BCV's financial situation and new strategic approach

BCV's 2002 gross profits (parent company) are satisfactory in spite of difficult markets.

BCV's Board of Directors has moved ahead sooner than planned with important strategic decisions designed to transform the Bank. The BCV of the future, once these necessary strategic changes have been implemented, will be a more compact and streamlined bank, one with a higher level of professionalism and one that has even closer ties to its clients.

On the occasion of the Extraordinary General Meeting of the Shareholders (EGM) of 5 February, BCV wishes to provide an update on its financial situation. As announced at the 30 October 2002 EGM, the Bank's top management has been considering its overall strategic approach for the next few years. Although the strategic development schedule presented at the October EGM called for a design period extending until the end of March 2003, the Bank can in fact already make public a series of decisions regarding the main points of the new strategic approach and some concrete measures aimed at implementing it.

As for the motions submitted for approval to the shareholders at today's EGM, they relate to the capital increase made public last October 30th and will be covered in a separate press release to be made public this evening.

2002's Business Trends Augur Well for the Future

The parent company's business activities in fiscal 2002 were conducted against the backdrop of a very difficult economic climate, and keeping this in mind, gross profits posted for the year may be deemed quite satisfactory. The Bank kept its clients' trust during this difficult period, and their having chosen to keep banking with BCV was a key factor behind a drop of only 4% in gross profits for the period under review. Total revenues fell by less than 2%, while operating expenses dropped very slightly. The Bank will post a net loss for the period considered, essentially as a result of the additional amount of CHF 850 mn booked to valuation adjustments and provisions and the creation of a CHF 250 mn reserve for general banking risks.

Interest income declined only very slightly, (less than 1%) and commission income fell only moderately, by 4.7%, in spite of the extremely unfavorable conditions that prevailed within the wealth management industry as a whole during the period. Trading, which had posted a loss of CHF 25 mn in 2001, posted satisfactory revenues in 2002 thanks to buoyant forex, banknote and precious metals business trends in conjunction with successful moves to reduce risks on equity portfolios and thus limit declines in their value. As for the results posted by other ordinary banking activities, which had included a profit taken on the sale of shares in Orange Communication in 2001, they dropped by 66% in the period under review, in particular because of drops in the value of equities listed as financial investments. Operating expenses were stable in fiscal 2002. Staff numbers fell by 3% in 2002, with 2017 full-time equivalent posts in December. The Bank's strategic personnel objective remains a decrease of roughly 10% in full-time equivalent staff numbers by the end of 2004.

BCV Group's audited Consolidated Financial Statements will be released on 25 March.

SAs for the Bank's underlying business trends for 2002, they augur well for 2003, and Management's goal for the year is clear: a net profit. The various risk- and cost-control measures and changes in operational procedures which are being speedily implemented within BCV should make this goal a reality in spite of the enduringly unsettled conditions on the markets.

Tomorrow's BCV: a more compact, streamlined, & professional bank that is even closer to its clients

The Bank's Board of Directors, working closely with the Executive Board, finalized BCV's overall strategic approach for the next few years during the month of January 2003. Their strategic analyses factored in the currently difficult conditions on the markets, which are likely to remain so over the medium term, as well as the period of marked expansion BCV underwent between 1996 and 2000. It should be noted that the strategic design period had originally been scheduled to last longer, with decisions promised for March 31st. The Board of Directors has thus considerably speeded up the design phase, which bears witness to its commitment to change at BCV.

The core concept in the new strategic approach is as follows: BCV will boost its business by playing to its strengths. The Bank will thus concentrate its efforts on key areas of business with proven track records (savings, wealth management, credit, and equity/currency trading) and key client segments (individuals and business within Vaud Canton; on-shore and off-shore private banking clientele). The strategic approach to be implemented at BCV can be summed up as follows:

More compact structures - The Bank will simplify its range of activities over the short and medium term, which will entail a certain number of structural changes. These strategic moves will lower the Bank's risk profile, stabilize its revenue and profit levels, and boost its core business areas.

More efficient processes - BCV wants to be quicker on its feet: decision-making processes and implementation phases must be speeded up. The Bank has already begun implementing a simplified governance and operations-process model which is fully in line with the latest developments in the field.

A higher level of professionalism - The Bank will drive for an even higher level of professionalism, both by leveraging and developing the top-notch skills and resources it already has and by making financial management and risk control more rigorous. Concrete measures, in particular in terms of training programs and management, are being taken in this area. In addition, Management has set ambitious goals for cost-cutting and systematically streamlining operations.

An even closer relation with our clients - The Bank intends to leverage its strong, well-integrated distribution network, which comprises branch offices, ATMs, internet banking and phone banking, and thus connect even more closely with its clients. BCV can count on a diversified network that has been perfectly tailored to the ever-changing lifestyles and needs of its clients to help the Bank meet its goals for growing its business.

First Concrete Measures

The Board of Directors has already decided upon the first measures to be implemented based on the new strategic approach. The implementation phase will of course be fully discussed and planned out in detail with the clients and other stakeholders involved in each area. These initial measures are as follows:

• Trade finance activities in commodities will be narrowed down to metals and foodstuffs
• The Bank will progressively pull out of financing activities for shipping and petroleum products trading, collaborating with the teams in these areas to implement this decision harmoniously.
• BCV will take a more selective approach to credit activities with companies from outside Vaud Canton
• BCV will adapt its European on-shore Private Banking strategy, and progressively pull out of these activities in Greece and Italy
• Banque Piguet will be strengthened, and a merger between Banque Galland and Banque Piguet is possible

Solid Footing for the Future

BCV knows it will have to continue to work hard to get back to the position it held within the industry as little as two years ago, but the Board of Directors is certain that the new strategic approach will put the Bank on solid footing for the future, even though the necessary changes will take time to implement.

The Executive Board will now implement the measures needed for our ambitious but realistic goals regarding sustained profitability levels. Rigorously managed activities, a higher level of professionalism, solid cost and risk control and complete compliance with the Swiss banking industry's codes of conduct will make it possible for BCV to reach these goals.

Important Upcoming BCV Group Events

• 25 March 2003: Consolidated Financial Statements made public
• 22 May 2003: AGM, with First Quarter Business Report
• August 2003: Half-yearly statements
• November 2003: Third Quarter Business Report

Lausanne, 5 February 2003

Contact(s)

Daniel Herrera, Head of Communications
Phone +41 844 228 228
E-mail