Risk management forms an integral tool of overall bank management in the OeKB Group and is the joint responsibility of the whole Executive Board. The risk policy and strategy, set by the Executive Board, aims to assure a sustained return on equity combined with organic growth.
The bank’s special position by virtue of its public mandate from the Austrian government and of its role as a central provider of essential services to the capital market, along with the associated responsibi- lity for the Austrian economy, dictate a very high standard of soundness in OeKB’s risk management. An important feature of the bank’s corporate policy is therefore the conservative management of all risks, in- cluding financial risks and risks arising from business operations in general — irrespective of whether the
risks are OeKB’s own or are those managed on behalf of the Republic of Austria — yet without neglecting the need for profitability. This approach is also tradition- ally reflected in a sustainable compensation policy (see note 54).
A key variable in the measurement and management of risk is economic capital; it is calculated using the concept of Value at Risk (VaR) over a one-year time horizon. In the ICAAP, credit risk, market risk, opera- tional risk and business risk are taken into account quantitatively, through the calculation of economic capital (business risk is considered to be the risk that earnings will suffer as a result of changes in the business environment — such as markets, customer behaviour or technology — or of inappropriate or inadequately implemented business strategy). In subsidiaries, the respective management has
ultimate responsibility for the establishment and design of a system of internal control and of risk management appropriate to the respective company’s requirements, particularly in relation to the accounting process, and for compliance with the associated Group-wide policies and rules.
Information and communication
Policies and rules on financial reporting are regularly updated by management and communicated to the staff concerned.
As well, the accounting staff members receive frequent training regarding changes in international accounting practices in order to be able to detect risks of inadvertent reporting deficiencies at an early stage.
Monitoring
The responsibility for the enterprise-wide ongoing monitoring of business processes rests with mana- gement and the Supervisory Board as well as the Controlling department. Further, the respective department heads are responsible for the monitoring of the relevant areas of activity; for example, checks and validations are conducted at regular intervals. Internal Audit is also involved in the monitoring process. The system of internal control likewise performs a monitoring and oversight function. The findings of the monitoring activities are reported to management and the Supervisory Board. The Executive Board regularly receives summarised finan- cial reports such as, for example, monthly financial statements and quarterly segment and risk reports. Financial statements for publication undergo a final review by accounting management staff and the Executive Board before being forwarded to the Audit Committee of the Supervisory Board.
In the calculation of risk coverage, the economic capital required is compared with the economic capital available. This is done in a multi-tier system addressing various risk coverage objectives. Included in the ICAAP, but not in the calculation of risk coverage, is liquidity risk. It is measured and controlled on the basis of liquidity gap analysis (see Guidelines on Liquidity Buffers & Survival Periods, CEBS, 9 December 2009).
At the beginning of 2011 the documentation of risk management was supplemented by a liquidity risk management manual (including a contingency funding plan) and the software solution implemented in 2010 for risk assessment and asset/liability management was incrementally brought on stream into live opera-
tional use. This marks an important advance in the integrated management of the bank, as it allows both single-period and discounted multi-period parameters (returns and risks) to be calculated in a single system. The primary focus of enhancement activities in 2012 will be on revising the limits system and methodically refining the measurement of credit risk.
In 2011, the key priorities in operational risk management were the operational implementation of the internal control system (ICS) policy adopted at the end of 2010 and the expansion of the process- oriented ICS documentation at the subsidiaries. Details on the risk management of the OeKB Group are provided in notes 48-52 to the consolidated financial statements.
4 Human resources
Given the Group’s central significance for Austria’s capital market and export industry, OeKB and its subsidiaries are very aware of the importance of highly qualified and motivated staff. Service quality and professionalism, combined with sustained earnings-, cost- and risk-consciousness, are the critical success factors.
OeKB’s long-term success depends on the commit- ment of its staff. As a responsible employer, OeKB knows its employees’ interests and needs. Carefully tailored staff development tools help to create the best possible work environment.
Particular attention in this regard is devoted to the effectiveness of leadership, and thus of managers. In the year under review, OeKB therefore launched an approximately 15-month training and development programme for prospective managers in order to prepare highly qualified employees for leadership positions and foster Group-wide networking across department boundaries.
