Annual report 2007 Annual report Annual report BinckBank N.V.
BinckBank N.V.
Vijzelstraat 20 2007 1017 HK Amsterdam The Netherlands
P.O. Box 15536 1001 NA Amsterdam The Netherlands
T +31 (0)20 606 26 66 F +31 (0)20 320 41 76 E [email protected] I www.binck.com Where reference is made in this annual report to ‘BinckBank’, it refers to BinckBank N.V. Where reference is made in this BinckBank N.V. annual report to ‘Alex’, it refers to Alex Beleggersbank, formerly part of Coöperatieve Raiffeisen-Boerenleenbank B.A., Vijzelstraat 20 which BinckBank N.V. acquired in 2007. Where reference is made in this annual report to ‘Syntel’, it refers to the 1017 HK Amsterdam subsidiary Syntel Beheer B.V. The Netherlands
This document is a translation of the Dutch original and is provided as a courtesy only. In the event of any disparity, the Correspondence address Dutch version shall prevail. No rights may be derived from the translated document. P.O. Box 15536 1001 NA Amsterdam As last year, the illustrations in this annual report trace the route from a stock exchange to BinckBank, taking in The Netherlands historical and other landmarks, to symbolise the links our clients have with the stock exchange through BinckBank’s investment services. Last year, we were in Amsterdam, where our main office is located. This year, we have mapped a Tel: +31 (0)20 606 26 66 similar journey in Antwerp, from where we run our Belgian operations. Starting at ❶ the remains of the old trading Fax: +31 (0)20 320 41 76 floor, our route takes us past the Grote Markt ➋ to the Scheldt quayside ➌ and thence to the diamond district ➍ and the Central Station ➎, ending at the BinckBank offices ➏ Internet: www.binck.com
BinckBank N.V., established in Amsterdam and entered in the Trade Register of the Amsterdam Chamber of Commerce under no. 33 16 22 23.
Investor Relations Tel: +31 (0)20 522 03 72 Email: [email protected]
Colophon
Coordination and production Imprima (Nederland) bv
Photography Eveline Renaud, Amsterdam Other information Financial Statements 2007BinckBankN.V. Personnel andorganisation...... In-control statement...... Risk management...... Corporate Governance...... Acquisition ofAlex ...... Board the Supervisory of Report ...... 26 CVs Board members andSupervisory ofManagement Board...... the Management of Report ...... eventsImportant in2007 ...... Shareholder information ...... Chairman’s letter ...... Key figures 2007 Results inbrief...... Profile, missionandstrategy ofBinckBank Contents rpslfraporaino h eut ...... 154 Proposal for appropriation the result of ...... 1 ofAssociation) the Articles 32of (article Statutory provisions ofappropriation inrespect ofprofit ...... 153 ofAssociation) the Articles 15and21of (articles Statutory provisions ofpriorityshares inrespect ...... Auditors’ report ...... 140 the company to Notes balancesheet ...... 139 the companyto Notes financial statements ...... 138 Company statement ofchangesinequity ...... Company income statement ...... Company balancesheet Company Financial Statements ...... Financial riskmanagement ...... 111 the consolidatedto Notes income statement ...... 92 the consolidated to Notes balancesheet the consolidatedto ...... 75 Notes financialstatements ...... 74 Consolidated statement ofchangesinequity ...... Consolidated cashflowstatement ...... Consolidated income statement ...... Consolidated balancesheet Consolidated Financial Statements ...... 4 ...... 6 ...... 8 ...... 36 ...... 50 ...... 58 ...... 40 ...... 10 ...... 13 ...... 62 ...... 28 ...... 151 ...... 16 ...... 2 ...... 136 ...... 70 .....121 ..137 ..71 72 53
Annual report 2007 1 Profile, mission and strategy of BinckBank
Profile account and online advice and asset management BinckBank is a full-service online bank for investors, tools. Both Binck and Alex have been named by ranked in the top five in Europe. We offer our clients various independent research institutes as the best fast, low-cost access to all the important financial and cheapest providers of online investment markets around the world, online advice and asset services in the Netherlands on several occasions in management services, online savings, insourcing of recent years. administrative processing of securities and cash transactions and extensive market information. Professional Services Professional Services provides services for BinckBank is the largest independent Dutch online professional clients such as asset managers and broker which is listed on Euronext Amsterdam. banks, including an online product which handles BinckBank has offices in the Netherlands and the processing of securities and cash transactions Belgium and will shortly open an office in France. It and the entire securities-related administration employs 481 people (year-end 2007). process on their behalf. Professional clients of this business unit have the option of entering into a BinckBank was founded in 2000 had 214,000 service agreement with BinckBank or purchasing account holders at year-end. BinckBank’s activities the software needed to execute these processes are divided between two business units: Retail and themselves. Professional Services. Vision Retail The internet has changed the market for Retail provides services for independent private investment services dramatically, both for private 2 investors under two labels, Binck and Alex. Under investors themselves and for the relationship the Binck label, we serve the active independent between service providers and investors. The investor via a comprehensive investment website, internet enables investors to make better-informed including real-time streaming of prices and news, choices and makes it easier and quicker for them to order book depth, research, advice and analysis. invest on stock exchanges and in products of their choice, thereby offering an attractive alternative to Under the Alex label, we serve the more affluent traditional investment services. Consequently, investors; as well as a comprehensive investment online investment is a growing market, especially site, we also offer these investors an online savings in the countries of southern Europe. Annual report 2007 brokerage market. continuingthe more –on mature USonline has already beenexperienced –and is still have already doneonasmallscale.trend Asimilar acquisitions, assomeFrench andGermanplayers with larger players makingmore cross-border of onlinebrokerageterm, inEuropethe medium in envisage growing consolidation amongproviders transaction,to reduce per the cost help we transaction volumeBecause higher willultimately factorsignificant incompanies’ future growth. satisfactiontherefore will become anincreasingly the consumerthe web. ashesurfs Client campaigns andisincreasingly beingdeterminedby no longerdefinedsolelybyitsmarketing combinationtwo.the of The imageofacompany is rational choicesbasedonprice, qualityora in newsgroups ishelpingconsumersto make viacomparisonthem services websites anddiscuss existing players. products and to select The ability compare from products andservices newand makes easierforInternet it consumersto findand and competethe establishedplayers. with The players relativelythe marketto enter at lowcost between newandexisting providers, enablingnew the relationship hasalsochanged The Internet expansion ofallouractivities. Our businessstrategy envisages international process outsourcing). securities-related payments (BPO, orbusiness order execution, securities administration and to includebanks byinsourcingservices securities the Netherlandsandbroadenmanagers in our achieveto asset market leadershipinservices for private investors. Ourstrategyto isdesigned investment advice, andsavings management asset investors, inonline growth BinckBankseeks further Focusing private primarilyonindependent investors. European onlinebankforlargest full-service investmentthe Netherlandsandgrow in the into to maintainwe ourmarket aim leadershipinonline satisfaction. Bymaximisingcustomersatisfaction, customer baseandmaximising BinckBank byconcentrating ongrowing our We create shareholder value for investors in focus, we makethem ambassadorsfor ourservices. low prices, incombination withourintensive client By offering at ourclients ahigh-qualityproduct Business strategy maximising customersatisfaction. BinckBank seeksto maximiseshareholder value by Mission
Annual report 2007 3 Results in brief
Reflecting the very rapid growth in our Retail and Profit before tax for the Retail business unit Professional Services business units, BinckBank amounted to € 30.6 million, compared with € 25.4 posted a record net result of € 32.2 million in 2007, million in 2006 (+20.6%). Total revenues increased compared with € 24.0 million in 2006 (+33.9%). to € 54.4 million from € 39.3 million in 2006 Revenues were 48.2% higher at € 69.7 million, (+38.5%), while expenses rose to € 23.8 million in from € 47.0 million in 2006. The 2007 profit 2007 from € 13.9 million in 2006 (+71.1%). includes a deferred tax asset of € 4.3 million (2006: € 2.9 million) in respect of the increase of a Professional Services generated a profit of € 4.7 tax loss carryforward available and an upgraded million, compared with € 2.8 million in 2006 profit forecast for Binck België N.V. This revenue is (+70.1%). Total revenues rose to € 15.3 million from included in the taxation item. Total expenses were € 7.8 million in 2006 (+97.4%), while expenses 82.1% higher at € 34.4 million, compared with increased to € 10.6 million, compared with € 5.0 € 18.9 million in 2006. The 2007 expenses include million in 2006 (+112.7%). approximately € 0.9 million in respect of integration costs of around € 0.8 million already The management buy-out of the Trading business incurred for setting up the French operation. unit’s bond-trading operation was completed on 1 October 2007. Preparations were also made for The cost/income ratio increased to 49% from 40% hiving off the share-trading activities and talks are in 2006, mainly due to the consolidation of Syntel currently in progress on a management buy-out. In and the growth of the Belgian operation. We accordance with IFRS, the former Trading business continued to invest in system availability and unit’s results are accounted for in profit on 4 scalability in 2007. discontinued operations up to the date of disposal. The profit after tax on discontinued operations in 2007 amounted to € 1.6 million, compared with € 0.8 million in 2006.
Income statement 2007 2006 2005 2004 2003 (€ 1,000,-)
Revenue 69,732 47,081 44,113 39,965 24,556 Expenses (34,428) (18,911) (26,322) (35,051) (39,186)
Profit from operations 35,304 28,170 17,791 4,914 (14,630) Annual report 2007 Share in profits of associates 80---- Tax (4,785) (4,944) (4,879) (1,606) 5,259
Profit on continuing operations 30,599 23,226 12,912 3,308 (9,371) Profit on discontinued operations 1,556 783 616 - - Minority interest - - 81 (500) (906)
Net profit for the year 32,155 24,009 13,609 2,808 (10,277)
Employees at year end* 481 223 170 187 272 –10,000 year-end 2006(excluding Alex). year-end 2007, compared with223employees asat number ofemployees increasedto 481asat sharply As aconsequencethe acquisitionofAlex, of the 60,000 80,000 40,000 20,000 50,000 30,000 70,000 10,000 0 0320 0520 2007 2006 2005 2004 2003 Net Profit Net Expenses Revenue
Annual report 2007 5 Annual report 2007 6 Financial information x bybusinessunit Key figures2007 Other income orloss profit fairand liabilitiesat valuethrough gain/(loss)Net onfinancialassets Commission expense Commission income Interest expense Interest income Tax Tax Operating before profit tax associates Share of inprofit Total expenses losses Impairment of ot Impairment Depreciation andamortisation Other operating expenses Staff costs Net profit for profit the year Net fromProfit operation Operating expenses Total Revenue her investments € 1,000 1,5)(153 830 718 2,0)(861 2,0)(18,691) (22,609) – – (18,691) (22,609) (7,148) (8,350) (11,543) (14,259) 2,6)(397 1,7)(,7)(339 1,1)(,2)(517 4,6)(34,058) (42,364) (15,147) (9,025) (18,911) (33,339) (4,974) (10,579) (13,937) (22,760) 2,4)(397 1,7)(,7)(448 1,1)(,2)(517 4,5)(34,058) (43,453) (15,147) (9,025) (18,911) (34,428) (4,974) (10,579) (10,633) (13,937) (15,936) (23,849) (2,423) (1,746) (8,210) (14,190) (1,153) (1,756) (7,057) (12,434) 2714,5 1,8 276 8665,9 – – – 68,60654,492 68,60654,492 15,88512,736 52,721 41,756 65828,511 16,226 441 21,289 6,780 3,132 28,069 12,436 15,568 30,563 25,350 4,741 2,787 35,304 28,170 2,089 1,045 37,393 29,215 54,412 39,287 15,320 7,761 69,732 47,048 11,114 16,192 80,846 63,273 565 332 450 184 1,2)(,7)(7)(6)(060 (5,441) (10,600) (265) (475) (5,176) (10,125) (1,814) (4,500) (3,362) (5,625) 109 109 109 – (1,089) – – – (1,089) – – – (21,394) (24,544) (1,089) (12,337) (7,094) (9,057) (17,450) (3,263) (8,090) (5,794) (9,360) 0720 0720 0720 0720 072006 2007 2006 2007 2006 2007 2006 2007 2006 2007 96 106 73 49 169 155 15 37 184 (1,962) (1,884) (387) (185) (1,575) (1,699) (489) (733) (1,086) (966) 8 – – – 26 118 579 144 15,799 11,434 15,799 11,148 – 286 – – – 286 ,0 88 ,0 88 ,0 888 5,504 – – 888 5,504 888 5,504 – – 6)– (9 (69) – – – (69) – (69) – – – ealPoesoa oa icniudTotal Discontinued Professional Total Retail evcsactivities Services 0592,2 156 8 32,15524,009 783 1,556 30,599 23,226 5342,7 209 ,4 37,47329,215 1,045 2,089 35,384 28,170 475 494 53 22 538 (5,206) (5,318) (262) (533) (4,944) (4,785) 0 80 – – – 80 Shareholder information Chairman’s letter Important eventsImportant
Annual report 2007 7 Chairman’s letter
Dear shareholder, report of the Management Board. Also in 2007, we brought our organisation into line with the new In retrospect, 2007 was unquestionably an eventful Basel II and MiFID (Markets in Financial and, more importantly, a good year for BinckBank. Instruments Directive) regulations and upgraded In terms of net profit and growth in our client base our existing technology platform by and transaction volume, it was a record year. 2007 reprogramming it in a more modern language. was also the year we took the decision to acquire Alex, a transaction that we completed at the end of The agendas of the Management Board and the year. Although this acquisition will not affect Supervisory Board were largely dominated in the our clients, the transaction will bring about a second half of 2007 by the acquisition of Alex and number of obvious changes at the operational the related rights issue. The integration of Alex also level. requires substantial work, which means inter alia that we have had to postpone the start-up of our At the end of 2005, we took the strategic decision activities in France until mid-2008. to expand our core activity of online investment into other countries in the years ahead. Our The management buy-out of the former Trading decision was prompted by the success of business unit’s bond trading activities took place BinckBank’s services in our home market, in the earlier in the year and talks are in progress on a expectation of being able to achieve similarly management buy-out of the remaining share robust growth abroad. At that time, broadening trading activities. When that transaction has been our product range was a prospect for the longer effected, our organisation will be able to term. Rabobank’s decision to sell Alex suddenly concentrate fully on our core activity: online 8 brought that possibility within reach. Where investment. BinckBank had focused in recent years on deepening its existing services, Alex had opted to With the integration of Alex, the start-up of our broaden its range. The entrepreneurial spirit that activities in France, the sale of the remaining characterises our organisation drove us to grasp trading activities and the ongoing development of that opportunity energetically, culminating in our our services, 2008 promises to be another year of successful acquisition of Alex. With this acquisition, change and growth. We are looking closely at we have taken an important step towards European developments in the online brokerage achieving our ambition of growing and developing market and at the opportunities presented by into a full-service European online bank for MiFID. This is discussed in greater depth in the investors. More information on our acquisition of report of the Management Board. Alex can be found on page 36. We are a client-focused organisation. Our clients Our organisation’s focus is on customer service, tell us they are very satisfied with our services and quality and cost control, all aspects in which we demonstrate their satisfaction by introducing many
Annual report 2007 again invested much time and effort in 2007. We new clients. We thank our clients for the also worked hard on introducing our new BPO confidence they place in us and our staff, who work services, which are discussed in more detail in the every day to ensure that they stay satisfied. They are the foundation on which our profit growth is built. We also address a special word of thanks to our existing and new shareholders, who so enthusiastically supported the acquisition of Alex and the rights issue we undertook to finance it.
