Long-term compensation concept

The compensation concept introduced by Vontobel in 2005 provides employees with

an incentive to focus on long-term performance and to help drive the sustained suc-

cess of the company. The concept largely satisfies the demands for sustainable, inte-

grated compensation systems that are being widely debated. Further information on

this topic can be found in the chapter “Information relating to corporate governance”

in the section “Compensation, shareholdings and loans” as well as in the Notes to the

consolidated financial statements, note 29. The compensation system places a strong

emphasis on the long-term performance of the Vontobel Group and defers the pay-

ment of part of the variable compensation awarded to participating employees. In this

way, Vontobel encourages and rewards responsible and risk-conscious conduct that is

in the best interests of the company.

Responsibility for the environment

As part of its climate strategy, Vontobel implemented various measures in the course

of 2010 to gradually reduce the volume of CO2 emissions resulting from its banking

operations. As well as switching to renewable sources of electricity to power its

external computing centre, Vontobel conducted a comprehensive energy audit of the

largest office at its headquarters in Zurich, which offers workplaces for around 365

employees. Experts examined the heating, ventilation and lighting systems and certi-

fied that they are in generally good condition and are being carefully maintained. It

was nevertheless possible to achieve a 14% reduction in energy consumption – and

consequently in energy costs – simply through the use of optimization measures. The

costs of the energy audit were recovered in less than one year, meaning that this

measure proved beneficial not only from an environmental but also from a financial

perspective.

The “Energy Weeks” conducted in June 2010 – which are described in the section

“Focus on employees” – enabled Vontobel to generate savings of around 10,000 kg

of CO2 through the provision of climate-friendly meals in the staff restaurant as well

as a reduction in elevator usage. This is equivalent to the amount of carbon that

would be captured by planting 937 spruce trees, meaning that the Vontobel Group’s

efforts during the “Energy Weeks” can be compared to planting a forest of almost

1,000 trees.

The entire Vontobel Group has been carbon neutral since 1 January 2009. In con-

junction with the established partner First Climate, Vontobel purchased emissions

reduction certificates that are equivalent to its annual global CO2 output, thus fully

offsetting its greenhouse gas emissions. The purchase of these certificates enables

renewable energy projects to be implemented in developing countries and the emerg-

ing markets that would not otherwise be possible.

Each year, Vontobel gathers key data regarding the environmental impacts of its

banking activities. The most recent figures are published in a separate document that

can be downloaded from the Internet.



Implementation

Vontobel’s Sustainability Committee, which is chaired by the CEO, ensures that its

sustainability guidelines are implemented in practice and that Vontobel achieves

ongoing improvements in these various areas. The Sustainability Committee consists

of representatives of the three business units Private Banking, Investment Banking

and Asset Management, as well as various Group functions.

Vontobel’s efforts to take greater account of sustainability across all areas of its busi-

ness are part of an ongoing commitment in this area. It will therefore strive to achieve

continuous improvements in the many fields of sustainable business management.

Information about Vontobel’s progress in this area of sustainability is continuously

updated on the Internet: www.vontobel.com/sustainability


Review of business activities

20

06

20

07

20

08

20

09

20

10

80

70

60

50

40

30

20

10

0

Total assets under management(CHF bns)

Vontobel Group reports growth in profit and strong inflow of new money

The Vontobel Group grew its net profit by 7% to CHF 147.3 mn in 2010 while operat-

ing in a still very challenging environment. Its return on equity was 9.8%, in line with

the previous year (9.7%). Basic earnings per registered share totalled CHF 2.31 (2009:

CHF 2.17). Private Banking and Asset Management reported a substantial growth in

profits. Investment Banking – in an increasingly competitive market – did not reach

the previous year’s result. In view of this solid and broad-based result, the Board of

Directors will propose a dividend of CHF 1.40 per registered share – unchanged from

the previous year – to the General Meeting of Shareholders.

The Group attracted CHF 5.5 bn of net new assets during the financial year, corre-

sponding to growth of 7.3% of assets. This impressive inflow of new money confirms

the high level of trust that clients place in Vontobel’s expertise and financial solidity.

Total assets under management increased by 5% or CHF 3.4 bn to CHF 78.6 bn com-

pared to the end of 2009. The large volume of assets gathered by Vontobel and the

positive overall market effects of CHF 3.2 bn were more than offset by negative for-

eign exchange impacts totalling CHF 5.3 bn. From an investment perspective, 2010

was characterized by slight overall advances in prices in the equity and bond markets,

combined with a high level of volatility and strong currency fluctuations. The escala-

tion of the euro crisis from May 2010 onwards prompted another flight to quality, re-

sulting in falling yields in Switzerland and Germany. The equity markets rose primarily

in the second half of 2010 as a result of more positive economic forecasts.

The Vontobel Group reported strong shareholders’ equity of CHF 1.5 bn. Its solid cap-

ital position is also reflected by its above-average BIS tier 1 capital ratio of 21.8%.

Thanks to this solid financial basis, Vontobel is well positioned to pursue its targeted

growth strategy while taking account of stricter regulatory requirements.

Growing contribution of the wealth and asset management business

Pre-tax profit 31-12-10 31-12-09

CHF mns CHF mns

Private Banking 48.5 21.2

Investment Banking 115.5 147.1

Asset Management 50.6 31.5

Corporate Center (41.5) (47.9)

Total 173.1 151.9

The wealth and asset management business achieved significant progress in terms of

the generation of new money and profitability. Private Banking benefited from meas-

ures to strengthen its market presence as well as its increased advisory capabilities. In

Asset Management, the decision to focus on selected product lines and to strengthen

its distribution capacity proved effective. Private Banking and Asset Management col-

lectively accounted for CHF 99.1 mn of the Group’s pre-tax profit of CHF 173.1 mn.

Investment Banking maintained its leading position in the listed structured products

market in Switzerland and generated a pre-tax profit of CHF 115.5 mn. The Corporate

Center result improved due to the more active management of treasury holdings.



20

06

20

07

20

08

20

09

20

10

20

06

20

07

20

08

20

09

20

10

1.5

1.0

0.5

0

300

250

200

150

100

50

0

Group net profit (CHF mns)

Shareholders’ equity (CHF bns)

Pleasing development of net new money

All three business units substantially increased their inflows of new money compared

to the previous year. The institutional business, in particular, gathered an impressive

volume of new assets from international clients. Asset gathering in Private Banking

slowed following the announcement that Switzerland has reached initial agreements

on the issue of taxation with two EU countries. In view of all these circumstances, the

net inflow of new money from private and institutional clients can be viewed as

significant.

Development of net new money 31-12-10 31-12-09 CHF bns CHF bns

Private clients 1.5 0.5

Private Banking 1.2 0.4

External asset managers 0.3 0.1

Institutional clients 4.0 1.6

Asset management/mandates 2.8 2.2

Asset management/investment funds 0.9 (1.0)

Investment Banking 0.3 0.4

Total net new money 5.5 2.1

In the private clients business, Vontobel generated CHF 1.5 bn of net new money,

driven mainly by inflows from Central and Eastern Europe as well as the new branches

in its Swiss home market. In the institutional business and in investment funds,

Vontobel attracted CHF 4.0 bn of assets. The mandates business generated strong

inflows of CHF 2.8 bn from international markets in particular. Following a difficult

period, the investment fund business reported significant inflows of CHF 0.9 bn. At

the end of 2010, the Vontobel Group had CHF 78.6 bn of assets under management,

corresponding to an increase of 5% or CHF 3.4 bn compared to the end of the previ-

ous year. The pleasing growth in net new money and positive market developments

were partly offset by significant negative foreign exchange impacts.

Assets under management by investment category 31-12-10 31-12-09 in % in %

Swiss equities 17 17

Foreign equities 28 24

Bonds 31 31

Alternative investments 6 6

Liquid assets, fiduciary investments 14 18

Other1 4 4

1 Including structured products

The composition of assets under management by investment category altered during

the year under review due to a slight shift from liquid assets to equities. This reflects

the Vontobel Group’s active investment policy as well as a moderate increase in client

confidence in the capital markets.



20

06

20

07

20

08

20

09

20

10

20

06

20

07

20

08

20

09

20

10

1,000

800

600

400

200

0

1,400

1,200

1,000

800

600

400

200

0

Net operating income (CHF mns)

Headcount (full time equivalents)

Assets under management by currency 31-12-10 31-12-09 in % in %

CHF 36 36

EUR 26 32

USD 21 19

Other 17 13

The value of the euro declined by 16% versus the Swiss franc in 2010. The lower pro-

portion of euro investments in client portfolios reflects this trend. The impact of the

10% decline in the value of the US dollar versus the Swiss franc was offset by the

strong inflow of new money in the US institutional business.

Growing fee and commission income due to increased asset base

Structure of the income statement

31-12-10 31-12-10 31-12-09 31-12-09

CHF mns in % 1 CHF mns in %1

Net interest income 53.1 6 46.0 6

Fee and commission income 478.2 58 420.0 53

Trading income 273.9 33 298.0 38

Other income 25.0 3 21.0 3

Total operating income 830.2 100 785.0 100

Personnel expense 392.3 47 386.8 49

General expense 196.2 24 171.9 22

Depreciation, amortization 61.8 7 61.9 8

Valuation adjustments, provisions and losses 6.8 1 12.5 1

Operating expense 657.1 79 633.1 80

Taxes 25.8 3 13.6 2

Group net profit 147.3 18 138.3 18

1 Share of operating income

Operating income rose by 6% to CHF 830.2 mn in 2010. Net fee and commission

income, which is with a share of 58% by far the most important income component

at Vontobel, increased by 14% to CHF 478.2 mn, thus exceeding the growth in other

types of income. This mainly reflects a 20% increase in the average asset base. Trad-

ing income totalled CHF 273.9 mn, down slightly from the previous year. This com-

ponent includes the issuing, hedging and secondary trading of structured products

and derivatives, as well as foreign exchange trading. While trading income benefited

significantly from valuation effects in the previous year, this factor had a limited over-

all impact in the financial year 2010. The 15% rise in net interest income to CHF 53.1

mn reflects the significant increase in client deposits in the course of the year as well

as the more active management of treasury liquidity. The latter also had a positive

impact on the development of other income, which grew by 19% to CHF 25.0 mn.



Systematic implementation of strategic initiatives

The Vontobel Group’s strategy entails targeted growth initiatives in all three business

units, based on organic growth and expansion through acquisitions, as well as cooper-

ation agreements in the bank’s defined core markets. In the financial year 2010,

investments in the business once again focused on wealth and asset management

activities. In Private Banking, Vontobel grew its market presence in Switzerland by

completing the integration of Commerzbank (Schweiz) AG and opening new branches

in Basel and Berne. Asset Management strengthened its international distribution

capabilities. In Germany, Vontobel combined the activities of its three business units

within Bank Vontobel Europe AG, which is headquartered in Munich. It has thus laid

optimal foundations for the expansion of its operations across all areas of the business

in its second core market.

As a result of continued capital expenditure and increased business volumes, ope-

rating expense rose by 4% to CHF 657.1 mn. Personnel expense increased by 1% to

CHF 392.3 mn compared to the previous year and general expense grew by 14% to

CHF 196.2 mn. Operating expense included the final integration costs relating to

Commerzbank’s Swiss subsidiary in the amount of CHF 9.3 mn. At the end of 2010,

the Vontobel Group had 1,346 employees (FTEs), a decrease of 15 employees from the

end of 2009. Depreciation remained in line with the previous year at CHF 61.8 mn, as

planned. The tax rate increased from 9.0% to 14.9%, as expected, due to the more

balanced distribution of profits.

Capital expenditure and depreciation of property,

equipment and intangible assets 31-12-10CHF mns

31-12-09CHF mns

Capital expenditure 41.0 39.4

Depreciation 61.8 61.9

The cost/income ratio improved marginally to 78.3% (2009: 79.1%). Vontobel’s

operating efficiency remained slightly outside the mid-term target range of 65% to

75% defined by the Board of Directors and the Group Executive Management,

reflecting the ongoing transformation process in the finance industry as well as the

continuation of Vontobel’s strategic expansion.

Far-sighted risk policy

In 2010, the creditworthiness of certain EU countries came under severe pressure due

to their spiralling levels of debt. Thanks to its prudent risk management approach,

the Vontobel Group has only limited positions in bonds issued by these countries. The

Group has thus maintained its conservative risk profile. It has also made further

adjustments to the way it measures risk: with effect from 2010, its calculation of

Value at Risk has included the issuer-related credit spread risk. As a result, the aver-

age Value at Risk of CHF 19.7 mn reported by the Financial Products division of the

Investment Banking business unit cannot be compared with the figures for prior

periods.



Value at Risk (VaR) for the positions of Financial Products

Average 12 months ending 31-12-10 31-12-09 CHF mns CHF mns

Equities 1.1 2.7

Interest rates 17.9 1.6

Currencies 0.4 (0.1)

Commodities 0.3 0.2

Total 19.7 4.4

A new calculation method including issuer-related credit spread risk applies from 2010. The figures for prior period have not been adjusted.

Solid capital position – even in view of stricter future regulations

The Vontobel Group’s capital position remains solid, with an equity ratio of 8.2% and

a BIS tier 1 capital ratio of 21.8%. This means that it is well positioned to pursue its

growth path, even when it becomes subject to stricter regulatory requirements in the

future. Shareholders’ equity totalled CHF 1.5 bn and was thus unchanged from the

end of 2009. The Group generated a pleasing return on equity of 9.8%.

In view of the high level of market volatility and low investment returns, many of the

Vontobel Group’s clients favoured liquid investments, resulting in a further increase

in client deposits. Due to customers rose by 7% to CHF 4.9 bn compared to the end

of 2009. Vontobel’s balance sheet also reflects the strong level of interest in its deriv-

ative products (CHF 9.3 bn) and the more active management of treasury holdings.

On the assets side of the balance sheet, Vontobel continued to place a strong

emphasis on investments characterized by high credit quality and short maturities. At

CHF 18.3 bn, total assets remained virtually unchanged compared to the end of

2009.

Of the regulatory capital of CHF 625.1 mn (31-12-09: CHF 666.7 mn) required ac-

cording to BIS rules, 42% was allocated to Investment Banking.

Allocation of regulatory

capital required Credit risks Market risks

Operational risks

Goodwill etc. Total


Private Banking 30.3 0.0 34.9 77.1 142.3

Investment Banking 38.4 154.1 50.5 21.0 264.0

Asset Management 6.1 0.0 31.4 71.8 109.3

Corporate Center 51.5 56.2 1.8 0.0 109.5

Total 126.3 210.3 118.6 169.9 625.1

The two rating agencies Standard & Poor’s and Moody’s continue to rate the long-

term debt of Bank Vontobel AG as A+ and A1, respectively. They assigned Vontobel

Holding AG a rating of A and A2, respectively. These ratings confirm the recognized

financial strength and solidity of the Vontobel Group.


Private Banking

Private Banking is committed to expertly managing the assets entrusted to it by its

clients. It offers them the full range of financial and wealth management services and

advice based on a holistic and customized approach with a focus on individual solutions.

Private Banking supplies a wide variety of services, from portfolio management and

active investment advisory to integrated financial advice and inheritance planning.

Thanks to Vontobel's business model, clients can also benefit from access to the proven

expertise of Asset Management and Investment Banking. In every aspect of their work,

the specialists in Private Banking focus on security and the sustained enhancement of

value. The business unit has operations in Zurich, Basel, Berne, Geneva, Lucerne, Vaduz,

Salzburg, Vienna, Munich, Hamburg, Milan and Hong Kong. At the start of 2011 it

established a presence in Cologne.

The Swiss private banking sector is undergoing substantial changes. Following the sign-

ing of agreements in principle with Germany and the UK, the parameters that will apply

to the industry in the future are becoming increasingly clear. Many clients are position-

ing themselves accordingly. As a result, the net inflow of new money slowed in the sec-

ond half of 2010. The regulations that are being defined will once again provide greater

legal certainty and have a positive impact on the Swiss wealth management sector in

the medium term. During the year under review, Vontobel Private Banking focused on

actively realigning its activities to the changed operating environment and on increasing

business momentum. For example, the integration of Commerzbank (Schweiz) AG was

successfully completed and Private Banking strengthened its presence in its Swiss home

market by opening new branches in Basel and Berne. In addition, the establishment of

Vontobel Swiss Wealth Advisors AG created the basis for the provision of services to US

private clients. At the same time, Private Banking continued to expand its range of advi-

sory services and enhanced numerous processes by adopting a more client-focused

approach. The client survey conducted in 2010 confirmed the very high level of satisfac-

tion with Vontobel's advisory services among private banking clients.

At the end of December 2010, Vontobel Private Banking reported assets under manage-

ment of CHF 29.6 bn (–1% compared to the end of 2009). The net inflow of new money

trebled to CHF 1.2 bn compared to 2009. New money was acquired primarily in Vonto-

bel's Swiss home market as well as in Central and Eastern Europe. Market performance

had a positive impact in the amount of CHF 1.4 bn. This compared with negative foreign

exchange impacts totalling CHF 2.9 bn due to the weakness of the euro and the US

dollar.

Private Banking reported a pleasing 17% rise in operating income to CHF 248.5 mn. The

increase in operating expense remained within narrow limits thanks to synergy effects

resulting from the acquisition of Commerzbank (Schweiz) AG and strict cost discipline,

rising by 4% to CHF 200.0 mn. The cost/income ratio improved very significantly from

85.7% to 77.2%. Pre-tax profit grew by 129% from CHF 21.2 mn to CHF 48.5 mn. In

view of the high level of market uncertainty, clients remained cautious and displayed a

preference for near-liquid investments (22% of assets under management in Private

Banking). The gross margin reached 83 basis points, while the net margin rose by 7

basis points to 16 basis points.

Private Banking


Segment results 31-12-10 31-12-09 Change to 31-12-09

CHF mns CHF mns CHF mns in %

Net interest income 26.6 16.8 9.8 58

Other operating income 221.9 195.8 26.1 13

Operating income 248.5 212.6 35.9 17

Personnel expense 90.1 86.6 3.5 4

General expense 20.3 19.2 1.1 6

Services from/to other segment(s) 78.7 74.8 3.9 5

Depreciation of property, equipment and intangible assets 2.8 1.5 1.3 87

Value adjustments, provisions and losses 8.1 9.3 (1.2) (13)

Operating expense 200.0 191.4 8.6 4

Segment profit before taxes 48.5 21.2 27.3 129

Key figures

Cost1/income ratio (%) 77.2 85.7

Change of assets under management (%) (1.0) 30.0

of which net new money (%) 4.0 1.7

of which change in market value (%) (5.0) 9.2

of which through acquisition (%) 0.0 19.1

Net new money (CHF bns) 1.2 0.4

Operating income/average assets under management (bp)2 83 833

Profit before taxes/average assets under management (bp)2 16 94

Assets under management5

Assets under management (CHF bns) 29.6 29.96 (0.3) (1)

Average assets under management (CHF bns)7 30.0 25.6 4.4 17

Personnel

Employees (full time equivalents) 347.7 404.7 (57.0) (14)

of which relationship managers 183.3 170.3 13.0 8

1 Operating expense excl. value adjustments, provisions and losses

2 Calculation based on average values for individual months. The previous year’s figure has been adjusted.

3 Considering operating income of Commerzbank (Schweiz) AG, annualized

4 Considering profit before taxes of Commerzbank (Schweiz) AG, annualized

5 Calculation in accordance with Table Q of the guidelines issued by the Swiss Financial Market Supervisory Authority (FINMA) concerning accounting standards for financial institutions and Vontobel Group internal guidelines

6 Adjusted for reclassifications and including the acquisition of Commerzbank (Schweiz) AG which had CHF 4.4 bn of assets under management as of the acquisition date

7 Average based on monthly figures


Investment Banking

Vontobel Investment Banking focuses on the products business, while maintaining a con-

scious and prudent approach to risk. Vontobel Financial Products is one of the leading

issuers of derivatives and structured products in Switzerland and Europe. The Brokerage

division, which has received a number of international awards, is ideally complemented

by the Corporate Finance business. Comprehensive services are also offered to external

asset managers. Securities and foreign exchange trading, as well as the securities services

provided in the area of Transaction Banking, complete the broad range of offerings for

clients. Investment Banking has operations in Zurich, Geneva, Cologne, Frankfurt,

Munich, Dubai, London and New York.

In an environment characterized by low levels of client activity and increasingly fierce

competition, Investment Banking reported an 11% decline in operating income to CHF

331.7 mn. Financial products accounted for around 75% of the business unit's operating

income, while Brokerage and the business with external asset managers contributed 10%

and 9%, respectively. Operating expense fell by 4% to CHF 216.2 mn, reflecting lower

personnel costs. This resulted in a cost/income ratio of 65.0%. Pre-tax profit decreased

by 21% to CHF 115.5 mn. This included a slightly positive net impact from changes in

valuation. Assets under management increased to CHF 8.2 bn thanks to net inflows of

new money totalling CHF 0.6 bn. Custody assets totalled CHF 40.4 bn, including the

portfolios of Raiffeisen Switzerland, for which Vontobel provides custody services as part

of a long-term cooperation agreement.

Structured products have been an established asset class in Switzerland for several years

and now form an integral part of the portfolios of private and institutional investors.

According to statistics published by the Swiss National Bank, around 5% of the assets

held in client portfolios fall into this category. With a market share on Scoach Switzerland

of 24% in 2010, Vontobel Financial Products remains the leading provider of listed struc-

tured products and derivatives in this market. Vontobel also performed very well in

Germany, where it positioned itself as one of the top 10 providers. Compared to the end

of 2009, the Group-wide volume of structured products outstanding remained

unchanged (CHF 9.3 bn). In a sideways market combined with high levels of volatility,

there was a strong demand from investors for return optimization products. Commodi-

ties and the emerging markets were also popular investment themes. The organizational

structure of the Brokerage business, which is now headed by a new manager, has been

realigned to take greater account of the highly competitive environment. The awards

received by Vontobel from the renowned ranking agencies Extel Thomson and Starmine

confirm that Vontobel's Brokerage unit remains one of the leaders in the field of Swiss

equities. The range of services offered to external asset managers has been expanded

with the introduction of a state-of-the-art, multifunctional electronic banking platform

for this client group.

Investment Banking




Net interest income 10.8 6.1 4.7 77

Other operating income 320.9 367.1 (46.2) (13)

Operating income 331.7 373.2 (41.5) (11)

Personnel expense 103.6 127.4 (23.8) (19)



Depreciation of property, equipment and intangible assets 2.6 2.5 0.1 4

Value adjustments, provisions and losses 0.6 1.8 (1.2) (67)

Operating expense 216.2 226.1 (9.9) (4)

Segment profit before taxes 115.5 147.1 (31.6) (21)

Key figures


Assets under management2

Assets under management (CHF bns) 8.2 7.7 0.5 6

of which external asset managers (CHF bns) 3.7 3.33 0.4 12


of which external asset managers (CHF bns) 0.3 0.13

Custody assets

Custody assets (CHF bns) 40.4 39.2 1.2 3

Personnel

Employees (full time equivalents) 341.6 324.9 16.7 5


2 Calculation in accordance with Table Q of the guidelines issued by the Swiss Financial Market Supervisory Authority concerning accounting standards for financial institutions and Vontobel Group internal guidelines



Asset Management

The Asset Management business unit specializes in active asset management and is

positioned as a multi-boutique provider. It has three global and three regional

actively managed, distinctive product lines in the market. Vontobel Asset Manage-

ment's core competencies include targeted asset allocation, stock selection and

multi-manager approaches. Its products are distributed directly to institutional

clients and via wholesale channels and are also sold by Vontobel’s cooperation part-

ners. Harcourt, a boutique provider specializing in alternative investments, offers

hedge fund solutions that are mainly geared towards institutional investors, as well

as a UCITS III commodity product. The Vontobel Group has a longstanding cooper-

ation agreement with Raiffeisen Switzerland, which it supplies with comprehensive

investment services. The Asset Management business unit serves clients from loca-

tions in Zurich, Berne, Geneva, New York, Frankfurt, Vienna, Luxembourg, Milan,

Madrid, Stockholm, Hong Kong and now also London. In addition, Harcourt has

operations in Grand Cayman.

A recovery in the equity markets towards the end of 2010, as well as continued low

interest rates and the weakness of the euro and US dollar, shaped market develop-

ments in the year under review. In this challenging environment, Vontobel's portfolio

managers succeeded in outperforming the relevant benchmarks in many of their

product lines. In particular, the core Contemporary Value line and the Global Trend

Future Resources fund achieved a significant outperformance. Among fixed income

investment products, the Absolute Return products delivered pleasing results rela-

tive to their benchmark. Vontobel Asset Management once again received a number

of awards in recognition of the excellent performance of its products.

Client and fund assets totalled CHF 42.5 bn at the end of 2010. This 10% increase

was partly driven by a very pleasing and internationally broad-based net inflow of

new money totalling CHF 3.7 bn. At the same time, positive market effects were

offset by very negative currency fluctuations. The mandates business achieved

another highly successful performance with CHF 2.8 bn of net new money, while

the investment fund business generated net inflows of CHF 0.9 bn. The Contempo-

rary Value products managed in New York, which have now reached a volume of

USD 11.7 bn, also attracted a significant volume of new assets. Investor interest

focused on product lines offering absolute returns in the area of fixed income. As a

result of the successful steps taken in recent years to increase the depth of the prod-

uct range and the density of its international distribution network, Vontobel Asset

Management now reaches 90% of the global fee pool for institutional investments.

Operating income rose by 21% compared to 2009 to CHF 214.3 mn. Income from

performance fees accounted for CHF 8.2 mn (2009: CHF 2.9 mn) of operating

income. Operating expense grew less rapidly than operating income to CHF 163.7

mn (+12%). The cost/income ratio improved significantly to 77.0%. As a result, Von-

tobel Asset Management reported a 61% increase in pre-tax profit to CHF 50.6 mn.

Both the gross margin of 52 basis points and the net margin of 12 basis points

increased compared to 2009.

Asset Management




Net interest income 0.5 1.5 (1.0) (67)

Other operating income 213.8 175.9 37.9 22





Depreciation of property, equipment and intangible assets 8.4 8.7 (0.3) (3)

Value adjustments, provisions and losses (1.4) 0.6 (2.0) (333)


Segment profit before taxes 50.6 31.5 19.1 61

Key figures


Change of assets under management (%)2 9.4 14.8

of which net new money (%)2 9.9 3.7

of which change in market value (%)2 (0.5) 11.1


Operating income/average assets under management (bp)3 52 51

Profit before taxes/average assets under management (bp)3 12 9

Assets under management and investment fund assets4

Assets under management (CHF bns)5 42.5 38.6 3.9 10

of which Vontobel funds (CHF bns) 10.4 9.3 1.1 12

of which private label funds (CHF bns) 9.5 10.0 (0.5) (5)

of which managed on behalf of other segments (CHF bns) 1.7 1.3 0.4 31

Average assets under management (CHF bns)6 41.5 35.0 6.5 19

Personnel



2 Adjusted for assets that are managed on behalf of other segments.

3 Calculation based on average values for individual months. The previous year’s figure has been adjusted.


5 The assets under management reported by Asset Management now also include assets managed on behalf of other segments.

6 Average based on monthly figures


Corporate Center

The Corporate Center of the Vontobel Group comprises the support units Opera-

tions, Finance & Risk and Group Services. The Operations unit is divided into IT,

Facility Management & Services and Operations & Information Risk. The Finance &

Risk unit combines the areas of Finance & Controlling, Treasury, Risk Control, Com-

pliance, Legal and Investor Relations. Group Services encompasses the areas of

Human Resources, Group Communications, Corporate Business Development and

International.

The Corporate Center reported a pre-tax segment result of CHF –41.5 mn in 2010

compared to CHF –47.9 mn in the previous year. The improvement in the result is

mainly attributable to the active management of Group liquidity by Vontobel's

Treasury department. In view of the very low interest rates in the interbank market,

Treasury increased its level of investment in high-quality bonds. The Corporate

Center result includes integration costs relating to the acquisition of Commerzbank

(Schweiz) AG in the amount of CHF 9.3 mn.

The Operations unit continued to focus on the optimization of business processes

and the IT landscape during the period under review. The IT systems of Commerz-

bank (Schweiz) AG were successfully migrated to the Vontobel platform in the first

quarter of 2010. In the second half of the year, Vontobel began preparations for the

planned relocation of its Swiss Operations units from their current base in Zurich-

Wollishofen to Zurich-Enge.

The Finance & Risk unit ensures that the guidelines issued by the supervisory author-

ities, the Board of Directors and the Group Executive Management are implemented

appropriately within the Group. It produces financial reports and thus creates trans-

parency about Group-wide income and risk positions. The significant changes in the

regulatory environment placed particular demands on the Compliance division dur-

ing 2010. Its activities focused primarily on preparations for the introduction of

FATCA (US Foreign Account Tax Compliance Act) and the implementation of meas-

ures relating to the cross-border wealth management business, as well as the estab-

lishment of the new unit serving US private clients.

Corporate Center




Net interest income 15.2 21.6 (6.4) (30)

Other operating income 20.5 0.2 20.3




Services from/to other segment(s) (177.7) (165.6) (12.1)

Depreciation of property, equipment and intangible assets 48.0 49.2 (1.2) (2)

Value adjustments, provisions and losses (0.5) 0.8 (1.3) (163)


Segment profit before taxes (41.5) (47.9) 6.4

Personnel



Information relating to Corporate Governance

1. Group structure and shareholders 38

2. Capital structure 42

3. Board of Directors 43

4. Group Executive Management 52

5. Compensation, shareholdings and loans 56

6. Shareholders’ participatory rights 58

7. Changes of control and defence measures 60

8. Statutory auditor/Group auditor 61

9. Information policy 62



The Vontobel Group is committed to pursuing a responsible, value-oriented approach

to corporate management and control. It considers good corporate governance to be

a vital success factor and an essential prerequisite for the achievement of strategic

corporate goals and the creation of lasting value for shareholders and all other stake-

holders. Key elements of our corporate governance are: a clearly defined, well-

balanced distribution of powers between the Board of Directors and the Group Exec-

utive Management, the protection and promotion of shareholders’ interests, and a

transparent information policy. The Articles of Association of Vontobel Holding AG,

the Organizational Regulations of Vontobel Holding AG and the Minutes of the Gen-

eral Meeting of Shareholders of Vontobel Holding AG are available on the Internet

(www.vontobel.com > Investor & Media Relations > Annual General Meeting).

The SIX Swiss Exchange AG issued a “Directive on Information relating to Corporate

Governance”, which entered into effect on 1 July 2002. The following information

meets the requirements of this directive and takes account of the SIX commentary

last updated on 20 September 2007. If information required by this directive is pub-

lished in the Notes to the financial statements, a reference indicating the correspond-

ing section of the notes is given.

1.1 Structure of the Vontobel Group as of 31 December 2010

Group companies that are to be consolidated (scope of consolidation) are listed in the

Notes to the consolidated financial statements on page 150 together with details of

the company name, registered office, share capital, stock exchange listing and the

interest held by the Group.

1. Group structure and shareholders

PrivateBanking

Peter Fanconi

Investment Banking

Roger Studer

AssetManagement

Dr ZenoStaub

Chief Executive OfficerHerbert J. Scheidt

Board of DirectorsChairman: Dr Urs Widmer

Finance & Risk

Dr Martin Sieg Castagnola

Operations

Felix Lenhard



1.2 Major shareholders and groups of shareholders with pooled voting rights

31-12-10 31-12-09

Nominal Share Nominal Share

CHF mns in % CHF mns in %

With voting rights on share capital of CHF 65 mn

Dr Hans Vontobel 11.8 18.2 11.8 18.2

Ruth de la Cour-Vontobel 3.6 5.5 3.6 5.5

Vontrust AG (Holding of the Vontobel family shareholders) 8.1 12.5 8.1 12.5

Other shares of family shareholders 0.3 0.5 0.3 0.5

Vontobel Foundation 7.1 10.9 7.1 10.9

Pellegrinus Holding AG (public utility foundation Corvus)1 2.7 4.2 2.7 4.2

Vontobel Holding AG including subsidiaries (own shares without voting rights)2 1.5 2.3 1.3 2.0

Executive members 0.6 0.9 0.6 0.9

Raiffeisen Switzerland 8.1 12.5 8.1 12.5

Total voting rights on share capital 43.8 67.5 43.6 67.2

of which members of the pool (with and without voting rights) 35.7 54.9 35.5 54.6

of which members of the pool (with voting rights) 34.2 52.6 34.2 52.6

of which pooled shares 26.0 40.0 26.0 40.0

1 Usufruct including voting right by Pellegrinus Holding AG, ownership by Vontobel Foundation

2 Excluding option rights amounting to 0.1% (previous year 0.1%) of shares outstanding

On 3 September 2009, the Disclosure Office of the SIX Swiss Exchange AG granted

Vontobel Holding AG’s request for the extension of the easing of the reporting and

disclosure requirement (“corridor solution”) in accordance with the Stock Exchange

Act. Until 31 March 2011, the shareholding of the group of shareholders of Vontobel

Holding AG that is subject to a reporting requirement (tied and free shares) can there-

fore fluctuate between 64.5% and 69.0% without leading to a disclosure report by

the aforementioned group of shareholders or a public disclosure by Vontobel Holding

AG upon it reaching, exceeding or falling below the threshold of 662/3%.

Furthermore, no disclosure notifications as defined in Article 20 of the Stock Ex-

change Act or other notifications of significant changes in shareholder structure were

published during the year under review.

Shareholder pooling agreement

The major shareholders (Dr Hans Vontobel, Ruth de la Cour-Vontobel, Vontrust AG,

other shares of family shareholders, Vontobel Foundation, Pellegrinus Holding AG,

Vontobel Holding AG and executive members) are parties to a pooling agreement.

This agreement encompasses specific Vontobel Holding AG shares held by these share-

holders. As of 31 December 2010, 40% of all shares issued are bound by the pooling

agreement. The members of the pool can freely dispose of any shares not specifically

mentioned in the pooling agreement. Any sale of pooled Vontobel Holding AG shares

requires prior approval by the pool members. If the members approve the intended

sale, the pool member wanting to sell shares must first offer his or her shares to the

other pool members for purchase. The other pool members have pre-emptive rights of

purchase in proportion to each member’s pooled interest. If a pool member declines

to exercise or transfer all or part of his or her rights of purchase, the unexercised rights



will be allocated among the remaining pool members willing to exercise said rights, in

proportion to each member’s respective interests. The rules governing the sale of

pooled shares held by executive members differ in that Vontobel Holding AG has pre-

emptive rights to purchase their shares. The parties to the shareholder pooling agree-

ment exercise their rights at the General Meeting of Shareholders uniformly in accord-

ance with the prior resolutions passed by the pool. The shareholder pooling agreement

is valid until 31 December 2017. It will be renewed automatically for three years at a

time, provided notice to terminate the agreement is not given beforehand.

