Management Report

The following aspects are particularly important in assessing the Bank's current risk situation:

Credit risks

• 96.6% of Sal. Oppenheim's loan portfolio, and 93.7% of BHF-BANK's is comprised of Investment Grade companies, in line with an S&P rating of "BBB-" or higher.
• There are no significant country risks at Bankhaus Sal. Oppenheim. At BHF-BANK, these risks amounted to € 430.0 million.
• The systems for monitoring and managing credit risks were further developed in 2006 to guarantee the timely monitoring and management of overall loan portfolio risks, both at Bank and Group levels.
• The equity investment portfolio is valued conservatively.
• The stable economic situation and the diversified portfolio lead the Bank to expect no year-on-year increase in risk from the lending areas.

Market risks

The trading business has largely been determined by client-driven sales in retail equity derivatives for a number of years. Because of the existing and ever-growing range of products, investors can assume a position according to their individual market expectations. The Sal. Oppenheim business model is based on the principle of managing risks resulting from the sale of retail equity derivatives within the authorised limits, and receiving potential margins.

Capital resources

As at the balance sheet date, shareholders' equity amounted to € 1,935 million. The strong capital base of the Group and Bankhaus Sal. Oppenheim is also reflected in the above-average solvency ratio of 12.3%, compared with the required level of 8%.

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