Kinds regards,
Thierry Schaap Chairman of the Management Board
Amsterdam, 11 March 2008 9 Annual report 2007 Annual report 2007 10 10.00 subscription rights received remaining share,the holdersofunexercised exceededtotal issuepriceby the total proceedsthe fromthe remaining shares institutional investors apricevan at global coordinatorsjoint withinternational 4,157,762 newordinary shares werethe placedby 42,098,343 newordinary shares. The remaining Shareholders exercisedtheir subscriptionrights on November 2007. tradingshare closeof at on26 price of approximatelytheoreticalthe ex-rights 24%on € price of threeto purchaseentitled the issue newshares at subscription rights held,the shareholder was received onesubscriptionright. For everytwo each share heldon27November,the shareholder with arights issueof46,256,105 newshares. For BinckBank’s acquisitionofAlex in2007was funded Year-end pricein BinckBank sharesin2007 Shareholder information (2006: 30,551,278). average numberofshares in2007was 32,829,886 listed(0.00006%are not the shares of issued). The fifty priorityshares of priorityshareholder’) Binck(‘the holds Prioriteit end 2006. The share capitalisfullypaid. Stichting increasedto 77,093,508, from 30,837,403 year- asat outstanding ordinary shares year-end asat 2007 the share of As aresult issue,the numberof right. 14.00 12.00 6.00 4.00 8.00 2.00 1 January 0.10. This issuepricerepresented adiscount of – € € 10.98,the price of basedon 8.32 pershare withanominalvalue of € € 0.10 nominalvalue, which 1 July € 3.27 perunexercised € 2.18 per € € 10.50. Since 14.98 per 14.98 31 December Dividend 2006 Dividend 2007 Earnings pershare 2006 Earnings pershare 2007 Issued Authorised Market capitalisation ( Averageturnover daily Turnover -low(28-05) Turnover -high(31-10) Share turnover Change % AMX year-end 2006 AMX year-end 2007 Share price-low(17-09)* Share price-high(06-11)* Year-end price2006* Year-end price2007* Repurchased Issued Authorised Priority shares Ordinary shares Share capital * Adjustedpricesafter rights issue. Management Board.Management the remunerationoption planand the of shares willbe usedinter aliaforthe staff stock repurchased anaverage at priceof shares initsowncapitalwhichhadbeen On 31December2007, BinckBankheld129,137 0,0,0 100,000,000 100,000,000 € ereddYear-ended Year-ended 7035830,837,403 77,093,508 million) 2,3 253,145 129,137 072006 2007 050 50 050 50 € 3.78. These 86,815,383 3,041,189 € € € € 332,626 € € € € € 779.40 39,670 657.04 678.26 3.22% 12.49 11.00 10.11 0.40 0.21 0.79 0.98 9.30 The rights issue at the end of the year to finance Dividend the acquisition of Alex increased shareholders’ Under the company’s dividend policy, 6% of the equity to around € 466 million, but decreased the nominal value is paid on the priority shares core capital element of own funds because the (50 x € 0.10 x 6%). The priority shareholder then intangible assets identified at the time of determines what proportion of the profit is to be acquisition have to be deducted from shareholders’ retained. This sum is not distributed to the equity to arrive at actual own funds. Actual own shareholders, but is added to the company’s funds as at year-end 2007 were around € 54 reserves. million (2006: € 63 million). The remainder of the profit is placed at the Listing disposal of the General Meeting of Shareholders, BinckBank N.V. shares are traded continuously on which means that it can choose whether to Euronext Amsterdam. Under its active investor distribute the remaining profit, add it to reserves relations policy, the company visited many or a combination of the two. Distributions may, institutional investors in the Netherlands and according to the provisions of the Articles of abroad in 2007. During the preparation phase and Association, be paid in cash or entirely or partially the subscription period for the rights issue in in ordinary shares. particular, the company held many discussions with international institutional investors. Profit is placed at the disposal of the General BinckBank shares are now covered by several Meeting only if doing so would not, in the priority analysts from leading financial institutions in the shareholder’s view, reduce the company’s liquidity Netherlands. and capital adequacy to insufficient levels. If, with due observance of these conditions, a proportion of The average daily turnover in 2007 was the profit is placed at the disposal of the General 11 approximately 332,626, compared with about Meeting, the priority shareholder will aim in 370,511 in 2006. As in 2007, BinckBank is included in principle for a payout ratio of 50% of the adjusted the Amsterdam Midkap index (AMX). net earnings per share (net earnings per share adjusted for the amortisation of intangible assets The performance benchmark for BinckBank’s share and the tax asset relating to the acquisition of price is an index composed of a number of Alex). international competitors which engage in more or less comparable activities. These are Ameritrade, An interim dividend of € 0.06 was distributed in Charles Schwab, Comdirect, Swissquote, 2007 on 77,093,508 shares (or € 0.14 on 30,837,403 Boursarama and Avanza. shares). This interim dividend amounted to approximately 30% of the earnings per share for 130 the first half of 2007 and was calculated on the 120 new number of shares as at year-end 2007 (77,093,508). The shareholders will be invited to 110 approve a final dividend of € 0.15.
100 Annual report 2007
90 Dividend WPA In % WPA
80 Binck Binck Peer Group Index € € MIDCAP 2007* 0.21 0.98 21.40% 70 2006 € 0.40 € 0.79 50.60% 1-1-2007 1-7-2007 29-12-2007 2005 € 0.22 € 0.45 48.90% 2004 € 0.05 € 0.10 50.00% 2003 -(€ 0.42) -
* Subject to the approval of the General Meeting of Shareholders. Key figures per BinckBank share There was a rights issue of 46.3 million new shares in December 2007. The BinckBank ordinary shares were traded ex-rights from 28 November 2007, resulting in an apparent reduction in the share price.
Figures per share
Figures per share 2007 2006 2005 2004 2003
Earnings in € 1) 4) 5) 0.98 0.79 0.45 0.10 (0.42) Dividend in € 0.21 0.40 0.22 0.05 - Dividend yield in % 2.08 2.70 2.40 1.60 - Net asset value in € 2) 3) 6.07 2.31 1.81 1.50 1.89 Year-end share price in € 6) 10.11 14.66 9.15 3.20 1.37 Year-end price/earnings ratio 10.32 18.6 20.3 29.10 -
1) Based on adjusted average number of shares in issue for year 2) Based on adjusted average number of shares in issue at year-end, before deduction of proposed dividend 3) Decrease in net asset value per share in 2004 due to acquisition of minority interest in BinckBank 3) Increase in net asset value per share in 2007 due to increase in shareholders’ equity as a result of rights issue 4) 2003 figures not in accordance with IFRS 5) 2007 profit adjusted for discontinued trading activities 12 6) 2007 year-end closing price is adjusted price after rights issue
Major shareholders and Management Financial calendar 2008 Board Four shareholders have disclosed interests of over 16 April 2008 Annual report 5% pursuant to the Act on the Disclosure of Major 6 May 2008 Q1 2008 figures Holdings and Capital Interests in Securities-Issuing 6 May 2008 2008 AGM Institutions (Wet melding zeggenschap). These are 8 May 2008 Ex-dividend Vereniging Friesland Bank (15.09%), Boron 9 May 2008 Record-date Investments (10.1%), Delta Finance Amsterdam 12 May 2008 Dividend payable (6.11%) and Navitas (5.17%). 25 July 2008 H1 2008 figures 24 October 2008 Q3 2008 figures As at year-end 2007, the members of the Management Board of BinckBank N.V. held the
Annual report 2007 following shares: - Thierry Schaap : 1,022,995 shares - Kalo Bagijn : 1,022,995 shares - Pieter Aartsen : 6,755 shares Investor Relations The shareholdings of Messrs. Schaap, Bagijn and Telefoon: 020 – 522 0372 Aartsen fall under the lock-up arrangements Fax: 020 – 320 41 76 specified in the prospectus of 26 November 2007 e-mail: [email protected] issued in connection with the acquisition of Alex. www.binck.com Important events in2007 Important 1Dcme AcquisitionofAlex byBinckBankcompleted 31 December 1Dcme BinckBankannouncesplacingofremaining shares inrights issueat 11 December ofsuccessfulrights Announcement issue–91%subscribed 11 December Board Management increases shareholding inBinckBank 10 December BinckBankandFriesland agreement BanksignBPO 6 December of3-for-2 Announcement rights issueworth 27 November BinckBankshareholders approve acquisitionofAlex andfinancingarrangements 19 November AcquisitionofAlex announced 31 October BinckBankpostsbest-ever result quarterly 24 October ofexclusive Announcement talks acquisition withAlex 10 October Completiontrading ofbond buy-out ofmanagement activities 1 October broker internet Bincknamedbest inBeursBulletinsurvey BinckBankinBelgiumopens10,000th investor account October broker internet Bincknamed best inBeurs.nlsurvey 15 July May ofpositive Announcement ofBelgianactivities result 19 April Introduction ofoptionsonBinckBankN.V. shares 21 March BinckBankN.V. includedinMidkap Index 1 March share € 385 million € 10.50 pernewordinary
Annual report 2007 13 Annual report 2007 14 Report of the Management Boardthe Management of Report Report of the Supervisory Boardthe Supervisory of Report Acquisition ofAlex
Annual report 2007 15 Report of the Management Board
Review of 2007 The growth of the Retail and Professional Services We are pleased to report that BinckBank posted a business units translated into a record net profit, to record net profit of € 32.2 million in 2007. The year which all activities made a positive contribution. also saw the expansion of our product range to The positive contribution made by our subsidiary include BPO services, preparations for the demerger Syntel also exceeded expectations. The higher of the trading activities and the Belgian operation’s profit was largely the product of rapid growth in move into profit after only eighteen months. the number of new clients, the number of Although the preparations for the start-up of the transactions they executed and the assets they activities in France were nearing completion, it was entrusted to BinckBank. Market volatility was a decided to postpone the launch until mid-2008 in factor in the high level of trading activity by our view of the work associated with the acquisition of existing and new clients; although the AEX index Alex, which has opened up a new route to future ended the year only fractionally higher, there was growth. With this acquisition, BinckBank has considerable market turbulence throughout the become the largest online broker in the year, mainly due to the sub-prime crisis which Netherlands and has secured a place among the caused great uncertainty on the financial markets. top five in Europe. As a consequence of the acquisition of Alex We worked hard in the first half of the year on Beleggersbank in late 2007, its assets and liabilities further improvements to the company’s technology are included in BinckBank’s consolidated balance platform. By reprogramming in the more modern sheet but its financial result for 2007 is not ASP/.Net language, we have improved the included in BinckBank’s income statement. platform’s scalability and flexibility. ASP./Net Including the Alex clients, BinckBank’s total 16 enables functionalities to be developed faster and number of accounts as at 31 December 2007 more easily in response to market demand. increased to 214,000. Together, the Alex and BinckBank clients generated 6.6 million The management buy-out of the bond trading transactions in 2007. activities of the Trading business unit was completed on 1 October 2007. Preparations were The total number of BinckBank clients excluding also made for the demerger of the share trading Alex was 47.7% higher, rising to 79,900 at the end activities. The results of the share trading activities of 2007 compared with 54,100 at year-end 2006. are accounted for in profit on discontinued Excluding Alex, BinckBank’s clients generated 2.9 operations and contribute to BinckBank’s result million transactions in 2007, compared with 2.1 until the time of sale. Disposal of these activities million in 2006 (+38.1%). will enable us to concentrate more closely on growing our core activity of online investment Including the Alex clients, total client accounts (in within the Retail and Professional Services business cash and securities) increased to € 8.2 billion in units and will lower the company’s risk profile still 2007. Excluding the Alex clients, BinckBank’s client € Annual report 2007 further. accounts as at year-end 2007 totalled 3.7 billion compared with € 2.7 billion in 2006 (+37.0%). Partly reflecting the growth in BinckBank client accounts, the interest margin increased to € 17.9 million in 2007, compared with € 10.4 million in 2006 (+72.1%). This growth translated into revenues of € 69.7 proposed for appointment by the shareholders as a million, an increase of 48.0% compared with the member of the Management Board for a term of 2006 figure of € 47.1 million. The deferred tax asset four years, subject to approval by the relevant has been increased by € 4.3 million (2206: € 2.9 regulators. BinckBank’s Management Board will million) in respect of a tax loss carry-forward then consist of Messrs. Schaap, Aartsen, Kooistra available to BinckBank België N.V. and revised and Bortot. Mr. Bagijn has agreed to continue his expectations of Binck België N.V.’s future profits. association with the company as a consultant. At This amount is included in deferred taxation. Total the forthcoming Annual General Meeting, the expenses rose to € 34.4 million, compared with shareholders will be invited to approve the € 18.9 million in 2006 (+82.0%). The expenses for extension of Mr. Schaap’s contract of employment 2007 include around € 0.9 million in respect of for two years. integration costs already incurred and approximately € 0.8 million for setting up the The remuneration of the members of BinckBank’s French operation. The cost/income ratio increased Management Board is explained in greater detail in to 49% from 40% in 2006, mainly due to the the section on remuneration policy as of page 32 of consolidation of Syntel and the growth of the this annual report. Belgian operation. BinckBank was affected in 2007 by new legislation Although the financing of the Alex acquisition and regulations under Basel II, the Markets in increased shareholders’ equity, it reduced the Financial Instruments Directive (MiFID) and the solvency ratio to 8.3% (year-end 2006: 25%) under new Financial Supervision Act (Wet op het Basel I and approximately 12% under Basel II. This financieel toezicht or Wft). A number of policy decrease is because the value of the intangible measures were adopted in connection with the assets of and goodwill paid for Alex has to be implementation of MiFID, including the adoption of 17 deducted from BinckBank’s shareholders’ equity to (i) the ‘know your client’ principle, (ii) a best- determine the actual own funds. execution policy, (iii) a conflict of interest policy, (iv) a client classification procedure and (v) an order In view of the growth of the organisation and the allocation policy. Since 1 November 2007, BinckBank acquisition of Alex, the Management Board and has been fully MiFID-compliant. A number of Supervisory Board have decided to strengthen the changes were also made to the ‘know you client’ Management Board by appointing Evert Kooistra as procedures in connection with Wft. Basel II includes Chief Financial Officer. The forthcoming Annual a number of new rules for risk and capital General Meeting will be invited to approve management. BinckBank started work in 2007 on Mr. Kooistra’s appointment. His responsibilities will the development and implementation of a Basel II- comprise finance, risk management and HRM, compliant capital policy, which became operational which have hitherto been discharged by Thierry on 1 January 2008. Although Basel II requires Schaap, the Chairman of the Management Board. additional capital to cover operational risk, the Co-founder Kalo Bagijn has decided to stand down implementation of the Basel II rules improves the from BinckBank’s Management Board after long risk-weighted assets. The net effect of Basel II on
service with the company in order to pursue a BinckBank’s capital ratios is positive. Annual report 2007 different career path. Now that the acquisition of Alex has been accomplished and the first phase of integration has been completed, he feels that the time is right to hand over his portfolio to Nick Bortot. Mr. Bortot has a long track record with BinckBank, having joined the company on its formation in 2000 and serving in turn as head of Private Clients, Marketing & Sales Manager and General Manager of the BinckBank’s successful Belgian operation. At the forthcoming General Meeting of Shareholders, Mr. Bortot will be BinckBank is exposed to various risks in the course Aiming for maximum possible client satisfaction is of its activities. To identify and monitor these risks, an integral part of BinckBank’s marketing policy, BinckBank performs an annual risk analysis. The because a high level of client satisfaction means identification of risks and the implementation and that existing clients act as ambassadors for modification of the relevant control measures is a BinckBank’s services. BinckBank encourages this continuous process within BinckBank. More with annual ‘member-get-member’ campaigns, information on risk management at BinckBank can rewarding both the existing client and the new be found in the sections entitled ‘Risk client when the latter opens a new account. management’ on page 50 and ‘In control Approximately 25% of the new clients in 2007 were statement’ on page 58, which form an integral part introduced by an existing client. of this annual report. The annual survey which BinckBank commissions The unrest on the financial markets due to the sub- from TNS NIPO showed that our name recognition prime crisis is not affecting BinckBank’s investment has again increased, with assisted name policy (investment portfolio). The company pursues recognition increasing from 74% in December 2006 a low-risk investment policy, investing client to 83% in January 2008 and spontaneous name accounts only in (government) bonds and call recognition improving from 47% to 55%. BinckBank money with banks with a Standard & Poor’s rating also scored high on customer satisfaction, with a of AA– or better. rating of 8.21. BinckBank again achieved the highest scores in 2007 in leading independent polls, such as In accordance with the company’s dividend policy, the Dutch broker surveys by Beursbulletin, Beurs.nl the General Meeting of Shareholders on 6 May and Netprofiler2. One remarkable finding of the 2008 will be invited to approve the distribution of Netprofiler survey was that almost 30% of online a final dividend of € 0.15 in cash. Assuming that investors said they wanted to change their service 18 this proposal is approved by the meeting, the provider and, of those, 45% were considering dividend – net of 15% dividend tax – will be paid to switching to BinckBank. The annual survey3 of all holders of BinckBank N.V. shares on Monday, 12 May Retail clients found that 95% of BinckBank’s clients 2008. BinckBank N.V. shares will be quoted ex- are satisfied to very satisfied with BinckBank’s dividend as from 8 May 2008. services. As well as the annual client survey, BinckBank also measures client satisfaction using Retail: online brokerage for private the net promoter score method, which shows the investors ratio of promoters (satisfied clients) to detractors The Retail business unit provides online investment (dissatisfied clients). The net promoter score for services for independent private investors in the 2007 was high, from which we may conclude that a Netherlands and Belgium. large percentage of BinckBank clients would recommend our services to friends and colleagues. In recent years, a number of new (foreign) providers of online investment services have entered the Dutch market and major Dutch banks
Annual report 2007 have become more active in this field. Judging by the sustained strong growth in our client base, however, private online investors are still choosing BinckBank: in 2007 we opened 25,800 new accounts, a record for BinckBank.
1 TNS NIPO, January 2008 2 Beursbulletin.nl, beurs.nl, NetProfiler 2008 3 BinckBank client survey, January 2008 The Alex and Binck labels have remained BinckBank reached break-even point in Belgium in unchanged since the acquisition, because they 2007, which was sooner than expected. BinckBank have different client profiles. This enables has grown rapidly in Belgium since the launch in BinckBank to provide services that meet the 2006, in terms of client base, client accounts and requirements of all kinds of investor. Under the number of transactions and is now the second Binck label, BinckBank addresses the needs of largest provider of online investment services in active independent private investors with that country. By tailoring the product and service BinckCompleet, a free investment site providing fully to the needs of the Belgian market, BinckBank information, tools and real-time streaming prices. now has an extremely attractive proposition for the Depending on the account holder’s investment Belgian online investor. The combination of very behaviour, BinckCompleet is automatically low charges relative to the competition and high- upgraded free of charge with the addition of Trader quality services has undoubtedly contributed to and DayTrader, which are more comprehensive this rapid growth. In the light of our success in trading applications for more active investors. Belgium, we have decided to establish a business in BinckCompleet was further refined in 2007 to meet France, which we expect to launch in mid-2008. the needs of the Belgian market, with the addition of unique option matrix and advanced order The growth in the number of clients and the functionalities, which have been received number of transactions they generated translated enthusiastically by our Belgian clients. In the into profit before tax of € 30.6 million, compared Netherlands, too, BinckCompleet was upgraded with € 25.4 million in 2006 (+20.6%). Total with the incorporation of such features as revenues increased to € 54.4 million from comprehensive streaming price information on the € 39.3 million in 2006 (+38.5%), while expenses order screen and an advanced BinckLab function. rose to € 23.8 million in 2007 from € 13.9 million in New markets were also added to the existing 2006 (+71.1%). The expenses include around 19 selection, enabling BinckBank investors to invest in € 1.7 million relating to integration costs options and futures on Euronext Brussels and trade (€ 0.9 million) and the cost of setting up the on the Canadian stock exchange. French operation (€ 0.8 million).