Registered shareholders

as at 31-12-10

Number of

shareholders in % Number of

shares in %

Natural persons 7,193 95.1 25,012,842 38.5

Legal persons 373 4.9 31,481,344 48.4

Unregistered shares - - 8,505,814 13.1

Total 7,566 100.0 65,000,000 100.0

Shareholding of Raiffeisen Switzerland related to long-term cooperation agreement

In connection with the long-term cooperation between Vontobel Holding AG and

Raiffeisen Switzerland, Raiffeisen Switzerland and the members of the aforementioned

shareholder pooling agreement (including Vontobel Holding AG) signed an agreement

on 7 June 2004 governing the shareholding in Vontobel Holding AG acquired by

Raiffeisen Switzerland (the “participation agreement”). Under the participation agree-

ment, several pool members – particularly Vontobel Holding AG – sold 12.5% of out-

standing Vontobel Holding AG shares to Raiffeisen Switzerland for total consideration

of CHF 225 mn. The price per share was based on the volume-weighted average price

paid for Vontobel shares during the 60 trading days prior to 17 May 2004, the refer-

ence date set by the parties to the agreement. After the signing of the cooperation

agreements, the purchase transaction was conducted by Raiffeisen Switzerland and

Vontobel Holding AG on 8 December 2004. Raiffeisen Switzerland has undertaken not

to purchase any Vontobel Holding AG shares – in particular free float shares – prior to

the termination of the participation agreement. This restriction does not apply to the

purchase of shares by Raiffeisen Switzerland from pool members in accordance with

the purchase rights defined in the participation agreement. On 14 December 2009,

the existing cooperation agreement was extended until at least the end of June 2017.

The parties essentially granted each other the following rights of purchase: If the co-

operation is terminated by Raiffeisen Switzerland or with mutual consent, the selling

pool members have the pre-emptive right to repurchase the interest acquired by

Raiffeisen Switzerland. If the cooperation is terminated by Vontobel Holding AG

(further details on the duration of the agreement and the terms and conditions of

termination are given in the Notes to the consolidated financial statements, note 40),

Raiffeisen Switzerland has the right to sell its interest back to Vontobel Holding AG in

two tranches in the first and fourth year after termination of the cooperation. If

Raiffeisen Switzerland does not exercise this right of sale, the pool members have the

right to repurchase the shares in two tranches in the second and fifth year after

terminaton of the cooperation. The selling pool members and Raiffeisen Switzerland



have additionally granted each other mutual pre-emptive rights of purchase in the

event that Raiffeisen Switzerland sells its interest to a third party or the pool mem-

bers sell shares bound by the pooling agreement to a third party prior to the termina-

tion of the cooperation agreement. In all of the above cases, the prevailing market

price shall apply, based on the 60-day, volume-weighted average share price.

Furthermore, in the event that the pool members plan to sell a controlling stake to a

third party that would give said party control over more than 331/3% of the voting

rights of Vontobel Holding AG, the pool members must offer Raiffeisen Switzerland

the corresponding number of shares for purchase prior to executing the aforemen-

tioned transaction. In this case, the prevailing market price at the time plus an appro-

priate control premium will apply. The pre-emptive rights of purchase and the

requirement to tender shares for purchase shall not apply in the event that a public

takeover bid is issued by a third party. Provided Raiffeisen Switzerland does not issue

at least an equivalent public takeover bid of its own, the pool members will decide at

their sole discretion whether to accept or refuse the third-party takeover bid.

Raiffeisen Switzerland has the right to propose a candidate for election to the Board

of Directors of Vontobel Holding AG throughout the duration of the cooperation.

The pool members are required to cast all of the voting rights stemming from their

shareholdings in favour of this representative. In reciprocation, Vontobel Holding AG

has the right to attend the meetings of the Board of Directors of Raiffeisen Switzer-

land. Apart from these provisions, the participation agreement contains no voting

rights commitments between the pool members and Raiffeisen Switzerland, nor has

Raiffeisen Switzerland been granted any veto rights. In particular, the pool members

are free to exercise the voting rights stemming from their shareholdings in accord-

ance with the terms and conditions of the shareholder pooling agreement by which

they are bound (see above), and no understanding or agreements have been reached

that have a bearing on the decision-making processes of the Board of Directors of

Vontobel Holding AG or on the passing of the Board’s resolutions.

The participation agreement essentially ends with the sale of all shares governed by

the pool to Raiffeisen Switzerland (if the pre-emptive rights of purchase are exer-

cised) or to a third party, in compliance with the provisions of all valid agreements or

with the sale of the shares owned by Raiffeisen Switzerland to the authorized pool

members (if the pre-emptive rights of repurchase are exercised) or to a third party in

compliance with the provisions of all valid agreements, or at the latest upon retrans-

fer of the interest acquired by Raiffeisen Switzerland to Vontobel Holding AG or to

the pool members following the termination of the cooperation.

The Swiss Takeover Board noted in a Recommendation dated 4 June 2004 that the

purchase of the interest by Raiffeisen Switzerland and the granting of the rights de-

scribed above did not trigger an obligation to issue a public takeover bid. Raiffeisen

Switzerland and the pool members do not therefore represent a group that is obli-

gated to issue a public takeover bid.

1.3 Cross shareholdings

No cross shareholdings exist between Vontobel Holding AG or its subsidiaries and

other corporations that exceed 5% of capital or voting rights.



2.1 Capital

The share capital of Vontobel Holding AG amounts to CHF 65,000,000. The regis-

tered shares of Vontobel Holding AG (security no. 1 233 554) are listed on the SIX

Swiss Exchange and are included in the Swiss Performance Index SPI®. Further infor-

mation on the composition of capital can be found in the Notes to the consolidated

financial statements, note 26.

2.2 Details of contingent and authorized capital

Details of contingent and authorized capital can be found in the Notes to the consol-

idated financial statements, note 26.

2.3 Changes in capital

Information on the composition of capital, changes in capital during the past two

years and authorized capital is given in the Statement of equity and in the Notes to

the consolidated financial statements, note 26. For information on earlier periods,

please refer to the relevant Annual Reports (2009 and 2008: see note 28).

2.4 Shares and participation certificates

The share capital of Vontobel Holding AG is divided into 65,000,000 fully paid in

registered shares with a par value of CHF 1.00 each. Vontobel Holding AG does not

have any participation certificates outstanding.

2.5 Profit-sharing certificates

Vontobel Holding AG does not have any profit-sharing certificates outstanding.

2.6 Restrictions on transferability and nominee registrations in the share register

This information is provided in section 6 “Shareholders’ participatory rights”.

2.7 Convertible bonds and options

All outstanding bonds are listed in the Notes to the consolidated financial statements,

note 23. There were no convertible bonds outstanding as of 31 December 2010. In-

formation on the options on shares of Vontobel Holding AG issued by the Vontobel

Group is provided in the Notes to the consolidated financial statements, note 26. The

volume of the entire share capital recorded for outstanding structured products and

options amounts to 34,764 shares, net (previous year: 72,814 shares). This means

that option rights issued by the Vontobel Group amounting to 0.1% (previous year:

0.1%) of share capital were outstanding on 31 December 2010. No conditional capi-

tal is used to hedge these option rights; they are hedged through market transac-

tions.

2. Capital structure



3.1 Members of the Board of Directors

The Board of Directors of Vontobel Holding AG consists of the following members as

of 31 December 2010:

Name Function Nationality Committee

membership1 Initial election Term expires

Dr Urs Widmer Chairman CH NCC 2003 2011

Dr Wolfhard Graetz Vice-Chairman D AC 1997 2011

Prof. Dr Ann-Kristin Achleitner Member D AC 2009 2011

Bruno Basler Member CH NCC2 2005 2011

Dr Philippe Cottier Member CH NCC 2009 2011

Peter Quadri Member CH 2005 2011

Dr Frank Schnewlin Member CH AC2 2009 2011

Dr Pierin Vincenz Member CH 2005 2011

1 Further information on the Committees is provided below under “Internal organization”NCC: Nomination and Compensation CommitteeAC: Audit Committee

2 Chair

Dr Hans Vontobel has been Honorary Chairman of Vontobel Holding AG and Bank

Vontobel AG since 1991.

No member of the Board of Directors of Vontobel Holding AG performed any opera-

tional management functions for the company or any of its subsidiaries in 2010. Any

previous executive functions are detailed below. The Chairman of the Board of Direc-

tors of Vontobel Holding AG, Dr Urs Widmer, has a seat on the Board of Directors of

Helvetia Holding AG in connection with Vontobel’s cooperation with Helvetia. Bruno

Basler is Vice-Chairman of the Board of Trustees of the Vontobel Foundation and

thus represents the interests of majority shareholders. Dr Pierin Vincenz represents

Raiffeisen Switzerland on the Board of Directors of Vontobel Holding AG. The Von-

tobel Group and Raiffeisen Switzerland have a long-term cooperation agreement

(see note 40). Dr Philippe Cottier was CEO of Harcourt Investment Consulting AG, a

subsidiary of Vontobel Holding AG, until 30 June 2007. He subsequently held the

position of Senior Advisor, member of the Board of Directors and member of the

Investment Committee of this company until the end of March 2009.

The majority of the members of the Board of Directors of Vontobel Holding AG meet

the independence criteria prescribed in the FINMA Circular 08/24 “Supervision and

Internal Control at Banks”, mn 20–24. They are: Prof. Dr Ann-Kristin Achleitner,

Dr Wolfhard Graetz, Peter Quadri, Dr Frank Schnewlin and Dr Urs Widmer.

3. Board of Directors



Dr Urs Widmer, born 1941, Swiss citizen

Chairman of the Board of Directors until 3 May 2011

Dr. iur.; attorney at law, own law firm

Professional background:1974–2002 Ernst & Young: – 1980 Head of the Legal department of ATAG Ernst & Young AG – 1984 Member of the Executive Board of ATAG debis Informatik AG – 1986 CEO of ATAG Wirtschaftsinformation Holding AG – 1988 Member of the Board of Directors of ATAG Ernst & Young AG – 1991 Member of the Executive Board of Ernst & Young Europe, Brussels – 1994 Member of the Global Executive Board of Ernst & Young International, New York and London – 1995 Delegate and Chairman of the Board of Directors of ATAG Ernst & Young Holding2002 Opening of own law fi rm2002–April 2005 Chairman of the Board of Directors of Vontrust AG2003 Member of the Board of Directors of Vontobel Holding AG and Bank Vontobel AGSince 2005 Chairman of the Board of Directors of Vontobel Holding AG and Bank Vontobel AG

Member of the Board of Directors of Barry Callebaut AG and Helvetia Holding AG

Member of the Board of Trustees of Stiftung Technopark and of Stiftung Zoo Zürich

Dr Wolfhard Graetz, born 1946, German citizen

Vice-Chairman until 3 May 2011

Dr. oec., University of St. Gallen; financial advisor

Professional background: 1973–1974 Citibank Switzerland1974–1985 Nestlé SA1985–1988 Lombard Odier & Cie1988–1999 Various executive functions within the Vontobel Group in Zurich,

New York and Geneva: – 1988–1998 CEO of Vontobel Asset Management AG, Zurich – 1991–1998 Chief Investment Offi cer of the Vontobel Group – 1996–1998 Chairman of Vontobel USA, New York – 1995–1998 Chairman of the Board of Directors of Tardy, de Watteville & Cie SA

(subsequently renamed Banque Vontobel Genève SA) – 1998–1999 CEO of Tardy, de Watteville & Cie SASince 2000 independent fi nancial advisor

Chairman of the Board of Directors of Pfister Arco Holding AG and Möbel Pfister AG



Prof. Dr Ann-Kristin Achleitner, born 1966, German citizen

Dr. oec. and Dr. iur., University of St. Gallen; Scientific Director of the Center for

Entrepreneurial and Financial Studies (CEFS) at the Technical University Munich

Professional background: 1992–1994 Lecturer in Finance & External Auditing at the University of St. Gallen1994–1995 Business Consultant at McKinsey & Company Germany1995–2001 Holder of the Endowed Chair and Chairman of the Board of the Institute for Financial

Management at the EBS European Business School, Germany Since 1994 Adjunct Professor of Business Administration at the University of St. GallenSince 2001 Holder of the KfW Endowed Chair for Entrepreneurial Finance at the Technical University

MunichSince 2003 Scientifi c Director of the Center for Entrepreneurial and Financial Studies (CEFS) at the

Technical University Munich

Member of the Board of Directors of SpineWelding AG (formerly WW Technology

AG); Vice-Chairman of the “Research and Innovation” Commission of Experts (EFI)

of the German Federal Government; member of the Senate of Fraunhofer Gesells-

chaft (FhG); member of the Board of Trustees of the Johannes B. Ortner Foundation;

member of the “FLÜGGE” Commission of Experts of the Bavarian State Ministry of

Science, Research and the Arts

Bruno Basler, born 1963, Swiss citizen

Degree in civil engineering from the Swiss Federal Institute of Technology (ETH);

MBA INSEAD

Chairman of the Board of Directors of Ernst Basler + Partner AG

Professional background:1989–1991 Holinger AG1992–1994 McKinsey & CompanySince 1994 Ernst Basler + Partner AG – 1994–2001 Delegate and Chairman of the Board of Directors – Since 2001 Chairman of the Board of Directors

Vice-Chairman of the Board of Trustees of the Vontobel Foundation

Member of the Board of Directors of Robert Aebi AG

Member of the Board of Directors of Baumann Federn AG



Dr Philippe Cottier, born 1967, Swiss citizen

Dr. oec. and lic. rer. publ., University of St. Gallen

Professional background:1994–1998 UBS AG – 1994–1995 SBC Warburg Futures & Options Management, Zurich – 1995–1996 Hedge fund analyst at SBC Private Bank Investment Consulting, Basel – 1997–1998 Hedge fund analyst and portfolio manager at UBS Warburg, Hong Kong1998–1999 Boston Consulting Group, Sydney1998–2009 Harcourt Investment Consulting AG, Zurich – 1998–2002 Chairman – 1999–2006 Head of Research – 2002–2007 CEO – 2007–2009 Senior advisor, member of the Board of Directors and of the Investment

Committee

Member of the Board of Directors of EFIS AG

Member of the Board of Trustees of the Cottier Donzé Foundation

Member of the Advisory Board of Ansher Holding Ltd.

Member of the Advisory Board of Lumix Capital AG

Peter Quadri, born 1945, Swiss citizen

lic. oec. publ.

Professional background:1970–2007 IBM (International Business Machines) in various functions in systems engineering, sales

and management. Activities in the US, Denmark, Germany and Austria. – 1996–2007 Member of the Executive Board with overall responsibility for the service business – 1998–2007 CEO and Chairman of the Board of Directors of IBM Switzerland

Chairman of the Board of Directors of Unitectra

Member of the Board of Directors of Swiss Life Holding AG and Bühler AG

President of the Zurich Chamber of Commerce



Dr Frank Schnewlin, born 1951, Swiss citizen

Dr. ès. sc. écon., University of Lausanne; MBA, Harvard Business School;

MSc, London School of Economics; lic. oec., University of St. Gallen

Professional background: 1983-2001 Various functions within Zurich Financial Services Group – 1983 Zurich Insurance Company, Zurich – 1984–1986 Zurich American Insurance Group, Schaumburg, US – 1986–1987 Senior Territorial Manager at Zurich American Insurance Group, Cleveland, US – 1987–1989 CFO & Senior Vice President at Universal Underwriters Group, Kansas, US – 1989–1993 Head of the Corporate Development department, Head offi ce, Zurich – 1993–2000 Head of the Southern Europe, Asia/Pacifi c, Middle East and Africa, Latin America

business division, member of the Group Management Board – 2000–2001 Head of Corporate Center, Head offi ce, Zurich, member of the Group Executive

Committee, Chairman of the Group Finance Council2002–2007 Group CEO of Bâloise Holding, Head of the Group Corporate Executive Committee

and CEO of the International business division

Vice-Chairman of the Board of Directors of Swiss Life Holding AG; Chairman

of the Nomination and Compensation Committee.

Member of the Board of Trustees of the Drosos Foundation; Chairman of the

Finance Committee

Dr Pierin Vincenz, born 1956, Swiss citizen

Dr. oec., University of St. Gallen; Chairman of the Management Board of the

Raiffeisen Group Switzerland

Professional background: 1979–1982 Schweizerische Treuhandgesellschaft, St. Gallen1986–1990 Swiss Bank Corporation, Global Treasury, Zurich, and Swiss Bank Corporation

O’Connor Services L.P1991–1996 Vice President and Treasurer at Hunter Douglas, LucerneSince 1996 Raiffeisen Switzerland: – 1996–1999 Head of the Finance department and member of the Executive Board of

Raiffeisen Switzerland – Since 1999 CEO of Raiffeisen Switzerland

Chairman of the Board of Directors of Aduno-Gruppe and Plozza Vini SA

Member of the Board of Directors of SIX Group, Helvetia Holding AG and Pfandbrief-

bank Schweizerischer Hypothekarinstitute

Member of the Steering Committee of the UNICO Banking Group Brussels; member

of the Committee of the Governing Board of the Swiss Bankers Association; member

of the Management Board of Pflegekinder-Aktion Schweiz; member of the Board of

Directors of the Swiss Finance Institute; member of the Board of Trustees of the Ost-

schweizerischen Stiftung für klinische Krebsforschung



3.2 Other activities and functions

See section 3.1 “Members of the Board of Directors”.

3.3 Cross-directorships

There are no cross-directorships between Vontobel Holding AG and other listed com-

panies.

3.4 Election and term of office

The Chairman of the Board of Directors and all other members of the Board are

elected individually by the General Meeting of Shareholders. The Board of Directors

constitutes itself except for the position of Chairman. The members of the Board of

Directors are elected for a term of one year and may be re-elected. According to the

internal Organizational Regulations, members of the Board of Directors have to step

down at the General Meeting of Shareholders in the calendar year in which they turn

70. Further information regarding the year in which the individual members of the

Board of Directors were first elected can be found in section 3.1 “Members of the

Board of Directors”.

3.5 Internal organization

Board of Directors

The Board of Directors appoints a Vice-Chairman from among its members. The

Chairman of the Board of Directors appoints a Secretary, who need not be a member

of the Board of Directors. The Board of Directors meets as often as necessary to per-

form its duties and generally once or twice a quarter but no fewer than four times a

year. The meetings usually last around eight hours. A total of five meetings were held

during the year under review (in February, April, July, October, and December); this

included a two-day strategy meeting. The Board of Directors constitutes a quorum

when the absolute majority of its members is present. Board resolutions and appoint-

ments are decided by the absolute majority of the members present, in accordance

with the Organizational Regulations. In the event of a tied vote, the chairman of the

meeting casts the deciding vote. Resolutions passed by circular letter must be

approved by the majority of all members of the Board of Directors.

The Board of Directors may delegate some of its duties to committees. The standing

committees are as follows: the Nomination and Compensation Committee and the

Audit Committee. Their duties and powers of authorization are defined in internal

regulations. Information on the composition of the individual committees can be

found in section 3.1 “Members of the Board of Directors”.

Nomination and Compensation Committee (NCC)

The Nomination and Compensation Committee prepares decisions concerning all im-

portant personnel issues and related organizational issues at the level of the Group

Executive Management and senior executives, including compensation issues, for ap-

proval by the Board of Directors. The Nomination and Compensation Committee also

decides on the compensation of the members of the Board of Directors of Vontobel

Holding AG with the exception of the Chairman. The meetings of the Nomination

and Compensation Committee are attended by the CEO as well as the Head of



Human Resources. The CFO is invited to attend when financial issues are discussed.

The Nomination and Compensation Committee meets at least once a year. The meet-

ings usually last around four hours. A total of five meetings were held during the year

under review (in February, June, September, November and December).

Audit Committee (AC)

The Audit Committee examines whether all systems created to monitor compliance

with legal and statutory provisions and internal regulations are appropriate and

whether they are being applied properly. It reports to the Board of Directors and pro-

vides it with recommendations. It also monitors and evaluates the integrity of the

financial results, internal controls, and the effectiveness of the external auditor and

Internal Audit. Its range of responsibilities include: aspects of external and internal

audit; the interaction between the Board of Directors, the CEO, the Group Executive

Management and the heads of the business units and support units; the internal con-

trol system; risk management; compliance activities and the structure of the Compli-

ance function; accounting; and the receipt and handling of internal and external

audit reports.

The Audit Committee can conduct special reviews of important issues in consultation

with the Chairman of the Board of Directors and can request additional internal and/

or external resources for this purpose.

The Chairman of the Board of Directors is not a member of the Audit Committee but

is invited to attend the meetings. All the members of the Audit Committee meet the

independence criteria prescribed by supervisory law. The meetings of the Audit Com-

mittee are also attended by the CEO, the CFO and representatives of Internal Audit

and the external auditor. When specific topics are discussed, internal specialists in

the relevant fields – particularly from Finance & Risk – are regularly invited to attend.

The Audit Committee meets at least three times per year. The meetings usually last

four to six hours. A total of four meetings were held during the year under review (in

February, June, July and November).

The Board of Directors of Vontobel Holding AG decided to discontinue the IT Com-

mittee in 2010. The upgrading of the Group-wide IT infrastructure was largely com-

pleted in 2009 with the rollout of the Avaloq system. Consequently, the main focus

in the area of IT is now on operational aspects.

When necessary, ad-hoc committees are formed to deal with specific topics such as

mergers and acquisitions projects. No ad-hoc committees were formed during the

year under review.

Internal Audit

Internal Audit helps the Board of Directors to exercise its statutory supervisory and

control duties within the Vontobel Group and performs the audit functions assigned

to it. The duties and rights of Internal Audit are detailed in separate regulations. It

has an unlimited right of inspection within all Group companies; all business docu-

ments are available for it to inspect at any time. Internal Audit reports to the Board of



Directors and regularly attends the meetings of the Audit Committee. Its audit activ-

ities are based on the guidelines issued by the Swiss Institute of Internal Auditing

(SVIR). Internal Audit coordinates its activities with the external auditor in accord-

ance with professional guidelines.

3.6 Powers of authorization

Board of Directors

The Board of Directors is responsible for the overall management of the company and

the supervision and oversight of the managers of the holding company and the Group.

It approves and periodically revises the Mission Statement and Group strategy, issues

directives and guidelines as necessary, and determines the Group’s organizational

structure and risk policies. It also receives reports about the existence, appropriate-

ness and effectiveness of the internal control system. In addition, it supervises and

monitors individuals entrusted with the operational management of the company.

The Board of Directors is responsible for appointing and dismissing the CEO and

members of the Group Executive Management, as well as the Head of Internal Audit.

It also approves the appointment and promotion of managers of the Vontobel Group.

Furthermore, the Board of Directors performs the duties assigned to it by law (Art.

716a of the Swiss Code of Obligations). The delegation of powers between the Board

of Directors, its committees, the CEO, and the Group Executive Management is spec-

ified in the Group’s Organizational Regulations (www.vontobel.com > Investor & Me-

dia Relations > Annual General Meeting). Among other things, the purchase and dis-

posal of shareholdings, the establishment and closure of Group companies and

regional offices, the raising of loans and bonds as well as the issuing of bonds or guar-

antees that exceed a certain limit, are to be approved by the Board of Directors. In-

vestment plans and other decisions that have an impact on cash flows must also be

approved by the Board of Directors once a certain threshold is exceeded.

Group Executive Management

The Group Executive Management is the Group’s executive body and reports to the

Board of Directors. It is responsible for all Group issues that do not expressly fall

within the remit of the Board of Directors of Vontobel Holding AG or a Group com-

pany according to legislation, the Articles of Association or the Organizational Regu-

lations. The Group Executive Management functions as a committee and all decisions

have to be reached by the entire executive body. If its members are unable to agree

on an issue, the decision is reached by the CEO. The Group Executive Management is

responsible, in particular, for developing a Group-wide business strategy for presen-

tation to the Board of Directors, implementing the decisions reached by the Board of

Directors within the Group, monitoring the execution of these decisions, and manag-

ing and supervising the Group’s everyday operations. The latter must be effected

within the scope of the financial plan, annual objectives, annual budget and risk pol-

icy and in accordance with the other regulations and instructions issued by the Board

of Directors. It is responsible for ensuring compliance with legal and regulatory re-

quirements as well as applicable industry standards. Its responsibilities also include

the management of income, the balance sheet structure and the formulation of the

risk policy. The Group Executive Management submits the risk policy to the Audit

Committee for approval by the Board of Directors and regularly reviews the policy



and presents any amendments to the Board. A detailed description of the Vontobel

Group’s risk policy, Risk Management function and risk controls can be found in the

Notes to the consolidated financial statements commencing on page 81.

The Group Executive Management is responsible for issuing regulations relating to

the implementation of the risk policy, i.e. rules governing basic aspects of risk re-

sponsibility, risk management and risk control. In particular, this includes the organi-

zation of the internal control system and its compliance with the requisite division of

powers and functions.

The Group Executive Management reports to the Board of Directors and the Audit

Committee about the existence, appropriateness and effectiveness of internal con-

trols. The duties of the Group Executive Management also include the drawing-up of

the Group’s annual budget and the definition of its annual objectives, broken down

by business unit and support unit, and their submission to the Board of Directors for

approval.

Furthermore, the Group Executive Management reaches decisions about new prod-

ucts, business activities and markets. If this has a significant impact on the Group’s

business policy, the Group Executive Management refers the matter directly to the

Board of Directors. However, if the issue has a significant impact on the Group’s risk

profile, the Group Executive Management obtains the relevant approval from the

Board of Directors through the Audit Committee. The Group Executive Management

ensures that a professional investment policy is permanently in place and is imple-

mented promptly throughout the Group. It issues the directives which apply to the

entire Group and which – according to legal provisions, the Articles of Association or

the current Organizational Regulations – fall exclusively within the remit of the Group

Executive Management. Equally, it is responsible for issuing directives for the Compli-

ance function and Asset & Liability Management. In addition, its competences in-

clude the granting of loans in accordance with the powers of authorization defined in

the credit regulations as well as the assumption of trading positions on own account

within the defined limits. The Group Executive Management delegates the per-

missible limits to the responsible areas and units within the Group.

Further information about the delegation of powers between the Board of Directors

and the Group Executive Management can be found in the Organizational Regula-

tions of Vontobel Holding AG, which are available on the Internet:

www.vontobel.com > Investor & Media Relations > Annual General Meeting

3.7 Information and control instruments relating to the Group Executive

Management

The Board of Directors meets at least four times a year as specified in the Organiza-

tional Regulations; in practice, there are six to eight meetings a year. The ordinary

meetings usually last an entire day. These meetings are also attended by the CEO,

the CFO and, depending on the items on the agenda, other members of Group Exec-

utive Management or internal specialists. The Board of Directors receives monthly re-

ports about the performance of the business and is informed about the development



of risk as well as the Group’s compliance with legal, regulatory and internal rules and

requirements at least every six months. Its control instruments include semi-annual

reporting requirements, the annual budgeting process and internal and external au-

dits. The periodic reporting requirements include a monthly financial report, which

provides information on the current performance of the business and the correspond-

ing realization of targets at both Group level and business unit level (MIS), as well as

information about the meetings of the Group Executive Management. Internal Audit

reports to the Chairman of the Board of Directors and the Audit Committee about its

audit activities on an ongoing basis and provides the Board of Directors with consol-

idated reports twice annually. The external auditor produces its annual statutory re-

port (report about the statutory audit) as well as further reports on audits addressing

specific topics for submission to the Board of Directors. The statutory report is ad-

dressed to the Board of Directors and a copy of the report is submitted to the Swiss

Financial Market Supervisory Authority (FINMA) as well as the Group Executive

Management and the Head of Internal Audit.

During the meetings of the Board of Directors, any member of the Board may request

information on any matters relating to the holding company and the Group from the

other members of the Board of Directors or the CEO. Outside the meetings of the

Board of Directors, any member of the Board may request information about the per-

formance of the business from the CEO and, subject to the approval of the Chairman,

may obtain information about specific business transactions and inspect business

records.

4.1 Members of the Group Executive Management

Group Executive Management comprises the following members as of 31 December

2010:

Name Function Nationality

Herbert J. Scheidt CEO CH/D

Dr Martin Sieg Castagnola CFO CH

Peter Fanconi Member CH

Felix Lenhard Member CH

Dr Zeno Staub Member CH

Roger Studer Member CH

4. Group Executive Management



Herbert J. Scheidt, born 1951, Swiss and German citizen

CEO of the Vontobel Group since 1 October 2002; designated Chairman of the

Board of Directors of Vontobel Holding AG and Bank Vontobel AG, Zurich

Business Manager; M.A. in Economics, University of Sussex; MBA, University of

New York

Professional background: 1982–2002 Various functions at Deutsche Bank in Germany, New York, Milan and Geneva – 1996–2002 Head of Private Banking International in Geneva – 2001–2002 Chief Executive Offi cer Deutsche Bank (Schweiz) AG

Vice-Chairman of the Board of Directors of Hero AG, Lenzburg

Member of the Board of Directors of SIX Group, Zurich

Member of the Board of Directors Swiss Bankers Association, Basel

Member of the Board of the Association of Swiss Commercial and Investment Banks

(VHV)

Member of the Executive Committee of the German Council on Foreign Relations

(DGAP)

Designated member of the Board of Directors of Helvetia Holding AG

Dr Martin Sieg Castagnola, born 1965, Swiss citizen

CFO of the Vontobel Group since 1 November 2008

Dr. oec., University of Zurich

Professional background: 1994–2008 Zürcher Kantonalbank (ZKB), Zurich – 1994–1999 Head of the Economy department and Risk Controlling – 1999–2003 Head of Equities & Equity Derivatives Trading – 2003–2005 Head of Portfolio Management of ZKB Axxess Vision – 2005–2006 Head of Treasury – 2007 Head of Asset Management – 2007–2008 Member of the Executive Board and Head of Investment & Private Banking1994–1999 Lecturing assignments at the University of Zurich in the area of empirical economic

research/econometrics; assistant at the Institute for Empirical Research in Economics

Vice-Chairman of the Regulatory Board of the SIX Swiss Exchange AG and Chairman

of the Participants & Surveillance Committee of the SIX Swiss Exchange AG



Peter A. Fanconi, born 1967, Swiss citizen

Head of Private Banking since 1 March 2009

lic. iur., University of Zurich

Professional background: 1995–1997 SCG St. Gallen Consulting Group AG: Senior Consultant1997–2002 Founding shareholder and Managing Partner of MAP Group AG2002–2003 PwC, Managing Partner and Head of Business Development Switzerland within

Corporate Finance/M&A business (after PwC acquired MAP Group AG)2003–2009 Harcourt Investment Consulting AG: Managing Partner – 2003–2007 Head of Business Development – 2007–2009 CEO and member of the Board of Directors

Member of the Board of the Zurich Banking Association

Felix Lenhard, born 1965, Swiss citizen

Head of Operations of the Vontobel Group since 1 January 2010

lic. oec., University of St. Gallen

Professional background: 1991–1996 PwC, Financial Services division, Zurich and London1996–2000 Partner of almafi n AG, St. Gallen, with responsibility for the area of consulting2000 Member of the Executive Management of BZ Informatik AGSince 2001 Vontobel Group: – 2001–2003 Project Manager (implementation of functional organization; central

project controlling) – 2003–2009 Head of Business Applications division within the Operations support unit – 2009 Head of IT within the Operations support unit



Dr Zeno Staub, born 1969, Swiss citizen

Head of Asset Management since 1 January 2008; designated CEO of the Vontobel

Group

Dr. oec., University of St. Gallen

Professional background:1994–2000 Founding shareholder and Managing Partner of almafi n AG2000 Member of the Executive Management of BZ Informatik AGSince 2001 Vontobel Group: – 2001–2002 Head of the CFO management support unit (Controlling and IT project portfolio) – 2003–2006 CFO and Member of the Group Executive Management – 2006–2007 Head of Investment Banking and member of the Group Executive Management

Member of the Management Board of Schweizerische Management Gesellschaft

President of the Board of Directors of the Sustainability Forum Zurich

Member of the Swiss Society for Financial Market Research (SGF)

Roger Studer, born 1967, Swiss citizen

Head of Investment Banking since 1 January 2008

MBA, Rochester-Berne; Swiss Certified Financial Analyst and Portfolio Manager

(CIIA); Swiss Certified Expert in Finance and Investments (CIWM)

Professional background:1984–1996 Bank Vontobel AG: – 1992–1995 Head of Warrants and Options Trading – 1995–1996 Head of Market Making Derivative Products 1997–1998 DG Bank AG (Switzerland), Head of Private Clients Austria 1999 Rentenanstalt/Swiss Life, Head of Quantitative Asset Allocation 1999–2000 ABN AMRO Bank AG (Switzerland), Head of Portfolio Management and Research Since 2001 Vontobel Group: – 2001–2002 Head of Risk Management and Development of Derivative Products – 2003–2007 Head of Financial Products

Vice President of the European Structured Investment Products Association (Eusipa),

Brussels

Member of the Cash Market Advisory Board of the SIX Swiss Exchange AG

Member of the Commission for Structured Products (KSP) of Scoach Schweiz AG



4.2 Other activities and functions

See section 4.1 “Members of the Group Executive Management”.

4.3 Management contracts

There are no management contracts.

5.1 Structure and definition of compensation and stock ownership plans

The Vontobel Group’s compensation system is designed to successfully motivate em-

ployees at all levels of the company to realize or even exceed ambitious short, me-

dium and long-term strategic objectives. Through its Long-Term Incentive Plans, it

systematically rewards the sustained achievement of good financial results in combi-

nation with a relatively low risk profile more generously than the achievement of

good financial results in combination with a comparatively higher risk profile. The

compensation system introduced in spring 2005 is structured in such a way as to

align the interests of all stakeholders as effectively as possible. Consequently, the

principles set out in the FINMA Circular 10/1 “Remuneration Schemes”, which is

recommended as a guideline for the Vontobel Group, have largely been imple-

mented.

The CEO submits a proposal to the Nomination and Compensation Committee of the

Board of Directors (NCC) in June and December of each year regarding the level of

bonus accruals to be recorded for the first half of the year and the size of the annual

bonus pool, respectively. The Nomination and Compensation Committee discusses

the size of the bonus pool and subsequently submits a proposal to the entire Board of

Directors, which reaches a decision on the bonus pool. The total bonus pool is di-

vided into smaller bonus pools for each business unit and support unit by the CEO of

the Vontobel Group on the basis of various quantitative and qualitative criteria.

The Vontobel Group wants to be a fair and attractive employer to its staff, manage-

ment and the members of the Board of Directors. It is therefore very important for it

to offer compensation that is in line with market rates. When determining fixed sala-

ries and bonuses, it consults benchmarking studies and comparisons of compensation

levels, particularly with regard to medium-sized institutions that are active in private

banking, institutional asset management and the product business within investment

banking in Switzerland. These data are supplied to the Vontobel Group in an ano-

nymized form by external consultants (e.g. Towers Watson).

Board of Directors

The compensation of the Chairman of the Board of Directors, who performs this role

on a full time basis, comprises a base salary that is paid each month and a variable

bonus which is determined each year according to performance-related criteria (and

includes his participation in the stock ownership plan), as in the case of the members

of the Group Executive Management. The Nomination and Compensation Commit-

tee determines the level of compensation, including any special payments, of the

members of the Board of Directors. The Board of Directors decides on the level of

compensation paid to the Chairman; the Chairman is not party to this discussion.

5. Compensation, shareholdings and loans



The compensation of the other members of the Board of Directors consists of a min-

imum base component, which is paid in cash. If the dividend paid exceeds 100% of

the par value of the registered share of Vontobel Holding AG, the base compensation

increases accordingly. This additional compensation component is paid in registered

shares of Vontobel Holding AG, which are blocked for a period of three years. In ad-

dition, members of the Board of Directors receive an expense allowance and actual

costs are reimbursed. The members of the committees are paid additional compensa-

tion. The modalities of the compensation paid to the members of the Board of Direc-

tors are reviewed annually and determined by the Nomination and Compensation

Committee. For the financial year 2010, the performance-related component of the

compensation paid to the Chairman of the Board of Directors amounted to 208%

(previous year 189%) of the base salary and the performance-related component of

the compensation paid to the other members of the Board of Directors amounted to

an average of 24% (previous year 23%) of the base compensation.