A variable pay component under the compensation policy is based on personal performance, corporate results and a market benchmark. To achieve compli- ance with the new legal requirements, the existing compensation policy was revised and brought into line with the statutory environment (see the notes to the consolidated financial statements). Comparable remuneration models are in place at Oesterreichische Entwicklungsbank and at Exportfonds.
The Group’s staff count at the end of 2011 was 401 full-time equivalents (prior year: 401); the average count during the year was 397 FTE (prior year: 396). The concerted efforts of the entire staff enabled the Group, even in the difficult market situation, to generate an operating profit of EUR 197,564.05 per full-time equivalent.
The Executive Board would like to express its gratitude and appreciation to all employees for their commitment and contribution to the good business performance achieved. This sincere thank you also goes to the Staff Council, whose members, true to tradition, represented the interests of both the
Vienna, 22 February 2012
Oesterreichische Kontrollbank Aktiengesellschaft
Signed by the Executive Board
Johannes Attems Rudolf Scholten 1OeKB, including the fully consolidated institutions Entwicklungsbank and Exportfonds.
2011
2010
Total number of employees as of 31 December 428 428 428
Of whom part-time employees 83 86 87
Total employees in full-time equivalents 402 401 401
Average number of employees 385 396 397
Up to 30 44 42 40
More than 30 and up to 40 117 114 105
More than 40 and up to 50 163 165 174
More than 50 and up to 60 89 96 99
More than 60 15 11 10
Up to 5 100 97 107
More than 5 and up to 10 69 70 54
More than 10 and up to 20 122 107 101
More than 20 and up to 30 95 107 115
More than 30 and up to 40 34 42 48
More than 40 8 5 3
OeKB Group’s staff1
By age in years
By length of service in years
2009
Turnover rate 1.0% 1.8% 4.5%
Sick days per year and employee 8.2 6.9 8.6
Training days per year and employee 5.4 4.9 5.1
Proportion of total positions held by women 56.8% 57.0% 58.4% Proportion of management pos. held by women 30.2% 31.7% 34.4% Proportion of positions that are part-time 19.4% 20.3% 20.3%
At 31 December 2011, as one year earlier, there were no exercisable conversion or option rights. The stated earnings per share therefore represent basic earnings per share and are not subject to dilution.
Interest and similar income 774,225 790,492 — 2.1
Interest and similar expense (679,677) (696,511) — 2.4
Share of results of equity-accounted investees 14 7,144 7,051 + 1.3
Impairment losses on loans and advances and other credit risk provisions 15 (36) (150) — 76.0
Net fee and commission income 16 50,076 51,164 — 2.1
Fee and commission income 57,025 57,882 — 1.5
Fee and commission expense (6,949) (6,718) + 3.4
Administrative expenses 17 (79,864) (80,082) — 0.3
Net other operating income 18 6,565 7,349 — 10.7
Net gain or loss on financial instruments 19 (13,371) 13,584 — 198.4
Income tax and other taxes 20 (14,709) (20,699) — 28.9
Attributable to: non-controlling interests (186) (215) — 13.5
EUR thousand Notes 2011 Change
in % 2010
Profit for the year attributable to OeKB shareholders, in EUR thousand 50,167 71,983
Average number of shares outstanding 880,000 880,000
Earnings per share in EUR 57.01 81.80
2011 2010
Earnings per share
Net interest income 14 94,548 93,981 + 0.6
Operating profit 78,433 79,313 — 1.1
Profit before tax 65,062 92,897 — 30.0
Profit for the year 50,353 72,198 — 30.3
Change in % 31 December
2010
EUR thousand Notes
Cash and balances at central banks 22 586,152 83,060 + 605.7
Loans and advances to banks 23 28,736,788 28,192,342 + 1.9
Loans and advances to customers 24 1,409,686 1,406,150 + 0.3
Allowance for impairment losses on loans and advances 7, 25 (259) (224) + 15.6
Other financial instruments 26 1,468,109 1,356,221 + 8.3
Interests in equity-accounted investees 28 57,888 52,914 + 9.4
Property and equipment and intangible assets 27 31,322 29,482 + 6.2
Current tax assets 34 438 469 — 6.6
Deferred tax assets 34 58,862 53,085 + 10.9
Other assets 29 5,629,229 4,628,787 + 21.6
Assets