Under the Alex label, BinckBank provides a range of Excluding Alex’s client accounts, the Retail business services appropriate to the more affluent investor. unit’s client accounts increased to € 2.4 billion in As well as the Alex Pro and Alex Advanced online 2007, compared with € 1.9 billion in 2006 (+26.3%). investment services for independent investors, Alex Including Alex’s client accounts, they amounted to also offers a digital individual investment advice € 6.9 billion at the end of 2007. The interest product (Alex Assist) and an internet savings margin in 2007 was € 15.7 million, an increase of account. In 2007, online asset management service 74.4% on the 2006 figure of € 9.0 million. was introduced for investors who prefer to outsource the management of their portfolios. The total number of BinckBank Retail clients grew Alex also provides investor education at all levels to 72,500, compared with 48,700 at the end of via the Alex Academy, which enrolled its 10,000th 2006 (+48.9%). Together they generated 2.6 million
investor last year. Early in 2007, Alex opened its transactions, compared with 1.9 million in 2006 Annual report 2007 100,000th investment account. (+39.7%). BinckBank had 13,500 clients in Belgium as at year-end 2007 (2006: 5,200), who together generated 330,000 transactions (2006:78,200). The net increase in the number of accounts in Belgium was 8,300. In terms of volume, client accounts in Belgium as at year-end 2007 amounted to € 428 million (2006: € 141 million). The Retail business unit’s total client base structure with a new management team. As well as (BinckBank and Alex clients) increased to 207,000 the investor giro module, Syntel also developed an at the end of 2007. Together these clients application named EuroFront in 2007 for online generated 6.3 million transactions in 2007. interfacing with the EuroPort+ software. Both products were successfully launched on the market Professional Services: services for in 2007. Syntel also developed a EuroFront payment professional players system that uses integrated identification Professional Services provides banking services, software. The system has been subjected to an executes securities orders and takes care of all external audit and was declared secure. For Binck’s aspects of securities administration for asset BPO product, Syntel developed amongst others a managers and banks. These services are fully multibank version of the EuroPort+ software. automated and are provided online. Professional Services also provides services for The Professional Services business unit’s clients can Belgian asset managers working out of BinckBank be divided into asset managers, together with the Belgium. A manager was appointed in 2007 to run investors they represent, and banks. these services in Belgium. The Dutch-language product was offered to Dutch-speaking asset Services to asset managers grew rapidly in 2007, managers in the first instance, while we worked on consistent with the increase in the number of asset the development of a French-language version that management clients and the investors they we could market in Belgium to Francophone asset represent. managers and the investors they represent. As in the Netherlands, selling professional services to The asset manager services are based on an asset managers in Belgium is a lengthy process. integrated online trading and administration 20 application (DBA). As well as regular upgrades to Professional Services generated a profit before tax existing functionalities and the addition of new of € 4.7 million, compared with € 2.8 million in functionalities, DBA was expanded to include 2006 (+70.1%). Total revenues rose to € 15.3 million fractional unit administration in preparation for from € 7.8 million in 2006 (+97.4%), while the introduction of the investor giro module. This expenses increased to € 10.6 million, compared system, which enables the investor to hold with € 5.0 million in 2006 (+112.7%). fractional units, is attractive to asset managers and banks wanting to invest in investment funds on Client accounts (in cash and securities) grew to behalf of their clients. € 1.3 billion in 2007, compared with € 0.8 billion in 2006 (+62.5%). The interest margin in 2007 was The BPO services for banks were officially launched € 2.3 million, as against € 1.3 million in 2006 in January 2008 with the implementation of these (+76.9%). The total number of private individuals services at Friesland Bank. BinckBank has taken investing with BinckBank via asset managers grew over all of Friesland Bank’s securities to 7,400 from 5,400 as at year-end 2006 (+37.0%). administration activities on behalf of the latter’s Together, these clients generated 264,700
Annual report 2007 retail clients and settles transactions in BinckBank’s transactions, compared with 222,000 in 2006 web-based multi-bank environment. The (+19.2%). development and implementation process was completed satisfactorily. The project was received Professional Services now has 17 asset so well and progressed so smoothly that the management clients in Belgium, who in turn Professional Services business unit has launched an represent around 100 private investor clients. They active sales campaign for BinckBank’s BPO services. placed € 24.3 million with BinckBank in Belgium and generated 2,100 transactions. Syntel’s contribution to BinckBank’s result in 2007 surpassed expectations. With the departure of Profit on discontinued operations former General Manager Jan Veenstra, it was The former Trading business unit’s bond-trading decided to implement a new organisational operation was disposed of in 2007 via a management buy-out. As from 1 October 2007, been given to cultural integration through social these activities have been carried on independently activities such as staff events. by a newly formed company, Florint B.V., which was granted a licence by the Authority for the Financial Of the synergy and operational gains of € 18–20 Markets in October 2007. BinckBank has a 35% million (before tax) expected to accrue from the interest in Florint B.V., to which it has outsourced a acquisition of Alex which had been announced number of treasury activities. previously, the savings on investment operations were realised immediately in early 2008. Steps Talks are currently in progress on a management were also taken to reduce the cost of temporary buy-out of the share-trading activities. In external staff. Further savings in marketing accordance with IFRS, the Trading business unit’s expenses are expected in the coming months. results are accounted for in profit on discontinued operations up to the date of disposal. In view of the massive increase in BinckBank’s shareholders’ equity in connection with the The profit after tax on discontinued operations in acquisition, it has been decided to revise the 2007 amounted to € 1.6 million, compared with dividend policy and abandon the lower limit of a € 0.8 million in 2006. The hiving-off of the bond- total net annual profit of 5% of shareholders’ trading operation reduced the capital requirement equity. for the trading activities to approximately € 5 million. The proposed hiving-off of the share- Outlook trading activities will enable us to focus more The core activities of the Retail and Professional closely on our core business – providing online Services business units again generated record investment services. profit, in both the Netherlands and Belgium, in 2007. BinckBank promotes growth by providing 21 Recent events excellent services and running effective marketing As soon as the acquisition of Alex was announced, campaigns. Market volatility has also contributed a committed team began preparing for the to the high transaction volume. Underpinned by integration of the Alex and BinckBank operations, these favourable trends, our expectations are so that a start could be made immediately on the positive, but our results may be affected by integration process on 2 January 2008. In line with sentiment on the global financial markets. the organisational structure that had already been defined, departments were combined and prepared Since 1 January 2008, Alex has formed an integral for relocation. The new organisational structure is part of the Retail business unit and its results are officially in operation since 1 February 2008 and a consolidated with those of the Retail business unit start will be made on relocating several from that date. The effect of the acquisition of Alex departments in April. is, however, visible in the balance sheet as at 31 December 2007. The non-recurring integration The integration process did not result in any expenses relating to the acquisition of Alex are compulsory redundancies. There were around 15 expected to amount to € 5 million in 2008.
duplicated jobs, for which the employees Annual report 2007 concerned were invited to apply and were selected BinckBank’s strategy for the international roll-out on the ‘best man for the job’ principle. Staff who of its services in the coming years remains did not qualify for those jobs were offered a choice unchanged. The figures which BinckBank has given between a suitable alternative position and in the past for the transaction volume generated termination of their contract of employment with a by Dutch independent private investors were based predetermined financial settlement. Only a few partly on the scant information published by a few employees opted for the voluntary redundancy large banks but mainly on our own estimates, package. The work has progressed smoothly and arrived at in the absence of reliable data on private the integration process is ahead of schedule. As transaction volume in the Netherlands. BinckBank’s well as operational integration, full attention has Management Board is no longer comfortable with setting targets based on assumptions that are subject to considerable uncertainty. In future, BinckBank is renowned for the special services it targets will therefore be based on the number and provides for its clients and the high quality of its volume of client accounts. Our target for the years products. To guarantee that this level of quality is ahead will be € 10 billion of client accounts in maintained, BinckBank will invest an estimated Netherlands and 200,000 independently operating € 10 million in property and equipment in 2008. Dutch account holders. Over the same period, Given its strong financial position, BinckBank will BinckBank aims to grow to 20,000 advice and asset not need to have recourse to the capital market. management accounts and 45,000 savings accounts in the Netherlands. The target for Because the amortisation of the intangible assets Belgium for the coming years has been revised and the tax asset relating to the financing of the upwards to 40,000 accounts. acquisition of Alex will be reflected in BinckBank’s results from 2008, BinckBank will report an We plan to open for business in France in mid-2008 adjusted net profit from 2008 onwards. The and reach break-even point as soon as possible. combination of a larger and more diverse client More precise targets for the French market will be base and significant synergy gains and operational set when that point is reached. BinckBank’s start- benefits is expected to translate into growth in the up and marketing costs for the French operation adjusted earnings per share from 2008. The are estimated at € 3 million in 2008, with financing of the acquisition will also have marketing costs continuing at around € 2 million a repercussions on the company’s capital and year thereafter. Depending on how successful dividend policy. More information on these aspects BinckBank is in France, further international can be found in the section headed ‘Acquisition of expansion will be considered. Alex’ on page 36.
The Professional Services business unit’s longer- Amsterdam, 11 March 2008 22 term objective is to achieve market leadership in services to asset managers and become a Thierry Schaap, Chairman of the Management recognised provider of BPO services. Syntel is Board expected to make a positive contribution to Kalo Bagijn, member of the Management Board BinckBank’s result once again in 2008. Pieter Aartsen, member of the Management Board
BinckBank has high expectations of the alternative markets emerging in the context of the new European Markets in Financial Services Directive (MiFID). Several Multilateral Trading Facilities (MTFs) were created in 2007 in compliance with MiFiD which in our view can provide a better and cheaper alternative to the existing stock exchanges. In accordance with the ‘best execution’ policy adopted by BinckBank in 2007, we intend to
Annual report 2007 settle some orders via these alternative platforms, which we expect to offer cheaper settlement and better prices.
We are confident that we can raise our efficiency and continue to grow with only a small increase in our personnel in the years ahead. This has been made possible by the acquisition of Alex, which has given us ample labour capacity to support our growth in the coming years. Annual report 2007 23 From the left to the right: Management Board members Pieter Aartsen, Thierry Schaap (Chairman of the Management Board) and Kalo Bagijn. From the left to the right: Supervisory Board members Fons van Westerloo, Kees Scholtes (Chairman), Leo Deuzeman and Hans Brouwer CVs of Management and Supervisory Board members
Kees J.M. Scholtes, Chairman University of Groningen and Stichting Vereniging (1945, Dutch nationality) voor de Effectenhandel (Amsterdam Stock Mr. Scholtes has been a member of the Supervisory Exchange Association). He is Chairman of Stichting Board of BinckBank N.V. since 2004. He was Amindho and Stichting Jazzorchestra van het reappointed for a term of three years at the General Concertgebouw and a member of the Advisory Meeting of Shareholders on 19 April 2007. The Committee of Professional Vision B.V. Mr. Brouwer Supervisory Board has appointed Mr. Scholtes as its is a former General Manager of Euronext (formerly Chairman. Amsterdamse Effectenbeurs and European Options Exchange) and Chairman of the Supervisory Board Mr. Scholtes is currently a member of the of NLKKAS, which is part of Euronext Clearing & Supervisory Board of IBUS Company N.V., a member Depositary N.V. of the Executive Board of finance house Colonade B.V. and Chairman of the Investment Committee of BinckBank N.V. shares held:0 Kunst- en Cultuur Pensioen- en Levensverzekerings- maatschappij. Mr. Scholtes has been a member of Leo Deuzeman the Executive Boards of Postbank N.V., NMB (1952, Dutch nationality) Postbank N.V. and ING Bank N.V. and a member of Mr. Deuzeman was appointed for a term of four the Supervisory Boards of several Postbank N.V., years at an Extraordinary General Meeting of NMB Postbank N.V. and ING Bank N.V. investment Shareholders on 19 November 2007. funds. Mr. Scholtes has also been a member of the Supervisory Boards of Parcom N.V., Barings Private Mr. Deuzeman is a business economist and Equity Holding, Euroclear Nederland and RBC Dexia Registeraccountant. From 1990 to 1998 and from 26 Securities Services N.V. (formerly NIEC CDC April 2003 until April 2007, he was CFO of Kempen Labouchere Securities Services) and a member of & Co N.V., at which bank he held the position of the Executive Committees of Euronext (formerly Finance and Administration Manager from 1986 to the Amsterdam Stock Exchange and European 1990. From 1998 to 2003, Mr. Deuzeman was also Options Exchange). Mr. Scholtes also acted as managing partner of Greenfield Capital Partners project manager in the formation of the Dutch N.V. He was formerly a member of the Securities Institute and the Financial Services Management Boards of Publifisque B.V., Foundation. Managementmij Tolsteeg B.V., Kempen Management B.V., Asmey B.V., Arceba B.V., Kempen BinckBank N.V. shares held: 0. Finance B.V., Global Property Research B.V., Kempen Deelnemingen B.V., Greenpart B.V., Greenfield Hans J.K. Brouwer Management Services B.V. and Nethave (1944, Dutch nationality) Management N.V. He was also a member of the Mr. Brouwer has been a member of the Supervisory Supervisory Boards of Trustus Capital Management Board of BinckBank N.V. since 2004. He was B.V., Engage B.V. and Cegeka N.V.
Annual report 2007 reappointed for a term of two years at the General Meeting of Shareholders on 19 April 2007. Mr. Deuzeman is currently a member of the Supervisory Boards of Blue Sky Group and Mr. Brouwer represents NPM-Capital N.V. on the Intereffekt Investment Funds and a member of the Supervisory Boards of Koninklijke Jansen, Post & Management Boards of Amstel Private Equity Club, Cocx B.V. (JPC Group) and Van Meijel Kempen Property Hedge Fund Limited, Kempen Automatisering B.V. He is Chairman of the Property Master Hedge Fund Limited and Kempen Supervisory Board of Koninklijke Jumbo B.V. and a Custody Services N.V. member of the Supervisory Board of Nobel B.V. Mr. Brouwer is also a member of the Executive BinckBank N.V. shares held: 0. Committees of Stichting Leerstoel Effectenrecht (Chair of Securities Law Foundation) at the Fons A.M. van Westerloo Thierry C.V. Schaap, Chairman of the Management (1946, Dutch nationality) Board Mr. Van Westerloo has been a member of the (1971, Dutch nationality) Supervisory Board of BinckBank N.V. since 2004. He was reappointed for a term of four years at the Mr. Schaap was one of the founders of Binck General Meeting of Shareholders on 19 April 2007. Brokers N.V. (later BinckBank N.V.). He has been Chairman of BinckBank’s Management Board since Mr. Van Westerloo is a member of the Operational 1 January 2006 and is responsible for Finance, Management Committee of RTL Group S.A. He is Trading, Operations, ICT, Risk Management, IAD, also Chairman of the Bertelsmann Synergy Human Resources, Legal and Investor Relations. Committee Benelux member of the Supervisory Board of RTL Nederland B.V., a member of the BinckBank N.V. shares held as at year-end 2007: Advisory Council of DDB Amsterdam B.V., Chairman 1,022,995 of the Broadcast Business Club, a member of the General Council of the Netherlands Institute for Kalo Bagijn, member of the Management Board Classification of Audiovisual Media, a member of (1971, Dutch nationality) the Executive Committee of Media Academie, a member of the Advisory Council for Media & Mr. Bagijn was one of the founders of Binck Brokers Entertainment Management Studies at N.V. (later BinckBank N.V.). As a member of the INHOLLAND University, a member of the Management Board of BinckBank, his main areas of Management Board of the National Film Archive responsibility are Retail, Communication and Public Museum Film and Sound and a member of the Relations. 27 Board of management of the Royal Concert Building Orchestra. Mr. Van Westerloo was formerly Other positions: member of the Advisory Council of CEO of SBS Broadcasting B.V., General Manager of Antaurus Capital Management B.V. RTL 5 and Deputy General Manager of AVRO. BinckBank N.V. shares held as at year-end 2007: BinckBank N.V. shares held: 0. 1,022,995
Pieter Aartsen, member of the Management Board (1964, Dutch nationality)
Mr. Aartsen has been a member of the Management Board of BinckBank since 2006. His main areas of responsibility is Professional Services. From 1990 to 2004, Pieter Aartsen was with KAS BANK, where he held various posts in the
Institutional Banking division until his Annual report 2007 appointment as Head of Sales and Relationship Management for the Benelux in 1996. Mr. Aartsen was appointed Head of Sales and Relationship Management for the UK in 2001 and then joined Deutsche Bank AG in London as Head of European Securities Clearing and Vice-President with responsibility for product development and sales.