As in the case of all employees of the Vontobel Group, the performance of the CEO

and members of the Group Executive Management is evaluated systematically ac-

cording to the principles of management by objectives (MbO). The compensation

paid to members of the Group Executive Management comprises a base salary that is

paid in cash and a variable bonus which is determined each year and takes the form of

a one-off payment. For the financial year 2010, the variable bonus paid to the mem-

bers of the Group Executive Management based on an analysis of the achievement of

their individual objectives amounted to an average of 294% (previous year 252%) of

the base salary. The change compared to the previous year reflects the development

of the Group’s financial result and the performance of the relevant business unit, as

well as the extent to which the individual objectives of the members of the Group

Executive Management were achieved (see below for details of the objectives). Within

the scope of the Vontobel Group’s stock ownership plan, half of the bonus is paid in

cash and half in the form of registered shares of Vontobel Holding AG, which are

blocked for a period of three years. The number of these bonus shares forms the basis

for the number of performance shares allocated after a period of three years, depend-

ing on the results achieved during the preceding three financial years. Further infor-

mation on the modalities of the compensation paid to the members of the Group

Executive Management is disclosed in the Notes to the consolidated financial state-

ments, note 29. The Nomination and Compensation Committee of the Board of

Directors is responsible for determining the compensation paid to the members of the

Group Executive Management, including the individual compensation components.

The entire Board of Directors is informed about compensation decisions by the NCC.

The base salary and bonus are determined on an annual basis.

The annual bonus paid to the members of the Group Executive Management is deter-

mined on the basis of the achievement of their individual objectives, as well as the

realization of the targets defined for the relevant business unit or support unit and

the company as a whole. The evaluation takes account of their performance and

leadership.



This means that aspects including:

Individually agreed budget targets –

Process/structure/system-related targets –

Client/market/product-related targets –

Culture/expertise/employee-related targets –

are systematically assessed for each member of the Group Executive Management

and are taken into account when determining their individual bonuses. This process is

not based on a specific formula or on fixed weighting criteria. Instead, the various

aspects described above are considered in respect of the function of each member of

the Group Executive Management on a differentiated basis. These individual per-

formance targets are also designed to ensure that the Group Executive Management

and each of its members do not assume any inappropriate risks and that the risk

policy approved by the Board of Directors is implemented properly. Against the back-

drop of significant market developments and regulatory changes, the bonuses

awarded to the members of the Group Executive Management are discussed in detail

by the NCC and are determined using its best judgment. The Vontobel Group does

not disclose the detailed objectives when determining the variable compensation of

the individual members of the Group Executive Management. Any such disclosure

would reveal activities and plans of strategic relevance (e.g. acquisition targets) that

could place Vontobel at a competitive disadvantage. In this case, it is to be assumed

that competitors might use the information about Vontobel’s ambitions in individual

markets in a way that would prove detrimental to the Group (e.g. to poach clients or

employees).

In principle, all the employment contracts of employees of the Vontobel Group

(i.e. including members of the Group Executive Management) are subject to a notice

period of a maximum of six months. The contracts concluded with the members of

the Board of Directors and the Group Executive Management do not contain any

clauses relating to severance payments.

Information on compensation, shareholdings and loans is provided in the Notes to

the consolidated financial statements (notes 28–30).

6.1 Voting rights: restrictions and representation

According to Art. 4 of the Articles of Association, the transfer of registered shares is

subject to the approval of the Board of Directors or a committee designated by the

Board of Directors. If the registered shares have been purchased on the stock ex-

change, ownership of the shares passes to the purchaser when transferred; if they are

purchased other than through the stock exchange, ownership passes to the purchaser

as soon as the purchaser applies to be recognized as a shareholder in the company’s

share register. In any event, the purchaser cannot exercise either the voting rights as-

sociated with the shares or any other rights associated with the voting rights until the

company has officially recognized the purchaser as a shareholder. The purchaser is

not subject to any restrictions on the exercising of all other shareholder rights.

6. Shareholders' participatory rights



The Board of Directors can refuse to recognize a purchaser of registered shares as a

shareholder with full rights if

(a) the number of registered shares held by the purchaser exceeds 10% of the total

number of shares entered in the Commercial Register. These voting rights restric-

tions are intended to ensure a clear control structure. The General Meeting of

Shareholders may rescind them at any time. Natural or legal persons that take

coordinated action in an effort to avoid restrictions on entry in the share register

are considered as one single purchaser with regard to this provision. The duly

acquired rights of shareholders or shareholder groups that had already owned

more than 10% of share capital prior to the introduction of this registration

restriction on 25 January 2001 remain reserved in accordance with Art. 4 of the

Articles of Association.

(b) the purchaser does not, upon the request of the company, expressly state that he

has acquired the shares in his own name and for his own account.

The company recognizes as shareholders and beneficiaries of registered shares only

those natural or legal persons duly registered in the share register. Purchasers of

shares who have not yet been recognized by the company are entered in the share

register after transfer of ownership as shareholders without voting rights; the corre-

sponding shares are deemed not to be represented at the General Meeting of Share-

holders.

See section 6.2 “Statutory quorums” for information on the conditions that apply to

the lifting of statutory restrictions on voting rights.

No nominee registrations are made in the share register.

6.2 Statutory quorums

Resolutions and elections are decided at the General Meeting of Shareholders by an

absolute majority of the votes cast, unless otherwise prescribed by law. In accord-

ance with Art. 17 of the Articles of Association, the General Meeting of Shareholders

must pass resolutions with at least two thirds of the votes represented and the abso-

lute majority of the share par value represented voting in favour of the resolution in

the following cases:

Modification of the company’s business purpose(a)

Issuance of shares with special voting rights (b)

Modification or abolishment of the restrictions regarding transferability of regis-(c)

tered shares

Authorized or conditional capital increases(d)

Capital increases from equity capital in return for contributions in kind or for the (e)

purpose of acquisitions in kind or the granting of special benefits

Restriction or suspension of subscription rights(f)

Relocation of the company’s registered office(g)

Removal of more than one member of the Board of Directors during the course (h)

of one financial year

Dissolution of the company (with or without liquidation)(i)

Distribution of a dividend in kind(j)

Increase in share capital (in all cases)(k)



6.3 Convening of General Meeting of Shareholders

The following legal regulations apply to the convening of the General Meeting of

Shareholders. Written invitations to the General Meeting of Shareholders, including

the items on the agenda and the proposals, are issued at least 20 days prior to the

date of the General Meeting of Shareholders. No resolutions can be passed on items

that have not been duly placed on the agenda with the exception of motions to con-

vene an Extraordinary General Meeting or to initiate a special audit. One or more

shareholders who collectively represent at least 10% of the share capital may request

that an Extraordinary General Meeting be convened. In this case, the Extraordinary

General Meeting must be held no later than two months after the request was re-

ceived.

6.4 Inclusion of an item on the agenda

Shareholders representing shares with an aggregate par value of at least 0.5% of

share capital may request that an item be included on the agenda, provided the re-

quest is submitted in writing and the items to be included and the proposals to be put

forward are specified. In accordance with Art. 10 of the Articles of Association, any

such request must be received by the company at least two months prior to the date

of the General Meeting of Shareholders.

6.5 Entry in the share register and proxies

Shareholders may only be represented by proxy at the General Meeting of Share-

holders if a written power of attorney is granted. No entries will be made in the share

register from the date on which the invitations to the General Meeting of Sharehold-

ers are sent out until one day after the General Meeting of Shareholders.

7.1 Mandatory public takeover offer

The Articles of Association do not include an “opting out” or “opting up” clause with

regard to mandatory public takeover offers, as defined in Art. 22 of the Stock Ex-

change Act. The instruments available to the company to defend itself against hostile

takeover bids essentially comprise the following measures already referred to above:

At present, 40% of voting rights are bound by a shareholder pool agreement on a –

long term basis (see section 1.2 “Major shareholders and groups of shareholders

with pooled voting rights”).

The registration restrictions allow the Board of Directors to refuse to enter share- –

holders or a group of shareholders in the share register once their shareholdings

exceed a 10% threshold (see section 6.1 “Voting rights: restrictions and represen-

tation”).

A change in the registration restrictions or the removal of more than one member –

of the Board of Directors during the course of one financial year must be approved

by a qualified majority (see section 6.2 “Statutory quorums”).

7.2 Clauses on changes of control

The contracts with the members of the Board of Directors and the Group Executive

Management do not make provision for any agreements in the case of a change of

corporate control (change of control clauses). In the event of a change of control, the

7. Change of control and defence measures



claims arising from the stock ownership plan will, however, be granted directly if the

plan cannot be continued.

8.1 Duration of mandate and term of office of auditor in charge

The consolidated financial statements and the financial statements of Vontobel Hold-

ing AG and the majority of the subsidiaries are audited by Ernst & Young. The

remaining subsidiaries are audited by other companies. The external auditor of

Vontobel Holding AG is elected for a period of one year at the Ordinary General

Meeting of Shareholders. Ernst & Young was elected as auditor for the first time

when Vontobel Holding AG was established in 1983. The auditor in charge is Iqbal

Khan, who has held this function since the financial year 2009. The holder of this

office changes every seven years, in accordance with banking legislation. Iqbal Khan

has also performed the role of statutory auditor since the financial year 2009.

8.2 Audit fees

Fees paid to the auditor 31-12-10 31-12-09

1,000 CHF 1,000 CHF

Auditing fees billed by Ernst & Young 2,986.7 3,205.3

Additional fees billed by Ernst & Young for audit-related services 278.3 581.2

Tax advice 46.8 61.7

Legal advice 0.0 181.8

Advice on international accounting 0.0 21.5

Other consulting services 231.5 316.2

8.3 Additional fees

The additional fees primarily concern services provided in connection with projects

and audit-related services regarding international accounting as well as tax, legal or

regulatory issues. The audit company is permitted to provide these services as well as

performing the auditing duties of the external auditor as they do not give rise to any

conflicts of interests. The subject of any new audits, as well as special audits that

have to be conducted at the request of the supervisory authorities, are subject to the

approval of the Audit Committee. There is no prescribed catalogue of criteria that

has to be consulted when approving these types of additional mandates; the Audit

Committee decides on an individual basis whether the issuing of the additional man-

dates would impact the auditor's independence.

8.4 Supervision and control instruments relating to audits

The Board of Directors is responsible for the supervision and control of the external

audit process. Its remit includes reviewing internal and external audit reports; it is

assisted by the Audit Committee when discharging this duty. The Audit Committee

receives regular reports from representatives of the external auditor and it discusses

these reports and evaluates their quality and comprehensiveness. The auditor in

charge who represents the external auditor attended three meetings of the Audit

Committee in the year under review. The Head of Internal Audit attended all four

meetings of the Audit Committee in the year under review.

8. Statutory auditor/Group auditor



The Vontobel Group, as a banking group, is subject to consolidated supervision by the

Swiss Financial Market Supervisory Authority (FINMA). The requirements set out in

Art. 728 of the Swiss Code of Obligations (independence of auditors), as well as the

guidelines stipulated by FINMA in Circular 08/41 “Audit matters”, have to be observed

when selecting an external audit company. Other relevant selection criteria applied by

the Board of Directors comprise the auditor's proven level of expertise, including its

ability to address complex finance and valuation issues in accordance with the account-

ing standards prescribed by FINMA and the International Financial Reports Standards

(IFRS). Considerable importance is also assigned to continuity. When evaluating the

performance and fees of the external auditor, the Audit Committee bases its assess-

ment on its own experience and professional powers of judgment; there is no pre-

scribed catalogue of criteria that has to be consulted in this context.

As a company listed on the stock exchange, Vontobel Holding AG pursues a consistent

and transparent information policy vis-à-vis its shareholders, clients and employees, as

well as the financial community and the general public. Its regular reporting activities

include the publication of the annual and half-year reports and shareholders’ letters, as

well as the organization of events such as the annual press conference, conferences

with financial analysts and the General Meeting of Shareholders. When important

events occur, the above-mentioned stakeholders are informed simultaneously via press

releases.

Details of sources of information, the financial calendar and contact addresses are

listed on page 168 of the Annual Report.

9. Information policy


Consolidated financial statements

Consolidated income statement 64

Consolidated statement of comprehensive income 65

Consolidated balance sheet 66

Statement of equity 68

Consolidated cash flow statement 70

Notes to the consolidated financial statements 72

Report of the Group Auditors 155


Consolidated income statement

31-12-10 31-12-09 Change to 31-12-09

Note CHF mns CHF mns CHF mns in %

Interest income 59.8 59.0 0.8 1

Interest expense 6.7 13.0 (6.3) (48)

Net interest income 1 53.1 46.0 7.1 15

Fee and commission income 593.1 525.3 67.8 13

Fee and commission expense 114.9 105.3 9.6 9

Net fee and commission income 2 478.2 420.0 58.2 14

Trading income 3 273.9 298.0 (24.1) (8)

Other income 5, 6 25.0 21.0 4.0 19

Total operating income 830.2 785.0 45.2 6

Personnel expense 7 392.3 386.8 5.5 1

General expense 8 196.2 171.9 24.3 14

Depreciation of property, equipment and intangible assets 9 61.8 61.9 (0.1) (0)

Value adjustments, provisions and losses 10 6.8 12.5 (5.7) (46)


Profit before taxes 173.1 151.9 21.2 14

Taxes 11 25.8 13.6 12.2 90

Group net profit 147.3 138.3 9.0 7

of which allocated to minority interests (0.5) (0.6) 0.1

of which allocated to shareholders of Vontobel Holding AG 147.8 138.9 8.9 6

Share information

Basic earnings per share (CHF)1 12 2.31 2.17 0.14 6

Diluted earnings per share (CHF)1 12 2.26 2.12 0.14 7

1 Basis: weighted average number of shares


Consolidated statement of comprehensive income

31-12-10 31-12-09 Change to 31-12-09


Group net profit according to the income statement 147.3 138.3 9.0 7

Other comprehensive income

Currency translation adjustments

Income during the reporting period (32.9) (2.6) (30.3)

Income tax related to currency translation adjustments 0.0 0.0 0.0

Currency translation adjustments, net of tax (32.9) (2.6) (30.3)

Financial investments carried at fair value (“available-for-sale”)

Income during the reporting period 11.9 41.0 (29.1) (71)

Gains and losses transferred to the income statement (12.0) (1.8) (10.2)

Income tax related to financial investmentscarried at fair value 0.9 (4.1) 5.0

Financial investments carried at fair value, net of tax 0.8 35.1 (34.3) (98)

Total other comprehensive income (32.1) 32.5 (64.6) (199)

Comprehensive income 115.2 170.8 (55.6) (33)

of which allocated to minority interests (0.5) (0.6) 0.1

of which allocated to shareholders of Vontobel Holding AG 115.7 171.4 (55.7) (32)


Consolidated balance sheet

Assets 31-12-10 31-12-09 Change to 31-12-09


Cash 1,457.6 1,950.0 (492.4) (25)

Due from banks 2,227.8 2,580.5 (352.7) (14)

Cash collateral for reverse-repurchase agreements 21 300.0 300.0 0.0 0

Trading portfolio assets 13 2,017.3 1,708.1 309.2 18

Positive replacement values 13, 41, 42 197.2 214.5 (17.3) (8)

Other financial assets at fair value 13 8,476.6 8,529.9 (53.3) (1)

Securities lent or delivered as collateral 13, 15, 21 500.1 239.5 260.6 109

Due from customers 14 1,427.0 1,005.4 421.6 42

Accrued income and prepaid expenses 226.6 197.9 28.7 15

Financial investments 15 1,044.6 899.1 145.5 16

Investments in associates 16 0.6 0.6 0.0 0

Property and equipment 17 204.8 217.8 (13.0) (6)

Goodwill and other intangible assets 18 150.7 161.2 (10.5) (7)

Current tax assets 4.4 18.2 (13.8) (76)

Deferred tax assets 11 6.3 5.6 0.7 13

Other assets 19 60.0 53.1 6.9 13

Total assets 18,301.6 18,081.4 220.2 1

Total subordinated assets 5.0 5.9 (0.9) (15)


Consolidated balance sheet

Liabilities and equity 31-12-10 31-12-09 Change to 31-12-09


Due to banks 1,472.0 1,738.8 (266.8) (15)

Trading portfolio liabilities 13 1,215.8 1,178.0 37.8 3

Negative replacement values 13, 41, 42 544.2 361.7 182.5 50

Other financial liabilities at fair value 13 8,183.0 8,279.7 (96.7) (1)

Due to customers 22 4,925.7 4,594.4 331.3 7

Accrued expenses and deferred income 325.9 274.4 51.5 19

Issued debt instruments 23 0.0 25.0 (25.0) (100)

Current tax liabilities 15.3 5.4 9.9 183

Deferred tax liabilities 11 56.6 60.1 (3.5) (6)

Provisions 25 10.4 9.0 1.4 16

Other liabilities 24 49.2 40.3 8.9 22

Total liabilities 16,798.1 16,566.8 231.3 1

Share capital 26 65.0 65.0 0.0 0

Capital reserve 189.6 190.1 (0.5) (0)

Net gains/(losses) on available-for-sale financial investments 27 51.8 51.0 0.8 2

Currency translation adjustments (46.2) (13.3) (32.9)

Retained earnings 1,298.0 1,240.4 57.6 5

Shareholders’ equity classified as a liability to purchase minority interests (0.1) (0.1) 0.0 0

Treasury shares 26 (54.2) (49.5) (4.7)

Shareholders’ equity 1,503.9 1,483.6 20.3 1

Minority interests (0.4) 31.0 (31.4) (101)

Total equity 1,503.5 1,514.6 (11.1) (1)

Total liabilities and equity 18,301.6 18,081.4 220.2 1


Statement of equity

in CHF mns Share capital Treasury shares

Balance as of 01-01-09 65.0 (77.5)

IAS-/IFRS adjustments

Balance as of 01-01-09 after adjustments 65.0 (77.5)

Changes in equity

Ownership-related changes 0.0 28.0

Dividend payment1

Purchase/sale of treasury shares 28.0

Income from sale of treasury shares

Employee share based benefit programs

Change in minority interests

Change in liability to purchase minority interests

Other effects 0.0 0.0

Group net profit


Balance as of 31-12-09 65.0 (49.5)

Balance as of 01-01-10 65.0 (49.5)

IAS-/IFRS adjustments

Balance as of 01-01-10 after adjustments 65.0 (49.5)

Changes in equity

Ownership-related changes 0.0 (4.7)

Dividend payment1

Purchase/sale of treasury shares (4.7)

Income from sale of treasury shares

Employee share based benefit programs

Change in minority interests

Change in liability to purchase minority interests

Other effects 0.0 0.0

Group net profit


Balance as of 31-12-10 65.0 (54.2)

1 Vontobel Holding AG paid a dividend of CHF 1.40 (previous year: CHF 1.20) per registered share with a par value of CHF 1.00 in May 2010.2 The reduction was the result of the squeeze-out of minority shareholders of VT Finance AG in the course of the merger with VT Investment (Zurich) AG.


Statement of equity

Capital reserve

Shareholders’ equity classified

as a liability to purchase minority

interests Retained earnings

Net unrealized gains/(losses) on available-for-sale

financial investments

Currency translation

adjustments Shareholders’

equity Minority interests Total equity

198.4 (0.1) 1,178.9 15.9 (10.7) 1,369.9 0.7 1,370.6

0.0 0.0 0.0

198.4 (0.1) 1,178.9 15.9 (10.7) 1,369.9 0.7 1,370.6

(8.3) 0.0 (77.4) 0.0 0.0 (57.7) 30.9 (26.8)

(77.4) (77.4) 0.0 (77.4)

28.0 0.0 28.0

(17.7) (17.7) (17.7)

9.4 0.0 9.4 0.0 9.4

0.0 0.0 0.0 0.0 0.0 30.9 30.9

0.0 0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0 0.0 0.0 0.0

138.9 138.9 (0.6) 138.3

35.1 (2.6) 32.5 0.0 32.5

190.1 (0.1) 1,240.4 51.0 (13.3) 1,483.6 31.0 1,514.6

190.1 (0.1) 1,240.4 51.0 (13.3) 1,483.6 31.0 1,514.6

0.0 0.0

190.1 (0.1) 1,240.4 51.0 (13.3) 1,483.6 31.0 1,514.6

(0.5) 0.0 (90.2) 0.0 0.0 (95.4) (30.9) (126.3)

(90.2) (90.2) 0.0 (90.2)

(4.7) 0.0 (4.7)

0.8 0.8 0.8

(1.3) 0.0 (1.3) 0.0 (1.3)

0.0 0.0 0.0 0.0 0.0 (30.9) 2 (30.9)

0.0 0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0 0.0 0.0 0.0

147.8 147.8 (0.5) 147.3

0.8 (32.9) (32.1) 0.0 (32.1)

189.6 (0.1) 1,298.0 51.8 (46.2) 1,503.9 (0.4) 1,503.5


Consolidated cash flow statement

31-12-10 31-12-09

CHF mns CHF mns

Cash flow from operating activities

Group net profit (incl. minorities) 147.3 138.3

Reconciliation to net cash flow from operating activities

Non-cash positions in Group results:

Depreciation and value adjustments of property, equipment and intangible assets 61.8 61.9

Credit loss expense 0.6 5.5

Income from investments in associates (0.1) 0.2

Deferred taxes (4.6) 0.7

Change in provisions 1.6 2.9

Net income from investing activities 30.8 0.0

Other non-cash income 0.0 (15.1)

Net (increase)/decrease in assets relating to banking activities:

Due from/to banks, net (129.9) 1,610.1

Reverse-repurchase agreements, cash collateral for securities borrowing 0.0 (155.0)

Trading positions and replacement values, net (77.7) (425.9)

Other financial assets/liabilities at fair value, net (279.4) 209.3

Due from/to customers, net (90.2) 293.1

Accrued income, prepaid expenses and other assets (35.8) (47.2)

Net increase/(decrease) in liabilities relating to banking activities:

Repurchase agreements, cash collateral for securities lending 0.0 0.0

Accrued expenses, deferred income and other liabilities 90.4 (50.1)

Taxes paid (6.5) (30.8)

Cash flow from operating activities (291.7) 1,597.9

Cash flow from investing activities

Investments in subsidiaries and associates 0.0 183.8

Disposal of subsidiaries and associates 0.0 0.1

Purchase of property, equipment and intangible assets (41.0) (39.4)

Disposal of property, equipment and intangible assets 0.0 0.3

Investment in financial investments (1,806.8) (890.3)

Divestment of financial investments 1,595.7 541.5

Cash flow from investing activities (252.1) (204.0)

Cash flow from financing activities

Net movements in treasury shares (6.0) 17.0

Capital increase/(decrease) 0.0 0.0

Dividends paid (90.2) (77.4)

Issued debt instruments (25.0) (24.0)

Change in minority interests (30.9) 0.0

Cash flow from financing activities (152.1) (84.4)

Effects of exchange rate differences (12.4) (0.4)

Net increase/(decrease) in cash and cash equivalents (708.3) 1,309.1

Cash and cash equivalents, beginning of the year 3,746.2 2,437.1

Cash and cash equivalents as at the balance sheet date 3,037.9 3,746.2


Consolidated cash flow statement

31-12-10 31-12-09

CHF mns CHF mns

Cash and cash equivalents comprise at year end

Cash 1,457.6 1,950.0

Money market paper with original time to maturity up to 3 months 0.0 0.0

Due from banks on demand 1,580.3 1,796.2

Total 3,037.9 3,746.2

Further information:

Dividends received 30.3 24.2

Interest received 258.2 151.1

Interest paid 5.0 18.5


Notes to the consolidated financial statements

1. Basis of presentation

Vontobel Group’s consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS), which are published by the International Ac-counting Standards Board (IASB). The accounting standards applied are the same as in the consoli-dated financial statements dated 31 December 2009, the only exceptions being the changes re-ferred in section 4.

2. Estimates, assumptions and the exercising of discretion by management

In the application of the accounting principles, management is required to make numerous esti-mates as well as assumptions and discretionary decisions that influence the level of reported as-sets and liabilities and expenses and income, as well as the disclosure of contingent assets and contingent liabilities. The Vontobel Group is convinced that – in all material respects – these con-solidated financial statements provide a true and fair view of its financial position, its results of operations and its cash flows. Management reviews its estimates and assumptions on a continual basis and adapts them in line with new findings and conditions.

Estimates and assumptions are mainly contained in the following areas of the consolidated finan-cial statements and are disclosed in the corresponding notes to the consolidated financial state-ments: fair value of financial instruments, share-based payment, provisions, income taxes, pen-sion plans, and goodwill and other intangible assets.

3. Summary of the most important accounting principles

3.1 Consolidation principles

Subsidiaries The consolidated financial statements comprise the accounts of Vontobel Holding AG and its subsidiaries. All subsidiaries directly or indirectly controlled by the Vontobel Holding AG are con-solidated. Acquired subsidiaries are consolidated from the date on which control is transferred to the Vontobel Group. Changes to investments in subsidiaries are recorded as transactions in share-holders’ equity provided the Vontobel Group retains control of the subsidiary. Subsidiaries that are sold are consolidated until the date on which control is lost. If the Group loses control of the subsidiary, any remaining interest is recorded under “Investments in associates” or as a financial instrument according to IAS 39.

The acquisition of a subsidiary is accounted for using the purchase method. The acquisition costs are measured at the fair value of the consideration at the acquisition date. Previously held equity interests in the acquiree that are treated as financial instruments in accordance with IAS 39 or as an associated company are measured at fair value at the acquisition date and any gain or loss is recorded in the income statement. The identifiable assets acquired and liabilities and contingent liabilities assumed are recognized at fair value at the acquisition date. A minority interest in the acquiree is measured either at fair value or at its proportionate interest in the fair value of the net assets acquired; either method can be exercised on a transaction-by-transaction basis. If the ag-gregate of the fair value of the consideration, the previously held equity interests and the minor-ity interests measured according to the chosen method, as detailed above, exceeds the fair value of the net assets acquired, the difference between the two amounts is recorded as goodwill. If the opposite applies, the difference is immediately recorded in the income statement. The costs di-rectly attributable to the acquisition (e.g. consulting and audit costs) are charged to the income statement.

The effects of intra-Group transactions are eliminated in the consolidated financial statements. Shareholders’ equity, net profit and comprehensive income attributable to minority interests are reported separately in the consolidated balance sheet and statement of comprehensive income.

AssociatesCompanies over which the Group can exert significant influence are accounted for using the equity method. As a rule, influence is deemed significant when the Group holds 20% to 50% of voting rights.

Accounting principles


Notes to the consolidated financial statementsAccounting principles

According to the equity method of accounting, the interest acquired in a company is stated at cost in the balance sheet upon acquisition. After the acquisition, the book value of the associated company is increased or reduced, depending on the Group’s share of the comprehensive income and the ownership-related changes in the shareholders’ equity of the associated company.

3.2 General principles

Foreign currency translationThe Group companies prepare their financial statements in the respective functional currency. Transactions in a currency other than the functional currency are recorded by the companies at the exchange rate on the date of the transaction. Exchange differences arising between the date of a transaction and its subsequent settlement are recognized in the income statement. At the balance sheet date, monetary assets and liabilities denominated in a foreign currency are trans-lated into the functional currency using the closing exchange rates, unrealized exchange differ-ences are recognized in the income statement. Non-monetary items carried at historical cost in a foreign currency are translated into the functional currency at the historical exchange rate. Non-monetary items carried at fair value in a foreign currency are translated into the functional cur-rency at the closing exchange rates.

When drawing up the consolidated financial statements, the balance sheets of Group companies that are denominated in a foreign currency are translated into Swiss francs at the closing ex-change rates. Average exchange rates for the period under review are used for items of the in-come statement, other comrpehensive income and cash flows. Exchange differences arising from the use of closing exchange rates and average exchange rates are recognized as currency transla-tion differences in other comprehensive income. On the loss of control of a subsidiary, the cur-rency translation differences previously recognized in other comprehensive income are reclassi-fied from other comprehensive income to the income statement.

Business segmentsExternal segment reporting reflects the organizational structure of the Vontobel Group as well as internal management reporting, which forms the basis for the assessment of the financial per-formance of the segments and the allocation of resources to the segments. The Group comprises three business units – Private Banking, Investment Banking and Asset Management – which re-flect the types of products and services offered to clients and constitute the operating and report-able segments as defined in IFRS 8. The support units Operations, Finance & Risk und Group Services supply core services to the business units and are grouped within the Corporate Center.

Income, expenses, assets and liabilities are allocated to the business units on the basis of client responsibility or according to the principle of origination. Items that cannot be allocated directly to the business units are reported in the Corporate Center accounts. The Corporate Center also includes consolidating entries.

The costs of the services supplied internally are reported in the item “Services from/to other segment(s)” as a reduction in costs for the service provider and as an increase in costs for the recipient, based on agreements that are renegotiated periodically according to the same principle as if they were concluded between independent third parties (“at arm’s length”).

Cash and cash equivalentsCash and cash equivalents in the cash flow statement include cash (petty cash, postal check ac-count deposits, giro or demand deposits at the Swiss National Bank and foreign central banks as well as clearing credit balances at recognized clearing centres and clearing banks), receivables due from banks on demand as well as available-for-sale money market paper in the balance sheet item “Financial investments” with an original term of a maximum of three months.

Accrual of earningsIncome from services rendered over a specific period of time is recorded on a pro rata basis for the duration of the service. This includes asset management fees and custody fees. Profit-based income and performance-based income are not recorded until all of the relevant criteria have been met. This type of income may, for example, be generated in corporate finance and in the business with hedge funds. Interest income is accrued as earned. Dividends are recognized when payment is received.



3.3 Financial instruments

Initial recognitionPurchases and disposals of financial assets are recognized in the balance sheet on the trade date. At the time of initial recognition, financial assets or financial liabilities are classified in the respec-tive category according to IAS 39 criteria and measured at the fair value of the consideration given or received, including directly attributable transaction costs. In the case of trading portfolio assets and other financial instruments at fair value (“Fair value through profit and loss”), the transaction costs are immediately recognized in the income statement.

Determining fair value and recognition of “Day 1 Profit”Please refer to note 34 “Fair value of financial instruments” and note 35 “Level 3 instruments” for information on the determination of the fair value of financial instruments, the fair value hi-erarchy, the valuation methods and the day 1 profit.

Trading portfolio assets and liabilities and other financial instruments at fair value (“fair value through profit and loss”)Financial assets or financial liabilities held for trading purposes are measured at fair value in “Trading portfolio assets” or “Trading portfolio liabilities”. Gains and losses on the sale and re-demption of such instruments, interest and dividend income as well as all changes in fair value are recognized in “Trading income”.

Provided the criteria defined by IAS 39 have been met, a financial instrument can be assigned to the category “Other financial instruments at fair value” upon initial recognition and carried in the balance sheet as “Other financial assets at fair value” or “Other financial liabilities at fair value”. The corresponding accounting treatment in the income statement is analogous to the treatment of trading portfolio assets and liabilities.

Within the scope of the issuing business, the Vontobel Group reports structured products con-taining a debt instrument and an embedded derivative in the balance sheet item “Other financial liabilities at fair value” and reports interest rate instruments that were acquired for the purpose of reinvesting the issue proceeds and hedging the interest rate risks of these structured products in the balance sheet item “Other financial assets at fair value”. In addition, certain designated portfolios of equity instruments and shares in funds outside the trading business are also reported in the item “Other financial assets at fair value”.

Based on a documented strategy, the management, valuation and reporting to the senior man-agement of both structured products and designated interest rate instruments from the issuing business as well as of equity instruments and shares in funds outside the trading business is per-formed on a fair value basis. This allows for the consistent treatment of issued products and designated hedging transactions in the issuing business.

Available-for-sale financial assetsFinancial assets that are available for sale are stated at fair value. Unrealized gains and losses are recognized in other comprehensive income until the financial assets are sold or determined to be impaired. Equities and similar securities and rights are considered impaired if the acquisition cost may not be recovered due to a significant or prolonged decline in fair value. A debt instrument is considered impaired if the creditworthiness of the corresponding debtor significantly deteriorates or if other specific signs of difficulty are observable. If an available-for-sale asset is determined to be impaired, the cumulative unrealized loss previously recognized in other comprehensive income is reclassified to the item “Other income” in the income statement. Impairment reversals on debt instruments are recognized in “Other income”, impairment reversals on equities in other compre-hensive income. This also applies if an impairment recorded in the first half of the year is partly or completely offset by a reversal of impairment in the second half of the year. On the disposal of a financial asset that is available for sale, the cumulative unrealized gain or loss previously recog-nized in other comprehensive income is transferred to the item “Other income” in the income statement. Gains or losses from partial disposals are calculated using the average cost method.

Interest is accrued in the period in which it is earned using the effective interest method and recognized together with dividend income in the item “Net interest income”.



Loans grantedLoans are reported in the balance sheet at amortized cost using the effective interest method less any specific allowances for credit risks. Based on the size and structure of the credit portfolio, as well as the Vontobel Group’s policy of essentially only granting credit on a secured basis or to counterparties with very high creditworthiness, no general allowances are made for credit risks. A loan is considered impaired when it is likely that the amount due according to the contractual terms cannot be entirely collected. An impairment is recorded under “Valuation adjustments, provisions and losses” and corresponds to the difference between the book value of the loan and the present value of the amount that is expected to be collected – calculated on the basis of the original effective interest rate on the loan – taking account of the counterparty risk and the net proceeds from the liquidation of any collateral. The reasons for impairment could be specific to the relevant counterparties or countries.

Interest income on loans that are not overdue is accrued in the period in which it is earned and recorded in “Net interest income”. Increases in or reversals of impairment losses are recognized in “Value adjustments, provisions and losses”. As a rule, they are derecognized at the point in which a legal title confirms the conclusion of the liquidation process.

Securities lending and borrowing transactionsThe transfer of securities in the case of securities lending and borrowing transactions (due to the actual lending or borrowing transaction or as collateral) is only recorded in the balance sheet if the risks and rewards of ownership of the securities are also transferred. In securities lending agreements, cash collateral received is recorded in the balance sheet as “Cash collateral from securities lending agreements”. In securities borrowing agreements, cash collateral provided is recorded in the balance sheet as “Cash collateral for securities borrowing agreements”.

Securities lent or delivered as collateral for which the counterparty has an unlimited right to resell or pledge are reported in the balance sheet item “Securities lent or delivered as collateral”.

Fees and interest from securities lending and borrowing are accrued in interest income or interest expense in the period in which they are incurred.

Repurchase and reverse-repurchase agreements Repurchase and reverse-repurchase agreements are treated as secured financing agreements. The transfer of securities in the case of repurchase and reverse-repurchase agreements is only recorded in the balance sheet if the risks and rewards of ownership of the securities are also transferred.

In reverse-repurchase agreements, cash collateral provided is stated in the balance sheet as “Cash collateral for reverse-repurchase agreements”. In repurchase agreements, the cash collateral re-ceived is stated in the balance sheet as “Cash collateral from repurchase agreements”.

Delivered securities for which the counterparty has an unlimited right to resell or pledge are re-ported in the balance sheet item “Securities lent or delivered as collateral”.

Interest income from reverse-repurchase agreements and interest expense from repurchase agreements are accrued in the period in which they are incurred.

Derivative financial instrumentsDerivative instruments are stated at fair value and presented as positive and negative replace-ment values. The Group offsets positive and negative replacement values in the case of transac-tions with the same counterparty, provided that legally enforceable netting agreements are in place and the intention to offset exists. Realized and unrealized gains and losses are recognized in the item “Trading income”.

The Group may apply hedge accounting if the criteria specified in IAS 39 are met.1 At the time a hedge transaction is made, it is determined whether it is a hedge of the fair value of a balance sheet item or an unrecognized firm commitment (fair value hedge) or a hedge of the cash flows from a balance sheet item or a highly probable future transaction (cash flow hedge).

