Arrangements for handling conflicts of interest in the provision of investment services and ancillary investment services

We rely on the trust of our clients, our employees, and the public in the performance and integrity of our company.
This trust depends significantly on how our employees, managers, and members of the Management Board (“employees”) conduct themselves and how they use their skills for the benefit of our clients and the company. As a client of our institution, you should always be able to rely on our employees to provide services with the highest level of expertise, care, and diligence, while duly safeguarding the interests of our clients. To this end, we have established high standards of conduct that further strengthen our clients’ trust and make compliance with legal and regulatory requirements an integral part of our business activities.
Conflicts of interest cannot always be avoided at a private bank that, among other things, provides a wide range of investment services and ancillary investment services, as well as finances and advises companies on behalf of its clients.

With the arrangements for handling conflicts of interest, we implement these standards in the provision of investment services and ancillary investment services (“securities business”). Conflicts of interest may arise in the securities business whenever a client has given us an order and their expectation of proper service provision encounters market participants with opposing interests. Differing expectations cannot always be completely avoided, especially at a bank that aims to support its clients not only in securities business but also in all other banking services. However, conflicts of interest can call into question the professionalism and reputation of our institution. For this reason, we have put in place appropriate measures to identify such situations as early as possible and to handle them appropriately.
With the principles set out below, which constitute a binding and permanent minimum standard for all employees of the Warburg Bank, we would like to inform you—referring to the German Securities Trading Act—about how we deal with potential conflicts of interest. In doing so, we also take into account such conflicts of interest that arise from the structure or business activities of other companies within the Warburg group, insofar as they are known to us.
In principle, conflicts of interest may also arise from the establishment of principles or objectives that directly or indirectly affect the turnover, volume, or earnings of transactions recommended as part of investment advice (sales targets). However, we would like to emphasize that appropriate organizational measures are in place to ensure that client interests always take precedence and that this is strictly monitored.

The Management Board of the Warburg Bank has established a so-called Compliance department under its direct responsibility and has permanently tasked it with managing conflicts of interest. This department is independent of the bank’s trading, business, and settlement divisions, enabling it to perform its duties in a neutral and autonomous manner.

Compliance is obliged to
(a) identify conflicts of interest and

(b) implement appropriate and effective arrangements to manage conflicts while duly safeguarding the interests of clients. If the risk of a significant impairment of client interests cannot be excluded with sufficient certainty, Compliance ensures dass

(c) you, as a client or business partner of Warburg Bank, are informed about the general nature of the conflict before making use of the service.

a) Identification of Conflicts of Interest 
In connection with our securities business, conflicts of interest may essentially arise in the areas of issuing and placement business, securities trading, asset management, mandate management, investment advisory, and corporate finance. 
In the securities business, it is conceivable that different parties may have differing interests, either of a financial nature or regarding the outcome of a service or transaction. There may also be competitive relationships within a business area, financial incentives that lead to inappropriate unequal treatment of clients or client groups, or excessive incentives that result in interests not aligned with those of the client. Therefore, we monitor business activities and have implemented organizational measures and codes of conduct, including in the following cases:

• Relationships exist between our institution and an issuer of financial instruments, for example, because we support a financial instrument of the issuer or the issuer itself in the capital market, or have recently participated in leading a consortium for an issuance by this issuer; it is also conceivable that the Warburg Bank holds a significant stake in an issuer or a service provider; 
• Employees have been appointed by our institution to the supervisory board or another body of an issuer or service provider, resulting in personal interconnections; business activities of other divisions of our institution, such as proprietary trading, may conflict with client orders;
• In asset management, opposing strategies are pursued or the frequency of trading could indicate that transactions are not being generated in the client’s interest;
• Information is available that is not publicly known;  
• The Warburg Bank receives or grants inducements, especially payments from or to third parties;
• Our employees are granted inducements that could encourage them to disregard client interests in order to maximize sales or to preferentially offer products from a particular provider. 

b) Means and Procedures for Avoiding Conflicts of Interest 
To prevent extraneous interests from influencing objective investment advice, order execution, or asset management, our employees receive appropriate training and are required to report situations that may give rise to conflicts of interest to Compliance. 
Compliance collects sensitive information within the bank on a confidential basis and decides whether the flow of information and the business activities of the bank and its employees should be monitored, specifically managed, or restricted to ensure market and regulatory compliance.
Business units that regularly have access to sensitive client and business data are classified by Compliance as confidentiality areas. These confidentiality areas are separated from other divisions and their information and reporting channels by functional, spatial, or IT access restrictions. These measures ensure that individuals with opposing interests cannot improperly influence the activities of employees in the securities business.
All employees are prohibited from transmitting sensitive or insider information from one confidentiality area to another within the bank or to external parties without authorization. Exceptions must be reported to Compliance in advance. This approach ensures targeted management of such information and precise knowledge of the individuals involved.
To prevent conflicts of interest, employees must observe the prohibition of insider trading. They are also forbidden from influencing prices through misleading market activities or other deceptive actions, or from creating irregular market situations through false representations or unlawful concealment of information.
The remuneration of our employees is not linked to the success of other business units with potentially conflicting interests. Client advisors do not receive completion-based commissions for securities transactions. The acceptance of personal benefits is prohibited for employees of our institution.
Compliance monitors and assesses the adequacy and effectiveness of these arrangements, as well as the measures taken to address any deficiencies. For example, all trading activities of the bank and securities transactions by employees are checked daily for improper conduct; employees who, in the course of their duties, are involved in potential conflicts of interest are subject to special disclosure requirements and controls. Compliance itself is audited by internal audit and an external auditor. The Management Board and the Supervisory Board receive a report at least once a year on the principles, means, and procedures introduced by Compliance to ensure adherence to relevant regulations, enabling them to fulfill their responsibilities for the management and supervision of the bank in the area of conflict-of-interest management.
c) Disclosure of Unavoidable Conflicts of Interest 
If the risk of a significant impairment of client interests cannot be ruled out with sufficient certainty, we will inform you of the general nature of the conflict before you make use of the respective service. In doing so, we aim to ensure that you can always make your decisions on an informed basis. If our institution receives or grants commissions, fees, or other monetary benefits or advantages to third parties in the securities business, we would like to draw your attention to the following:
In the distribution of financial instruments, the Warburg Bank sometimes receives inducements from investment companies and securities issuing houses. For example, investment companies grant distribution trail commissions from the management fees they collect for the sale of investment fund units. Similar payments may also occur in transactions involving certificates and comparable bonds; in some cases, the Warburg Bank also receives distribution commissions. In addition, any sales charges collected during the distribution of securities remain with our institution.
These payments are used to continuously adapt our high-quality system for obtaining information on potential investment products and for processing transactions in financial instruments to changing conditions. At the same time, this enables us to provide our clients with comprehensive advice and offer products tailored to their needs in compliance with legal requirements. You will be informed about the receipt of such inducements in each case.
The bank’s Private Asset Management advises various investment funds on their investment decisions and receives an advisory fee for this service. The investment funds advised may be taken into account by the bank’s portfolio management in the investment strategies of asset management.
d) If we receive non-monetary benefits such as informational materials, training, or technical services and equipment from other service providers in connection with our securities business – which provide access to information relevant to our securities business – we use these benefits to deliver and further develop our services at the high quality you expect from us.

If you have further questions regarding our management of conflicts of interest in the securities business, your client advisor or the Compliance department of our institution will be happy to assist you. Additional information, as well as a list of the investment funds we advise, can be found on our website. Information and details on specific matters are available upon request from the Warburg Bank’s Compliance department.