BinckBank N.V. shares held as at year-end 2007: 6,755. Report of the Supervisory Board
In a still highly competitive environment, Software house Syntel, which was acquired in BinckBank delivered another good performance 2006, was successfully integrated and, as expected, last year, sustaining the rising trend which started contributed to BinckBank’s results. Syntel’s in 2004. Several surveys have found that BinckBank positioning and strategy have significantly is still perceived as having greater client focus and strengthened the IT organisation, building a strong investing more in technology and product base from which BinckBank can pursue its development than other players. ambitions for its professional services.
Economic conditions were again favourable in 2007, The business process outsourcing agreement which until the securities market was hit by a financial Professional Services signed with Friesland Bank crisis in the second half-year that severely tested N.V. in 2007 should also be viewed in this light. market confidence, but price volatility created Under this agreement, BinckBank has taken over attractive trading opportunities for active the processing of transactions by Friesland Bank’s investors. clients. The business process outsourcing activities will start to contribute to the results of the For BinckBank, the highlights of 2007 were the Professional Services business unit in 2008. successful implementation of its existing strategy and the acquisition of Alex which, notwithstanding As well as these achievements, a major effort was the support of external advisers, made heavy made in 2007 to implement substantial changes to demands on the Management Board and the the regulations on time, which required extensive management. The acquisition of Alex has modifications to both systems and procedures. significantly strengthened BinckBank’s market 28 position and effected a strategically important Consistent with our strategy of winding down our expansion of the product range. Successful trading activities for own account, the bond- integration of the two organisations will also yield trading activities were hived off in 2007 to an substantial cost savings in due course. independent company to which BinckBank has partly outsourced the implementation of our Retail’s good results were not confined to the treasury policy. Effective control of the associated Netherlands. It also performed strongly in Belgium risks is guaranteed by a Risk Committee-approved and its operations in that country started to investment policy, relevant limit systems and contribute to profit in 2007, but pressure of work supervision of BinckBank’s Risk Management associated with the acquisition of Alex made it department and BinckBank’s substantial holding in necessary to defer the start-up of activities in the company. Demerger of the share-trading France until 2008. activities is planned in 2008.
The Professional Services business unit also The Supervisory Board is responsible for overseeing developed well and BinckBank has established a the policy pursued by the Management Board and
Annual report 2007 good reputation with asset managers, reflected the operations under its direction. It is also the both in the number of professional players using duty of the Supervisory Board to advise the BinckBank’s services and the number of clients and Management Board, in the best interests of the the volume of assets administered on their behalf. company and its stakeholders, in both the short and long term.
Here we report on the activities of the Supervisory Board in the past year and provide the information prescribed by the Dutch corporate governance code (hereinafter referred to as the ‘Code’). Composition of the Management The members of the Supervisory Board again Board and Supervisory Board achieved an almost 100% attendance record. The The members of BinckBank’s Management Board Supervisory Board places great value on attendance and Supervisory Board are appointed by the at meetings and takes the view that force majeure General Meeting of Shareholders on the basis of a is the only acceptable reason for absence. Access to non-binding list of candidates drawn up by the the members of the Management Board and priority shareholder. Supervisory Board for consultation between meetings was excellent and is indicative of their At the 2007 Annual General Meeting, Messrs. commitment to the company. C.J.M. Scholtes, J.K. Brouwer and A.M. van Westerloo were reappointed to the Management Activities in 2007 Board. At the Extraordinary General Meeting in The Supervisory Board’s close involvement with the 2007, Mr. L. Deuzeman was appointed as a member company’s business is evidenced by the fact that it of the Supervisory Board subject to approval by the held nine regular meetings in 2007 and the Nederlandsche Bank (DNB). DNB has granted the Chairman and individual members of the requisite approval and Mr. Deuzeman’s Supervisory Board held many informal meetings appointment is effective. The Supervisory Board with the Chairman of the Management Board. thus consists of Messrs. Scholtes, Brouwer, Van The Audit Committee also held five meetings. Westerloo and Deuzeman. The Supervisory Board’s schedule in 2008 will be essentially similar. The members of the Supervisory At the forthcoming Annual General Meeting, the Board insist on being kept informed of the Management Board will propose the company’s activities. reappointment of Mr. T.C.V. Schaap (CEO) and the appointment of Messrs. E.J.M. Kooistra (CFO) and The agendas of the Supervisory Board meetings 29 N. Bortot (Retail). Mr. K.J. Bagijn (Retail), one of the covered all aspects of the company’s operations co-founders of BinckBank, has decided to stand and included strategic, operational and down from BinckBank’s Management Board after organisational issues. The company’s strategy and long service with the company. He will be risk exposure were discussed on several occasions, succeeded by Mr. Bortot, subject to approval by the as were the findings of the Management Board’s relevant regulators. BinckBank’s Management evaluation of the structure and operation of the Board will then consist of Messrs. Schaap, Aartsen, internal risk management and control systems and Kooistra and Bortot. Mr. Bagijn has agreed to any significant changes. continue his association with the company as a consultant. The joint meetings of the Supervisory Board and the Management Board were conducted in an open The Supervisory Board is composed such that the and collegial atmosphere, allowing ample scope for members are able to act independently, both of constructive criticism, which was helpful to the one another and of the Management Board or any Supervisory Board in properly discharging its other particular or partial interest, within the supervisory and advisory responsibilities. The
framework imposed by the Supervisory Board’s Chairman’s conduct of the meetings was Annual report 2007 profile. The Supervisory Board considers that the considered satisfactory by those attending them. independence criteria defined in best-practice provision III.2.1 of the Code have been met. At the joint meetings of the Management Board In view of the growth in the scale and scope of and Supervisory Board, there was frequent and BinckBank’s activities, the Supervisory Board paid detailed discussion of strategy, prompted partly by particular attention to broadening and deepening Rabobank Nederland putting Alex up for sale. the organisation and the available knowledge and Following the decision to investigate the feasibility expertise, thereby making an important of acquiring Alex, the Supervisory Board closely contribution to management continuity at all monitored the valuation and bidding process and levels in the organisation. Working closely with the the ensuing negotiations and gave the Management Board, the Supervisory Board also Management Board the benefit of its advice. took steps to widen the span of control of the Management Board by augmenting it with the The acquisition of Alex was a major transaction for appointment of a CFO. BinckBank and success depended largely on how well the task of organisational and technical In the absence of the Management Board, the integration was performed. Financing the Supervisory Board discussed the functioning of the acquisition required a relatively large rights issue Supervisory Board itself and of its individual of new shares. The issue was successfully members and the conclusions to be drawn. Taking completed in December, in a volatile capital the above considerations into account and market, demonstrating the shareholders’ trust in exercising the necessary discretion, this the rationale for the acquisition. examination addressed the profile, composition and competence of the Supervisory Board and that We expect this method of funding the acquisition of its individual members. of Alex to bring about rapid improvement in BinckBank’s solvency ratio. It may also warrant a Likewise in the absence of the Management Board, review of BinckBank’s dividend policy and the Supervisory Board discussed the functioning of 30 necessitate the repurchase of shares to maintain the Management Board and of its individual the company’s shareholders’ equity at an efficient members, again taking the above considerations level. into account. The Supervisory Board came to the unanimous conclusion that the Management Board With some delay due to the pressure of work in as a whole and its individual members had again 2007, we shall continue to pursue the existing performed well in the past year. strategy for both Retail and Professional Services, supplemented with the services provided under the Alex label.
The papers produced for the meetings of the Supervisory Board and its joint meetings with the Management Board were circulated in good time and were of a good standard. The papers provided the basis for well-informed discussion of all
Annual report 2007 relevant developments and risks within the company and of the policy and strategy, which is essential to prudent decision-making. Functioning of the Management Committees Board The Supervisory Board has appointed an Audit The Management Board functioned last year as a Committee from among its members. The Audit close-knit professional team whose individual Committee currently consists of Messrs. J.K. members performed their tasks to an extremely Brouwer (Chairman), C.J.M. Scholtes and L. high standard and were able to focus particular Deuzeman. attention on the specific areas allocated to them while discharging their broader responsibilities. The Audit Committee is responsible for overseeing The exchange of specific information on these the implementation and operation of the system of areas between the individual members of the internal control and risk management and Management Board and between the Management monitoring the implementation of the external Board and Supervisory Board was prompt and of auditors’ recommendations and the functioning of good quality, enabling those concerned to perform the internal audit department. Supervision of the their tasks satisfactorily. The allocation of company’s financial reporting is the responsibility responsibilities among the members of the of the Supervisory Board. The Audit Committee met Management Board was found to be balanced and five times in 2006. All the meetings are attended effective. By exchanging expertise and experience by a member of BinckBank’s Management Board. intensively and proactively, the members of the Management Board were able, each from the The Internal Audit department was strengthened perspective of their individual backgrounds, to put in 2007 with the recruitment of an IT auditor. On the collegial principle of management into 1 January 2008, Internal Audit and Compliance practice. were split into independent departments. Reflecting the company’s growth, two new The Management Board continued to work members of staff were appointed in the Internal 31 assiduously to develop and extend the available Audit department, an operational/financial auditor expertise within in the operational organisation, and an IT auditor. the IT organisation and the staff departments. The Supervisory Board valued in particular the role Three members of the Internal Audit department played by the Chairman of the Management Board attended the meetings of the Audit Committee in in the acquisition of Alex. 2007.
The Management Board achieved the financial, The work of the Internal Audit department is based commercial and operational targets and the profit on a risk analysis and audit schedule compiled by generated in 2007 met the ambitious budget. On the Internal Audit department and approved by the that basis, the Supervisory Board agreed Audit Committee. The audits performed by the unanimously that the Management Board had Internal Audit department and the findings and delivered a strong performance. In evaluating the recommendations were discussed at the meetings performance of the Management Board, the of the Audit Committee. The general conclusion Supervisory Board also took into account the was that the internal control measures and the
successful completion of the acquisition of Alex organisational safeguards in respect of the risks Annual report 2007 and the related rights issue. For those reasons, the covered by the analysis were adequate. Specific Supervisory Board has decided to exercise its comments and recommendations by the Audit discretionary powers to the full and to increase the Committee are discussed in the section entitled Management Board bonus by 25%. ‘Risk management’.
The Audit Committee also discussed compliance with the recommendations made by the external auditors in their long-form report on the 2006 audit. Key features of 2007 remuneration 2007 remuneration policy policy General General The remuneration received by the members of In accordance with the principles of the Code BinckBank’s Management Board consists of a) a concerning the adoption and disclosure of competitive fixed basic salary which is paid remuneration policy and the provisions of Section regularly, b) a variable element, as a reward for 135 of Book 2 of the Netherlands Civil Code, the meeting short-term (one-year) targets, consisting revised remuneration policy for the Management of an annual bonus paid in cash or at least 25% and Board and the related rules on remuneration in the at most 50% in ‘optional shares’, and c) a variable form of shares (hereinafter referred to as the ‘2006 element, as a reward for achieving medium/long- remuneration policy’) were adopted and approved, term (three-year) targets, in the form of free respectively, by the Annual General Meeting on BinckBank shares. 27 March 2006. Fixed remuneration At the 2007 Annual General Meeting, the 2006 The fixed annual remuneration of the members of remuneration policy was revised to provide for the Management Board for 2007 was set at a level participation by the members of the Management which is appropriate to the size of the organisation Board in a pension plan into which the company and the responsibilities associated with managing pays an annual contribution of 20% of their basic a listed company. The fixed remuneration annual salary. The revised 2006 remuneration represents adequate recompense for the effort policy (hereinafter referred to as the ‘2007 invested in and responsibilities assumed by the remuneration policy’) and the remuneration report members of the Management Board which is for the 2007 financial year have been posted on the appropriate to the level of their positions. The 32 company’s website (www.binck.com). company has grown to such an extent that we intend to present a revised remuneration policy to The Supervisory Board considers that the growth the forthcoming Annual General Meeting on 6 May percentages stated in the 2007 remuneration 2008 for approval. policy as criteria for qualifying for free shares are still realistic. Other regular elements such as health insurance do not in principle form part of the remuneration The key features of the 2007 remuneration policy package. Members of the Management Board are and its implementation in 2007 are outlined below. eligible for a company-car scheme on similar terms A summary is also given of the remuneration policy to those applying to the company’s commercial which the forthcoming Annual General Meeting staff. Members of the Management Board are in will be invited to approve. This section concludes principle eligible for a pension plan which is similar with the Supervisory Board’s assessment. in terms of cost to the company to that applying to the majority of the other staff of BinckBank and its subsidiaries in the Netherlands. Annual report 2007 Variable remuneration General The purpose of the variable remuneration is to reward the members of the Management Board for exceptional performance and reinforce their commitment to BinckBank and the achievement of its short and medium/long-term targets. The variable element therefore serves as a significant incentive to grow shareholder value in the short and medium/long term. The variable element is calculated as follows. If the The income tax due on the part of the cash bonus members of the Management Board meet the paid in optional shares will be paid by the annual budgets approved by the Supervisory Board company. If some or all of these shares are sold in the light of the short-term targets, they qualify within three years, the income tax paid will be for annual variable remuneration approximately refunded immediately to the company by the equal to half of their fixed annual salary. Management Board member concerned. BinckBank’s Supervisory Board has discretionary powers to vary this amount by 25%. If they achieve Medium/long-term target and remuneration the medium/long-term targets, they may also The medium/long-term target is set by the qualify for free shares. Supervisory Board in terms of profit after tax, expressed as earnings per share, a quantifiable and Short-term target and remuneration measurable performance criterion. The short-term target is to meet the annual budget set by the Supervisory Board for profit after The reward for achieving the medium/long-term tax, expressed as earnings per BinckBank share, a target takes the form of an award of shares for nil quantifiable and measurable performance consideration (‘free shares’). criterion. The medium/long-term target is growth of at least The reward for achieving the short-term target is a 50% in earnings per BinckBank share over a rolling bonus. The bonus is reduced on a pro rata basis if three-year period, starting from the first financial the individual was a member of the Management year after that in which the individual was Board for less than the full year. Qualification for appointed to the Management Board (and was and award and payment of the bonus are also awarded optional shares). subject to any additional restrictions under the 33 contract of employment. The growth in earnings per share is initially calculated relative to the profit as shown by the The Supervisory Board may, at its discretion, apply adopted financial statements for the first year of a maximum uplift of 25% to the bonus if justified membership of the Management Board and by the results. subsequently relative to each succeeding financial year. If the short-term target is not fully achieved, due for example to external circumstances beyond the Whether the growth in earnings per share for the Management Board’s control, the Supervisory third financial year has been achieved and thus Board may, at its discretion, award the whether free shares are to be awarded is decided Management Board members a bonus of a on the basis of the press release announcing the maximum of 25% of their fixed annual salary. results for the third financial year.
Members of the Management Board may opt to Free shares are awarded only for the optional receive at least 25% and at most 50% of their total shares awarded three years previously to and still
cash bonus in shares (‘optional shares’). These held by members of the Management Board. The Annual report 2007 shares cannot be sold for three years. date of award of the free shares is the date when the company publishes a press release announcing The number of shares they receive depends on the the results for the previous financial year. closing price on the date of award. The date of award is the date when the company publishes a press release announcing the results for the previous financial year. Pursuant to the foregoing, one free share will be Revision of 2007 remuneration policy awarded for every two optional shares held if The 2008 Annual General Meeting of Shareholders earnings per share grow by 50% or more and one will be invited to adopt a revision of the 2007 free share will be awarded for each optional share remuneration policy (the revision hereinafter held if earnings per share grow by 100% or more. referred to as the ‘2008 remuneration policy’). The Half shares are rounded downwards. Income tax on basic salary of the Management Board members free shares thus awarded is for the Management has not been revised for three years. Now that the Board member’s account and risk. strategic targets for the period 2004–2007 have been met (the significant growth of Retail in the Given the company’s present stage of development, Netherlands, the strong position attained by the targets can be considered ambitious and Professional Services which has culminated in a challenging. The Supervisory Board checks each first profitable BPO contract and the successful year that the growth percentages required to move into Belgium as the next step in the qualify for an award of free shares are realistic and company’s international expansion) and the submits any proposed changes which may be company’s scale and scope have been expanded by necessary to the approval of the Annual General the acquisition of Alex, the remuneration policy for Meeting. 2008 and subsequent years has been reviewed by the Supervisory Board with the support of a A member of the Management Board only qualifies professional adviser. In accordance with the Code, for an award of free shares if he is in post at the its proposal will be presented to the forthcoming end of the third year. The free shares must be held Annual General Meeting of Shareholders for for five years or until termination of employment if approval. earlier, failing which the Management Board member is obliged to return the relevant free In essence, the proposal is to base the 34 shares immediately to the company. remuneration levels on the 25th percentile of the reference market, consisting of the companies Implementation of 2007 which currently constitute the Amsterdam Midcap remuneration policy Index (AMX). The short-term variable remuneration, The remuneration of the members of BinckBank’s which will be paid entirely in cash, will be linked to Management Board for the period 1 January– predetermined performance targets. These targets 31 December 2006 was determined with reference will be both quantitative and qualitative, with to the remuneration policy. As a reward for meeting equal weighting. The long-term variable the predetermined annual budget, 25% uplift was remuneration will be entirely unrelated to the applied to the variable remuneration by the short-term variable remuneration and will consist Supervisory Board in recognition of the good of a conditional allocation of performance-related results. ‘phantom shares’.