In a fair value hedge, the change in fair value of the hedging instrument is reported in the income statement. The change in fair value of the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and is also recognized in the income statement.

1 No hedge accounting was applied neither in the year under review nor in the previous year



In a cash flow hedge, the change in fair value of the effective portion of the hedging instrument is recognized in other comprehensive income, while the change in fair value of the ineffective portion of the hedging transaction is recorded in the income statement. Gains or losses from the hedging instrument reported in other comprehensive income are reclassified from other compre-hensive income to the income statement in the same periods in which the hedged cash flows of the underlying transactions are recognized in the income statement.

Issued debt instrumentsIssued debt instruments are carried in the item “Issued debt instruments” at amortized cost using the effective interest rate method provided they were not designated as “Other financial liabili-ties at fair value” upon initial recognition.

Debt instruments with embedded derivatives on own shares are split up into these two compo-nents upon issue and subsequently recognized as an issued debt instrument and as derivatives on own shares.

Financial guaranteesAfter initial recognition, a financial guarantee is reported in the balance sheet at the higher of the following two values: the amount of the provision that has to be recorded for the financial guar-antee if an outflow of funds is probable, the level of which can reliably be estimated, and the amount that was originally recorded less the cumulative amortization recorded in the income statement.

3.4 Other basic principles

Own shares and derivatives on own sharesVontobel Holding AG shares held by the Group are deducted from shareholders’ equity in the item “Treasury shares” at weighted average cost. Changes in fair value are not recorded. The difference between the sales proceeds of treasury shares and the corresponding acquisition cost is recorded in “Capital reserve”.

Derivatives on own shares that must be physically settled qualify as equity instruments and are stated in shareholders’ equity under “Capital reserve”. Changes in fair value are not recognized. Upon settlement of a contract, the sale proceeds net of costs are recorded under “Capital re-serve” or the purchase price is recorded under “Treasury shares”.

Derivatives on own shares that must be settled in cash or that offer a choice of settlement meth-od are treated as derivative financial instruments.

An exception are put options written on own shares and forward contracts to purchase own shares in which physical settlement has been agreed on or offered as an alternative. In both cases, the discounted strike price or forward price upon execution of the contract is deducted from shareholders’ equity as a liability. This liability is increased during the contract term up to the strike price or forward price using the effective interest rate method. Upon settlement of a con-tract, the liability is either derecognized or transferred to shareholders’ equity.

Share-based paymentAccording to the bonus model of the Vontobel Group, the employees of most Group companies are offered an annual bonus as well as a performance-related future allocation of shares. Employ-ees have the right and/or the obligation to draw part of their annual bonus in shares of Vontobel Holding AG instead of in cash. The fair value of these shares at grant date is charged as personnel expense. Employees who elect to draw part of their annual bonus in shares are entitled to receive additional Vontobel Holding AG shares after three years have lapsed provided certain criteria with regard to operating performance have been met. Market-related variables are fixed at the time the rights to receive these so-called performance shares are granted and are not adjusted during the vesting period. The share price used to determine personnel expense is calculated on the basis of the fair value of the Vontobel Holding AG share at this time, less the present value of the dividends expected during the vesting period. The variables that cannot be observed in the mar-ket, such as the future performance of the business and the probability that employees with rights to receive performance shares will leave the company early, are continually reassessed by



management during the vesting period based on current developments and conditions. The esti-mated cost of the performance shares for the entire vesting period on the balance sheet date is charged as personnel expense on a pro rata temporis basis.

Property and equipmentProperty and equipment include bank buildings, leasehold improvements, information technolo-gy and telecommunications equipment, software (IT core systems and other software, incl. soft-ware in development) and other fixed assets. The acquisition or production costs of property and equipment are capitalized if the Group is likely to obtain future economic benefits from them and the costs can be both identified and reliably determined. Property and equipment are depreciated on a straight-line basis over their estimated useful life as follows:

Bank buildings max. 40 years

Leasehold improvements max. 10 years

Information technology and telecommunications equipment 3 years

IT core systems max. 10 years

Other software 3–5 years

Other fixed assets 2–5 years

Property and equipment are reviewed for impairment if events or circumstances indicate that the carrying amount may be impaired. If the carrying amount exceeds the realizable amount, an im-pairment loss is recorded. Any reversals of impairments at a later date will be recognized in the income statement.

Goodwill and other intangible assetsThe goodwill arising from the acquisition of a subsidiary (see section 3.1 “Consolidation princi-ples” for details) is recognized as an asset in the balance sheet and assigned to one or more cash-generating units and is, in principle, subject to an annual impairment test. If events or a change of circumstances indicate a possible impairment, the test is carried out more frequently to deter-mine whether the book value of the relevant cash-generating unit exceeds its recoverable amount. The recoverable amount is the higher of the fair value less costs to sell and the value in use. If the book value of the cash-generating unit exceeds the recoverable amount, a goodwill impairment is recorded. Reversals of impairments are not recorded. This also applies if an impair-ment recorded in the first half of the year is partly or completely offset by a reversal of impair-ment in the second half of the year.

Other intangible assets include the client relationships and brands acquired during business com-binations. They are depreciated on a straight-line basis over the useful life of five to ten years (client relationships) or ten years (brands). The other intangible assets are tested for impairment if events or circumstances indicate that the book value may be impaired. If the book value ex-ceeds the recoverable amount, an impairment loss is recorded. Any reversals of impairments at a later date will be recognized in the income statement. No other intangible assets with an indefi-nite useful life are capitalized in the Vontobel Group’s balance sheet.

LeasingIn the case of operating leasing, the leased assets are not reported in the Vontobel Group’s bal-ance sheet since the related ownership rights and obligations remain with the lessor. The ex-penses resulting from operating leasing are recorded in the position “General expense”. Vontobel does not have any significant finance leasing agreements.

Income taxesCurrent income taxes are calculated on the basis of the applicable tax laws in individual countries and recognized as an expense in the period in which the related profits are made. Assets or liabil-ities related to current income taxes are reported in the balance sheet in the items “Current tax assets” or “Current tax liabilities”.

Tax effects arising from temporary differences between the carrying amounts of assets and liabil-ities in the Group’s balance sheet and their corresponding tax values are recognized, respectively, as “Deferred tax assets” and “Deferred tax liabilities”. Deferred tax assets arising from temporary differences and from loss carryforwards eligible for offset are capitalized if it is likely that suffi-cient taxable profits will be available against which those temporary differences or loss carry-



forwards can be offset. Deferred tax assets and deferred tax liabilities are calculated at the tax rates expected to apply in the period in which the tax assets will be realized, or the tax liabilities settled.

Tax assets and tax liabilities are offset against each other when they refer to the same taxable entity, concern the same tax authority, and an enforceable right to offset exists.

Current and deferred taxes are credited or charged to other comprehensive income or sharehold-ers’ equity if the taxes refer to items that are credited or charged to other comprehensive income or to shareholders’ equity in the same or a different period.

Pension fundsThe Group operates a number of pension plans for its employees in Switzerland and in other countries. They include both defined benefit and defined contribution plans. The pension plans in Switzerland have been set up according to the Swiss method of defined contributions but do not fulfil all the criteria of a defined contribution pension plan according to IAS 19. For this reason, the Swiss pension plans are treated as defined benefit plans in the con-solidated financial statements.

In the case of defined benefit plans, the pension obligations and expenses are determined by actuarial appraisals prepared by outside experts according to the projected unit credit method. The appropriate calculations are performed on an annual basis. If the balance of the accumulated, unrecognized actuarial gains or losses at the end of the preceding year surpasses both 10% of the assets and 10% of the obligations of the pension plan, the part of the unrecognized actuarial gains or losses that exceeds the higher of the two threshold values is recorded in the income statement over the average remaining working lives of the employees. If the total resulting from a pension fund surplus plus (less) actuarial losses (gains) that have not yet been recognized and any service costs that have not yet been recognized is negative, a liabil-ity for the corresponding amount is recognized in the Group’s balance sheet.If the above total is positive, an asset is recognized in the Group’s balance sheet, which corre-sponds to the lower of the following two values:

the above total, or –the total of the actuarial losses that have not yet been recognized and service costs that have –not yet been recognized, plus the economic benefit in the form of a future reduction in con-tributions.

No actuarial calculations are required in order to record defined contribution plans in the balance sheet. The contributions to these types of pension plans are recorded in the income statement when the employees render the corresponding services, which is generally in the year in which the contributions are paid.

ProvisionsA provision is recognized if the Group has, as a result of a past event, a current liability at the balance sheet date that will probably lead to an outflow of funds, the level of which can be reli-ably estimated. The recognition and release of provisions are recorded in the item “Value adjust-ments, provisions and losses”. If an outflow of funds is unlikely to occur or the amount of the liability cannot be reliably estimated, a contingent liability is shown. If there is, as a result of a past event, a possible liability as of the balance sheet closing date whose existence depends on future developments that are not fully under the Vontobel Group’s control, a contingent liability is like-wise shown.

4. Changes in accounting principles and presentation

4.1 Standards and interpretations that have been implemented

The Vontobel Group applied the following new and revised standards and interpretations for the first time in the financial year 2010:

IFRS 3 – Business Combinations and IAS 27 – Consolidated and Separate Financial StatementsThe changes to the two revised standards relate to the treatment of specific issues in the case of business combinations (e.g. the valuation of minority interests, the treatment of business combi-



nations achieved in stages, the recording of conditional consideration and the determination of acquisition costs) as well as subsequent changes in ownership interests with or without a loss of control. The changes apply to financial years that began on or after 1 July 2009. The new provi-sions did not have any significant impact on the Vontobel Group when they were first applied.

Other new standards and interpretationsThe following new and revised standards and interpretations did not have any impact on the Vontobel Group or were not relevant to the Vontobel Group when applied for the first time:

IAS 39 – Exposures Qualifying for Hedge Accounting –IFRS 1 – First-time Adoption of International Financial Reporting Standards –IFRS 2 – Group Cash-settled Share-based Payment Transactions –Annual Improvement Project (publication 2009) –Conceptual Framework for Financial Reporting (Phase A) –IFRIC 17 – Distributions of Non-cash Assets to Owners –

4.2 Other changes

None.

5. Standards and interpretations that have not yet been implemented

Various new and revised standards and interpretations have to be applied with effect from 1 January 2011 or a later date. The Vontobel Group has not made use of the option of applying them prior to the effective dates.

IFRS 9 – Financial Instruments: Classification and MeasurementThe publication of IFRS 9 represents the completion of the first phase in a project to replace IAS 39. The IASB is expected to approve new regulations on the impairment methodology for finan-cial instruments and on hedge accounting in 2011, as part of the second and third phases of the project.

Under IFRS 9, all financial assets are measured either at fair value or at amortized cost. Debt in-struments that are held with the aim of generating contractual cash flows that solely represent the repayment of principal and interest are measured at amortized cost. All other debt instru-ments are measured at fair value and all income components are recorded in the income state-ment. All equity instruments are measured at fair value and, in principle, changes in their fair value are recorded in the income statement. If an equity instrument is not held for trading pur-poses, it can irrevocably be classified as an instrument that is measured at fair value the first time it is recorded in the balance sheet, as a result of which all income components – with the excep-tion of dividends – are recorded in other comprehensive income.

IFRS 9 incorporates the rules on the classification and valuation of financial liabilities set out in IAS 39. A new feature in IFRS 9 is that the impact of the change in own credit risk from financial lia-bilities, for which the fair value option is applied, is now recorded in other comprehensive income. However, if this treatment would create or increase an accounting mismatch in the income state-ment, the impact of the change in own credit risk should continue to be recorded in the income statement according to the method used in IAS 39.

These changes have to be applied from 1 January 2013. The Vontobel Group is currently analyz-ing the impacts of the new regulations.



IFRIC 14 – Prepayments of a Minimum Funding RequirementIFRIC 14 is an interpretation of IAS 19 – Employee Benefits. The amendment to IFRIC 14 applies in circumstances when a company is subject to minimum funding requirements for a defined benefits plan and makes an early payment of contributions. According to the amendment to IFRIC 14, the prepayments that are made to cover minimum funding requirements are always recognized in the form of a future reduction in contributions when their economic benefit is de-termined. The amendment to IFRIC 14 applies from 1 January 2011 and is not expected to have any impact on the consolidated financial statements of the Vontobel Group.

Other new standards and interpretationsBased on initial analyses, the following new and revised standards and interpretations are not expected to have any significant impact on the Vontobel Group’s net profit, comprehensive in-come and shareholders’ equity or are not expected to be relevant to the Vontobel Group:

IAS 12 – Deferred Tax: Recovery of Underlying Assets –IAS 24 – Related Party Disclosures –IAS 32 – Classification of Rights Issues –IFRS 1 – First-time Adoption of International Financial Reporting Standards –IFRS 7 – Enhancing Disclosures about Transfers of Financial Assets –Annual Improvement Project (publication 2010) –IFRIC 19 – Extinguishing Financial Liabilities with Equity Instruments –


Notes to the consolidated financial statementsRisk management and risk control

1. Risk policy

A conscious and prudent approach to risk is a prerequisite for the sustained, long-term success of the Vontobel Group as an internationally oriented Swiss banking group specializing in wealth and asset management and investment banking. The assumption of risk is an inherent part of the activities of the three business units Private Banking, Investment Banking and Asset Manage-ment.The Vontobel Group’s risk policy defines the relevant risk categories and the corresponding risk profile, as well as the powers of authorization, organizational structure, methods and processes relating to the management and control of risks. The appropriateness of the risk policy is re-viewed at least once annually by the Board of Directors.The Risk Management and Risk Control units ensure that all risks are managed and monitored with the utmost care.

The most important principles regarding risk management and control are:Clearly delegated responsibilities and authority –Alignment of risk profile and risk capacity –Independent control functions and adequate human and technical resources –Adequate internal control systems –Transparency regarding the risks taken –

Clear responsibilities and powers of authorizationOrganization and authority regarding the management and control of all risks have been defined as follows:

Responsibility for risk has been assigned to the Board of Directors. –The Group Executive Management is responsible for the operational management of the –Group and hence for the implementation of our risk policy and for the management and control of all risks.The heads of the business units and support units are responsible for the management of –risks in the framework of the qualitative and quantitative guidelines.The “Risk Control” unit is responsible for risk control. –

Alignment of risk profile and risk capacityComprehensive, combined company-wide stress tests are conducted on a regular basis. As well as taking account of market and credit risks (i.e. position risks), these tests assess operational risks as well as risks relating to income and costs. The results of the stress tests are compared with the Vontobel Group’s risk capacity to ensure that its risk profile does not exceed the available risk capacity.

Independent control functions as well as adequate human and technical resourcesThe Risk Control unit reports directly to the Head of the Finance & Risk support unit. It is organ-ized into various teams, which are responsible for the subsequent independent monitoring of market risks, credit and counterparty risks and operational risks in general, as well as the risks that result when client assets are not invested in accordance with internal or external regulations (in-vestment control) in particular.

The Compliance and Legal units have an important role to play in the area of operational risk in particular. They also report to the Head of the Finance & Risk support unit.

The Risk Control unit is primarily responsible for identifying risks related to ongoing business activities, changes in the environment (markets or regulation) or the launch of new activities (new products and services or new markets). Secondly, it records the identified risks using suitable methods and measuring systems and quantifies, aggregates, analyses and monitors them as far as possible. The Vontobel Group employs conventional methods and procedures to achieve this (see the following sections on the individual risk categories). Market and credit risks are moni-tored on a daily basis and compared with the limits that have been set. If any limits are exceeded, this is reported immediately and the position is monitored closely until the additional exposure is reduced. The Risk Control unit’s third responsibility is to ensure transparency regarding the risks that have been assumed.

Risk management and risk control



Adequacy of internal control systemsThe management and control of all risks is essentially performed using a holistic approach re-ferred to as the Internal Control System (ICS). In accordance with the FINMA circular 08/24 “Supervision and Internal Control at Banks”, as well as the provisions governing control proc-esses during the production of financial statements according to the Swiss Code of Obligations, existing control processes are regularly reviewed and further optimized. As well as ensuring com-pliance with legal and regulatory requirements, the focus is on ensuring the effectiveness, effi-ciency and reliability of business processes as well as of the financial information.

Transparency regarding the risks takenThe Vontobel Group’s risk policy distinguishes between market, liquidity, credit, operational and reputational risks. The latter are considered to be of particular and overriding importance. The Board of Directors, Group Executive Management and employees know that the good reputation of the Vontobel Group and the trust which is placed in it are based on their ability to strike a bal-ance between profit orientation, risk tolerance and compliance with mandatory rules of conduct each day.Ensuring transparency about the risk profile as a whole, as well as the individual risks that have been assumed, is a core function of the risk control areas (see above). The front office areas which are responsible for risk management are essentially informed about market and credit risks on a daily basis via suitable reports. However, reports on operational risks are provided at appropriate intervals rather than on a daily basis.The Group Executive Management and the Board of Directors are informed in full about any changes in individual risk factors in the Group’s risk profile via consolidated periodic risk reports. The valuation principles are set out in note 34.

2. Market risk

2.1 General information

Market risk refers to the risk of losses due to adverse changes in market deveopments related, for example, to interest rates, credit spreads, foreign-exchange rates, stock prices, or commodities prices, and in the corresponding volatilities. Market risks are relevant in various areas, both with-in and outside Investment Banking.

The major proportion of the risk positions within Investment Banking originates from its business with proprietary products such as warrants, certificates and structured products, as well as the hedging of these instruments. Financial Products of Investment Banking is responsible for these positions, as well as for foreign exchange and money market trading, the management of the foreign exchange position and collateral trading (repo transactions and securities lending and borrowing transactions).

Market risks are limited and monitored using a multi-level system of limits. In addition to the Value at Risk limits and stress exposure limits defined at a global level and for each trading unit, this system defines a wide range of detailed sensitivity limits and volume limits in order to control and limit risks.

Market risk positions are also held outside Investment Banking. These financial investments con-sist of broadly diversified portfolios and non-consolidated holdings. Within the scope of asset allocation, the equity exposure is maintained at a consistently low level. The financial investments are classified as “available-for-sale”. Non-strategic exposures in equity instruments and invest-ment funds (incl. alternative investments) are classified as “Other financial assets at fair value through profit and loss” (see note 13). To quantify and limit risk, the same measurement methods – i.e. Value at Risk and stress exposure – are used for these positions at an aggregate level as for the positions held by Investment Banking.

Further information on market risks at overall balance sheet level (interest rate risks and currency risks) can be found in section 2.3 “Market risks related to the balance sheet structure”



2.2 Market risks related to Investment Banking and other securities holdings

2.2.1 Value at Risk (VaR)The management and control of market risks for all the positions in Investment Banking as well as for securities holdings outside Investment Banking is based on specific sensitivity and volume limits as well as on Value at Risk and stress exposure measurements, in line with the general mar-ket standard.

VaR is measured using the historical simulation method. All instruments are revalued based on historical changes of the risk factors. As a result, the historically observed volatility of the indi-vidual risk factors and the historically observed correlations between the individual risk factors are imputed directly into the VaR calculations. The confidence level is 99%, the holding period is set at one day and the historical period of observation to determine the time series relevant to VaR is now four years.

At the beginning of 2010, the risk measurement methods used to calculate value at risk as well as stress exposures underwent a significant change, which involves the comprehensive modelling of issuer-specific credit spread risks relating to interest rate instruments. As a result of this change, value at risk figures have increased although the positions remain the same. Consequently, the value at risk figures for 2010 are not comparable with the figures for prior periods.

The following table shows the VaR for the Vontobel Group as a whole, as well as for Investment Banking. The average VaR for the year under review totalled CHF 27.4 mn for the Vontobel Group as a whole, of which CHF 19.7 mn comprised the VaR for Investment Banking. As a result of the change in methodology, these figures cannot be compared with the figures for the previ-ous year (average VaR of CHF 10.1 mn for the Vontobel Group and of CHF 4.4 mn for Investment Banking).

The table also shows the relative importance of the VaR for the individual risk factors as a propor-tion of total VaR. In the year under review, the largest proportion of average VaR was attributable to interest rate risks and issuer-specific credit spread risks both in the Vontobel Group as a whole and in Investment Banking. When interpreting the table, it should be noted that – depending on the historically realized correlations between risk factors – individual risk factors may also display positive risk values; these figures are shown in brackets in the following table.

Value at Risk (VaR) for Vontobel Group overall and for Investment Banking1

Equities2

Interests incl. credit

spread

Currencies

Commo-dities3

31-12-10

Total


Vontobel Group: 17.4 17.6 0.7 0.4 36.1

Average 7.3 19.4 0.4 0.3 27.4

Minimum 6.5 12.4 0.6 0.0 19.5

Maximum 15.1 20.8 0.7 1.0 37.6

of which Investment Banking 5.2 20.5 0.7 0.3 26.7

Average 1.1 17.9 0.4 0.3 19.7

Minimum 0.1 12.1 0.3 0.1 12.6

Maximum 4.5 20.7 1.2 0.5 26.9

1 99% confidence level; 1-day holding period; four-year historical observation period. The contributions to the risk factors include both price and volatility risks.

2 Including positions in investment funds and hedge funds

3 Including precious metals



Equities1

Interests incl. credit

spread

Currencies

Commo-dities2

31-12-09

Total


Vontobel Group: 12.0 (1.3) 1.1 1.1 12.9

Average 10.3 (0.8) 0.2 0.4 10.1

Minimum 5.9 (0.6) (0.0) 0.0 5.3

Maximum 14.3 (0.5) 0.5 0.6 14.9

of which Investment Banking 4.9 (0.7) 0.6 0.8 5.6

Average 2.7 1.6 (0.1) 0.2 4.4

Minimum 1.9 0.3 0.0 0.1 2.3

Maximum 8.3 2.5 (0.8) 0.1 10.1

1 Including positions in investment funds and hedge funds

2 Including precious metals

The graph below shows the development over time of 1-day VaR for the positions of Investment Banking/Financial Products of Vontobel Group. There is also a graph to show the frequency dis-tribution of daily gains and losses for the years 2010 and 2009.

Value at Risk (VaR)1 for the positions of Investment Banking/Financial Products of Vontobel Group (CHF mns)

30

28

26

24

22

20

18

16

14

12

1031-03-10 30-06-10 30-09-10 31-12-10

1 99% confidence level; 1-day holding period; four-year historical observation period.



Frequency distribution of the gains and losses of the positions Investment Banking/Financial Products1 (number of days)

80

70

60

50

40

30

20

10

0

■ 2010 ■ 2009

<–1

0.00

–9.2

5

–8.2

5

–7.2

5

–6.2

5

–5.2

5

–4.2

5

–3.2

5

–2.2

5

–1.2

5

–0.2

5

0.75

1.75

2.75

3.75

4.75

5.75

6.75

7.75

8.75

9.75

>10

.00

1 The reported gains and losses represent actual income incl. spreads as well as income from intraday trading (in CHF mns).

2.2.2 Stress exposureIn addition to the 99% confidence level for the Value at Risk limits, there are predefined stress exposure limits and corresponding stress tests conducted on a daily basis. All positions held by Investment Banking and all other securities positions are re-evaluated in a specific number of historical and institute-specific stress scenarios (with 1-day and 10-day holding periods) and the scenario with the largest loss is subsequently selected for the stress exposure.

2.3 Market risks related to the balance sheet structure

The Treasury division is responsible for managing the balance sheet structure and capital. Interest rate risks and currency risks are monitored and limited as part of the Group’s asset and liability management (ALM) activities. Treasury is also responsible for securing refinancing and monitor-ing liquidity risk on a continuous basis.

2.3.1 Interest rate riskInterest rate and foreign-exchange risks arise in balance sheet management through differing interest commitments and foreign currencies on the asset and liability side of the balance sheet and of off-balance-sheet items. These risks are managed and monitored at an aggregated level. The interest rate sensitivities of the market value of shareholders’ equity (and broken down to show positions within and outside Investment Banking) are presented in the tables on the next two pages. The table shows the gains and losses by currency and maturity range, assuming a +/–100 basis point change in interest rates in accordance with the reporting of interest rate risks prescribed by FINMA Circular 08/6. Assuming very conservative, additive aggregation between individual currencies, the sensitivity to a +100 basis point change corresponds to CHF +2.2 mn for the current year and CHF –26.9 mn for the previous year.



Interest rate risk of Vontobel Group

Interest sensitivity as of 31-12-10

up to 1 month

1 to 3months

3 to 12months

1 to 5years

more than5 years Total

CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns

Interest rate risk

+100 basis points

CHF: Vontobel Group 1.3 2.3 (2.1) (1.6) 7.2 7.1

of which IB 0.4 2.4 (0.9) 4.4 7.4 13.7

of which non-IB 0.9 (0.1) (1.2) (6.0) (0.2) (6.6)

USD: Vontobel Group 0.0 (0.4) 2.1 0.5 (0.2) 2.0

of which IB (0.1) (0.3) 1.9 1.2 (0.2) 2.5

of which non-IB 0.1 (0.1) 0.2 (0.7) 0.0 (0.5)

EUR: Vontobel Group 0.0 (0.6) 2.9 (13.5) 6.0 (5.2)

of which IB (0.3) (0.4) 2.5 0.9 6.5 9.2

of which non-IB 0.3 (0.2) 0.4 (14.4) (0.5) (14.4)

others: Vontobel Group 0.0 (0.1) (1.1) (0.4) (0.1) (1.7)

of which IB 0.0 0.0 (0.5) (0.3) (0.1) (0.9)

of which non-IB 0.0 (0.1) (0.6) (0.1) 0.0 (0.8)

–100 basis points

CHF: Vontobel Group (0.7) 0.0 0.4 (5.2) (0.8) (6.3)

of which IB 0.2 (0.1) (0.8) (11.4) (1.1) (13.2)

of which non-IB (0.9) 0.1 1.2 6.2 0.3 6.9

USD: Vontobel Group 0.0 0.5 (1.9) (0.4) 0.2 (1.6)

of which IB 0.1 0.4 (1.7) (1.1) 0.2 (2.1)

of which non-IB (0.1) 0.1 (0.2) 0.7 0.0 0.5

EUR: Vontobel Group 0.0 0.2 (4.0) 12.7 (6.3) 2.6

of which IB 0.3 0.0 (3.6) (2.2) (6.8) (12.3)

of which non-IB (0.3) 0.2 (0.4) 14.9 0.5 14.9

others: Vontobel Group 0.0 0.1 1.1 0.2 0.2 1.6

of which IB 0.0 0.0 0.3 0.1 0.2 0.6

of which non-IB 0.0 0.1 0.8 0.1 0.0 1.0

IB = Investment Banking



Interest sensitivity as of 31-12-09

up to 1 month

1 to 3months

3 to 12months

1 to 5years

more than5 years Total


Interest rate risk

+100 basis points

CHF: Vontobel Group 0.0 2.5 0.8 (13.9) (9.2) (19.8)

of which IB (1.0) 2.6 1.4 0.9 (6.2) (2.3)

of which non-IB 1.0 (0.1) (0.6) (14.8) (3.0) (17.5)

USD: Vontobel Group (0.2) 1.2 (0.3) (3.3) (1.3) (3.9)

of which IB (0.4) 1.3 (0.5) (3.0) (1.3) (3.9)

of which non-IB 0.2 (0.1) 0.2 (0.3) 0.0 0.0

EUR: Vontobel Group 0.3 1.3 4.9 (0.2) (8.4) (2.1)

of which IB 0.2 1.4 5.0 3.3 (7.8) 2.1

of which non-IB 0.1 (0.1) (0.1) (3.5) (0.6) (4.2)

others: Vontobel Group 0.0 0.2 (0.7) (0.6) 0.0 (1.1)

of which IB 0.0 0.3 (0.5) (0.6) 0.0 (0.8)

of which non-IB 0.0 (0.1) (0.2) 0.0 0.0 (0.3)

–100 basis points

CHF: Vontobel Group 0.8 (2.4) (0.1) 14.7 10.4 23.4

of which IB 1.8 (2.5) (0.8) (0.7) 7.2 5.0

of which non-IB (1.0) 0.1 0.7 15.4 3.2 18.4

USD: Vontobel Group 0.2 (1.2) 0.4 3.9 1.7 5.0

of which IB 0.4 (1.3) 0.6 3.6 1.7 5.0

of which non-IB (0.2) 0.1 (0.2) 0.3 0.0 (0.0)

EUR: Vontobel Group (0.2) (1.9) (5.0) (2.1) 9.4 0.2

of which IB (0.1) (1.9) (5.2) (5.7) 8.7 (4.2)

of which non-IB (0.1) 0.0 0.2 3.6 0.7 4.4

others: Vontobel Group 0.0 (0.3) 0.7 0.7 0.0 1.1

of which IB 0.0 (0.4) 0.6 0.7 0.0 0.9

of which non-IB 0.0 0.1 0.1 0.0 0.0 0.2

IB = Investment Banking



Under IFRS, the market value effect of changes in interest rates in Investment Banking essen-tially has an impact on the income statement, as well as on shareholders’ equity as a result of changes in retained earnings. However, the only impact outside Investment Banking is on interest rate sensitive positions that are assigned to the category “fair value through profit and loss” under IFRS. In the case of interest rate sensitive financial investments in the category “available-for-sale”, the market value effect of changes in interest rates only has an impact on shareholders’ equity. If interest rates changed by +100 (–100) basis points, the impact on pre-tax profit in In-vestment Banking would be CHF +24.5 mn as of 31-12-10 and CHF –4.9 mn as of 31-12-09 (31 12-10: CHF –27.0 mn, 31-12-09: CHF +6.7 mn) and the pre-tax impact on consolidated share-holders’ equity would be CHF +2.2 mn as of 31-12-10 and CHF –26.9 mn as of 31-12-09 (31-12-10: CHF –3.7 mn, 31-12-09: CHF +29.7 mn).

As a result of conservative risk limits and the moderate level of sensitivity to changes in interest rates at Group level, it is not necessary for Treasury to implement hedging measures involving interest rate derivatives.

In view of the limited importance of interest income from positions outside Investment Banking, the impact of a change in interest rates on income levels has not been simulated.

2.3.2 Currency riskAs in the case of interest rate risks, currency risks relating to trading positions and the balance sheet structure are kept at a low level. This is achieved primarily through currency-congruent investments and refinancing activities. The following table shows the sensitivities to changes in foreign exchange rates of +/–5% according to internal reports. The sensitivities correspond to the pre-tax impact on consolidated shareholders’ equity; the impact on pre-tax profit is largely rep-resented by the sensitivities in IB.

Currency risk

Currency sensitivity as of 31-12-10

USD EUR JPY GBP Others

1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF

+5%

Vontobel Group 388.4 7,681.5 (608.8) 74.8 (966.8)

of which IB (1,311.2) 1,115.1 (611.8) (138.8) (1,289.3)

of which non-IB 1,699.6 6,566.4 3.0 213.6 322.5

–5%

Vontobel Group (2,502.2) (6,928.0) (109.2) (471.7) (970.9)

of which IB (802.6) (361.6) (106.2) (258.1) (648.4)

of which non-IB (1,699.6) (6,566.4) (3.0) (213.6) (322.5)

Currency sensitivity as of 31-12-09

USD EUR JPY GBP Others

1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF

+5%

Vontobel Group (2,251.0) 5,893.3 114.7 619.9 128.7

of which IB (1,112.4) 685.3 114.9 601.3 86.8

of which non-IB (1,138.6) 5,208.0 (0.2) 18.6 41.9

–5%

Vontobel Group 5,457.5 (3,954.0) (333.2) (489.0) (90.9)

of which IB 4,318.9 1,254.0 (333.4) (470.4) (49.0)

of which non-IB 1,138.6 (5,208.0) 0.2 (18.6) (41.9)



3. Liquidity risk and refinancing

Liquidity risk refers to the risk of being unable to cover short-term funding needs at any time (impossibility of substituting or renewing deposits, outflows of funds due to drawing on lending commitments or margin requirements, etc.). By diversifying the sources of refinancing and through access to the repo market, cash and cash equivalents can rapidly be made available on a secured basis if required. Liquidity is monitored and assured on a daily basis. The continuous monitoring of the volume and quality of available collateral also ensures that the Vontobel Group always has adequate refinancing capabilities. In the event of an unexpected tightening of liquid-ity, the Group can also access a portfolio of positions that retain their value and can easily be liquidated.

The maturity structure of assets and liabilities is shown in note 33. Liquidity has to be provided for the daily market making required for the issuing and trading business. Consequently, the bal-ance sheet positions “Trading portfolio assets”, “Positive replacement values”, “Other financial assets at fair value”, “Trading portfolio liabilities”, “Negative replacement values” and “Other financial liabilities at fair value” are not broken down into individual cash flows and divided into different maturity ranges but are, instead, reported at fair value in the “Demand” column. In the case of the other financial balance sheet positions, the book values are reported in the maturity range which represents the earliest point at which payment can be demanded according to the contractual provisions. In view of the predominantly short maturities, the breakdown of these positions into individual cash flows would provide an only marginally different view.

4. Credit risk

4.1 General information

Credit risk concerns the risk of losses should a counterparty fail to honour its contractual obliga-tions. In the case of the Vontobel Group, credit risk comprises:

Default risks from lending against collateral ( – “lombard lending”)Default risks from bond positions (issuer risk) –Default risks from money market transactions –Default risks related to securities lending and borrowing, repo transactions, collateral man- –agement and derivatives, as well asDefault risks related to settlement. –

The Vontobel Group is not active in the commercial lending business.

4.2 Lending to private and institutional investment clients

The Vontobel Group basically only engages in lending against collateral with private and institu-tional investment clients, i.e. the extension of loans is subject to the provision of securities that serve as easily realizable collateral. As a restriction on lending, limits on blanket credit lines are set for each client. These limits cover all the exposures assumed in respect of each client. These ex-posures (including the risk add-ons determined by the type of exposure) must essentially be covered by the collateral value of the collateral (securities after haircuts). Exposures that are only secured from a market value perspective but not after the application of collateral add-ons or haircuts, or exposures that are secured by collateral that is not recognized according to the guide-lines of the Basel Committee on Banking Supervision, are only assumed in exceptional cases in respect of these clients. The lending value of positions and portfolios is generally determined in accordance with the “comprehensive approach” prescribed in the capital adequacy requirements of the Basel Committee on Banking Supervision (Basel II). The quality of the collateral (volatility, rating, liquidity and tradability) and the diversification of the portfolio are considered in the cal-culation.

In cases where the exposures are covered by market values but not by lending values (i.e. after taking account of risk discounts), a default process is initiated with the aim of restoring cover through the reduction of the exposures or the provision of additional collateral.



As of 31-12-10, gross exposures to private clients and institutional investment clients totalled CHF 1,204.9 mn (31-12-09: CHF 849.5 mn), of which CHF 1,149.8 mn (31-12-09: CHF 804.8 mn) was secured by recognized financial collateral (after risk discounts) and CHF 55.1 mn (31-12-09: CHF 44.7 mn) was not secured by recognized financial collateral.

Lending to private clients and institutional investment clients1

Covered by recognized

collateral

Not covered by recognized

collateral

31-12-10

Total

CHF mns CHF mns CHF mns

Total lending exposure 1,149.8 55.1 1,204.9


collateral


collateral

31-12-09

Total


Total lending exposure 804.8 44.7 849.5

1 Comprises not only cash credits but also the total due from private and institutional investment clients.



4.3 Exposures to professional counterparties and issuer risk

The Vontobel Group has both secured and unsecured exposures to professional counterparties.

