Supervisory Boards's Report
Supervisory Board
BAWAG P.S.K.'s Supervisory Board duly fulfilled all of its obligations as set forth in the law, in the Articles of Association and in its Rules of Procedure. In addition, regular advice and support were given to the Managing Board, while at the same time the actions of the management were closely monitored. The Managing Board reported all relevant issues to the Supervisory Board in a timely and comprehensive manner. There was an open discussion in the Supervisory Board as well as between the Supervisory and Managing Board at all times. Individual issues and topics were discussed on an ongoing basis between the Chairman of the Managing Board and the Chairman of the Supervisory Board.Supervisory Board Members
Scott Parker stepped down from the Supervisory Board in 2010 due to a career change. I would like to take this opportunity to wish Scott Parker all the best for his professional future in the name of the entire Supervisory Board.
Ronald Kolka was appointedto the Supervisory Board in August and Keith Tietjen in October to achieve the required number of six equity holder representatives.
Supervisory Board Meetings
The Supervisory Board convened for seven meetings in 2010, and all members were personally present in the majority of the meetings.
The Supervisory Board discussed the strategy of the Bank, possible strategic alliances and the overall risk profile of BAWAG P.S.K. on a regular basis.
The agenda of each meeting included the discussion of the Bank's business and capital situation, among other things. The Supervisory Board was also informed on a regular basis about the Bank's market position, about relevant legal and compliance issues and about personnel and Managing Board matters.
The focuses of the individual meetings included the discussion of key subsidiaries of BAWAG P.S.K., the new sales strategy and the intensification of cooperation with Österreichische Post AG, the efficiency boosting programme and the European Commission procedure for approving the acceptance of participation capital from the Republic of Austria. Another key topic was the effect that regulatory changes such as Basel III will have on the Bank. In March 2010, the discussions focused on the results for the 2009 financial year.
Additional reports and presentations dealt with the management letter and the approval of the incorporation of amendments to the general Austrian Code of Corporate Governance in the Bank's own code. The Rules of Procedure for the Managing Board and Supervisory Board were also revised and amended.
Once a year, the Supervisory Board discusses its own efficiency and potential measures for improvement of discussions and procedures.
The committees of the Supervisory Board also reported regularly about their discussions and decisions.
Meetings of the Supervisory Board Committees
The Audit Committee held six meetings in 2010. The meetings in February and March focused on reviewing the Bank's annual financial statements and the Corporate Governance Report for 2009. In July, the committee discussed the recommendation for the appointment of the auditor, among other things. Quarterly reports from Internal Audit and the Compliance department were presented. The annual audit plans for Internal Audit and the Compliance department were presented and approved. There are regular private sessions without participation of the Managing Board, for example with the external and internal auditor as well as with the head of Legal and Compliance.
Reports on audits and enquiries from the regulatory authorities were also provided on a regular basis. The risk report for the Bank, which includes the calculation of the Bank's risk-bearing capacity and reports on corporate, retail and market risk, was a regular item on the Audit Committee's agenda.
The auditors were present at all of the meetings and were involved in the discussions. In addition to the meetings, the members of the Audit Committee also held discussions with relevant division managers.
The Credit Committee held six meetings in 2010. There were also a number of credit applications that were decided upon by way of circular resolution. In addition to deciding on credit applications, this committee also discussed general credit risk issues. A focus in February was the guidelines for the International Business unit. The results of a study on risk returns were presented in May. Reports on the Bank's most important equity holdings were presented in July.
The Related Parties Committee generally meets only when needed. There were no meetings in 2010.
The Nomination Committee convened four times in the reporting period. The most important topics of discussion were the posts of the Managing Board members and succession planning. Recommendations on the appointment of Managing Board members were also submitted to the Supervisory Board.
The Remuneration Committee held five meetings in which it discussed the compensation, objectives and contracts of the Managing Board members. The new remuneration regulations (CRD III) were also discussed.
Managing Board
The Supervisory Board welcomed four new members to the Managing Board in 2010.
Sanjay Sharma was appointed as the new Chief Operating Officer in January. He had been the Managing Director of Operations for BAWAG P.S.K. since August 2008. Prior to that, he was at Barclays Bank plc, where he gained international experience especially in the implementation of strategies and operational and structural changes.
Christoph Raninger joined the Bank in May 2010 and took over responsibility for the Financial Markets unit as the successor to Carsten Samusch, who decided not to extend his contract in May 2010. In September 2010, he was also assigned responsibility for Austrian commercial banking in the place of Regina Prehofer, who left the Managing Board at the end of August 2010. I would like to use this opportunity to thank Regina Prehofer and Carsten Samusch for their work and their committment and would like to wish them all the best for their future on behalf of the entire Supervisory Board.
Andreas Arndt was brought on board as Chief Financial Officer effective 1 October 2010. Before that, he worked for the Deutsche Bank group and Roland Berger Strategy Consultants, among other positions, where he gained extensive experience in various aspects of banking.
Wolfgang Klein, who was newly appointed during the reporting period, assumed responsibility for Retail Banking and Small Business effective 1 November 2010. Wolfgang Klein can contribute his experience from positions at McKinsey and Deutsche Postbank AG, among others, to enhance BAWAG P.S.K.'s retail activities.
All of the new Managing Board members have many years of experience in banking and in their specific areas of responsibility, and are certain to provide valuable input for the management of the Bank.
I look forward to working with the Bank's Managing Board and to constructive discussions at the Supervisory Board meetings.
Annual Financial Statements
The accounts, the 2010 annual financial statements and the management report were audited by Deloitte Audit Wirtschaftsprüfungs GmbH. The audit revealed no cause for objection. The legal requirements were met in full, and an unqualified auditor's opinion was issued.
After an in-depth discussion, the Supervisory Board concurred with the results of the audit, raised no objections against the annual financial statements and management report including the proposal for the appropriation of profits submitted by the Managing Board and hereby approves the annual financial statements for 2010 pursuant to section 125 paragraph 2 Aktiengesetz.
The consolidated annual financial statements for 2010 including the notes pursuant to the International Financial Reporting Standards (IFRS) and the Group management report were audited by Deloitte Audit Wirtschaftsprüfungs GmbH. The audit revealed no reasons for objection, and the legal requirements were met in full. The auditor confirmed that the consolidated annual financial statements provide a true and accurate picture of the financial position of the Group as of 31 December 2010 and of the earnings position and cash flows for the financial year started on 1 January 2010 and ended 31 December 2010 in accordance with the International Financial Reporting Standards.
The auditors also confirmed that the Group management report is congruent with the consolidated financial statements and that the legal requirements for exemption from the preparation of consolidated annual financial statements according to Austrian law have been met in full.
The Supervisory Board agreed with the opinion of the auditor after extensive discussion.
In conclusion, I would like to sincerely thank all of the Bank's employees for their hard work and dedication in 2010 in the name of the entire Supervisory Board.
Vienna, 15 March 2011
The Supervisory Board
Cees Maas
Chairman of the Supervisory Board