The members of the Management Board participated in the applicable pension scheme. The
Annual report 2007 gross annual salary of the members of the Management Board was € 215,000. The variable remuneration received by Messrs. Schaap and Bagijn was set at € 281,000 (including the bonus in respect of the ‘free shares’). Mr. Aartsen’s variable remuneration was set at € 228,000. In conclusion 2007 was another successful year. It was also an eventful year, one of the highlights being the acquisition of Alex and the rights issue we undertook to finance it. Thanks to the excellent leadership provided by the Management Board and our other managers and the commitment, expertise and dedication of all our staff, we achieved all our main commercial targets and, by integrating and combining the potential of BinckBank and Alex, added a successful new chapter to the still brief history of our company. We take this opportunity to thank the Management Board and all our staff for their hard work and we are confident that they will again play a pivotal role in 2008.
The Supervisory Board
Amsterdam, 11 March 2008
C.J.M. Scholtes (Chairman) J.K. Brouwer 35 A.M. van Westerloo Annual report 2007 Acquisition of Alex
On 30 October 2007, BinckBank reached agreement Since the acquisition, the existing strategy has with Rabobank on the acquisition of all of the been refined and expanded with the addition of assets and liabilities of Alex, then part of the Alex’s online savings services and online advice and Rabobank group, for approximately € 387 million in asset management services. More information on cash. Most of the acquisition price was financed this aspect can be found in the section ‘Profile, with € 385 million of shareholders’ equity, raised by mission and strategy of BinckBank N.V.’ on page 2. issuing new ordinary shares in a rights issue. More information on the rights issue is given in the The integration of the operational and ICT ‘Shareholder information’ section on page 10. The activities of BinckBank and Alex and the remainder was financed from available cash integration of the Alex marketing and sales reserves. The acquisition was formally completed activities into BinckBank’s Retail business unit are on 31 December 2007. expected to yield substantial synergy and operational gains amounting to € 18–20 million The acquisition represents an important and (before tax) per year. The integration process will attractive strategic step. It will enable BinckBank to be completed in 2010. The majority of synergy consolidate its operations by: gains will probably be made in the last two years - providing it with two strong labels which of the integration process. The non-recurring together make it a leading online bank for integration costs relating to the acquisition total investors which ranks among the top five in approximately € 5 million and will mainly be Europe; charged to the 2008 result. Alex has been part of - expanding the client base with a more diversified BinckBank’s Dutch Retail business unit since 36 product range; 1 January 2008 and Alex’s results will be included in - achieving substantial economies of scale and the Retail business unit’s consolidated results from cost savings by combining the Alex and Binck that date. organisations; and - benefiting from the combined innovative Under IFRS, BinckBank’s future results will include potential and long experience of the two Dutch amortisation of the intangible assets identified at pioneers in internet brokerage. the time of acquisition of Alex. This amortisation will reduce the net profit, but will not affect the By year-end 2007, BinckBank and Alex together had operational cash flows or the cash position. 214,000 accounts and € 8.2 billion in client BinckBank will also benefit for the next ten years accounts (in cash and securities) and executed from additional tax savings in respect of the around 6.6 million transactions for private acquisition. To provide investors with a clearer view investors. Different services are provided under the of the development of BinckBank’s profitability, net Alex and Binck labels. To maintain the existing profit adjusted for these two items will be reported services to Alex and Binck clients, both labels are from 2008 onwards. The combination of a larger
Annual report 2007 being preserved and their product ranges are and more diversified client base and the unchanged. The combination of BinckBank and substantial synergy and operational gains are Alex will hold a strong position on the private expected to translate into growth in the adjusted market in the Netherlands right from the start. earnings per share from 2008. By bringing both labels together in one company, BinckBank is able to reach a wider group of investors, in the Netherlands and outside. In accordance with DNB’s capital adequacy requirements, the majority of the acquisition price was financed with shareholders’ equity. BinckBank expects the amortisation of the intangible assets that have been identified, coupled with retained profit, to improve its BIS ratio significantly in the years ahead. BinckBank intends to pursue strict capital management, which is expected to give a BIS ratio of between 12% and 20% based on the Basel II guidelines. If the upper limit of this band is approached or exceeded, BinckBank intends to distribute the surplus capital to the shareholders by repurchasing shares or paying extra dividend. Under the current dividend policy, 50% of the net profit each year is distributed as dividend. BinckBank will seek to maintain this policy in future, but based on the adjusted net profit. 37 Annual report 2007 Annual report 2007 38 Corporate Governance Corporate governance
A. Introduction them. As mentioned above, the ‘comply or explain’ Corporate governance was a frequent subject of principle has been enshrined in law. debate again last year, on several occasions straining relations between the various stakeholders in listed Best-practice provision 1.2 of the Code requires that companies. In many cases, the debate centred on the each substantial change in the company’s principles of good governance expounded in the corporate governance structure or its compliance Dutch Corporate Governance Code (the ‘Code’). The with the Code be submitted to the General end of the evolving corporate governance story is Meeting of Shareholders for discussion under a not yet in sight. separate agenda item.
The Code has assumed the status of law, in the As a modern and innovative company, BinckBank sense that all listed companies are now required to endorses in large measure the principles include in their annual reports a statement of expounded in the Code, which have received broad compliance with the Code’s principles and best- support. The proposed procedure for adoption of practice provisions as they apply to their the Code by BinckBank was discussed at the Annual management and supervisory boards. If they have General Meeting of Shareholders on 21 April 2005 not complied with those principles or best-practice and was implemented in the course of 2005, inter provisions and/or do not intend to do so in the alia via amendment of the Articles of Association. current or next financial year, they are required to There has been no substantial change in state the reasons in their annual report (the BinckBank’s corporate governance structure or ‘comply or explain’ principle). compliance with the Code since then. Best-practice 40 provision 1.2 of the Code is therefore not The way in which Dutch listed companies applicable. implement an effective and transparent system of checks and balances is influenced by evolving social The main features of BinckBank’s corporate values and developments on the capital market. governance structure are explained under B. below. The Corporate Governance Code Monitoring An explanation of the best-practice provisions of Committee was set up in 2004 to address this the Code which are not complied with and why and issue. Its responsibilities include ensuring that the to what extent they are departed from is given in Code is kept up-to-date and operable, thereby C. The statements prescribed by Article 10 of the maintaining a high standard of corporate Takeover Directive Decree are given under D. and governance. The Corporate Governance Code the conclusions are presented under E. Monitoring Committee published several reports on compliance with the Code and made a number Reasons are given for any departure from the of recommendations. The Monitoring Committee’s Code’s provisions and in some cases an explanation recommendations of May 2007 recently resulted in is given of how the Code’s provisions are
Annual report 2007 a bill to strengthen the Dutch corporate implemented, where possible adopting the same governance system. classification of the principles and best-practice provisions as that employed in the Code. According to best-practice provision 1.1 of the Code, the broad outlines of the corporate governance A more detailed description of BinckBank’s structure of the company must be explained each application of the Code is given in a separate year in a separate chapter of the annual report, annex. This has been posted on the company’s partly by reference to the principles set forth in the website (www.binck.com), to give BinckBank’s Code. In this chapter, the company must also shareholders and other stakeholders access to expressly state the extent to which it applies the information on how the company puts into practice best-practice provisions of the Code and, if it does the standards of good corporate governance not, why and to what extent it does not apply embodied by the Code. B. Legal structure in cash. The pre-emptive right may be restricted or In this section, an explanation is given of the main suspended by a resolution of the General Meeting. features of BinckBank’s corporate governance Pre-emptive rights can also be restricted or structure. suspended by the corporate body referred to above, if it has been designated by resolution of the General General Meeting, for a maximum of five years, as BinckBank is a public limited liability company authorised to restrict or suspend pre-emptive which is listed on Euronext Amsterdam. BinckBank rights. has several Dutch subsidiaries and one foreign subsidiary. BinckBank also has offices in Belgium If less than half of the issued capital is represented and France. BinckBank is subject to supervision by at the General Meeting, a resolution by the General both the Nederlandsche Bank (‘DNB’) and the Meeting to restrict or suspend pre-emptive rights, Authority for the Financial Markets (‘AFM’). One to designate another corporate body as authorised subsidiary, Binck Securities B.V., is licensed as an to do so or to withdraw such designation requires a investment institution. The foreign subsidiary Binck majority of at least two-thirds of the votes cast. België N.V. is subject to supervision by local Such resolutions may only be adopted by the securities regulators and holds the requisite General Meeting on a motion by the priority licence. shareholder.
At central level, BinckBank has a Compliance Voting rights Officer who is responsible for monitoring Each BinckBank share confers the right to cast one compliance with the applicable codes of conduct vote. Resolutions are adopted on a simple majority and related securities legislation and regulations. of the votes cast, except where a larger majority is These codes of conduct reflect the values, such as prescribed by law or the Articles of Association. For 41 integrity and trustworthiness, to which BinckBank example, BinckBank’s Articles of Association state attaches great importance. that a resolution to amend the Articles of Association, on a motion of the priority Shares shareholder, requires a majority of at least two- BinckBank’s authorised capital consists of listed thirds of the votes cast. ordinary shares and 50 priority shares, each with a nominal value of € 0.10. The priority shares are not Subject to the Supervisory Board’s approval, listed on the stock exchange and are held by BinckBank’s Management Board may, pursuant to Stichting Prioriteit Binck (the ‘priority shareholder’). the Articles of Association, resolve to set a record Special controlling rights are vested in the priority date when convening meetings of shareholders. shareholder, as stipulated in the company’s Articles BinckBank sets record dates and thus complies of Association which are posted on the company’s with best-practice provision IV.1.7 of the Code. website. Further information on the position of the priority shareholder is given below. No depositary Shareholder structure receipts have been issued for BinckBank shares. The shareholders who have given notification of
their holdings in BinckBank pursuant to Section 5.3 Annual report 2007 Issue of shares of the Financial Supervision Act (Wft) are listed on The issue of shares requires a resolution of the page 12 of this annual report. No shareholder General Meeting of Shareholders, which may agreements exist between BinckBank and the assign this authority to another corporate body for major shareholders. a maximum of five years. Save as provided otherwise by law, each shareholder will have a pre- As at year-end 2007, the members of the emptive right to issues of ordinary shares in Management Board of BinckBank N.V. held the proportion to the total amount of his shares. following shares: Shareholders have no pre-emptive right to shares - T.C.V. Schaap : 1,022,995 shares which are issued a) to employees of the company - K.J. Bagijn : 1,022,995 shares or a group company or b) for payment other than - P. Aartsen : 6,755 shares The shareholdings of Messrs. Schaap, Bagijn and comply and the reasons for and extent of Aartsen are covered by the lock-up arrangement departures from those provisions. referred to in the prospectus of 26 November 2007 in connection with the acquisition of Alex. Remuneration Principle II.2 and the related best-practice provisions Management Board of the Code recommend that the remuneration received by members of the company’s Management Two-tier management structure Board should be sufficient to enable the company to BinckBank has a two-tier management structure, recruit and retain qualified and expert individuals. which means that the executive and supervisory This is achieved by developing a system of objective functions are assigned to different corporate measurement criteria, which are defined in a bodies – the Management Board and the remuneration policy adopted by the General Supervisory Board. BinckBank believes that this Meeting. structure ensures an adequate system of checks and balances, whereby the Management Board is The remuneration report drawn up and published responsible for the day-to-day running of the by the Supervisory Board explains how the company and its short-term, medium-term and remuneration policy has been implemented in the long–term strategy, while the Supervisory Board past financial year. This report, or in any event the oversees and advises the Management Board. remuneration policy which it embodies, will for the time being guide the Supervisory Board when Shared membership determining the various components of the pay The Management Boards of BinckBank and the packages of individual members. majority of its subsidiaries share a common membership, i.e. the majority of the members of In accordance with the principles of the Code 42 BinckBank’s Management Board are also members concerning the adoption and disclosure of of the Management Boards of BinckBank’s remuneration policy and the provisions of Section subsidiaries. This arrangement is conducive to 135 of Book 2 of the Netherlands Civil Code, the consistent corporate policy and strategy. revised remuneration policy for the Management Board and the related rules on remuneration in the Conflichts of interest form of shares (hereinafter referred to as the ‘2007 In connection with its business process outsourcing remuneration policy’) were adopted and approved, activities, BinckBank N.V. entered into a service respectively, by the Annual General Meeting on 19 agreement in 2007 with Friesland Bank N.V., which April 2007. The 2007 remuneration policy and the holds 15.09% of the shares in BinckBank N.V.'s remuneration report for the 2007 financial year capital. Best-practice provision III.6.4 of the Code have been posted on the company’s website was complied with in respect of this agreement. (www.binck.com).
In the course of its customary services to clients, The 2008 Annual General Meeting of Shareholders BinckBank N.V. advanced securities credit to Messrs. will be invited to adopt a revision of the 2007
Annual report 2007 T.C.V. Schaap and K.J. Bagijn in 2007. These credit remuneration policy (the revision hereinafter being transactions could potentially give rise to a conflict referred to as the ‘2008 remuneration policy’). In of interest, since Messrs. Schaap and Bagijn, as essence, the proposal is to base the remuneration members of the Management Board, may have levels on the 25th percentile of the reference influence over the terms and conditions on market, consisting of the companies which which this credit was advanced. Best-practice currently constitute the Amsterdam Midcap Index provisions II.3.2.-II.3.4. of the Code were complied (AMX). The short-term variable remuneration, with in respect of these credit transactions. which will be paid entirely in cash, will be linked to predetermined performance targets. These targets C. Compliance with the Code will be both quantitative and qualitative, with An explanation is given in this section of the best- equal weighting. The long-term variable practice provisions with which BinckBank does not remuneration will be entirely unrelated to the short-term variable remuneration and will consist achievement of clearly quantifiable and challenging of a conditional allocation of performance-related targets, which have been defined in advance. The ‘phantom shares’. performance criteria must be stated in the remuneration report. By retrospectively evaluating the outcome of the remuneration policy for the individual members of Under the remuneration policy embodied in the the Management Board, the shareholders and remuneration report, members of the Management other stakeholders in BinckBank are well placed to Board may opt to receive at least 25% and at most reach an informed opinion on remuneration, both 50% of their cash bonus in shares, which must be collective and individual. This will ensure a practical retained for three years. Depending on the and balanced result, with the shareholders being achievement of a specified percentage rate of able to exert significant influence on the growth in net earnings per share, additional shares remuneration of Management Board members, may be awarded for no financial consideration, at without shareholders’ meetings turning into the rate of one BinckBank share for every one debates on the pay received by individuals. BinckBank share or every two BinckBank shares thus acquired and retained. These shares must be Best-practice provision II.2.10 of the Code specifies the held for a period of five years or until termination information to be provided by the Supervisory Board in of employment if earlier. its overview of the remuneration policy planned for the next financial year and subsequent years. In the opinion of the Supervisory Board, this method of remuneration adequately reinforces the BinckBank complies with this best-practice Management Board members’ long-term provision if and to the extent that it does not commitment to the company and the furtherance relate to information which relates to the of its interests. By giving Management Board 43 company’s competitive position, such as financial members the choice of receiving part of their cash and commercial objectives. The Management Board bonus in shares, the allocation of shares (for a and Supervisory Board do not consider it to be in financial consideration) is – indirectly – linked to the interests of the company or its stakeholders to the achievement of clearly quantifiable and disclose such information. The same reservation challenging targets. Because they receive part of applies to publication of the main elements of their cash bonuses in shares, they are effectively contracts between Management Board members buying their optional shares out of their bonuses. and the company immediately they are signed, as The targets are not disclosed because they involve required by best-practice provision II.2.11 of the information which relates to the company’s Code, if and to the extent that this relates to competitive position, such as financial and market-sensitive information. commercial objectives, and disclosure would not be in the interests of the company or its stakeholders. Stock options/shares Shares are awarded for no financial consideration Best-practice provision II.2.3 of the Code treats the in the event of a specified percentage rate of allocation of shares for no financial consideration as growth in net earnings per share being achieved.