Secured exposures result from securities lending and borrowing, repo transactions, the collateral management of margin obligations and margin calls, as well as the collateralization of OTC derivatives that are eligible for netting. The mitigation of credit risks using securities as easily realizable collateral is of key importance for these types of transactions. The transactions are generally concluded on the basis of collateralized netting agreements with strict requirements regarding eligible collateral, appropriate contractual collateral values and low contractual thresh-olds and minimum transfer amounts. The daily calculation and comparison of credit exposures and collateral is a core element of the management and monitoring of credit risks. During this process, conservative add-on factors are applied to the credit exposures and conservative haircuts are applied to the collateral in accordance with the “comprehensive approach” prescribed in the capital adequacy requirements of the Basel Committee on Banking Supervision (Basel II). The dif-ferent add-ons and haircuts are determined according to the type of instrument, rating, term to maturity, liquidity and tradability.

Unsecured exposures mainly comprise the issuer risks in bond portfolios held in Investment Banking or for the purpose of balance sheet management. They also include exposures relating to money market transactions, accounts, guarantees and contractual independent amounts (threshold values and minimum transfer amounts) that are agreed with counterparties in netting agreements for securities lending and borrowing, repurchase agreements and the collateraliza-tion of OTC derivatives.

Settlement risks are reduced through the use of the Continuous Linked Settlement (CLS) system when conducting foreign currency transactions. Vontobel is connected to the CLS system as a third party. The remaining settlement risks are restricted and monitored through the use of limits for each settlement period.

All exposures to professional counterparties are monitored and restricted using a differentiated system of limits for the individual counterparty categories, rating segments, countries and re-gions.

The Vontobel Group bases the management and limitation of exposures to professional counter-parties on internal assessments by the Credit Management unit as well as on the ratings of exter-nal agencies recognized by the FINMA. It uses the ratings of Fitch, Moody’s and S&P. If various ratings exist for a specififc position, the relevant rating is assigned according to the rules pre-scribed by the Basel Committee on Banking Supervision.

The requirements regarding counterparty creditworthiness are particularly high for unsecured credit risks as well as issuer risks. The breakdown of unsecured counterparty and issuer risks by rating category is shown in the following table and graph. This and the following tables now only contain information on current unsecured exposures without potential exposures relating to collateralized positions. The figures including the application of add-ons or haircuts in accordance with capital regulations are presented in the tables in the section on capital.



Breakdown of unsecured counterparty and issuer risks by rating1

AAA

AA

A

BBB

below BBB/without

rating

31-12-10

Total CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns

Issuer risk from debt instruments 3,100.3 3,356.1 3,038.9 279.4 139.4 9,914.1

Money market and accounts 1,515.8 310.5 133.6 0.0 2.1 1,962.0

Other financial receivables2 3.9 24.0 62.3 3.0 1.6 94.8

Total 4,620.0 3,690.6 3,234.8 282.4 143.1 11,970.9

AAA

AA

A

BBB

below BBB/without

rating

31-12-09

Total





Total 5,154.1 3,462.8 2,814.4 236.8 199.5 11,867.6

1 Unsecured credit exposure after contractual netting without the application of add-ons on derivatives and haircuts on other financial securities

2 Securities lending & borrowing, repo-transactions, collateral management, derivatives, guarantees, and pledged capital life insurance policies

■ 2010 ■ 2009

AAA AA below BBB/without rating

6,000

5,000

4,000

3,000

2,000

1,000

0

Breakdown of the Vontobel Group’s credit risk by rating (CHF mns)

A BBB

The exposures mainly relate to the rating categories “AAA” and “AA”, as shown in the previous table and graph: as of 31-12-10, 69% (31-12-09: 73%) of the exposures related to these cate-gories of high creditworthiness. 96% of the exposures comprised a rating of “A” or above (31-12-09: 96%). The proportion of exposures with a rating of less than “BBB” or with no rating was 1% (31-12-09: 2%).



The breakdown of credit exposures by counterparty type as well as by geographical region is illustrated in the following table.

Breakdown of unsecured counterparty and issuer risks by counterparty type1

Banks

Other corporations/

institutions without bank

status

Govern-ments/public sector bodies2

31-12-10

Total

CHF mns CHF mns CHF mns CHF mns

Issuer risk from debt instruments 4,501.1 1,482.1 3,930.9 9,914.1

Money market and accounts 572.9 13.0 1,376.1 1,962.0

Other financial receivables3 41.4 51.3 2.1 94.8

Total 5,115.4 1,546.4 5,309.1 11,970.9

Banks

Other corporations/

institutions without bank

status

Govern-ments/public sector bodies2

31-12-09

Total


Issuer risk from debt instruments 5,245.9 1,250.1 2,867.5 9,363.5

Money market and accounts 500.2 29.7 1,741.8 2,271.7

Other financial receivables3 182.6 49.8 0.0 232.4

Total 5,928.7 1,329.6 4,609.3 11,867.6


2 Incl. due from the Swiss National Bank


With regard to the counterparty type, a large proportion of the unsecured counterparty and issuer risks relates to banks, as expected. As of 31-12-10, these exposures accounted for CHF 5,115.4 mn (previous year CHF 5,928.7 mn) of a total of CHF 11,970.9 mn (CHF 11,867.6 mn) or 43% (previous year 50%).

When setting limits, considerable importance is assigned to preventing concentration risks relat-ing to individual counterparties, thus ensuring that exposures within counterparty categories are broadly diversified.



Breakdown of unsecured counterparty and issuer risks by region1

Switzerland

Europe excl. Switzerland

North America

Asia

Others

31-12-10

Total


Issuer risk from debt instruments 805.5 6,773.2 1,178.4 866.6 290.4 9,914.1



Total 2,423.9 7,170.2 1,215.0 866.6 295.2 11,970.9

Switzerland


North America

Asia

Others

31-12-09

Total





Total 2,840.1 6,471.0 1,250.9 1,025.9 279.7 11,867.6



In geographical terms, the unsecured credit and issuer risks mainly relate to the region of Europe (excl. Switzerland). Exposures in Switzerland and in the regions of North America and Asia ac-count for a much smaller proportion of these risks.

Exposures involving country risks are avoided in principle. Consequently, there are no relevant country risks to report on a consolidated basis.



5. Operational risks

5.1 Definition of operational risks

Operational risks – which are primarily regarded as the residual exposures to the traditional risk categories of market and credit risks – represent the risk of losses resulting from the inadequacy or failure of internal processes, people and systems or from external events.

5.2 Operational risk concept

In order to identify and restrict operational risks, appropriate measures such as internal control systems (ICS) as well as the selection, training and supervision of employees are implemented within the individual units. A uniform framework is used throughout the Vontobel Group to pro-vide a shared understanding of the concept and to ensure the comparability of results. The con-cept is based on four dimensions:

A generic, hierarchical process model forms the basic framework. –The qualitative assessment of risks leads to an aggregation of subjective evaluations. –The quantitative measurement of risks completes the picture. –After being assessed and measured, the risks are prioritized and appropriate measures are –taken to mitigate them.

The identification, analysis and measurement of operational risks is an iterative, ongoing process conducted throughout the organization.

5.2.1 Process modelMeasures to identify operational risks are focused on the value-creating core competencies with-in the organization and consequently on income-generating core business processes. A generic process model that is applied to all business units as well as to the Group on an aggregate basis thus forms the basic framework for the management of operational risks. This process view con-stitutes the basis for the qualitative and quantitative examination of risk as well as for the Internal Control System.

5.2.2 Qualitative risk assessmentThe qualitative risk assessment takes account of risks that are difficult or impossible to quantify. These risks include potential losses that don’t directly result in financial gains or losses at the time of the loss event but indirectly impact the company’s earnings position at a later date.

The assessment of qualitative risks is based on the view that the most accurate picture of the qualitative risk situation can be obtained primarily through subjective evaluations by risk special-ists. Subjective estimates are produced using various methods of data collection.

Within the operational risk concept, the method used for this assessment and qualitative evalua-tion of risks is founded on the Key Risk Indicator (KRI) process – comprising risk assessment workshops and surveys of experts – which is based on an industry-wide approach that is recog-nized from a regulatory perspective.

Classification of operational risksThe possibility that an operational risk event could occur is implicit in every business activity. At the Vontobel Group, a combination of two risk dimensions – frequency and impact – are consid-ered relevant when assessing risks.

Frequency: denotes the probability that a loss event will occur, i.e. how often a specific event –can be expected to happen.Impact: denotes the magnitude of the loss event. This risk dimension is expressed in directly –quantifiable terms (profit/loss; opportunity costs) as well as in (external) terms that are dif-ficult to quantify (e.g. reputation, level of resources tied up internally, external investigations and proceedings, etc.).



Risks are classified as follows, based on the various possible combinations of these two risk di-mensions:

Low Operational RiskLow Impact/Low Frequency: – Loss events that rarely occur and have a low loss potential.

Medium Operational RiskLow Frequency/High Impact: – Loss events that rarely occur but have a high loss potential. For example, a loss event could lead to the breakdown of one or more business-critical process entities and thus render one or more core business processes and business functions impos-sible, resulting in a significant loss of income. This risk category has to be monitored very carefully due to the high loss potential involvedHigh Frequency/Low Impact: – Loss events that have an insignificant loss potential when they occur individually and do not directly jeopardize core business processes and functions. In view of the frequency with which these loss events occur, this combination is nevertheless of relevance to the business and can lead to a significant loss of income. This risk category has to be monitored very carefully due to the high loss potential involved.

High Operational RiskHigh Frequency/High Impact: – Loss events that have a high loss potential and occur very frequently. Their impact ranges from a very significant loss of income to the unavoidable discontinuation of business activities. These risks can have exceptionally far-reaching impli-cations for the Group and are therefore of the utmost importance in terms of risk manage-ment.

5.2.3 Quantitative risk assessmentA quantitative risk assessment is performed with the aim of comprehensively recording all the actual or potential operational risk variables that occur in the company based on numerical val-ues. As well as ensuring compliance with all regulatory and legislative requirements, the primary objective of this risk assessment is to create transparency and expertise regarding the company-wide operational risk situation and the active management of risk.

5.2.4 Risk mitigationThe Vontobel Group assigns particular importance to operational risks that are classified as me-dium or high-level operational risks in the qualitative risk assessment. Based on economic and risk-related considerations, the aim is to transform higher-level risks into lower-level risks. This process involves identifying and analyzing potential sources and transmitters of risk and planning appropriate measures to reduce the frequency with which the loss events occur and/or their im-pact. The following strategies are applied in this context:

Risk prevention: Selective approach to business activities to prevent risk. –Risk reduction: Reduction of risk through improvements in processes, systems and controls. –Risk transfer: Transfer of risks to third parties through the conclusion of suitable insurance –policies or sourcing.

In order to mitigate risks, it is absolutely imperative to have an ICS as well as an iterative process to ensure the ICS functions effectively and to keep it up to date.


Notes to the consolidated financial statementsCapital

The capital base serves primarily as a means of covering inherent business risks. The active man-agement of the volume and structure of capital is therefore of key importance. Capital adequacy is monitored and controlled according to the regulations and ratios defined by the Basel Commit-tee on Banking Supervision in particular, as well as other criteria. Compliance with the statutory capital adequacy requirements prescribed by Switzerland and the Swiss Financial Market Super-visory Authority (FINMA) is mandatory. External capital adequacy requirements were met in the year under review and in previous years without exception.

1. Capital management

Capital management is aimed primarily at supporting growth and creating added value for share-holders while complying with the regulatory minimum capital requirements. By maintaining a solid capital structure, the Vontobel Group can also demonstrate its financial strength and credit-worthiness to its business partners and clients.

Capital management is performed while taking account of the economic environment and the risk profile of all business activities. Various control options are available to maintain the capital structure or to adapt it in line with changing requirements, including flexible dividend payments, the repayment of capital or the procurement of various forms of capital (tier 1 to tier 3). During the year under review, there were no significant changes to the objectives, principles of action or processes compared to the previous year.

2. Regulatory requirements

Banks can use a number of different approaches to calculate their capital adequacy requirements according to Basel II. The Vontobel Group applies the International Standardized Approach (SA-BIS) for credit risks, the standardized approach for market risks and the base indicator ap-proach for operational risks. As part of the reduction of credit risks (risk mitigation), the compre-hensive approach with standard haircuts is applied for the recognition of collateral.

As a result of the recognition of the fair value option by FINMA in accordance with Section V. of the FINMA circular 08/34 (adjustment of tier 1 capital), unrealized gains and losses are included in the calculation of tier 1 capital. This excludes the valuation adjustments of own liabilities re-corded in accordance with IFRS rules due to a change in own creditworthiness. Including the valuation adjustments of own liabilities, tier 1 capital amounts to CHF 1,261.9 mn and the BIS tier 1 ratio would be 22.2%.

The scope of consolidation used for the calculation of capital was the same in the year under review and the previous year as the scope of consolidation used for accounting purposes. Please refer to the tables “Major subsidiaries and participations” and “Changes in the scope of consoli-dation” in the Notes to the consolidated financial statements for further details. With the excep-tion of the statutory regulations, no restrictions apply that prevent the transfer of money or capital within the Group.

Capital



Eligible and regulatory capital

31-12-10 31-12-09

CHF mns CHF mns

Eligible capital

Gross tier 1 capital 1,412.6 1,425.6

Paid-in capital 65.0 65.0

Disclosed reserves 1,345.4 1,329.3

Net profit for the current financial year 147.8 138.9

Deduction for treasury shares (54.2) (49.5)

Minority interests (0.4) 31.0

Innovative instruments (hybrid tier 1) 0.0 0.0

Deduction for dividends, as proposed by the Board of Directors (91.0) (89.1)

Deduction for goodwill and intangible assets (150.7) (161.2)

Other deductions (19.2) (33.9)

Eligible BIS tier 1 capital 1,242.7 1,230.5

Tier 2 and tier 3 capital 0.0 0.0

Other deductions from total capital 0.0 0.0

Eligible capital (BIS) 1,242.7 1,230.5

Regulatory capital

Credit risks 145.6 179.3

Receivables 125.8 151.1

Price risk relating to equity instruments in the banking book 19.8 28.2

Non-counterparty related risks 16.2 17.1

Market risks 174.8 148.6

Interest rates 109.7 88.9

Equities 23.5 29.4

Currencies 26.5 19.3

Gold 1.6 2.6

Commodities 13.5 8.4

Operational risk 118.6 126.6

Total regulatory capital 455.2 471.6

Additional Swiss capital requirements for non-counterparty related risks and credit risks 49.9 69.5

Total regulatory capital according to FINMA regulations 505.1 541.1

Ratios

BIS tier 1 capital ratio before the adjustment of the Group’s own credit risk (minimum requirement: 4%)1 22.2% 21.4%

BIS tier 1 capital ratio after the adjustment of the Group’s own credit risk (minimum requirement: 4%)1 21.8% 20.9%

BIS total capital ratio after the adjustment of the Group’s own credit risk (minimal requirement: 8%)1 21.8% 20.9%

Ratio of eligible/regulatory capital according to the guidelines of the Swiss Financial Market Supervisory Authority(minimum requirement 100%) 223.1% 207.1%

1 As a result of the recognition of the fair value option by FINMA in accordance with Section V. of the FINMA circular 08/34 (adjustment of tier 1 capital), unrealized gains and losses are included in the calculation of tier 1 capital. This excludes the valuation adjustments of own liabilities recorded in accordance with IFRS rules due to a change in own creditworthiness. Including the valuation adjustments of own liabilities, tier 1 capital amounts to CHF 1,261.9 mn (previous year CHF 1,264.4 mn) instead of CHF 1,242.7 mn (previous year CHF 1,230.5 mn).



3. Breakdown of credit risks in accordance with FINMA Circular 08/22

The following tables are intended to provide additional quantitative information regarding the capital adequacy requirements for credit risks, in accordance with the FINMA Circular 08/22. The information is based on the Basel II regulations and the totals may deviate from the book values reported according to IFRS. In particular, off-balance-sheet items are weighted with the corre-sponding credit conversion factor and reported accordingly. In the case of derivative financial instruments, the negative replacement values that are eligible for offset (netting) are deducted from the positive replacement values. Financial investments comprise all securities in the banking book that represent an issuer-related risk. All remaining positions are reported collectively under “Other assets” if they have to be covered with capital for credit risks.

The balance sheet items “Trading portfolio assets” and ”Other financial assets at fair value” do not represent any credit risks from a capital adequacy perspective; instead, they entail a specific market risk. As a result, these items are not shown in the following tables. Information on credit risks relating to these balance sheet items can be found in section 4.3 of the notes on risk man-agement and risk control.

The domicile of the counterparty or issuer serves as the basis for the allocation to the different geographical regions in the following table.

Credit risks broken down by region

Switzerland


North America

Asia

Others

31-12-10

Total


Balance sheet

Due from banks 754.1 974.1 53.2 144.8 301.6 2,227.8

Due from customers 419.9 776.0 98.7 31.2 101.2 1,427.0

Financial investments/debt instruments/securities without securitisation transactions 269.3 594.7 64.9 0.0 63.0 991.9

Other assets 718.5 34.1 0.1 15.6 0.5 768.8

Positive replacement values after netting 43.0 75.0 4.0 0.1 1.8 123.9

Total balance sheet 2,204.8 2,453.9 220.9 191.7 468.1 5,539.4

Off balance sheet

Contingent liabilities/guarantee credits 175.6 32.2 5.6 1.5 7.4 222.3

Irrevocable commitments 2.5 0.0 0.0 0.0 0.0 2.5

Add ons 14.6 167.7 0.6 0.2 3.1 186.2

Total off balance sheet 192.7 199.9 6.2 1.7 10.5 411.0

Total 2,397.5 2,653.8 227.1 193.4 478.6 5,950.4



Switzerland


North America

Asia

Others

31-12-09

Total


Balance sheet

Due from banks 1,143.8 1,250.5 40.2 65.4 80.6 2,580.5


Financial investments/debt instruments/securities without securitisation transactions 692.3 313.1 57.9 0.6 28.4 1,092.3

Other assets 664.1 42.2 0.1 3.9 0.5 710.8


Total balance sheet 2,797.6 2,264.7 144.3 91.9 242.0 5,540.5

Off balance sheet



Add ons 17.9 275.7 1.1 0.7 6.3 301.7


Total 2,922.8 2,620.1 150.3 161.5 255.1 6,109.8

The industry code of the counterparty or issuer serves as the basis for the allocation to the differ-ent sectors in the following table.

Credit risks broken down by sector or counterparty type

Government and central

banks

Banks

Public bodies

Private clients and

institutional investment

clients

Other

31-12-10

Total


Balance sheet

Due from banks 0.0 2,227.8 0.0 0.0 0.0 2,227.8

Due from customers 36.3 0.0 67.3 1,274.4 49.0 1,427.0

Financial investments/debt instruments/securities without securitisation transactions 232.7 158.3 264.2 0.0 336.7 991.9

Other assets 1.2 35.0 0.1 503.2 229.3 768.8


Total balance sheet 270.4 2,499.4 332.1 1,819.2 618.3 5,539.4

Off balance sheet



Add ons 0.2 171.8 1.0 10.3 2.9 186.2


Total 271.5 2,749.3 333.7 1,883.0 712.9 5,950.4



Government and central

banks

Banks

Public bodies

Private clients and

institutional investment

clients

Other

31-12-09

Total


Balance sheet

Due from banks 0.0 2,580.5 0.0 0.0 0.0 2,580.5


Financial investments/debt instruments/securities without securitisation transactions 131.1 74.3 275.9 0.0 611.0 1,092.3

Other assets 1.8 54.5 0.0 252.6 401.9 710.8


Total balance sheet 136.5 2,824.1 289.9 1,221.3 1,068.7 5,540.5

Off balance sheet



Add ons 0.0 283.0 0.6 16.9 1.2 301.7


Total 136.8 3,286.6 296.4 1,304.1 1,085.9 6,109.8

The following table provides an overview of credit risks broken down by risk weighting categories according to Basel II. The allocation of the exposures to the risk weightings is based on the type and current rating of the counterparty or the issue rating for the financial investment.

Credit risks broken down by risk weighting categories according to Basel II

0%

20%

50%

75%

100%

150%

31-12-10

Total

CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns

Balance sheet

Due from banks 1,819.8 346.0 62.0 0.0 0.0 0.0 2,227.8

Due from customers 961.5 0.1 0.0 78.5 386.9 0.0 1,427.0

Financial investments/debt instruments/securities without securitisation transac-tions 251.0 507.6 127.3 0.0 63.1 42.9 991.9

Other assets 4.7 1.2 31.1 0.3 731.5 0.0 768.8

Positive replacement values after netting 76.7 10.1 34.5 0.0 2.5 0.1 123.9

Total balance sheet 3,113.7 865.0 254.9 78.8 1,184.0 43.0 5,539.4

Off balance sheet

Contingent liabilities/guarantee credits 37.1 67.9 4.6 6.5 106.0 0.2 222.3

Irrevocable commitments 0.0 0.0 0.0 0.0 2.5 0.0 2.5

Add ons 20.5 4.9 158.2 0.0 2.6 0.0 186.2

Total off balance sheet 57.6 72.8 162.8 6.5 111.1 0.2 411.0

Total 3,171.3 937.8 417.7 85.3 1,295.1 43.2 5,950.4



0%

20%

50%

75%

100%

150%

31-12-09

Total

CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns

Balance sheet

Due from banks 1,629.5 685.4 265.6 0.0 0.0 0.0 2,580.5

Due from customers 506.9 0.0 0.0 55.3 443.2 0.0 1,005.4

Financial investments/debt instruments/securities without securitisation transac-tions 137.4 545.7 58.3 0.0 232.7 118.2 1,092.3

Other assets 2.7 10.4 44.0 0.5 653.2 0.0 710.8

Positive replacement values after netting 34.7 39.4 74.1 0.0 3.3 0.0 151.5

Total balance sheet 2,311.2 1,280.9 442.0 55.8 1,332.4 118.2 5,540.5

Off balance sheet

Contingent liabilities/guarantee credits 70.5 105.1 70.7 2.1 13.5 0.1 262.0

Irrevocable commitments 0.0 5.6 0.0 0.0 0.0 0.0 5.6

Add ons 15.5 17.6 265.2 0.5 2.1 0.8 301.7

Total off balance sheet 86.0 128.3 335.9 2.6 15.6 0.9 569.3

Total 2,397.2 1,409.2 777.9 58.4 1,348.0 119.1 6,109.8

Loans extended against collateral, OTC derivatives, securities lending and borrowing transactions and repo transactions are secured primarily using securities as easily realizable collateral. The fol-lowing table shows the credit risks broken down by collateral type in accordance with the com-prehensive approach under Basel II with standard haircuts.

Credit risks broken down by credit risk mitigation methods


collateral


collateral

31-12-10

Total


Balance sheet

Due from banks 1,819.8 408.0 2,227.8

Due from customers 961.5 465.5 1,427.0

Financial investments/debt instruments/securities without securitisation transactions 0.0 991.9 991.9

Other assets 0.0 768.8 768.8

Positive replacement values after netting 76.8 47.1 123.9

Total balance sheet 2,858.1 2,681.3 5,539.4

Off balance sheet

Contingent liabilities/guarantee credits 37.1 185.2 222.3

Irrevocable commitments 0.0 2.5 2.5

Add ons 20.4 165.8 186.2

Total off balance sheet 57.5 353.5 411.0

Total 2,915.6 3,034.8 5,950.4




collateral


collateral

31-12-09

Total


Balance sheet

Due from banks 1,629.5 951.0 2,580.5

Due from customers 506.9 498.5 1,005.4

Financial investments/debt instruments/securities without securitisation transactions 0.0 1,092.3 1,092.3

Other assets 0.0 710.8 710.8

Positive replacement values after netting 34.7 116.8 151.5

Total balance sheet 2,171.1 3,369.4 5,540.5

Off balance sheet

Contingent liabilities/guarantee credits 70.5 191.5 262.0

Irrevocable commitments 0.0 5.6 5.6

Add ons 15.5 286.2 301.7

Total off balance sheet 86.0 483.3 569.3

Total 2,257.1 3,852.7 6,109.8

The above information on the mitigation of credit risks is based on the Basel II rules and thus represents the coverage ratios from a capital adequacy perspective. However, the disclosure of credit risk on page 90 provides a more appropriate basis for the assessment of the actual risk profile.


Notes on the consolidated financial statementsDetails on consolidated income statement

Net interest income1 31-12-10 31-12-09 Change to 31-12-09


Interest income from banks and customers 25.0 33.1 (8.1) (24)

Interest income from securities borrowing and reverse-repurchase agreements 6.4 5.6 0.8 14

Interest income from financial assets at amortized costs 31.4 38.7 (7.3) (19)

Dividend income from financial assets available-for-sale 7.1 7.5 (0.4) (5)

Interest income from financial assets available-for-sale 21.3 12.8 8.5 66

Interest and dividend income from financial assets at fair value 28.4 20.3 8.1 40

Total interest income 59.8 59.0 0.8 1

Interest expense from securities lending and repurchase agreements 0.8 1.1 (0.3) (27)

Interest expense from other financial liabilities at amortized costs 5.9 11.9 (6.0) (50)

Interest expense from financial liabilities at amortized costs 6.7 13.0 (6.3) (48)

Total 53.1 46.0 7.1 15

Net fee and commission income2 31-12-10 31-12-09 Change to 31-12-09


Commission income from lending activities 0.8 0.6 0.2 33

Brokerage fees 138.6 132.3 6.3 5

Custody fees 114.4 91.2 23.2 25

Advisory and management fees 301.4 258.3 43.1 17

Corporate finance 3.6 5.3 (1.7) (32)

Fiduciary transactions 3.2 7.1 (3.9) (55)

Other commission income from securities and investment transactions 28.7 27.5 1.2 4

Total fee and commission income from securities and investment transactions 589.9 521.7 68.2 13

Other fee and commission income 2.4 3.0 (0.6) (20)

Brokerage fees 22.3 19.0 3.3 17

Other commission expense 92.6 86.3 6.3 7

Total commission expense 114.9 105.3 9.6 9

Total 478.2 420.0 58.2 14

Trading income3 31-12-10 31-12-09 Change to 31-12-09


Securities 320.5 558.9 (238.4) (43)

Other financial instruments at fair value (55.2) (275.0) 219.8

Forex and precious metals 8.6 14.1 (5.5) (39)

Total 273.9 298.0 (24.1) (8)

Trading income as of 31-12-10 includes an income of CHF –15.8 mn (31-12-09: CHF –167.5 mn), which is attributable to changes in fair value due to a change in the Group’s own credit risk. Of the total impact, CHF –1.1 mn was realized as of 31-12-10 (31-12-09: CHF 4.3 mn), while the remaining CHF –14.7 mn (previous year CHF –171.8 mn) is unrealized and is shown in the balance sheet item “Other financial liabilities at fair value” as of 31-12-10. On a cumulative basis, the changes in own credit risk resulted in a cumulative profit of CHF 31.4 mn, of which CHF 12.2 mn are realized and CHF 19.2 mn are unrealized. This unrealized impact will be completely reversed over the term of the relevant instruments provided they are not redeemed or repurchased prior to their contractual maturity.



Comprehensive income from financial instruments before tax4 31-12-10 31-12-09 Change to 31-12-09


Financial instruments held-for-trading 320.5 558.9 (238.4) (43)

Other financial instruments at fair value (55.2) (275.0) 219.8

Forex and precious metals 8.6 14.1 (5.5) (39)

Trading income 273.9 298.0 (24.1) (8)

Financial instruments available-for-sale 49.7 22.3 27.4 123

Loans and receivables 30.8 33.2 (2.4) (7)

Financial liabilities measured at amortized costs (6.7) (13.0) 6.3

Total financial instruments income statement 347.7 340.5 7.2 2

Unrealized gains/(losses) on available-for-sale financial instruments,recorded in other comprehensive income 11.9 41.0 (29.1) (71)

(Gains)/losses on available-for-sale financial instruments, transferredfrom other comprehensive income to the income statement (12.0) (1.8) (10.2)

Comprehensive income before tax 347.6 379.7 (32.1) (8)

Comprehensive income includes interest income, dividend income, net realized and unrealized gains and currency translation adjustments, as well as impairment losses and reversals.

Other income5 31-12-10 31-12-09 Change to 31-12-09


Real estate income 0.7 0.8 (0.1) (13)

Income from the sale of financial investments available-for-sale 6 21.3 2.0 19.3 965

Impairments of financial assets available-for-sale 0.0 (0.1) 0.1

Income from investments in associates 6 0.1 (0.2) 0.3

Other income 2.9 18.5 (15.6) (84)

Total 25.0 21.0 4.0 19

Income from the sale of financial investments6 available-for-sale

31-12-10 31-12-09 Change to 31-12-09


Debt instruments 15.9 2.2 13.7 623

Equity instruments 5.4 (0.2) 5.6

Total 21.3 2.0 19.3 965

Income from investments in associates 31-12-10 31-12-09 Change to 31-12-09


Share of profit 0.1 0.2 (0.1) (50)

Impairments 0.0 (0.4) 0.4 (100)

Total 0.1 (0.2) 0.3 (150)



Personnel expense7 31-12-10 31-12-09 Change to 31-12-09


Salaries and bonuses 318.8 315.6 3.2 1

Retirement benefit plan expense 43 26.5 29.3 (2.8) (10)

Other social contributions 26.1 26.2 (0.1) (0)

Other personnel expense 20.9 15.7 5.2 33

Total 392.3 386.8 5.5 1

Personnel expense includes the expense for share-based compensation of CHF 19.2 mn (previous year: CHF 28.4 mn).

General expense8 31-12-10 31-12-09 Change to 31-12-09


Occupancy expense 33.2 32.2 1.0 3

IT, telecommunications and other equipment 73.7 67.6 6.1 9

Travel and representation, public relations, marketing 41.1 35.0 6.1 17

Consulting and audit fees 23.1 18.9 4.2 22

Other general expense 25.1 18.2 6.9 38

Total 196.2 171.9 24.3 14

Depreciation of property, equipment and intangible assets9 31-12-10 31-12-09 Change to 31-12-09


Depreciation of property and equipment 50.7 52.8 (2.1) (4)

Amortization of other intangible assets 10.5 8.5 2.0 24

Impairments of property and equipment 0.6 0.6 0.0 0

Total 61.8 61.9 (0.1) (0)

Value adjustments, provisions and losses10 31-12-10 31-12-09 Change to 31-12-09


Impairments on credit risks 0.8 5.6 (4.8) (86)

Decrease of allowances for credit losses (0.2) (0.1) (0.1)

Additions to provisions 7.5 5.8 1.7 29

Release of provisions (3.3) (2.0) (1.3)

Other 2.0 3.2 (1.2) (37)

Total 6.8 12.5 (5.7) (46)



Taxes11 31-12-10 31-12-09 Change to 31-12-09


Statement of tax status

Explanation of the relationship between tax expenseand net profit before taxes:

Current income taxes 30.4 12.9 17.5 136

Deferred income taxes (4.6) 0.7 (5.3) (757)

Total 25.8 13.6 12.2 90

Profit before taxes 173.1 151.9 21.2 14

Expected income tax rate of 22% 38.1 33.4 4.7 14

Explanations for higher (lower) tax expense:

Applicable tax rates differing from expected rate (10.3) (13.7) 3.4

Tax losses not taken into account 8.7 8.1 0.6 7

Appropriation of non-capitalized deferred taxes on loss carryforwards (0.2) 0.0 (0.2)

Value adjustments on deferred tax assets 0.2 0.0 0.2

Other non-deductible expenses 0.0 0.7 (0.7) (100)

Tax income unrelated to accounting period 2.0 (1.9) 3.9

Participation relief granted to holding companies (13.9) (13.9) 0.0 0

Other impacts 1.2 0.9 0.3 33

Income tax expense 25.8 13.6 12.2 90

Composition of deferred taxes

Tax loss carryforwards 0.8 0.2 0.6 300

Other 5.5 5.4 0.1 2

Total deferred tax assets1 6.3 5.6 0.7 13

Intangible assets 10.0 11.8 (1.8) (15)

Investments in associates 1.4 1.4 0.0 0

Other provisions 29.9 29.8 0.1 0

Unrealized gains on available-for-sale financial investments 4.6 3.7 0.9 24

Other 10.7 13.4 (2.7) (20)

Total deferred tax liabilities1 56.6 60.1 (3.5) (6)

1 According to IAS 12, a company may offset deferred tax assets and liabilities with each other if those assets and liabilities refer to taxes on income levied by the same tax authority. This condition is fulfilled in the case of companies belonging to the Vontobel Group. The deferred tax assets and deferred tax liabilities shown in the balance sheet therefore represent the balance of the gross amounts of such assets and liabilities presented here.



31-12-10 31-12-09 Change to 31-12-09


Changes in deferred tax assets and liabilities (net)

Balance at the beginning of the year 54.5 44.6 9.9 22

Changes effecting the income statement (5.8) 1.4 (7.2) (514)

Changes not effecting the income statement 1.5 3.8 (2.3) (61)

Change in scope of consolidation 0.0 4.5 (4.5) (100)

Translation adjustments 0.1 0.2 (0.1) (50)

Total as at the balance sheet date 50.3 54.5 (4.2) (8)

Tax loss carryforwards expire as follows: 31-12-10 31-12-09 Change to 31-12-09


Within 1 year 0.0 4.3 (4.3) (100)

From 1 to 5 years 4.9 5.9 (1.0) (17)

After 5 years 55.3 49.4 5.9 12

Total 60.2 59.6 0.6 1

Vontobel Holding AG and its subsidiaries are liable for income tax in most countries. The current tax assets and current tax liabilities reported as of the balance sheet date, as well as the resulting current tax expense for the period under review, are based partly on estimates and assumptions and may therefore differ from the amounts determined by the tax authorities in the future. In certain cases where complex tax questions arise, external tax specialists are consulted or preliminary clarification is obtained from the tax authorities.

In the case of deferred taxes, the level of recognized tax assets depends on assumptions regarding available future taxable profits that are eligible for offset. The determination of deferred tax assets is essentially based on budget figures and mid-term planning. If a company has posted a series of financial losses in the recent past, the deferred tax assets are only recognized to the extent that the company has sufficient taxable temporary differences or has convincing other evidence that sufficient taxable profits will be available in future periods. Recognized deferred tax assets for loss carryforwards eligible for offset amounted to CHF 0.8 mn (31-12-10) or CHF 0.2 mn (31-12-09). Unrecognized loss carryforwards in the amount of CHF 60.2 mn (31-12-10) or CHF 59.6 mn (31-12-09) are subject to tax rates of 21% to 33% (31 12 10) or 21% to 33% (31-12-09). If recognized in full, the deferred tax assets for loss carryforwards eligible for offset would total CHF 18.7 mn (31-12-10) or CHF 17.0 mn (31-12-09).

Earnings per share12 31-12-10 31-12-09 Change to 31-12-09

in %

Net profit (CHF mns)1 147.8 138.9 8.9 6

Weighted average number of shares issued 65,000,000 65,000,000 0 0

Less weighted average number of treasury shares 1,081,468 1,026,419 55,049 5

Weighted average number of shares outstanding (undiluted) 63,918,532 63,973,581 (55,049) (0)

Dilution effect number of shares2 1,549,414 1,546,463 2,951 0

Weighted average number of shares outstanding (diluted) 65,467,946 65,520,044 (52,098) (0)

Undiluted Group earnings per share (in CHF) 2.31 2.17 0.14 6

Diluted Group earnings per share (in CHF) 2.26 2.12 0.14 7

1 The net profit attributable to the shareholders of Vontobel Holding AG constitutes the basis for the calculation of undiluted as well as diluted earnings per share.