a form of variable remuneration. According to the These shares must be retained for at least five Annual report 2007 Code, the purpose of a variable element should be to years or until termination of employment if earlier. reinforce the Management Board members’ long- term commitment to the company and the Regulations embodying rules on the ownership of furtherance of its interests. According to the Code, and transactions in securities by Management this can be achieved by requiring Management Board members other than those issued by their Board members who are allocated shares for no ‘own’ company financial consideration to undertake to retain them One of the recommendations of best-practice for at least five years or until termination of their provision II.2.6 of the Code is that the Supervisory employment. Since these shares are allocated for no Board should adopt regulations embodying rules on financial consideration, the best-practice provision the ownership of and transactions in securities by requires that allocation be dependent on the Management Board members other than those issued by their ‘own’ company. These regulations Supervisory Board should be posted on the company’s website. Committees BinckBank complies with this best-practice Principle III.5 of the Code recommends that all provision, but for practical reasons has integrated Supervisory Boards appoint an audit committee, a these regulations into the Management Board remuneration committee and a selection and regulations. After approval by the Supervisory appointments committee to perform certain tasks Board, the latter regulations were adopted by the on behalf of and under the responsibility of the Management Board at the end of 2004 and posted Supervisory Board. If the Supervisory Board is too on the company’s website (www.binck.com) in small, the appointment of committees may be 2005. The regulations have therefore been adopted dispensed with, in which case the entire indirectly by the Supervisory Board and the Supervisory Board is responsible for performing the requirements of best-practice provision II.2.6 of the tasks and functions of those committees as Code have been met. The Management Board referred to in the best-practice provisions. members are also bound by the company’s current regulations, which they have agreed to observe, on Because its Supervisory Board consists of no more insider trading, price-sensitive information and than four members, BinckBank has only appointed personal investment transactions. an audit committee in accordance with the recommendation in principle III.5 of the Code. The Suspension/dismissal tasks and functions of the remuneration According to best-practice provision IV.1.1 of the committee and selection and appointments Code, it must be possible for a resolution to dismiss committees described in the best-practice a member of the Management Board or provisions are applicable in full, are performed by Supervisory Board to be adopted by an absolute the entire Supervisory Board and are included as 44 majority of the votes cast, but it may be made a such in the Supervisory Board’s regulations. condition that this majority represents a given proportion of the issued capital, which may not Best-practice provision III.5.4 refers to a number of exceed one-third. areas on which the audit committee should focus in supervising the Management Board. BinckBank Pursuant to BinckBank’s Articles of Association, a applies this best-practice provision, but some of resolution of the General Meeting to suspend or these supervisory tasks have, for practical reasons, dismiss a member of the Management Board or been assigned to the Supervisory Board as a whole Supervisory Board requires a majority of at least and are thus included in the Supervisory Board two-thirds of the votes cast, representing more regulations. than half of the issued capital. Independence Best-practice provision IV.1.1 of the Code will be Principle III.2 of the Code states that members of implemented when the Articles of Association are the Supervisory Board must be able to act critically next amended. In the interim, as the members of and independently of one another, of the
Annual report 2007 BinckBank’s Management Board and Supervisory Management Board and its members and of any Board have adopted this best-practice provision particular and partial interests. According to best- and compliance is thus assured. The members of practice provision III.2.1, the Supervisory Board BinckBank’s Management Board and Supervisory must not include more than one member who is Board also, on a purely voluntary basis, complied not independent within the meaning of best- with the majority and quorum requirements of this practice provision III.2.2. These independence best-practice provision in respect of any resolution criteria are satisfied. of the General Meeting to suspend them. Regulations embodying rules on the ownership of External auditors and transactions in securities by Supervisory Board Ernst & Young Accountants were appointed to members other than those issued by their ‘own’ audit the 2007 annual accounts by the Annual company General Meeting of Shareholders on 19 April 2007. One of the recommendations of best-practice In accordance with best-practice provision V.2.3 of provision III.7.3 of the Code is that the Supervisory the Code, the Management Board and the Audit Board should adopt regulations embodying rules on Committee make a thorough assessment of the the ownership of and transactions in securities by functioning of the external auditors at least once Supervisory Board members other than those issued every four years. The main findings are by their ‘own’ company. These regulations have been communicated to the General Meeting to assist in posted on the company’s website. considering the nomination for appointment of the external auditors. To ensure the independence of BinckBank complies with this best-practice the external auditors, BinckBank required in 2004 provision, but for practical reasons has integrated that one partner be rotated, which was duly done. these regulations into the Management Board regulations. These regulations were adopted by the Anti-takeover defences Supervisory Board in 2004 and have been posted Stichting Prioriteit Binck (the ‘priority shareholder’) on the company’s website (www.binck.com). Apart holds 50 priority shares in BinckBank N.V. Under the from the fact that the Supervisory Board has not Articles of Association, the priority shareholder has adopted separate regulations, the requirements of a central role in a (limited) number of important best-practice provision III.7.3 of the Code have been decisions. Management Board and Supervisory met. The Supervisory Board members are also Board members, for example, are appointed from a bound by the company’s current regulations, which non-binding list of candidates drawn up by the they have agreed to observe, on insider trading, priority shareholder. A resolution to amend the 45 price-sensitive information and personal Articles of Association can only be adopted on a investment transactions. proposal of the priority shareholder, and the priority shareholder determines what part of the Minutes (remaining) profits is to be added to reserves. According to best-practice provision IV.3.8 of the Code, the minutes of the General Meeting of In essence, the purpose of the priority shareholder Shareholders must be made available on request to is to counter any influence over BinckBank’s shareholders within three months of the meeting, management or operations which might be after which the shareholders must be given three prejudicial to the independence of the company months to comment on the minutes. The minutes and its related enterprise and to promote good must then be adopted in the manner prescribed by governance of its affairs. The Executive Committee the Articles of Association. of the priority shareholder has three members. Member A is appointed by BinckBank’s Supervisory This best-practice provision only applies to Board, member B by BinckBank’s Management BinckBank if the Chairman of the Management Board and member C by members A and B
Board and/or the Management Board does not together. The incumbent members A, B and C of the Annual report 2007 decide to have a notarial record made of the priority shareholder’s Executive Committee are meeting, in which case BinckBank will comply with Messrs. C.J.M. Scholtes (Chairman of BinckBank’s the best-practice provision. If it is decided to have a Supervisory Board), T.C.V Schaap (Chairman of notarial record made of the meeting, or at least of BinckBank’s Management Board) and J.K. Brouwer the resolutions adopted by the meeting, that record (member of BinckBank’s Supervisory Board), will have absolute evidential force. In the absence of respectively. evidence to the contrary, it will be accepted by all as As stated in the 2006 annual report, BinckBank’s an accurate representation of the proceedings of Management Board and Supervisory Board see no the meeting. It is permitted in that case not to justification at present for rescinding or restricting include responses by shareholders in the record. the priority shareholder’s powers. The Management Board and Supervisory Board consider that maintaining the priority shareholder’s position i) The service agreement entered into with helps to maintain the continuity of BinckBank N.V. Friesland Bank N.V. in recent years states that, in and its short-term and long-term policy by the event of a specifically defined change in ensuring that due consideration is given to the BinckBank’s control structure, Friesland Bank N.V. interests of all stakeholders in the company. will be entitled to terminate the agreement. j) Information on the severance arrangements for D. Article 10 of the Takeover Directive members of the Management Board is given in Decree the remuneration rapport for the 2007 financial The statements prescribed by Article 10 of the year. Takeover Directive Decree are given in this section. E. Conclusion a) An overview of the company’s capital structure, There has been no substantial change in the the different classes of share and the associated company’s corporate governance structure or its rights (including special controlling rights) and application of the Code since the 2005 Annual obligations is given on page 10 of this annual General Meeting, then, other than the report, together with the percentage of the amendments to the Articles of Association which issued capital which each class of share were adopted by the Extraordinary General represents. Meeting on 19 October 2005 to bring them into b) There are no restrictions on the transfer of line with the Large-Company Regime Amendment shares by the company. Act (Wet aanpassing structuurregeling), which came c) Shareholdings in the company of which into effect on 1 October 2005, and the Code. The disclosure is prescribed by Section 5.3 of the opportunity was also taken to make a number of Financial Supervision Act (Wft) are stated on editorial and/or technical amendments to the page 12 of this annual report. Articles of Association. BinckBank complies with 46 d) There are no share schemes for employees other the Code’s best-practice provisions, except as than employees of Syntel Beheer B.V. and explained in this section. members of the Management Board. e) The voting rights attaching to the company’s shares are not subject to any restrictions. No depositary receipts have been issued for the shares. f) The company is not aware of any agreements with shareholders which might give rise to any restrictions on the transfer of BinckBank shares or on the voting rights. g) The procedure for appointment and dismissal of the members of the Supervisory Board and Management Board and the rules for amendment of the Articles of Association are
Annual report 2007 defined in the company’s Articles of Association and are summarised on page 44 of the annual report. The Articles of Association are posted on the company’s website. h) The powers of the Management Board in respect of the issue of the company’s shares and the acquisition of shares by the company are explained on page 41 of the annual report. For further information, see the company’s Articles of Association and the minutes of the General Meeting of Shareholders, which are posted on the company’s website. Annual report 2007 47 Annual report 2007 48 In-control statement Risk management
Annual report 2007 49 Risk management
All business involves risk and BinckBank is exposed general and the markets which are relevant to the to various risks in the course of its operations, company in particular. Like other banking which it seeks to manage prudently and institutions, BinckBank relies on the trust of private responsibly. clients. Because of its relative youth, the absolute size of its shareholders’ equity, its stock exchange Business strategy listing and its large client base, BinckBank is By offering our clients a high-quality product at particularly sensitive to ‘confidence issues’. The low prices, in combination with our intensive client need to avoid such issues in all cases results inter focus, BinckBank makes them ambassadors for our alia in BinckBank adopting a risk-averse stance in services. We create shareholder value for investors the financial arena. in BinckBank shares by concentrating on growing our customer base and maximising customer Banking activities satisfaction. By maximising customer satisfaction, BinckBank’s banking operations are relatively we aim to maintain our market leadership in online simple, consisting of lending (securities credit) investment in the Netherlands and grow into the secured against readily liquidatable securities largest European full-service online bank for portfolios, facilitating payments to regular contra investors. accounts with other banking institutions and interest-based activities relating to client accounts. Focusing primarily on independent private These activities are in general classed as relatively investors, BinckBank seeks further growth in online low-risk. investment advice, asset management and savings 50 for private investors. Our strategy is designed to BinckBank has a very strong liquidity position. Our achieve market leadership in services to asset clients open accounts with BinckBank in order to managers in the Netherlands and broaden our invest, but it is virtually impossible in practice to services to include banks by insourcing securities keep investment at 100% and an average of 10–15% order execution, securities administration and of the client accounts (cash and securities) are held securities-related payments (BPO, or business in liquid form, so the bank’s liquidity position is process outsourcing). Our business strategy very strong at all times. BinckBank invests the cash envisages international expansion of all our in the market in a responsible and risk-averse activities. manner in call loans and fixed-income securities or uses it to finance securities credit. Strategic risk International economic conditions affect financial Capital policy markets around the world and hence the results on BinckBank holds sufficient capital to maintain a BinckBank’s operations. Reduced trading volumes solvency ratio of 12–20% in accordance with the can translate into reduced interest and commission Capital Requirements Directive (CRD) guidelines. To
Annual report 2007 income and reduced revenue from financial prevent erosion of its capital, BinckBank pursues a transactions. BinckBank operates in a highly dividend policy whereby dividends are only competitive environment in which its competitors, distributed if the result for the past financial year often very large financial institutions, have well is positive. Stichting Prioriteit Binck determines the established brands and ample financial resources. sum to be distributed to shareholders as dividend. Retaining existing clients and attracting new ones is a high priority for BinckBank, and one in which it Risk management organisation makes substantial investments. BinckBank’s BinckBank’s Management Board paid close financial position and results can be adversely attention in 2007 to improving the risk affected by misjudged business decisions, poor management organisation and increasing risk execution of business decisions or inadequate transparency. With a view to facilitating the response to changes in the business climate in integration of Alex and BinckBank, staff departments and consultation structures were department (IAD), the Audit Committee and the reorganised and a new structure was developed Supervisory Board, together with the external which clearly defines risk management regulators and external auditors, constitute the responsibilities and reporting and escalation lines third line of defence in the control framework. in the new organisation. The Chairman of the Management Board (CEO) and the Chief Financial Officer (CFO), to whom the various departments involved in controlling risk report, will be ultimately responsible for risk management in the new organisation. Each of these departments has its own by-laws which define their duties and responsibilities in relation to risk management. These by-laws have been coordinated to avoid both duplications and gaps in the risk management mechanisms. The independence of the various functions/departments is safeguarded by segregating the reporting lines.
BinckBank operates according to the ‘three lines of defence’ principle. The business units are primarily responsible for managing risk. They are supported by second-line specialised departments, such as Risk Management, Treasury, Compliance, Internal Control and ICT Security. The Internal Audit 51
BinckBank Control Framework
Supervisory Board
Audit Committee
Risk Treasury Management Board Committee Committee
BinckBank Business Units Risk Management (escalation AC) Annual report 2007 Private Professional Clients Clients Treasury
Marketing & Sales IAD Compliance (escalation (escalation to AC) to AC) Operations External auditors External
Regulators (DNB/AFM) Regulators Internal Control ICT
Other departments ICT security (Finance/HR/IR/Legal) (escalation to CEO) 1st line of defence 2nd line of defence 3rd line of defence Risk management in practice
Risk assessment for the organisation in general and this growth is The Management Board, assisted by the Internal associated with risks in the area of operational Audit department (IAD), ensures that a systematic processes and system support. A number of major analysis is conducted annually to identify, analyse system modification projects are in progress to and assess all risks. The findings of the risk analysis manage the expected growth effectively. are discussed at the meetings of the Management Board and the Audit Committee and the BinckBank also operates a procedure based on an Management Board’s meetings with the internal cascade system, under which foreign local Supervisory Board. If necessary, the policy and management is required to issue a statement on business plan are adjusted on the basis of the the functioning of the local internal control findings of the risk analysis. measures and the design of the organisation.
The results of the risk analysis are the input for Risk control planning the audit by the Internal Audit department. As well as the regular risk analysis for Legal structure and segregation of assets the Management Board, the Internal Audit BinckBank is a public limited company which is department is also responsible for performing listed on NYSE-Euronext Amsterdam. BinckBank internal investigations of the configuration and has several Dutch subsidiaries and one foreign function of the internal control and risk subsidiary. BinckBank holds all the necessary management measures. On the basis of the risk licences. BinckBank also has offices in Belgium and analysis, an internal audit schedule is drawn up, France. BinckBank is regulated by the 52 which ensures that all the risk areas that have Nederlandsche Bank (DNB) and the Authority for been identified in all business units are subjected the Financial Markets (AFM). Foreign subsidiary to an internal audit every three years. The audit Binck België N.V. is subject to supervision by the schedule is fixed by the Audit Committee. The local securities regulators and also holds the audit schedule includes follow-up audits in which requisite licences. the Internal Audit department checks that the necessary action has been taken to address the Asset segregation is crucial for protection of the shortcomings or other issues identified by previous rights of BinckBank’s clients. BinckBank ensures audits. Each year, the Internal Audit department that securities owned by clients are kept separate updates the risk analysis on the basis of new from BinckBank’s assets by keeping client assets in activities/procedures and findings. The Internal a separate entity, Binck Bewaarbedrijf B.V. The Audit department reports its findings to the agreements, guarantees, rights and obligations of responsible manager, the Management Board and BinckBank with respect to its clients are embodied the Audit Committee. in a client contract which is signed on BinckBank’s behalf by its Management Board. Where necessary,
Annual report 2007 The general conclusion drawn from the internal these agreements are specified in schedules that audits performed in 2007 was that the internal form an integral part of the contract. For clients control measures and organisation were under the Alex label, BinckBank holds the status of satisfactory with regard to the areas of risk within affiliated institution of Euroclear Nederland, so BinckBank that had been investigated. Broadly that they enjoy protection under the Securities speaking, the remaining issues were shortcomings Book-Entry Transfer Act (Wet giraal effectenverkeer). in the area of policy documentation and, in some cases, compliance with policy documentation. Higher-risk activities, such as trading in securities, A number of shortcomings were also identified in are placed under a separate subsidiary, Binck the transaction coding and reconciliation process, Securities B.V., which holds its own licence as an which will be rectified in the foreseeable future. investment company. BinckBank has issued no Keeping pace with growth is a significant challenge guarantees to Binck Securities and the risk is limited to the capital invested in that subsidiary. Treasury Committee The shareholders’ equity of Binck Securities The Treasury Committee is concerned primarily amounts to approximately € 5.9 million. BinckBank with the management of liquidity risk and plans to demerge these activities. determines the investment policy for interest-rate- dependent operations. This relates to matters such The Management Boards of BinckBank and the as strategic allocation of freely available funds to majority of its subsidiaries share a common the investment portfolio and determination of the membership, i.e. the majority of the members of funds to be held in cash. In regard to funds to be BinckBank’s Management Board are also members held in cash, this includes investments in call loans, of the Management Boards of BinckBank’s the risk measures (ratings) employed and the subsidiaries. This arrangement is conducive to maximum exposure per counterparty and sector. consistent corporate policy and strategy. The Treasury Committee is also responsible for managing currency risk. Management of the BinckBank’s organisational structure guarantees investment portfolio is outsourced to Florint BV, in functional segregation. There are also a number of which BinckBank holds a 35% interest and with consultative structures/departments which are which BinckBank has signed an asset management closely involved in the management of certain agreement. Additions to and withdrawals from the types of risk. The most important of these are: investment portfolio are determined monthly by the Treasury Committee. The Treasury Committee Risk Committee consists of the the Chairman of the Board, the CFO, BinckBank’s Risk Committee concerns itself the Treasury Manager and the manager of the Risk primarily with the management of credit and Management department. Representatives of the market risk. It consists of a representative of the business lines may also be invited to attend its Management Board, the manager of the Risk meetings. 53 Management department and the manager of the Treasury department. Representatives of the Compliance department business lines may also be invited to attend its The Compliance department is responsible for meetings. The Risk Committee addresses such monitoring compliance with the applicable codes matters as securities credit policy and processing, of conduct and the relevant securities legislation non-compliance with securities credit limits and and regulations and is concerned primarily with maximum permitted trading positions in securities management of integrity risk. Through its code of for BinckBank’s account and risk (Binck Securities). conduct, insider trading regulations and The manager of the Risk Management department whistleblower’s charter, BinckBank demonstrates has the option of referring issues upwards to the the importance it attaches to values such as Audit Committee. integrity and dependability. The Management Board has authorised the Compliance department Risk Management department to access to all information with regard to its entire The Risk Management department is responsible area of responsibility and use any available tools for the day-to-day implementation of the policy which it considers germane to the performance of
formulated by the Risk Committee for the its tasks. The Management Board also provides the Annual report 2007 management of credit and market risk and reports Compliance department with sufficient resources direct to the Management Board (CFO) and the Risk to perform its duties responsibly and expertly. The Committee. The credit risk policy with regard to Compliance department reports to the Chairman of deficit management, margin requirements and the Management Board and has the option of advances has been formulated in accordance with referring matters upwards to the Audit Committee. statutory requirements. Market risk is quantified by the Risk Management department on the basis of Internal Control department the trading strategy, using models commonly The Internal Control department exists to facilitate employed by investment companies such as value operational improvement, by supporting the at risk, duration, haircut and stress tests. business units in defining their administrative organisation and internal control structures and verifying the existence of risk control measures. Supervisory Board. BinckBank believes that this The area of responsibility of the Internal Control structure ensures an adequate system of checks department covers all operational and IT processes and balances, whereby the Management Board is of all BinckBank entities. responsible for the day-to-day running of the company and its short-term, medium-term and IT Security department long–term strategy, while the Supervisory Board The IT Security department is responsible for oversees and advises the Management Board. Each formulating and implementing information year, the Supervisory Board discusses the strategy security policy. The IT Security department has the of and risks associated with the business and, on option of referring issues upwards to the Chairman the basis of reports, assesses the implementation of the Management Board. and operation of the internal risk management and control systems. BinckBank thus complies with Information and communication best-practice provision III 1.8 of the Dutch Each year, the Management Board formulates a Corporate Governance Code. business plan defining the strategy, the targets and the expected risks, which is first submitted to the Audit Committee Supervisory Board for approval. After approval, the The Audit Committee is responsible for overseeing responsible department heads are given a the implementation and operation of the system of presentation of the strategy, the broad targets and internal control and risk management and the specific targets for their individual monitoring the implementation of the external departments. These targets are a standard part of auditors’ recommendations and the functioning of the job profiles of these department heads. the Internal Audit department. Supervision of the company’s financial reporting is the responsibility Each month, BinckBank’s financial progress is of the Supervisory Board. 54 discussed at the meeting of the Management Board on the basis of the management reports, Internal Audit department (IAD) covering such items as the income statement and The IAD is an independent function which is balance sheet for the past month and the current separate from the line organisation and the year in relation to the budget. internal control built into the different areas of the business processes. The Internal Audit department On the basis of these discussions, the policy is exists to facilitate operational improvement by assessed and evaluated and, where necessary, examining and assessing the management of adjusted. critical processes. The area of responsibility of the Internal Audit department covers all BinckBank Operational supervision activities and entities, which are audited at least BinckBank’s operations are supervised by various once every three years. The audit schedule is based external and internal bodies. on a risk analysis. Internal Audit is part of the portfolio of the Chairman of the Management External regulators Board. The IAD reports to both the Chairman of the
Annual report 2007 BinckBank is a public limited company which is Management Board and the Audit Committee. listed on NYSE-Euronext Amsterdam. BinckBank is regulated by the Nederlandsche Bank (DNB) and Relevant risks and control measures the Authority for the Financial Markets (AFM). Its The main risks are summarised below. The foreign activities are subject to supervision by the identification, analysis and assessment of risks and local securities regulators. the design and implementation of the relevant control measures is a continuous process within Supervisory Board BinckBank. BinckBank has a two-tier management structure, which means that the executive and supervisory Liquidity risk functions are assigned to different corporate Liquidity risk is the current and future risk of bodies – the Management Board and the BinckBank’s financial position and results not being sufficient to enable the company to meet its short- internal counterparty limits on both amount and term commitments without incurring excessive duration. Credit risk is reviewed periodically. costs and/or losses. In its institutional brokerage activities, BinckBank is BinckBank’s liquidity position as at year-end 2007 exposed to credit risk in respect of counterparties was satisfactory. Given the nature of BinckBank’s failing to honour their obligations in over-the- activities, there is some risk of liquidity shortage, counter (OTC) transactions. Limits are set for each for example when running maximum trading counterparty. These transactions are chiefly in positions or in the event of incorrect settlement of equities and bonds. This risk is controlled by transactions in financial instruments for procedural monitoring of settlements (position and professional clients, a high volume of lending to transaction reconciliation). Retail and Professional Services clients or a decrease in Retail and Professional Services client Market risk (price risk) accounts. Market risk is the risk of movements in interest rates and prices of financial instruments. For its Fluctuations in the volume of client accounts are trading activities, BinckBank has a trading portfolio managed by restricting the duration of the of equities and a very minor position in derivatives, investment of these funds or including liquidity on which it is exposed to market risk. Movements requirements in investment policy. in prices and interest rates of financial instruments have a direct effect on the value of the trading Liquidity risk is monitored by computing the portfolio and hence on BinckBank’s financial liquidity position on a daily basis, covering all position and results, with a maximum of activities. approximately € 5 million. To control the market risks on the trading portfolio, BinckBank operates a 55 Credit risk system of internal limits, which are monitored by Credit risk is the risk of a counterparty in a trade the Risk Management department. The Risk and/or an institution issuing a financial instrument Committee meets regularly to discuss the limit failing to honour its obligations, as a result of system and the risks relating to the existing which BinckBank incurs a financial loss. positions and limits and to consider and adopt proposals for new trading strategies. If the set In its retail operations, BinckBank only lends limits are exceeded, Risk Management takes action against readily liquidated collateral, such as immediately and reports to the responsible financial instruments and bank guarantees. Given Management Board member. In its role as liquidity the nature of its lending activities and the provider as part of its trading activities, BinckBank collateral required, the credit risk is limited. The may be committed in some cases to buy or sell bulk of BinckBank’s lending is to natural persons financial instruments. and legal entities in the Netherlands. Where BinckBank lends against the collateral of financial The collateral (margin) required by BinckBank for instruments, the lending limit depends on the liabilities in respect of uncovered derivatives
liquidity and market value of the financial positions affords a reasonable degree of protection Annual report 2007 instruments concerned. Lending is monitored by against unexpected price movements but provides the Risk Management department using no guarantee against possible future losses on automated systems, based on real-time prices. The these positions. The Risk Management department risk on lending operations can therefore relate to checks constantly that the margin is consistent changes in the value of the collateral (financial with current market conditions and adjusts the instruments), system malfunctions (operational margin requirements where necessary. risk) and malfunctions in credit monitoring procedures (operational risk). Interest-rate risk BinckBank also lends to banks as a vehicle for Interest-rate risk is the risk of movements in investing client accounts. This lending is subject to interest rates which might adversely affect future profitability. BinckBank manages this risk, as it relates to • quantitative or qualitative deficiencies or BinckBank’s banking operations, by matching and limitations in human resources; maintaining the durations of client accounts and • deficient decision-making due to inadequate investments within set limits. management information; • incorrect application of internal control BinckBank has an investment portfolio consisting procedures. of fixed-income securities with a range of maturities. The composition of the investment Operational risk is managed on a structural basis portfolio is determined by the Treasury Committee. throughout the organisation, via a series of The value of the investment portfolio is subject to internal monitoring procedures including: variation due to movements in interest rates and • transaction and position reconciliation, changes in the creditworthiness of the institutions including management reporting; issuing those bonds. BinckBank invests only in • automated recording and execution of fixed-income securities with a Standard & Poor’s transactions and related audit trails; rating of AA– or better. • procedures for staff recruitment and mentoring and functional segregation and job descriptions Currency risk for all employees and departments; Currency risk is the risk of movements in the value • clear reporting lines, recording of required of items denominated in foreign currencies due to management information and periodic internal movements in exchange rates. Currency risks on consultation; trading and brokerage activities are hedged as • internal control and internal audit procedures, soon as possible in accordance with internal mandatory application of the four-eyes principle guidelines, unless a currency position is taken as to powers of attorney and authority to enter part of a trading strategy approved by the Risk into binding contracts on behalf of the 56 Committee. company; • reporting structures. The currency position is monitored on a daily basis to ensure that it stays within the set limits. IT risk is the current and future risk to BinckBank’s financial position and results posed by deficiencies Operational risk in the technology employed. Operational risk is the risk of loss due to inadequate systems, processes and procedures. The BinckBank is heavily dependent on IT in general term covers general operational risks, IT risks and and deficiencies in this area pose a significant risks relating to outsourcing of business processes. threat to BinckBank’s financial position and results. The IT organisation is designed to manage that risk Many unexpected events may occur in BinckBank’s and incorporates a series of internal monitoring operational processes which result in losses or procedures covering IT policy, security policy, prevent the achievement of targets. Processes, incident management, change management and systems and people may fail to perform as availability and performance management.
Annual report 2007 intended, employees may commit fraud, incidents BinckBank also has a fallback facility which it can may occur and day-to-day processes may be use in emergencies. Each year, BinckBank disturbed by accidents or system faults. The risks commissions external agencies to audit and report arising out of such events are all classed as on specific areas of its IT operations. operational risks. Risks relating to outsourcing of business processes Operational risk is generally the result of: are current and future risks to the company’s • deficiencies in the daily processing and financial position and results posed by third-party settlement of transactions with clients or other provision on a structural basis of services which are parties or in the procedures and actions part of BinckBank’s business processes. designed to ensure prompt detection of defects; BinckBank has outsourced the following processes: • Belgian payroll processing • French payroll processing • French office administration • BinckBank NV investment portfolio management • External custody of securities Service level agreements have been entered into for all outsourced activities.
Various subsidiaries and associates also outsource activities to one another, for which internal service level agreements have been entered into.
Integrity risk Integrity risk is the risk of harm to the company’s reputation and/or its financial position and results due to inadequate compliance with applicable legislation and regulations and internal standards, rules or codes of conduct.
To control this risk, BinckBank imposes clear internal standards and codes of conduct which are clearly communicated within the organisation. 57 BinckBank has a Compliance Officer, for whom clear reporting lines have been defined and a clear escalation procedure has been implemented. Together with the Legal department, the compliance officer is responsible for notifying managers and the Management Board promptly and accurately, in order to ensure that BinckBank’s activities comply with the applicable legislation and regulations. BinckBank has procedures in place for whistleblowers and mandatory reporting of suspicious transactions and has a Security Officer and a Privacy Officer. Annual report 2007 In-control statement
Closely monitoring the company’s internal risk against the benefits when accepting risks and management and control systems during 2007 has implementing controls. Even minor mistakes due to helped us to identify significant risks relating human error may have significant results, specifically to BinckBank. employees may conspire to circumvent internal controls and responsible managers may ignore We are provided with periodic internal control internal agreements. reports, including reports on positions held for own account and risk in relation to internally set Given these limitations, which are inherent in all maximum position limits (market risk), lending in internal risk management and control systems, and relation to the value of the collateral (credit risk), given the areas for improvement which have been transaction and position reconciliation (operational identified, our assessment is that the internal risk risk), client complaints and comments (operational management and control systems provide a risk) and availability of IT systems (operational reasonable degree of assurance that: risk). We also receive numerous regular reports on • we are able to keep track of our progress the progress of our business, such as financial towards BinckBank’s strategic and operational reports (including profit and loss accounts, balance goals; sheets, debtors, solvency and liquidity positions • BinckBank complies with the applicable and related analyses) and reports on the legislation and regulations; development of our client base. We also receive annual statements by the local management of our and, with regard to financial reporting risks: foreign operations on the functioning of the local • the risk management and control systems 58 internal risk management and control systems. The provide a reasonable degree of assurance that Internal Audit department submits periodic reports the financial statements contain no material presenting the findings of the internal audits it has misstatements; performed on the basis of the audit plan adopted • the risk management and control systems have by the Audit Committee. One or more specific functioned properly in the past financial year; audits are also performed by external agencies • there are no indications that the risk each year on specific areas such as the IT management and control systems will not environment. All these reports are discussed in the function properly in 2008. meetings of the Management Board, other internal bodies such as the Audit Committee, and the Supervisory Board. The purpose of these meetings is to monitor the correct functioning of the internal controls during the financial year, so that action can be taken where necessary.
Annual report 2007 These risks and the related control measures are described in the ‘Risk management’ section of this annual report.
However well our internal risk management and control system is designed, it can never give absolute assurance that we shall always be able to meet our objectives in terms of strategy, operations, reporting and compliance with all applicable legislation and regulations. The reality is that human error is always an element in decision- making and the cost always has to be balanced Annual report 2007 59 Annual report 2007 60 Personnel and organisation Annual report 2007 62 integration hasbeencompleted,the hefeels that Alex phaseof hasbeenachievedthe first and different career path.the acquisitionof that Now the company with service to pursuea inorder from BinckBank’s Board Management after long Co-founder Kaloto standdown Bagijnhasdecided Nederlandsche Bank. appointment hasalready beenapprovedthe by Board.the Management Chairman of Mr. Kooistra’s beendischarged by hitherto Thierry Schaap,the finance, andHRM, riskmanagement whichhave four years. Hisresponsibilities willcomprise Kooistra’sapprove Mr. appointment forterm of a General Meetingon6May 2008willbeinvitedto regulated markets. The forthcoming Annual andinternationalmanagement experience in experience inoperational andstrategic financial Chief Financial Officer. Kooistra hasextensive Mr. BoardManagement byappointing Kooistra Evert as Board haveSupervisory to strengthenthe decided acquisition ofAlex, Boardthe Management and the organisationthe of the growth and In viewof Board Management principal subsidiaries. as follows. belowshows BinckBank’sThe chart changes,the companythe legalstructure of willbe discontinued operations. Asaconsequencethese of aretherefore accounted for asresults on the sharetrading activities,the results onwhich Preparations were alsomadeforthe demerger of tradingthe bond the demerger activities. of with The organisation simplifiedin2007 was further Organisational ofBinckBank structure Personnel and organisation Beheer B.V. Syntel Retail /Professional Services BinckBank B.V. Bewaarbedrijf Binck BelgiëN.V. follows: Bortot. Their responsibilities willbeallocated as Messrs. Schaap, Aartsen, Bagijn, Kooistra and BinckBank’s Board Management of willconsist shareholdersthe relevant and regulators, After approvalthese appointmentsthe of by for two years. extension ofMr. Schaap’s contract ofemployment shareholders willbeinvitedto approve the forthcoming AnnualGeneral Meeting,the the companywith asaconsultant.the At hasagreed Bagijn to continue hisassociation Mr. of Messrs. Schaap, Aartsen, Kooistra andBortot. BinckBank’sthen consist Board Management will to approval the relevantsubject by regulators. Boardthe Management forterm offour a years, the shareholdersappointment by asamemberof Shareholders, Mr. willbeproposed for Bortot operation.the forthcoming At General Meetingof General ManagerofBinckBank’s successfulBelgian Private Clients, Marketing &SalesManagerand formationturn asheadof in in2000andserving BinckBank, havingthe company joined onits Bortot. Mr.track hasalong record Bortot with to handover to Nick time isright hisportfolio Effectengiro Binck Stichting Securities B.V. Florint B.V.Florint Binck & • Thierry Schaap (36), Chairman of the With the acquisition of Alex, a number of changes Management Board, will be responsible for the have been made to the organisational structure to remaining Trading activities, Legal, Operations, provide the flexibility needed to enable BinckBank ICT, IAD, Investor Relations and Secretariat. to achieve its growth ambitions for the period • Pieter Aartsen (43), member of the Management ahead. ICT and Operations have been changed from Board, will be responsible for Professional staff departments to line departments and the Services (professional clients and BPO services) business units and line departments are headed by • Kalo Bagijn (36), member of the Management managers bearing appropriate titles. The foreign Board, will be responsible for Retail and Public establishments employ mainly sales and marketing Relations until 6 May 2008. staff, who report to the local manager. Each foreign • Evert Kooistra (39), member of the Management establishment also has a legal officer, who is also Board, will be responsible for Finance, Risk responsible for compliance. These staff members Management and HRM. report, as part of a matrix organisation, to both the • Nick Bortot (34), member of the Management local country management and the responsible Board, will be responsible for Retail and Public functional managers. Relations as from 6 May 2008. 63 Annual report 2007
From the left to te right: Kalo Bagijn, Evert Kooistra, Thierry Schaap, Nick Bortot, Pieter Aartsen Personnel policy Geographical distribution of BinckBank staff The acquisition of Alex sharply increased the as at year-end 2007 number of employees as at year-end 2007 to 481, compared with 223 as at year-end 2006 (excluding Belgium France 2% Alex). The average number of employees in the 5% 2007 financial year was 243 excluding Alex (2006: 169).