2 The dilution effect is primarily the result of employee share-based benefit programs.


Notes to the consolidated financial statementsDetails on consolidated balance sheet

Financial instruments at fair value through profit and loss13

Trading portfolio assets 31-12-10 31-12-09 Change to 31-12-09


Debt instruments

Debt instruments of governments and public sector entities 177.5 212.3 (34.8) (16)

Debt instruments of financial institutions 475.3 480.0 (4.7) (1)

Debt instruments of corporations 72.3 133.6 (61.3) (46)

Total 725.1 825.9 (100.8) (12)

of which listed 688.7 765.1 (76.4) (10)

of which unlisted 36.4 60.8 (24.4) (40)

Equity instruments

Listed 1,240.7 852.3 388.4 46

Unlisted 0.0 0.0 0.0

Total 1,240.7 852.3 388.4 46

Units in investment funds

Listed 34.5 28.9 5.6 19

Unlisted 46.3 50.3 (4.0) (8)

Total 80.8 79.2 1.6 2

Precious metals 51.1 24.8 26.3 106

Total trading positions 2,097.7 1,782.2 315.5 18

of which lent or delivered as collateral 80.4 74.1 6.3 9

Financial instruments that are lent or delivered as collateral are reported in the separate balance sheet item “Securities lent or delivered as collateral”.



Trading portfolio liabilities 31-12-10 31-12-09 Change to 31-12-09


Debt instruments 169.4 181.9 (12.5) (7)

of which listed 167.9 181.9 (14.0) (8)

of which unlisted 1.5 0.0 1.5

Equity instruments 1,046.4 995.1 51.3 5

of which listed 850.2 745.9 104.3 14


Units in investment funds 0.0 1.0 (1.0) (100)

of which listed 0.0 0.0 0.0


Total 1,215.8 1,178.0 37.8 3

Open derivative instruments 31-12-10 31-12-09 Change to 31-12-09


Positive replacement values 197.2 214.5 (17.3) (8)

Negative replacement values 544.2 361.7 182.5 50

Other financial assets at fair value through profit and loss

31-12-10 31-12-09 Change to 31-12-09


Debt instruments

Debt instruments of governments and public sector entities 952.6 794.4 158.2 20

Debt instruments of financial institutions 6,026.0 6,392.1 (366.1) (6)

Debt instruments of corporations 1,784.7 1,367.9 416.8 30

Total 8,763.3 8,554.4 208.9 2

of which listed 6,390.6 6,012.3 378.3 6

of which unlisted 2,372.7 2,542.1 (169.4) (7)

Equity instruments

Listed 0.7 0.9 (0.2) (22)

Unlisted 0.0 0.0 0.0

Total 0.7 0.9 (0.2) (22)


Listed 23.4 9.5 13.9 146

Unlisted 40.7 80.6 (39.9) (50)

Total 64.1 90.1 (26.0) (29)

Total other financial assets at fair value through profit and loss 8,828.1 8,645.4 182.7 2





Other financial liabilities at fair value through profit and loss

31-12-10 31-12-09 Change to 31-12-09


Structured products 8,183.0 8,279.7 (96.7) (1)

of which listed 6,981.2 7,769.4 (788.2) (10)

of which unlisted 1,201.8 510.3 691.5 136

Due from customers, net14 31-12-10 31-12-09 Change to 31-12-09


Other accounts receivable 1,429.5 1,013.4 416.1 41

Less allowances for credit risks (2.5) (8.0) 5.5

Total 1,427.0 1,005.4 421.6 42

Allowances for credit risks

Balance at the beginning of the year (8.0) (2.2) (5.8)

Utilization in conformity with designated purpose 6.2 0.0 6.2

Doubtful interest income1 (0.1) (0.3) 0.2

(Increase)/decrease recognized in the income statement, net (0.6) (5.5) 4.9

Allowances as at the balance sheet date (2.5) (8.0) 5.5

Impaired loans

Impaired loans 3.3 8.0 (4.7) (59)

Estimated proceeds of liquidating collateral 0.8 0.0 0.8

Impaired loans, net 2.5 8.0 (5.5) (69)

Allowance for credit losses related to impaired loans (2.5) (8.0) 5.5

Average impaired loans 3.3 8.4 (5.1) (61)

Non-performing loans1

Non-performing loans 3.3 8.0 (4.7) (59)

Allowance for credit losses related to non-performing loans (2.5) (8.0) 5.5

Average non-performing loans 3.3 8.4 (5.1) (61)

1 Interest of CHF 0.1 mn (previous year CHF 0.3 mn) on non-performing loans that had not yet been received was capitalized.

Change in non-performing loans

Non-performing loans at the beginning of the year 8.0 1.8 6.2 344

Net increase/(decrease) 1.5 6.2 (4.7) (76)

Write-offs and disposals (6.2) 0.0 (6.2)

Non-performing loans as at the balance sheet date 3.3 8.0 (4.7) (59)



Financial investments15 31-12-10 31-12-09 Change to 31-12-09


Carried at fair value (“available-for-sale”)

Debt instruments

Debt instruments of governments and public sector entities 344.8 334.3 10.5 3

Debt instruments of financial institutions 528.7 427.3 101.4 24

Debt instruments of corporations 100.1 49.6 50.5 102

Total 973.6 811.2 162.4 20

of which listed 769.8 607.2 162.6 27


Equity instruments and other participations

Listed 124.5 125.3 (0.8) (1)

Unlisted 1.1 1.0 0.1 10

Total 125.6 126.3 (0.7) (1)


Listed 12.6 10.5 2.1 20

Unlisted 1.0 1.0 0.0 0

Total 13.6 11.5 2.1 18

Total financial investments carried at fair value (“available-for-sale”) 1,112.8 949.0 163.8 17





Investments in associates and joint ventures16 31-12-10 31-12-09 Change to 31-12-09


Balance at the beginning of the year 0.6 0.9 (0.3) (33)

Increases 0.0 0.0 0.0

Decreases 0.0 (0.1) 0.1

Equity income 0.1 0.2 (0.1) (50)

Impairments 0.0 (0.4) 0.4

Translation differences (0.1) 0.0 (0.1)

Total as at the balance sheet date 0.6 0.6 0.0 0

Significant subsidiaries consolidated using the equity method

Share capital Interest held in %

Domicile Activity Currency mns 31-12-10 31-12-09

Vontobel Treuhand AG Vaduz Fiduciary CHF 0.5 49 49

Deutsche Börse Commodities GmbH Frankfurt Issues EUR 1.0 16 16



Property and equipment17

Bank buildings IT systems Software

Software in development

Other fixed assets

Total fixed assets


Acquisition cost

Balance as of 01-01-09 33.5 40.3 166.1 47.4 58.5 345.8

Additions 1.7 4.0 77.1 (44.4) 1.0 39.4

Disposals 0.0 (10.5) (16.1) 0.0 (2.3) (28.9)

Change in scope of consolidation 0.0 1.0 1.4 0.0 3.3 5.7

Translation differences 0.0 0.0 0.1 0.0 0.0 0.1

Balance as of 31-12-09 35.2 34.8 228.6 3.0 60.5 362.1

Additions 0.0 6.6 27.2 3.0 4.2 41.0

Disposals 0.0 (23.0) (19.8) 0.0 (6.4) (49.2)


Translation differences (2.9) (0.3) (0.3) 0.0 (1.2) (4.7)

Balance as of 31-12-10 32.3 18.1 235.7 6.0 57.1 349.2

Cumulative depreciation

Balance as of 01-01-09 (9.0) (23.6) (71.5) 0.0 (15.3) (119.4)

Depreciation (0.8) (10.9) (31.3) 0.0 (9.8) (52.8)

Impairment losses 0.0 0.0 0.0 0.0 (0.6) (0.6)

Reversals 0.0 0.0 0.0 0.0 0.0 0.0

Disposals 0.0 10.4 15.9 0.0 2.3 28.6


Translation differences (0.1) 0.0 (0.1) 0.0 0.1 (0.1)

Balance as of 31-12-09 (9.9) (24.1) (87.0) 0.0 (23.3) (144.3)

Depreciation (0.9) (8.2) (32.4) 0.0 (9.2) (50.7)

Impairment losses 0.0 (0.1) (0.3) 0.0 (0.2) (0.6)

Reversals 0.0 0.0 0.0 0.0 0.0 0.0

Disposals 0.0 23.0 19.8 0.0 6.4 49.2


Translation differences 1.0 0.2 0.3 0.0 0.5 2.0

Balance as of 31-12-10 (9.8) (9.2) (99.6) 0.0 (25.8) (144.4)

Net carrying values 31-12-09 25.3 10.7 141.6 3.0 37.2 217.8

Net carrying values 31-12-10 22.5 8.9 136.1 6.0 31.3 204.8

31-12-10 31-12-09 Change to 31-12-09


Additional information on property and equipment

Tangible assets in finance lease 2.1 2.3 (0.2) (9)

Fire insurance value of real estate 23.5 28.2 (4.7) (17)

Fire insurance value of other fixed assets 82.2 95.8 (13.6) (14)

The fixed assets in finance lease comprise information technology equipment.

Vontobel Group is not a party to any noteworthy “sale and lease back” transactions.



Goodwill and other intangible assets18 Goodwill

Other intangible

assets

Total intangible

assets


Acquisition cost

Balance as of 01-01-09 69.7 67.5 137.2

Additions 0.0 0.0 0.0

Disposals 0.0 0.0 0.0

Change in scope of consolidation 28.2 26.0 54.2

Translation differences 0.0 0.0 0.0

Balance as of 31-12-09 97.9 93.5 191.4

Additions 0.0 0.0 0.0




Balance as of 31-12-10 97.9 93.5 191.4

Cumulative depreciation

Balance as of 01-01-09 0.0 (21.7) (21.7)

Amortization (8.5) (8.5)

Impairment losses 0.0 0.0 0.0

Reversals 0.0 0.0




Balance as of 31-12-09 0.0 (30.2) (30.2)

Amortization (10.5) (10.5)

Impairment losses 0.0 0.0 0.0

Reversals 0.0 0.0




Balance as of 31-12-10 0.0 (40.7) (40.7)

Net carrying values 31-12-09 97.9 63.3 161.2

Net carrying values 31-12-10 97.9 52.8 150.7

Capitalized goodwill amounted to CHF 97.9 mn as of 31-12-10 (previous year CHF 97.9 mn) and originated from the following business combinations:

31-12-10 31-12-09 Change to 31-12-09


Banque Tardy, de Watteville & Cie SA 18.2 18.2 0.0 0

Harcourt Investment Consulting AG 51.5 51.5 0.0 0

Commerzbank (Schweiz) AG 28.2 28.2 0.0 0

Total 97.9 97.9 0.0 0



The following organizational units represent the lowest level at which the goodwill allocated to them is monitored for internal management purposes:

31-12-10 31-12-09 Change to 31-12-09


Private Banking segment 36.2 36.2 0.0 0

Latin Europe division 18.2 18.2 0.0 0

Asset Management segment 17.2 17.2 0.0 0

Harcourt division 26.3 26.3 0.0 0

Total 97.9 97.9 0.0 0

The above goodwill positions are subject to an annual impairment test, which is conducted in the third quarter of each year. If events or a change of circumstances indicate a possible impairment, the test is carried out more frequently to determine whether the book value of the relevant or-ganizational unit exceeds its recoverable amount. The recoverable amount is the higher of the fair value less costs to sell and the value in use. If the book value of the organizational unit exceeds the recoverable amount, a goodwill impairment is recorded.

When conducting an impairment test, the Vontobel Group begins by comparing the book value of the organizational unit with its fair value less costs to sell. Assets under management are a key factor that is considered in the case of all the organizational units that are assessed because it has a significant impact on their future earnings potential. The implicit multiplier for assets under management is calculated on the basis of the market capitalization of companies engaging in similar business activities, less reported shareholders’ equity. If there is a difference between the gross margins of the organizational unit under review and the peer group, the multiplier is ad-justed accordingly. If the book value of the organizational unit exceeds the fair value calculated using the adjusted multipliers less costs to sell, the book value is subsequently compared with the value in use of the organizational unit.

In the financial year 2010, adjusted multipliers for assets under management of 0.5% to 1.7% were calculated for the different organizational units. The fair value calculated using these ad-justed multipliers less costs to sell significantly exceeded the book value of all organizational units. As a result, management determined that no changes to the adjusted multipliers that would reasonably be possible would result in the book value of an organizational unit significantly ex-ceeding its fair value less costs to sell. The comparison of the book value of the organizational units and their value in use was therefore not required.

Other assets19 31-12-10 31-12-09 Change to 31-12-09


Value-added tax and other tax receivables 7.9 5.0 2.9 58

Prepaid pension costs 43 29.3 33.3 (4.0) (12)

Settlement and clearing accounts 0.1 1.5 (1.4) (93)

Other receivables 18.9 8.5 10.4 122

Other 3.8 4.8 (1.0) (21)

Total 60.0 53.1 6.9 13



Assets pledged or assigned as security20 for own liabilities

31-12-10 31-12-09

Carrying amount

Actualliability

Carrying amount

Actualliability


Trading portfolio assets 8.7 - 0.0 -

Financial assets 345.1 - 227.2 -

Other assets 153.5 - 123.3 -

Total 507.3 642.1 350.5 426.5

Assets are pledged for collateralized credit lines with central banks, security deposits with respect to stock exchange membership, OTC contracts as well as due to customers.

The transactions are carried out at fair market conditions.

Securities lending and borrowing operations and securities 21 repurchase and reverse-repurchase transactions

31-12-10 31-12-09

Cash collateral for Cash collateral for

securities borrowing

agreements

reverse-repurchase

agreements

securities borrowing

agreements

reverse-repurchase

agreements


Due from banks 0.0 300.0 0.0 300.0

Due from customers 0.0 0.0 0.0 0.0

Total balance sheet position: cash collateral 0.0 300.0 0.0 300.0

Other financial instruments at fair value 0.0 0.0 0.0 0.0

Total 0.0 300.0 0.0 300.0

31-12-10 31-12-09

Cash collateral for Cash collateral for

securities lending

agreements

repurchase agreements

securities lending

agreements repurchase

agreements


Due to banks 0.0 0.0 0.0 0.0

Due to customers 0.0 0.0 0.0 0.0

Total 0.0 0.0 0.0 0.0

31-12-10 31-12-09 Change to 31-12-09


Book value of securities in the bank’s possession that have been lent or given as collateral in securities lending and borrowing operations or have been transferred in repurchase transactions 500.1 239.5 260.6 109

of which those for which the right to resell or repledge as collateralhas been granted without restriction 500.1 239.5 260.6 109

Fair value of securities received as collateral or borrowed in securities lending and borrowing operations or received through reverse-repurchase transactions for which the right to resell or repledge as collateral has been granted without restriction 909.2 1,694.8 (785.6) (46)

of which fair value of securities resold or repledged as collateral 338.7 944.0 (605.3) (64)



Due to customers22 31-12-10 31-12-09 Change to 31-12-09


Due to customers on savings and deposit accounts 6.8 8.8 (2.0) (23)

Other accounts due, on time and demand 4,918.9 4,585.6 333.3 7

Total 4,925.7 4,594.4 331.3 7

Issued debt instruments23 Interest rate 31-12-10 31-12-09

in % CHF mns CHF mns

Vontobel Holding AG

Medium-term note issued by Vontobel Holding AG, 02-07-08 – 25-11-10 3.50 0.0 25.0

Total 0.0 25.0

Other liabilities24 31-12-10 31-12-09 Change to 31-12-09


Liabilities towards own employee benefit plans 43 4.0 5.1 (1.1) (22)

Value-added tax and other tax liabilities 12.1 10.4 1.7 16

Settlement and clearing accounts 0.6 1.7 (1.1) (65)

Other liabilities 25.8 14.1 11.7 83

Others 6.7 9.0 (2.3) (26)

Total 49.2 40.3 8.9 22

Provisions25

2010 2009

Other Total Total


Balance at the beginning of the year 9.0 9.0 6.1

Utilization in conformity with designated purpose (2.6) (2.6) (0.9)

Increase in provisions recognized in the income statement 7.5 7.5 5.8

Release of provisions recognized in the income statement (3.3) (3.3) (2.0)


Translation differences (0.2) (0.2) 0.0

Provisions as at the balance sheet date 10.4 10.4 9.0

Short-term provisions 10.0 10.0 3.7

Long-term provisions 0.4 0.4 5.3

Total 10.4 10.4 9.0

Other provisions consist of provisions for process risks and other liabilities.

A provision is recorded if, as a result of a past event, the Group has a current liability as of the balance sheet date that will probably lead to an outflow of funds, the level of which can be reliably estimated. When determining whether a provision should be recorded and whether the amount of the provision is appropriate, the best possible estimates and assumptions as of the balance sheet date are used; these estimates and assumptions may be adapted at a later date if necessary, based on new findings and circumstances.

The Vontobel Group is involved in various legal proceedings in the course of its normal business operations. A provision is recorded in respect of current and potential legal proceedings if the above recognition criteria are met. In certain cases, external legal specialists are consulted to determine whether this is the case.



Share capital26

Share capital Authorized capital

Number Par value Number Par value

of shares CHF mns of shares CHF mns

Balance as of 01-01-08 65,000,000 65.0 0 0.0

Balance as of 31-12-08 65,000,000 65.0 0 0.0

Balance as of 31-12-09 65,000,000 65.0 0 0.0

Balance as of 31-12-10 65,000,000 65.0 0 0.0

The share capital is fully paid in.

Authorized capitalIn fiscal 2009 and 2010 the Board of Directors did not apply for the creation of authorized capital.

Contingent share capitalThere is no contingent share capital.

Treasury shares Number CHF mns

Balance as of 01-01-09 1,955,585 77.5

Purchases 2,429,096 65.4

Disposals (3,040,337) (93.4)

Balance as of 31-12-09 1,344,344 49.5

Purchases 2,618,309 83.2

Disposals (2,503,012) (78.5)

Balance as of 31-12-10 1,459,641 54.2

As of 31-12-10 Vontobel Group held 6,398 (previous year 16,102) treasury shares to secure options and structured products.

Own shares were offset against shareholders’ equity in accordance with IAS 32.

Underlying shares

31-12-10 31-12-09

Options and structured products Number1 Number 1

Call options (1,200) (37,700)

Put options 2,680 2,000

Structured products (36,244) (37,114)

1 A negative (positive) symbol indicates that if the instrument is exercised, the Vontobel company that acted as issuer would be obliged to deliver (would receive delivery of) the corresponding number of shares of Vontobel Holding AG.

In the case of these derivative instruments, which are issued by a Vontobel Group company, the underlying instrument is the share of Vontobel Holding AG.



Unrealized gains and losses on financial investments27

31-12-10 31-12-09

Unrealized

gains

Unrealized losses

Unrealized gains

Unrealized losses


Equity instruments and other participations 56.7 (0.5) 47.7 (0.5)

Units in investment funds 2.1 (0.2) 1.4 (0.9)

Debt instruments 2.2 (4.2) 9.4 (0.8)

Total before taxes 61.0 (4.9) 58.5 (2.2)

Taxes (5.6) 0.8 (6.1) 0.6

Total net of tax1 55.4 (4.1) 52.4 (1.6)

1 The total amount after taxes includes exchange differences in the amount of CHF –0.5 mn (previous year CHF –0.2 mn).


Notes to the consolidated financial statementsTransactions with related parties

Compensation paid to governing bodies28

The governing bodies of Vontobel Group comprise the members of the Board of Directors of Vonto-bel Holding AG and Group Executive Management. Additional information about the current mem-bers of governing bodies can be found in the Corporate Governance section of this annual report.

Compensation of members of the governing bodies is decided by the Nomination and Compen-sation Committee (NCC) of the Board of Directors. The Board of Directors decides on the remu-neration of the Chairman. The composition of the NCC is likewise disclosed in the section on Corporate Governance.

The compensation paid to these persons is as follows. Compensation is recognized in the fiscal year in which it was accrued. It is thus reported according to the accrual principle, irrespective of cash flows. This does not include the cost of performance shares, which is recorded during the three-year vesting period. However, the allocation of the shares is shown when the vesting condi-tions are met and the performance shares are transferred.

Members of the Board of Directors of Vontobel Holding AG andBank Vontobel AG

31-12-10 31-12-091 Change to 31-12-09


Compensation for the financial year

Short-term employee benefits 2.5 2.4 0.1 4

Post-employment benefits 0.0 0.0 0.0

Other long-term benefits 0.0 0.0 0.0

Termination benefits 0.0 0.0 0.0

Equity compensation benefits bonus shares2 1.0 0.9 0.1 11

Total mandate-related compensation for the financial year3 3.5 3.3 0.2 6

Compensation for additional services 0.0 0.0 0.0

Total compensation for the financial year 3.5 3.3 0.2 6

1 Including compensation of one former member of the Board of Directors.

2 The members of the Board of Directors received a total of 31,581 (previous year 34,119) shares of Vontobel Holding AG as part of their compensation for the year under review, of which 24,630 (previous year 26,640) shares entail a conditional right to receive performance shares following the expiry of a three-year vesting period.

3 The cost of the performance shares is not included in the calculation of share-based compensation during the vesting period of the shares.

Compensation of the members of the Board of Directors for the financial year

Basic compen-

sation

Variable compen-

sation paidin cash

Variable compen-

sation paidin shares1

Other compen-

sation 31-12-10

Total

31-12-09Total

Name Function CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000

Dr Urs Widmer Chairman 686.3 715.0 715.0 10.0 2,126.3 1,991.3

Dr Wolfhard Graetz Vice-Chairman 220.0 0.0 36.0 14.7 270.7 273.6

Prof. Dr Ann-Kristin Achleitner Member 140.0 0.0 36.0 16.2 192.2 131.2

Bruno Basler Member 150.0 0.0 36.0 24.3 210.3 200.3

Dr Philippe Cottier Member 140.0 0.0 36.0 14.3 190.3 138.7

Peter Quadri Member 130.0 0.0 36.0 7.2 173.2 199.2

Heinz Roth Member - - - - n/a 70.7

Dr Frank Schnewlin Member 150.0 0.0 36.0 16.6 202.6 137.9

Dr Pierin Vincenz Member 130.0 0.0 36.0 3.6 169.6 2 185.72

Total 1,746.3 715.0 967.0 106.9 3,535.2 3,328.7

1 Allocation of shares of Vontobel Holding AG that are subject to a holding period of three years, during which they cannot be sold.

2 Of which payment of the cash component of CHF 133,600 (previous year CHF 149,700) to Raiffeisen Schweiz



Allocation of shares from the long-term employee share-based benefit programmeThe Vontobel Group’s compensation concept focuses on the achievement of sustained success. The granting of performance shares is a long-term component of this compensation system. The cost of performance shares is not included in share-based compensation during their vesting pe-riod. The number of shares allotted in the year under review is calculated on the basis of the number of bonus shares received for the 2006 financial year as well as the performance of the business from 2007 to 2009, measured in terms of the average return on equity and the average BIS tier 1 capital ratio. In accordance with the relevant IFRS rules, the cost per share was CHF 59.60 and was recorded on a pro rata temporis basis over the vesting period. The market price at the date on which the performance shares were allotted in April 2010 was CHF 32.25.

31-12-10 31-12-09 Change to 31-12-09


or number or number or number in %

Equity compensation benefits performance shares in CHF mns 1.7 1.2 0.5 42

Value of performance shares at the date on which they were allotted in CHF mns 0.9 0.6 0.3 50

Number of performance shares allotted 28,849 25,605 3,244 13

thereof Dr Urs Widmer 28,849 25,605 3,244 13

Members of the Group Executive Management

31-12-10 31-12-09 Change to 31-12-09


Compensation for the financial year

Base salary 3.2 4.01 (0.8) (20)

Other short-term employee benefits 0.1 0.1 0.0 0

Cash component of bonus 4.9 4.2 0.7 17

Post-employment benefits 0.5 0.6 (0.1) (17)

Other long-term benefits 0.0 0.0 0.0

Termination benefits 0.0 0.0 0.0

Equity compensation benefits bonus shares2 4.9 4.2 0.7 17

Total contract-related compensation for the financial year 13.6 13.1 0.5 4

Compensation for additional services 0.0 0.0 0.0

Total compensation the financial year 13.6 13.1 0.5 4

Number of persons receiving compensation 6 7 (1) (14)

1 Including compensation of CHF 0.7 mn paid to two former members of the Group Executive Management until the end of their contract. Furthermore, as a result of the new contractual terms agreed with one member who resigned from the Group Executive Management, his conditional rights to receive performance shares continue to apply in accordance with the allocation dates and calculation methods prescribed in the stock ownership plan.

2 A total of 167,072 (previous year 172,133) Vontobel Holding AG shares were allocated to members of the Group Executive Management. These bonus shares entail a conditional right to receive performance shares following the expiry of a three-year vesting period.

Allocation of shares from the long-term employee share-based benefit programmeThe Vontobel Group’s compensation concept focuses on the achievement of sustained success. The granting of performance shares is a long-term component of this compensation system. The cost of performance shares is not included in share-based compensation during their vesting pe-riod. However, the conditional right to receive performance shares was included in the calculation to determine the member of the Group Executive Management with the highest total compensa-tion with a weighting of one performance share per bonus share.

The number of shares allotted in the year under review is calculated on the basis of the number of bonus shares received for the 2006 financial year as well as the performance of the business from 2007 to 2009, measured in terms of the average return on equity and the average BIS tier 1 capital ratio. In accordance with the relevant IFRS rules, the cost per share was CHF 59.60 and was recorded on a pro rata temporis basis over the vesting period. The market price at the date on which the performance shares were allotted in April 2010 was CHF 32.25.



31-12-10 31-12-09 Change to 31-12-09


or number or number or number in %

Equity compensation benefits performance shares in CHF mns 7.6 6.8 0.8 12

Value of performance shares at the date on which they were allotted in CHF mns 4.1 3.5 0.6 17

Number of performance shares allotted 128,180 144,316 (16,136) (11)

Number of persons receiving compensation 4 4 0 0

Of which paid to the member with the highest total compensation for the financial year

Financial year

Base salary Bonus paid

in cash Bonus paid

in shares1 Pension plan

Other compen-

sation Total

Name Function CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000

2010 Herbert J. Scheidt CEO 704.6 1,300.0 1,300.0 118.7 13.0 3,436.3

2009 Roger StuderHead of Investment Banking 500.0 1,350.0 1,350.0 89.3 15.4 3,304.7

1 The member of the Group Executive Management was awarded 44,782 shares (previous year: 55,328 shares) of Vontobel Holding AG as part of his compensation for the year under review. These shares are subject to a holding period of three years, during which they cannot be sold. These bonus shares entail a conditional right to receive performance shares following the expiry of a three-year vesting period.

The Vontobel Group’s compensation concept focuses on the achievement of sustained success. The granting of performance shares is a long-term component of this compensation system. The number of shares allotted in the year under review is calculated on the basis of the number of bonus shares received for the 2006 financial year as well as the performance of the business from 2007 to 2009, measured in terms of the average return on equity and the average BIS tier 1 capital ratio. Further details of the programme can be found on page 77 and in note 29.

31-12-10 31-12-09

Number of performance shares allotted 49,829 30,260

Governing body loans and employee terms and conditionsLoans to members of the Vontobel Group’s governing bodies and to significant shareholders and the persons and companies related to them may only be granted in accordance with the gener-ally recognized principles of the banking industry. Governing body members are generally treated like employees, and that particularly in regard to lending terms. Governing body loans must be approved by the Board of Directors of Vontobel Holding AG in addition to the levels of authority applicable to employees.

As of 31 December 2010 and 31 December 2009, no loans to members of the Vontobel Group’s governing bodies or related parties were outstanding. In the case of members of the Vontobel Group’s governing bodies and major shareholders, margin calls that are fully secured by collateral totalled CHF 0.0 mn (previous year CHF 0.2 mn) as of 31 December 2010. No loans to former members of the Board of Directors or the Group Executive Management were outstanding that were not granted according to standard terms and conditions.

The Vontobel Group does not grant mortgage loans to governing body members or employees. It provides mortgage loans to governing body members or employees with selected outside banks at a preferential rate of 1% below the usual rate up to a maximum loan amount of CHF 1 million per borrower. The Vontobel Group does not assume any credit risks or other obligations in the process.



The members of the Board of Directors and Group Executive Management conduct usual banking transactions with Vontobel Group at the same conditions as employees.

Management and employee share based benefit programs29

Under the current stock ownership plan introduced in early 2005, the employees of Vontobel Group can draw 25% of their variable salary in shares of Vontobel Holding AG (bonus shares). These shares are acquired at a price equivalent to 80% of the market price. The relevant stock exchange price corresponds to the average closing price of the month of January of the year in which the bonus is paid out. The bonus shares are subject to a holding period of 3 years, during which time they cannot be sold. Members of Executive Management are allocated 50% of their entire bonus in shares at the aforementioned conditions.

After drawing bonus shares employees will automatically participate in the performance share program, which entitles them to receive additional shares (performance shares) at no cost after three years’ time provided the company’s financial performance has met certain hurdles and their employment contract has not been terminated. The amount of performance shares allocated depends on the number of bonus shares drawn as well as on the results of the preceding three fiscal years, in particular on the average return on equity (ROE) together with the average BIS tier 1 capital ratio. The performance shares allocated to employees are not subject to any holding period.

Previous stock ownership plans for top managementAn earlier management stock ownership plan that was discontinued at the end of 2002 was de-signed to give top-level executives a significant participation in Vontobel Holding AG. Shares were allotted at no cost and were subject to a holding period of ten years. Upon termination of the employment contract the management executives are required to tender the shares received within the scope of this managment participation program to Vontobel Holding AG. The price of the shares is calculated using the average price of the past 90 trading sessions prior to repurchase by Vontobel Holding AG. Shares distributed under stock ownership plans are included in person-nel expense at fair value, adequately taking into consideration trading and selling restrictions.

Employees

Members of the Board of Directors and

the top management 1

31-12-10 31-12-09 31-12-10 31-12-09

Number Number Number Number

Holdings of blocked shares at the beginning of the year 1,284,657 1,092,106 1,034,890 962,009

Allotted shares and transfers (addition) 583,884 613,080 219,597 222,029

Shares for which the holding period has lapsed (317,434) (288,002) (134,902) (109,442)

Shares of employees/members who have left the Group and transfers (reduction) (70,225) (132,527) (46,408) (39,706)

Shares bought back from the management plan - - 0 0

Holdings of blocked shares as at the balance sheet date 1,480,882 1,284,657 1,073,177 1,034,890

Charged as personnel expense in the year under review (CHF mns) 1.0 1.7 0.4 0.7

Charged as personnel expense in the preceding year (CHF mns) 16.3 12.2 6.4 4.7

Average price of shares upon allotment (CHF) 32.40 24.00 32.25 24.04

Fair value of blocked shares as at the balance sheet date (CHF mns) 52.7 38.0 38.2 30.6

1 In addition to the members of the Group Executive Management, the top management also includes the shares of managers that are included in the shareholder pooling agreement (see Chapter “Information relating to Corporate Governance”, page 39).



Rights to receive performance sharesThe cost of the performance share program is accrued over the respective vesting period and is charged as personnel expense. The estimated charge to personnel expense for the total remaining vesting periods takes account of expectations regarding the performance of the business (ROE and BIS tier 1 capital ratio) and the probability that employees will leave the company. In view of expectations regarding the performance of the business, the calculation of the number of rights is based on the assumption that between 78% and 98% (previous year between 94% and 122%) of the original number of bonus shares will be granted as performance shares to eligible employ-ees in connection with the individual programmes.

If the ROE in 2011 and 2012 is 3 percentage points higher (lower) than expected due to an im-provement (deterioration) in the performance of the business, between 78% and 119% (61% and 78%) of the original number of bonus shares will be granted as performance shares to eligi-ble employees in connection with the individual programmes. If the BIS tier 1 capital ratio in 2011 and 2012 is 2 percentage points higher (lower) than expected, these factors would be between 78% and 98% (74% and 87%). As a result, a reasonably possible deviation from the expected values would not have a significant impact on the Vontobel Group's future personnel expense.

Employees

Chairman of the Board of Directors and members of the


31-12-10 31-12-09 31-12-10 31-12-09

Number Number Number Number

Holdings of rights at the beginning of the year 1,383,296 1,181,631 574,757 492,494

Allotted rights and transfers (addition) 583,665 637,969 213,246 218,605

Recorded performance shares (384,974) (490,736) (157,029) (169,921)

Forfeited rights and transfers (reduction) (75,586) (115,455) (50,032) (38,908)

Change of rights due to modified parameters (192,269) 169,887 (73,788) 72,487

Holdings of rights as at the balance sheet date 1,314,132 1,383,296 507,154 574,757

Figures in CHF mns

Charged as personnel expense in the year under review 10.4 17.3 3.9 7.5

Estimated personnel expense for the remaining vesting periods including future terminations 13.3 14.5 5.2 5.9

Estimated personnel expense for the remaining vesting periods excluding future terminations 15.4 16.5 6.0 6.7



Share and option ownership 30

Members of the Board of Directors

31-12-10 31-12-09

Options Options

Number of shares at the time of exercise


Name Function Shares

Number

call option

put option

SharesNumber

call option

put option

Dr Urs Widmer Chairman 171,099 0 0 129,410 0 0

Dr Wolfhard Graetz Vice-Chairman 4,042 0 0 6,297 0 0

Prof. Dr Ann-Kristin Achleitner Member 787 0 0 0 0 0

Bruno Basler Member 6,418 0 0 5,237 0 0

Dr Philippe Cottier Member 137,577 0 0 136,790 0 0

Peter Quadri Member 6,918 0 0 5,737 0 0

Dr Frank Schnewlin Member 787 0 0 0 0 0

Dr Pierin Vincenz Member 13,155 0 0 11,974 0 0

Members of the Group Executive Management

31-12-10 31-12-09

Options Options



Name Function Shares

Number

call option

put option

SharesNumber

call option

put option

Herbert J. Scheidt CEO 444,611 0 0 347,650 0 0

Dr Martin Sieg Castagnola CFO 42,196 0 0 23,753 0 0

Peter Fanconi Member 109,557 0 0 87,519 0 0

Felix Lenhard Member 15,812 0 0 n/a n/a n/a

Dr Zeno Staub Member 126,351 0 0 136,572 0 0

Roger Studer Member 155,837 0 0 143,502 0 0

Member resigned

Peter Gubler Member n/a n/a n/a 138,408 (50,000)1 0

1 Written call options, strike CHF 33, maturity date 15-10-10

The above figures do not include rights to receive performance shares.

The calculation of the number of shares at the time of exercise reflects the exchange ratio of the respective options.

The above figures also include the share and option holdings of parties related to the members of the Vontobel Group’s governing bodies.



Transactions with related companies and persons31

Companies and persons are deemed related if one side is able to control the other or exert a substantial influence on the other’s financial or operational decisions.

31-12-10 31-12-09 Change to 31-12-09


Receivables 0.1 0.4 (0.3) (75)

Liabilities 77.1 77.4 (0.3) (0)

Vontobel Foundation and other members of the shareholder poolThe Vontobel Foundation conducts business with Bank Vontobel AG at the same terms and con-ditions offered to employees.

Other related parties32

Pension funds of Vontobel GroupThe assets of these pension funds are managed by Bank Vontobel AG. Reduced commission rates are charged.


Notes to the consolidated financial statementsRisk related to balance sheet positions

Risk related to balance sheet 33 positions

Demand Subject to

notice Due within

3 months

Due within3 to 12 months

Due within1 to 5 years

Due after5 years Total

31-12-10 CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns

Liquidity risk

Maturity structure of assets and liabilities

Assets

Cash 1,457.6 1,457.6

Due from banks 1,580.3 198.3 287.3 161.9 2,227.8

Cash collateral for reverse-repurchase agreements 300.0 300.0

Trading portfolio assets 2,097.7 2,097.7

Positive replacement values 197.2 197.2

Other financial assets at fair value 8,828.1 8,828.1

Due from customers net of allowances 19.5 622.6 463.9 203.7 94.8 22.5 1,427.0

Accrued income and prepaid expenses 226.6 226.6

Financial investments 136.9 38.1 143.1 786.0 8.7 1,112.8

Investments in associates1 0.6 0.6

Property and equipment1 204.8 204.8

Goodwill and other intangible assets1 150.7 150.7

Current tax assets 4.4 4.4

Deferred tax assets 6.3 6.3

Other assets 60.0 60.0

Total 14,614.6 820.9 1,089.3 508.7 880.8 387.3 18,301.6

Liabilities

Due to banks 1,459.1 12.3 0.6 1,472.0

Trading portfolio liabilities 1,215.8 1,215.8

Negative replacement values 544.2 544.2

Other financial liabilities at fair value 8,183.0 8,183.0

Due to customers 4,794.4 85.7 40.6 5.0 4,925.7

Accrued expenses and deferred income 325.9 325.9

Issued debt instruments 0.0

Current tax liabilities 15.3 15.3

Deferred tax liabilities 56.6 56.6

Provisions 10.4 10.4

Other liabilities 49.2 49.2

Total liabilities 16,653.9 12.3 86.3 40.6 0.0 5.0 16,798.1

Off-balance sheet

Contingent liabilities and irrevocable commitments 274.0 259.6 14.4 29.0 23.0 12.7 612.7

1 Immobilized



Demand Subject to

notice Due within

3 months

Due within3 to 12 months

Due within1 to 5 years

Due after5 years Total

31-12-09 CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns

Liquidity risk

Maturity structure of assets and liabilities

Assets

Cash 1,950.0 1,950.0

Due from banks 1,796.2 159.2 391.7 233.4 2,580.5

Cash collateral for reverse-repurchase agreements 300.0 300.0

Trading portfolio assets 1,782.2 1,782.2

Positive replacement values 214.5 214.5

Other financial assets at fair value 8,645.4 8,645.4

Due from customers net of allowances 26.6 350.4 312.0 196.8 106.9 12.7 1,005.4

Accrued income and prepaid expenses 197.9 197.9

Financial investments 136.0 17.4 90.4 631.4 73.8 949.0

Investments in associates1 0.6 0.6

Property and equipment1 217.8 217.8

Goodwill and other intangible assets1 161.2 161.2

Current tax assets 18.2 18.2

Deferred tax assets 5.6 5.6

Other assets 53.1 53.1

Total 14,825.7 509.6 1,021.1 520.6 738.3 466.1 18,081.4

Liabilities

Due to banks 1,664.3 64.5 8.3 1.7 1,738.8

Trading portfolio liabilities 1,178.0 1,178.0

Negative replacement values 361.7 361.7

Other financial liabilities at fair value 8,279.7 8,279.7

Due to customers 4,400.8 1.7 154.8 30.4 0.8 5.9 4,594.4

Accrued expenses and deferred income 274.4 274.4

Issued debt instruments 25.0 25.0

Current tax liabilities 5.4 5.4

Deferred tax liabilities 60.1 60.1

Provisions 9.0 9.0

Other liabilities 40.3 40.3

Total liabilities 16,273.7 66.2 163.1 57.1 0.8 5.9 16,566.8

Off-balance sheet

Contingent liabilities and irrevocable commitments 310.6 123.1 9.5 99.1 29.3 9.2 580.8

1 Immobilized



Fair value of financial instruments34

31-12-10 31-12-09

Book value Fair Value Deviation Book value Fair Value Deviation


Assets

Cash 1,457.6 1,457.6 0.0 1,950.0 1,950.0 0.0

Due from banks 2,227.8 2,227.8 0.0 2,580.5 2,580.5 0.0

Cash collateral for reverse-repurchase agreements 300.0 300.0 0.0 300.0 300.0 0.0

Due from customers net of allowances 1,427.0 1,431.0 4.0 1,005.4 1,008.6 3.2

Financial assets at amortized costs 5,412.4 5,416.4 4.0 5,835.9 5,839.1 3.2

Trading portfolio assets 2,097.7 2,097.7 0.0 1,782.2 1,782.2 0.0

Positive replacement values 197.2 197.2 0.0 214.5 214.5 0.0

Other financial assets at fair value 8,828.1 8,828.1 0.0 8,645.4 8,645.4 0.0

Financial assets available-for-sale 1,112.8 1,112.8 0.0 949.0 949.0 0.0

Financial assets at fair value 12,235.8 12,235.8 0.0 11,591.1 11,591.1 0.0

Liabilities

Due to banks 1,472.0 1,472.0 0.0 1,738.8 1,738.8 0.0

Due to customers 4,925.7 4,924.5 (1.2) 4,594.4 4,592.7 1.7

Issued debt instruments 0.0 0.0 0.0 25.0 25.0 0.0

Financial liabilities at amortized costs 6,397.7 6,396.5 (1.2) 6,358.2 6,356.5 1.7

Trading portfolio liabilities 1,215.8 1,215.8 0.0 1,178.0 1,178.0 0.0

Negative replacement values 544.2 544.2 0.0 361.7 361.7 0.0

Other financial liabilities at fair value 8,183.0 8,183.0 0.0 8,279.7 8,279.7 0.0

Financial liabilities at fair value 9,943.0 9,943.0 0.0 9,819.4 9,819.4 0.0

The table shows the fair value of the financial instruments based on the valuation methods and assumptions explained below. The fair value corresponds to the amount at which assets can be exchanged or obligations fulfilled by knowledgeable parties willing to contract and acting inde-pendently of one another.

Short-term financial instrumentsIncluded here are accounts due from/to banks, accounts due from/to customers, and debt issued that have a maturity or a refinancing profile of at most one year as well as the balance sheet items “cash”, “cash collateral for reverse-repurchase agreements” and “cash collateral for repurchase agreements”. It is assumed for short-term financial instruments that the book value matches the fair value.

Long-term financial instrumentsIncluded here are accounts due from/to banks, accounts due from/to customers, and debt issued that have a maturity or a refinancing profile of over one year. The fair value is based on listed market prices or the prices quoted by traders, provided the financial instrument is traded in an active market. Otherwise, the fair value is determined by means of the present value method.



Trading portfolio assets, other financial instruments at fair value, financial investments and derivative financial instrumentsIf a financial instrument is traded in an active market, its fair value is based on listed market prices or the prices quoted by traders. In the fair value hierarchy prescribed in IFRS 7, this type of financial instrument is classified as a level 1 instrument. If an active market no longer exists, the fair value is determined on the basis of valuation models or other generally accepted valuation methods. If all the significant inputs can be observed directly or indirectly in the market, the in-strument is classified as a level 2 instrument. This category mainly includes OTC derivatives, some debt instruments and products issued by the Vontobel Group. Most of the latter are listed with the Vontobel Group as market maker. The valuation models take account of the relevant param-eters such as contract specifications, the market price of the underlying asset, foreign exchange rates, yield curves, default risks and volatility. Vontobel’s credit risk is taken into account when determining the fair value of financial liabilities if market participants consider it important for the calculation of prices. If at least one significant input cannot be observed directly or indirectly in the market, the instrument is classified as a level 3 instrument. These instruments mainly com-prise illiquid fund shares. The fair value of these positions is usually determined based on the es-timates of external experts regarding the level of future payouts.

The fair value of level 2 and level 3 instruments is always an estimate or an approximation of a value that cannot be determined with absolute certainty. Furthermore, the valuation methods used do not always reflect all of the factors that are relevant when determining fair value. To ensure that the valuations are appropriate, additional factors such as uncertainties relating to the models and parameters as well as liquidity risks and the risk of the early redemption of products issued by the Vontobel Group are considered. Management believes it is necessary and appropri-ate to take these factors into account in order to correctly determine the fair value.

The appropriateness of the valuation of financial instruments that are not traded in an active market is ensured through the application of clearly defined methods and processes as well as independent controls. The control processes comprise the analysis and approval of new instru-ments, the regular analysis of risks as well as gains and losses, the verification of prices and the examination of the models on which the estimates of the fair value of financial instruments are based. These controls are conducted by units that possess the relevant specialist knowledge and operate independently from the trading and investment functions.

Sensitivity of fair values of level 3 instrumentsA reasonably realistic change in the basic assumptions or estimated values has no significant im-pact on the Vontobel Group’s income statement, statement of comprehensive income or share-holders‘ equity.

Day 1 profitWhen a financial instrument is recognized for the first time, the transaction price provides the best indication of the fair value unless the fair value of this financial instrument can be evidenced by comparison with other observable current market transactions involving the same instrument (level 1 instrument) or is based on a valuation method that uses market data (level 2 instrument). If this is the case, the difference between the transaction price and the fair value – referred to as “day 1 profit” – is recorded in “Trading income” in the case of trading portfolio assets, other fi-nancial instruments at fair value and derivative financial instruments and is recorded in “Other comprehensive income” in the case of financial investments.

In the case of level 3 instruments, the day 1 profit is deferred and is not recognized in the income statement. It is only recorded as “Trading income” or in the “Other comprehensive income” when the fair value can be determined using observable market data. During the financial year and the previous year, no positions with deferred day 1 profit were recorded.



Valuation methods offinancial instruments

Listed market

prices

Valuation methods based on

market data

Valuation methods not

based on market data

31-12-10 Total


Assets

Trading portfolio assets 2,015.0 82.7 0.0 2,097.7

Positive replacement values 30.0 167.2 0.0 197.2

Other financial assets at fair value

Equity instruments 0.7 0.0 0.0 0.7

Units in investment funds 23.4 20.9 19.8 64.1

Debt instruments1 5,765.1 2,998.2 0.0 8,763.3

Financial assets available-for-sale

Equity instruments and other participations 124.5 0.0 1.1 125.6


Debt instruments 769.8 203.8 0.0 973.6

Liabilities

Trading portfolio liabilities 178.6 1,037.2 0.0 1,215.8

of which listed 839.5

Negative replacement values 23.7 520.5 0.0 544.2

Other financial liabilities at fair value 0.0 8,183.0 0.0 8,183.0

of which listed 6,981.2

1 In the case of interest rate instruments measured at fair value through profit and loss, the difference between the book value (fair value) and the contractually agreed redemption amount at maturity was CHF 189.0 mn.

In the financial year 2010, positions with a fair value of CHF 138 mn (previous year CHF 811 mn) were reclassified from Level 1 (listed market prices) to Level 2 (valuation methods based on market data), positions with a fair value of CHF 828 mn (previous year CHF 52 mn) were reclassified from Level 2 to Level 1, and positions with a fair value of CHF 9 mn (previous year CHF 20 mn) were reclassified from Level 2 to Level 3 (valuation methods not based on market data).



Valuation methods offinancial instruments

Listed market

prices

Valuation methods based on

market data

Valuation methods not

based on market data

31-12-09 Total


Assets

Trading portfolio assets 1,671.1 111.1 0.0 1,782.2

Positive replacement values 24.3 190.2 0.0 214.5

Other financial assets at fair value

Equity instruments 0.9 0.0 0.0 0.9


Debt instruments1 4,513.3 4,041.1 0.0 8,554.4

Financial assets available-for-sale

Equity instruments and other participations 125.3 0.0 1.0 126.3


Debt instruments 607.2 204.0 0.0 811.2

Liabilities

Trading portfolio liabilities 220.6 957.4 0.0 1,178.0

of which listed 707.2

Negative replacement values 31.3 330.4 0.0 361.7

Other financial liabilities at fair value 0.0 8,279.7 0.0 8,279.7

of which listed 7,769.4

1 In the case of interest rate instruments measured at fair value through profit and loss, the difference between the book value (fair value) and the contractually agreed redemption amount at maturity was CHF 143.8 mn.



31-12-10 31-12-09

Level 3 instruments35 CHF mns CHF mns

Balance sheet

Holdings at the beginning of the year 17.8 0.0

Investments 1.6 0.0

Disposals (0.1) 0.0

Issues 0.0 0.0

Redemptions 0.0 0.0

Losses recognized in the income statement (8.0) (1.9)

Losses recognized as other comprehensive income (0.1) (0.5)

Gains recognized in the income statement 0.2 0.0

Gains recognized as other comprehensive income 0.2 0.0

Reclassifications to level 3 9.3 20.2

Reclassifications from level 3 0.0 0.0

Translation differences 0.0 0.0

Total book value at balance sheet date 20.9 17.8

Income on holdings on balance sheet date

Unrealized losses recognized in the income statement (15.8) (1.9)

Unrealized losses recognized as other comprehensive income (0.5) (0.5)

Unrealized gains recognized in the income statement 0.3 0.0

Unrealized gains recognized as other comprehensive income 0.2 0.0

No deferred day 1 profit or loss (difference between the transaction price and the fair value calculated on the transaction date) was reported for level 3 positions as of 31-12-10 or 31-12-09.


Notes to the consolidated financial statementsOff-balance sheet and other information

Off-balance sheet information36 31-12-10 31-12-09 Change to 31-12-09

Notes CHF mns CHF mns CHF mns in %

Contingent liabilities

Credit guarantees 193.4 271.6 (78.2) (29)

Performance guarantees 5.8 7.5 (1.7) (23)

Other contingent liabilities 398.6 289.4 109.2 38

Total 597.8 568.5 29.3 5

Irrevocable commitments

Undrawn irrevocable credit facilities 14.9 12.3 2.6 21

of which payment obligation to “Einlagensicherung”1 12.7 11.2 1.5 13

1 Deposit protection of Swiss Banks’ and Securities Dealers’ Depositor Protection Association

Of the aggregate sum of CHF 612.7 mn (previous year CHF 580.8 mn) comprising contingent liabilities and irrevocable commitments, a total of CHF 467.8 mn (CHF 551.9 mn) are secured by recognized collateral and CHF 144.9 mn (CHF 28.9 mn) are unsecured.

Fiduciary transactions

Other fiduciary placements 1,588.7 2,553.5 (964.8) (38)

Fiduciary credits 6.7 24.1 (17.4) (72)

Other fiduciary financial transactions 0.0 6.7 (6.7) (100)

Total 1,595.4 2,584.3 (988.9) (38)

Derivative financial instruments 41, 42

Positive replacement values 197.2 214.5 (17.3) (8)

Negative replacement values 544.2 361.7 182.5 50

Contract volumes 18,898.7 20,867.4 (1,968.7) (9)

LitigationOn 29 September 2010, Private Equity Holding AG, Zug, filed a lawsuit against Bank Vontobel AG, Zurich, with the Commercial Court of the Canton of Zurich. In the litigation relating to the purchase by Private Equity Holding AG of its own shares from Bank Vontobel AG in April 2000, Private Equity Holding AG asserts its claim that the transaction was invalid due to the infringe-ment of the provisions of Swiss company law and it demands payment of CHF 81.9 mn plus 5% interest for the period since 16 September 2005, as well as accrued interest of CHF 13.7 mn for the period up to 15 September 2005. Bank Vontobel AG firmly believes that the purchase of shares contested by Private Equity Holding AG was executed correctly. Furthermore, the Vonto-bel Group believes that any claims of enrichment based on Swiss company law are to be regarded as having been discharged based on the wording of the settlement reached with Private Equity Holding AG in August 2001. The Vontobel Group has therefore decided not to record any provi-sions in respect of the litigation and to report the sum claimed in the lawsuit of CHF 117.3 mn, including interest as of 31 December 2010, under contingent liabilities.

In connection with the fraud committed by Bernard Madoff, the liquidators of investment vehi-cles that invested directly or indirectly in Madoff funds have filed lawsuits with various courts against more than 100 banks and custodians. The litigation is targeted at investors who redeemed their investments in these vehicles between 2004 and 2008. The liquidators are demanding that the investors repay the sums involved because he considers them to have been obtained unjustly as a result of the redemptions. Since the liquidators often only know the names of the investors’ custodian banks, they have filed the lawsuits against them. Several legal entities of the Vontobel Group are or may be affected by the litigation in their capacity as a bank or custodian. The claims filed against the Vontobel Group concern the redemption of investments worth around USD 2.8 mn. However, based on the information currently available to it, the Vontobel Group believes the probability of a lawsuit resulting in an outflow of funds is low.



Assets under management37 1 31-12-10 31-12-09 Change to 31-12-09

CHF bns CHF bns CHF bns in %

Assets in self-managed collective investment instruments 20.4 19.6 0.8 4

Assets with management mandate 27.2 25.1 2.1 8

Other assets under management 31.0 30.5 0.5 2

Total assets under management (including double counts) 78.6 75.22 3.42 5

of which double counts 3.6 3.7 (0.1) (3)

Net inflow/(outflow) of new assets 5.5 2.1 3.4 162


2 Of which CHF 4.1 bn related to the acquistion of Commerzbank (Schweiz) AG

Assets under management and net inflows/outflows of new moneyAssets under management are calculated and reported in accordance with the guidelines issued by the Swiss Financial Market Supervisory Authority (FINMA) concerning accounting standards for financial institutions. Assets under management comprise all of the assets managed or held for investment purposes of private, corporate and institutional clients excluding borrowings, as well as assets in self-managed collective investment instruments. This includes all amounts due to customers on savings and deposit accounts, fixed-term and fiduciary deposits, and all valued as-sets. Assets under management that are deposited with third parties are included to the extent that they are managed by a Group company. Assets under management only include those assets on which the Vontobel Group generates considerably higher income than on assets that are held solely for custody purposes or the execution of transactions. These types of custody assets are reported separately. Assets that are counted more than once, i. e. in several categories of assets under management to be disclosed, are shown under double counts. They primarily include shares in self-managed collective investment instruments in client portfolios.

Net inflows or outflows of assets under management in the course of a specific period consist of the acquisition of new clients, the departure of clients as well as inflows and outflows of assets from existing clients. This also includes borrowing and the repayment of loans. The calculation of the net inflow or outflow of new money is performed at the level “total assets under manage-ment”, i. e. before the elimination of double counts. Securities and currency-related changes in market value, interest income and dividends, fee charges as well as loan interests paid do not represent inflows or outflows.

Custody assets38 1 31-12-10 31-12-09 Change to 31-12-09

CHF bns CHF bns CHF bns in %

Custody assets 40.4 39.2 1.2 3

1 Assets held exclusively for transaction and custody purposes, in which the Vontobel Group restricts itself to custody and collection.



Future liabilities for finance lease, operating lease and the 39 acquisition of fixed assets and intangible assets

Finance Lease

Operating Lease

31-12-10 31-12-09

Total Total


Due within 1 year 0.9 23.3 24.2 24.2

Due within 1 to 2 years 0.9 22.0 22.9 19.5




Due in more than 5 years 0.0 23.9 23.9 24.7

Total minimum obligation 2.2 125.4 127.6 116.2

In the year under review, general expense include CHF 26.4 mn (previous year CHF 26.3 mn) from operating lease. The future liabilities from operating leases mainly comprise lease agree-ments for premises occupied by the Vontobel Group.

The future income from minimum lease payments from non-terminable subtenancies amounted to CHF 0.0 mn in 2010 (previous year CHF 0.3 mn).

Cooperation agreement between Vontobel Group and Raiffeisen 40 Switzerland

The ongoing cooperation between Vontobel Group and Raiffeisen Switzerland (former Swiss Raiffeisen Group) initiated in 1994 was broadened in 2004 and extended through to 2017 at 14 December 2009. In connection with the expansion of its investment management business, the Raiffeisen Group cooperates with Vontobel Group and offers Vontobel’s investment-related serv-ices and selected third-party products at all of its banking locations in Switzerland. Vontobel de-velops and designs product and service solutions for Raiffeisen’s investment customers in the fields of investment funds, standardized asset management solutions and structured products. Raiffeisen banks continue to undertake the marketing and client advisory activities as before. Vontobel advises and supports Raiffeisen’s marketing organization. In addition, the Raiffeisen Group outsourced its securities trading and settlement as well as safekeeping activities to Vonto-bel in 2005. Additionally, Vontobel has made its trading infrastructure available to the central bank of the Raiffeisen Group. In October 2006, Vontobel Group as service provider assumed the custodian services for all Raiffeisen clients on behalf of the Raiffeisen Group.

To underpin the long-term nature of their partnership, Raiffeisen Group acquired a 12.5% stake in Vontobel Holding AG effective as of 8 December 2004 (refer to the information given in the Corporate Governance, page 39f.). The requisite agreements implementing the mutual coopera-tion in the investment management and securities transactions and administration business were signed at the same time. The cooperation agreements took effect retroactively to 1 July 2004 and were prolonged at 14 December 2009 for an indefinite period, at minimum, however, until 30 June 2017. The earliest effective date of ordinary termination – in observance of a period of notice of 24 months – is 30 June 2017.



Open derivative instruments41

Term to maturity

up to 3 monthsTerm to maturity

3 to 12 monthsTerm to maturity

1 to 5 yearsTerm to maturity

more than 5 years Total TotalTotal

contract PRV1 NRV2 PRV NRV PRV NRV PRV NRV PRV NRV volume

31-12-10 CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns

Debt instruments

Forward contracts incl. FRAs 0.0 0.0 0.0 0.0 3.1

Swaps 0.1 0.7 4.2 6.0 38.3 60.6 3.2 27.2 45.8 94.5 5,282.0

Futures 0.0 0.0 201.5

Options (OTC) 0.2 0.0 0.0 0.1 0.4 0.1 0.6 10.0

Options (exchange traded) - -

Total 0.1 0.9 4.2 6.0 38.3 60.6 3.3 27.6 45.9 95.1 5,496.6

Foreign currency

Forward contracts 21.4 27.6 5.6 8.1 0.2 0.1 0.0 27.2 35.8 1,114.8

Swaps 37.7 22.1 5.0 3.8 0.1 0.0 42.8 25.9 1,137.8

Futures 0.0 0.0 3.8

Options (OTC) 1.0 1.9 1.3 3.5 0.2 0.5 3.5 2.5 9.4 986.7


Total 60.1 51.6 11.9 15.4 0.5 0.6 0.0 3.5 72.5 71.1 3,243.1

Precious metals

Forward contracts 0.0 0.0 0.0 0.0 0.4

Futures 0.0 0.0 173.8

Options (OTC) 2.5 22.0 1.8 26.5 0.0 0.3 9.3 4.3 58.1 402.1


Total 2.5 22.0 1.8 26.5 0.0 0.3 - 9.3 4.3 58.1 576.3

Equities/indices

Forward contracts - -

Swaps 0.4 4.5 0.2 1.8 8.5 1.1 7.8 8.7 270.1

Futures 0.0 0.0 580.7

Options (OTC) 0.5 60.8 4.5 122.8 24.2 51.3 0.1 41.2 29.3 276.1 7,361.3

Options (exchange traded) 10.8 7.7 16.3 15.3 2.9 0.7 30.0 23.7 1,175.6

Total 11.7 68.5 25.3 138.3 28.9 60.5 1.2 41.2 67.1 308.5 9,387.7

Credit derivatives

Credit default swaps 0.0 0.3 2.3 0.3 2.3 96.4

Total - - - 0.0 0.3 2.3 - - 0.3 2.3 96.4

Other


Futures 0.0 0.0 18.2

Options (OTC) 0.3 6.6 6.4 0.5 2.4 7.1 9.1 80.4


Total - 0.3 6.6 6.4 0.5 - - 2.4 7.1 9.1 98.6

Total 74.4 143.3 49.8 192.6 68.5 124.3 4.5 84.0 197.2 544.2 18,898.7

1 Positive replacement values2 Negative replacement values



Term to maturity

up to 3 monthsTerm to maturity

3 to 12 monthsTerm to maturity

1 to 5 yearsTerm to maturity

more than 5 years Total TotalTotal

contract PRV1 NRV2 PRV NRV PRV NRV PRV NRV PRV NRV volume

31-12-09 CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns

Debt instruments

Forward contracts incl. FRAs - -

Swaps 0.1 0.0 12.2 8.8 54.1 63.7 1.3 20.2 67.7 92.7 5,804.8

Futures 0.0 0.0 0.0 228.7

Options (OTC) 0.0 0.1 0.0 0.2 0.2 0.2 0.3 65.6


Total 0.1 0.0 12.2 8.9 54.1 63.7 1.5 20.4 67.9 93.0 6,099.1

Foreign currency

Forward contracts 8.3 9.7 12.3 10.6 0.0 0.0 20.6 20.3 1,512.1

Swaps 14.5 9.8 1.7 1.2 16.2 11.0 1,310.1

Futures 0.0 0.0 2.9

Options (OTC) 0.5 1.3 11.4 11.6 0.2 0.1 0.7 12.1 13.7 589.0


Total 23.3 20.8 25.4 23.4 0.2 0.1 - 0.7 48.9 45.0 3,414.1

Precious metals

Forward contracts 0.2 0.1 0.0 0.0 0.2 0.1 8.2

Futures 0.0 0.0 104.5

Options (OTC) 0.0 3.3 1.6 2.6 1.4 0.8 2.8 3.0 9.5 178.2


Total 0.2 3.4 1.6 2.6 1.4 0.8 - 2.8 3.2 9.6 290.9

Equities/indices


Swaps 0.2 0.2 1.1 1.1 1.3 1.3 153.8

Futures 0.0 0.0 232.7

Options (OTC) 6.9 41.3 37.1 86.3 18.1 13.5 0.2 30.4 62.3 171.5 9,202.4

Options (exchange traded) 6.1 2.8 9.7 27.5 8.5 1.0 24.3 31.3 1,270.1

Total 13.0 44.1 47.0 114.0 27.7 15.6 0.2 30.4 87.9 204.1 10,859.0

Credit derivatives

Credit default swaps 3.1 0.0 3.1 70.3

Total - - - 3.1 - - - - 0.0 3.1 70.3

Other


Futures 0.0 0.0 29.3

Options (OTC) 0.2 0.7 0.2 5.9 5.2 1.3 6.6 6.9 104.7


Total - 0.2 0.7 0.2 5.9 5.2 - 1.3 6.6 6.9 134.0

Total 36.6 68.5 86.9 152.2 89.3 85.4 1.7 55.6 214.5 361.7 20,867.4

1 Positive replacement values2 Negative replacement values



Open derivative instruments42

Trading instruments Hedging instruments

PRV1 NRV2 contractvolume PRV NRV

contractvolume

31-12-10 CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns

Debt instruments

Forward contracts incl. FRAs 0.0 0.0 3.1

Swaps 45.8 94.5 5,282.0

Futures 201.5

Options (OTC) 0.1 0.6 10.0

Options (exchange traded)

Total 45.9 95.1 5,496.6 - - -

Foreign currency

Forward contracts 27.2 35.8 1,114.8

Swaps 42.8 25.9 1,137.8

Futures 3.8

Options (OTC) 2.5 9.4 986.7


Total 72.5 71.1 3,243.1 - - -

Precious metals

Forward contracts 0.0 0.0 0.4

Futures 173.8

Options (OTC) 4.3 58.1 402.1


Total 4.3 58.1 576.3 - - -

Equities/indices

Forward contracts

Swaps 7.8 8.7 270.1

Futures 580.7

Options (OTC) 29.3 276.1 7,361.3

Options (exchange traded) 30.0 23.7 1,175.6

Total 67.1 308.5 9,387.7 - - -

Credit derivatives

Credit default swaps 0.3 2.3 96.4

Total 0.3 2.3 96.4 - - -

Other

Forward contracts

Swaps

Futures 18.2

Options (OTC) 7.1 9.1 80.4


Total 7.1 9.1 98.6 - - -

Total 197.2 544.2 18,898.7 0.0 0.0 0.0

1 Positive replacement values

2 Negative replacement values



Trading instruments Hedging instruments

PRV1 NRV2 contractvolume PRV NRV

contractvolume

31-12-09 CHF mns CHF mns CHF mns CHF mns CHF mns CHF mns

Debt instruments

Forward contracts incl. FRAs

Swaps 67.7 92.7 5,804.8

Futures 228.7

Options (OTC) 0.2 0.3 65.6


Total 67.9 93.0 6,099.1 - - -

Foreign currency

Forward contracts 20.6 20.3 1,512.1

Swaps 16.2 11.0 1,310.1

Futures 2.9

Options (OTC) 12.1 13.7 589.0


Total 48.9 45.0 3,414.1 - - -

Precious metals

Forward contracts 0.2 0.1 8.2

Futures 104.5

Options (OTC) 3.0 9.5 178.2


Total 3.2 9.6 290.9 - - -

Equities/indices

Forward contracts

Swaps 1.3 1.3 153.8

Futures 232.7

Options (OTC) 62.3 171.5 9,202.4

Options (exchange traded) 24.3 31.3 1,270.1

Total 87.9 204.1 10,859.0 - - -

Credit derivatives

Credit default swaps 3.1 70.3

Total - 3.1 70.3 - - -

Other

Forward contracts

Swaps

Futures 29.3

Options (OTC) 6.6 6.9 104.7


Total 6.6 6.9 134.0 - - -

Total 214.5 361.7 20,867.4 0.0 0.0 0.0

1 Positive replacement values

2 Negative replacement values



Employee benefit plans43

There are pension plans for the majority of employees at Vontobel Group. These can be either defined contribution or defined benefit plans. Actuarial calculations of defined benefit plans are conducted by independent experts.

The majority of Vontobel Group employees participates in the pension plans in Switzerland. The pension obligations are met through the pension assets of pension funds that are legally separate and independent from the Vontobel Group. These pension funds are managed by a Board of Trustees consisting of employee and employer representatives. The pension plan is organized, managed and funded in accordance with legislation, the foundation charters and the applicable pension regulations. Employees and pensioners or their survivors receive their statutory benefits when they leave the company or retire as well as in the event of death or disability. These benefits are funded through employer and employee contributions. Under IAS 19, Swiss pension plans are regarded as defined benefit plans due to their mandatory minimum rate of return, minimum conversion rate and the additional liability to pay benefits in connection with the restructuring of plans. The last actuarial calculation for these pension plans was conducted as of 1 May 2010.

Foreign pension plans exist in Liechtenstein, Great Britain, Italy, Hong Kong, Luxemburg, Spain, Dubai, and the US. They are all defined contribution plans. There are individual pension commit-ments in Germany and Austria, for which a provision was expensed accordingly.

Actuarial data for the defined benefit pension plans1

31-12-10 31-12-09

CHF mns CHF mns

Present value of pension obligations at 1 January (574.3) (521.2)

Current service cost (23.9) (23.4)

Interest cost (19.9) (18.8)

Employee contributions (11.3) (11.1)

Benefits paid/(deposited) 43.4 27.5

Past service cost (1.2) (1.5)

Business combination 0.0 (48.8)

Curtailments and settlements 0.0 1.5

Actuarial gains/(losses) on obligations (26.9) 21.5

Present value of pension obligations at 31 December (614.1) (574.3)

Plan assets at fair value at 1 January 570.8 479.1

Expected return on plan assets 22.6 19.6

Contributions by the employer 19.7 17.4

Employee contributions 11.3 11.1

Benefits (paid)/deposited (43.4) (27.5)

Business combination 0.0 45.3

Actuarial gains/(losses) on plan assets (5.8) 25.8

Plan assets at fair value at 31 December 575.2 570.8

1 Pension obligations and costs are presented as negative amounts.



31-12-10 31-12-09 31-12-08 31-12-07 31-12-06


Plan assets at fair value 575.2 570.8 479.1 516.3 476.8

Present value of pension obligations (614.1) (574.3) (521.2) (480.8) (398.5)

Funding surplus/(gap) (38.9) (3.5) (42.1) 35.5 78.3

Unrecognized actuarial (gains)/losses 64.2 31.7 82.2 6.6 (42.9)

Uncapitalizable surpluses 0.0 0.0 0.0 (2.7) (29.2)

Prepaid/(deferred) pension cost 25.3 28.2 40.1 39.4 6.2

Experience gains/(losses) on plan assets (5.8) 25.8 (64.5) 1.0 11.6

Experience (gains)/losses on pension obligations (14.8) (14.5) 16.6 21.9 (54.7)

First-time application of IFRIC 14 – IAS 19 in 2008. The figures for 2007 have been adjusted accordingly.

31-12-10 31-12-09

CHF mns CHF mns

Current service cost (35.2) (34.5)

Interest cost (19.9) (18.8)


Recognition of actuarial gains/(losses) (0.2) (3.2)

Past service cost (1.2) (1.5)

Effects of curtailments and settlements 0.0 1.5

Employee contributions 11.3 11.1

Pension cost for defined benefit plans (22.6) (25.8)

Pension cost for defined contribution plans (3.9) (3.5)

Total pension cost recognized in personnel expense (26.5) (29.3)

Effective return on plan assets 16.8 45.4

Prepaid/(deferred) pension cost as of 1 January 28.2 40.1

Pension cost for defined benefit plans (22.6) (25.8)

Contributions by the employer 19.7 17.4

Business combination 0.0 (3.5)

Prepaid/(deferred) pension cost as of 31 December 25.3 28.2

of which reported in Other assets 29.3 33.3

of which reported in Other liabilities (4.0) (5.1)



Actuarial assumptions (Swiss pension plans)1

31-12-10 31-12-09

in % in %

Discount rate 2.7 3.5


Expected rate of salary increases 2.0 2.0

Expected rate of pension increases 0.0 0

Anticipated contributions to pension funds in the following year (defined benefit plans) in CHF mns 20.5 18.5

1 The expected return on the assets is based on the targeted allocation of plan assets and takes account of both the long-term historical performance of the individual asset classes and assessments of future market performance.

Demographic assumptions (e.g. probability of death, disability or termination) are based on the technical principles set out in the Swiss Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans (BVG) 2005, which are based on the observation of large insurance portfolios in Switzerland over a period of several years.

Composition of plan assets

31-12-10 31-12-09

CHF mns CHF mns

Equity instruments 183.2 173.4

Debt instruments 312.0 312.2

Real estate 27.0 23.3

Others 53.0 61.9

Total plan assets at fair value 575.2 570.8

of which registered shares of Vontobel Holding AG 0.0 0.0

of which debt instruments of the Vontobel Group 0.0 0.0

of which credit balances with Vontobel companies 23.2 15.7

of which securities lent to the Vontobel Group 0.0 0.0

Plan-specific sensitivities

The following overview illustrates the impacts of each isolated change in major actuarial assump-tions on the present value of the pension liabilities as of 31 December 2010 or the anticipated service costs of defined benefit plans in the following year.

Increase in the present value of the pension liability as of

31-12-10

CHF mns in %

Discount rate (reduction of 25 basis points) 14.6 2.4

Expected rate of salary increases (increase of 50 basis points) 8.8 1.4

Increase in the expected service costs in the following

year

CHF mns in %

Discount rate (reduction of 25 basis points) 0.9 3.4

Expected rate of salary increases (increase of 50 basis points) 0.4 1.3

If the expected return was reduced by 50 basis points, the expected pension cost in the following year would increase by CHF 2.9 mn or 13.1%.



Other employee benefits payable in the long term44

Other employee benefits payable in the long term exist in the form of long service awards and sabbatical leaves. Analogously to the defined benefit pension plans, actuarial calculations have been performed and an accrued expense recognized for these benefits.

31-12-10 31-12-09

Mio. CHF Mio. CHF

Accrued expense for long service awards and sabbatical leaves 1.0 0.9

Significant foreign currency rates45

For the significant currencies, the following rates were used:

year end rates average rates 31-12-10 31-12-09 2010 2009

1 EUR 1.25045 1.48315 1.37761 1.50474

1 USD 0.93210 1.03375 1.03649 1.08100

Events after the balance sheet date46

There were no events that had to be reported after balance sheet date.

Dividend payment47

The Board of Directors will propose the payment of a dividend of CHF 1.40 per registered share with a par value of CHF 1.00 to the General Meeting of Shareholders of Vontobel Holding AG on 3 May 2011. This corresponds to a total payment of CHF 90.5 mn.1

1 Shares entitled to a dividend as of 31-12-10

Authorization of the consolidated accounts48

The Board of Directors discussed and approved the present annual report during the board meet-ing on 10 February 2011. It will be submitted for approval at the General Meeting on 3 May 2011.


Notes to the consolidated financial statementsSegment reporting

Segment reporting principles49

External segment reporting reflects the organizational structure of the Vontobel Group as well as internal management reporting, which forms the basis for the assessment of the financial per-formance of the segments and the allocation of resources to the segments.

The segments correspond to the business units, which comprise the following activities:

Private BankingPrivate Banking encompasses portfolio management services for private clients, investment advi-sory, custodian services, integrated financial services relating to legal, inheritance and tax mat-ters, and wealth consolidation services.

Investment BankingInvestment Banking focuses on the derivatives and structured products business, securities and foreign exchange trading, institutional sales and research, corporate finance, services for external asset managers and transaction banking.

Asset ManagementAsset Management specializes in active asset management based on asset allocation, stock selec-tion and multi-manager approaches. Its products are distributed through wholesale channels and directly to institutional clients. They are also sold by Vontobel’s cooperation partners. Vontobel supplies Raiffeisen Switzerland with comprehensive investment services as part of their long-term cooperation.

Corporate CenterThe Corporate Center of the Vontobel Group comprises the support units Operations, Finance & Risk and Group Services, which supply core services to the business units.

Income, expenses, assets and liabilities are allocated to the business units on the basis of client responsibility or according to the principle of origination. Items that cannot be allocated directly to the business units are reported in the Corporate Center accounts. The Corporate Center also includes consolidating entries.

The costs of the services supplied internally are reported in the item “Services from/to other segment(s)” as a reduction in costs for the service provider and as an increase in costs for the recipient. This cost allocation is based on agreements that are renegotiated periodically according to the same principle as if they were concluded between independent third parties (“at arm’s length”).



Business segment reporting

PrivateBanking

Investment Banking

Asset Management

CorporateCenter Total Group


31-12-10

Net interest income 26.6 10.8 0.5 15.2 53.1

Other operating income 221.9 320.9 213.8 20.5 777.1

Operating income 248.5 331.7 214.3 35.7 830.2

Personnel expense 90.1 103.6 96.2 102.4 392.3

General expense 20.3 48.0 22.9 105.0 196.2

Services from/to other segment(s) 78.7 61.4 37.6 (177.7) 0.0

Depreciation of property, equipment and intangible assets 2.8 2.6 8.4 48.0 61.8

Value adjustments, provisions and losses 8.1 0.6 (1.4) (0.5) 6.8


Segment profit before taxes 48.5 115.5 50.6 (41.5) 173.1

Taxes 25.8

Net profit 147.3

of which minority interests (0.5)

Additional information

Segment assets 939.7 12,176.9 162.3 5,022.7 18,301.6

Segment liabilities 3,976.9 10,757.7 290.0 1,773.5 16,798.1

Allocated equity according to BIS1 142.3 264.0 109.3 109.5 625.1

Assets under management (CHF bns) 29.6 8.2 42.5 (1.7) 78.6

Net new money (CHF bns) 1.2 0.6 3.7 n/a 5.5

Custody assets (CHF bns) 40.4 40.4

Capital expenditure 0.6 0.9 0.8 38.7 41.0

Employees (full time equivalents) 347.7 341.6 281.0 375.8 1,346.1

1 The allocation of the regulatory capital required in accordance with BIS standards to the individual segments is based on the principle of origination. With regard to capital requirements for credit risks related to balance sheet assets, allocation is based on guidelines analogous to those used for reporting segmental assets. The prescribed deduction of CHF 150.7 mn from core capital for intangible assets has been included in the figures above of the segments Private Banking, Investment Banking and Asset Management. The valuation adjustments of own liabilities are assigned to the Investment Banking segment. The deduction of CHF 54.2 mn from core capital for Treasury shares is not included in the figures above.

Information on regions1 Switzerland

Europe excl. Switzerland Americas

Other Countries2

Consoli-dation Total Group


31-12-10

Operating income related to external customers 517.2 148.6 35.6 128.8 830.2

Assets 9,634.3 983.6 35.2 9,641.4 (1,992.9) 18,301.6

Property, equipment and intangible assets 338.4 13.6 1.5 2.0 355.5


1 Reporting is based on operating locations.

2 Mainly U.A.E.



Business segment reporting

PrivateBanking

Investment Banking

Asset Management

CorporateCenter Total Group


31-12-09

Net interest income 16.8 6.1 1.5 21.6 46.0

Other operating income 195.8 367.1 175.9 0.2 739.0

Operating income 212.6 373.2 177.4 21.8 785.0

Personnel expense 86.6 127.4 81.1 91.7 386.8

General expense 19.2 38.1 21.0 93.6 171.9

Services from/to other segment(s) 74.8 56.3 34.5 (165.6) 0.0

Depreciation of property, equipment and intangible assets 1.5 2.5 8.7 49.2 61.9

Value adjustments, provisions and losses 9.3 1.8 0.6 0.8 12.5


Segment profit before taxes 21.2 147.1 31.5 (47.9) 151.9

Taxes 13.6

Net profit 138.3

of which minority interests (0.6)

Additional information

Segment assets 908.3 11,301.2 184.9 5,687.0 18,081.4

Segment liabilities 3,565.6 11,469.1 364.9 1,167.2 16,566.8

Allocated equity according to BIS1 147.8 278.2 117.3 123.4 666.7

Assets under management (CHF bns) 29.9 7.7 38.6 (1.0) 75.2

Net new money (CHF bns) 0.4 0.5 1.2 n/a 2.1

Custody assets (CHF bns) 39.2 39.2


Employees (full time equivalents) 404.7 324.9 270.7 360.8 1,361.1

1 The allocation of the regulatory capital required in accordance with BIS standards to the individual segments is based on the principle of origination. With regard to capital requirements for credit risks related to balance sheet assets, allocation is based on guidelines analogous to those used for reporting segmental assets. The prescribed deduction of CHF 161.2 mn from core capital for intangible assets has been included in the figures above of the segments Private Banking, Investment Banking and Asset Management. The valuation adjustments of own liabilities are assigned to the Investment Banking segment. The deduction of CHF 49.5 mn from core capital for Treasury shares is not included in the figures above.

Information on regions1 Switzerland

Europe excl. Switzerland Americas

Other Countries2

Consoli-dation Total Group


31-12-09

Operating income related to external customers 508.5 122.7 23.0 130.8 785.0

Assets 9,004.0 1,014.9 141.7 8,981.1 (1,060.3) 18,081.4

Property, equipment and intangible assets 359.2 15.7 2.1 2.0 379.0


1 Reporting is based on operating locations.

2 Mainly U.A.E.


Notes to the consolidated financial statementsMajor subsidiaries and participations

Fully consolidated companies

Paid-upshare

capital

Share ofvotes

and capitalRegistered office Business activity Currency mns in %

Vontobel Holding AG Zurich Holding CHF 65.0 Parent company

Bank Vontobel AG Zurich Bank CHF 149.0 100

Bank Vontobel Cayman Grand Cayman Bank CHF 2.0 100

Bank Vontobel Österreich AG Salzburg/Vienna Bank EUR 9.6 100

Bank Vontobel Europe AG Munich/Frankfurt/Hamburg/Cologne

Bank EUR 40.5 100

Bank Vontobel (Liechtenstein) AG Vaduz Bank CHF 20.0 100

Vontobel Asset Management, Inc. New York Portfolio management USD 6.5 100

Vontobel Beteiligungen AG Zurich Holding CHF 10.0 100

Vontobel Fonds Services AG Zurich Fund management CHF 4.0 100

Vontobel Fund Advisory S.A. Luxemburg Fund management EUR 0.14 100

Vontobel Management S.A. Luxemburg Fund management EUR 1.5 100

Vontobel Europe S.A. Luxemburg/London/Madrid/Milan/Vienna

Portfolio management EUR 2.0 100

Vontobel Swiss Wealth Advisors AG Zurich Wealth management CHF 0.5 100

Vontobel Securities AG Zurich/New York Brokerage CHF 2.0 100

Vontobel Financial Products GmbH Frankfurt Issues EUR 0.1 100

Vontobel Financial Products Ltd. Dubai Issues USD 2.0 100

Vontobel Invest Ltd. Dubai Investments CHF 1.2 100

Vontobel Asia Pacific Ltd. Hong Kong Financial Advisor HKD 7.0 100

VTT-Management Trust reg. Vaduz Director services CHF 0.03 100

VT Wealth Management AG Zurich Wealth management CHF 0.8 51.0

VT Investment (Zürich) AG Zurich Holding CHF 0.1 100

Harcourt Investment Consulting AG Zurich Alternative investments CHF 3.0 100

Harcourt Services AG Zurich Financial Services CHF 0.25 100

Polaris Investment Advisory AG Zurich Alternative investments CHF 1.0 71.8

Harcourt Investment Consulting AB Stockholm Alternative investments SEK 0.25 100

Harcourt Alternative Investmtents (US) LLC Wilmington/New York Alternative investments USD 0.05 100

Alternative Investment Management Ltd. Bridgetown Alternative investments USD 0.006 100

Alternative Investment Solutions Ltd. Grand Cayman Alternative investments USD 0.005 100

Harcourt Alternative Investments (HK) Ltd. Hong Kong Alternative investments HKD 0.950 100

Harcourt Investments, Agencia de Valores, S.A. Madrid Alternative investments EUR 0.7 100

The share of voting rights held corresponds to the equity interest held.Only the shares of Vontobel Holding AG are listed on the Swiss Exchange (SIX). Please see pages 2 and 168 for more detailed information.

Associated companies and joint ventures

Vontobel Treuhand AG Vaduz Fiduciary company CHF 0.5 49.0

Deutsche Börse Commodities GmbH Frankfurt Issues EUR 1.0 16.2


Notes to the consolidated financial statementsChanges in the scope of consolidation in 2010

Companies fully consolidated for the first time

Paid-upshare

capital

Share ofvotes

and capitalCompany Registered office Business activity Currency mns in %

Vontobel Swiss Wealth Advisors AG Zurich Wealth management CHF 0.5 100

VT Investment (Zürich) AG Zurich Holding CHF 0.1 100

Participations accounted for under the equity method of accounting for the first time

none

Participations removed from the scope of consolidation

Participation Registered office Reason for removal

Commerzbank Oesterreich AG Vienna Merged with Bank Vontobel Österreich AG, Salzburg

Vontobel Europe S.A., Branch Frankfurt Contributed to Bank Vontobel Europe AG, Munich

Vontobel Securities AG Cologne Merged with Bank Vontobel Europe AG, Munich

VT Finance AG Schaffhausen Merged with VT Investment (Zürich) AG, Zurich

Vontobel Trust Company Cayman Grand Cayman Liquidation

VTC Director Services Ltd. Grand Cayman Liquidation

Changes in company names during the year under review

New company name Registered office Old company name Registered office

none


Notes to the consolidated financial statementsStatutory Banking Regulations

The Vontobel Group’s consolidated financial statements were prepared in accordance

with the International Financial Reporting Standards (IFRS). FINMA stipulates that

banks domiciled in Switzerland that report their financial statements according to US

GAAP or IFRS must explain any material differences between Swiss accounting regu-

lations for banks (Banking Ordinance and FINMA Circular 2008/2) and the reporting

standard used. The most significant differences between IFRS and Swiss accounting

regulations for banks that are of relevance to the Vontobel Group are as follows:

Financial assets available for sale

Under IFRS, financial assets available for sale will be measured at the fair value.

Changes in the fair value will be recognized in other comprehensive income, until the

financial asset is sold, collected or otherwise disposed of, or its value is deemed to be

impaired. As soon as a financial asset available for sale is deemed to be impaired, the

cumulative unrealized loss previously entered in other comprehensive income will be

reclassified to the income statement in the reporting period. Under Swiss law, these

kinds of financial assets are recorded at the lower of cost or market. Impairment

losses, any reversals of previously recognized impairment losses as well as profits and

losses from disposals are recognized as “Other ordinary income”.

Other financial assets and liabilities measured at fair value through profit and loss

(Fair Value Option)

According to IFRS, under certain conditions financial instruments can be assigned to

the Other financial assets or liabilities category measured at fair value through profit

and loss. These financial assets and liabilities are carried at fair value in the balance

sheet, and income from the financial instruments is recognized in the income state-

ment. This balance sheet item may also include financial instruments which under

Swiss law are carried according to the lower-of-cost-or-market principle or at amor-

tized cost. Write-downs to market value, any reversals of previously recognized im-

pairment losses as well as disposal gains and losses are recognized in “Other ordinary

income”.

Extraordinary profit

Under IFRS, all items of income and expense are allocated to ordinary operating activ-

ities. In accordance with Swiss law, income and expenses are classified as extraordi-

nary if they are not recurring or not related to operational activities.

Goodwill amortization

The amortization of goodwill has been prohibited according to IFRS since the begin-

ning of 2005. Instead it must be tested for impairment annually, or more frequently

if events or changes in circumstances indicate a possible impairment. Under Swiss

law, goodwill may still be written down on a linear basis over its anticipated useful

life, but not more than 20 years.

Reserve for general banking risks

IFRS stipulates that general provisions cannot be recorded for unspecified purposes.

Under Swiss accounting regulations for banks, reserves for general banking risks are

reported as a separate component of shareholders‘ equity.


Personnel

Number of personnel (total and full time equivalents)

Registered

office Number

31-12-10FTE 1 Number

31-12-09FTE1

Fully consolidated companies

Vontobel Holding AG Zurich 5 4.3 4 3.1

Bank Vontobel AG Zurich 1,060 999.9 1,087 1,037.4

Bank Vontobel Österreich AG Salzburg 49 44.0 48 43.8

Bank Vontobel Europe AG Munich 75 72.9 56 52.3

Bank Vontobel (Liechtenstein) AG Vaduz 13 11.8 14 12.8

Vontobel Asset Management, Inc. New York 41 41.0 35 34.6

Vontobel Fonds Services AG Zurich 13 12.3 14 12.7

Harcourt Group Zurich 66 64.1 72 69.1

Other Group companies 96 95.8 97 95.3

Total 1,418 1,346.1 1,427 1,361.1

1 Full time equivalents

Staff changes 31-12-10 31-12-09

Female Male Total Female Male Total

Total number of personnel 495 923 1,418 507 920 1,427

Breakdown by domicile

Switzerland 382 779 1,161 403 777 1,180

Abroad 113 144 257 104 143 247

Numbers include trainees

Further information on staff changes can be found in the “Sustainability at the Vontobel Group” chapter on pages 17ff.


Report of the Group Auditors

Ernst & Young Ltd Belpstrasse 23 CH-3001 Berne

Phone +41 58 286 61 11 Fax +41 58 286 68 18 www.ey.com/ch

To the General Meeting of

Vontobel Holding AG, Zurich

Berne, 10 February 2011

Report of the statutory auditor on the consolidated financial statements

As statutory auditor, we have audited the consolidated financial statements (pages 64 to 152) of Vontobel Holding AG for the year ended 31 December 2010.

Board of Directors’ responsibilityThe Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) and the requirements of Swiss law. This responsibility includes designing, im-plementing and maintaining an internal control system relevant to the preparation and fair presentation of consolidated 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 responsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards and International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material mis-statement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated 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 and fair presentation of the consolidated 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 effective-ness 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 consolidated financial state-ments. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements for the year ended 31 December 2010 give a true and fair view of the financial position, the results of operations and the cash flows in accordance with IFRS and comply with Swiss law.

Report on Other Legal Requirements

We confirm that we meet the legal requirements on licensing according to the Auditor Over-sight Act (AOA) and independence (arti-cle 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence.

In accordance with article 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 consolidated financial statements according to the instructions of the Board of Directors.

We recommend that the consolidated financial statements submitted to you be approved.

Ernst & Young Ltd

Iqbal Khan Dr Philippe WüstLicensed audit expert Licensed audit expert(Auditor in charge)


Vontobel Holding AG

Review of business activities 158

Key figures 159

Income statement 160

Balance sheet 162

Shareholders’ equity/Notes to the financial statements 164

Proposal of the Board of Directors 166

Auditors’ report 167


Vontobel Holding AGReview of business activities

Vontobel Holding AG reported a net profit of CHF 131.4 mn for the financial year

2010. This result was virtually unchanged compared to 2009. The holding company’s

income stemmed mainly from the prior-year profits (dividends) distributed by its op-

erational subsidiaries. Operating income for 2010 declined by 29% to CHF 193.9 mn

compared to the previous year. This decrease reflects the absence of non-recurring

income: in 2009, income from participations was very positively impacted by the par-

tial distribution of assets from Vontobel Beteiligungen AG in connection with Micro-

Value AG, which was acquired as a result of an exchange transaction. At the same

time, this transaction gave rise to a writedown on Vontobel Beteiligungen AG. In the

year under review, however, no one-off writedowns were recorded. As a result, oper-

ating expense also declined (–56%) to CHF 62.0 mn. Profit before extraordinary

items and taxes was therefore unchanged at CHF 131.9 mn. No significant extraordi-

nary income or expenses were recorded in 2010.

In view of the 7% increase in Group net profit to CHF 147.3 mn, the Board of Direc-

tors of Vontobel Holding AG will propose a dividend of CHF 1.40 per registered share

– unchanged from the previous year – to the General Meeting of Shareholders on

3 May 2011.

The company’s share capital amounts to CHF 65.0 mn, consisting of 65 mn regis-

tered shares with a par value of CHF 1.00 each, of which 64,612,611 were entitled to

a dividend as of 31 December 2010.


Vontobel Holding AGKey figures

Key figures 31-12-10 31-12-09 Change to 31-12-09


Net profit 131.4 132.5 (1.1) (1)

per registered share in CHF1 2.03 2.05 (0.02) (1)

Ordinary dividend in percent of share capital 140 2 140

per registered share in CHF 1.40 2 1.40 0.0 0

Shareholders’ equity (before distribution of profits) 900.0 859.1 40.9 5

per registered share in CHF1 13.93 13.27 0.66 5

Total operating income 193.9 273.8 (79.9) (29)

Income from participations 167.4 260.4 (93.0) (36)

Total operating expense 62.0 142.0 (80.0) (56)

Financial expense 3.3 4.7 (1.4) (30)

Personnel and general operating expenses 26.5 23.7 2.8 12

Depreciation, write-offs 32.0 111.9 (79.9) (71)

Total assets 1,444.9 1,394.5 50.4 4

Share capital 65.0 65.0 0.0 0

Participations 1,282.3 1,255.7 26.6 2

Average return on equity in % 15.8 16.7

1 Dividend-bearing shares as per end of year

2 As per the proposal submitted to the General Meeting


Vontobel Holding AGIncome statement

Income statement 31-12-10 31-12-09 Change to 31-12-09


Operating income

Commission income, Vontobel Group 23.3 8.3 15.0 181

Other income 1.1 2.6 (1.5) (58)

Total income from services performed 24.4 10.9 13.5 124

Interest income, Vontobel Group 1.6 0.7 0.9 129

Interest income, other 0.0 0.0 0.0

Interest and dividend from financial assets 0.0 0.1 (0.1) (100)

Subtotal interest and dividend income 1.6 0.8 0.8 100

Securities income and income from hedging 0.4 0.9 (0.5) (56)

Income from participations 167.4 260.4 (93.0) (36)

Foreign exchange income (0.1) 0.0 (0.1)

Subtotal trading income and income from participations 167.7 261.3 (93.6) (36)

Gains on the sale of financial investments 0.2 0.8 (0.6) (75)

Total financial income 169.5 262.9 (93.4) (36)

Total operating income 193.9 273.8 (79.9) (29)

Operating expense

Interest paid, Vontobel Group 2.6 3.8 (1.2) (32)

Interest expense bonds 0.7 0.8 (0.1) (13)

Subtotal interest paid 3.3 4.6 (1.3) (28)

Commission expense 0.0 0.1 (0.1) (100)

Total financial expense 3.3 4.7 (1.4) (30)

Occupancy expense, furniture 0.1 0.1 0.0 0

PR, advertising, annual report, consulting and audit expense 20.6 18.3 2.3 13

Other operating and office expense 0.5 0.3 0.2 67

Total operating and office expense 21.2 18.7 2.5 13


Social contribution and pension benefits 0.3 0.4 (0.1) (25)

Total personnel expense 5.3 5.0 0.3 6

Depreciation/write-offs on financial investments 29.0 111.9 (82.9) (74)

Depreciation/write-offs on non-current assets 0.0 0.0 0.0

Other depreciation/write-offs and provisions 3.0 0.0 3.0

Total ordinary depreciation/write-offs and provisions 32.0 111.9 (79.9) (71)

Total other operating expense 0.2 1.7 (1.5) (88)

Total operating expense 62.0 142.0 (80.0) (56)

Profit before extraordinary items and taxes 131.9 131.8 0.1 0


Vontobel Holding AGIncome statement

Net profit 31-12-10 31-12-09 Change to 31-12-09


Net profit before extraordinary items and taxes 131.9 131.8 0.1 0

Extraordinary income 0.1 1.2 (1.1) (92)

Total extraordinary income 0.1 1.2 (1.1) (92)

Extraordinary expense 0.0 0.0 0.0

Total extraordinary expense 0.0 0.0 0.0

Total tax expense 0.6 0.5 0.1 20

Net profit for the year 131.4 132.5 (1.1) (1)


Vontobel Holding AGBalance sheet

Assets 31-12-10 31-12-09 Change to 31-12-09


Current assets

Cash 0.0 0.0 0.0

Due from banks, Vontobel Group 8.1 2.1 6.0 286

Total liquid assets 8.1 2.1 6.0 286

Accounts receivable, Vontobel Group 0.0 0.0 0.0

Other receivables 0.0 0.1 (0.1) (100)

Total receivables 0.0 0.1 (0.1) (100)

Total securities 2.4 1.9 0.5 26

Total accrued income and prepaid expenses 9.2 0.1 9.1

Total current assets 19.7 4.2 15.5 369

Non-current assets

Due from banks, Vontobel Group 0.0 0.0 0.0

Accounts receivable, Vontobel Group 131.9 128.4 3.5 3

Securities 11.0 6.2 4.8 77

Participations 1,282.3 1,255.7 26.6 2

Total financial investments 1,425.2 1,390.3 34.9 3

Furniture and equipment 0.0 0.0 0.0

Total fixed assets 0.0 0.0 0.0

Total intangible non-current assets 0.0 0.0 0.0

Total non-current assets 1,425.2 1,390.3 34.9 3

Total assets 1,444.9 1,394.5 50.4 4

of which subordinated assets due from Group companies 5.0 1.4 3.6 257


Vontobel Holding AGBalance sheet

Liabilities and Shareholders’ equity 31-12-10 31-12-09 Change to 31-12-09


Liabilities

Due to banks, Vontobel Group 0.0 0.0 0.0

Due to banks, others 0.0 0.0 0.0

Short-term liabilities 0.1 0.4 (0.3) (75)

Accrued expenses and deferred income 4.8 4.8 0.0 0

Total short-term liabilities 4.9 5.2 (0.3) (6)

Bond issues 0.0 25.0 (25.0) (100)

Due to banks, Vontobel Group 335.0 480.0 (145.0) (30)

Due to customers, Vontobel Group 180.0 0.0 180.0

Long-term liabilities 0.0 0.0 0.0

Provisions 25.0 25.2 (0.2) (1)

Total long-term liabilities, provisions 540.0 530.2 9.8 2

Total liabilities 544.9 535.4 9.5 2

Shareholders’ equity


General reserve 162.0 162.0 0.0 0

Reserves from capital contributions 47.8 47.8 0.0 0

Reserve for own shares 54.1 49.0 5.1 10

Total statutory reserve 263.9 258.8 5.1 2

Other reserve 0.9 6.0 (5.1) (85)

Retained earnings 438.8 396.8 42.0 11

Net profit for the year 131.4 132.5 (1.1) (1)

Total retained earnings 570.2 529.3 40.9 8

Total shareholders’ equity 900.0 859.1 40.9 5

Total liabilities and shareholders’ equity 1,444.9 1,394.5 50.4 4


Vontobel Holding AGShareholders’ equity/Notes to the financial statements

Following approval of the Board of Directors’ proposal for the distribution of profit for the year ended 31 December 2010, shareholders’ equity will be as follows:

Shareholders’ equity 31-12-10 31-12-09 Change to 31-12-09



Statutory reserve 263.9 258.8 5.1 2

Other reserve 0.9 6.0 (5.1) (85)

Retained earnings 479.7 438.8 40.9 9

Total shareholders’ equity after distribution of profit1 809.5 768.6 40.9 5

1 As at 31-12-10. The exact amount will be determined at the dividend payment date in May 2011.

Notes to the financial statements 31-12-10 31-12-09 Change to 31-12-09


Total amount of guarantees and pledges in favour of third parties:

Guarantees and unpaid capital stemming from participations 9,222.2 9,161.8 60.4 1

Pledges in favour of third parties 0.0 0.0 0.0

Securities lending with Group companies 0.0 0.0 0.0

Total amount of assets assigned or pledged as security for own liabilities including assets to which title has been reserved:

Assets pledged in favour of Bank Vontobel AG 21.5 10.2 11.3 111

from which credit has been drawn 21.5 10.2 11.3 111

Total amount of off-balance sheet lease liabilities none none

Liabilities under employee benefit schemes:

Contributions to employee benefit schemes have been paid and Vontobel Holding AG has drawn no credits from employee benefit schemes.

Principal amount, interest rates and maturity of bonds issued by the Company:

See consolidated accounts, note 23


Vontobel Holding AGNotes to the financial statements

31-12-10 31-12-09

Book value Book value

CHF mns CHF mns

Principal subsidiaries/associated companies

Bank Vontobel AG 394.2 394.2

Bank Vontobel (Liechtenstein) AG 20.0 20.0

Bank Vontobel Österreich AG 56.6 54.0

Bank Vontobel Europe AG 73.6 74.9

Bank Vontobel Cayman 0.0 19.0

Vontobel Fonds Services AG 4.0 4.0

Vontobel Fund Advisory S.A. 0.2 0.2

Vontobel Beteiligungen AG 460.3 460.3

Vontobel Asset Management, Inc. 5.8 5.8

Vontobel Financial Products Ltd. Dubai 62.3 2.3

Harcourt Investment Consulting AG 187.2 187.2

Other 18.1 33.8

For further information on the main participations, refer to the consolidated accounts on page 150

Total amount of replacement reserves released plus any other reserves released in excess of the amount of new funds allocated to such reserves:

No significant amount of hidden reserves was released. There are no replacement reserves.

Information on the acquisition, disposal and number of own shares held by the company, including transactions involving other companies in which a majority interest is held:

Refer to the consolidated accounts, note 26, for further information on other purchases and disposals

Liabilities:

See consolidated accounts, notes 22 to 24

Amount of the authorized or conditional capital increase:

See consolidated accounts, note 26

Details of shareholders pursuant to Art. 663c of the Swiss Code of Obligations:

See consolidated accounts, page 39

For information on compensation, loans and shareholdings of members of the Board of Directors and the Group Executive Management pursuant to Art. 663bbis and Art. 663c of the Swiss Code of Obligations, please refer to the consolidated accounts, notes 28 to 30

For information on the risk evaluation process:

See the “Risk management and risk control” section of the consolidated financial statements, pages 81 to 96

Information relating to the application of the Internal Control System (ICS):

See the consolidated accounts, page 95f.

For further details on the consolidated accounts, please refer to pages 63 to 153


Vontobel Holding AGProposal of the Board of Directors

Proposal of the Board of Directors

The Board of Directors is submitting the following proposal for the distribution of

profit at the annual General Meeting of Shareholders on 3 May 2011:

CHF mns

Net profit for the year 131.4

Retained earnings prior year 438.8

Total retained earnings 570.2

Dividend 140% (share capital ranking for dividend CHF 64.6 mn)1 90.5

Allocation to general reserve

Allocation to other reserves

Carried forward to the new accounting period 479.7

Total retained earnings 570.2

1 As at 31-12-10. The exact amount will be determined at the dividend payment date in May 2011.

Dividend payment

If the proposal is approved, the dividend will be distributed as follows:

Dividend per registered share with a par value of CHF 1.00 (in CHF) 1.40

Coupon no. 10

Ex-dividend date 05 May 2011

Record date 09 May 2011

Payment date 10 May 2011


Auditors’ report

Ernst & Young Ltd Belpstrasse 23 CH-3001 Berne

Phone +41 58 286 61 11 Fax +41 58 286 68 18 www.ey.com/ch

To the General Meeting of

Vontobel Holding AG, Zurich

Berne, 10 February 2011

Report of the statutory auditor on the financial statements

As statutory auditor, we have audited the financial statements (balance sheet, income statement and notes pages 160 to 166) of Vontobel Holding AG for the year ended 31 December 2010.

Board of Directors’ responsibilityThe 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 responsibilityOur 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 assur-ance 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 evaluat-ing 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.

OpinionIn our opinion, the financial statements for the year ended 31 December 2010 comply with Swiss law and the company’s articles of incorporation.

Report on other legal requirements

We confirm that we meet the legal requirements on licensing according to the Auditor Over-sight Act (AOA) and independence (arti-cle 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence.

In accordance with article 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 incor-poration. We recommend that the financial statements submitted to you be approved.

Ernst & Young Ltd

Iqbal Khan Dr Philippe WüstLicensed audit expert Licensed audit expert(Auditor in charge)


Information for shareholders

Vontobel Holding AG registered shares

ISIN CH001 233 554 0

Security number 001 233 554

Par value CHF 1.00

Ticker symbols

Stock exchange listing Bloomberg Reuters Telekurs

SIX Swiss Exchange VONN SW VONTZn.S VONN

Credit ratingsBank

Vontobel AGVontobel

Holding AG

Standard & Poor’s Short-Term A-1 A-1

Long-Term A+ A

Moody’s Short-Term Prime-1

Long-Term A1 A2

Financial calendar

Annual General Meeting 2011 3 May 2011

Publication half-year results 2011 10 August 2011

Publication annual results 2011 16 February 2012

Annual General Meeting 2012 24 April 2012

Investor Relations

Susanne BorerTelephone +41 (0)58 283 73 29Christian WaeltiTelephone +41 (0)58 283 63 38E-mail [email protected]

Media Relations

Michael Pfister, Group CommunicationsTelephone +41 (0)58 283 72 24E-mail [email protected]

Vontobel Holding AGGotthardstrasse 43CH-8022 ZurichTelefon +41 (0)58 283 59 00Internet www.vontobel.comCorporate Governance www.vontobel.com/de/group/investor_and_media_relations/ corporate_governance/Sustainability www.vontobel.com/sustainability

This report also appears in German.The German version is prevailing.


Where to find us

Switzerland

ZurichVontobel Holding AGGotthardstrasse 43CH-8022 ZurichTelephone +41 (0)58 283 59 00www.vontobel.com

Bank Vontobel AGGotthardstrasse 43CH-8022 ZurichTelephone +41 (0)58 283 71 11

Vontobel Swiss Wealth Advisors AGTödistrasse 17CH-8022 ZurichTelephone +41 (0)44 287 81 11

Vontobel Fonds Services AGGotthardstrasse 43CH-8022 ZurichTelephone +41 (0)58 283 74 77

Vontobel Securities AGGotthardstrasse 43CH-8022 ZurichTelephone +41 (0)58 283 71 11

VT Wealth Management AGTödistrasse 27CH-8002 ZurichTelephone +41 (0)44 287 17 00www.vtwealth.ch

Harcourt Investment Consulting AGStampfenbachstrasse 48CH-8006 ZurichTelephone +41 (0)44 365 10 00www.harcourt.ch

BaselBank Vontobel AGSt. Alban-Anlage 58CH-4052 BaselTelephone +41 (0)58 283 21 11

BerneBank Vontobel AGSpitalgasse 40CH-3011 BerneTelephone +41 (0)58 283 22 11

GenevaBank Vontobel AGPlace de l’Université 6CH-1205 GenevaTelephone +41 (0)22 809 90 90

LucerneBank Vontobel AGSchweizerhofquai 3aCH-6002 LucerneTelephone +41 (0)41 249 31 11

Austria

SalzburgBank Vontobel Österreich AGRathausplatz 4A-5024 SalzburgTelephone +43 (0)662 8104 0

ViennaBank Vontobel Österreich AGKärntner Strasse 51A-1010 ViennaTelephone +43 (0)1 513 76 40

Vontobel Europe S.A.Vienna BranchKärntner Strasse 51A-1010 ViennaTelephone +43 (0)1 513 76 40

Germany

Frankfurt am MainBank Vontobel Europe AGFrankfurt am Main BranchKaiserstrasse 6D-60311 Frankfurt am MainTelephone +49 (0)69 297 208 0

Vontobel Financial Products GmbHKaiserstrasse 6D-60311 Frankfurt am MainTelephone +49 (0)69 297 208 11

CologneBank Vontobel Europe AGCologne BranchAuf dem Berlich 1D-50667 CologneTelephone +49 (0)221 20 30 00

HamburgBank Vontobel Europe AGHamburg BranchSudanhausGrosse Bäckerstrasse 13D-20095 HamburgTelephone +49 (0)40 638 587 0

MunichBank Vontobel Europe AGAlter Hof 5D-80331 MunichTelephone +49 (0)89 411 890 0

Great BritainVontobel Europe S.A.London BranchThird Floor22 Sackville StreetLondon W1S 3DN UKTelephone +44 207 255 83 00

Hong KongVontobel Asia Pacific Ltd.2301 Jardine House1 Connaught Place, Central, Hong KongTelephone +852 3655 3990

ItalyVontobel Europe S.A.Milan BranchPiazza degli Affari, 3I-20123 MilanTelephone +39 02 6367 3411

LiechtensteinBank Vontobel (Liechtenstein) AGPflugstrasse 20FL-9490 VaduzTelephone +423 236 41 11

Vontobel Treuhand AGPflugstrasse 20FL-9490 VaduzTelephone +423 236 41 80

LuxembourgVontobel Europe S.A.1, Côte D’EichL-1450 Luxembourg Telephone +352 26 34 74 1

Vontobel Management S.A.1, Côte D’EichL-1450 Luxembourg Telephone +352 26 34 74 40

SpainVontobel Europe S.A.Sucursal en EspañaPaseo de la Castellana, 40 bis - 6ºE-28046 MadridTelephone +34 91 520 95 34

USAVontobel Asset Management, Inc.1540 Broadway, 38th FloorNew York, NY 10036, USATelephone +1 212 415 70 00www.vusa.com

Vontobel Securities Ltd.New York Branch1540 Broadway, 38th FloorNew York, NY 10036, USATelephone +1 212 792 58 20

V.A.E.Vontobel Financial Products Ltd.Liberty House, Office 913Dubai International Financial Centre P.O. Box 506814Dubai, U.A.E.Telephone +971 (4) 703 85 00

Vontobel Invest Ltd.Liberty House, Office 913Dubai International Financial CentreP.O. Box 506814Dubai, United Arab EmiratesTelephone +971 (4) 703 85 00

SC2011021406

Publishing systemMultimedia Solutions AG, ZurichPressNeidhart + Schön AG, Zurich

annual reports 2010

Documents

risk market risk chf

high chf

low chf

share chf1

market capitalization

average value

share outstanding

share price