It is BinckBank’s policy to retain all employees of both organisations, to manage the integration process and support future growth. The expected efficiency gains should mean that the growth in the number of employees will be limited. Netherlands 93% BinckBank plans to harmonise the Alex and BinckBank terms of employment in 2008, in cooperation with the Staff Council. The Management Board intends to introduce these harmonised terms of employment as from 2009. 64
Management Board Thierry Schaap Kalo Bagijn Pieter Aartsen
Finance & Control Support staff: Treasury Compliance / Legal/ HRM / IR & PR / IAD
Annual report 2007 Risk Management
Retail BU Professional Operations ICT Services BU
Business Business Development Development
Netherlands Belgium France Netherlands Belgium France Staff Council BinckBank has not previously had a Staff Council. In early 2007, the Management Board invited BinckBank staff to stand for election to a newly formed Staff Council. Of the nine candidates who stood for election, the employees ultimately elected five, and the Staff Council was duly inaugurated in May 2007. The BinckBank Staff Council represents only the Dutch staff. Following the announcement of the acquisition of Alex, the latter’s employees were also invited to stand for election to the Staff Council in April 2008. Until then, four Alex employees will attend meetings of the BinckBank N.V. Staff Council as observers. The Management Board and Staff Council worked together in 2007 in an extremely good spirit of cooperation and consultation with the members on the acquisition of Alex was very constructive. 65 Annual report 2007 Annual report 2007 66 Financial statements
Annual report 2007 67 Annual report 2007 68 oe otecmayblneset ...... the company to Notes balancesheet the companyto Notes financialstatements...... Company statement ofchangesinequity...... Company income statement...... Company balancesheet Company Financial Statements ...... Financial riskmanagement the consolidatedto Notes income statement...... the consolidatedto Notes balancesheet...... the consolidatedto Notes financialstatements...... Consolidated statement ofchangesinequity ...... Consolidated cashflowstatement ...... Consolidated income statement Consolidated balancesheet...... Consolidated Financial Statements Financial Statements 2007BinckBankN.V...... 136 ...... 70 ...... 121 ...... 137 ...... 71 ...... 72 ...... 140 ...... 92 ...... 138 ...... 139 ...... 111 ...... 74 ...... 75
Annual report 2007 69 Annual report 2007 70 Consolidated balancesheet fcins19 24 7 22 23 16 - 20 Equity andliabilitiesheldfor sale 21 19 of clients Derivative positionsheldonbehalf 7 Provisions Accruals anddeferred income 17 16 Other liabilities Deferred tax liabilities 16 ofsecurities Liabilities inrespect 18 Funds entrusted Equity andliabilities 14 Total assets 15 Assets heldfor sale 13 of clients 9 onbehalf Derivative positionsheld 8 Prepayments andaccruedincome 11 10 Other assets Deferred tax assets 12 Tax Property, and equipment plant Intangible assets Investments inassociates Shares andothervariable-income securities Interest-bearing securities Loans andreceivables Banks Cash Assets hrhles qiy25 Total equityandliabilities Shareholders’ equity oe31December2007 Note ,7,2 383,543 1,772,822 5,4 108,415 455,240 2127,993 21,061 22,152 32,751 ,4 - 6,147 1 445 416 2109 82 ,5,2 620,610 2,756,426 ,5,2 620,610 2,756,426 x ,8,1 549,321 2,289,610 € 5,4 108,415 455,240 11,511 67,828 407,014 183,593 164,617 900,232 497,762 422,028 466,816 71,289 201- 4,969 12,031 23,659 ,0 x 1,000 ,8 38,049 2,963 5,443 2,613 7,689 6,843 7,396 6,342 5,672 9,522 0 - 605 324,937 63 31 December2006 27,755 € 1,000 Consolidated income statement Diluted earningspershare ( Diluted EPS on discontinued operations ( Diluted EPS on continuing operations ( Earnings pershare ( EPS ondiscontinued operations ( 7 EPS oncontinuing operations ( 13 Earnings pershare (EPS): 10 for profit the year Net ondiscontinuedProfit operations 30 (aftertax) - oncontinuingProfit operations (aftertax) 16 Tax 31 Operating before profit tax 17 32 29 Share inprofits ofassociates fromProfit operations Total expenses losses Impairment Operating expenses 27 ofotherinvestments Impairment 28 Depreciation andamortisation 26 Other operating expenses Staff costs Expenses Total revenue from operating activities Other income fairat valuethrough andloss profit gain/(loss)Net onfinancialassetsandliabilities commission income Net Commission expense Commission income interest income Net Interest expense Interest income Revenue € ) € ) € ) 33 € ) € )34 € ) oe2007 Note 2,0)(18,691) (5,176) (22,609) (10,125) 4108,212 9,057 14,190 17,450 54,492 15,568 68,606 28,070 ,9 1,575 1,699 x € 21524,009 32,155 05923,226 28,170 30,599 28,170 18,911 35,384 18,913 35,304 34,428 33,339 47,081 35,801 69,732 10,392 45,997 17,945 475 (4,944) (4,785) ,0 x 1,000 ,5 783 1,556 (2) 1,089 888 5,504 .80.79 0.98 .30.76 0.93 .50.03 0.79 0.05 0.98 .50.03 0.05 .30.76 0.93 8 - 286 0- 80 69 € 1,000 2006
Annual report 2007 71 Annual report 2007 72 Consolidated cashflowstatement Itrmdvdn o h er35 25 22 35 cashflow Net cashflowfrom financingactivities Net - -Interim dividendforthe year - -Final dividendfor preceding year 14 Dividends paid 17 13 Profit-sharing bondloan 6 to treasury shares 17 Proceeds fromthe saleofrights attaching 15 Share issue Cash flowfrom financingactivities cashflowfrom investingNet activities Investments inproperty, andequipment plant Investments inintangible assets Disposals ofotherinvestments Investments inotherinvestments Investments inassociates adjusted for acquired cash Investments inoperations/subsidiaries 24 16 Cash flowfrom investing activities cashflowfrom operatingNet activities Other liabilities, accrualsanddeferred income ofsecurities Liabilities inrespect Funds entrusted Other assets, prepayments andaccruedincome Shares andvariable-income securities 14 10 Interest-bearing securities Loans andreceivables availableBanks (balancesnot ondemand) 15 Movements in: itemsincludedinprofit Non-cash Deferred tax assets lossesonloansandreceivables Impairment Provisions Depreciation ofproperty, andequipment plant ofintangibleAmortisation assets Adjustments: forProfit the year Cash flowfrom operating activities oe2007 Note 2349 (25,556) (233,499) 7,6 - 376,165 147,707 134,711 1,0)(6,707) (12,009) (62,238) (62,687) (24,346) (72,110) 921(18,526) 40,727 18,722 19,251 21,099 37,871 24,009 32,155 429 (3,361) (4,889) (4,299) (8,874) (1,668) (956) (2,712) (4,197) (2,900) (3,880) ,0 (16,241) 4,405 (2) 1,089 20 (235) (240) - (525) 2 - 422 935 1,170 732 571 932 962 2)(313) (29) x € 6,1 27,713 (8,485) 262,913 363,174 1,4)(9,341) (19,443) 45,539 (80,818) ,0 x 1,000 (14) 4 € 1,000 2006 Consolidated (continued) cashflowstatement Commission paid Commission received ah8 - 7 Dividend received 10 Interest paid Interest received Tax paid the following items: Cash flowfrom operating includes activities Total 9 in assetsheldfor sale Cash andcashequivalents Loans andreceivables (callmoney) Banks (excluding available balancesnot ondemand) Cash below: followingthe amounts stated headingsat the consolidatedthe in under balancesheet consolidated cashflowstatement are included The cashandequivalents presentedthe in Movement Closing balanceofcashandequivalents Opening balanceofcashandequivalents oe2007 Note 3,3 174,418 146,705 437,331 174,418 x € 3,3 174,418 126,746 437,331 422,028 27,713 262,913 14718,695 54,154 21,437 68,545 20814,895 22,018 ,0 x 1,000 ,0 3,946 5,693 9,108 - 6,490 5,672 5,781 9,522 - € 42,000 1,000 2006 33
Annual report 2007 73 Annual report 2007 74 (amounts in Consolidated statement ofchanges inequity xrieo pin 25 25 31 December2007 Transfer ofretainedto otherreserves earnings 25 to treasury shares 25 Proceeds from sale ofrights attaching Costs ofshare issue 35 35 Issue ofshares Exercise ofoptions Payment ofbonusshares Payment ofstockoptionshares 11 Grantto shares ofrights 25 Payment ofinterim dividend Payment offinaldividend Total income andexpense forProfit the year 25 Results recognised inequity directly 25 Gains andlossesonexchange 25 assets (aftertax) ofavailable-for-saleImpairment financial 35 35 31 December2006 Transfer ofretainedto otherreserves earnings Payment ofbonusshares 11 Payment of stock optionshares Grantto shares ofrights 25 Payment ofinterim dividend Payment offinaldividend Total income andexpense forProfit the year Results recognised inequity directly Gains andlossesonexchange assets (aftertax) ofavailable-for-saleImpairment financial 1 January2006 € x 1,000) oeIse hr rauyUapo te Total Other Unappro- Treasury Share Issued Note ,8 085(,2)1,0 88955,246 18,819 13,609 (1,121) 20,855 3,084 7,709 71,289 24,297 24,009 (956) 20,855 3,084 ,2 8,2 384,850 - - - 380,225 4,625 aia rftand profit capital hr rmu hrspitdrsre equity reserves priated shares premium share 2 422 - 422 24,009 - (8,685) (24,009) - - 224 - - (154) 535 - - (74) - - 535 - - - (4,299) 378 - - (8,874) (4,299) 74 (8,685) (8,874) - - - - - 31,337 - (818) 32,155 - (818) - - (125) (818) --17--17 - - (693) 32,155 - (125) - - - (693) 32,155 ------342 - - (116) - - 342 13,609 - - - (13,609) (3,361) - - - (4,889) (3,361) - (4,889) 116 - - - - (58) 23,951 - 24,009 97 (58) - (58) - - - - (155) 97 24,009 - - - - (155) 24,009 ------392,395 47 21535,044 32,155 (487) 9(49) 49 earnings retained 466,816 come into operation orhave yet been endorsed not interpretations ofstandards whichhave yet not to existingamendments standards and have issuednewstandards,the IFRIC The IASBand Implications ofnewstandards thousand. nearest are ineuros,the with allamounts roundedto stated,Unless otherwise the financialstatements the Europeanendorsed by Commission. International Accounting Standards Board and Financialthe adoptedby Reporting Standards (IFRS) prepared inaccordancethe International with A.M. van Westerloo The consolidated financialstatements have been J.K. Brouwer Presentationthe financialstatements of C.J.M. Scholtes P. Aartsen K.J. Bagijn Board: Supervisory T.C.V. Schaap Board: Management Meeting ofShareholdersto beheldon6May 2008. statements forthe General 2007willbeadoptedat Board on11MarchSupervisory 2008. The financial takenthe Boardthe Management decision and by approved forto aformal publication pursuant preparedthe company’s by Board Management and the year ended31December2007have been BinckBank’s consolidated financialstatements for BinckBank N.V. anditsvarious subsidiaries. pages,the name ‘BinckBank’to refer willbeused to transactions.account ofsecurities the following In financial institutionsfor processing andkeeping Beheer B.V. specialisesindeveloping software for and professional investors. The subsidiarySyntel securities andderivativetransactions for private conventional broking in andinternet services shares aretraded. publicly BinckBankN.V. provides Netherlands withitsdomicileinAmsterdam, whose BinckBank N.V. isacompanythe establishedin Company information General 1. Notes tothe consolidated financial statements L. Deuzeman use of the option. use of financial statements make sinceBinckBankdidnot havewill not any implications forthe consolidated an expense asandwhenincurred. This amendment construction assets as orproduction ofqualifying borrowings directly relatingthe acquisition, to removesthe optionofrecognising the costs of to IAS23, The amendment ‘Borrowing Costs’, which statements. implications forthe consolidated financial thereforestandard is to have expected not any doesforas it this new external and reporting structures for internal measurement performance indicatorsthe samereporting performance and allocation ofresources.the same BinckBankuses segments andfor decisionsconcerningthe internally for evaluatingthe resultsthe business of the informationthe sameas whichisused concerningreported business segments shouldbe financial anddescriptive information whichis 2006, whichintroducesthe the requirement that 8,IFRS ‘Operating Segments’, issuedinNovember yet beenappliedbyBinckBank: not The following standards andinterpretations have andwillbedulyincluded. financial reporting additional information willberequiredthe in and interpretations become mandatory, certain effect fromthe datethe newstandards onwhich consequences forthe financialstatements. With to havestatements expected isnot any material into operation afterthe datethese financial of those standards andinterpretations whichcome number ofadditionalnotes. The implementation of ‘Presentation ofFinancial Statements’, haveto a led to IAS1, applicationthe amendments of ‘Financial Instruments: Disclosures’,the and financial position. The implementation 7, ofIFRS any implications forthe group’s financialresults or revised standards andinterpretations have didnot effect from 2007. The implementationthese of interpretations whichhave beenmandatory with andIFRIC the newandamendedIFRS implemented the Europeanby Union. BinckBankhas
Annual report 2007 75 Annual report 2007 76 items: The changesasregards 2006concernthe following comparative figures have beenrestated accordingly. the various items.included in balancesheet The insteadofbeing the facethe balancesheet of derivatives assumedbyclients asaseparate itemon present allpositionsrelatingto positionsin With effect from 2007,to hasbeendecided it Change inpresentation respectively. increase by the depreciation the years charges 2009–2011, will 2008, depreciation willbe reduced by € fromto 5years. 3 The changemeansareduction of computer software andhardware hasbeenrevised With effect from 2007,the expected usefullife of Changes inestimates the changesexplained below. the previousapplied in yearthe exception with of The accounting policiesarethose consistent with presentation Changes inaccounting policies, estimates and statements. consequences forthe consolidated financial to have expected isnot anyplans but material the group’s of to certain applies definedbenefit future contributionsthe plan.to The interpretation the planorareduction in under adefinedbenefit embody economicthe form benefitsin ofrefunds maythey onlyberecognised if the balancesheet in plans assetsrelatingthat to definedbenefit fact Interaction’,the situation clarifies concerningthe Asset, MinimumFunding Requirements and Their 14, IFRIC ‘IAS 19– onaDefinedBenefit The Limit statements. have any implications forthe consolidated financial 13,IFRIC ‘Customer Loyalty Programmes‘ willnot 12,IFRIC Concession‘Service Arrangements’, and 11,IFRIC ‘Group and Treasury Share Transactions’, 646,000the depreciation in charges for 2007. In € 255,000, € 541,000 and € € 161,000, 316,000. In makes individual estimatesthe future of cashflows, made, lossisindicated. animpairment BinckBank inadequate andnopayment arrangements canbe providedthe securities portfolio isfoundto be by sufficientto cover this lending. the collateral If as collateralserving for securitieslendingis the fairwhether valuethe securitiesportfolio of to ascertain tests periodical BinckBank performs ofloansandreceivablesImpairment flows. present valuecalculatingthe net those cash of and alsodeterminesasuitablediscount rate for future cashflows fromthe cash-generating unit BinckBank makes anestimatethe expected of is attributed.to estimatethe value In order inuse, the cash-generatingthe goodwill of to which units goodwill. This involves estimatingthe value inuse of the carryingamount on test impairment onceayearAt an least BinckBankperforms ofgoodwill Impairment liabilities are: ofassetsand the carryingamount to adjustment 108,415 havethat riskofcausingamaterial asignificant date the balancesheet estimation at uncertainty assumptions forthe future andotherkey sources of income andexpense items. significant The most (75,676) liabilities, contingent rights andliabilities recognition andmeasurement ofassetsand 108,415 making assumptionsandestimatesthe on The preparationthe financialstatements of involves (75,676) accountingSignificant judgements andestimates (32,739) of clients Derivative positionsheldonbehalf Other liabilities ofsecurities Liabilities inrespect (32,739) Liabilities of clients Derivative positionsheldonbehalf securities Shares andothervariable-income Loans andreceivables Assets amount and their fair and amount value lesscoststo sell. Assets sale are recognisedtheir carrying the lower of at throughtheir continuedthan use. Assets heldfor takeplanned should placewithin12months rather substantially is realisedthrough asalewhichit as heldfortheir bookvalue saleif willbe Individual assetsordisposalgroups are designated operations Assets andliabilitiesheldfor saleanddiscontinued tax losscarryforwardsto beutilised. the allow futuretaxablethat profits willbegeneratedto Deferredtax assetsare recognised isprobable ifit Deferred tax assets payments are accounted forthe goodwill. in Anythe computed adjustments in earn-out the projected results. changesin to reflect adjusted liabilityshouldbe the earn-out made ofwhether the acquisitioncost. Each year, is anassessment companies. payments Suchearn-out are includedin expected future profitabilitythe acquired of paymentsestimatethe the earn-out basedon of arrangements. Insuchcases, BinckBankmakes an Business acquisitionsmay involve earn-out arrangementsEarn-out royalty percentage. is used, anestimatethe appropriate isalsomadeof applicable discount rate. Wherethe royalty method to arrivethe cashflows at andforthe determining projections offuture revenues andresults inorder models. BinckBankmakes assumptionsand usingcashflowmodelsand/orperformed royalty company orbusinessactivities. The measurement is intangible assetsacquiredthe acquisitionofa with BinckBank measuresthe value the identifiable of with acquisitions Fair value ofidentified intangible assetsacquired losses. impairment the provisionnecessitate of anadjustment for whether any changeshavetaken placewhich receivables. BinckBankassessesperiodically transaction coststhe coststhe and ofcollecting proceeds from execution ofcollateral of net in the reporting period. the reporting in discontinued andqualifiesfor separate presentation restated ifanoperation isdesignated as Comparative figuresthe income in statement are disposal aftertax. discontinued operationstheir on the result and the orlossof profit the net madeupof amount are presentedthe income in statement asasingle orgeographicalsegment ofsignificance) segment (activities representing aseparate business The proceeds from discontinued operations separately. and liabilitiesofdisposalgroups are presented
Annual report 2007 77 Annual report 2007 78 BinckBank. those of periodsarethe sameas reporting The accountingtheir the subsidiariesand policiesof be immediately deconsolidated. to controlany point asubsidiary,the subsidiarywill BinckBank obtainscontrol. IfBinckBankceasesat Subsidiaries are fullyconsolidated assoon to obtainbenefitsfromas itsactivities. financial andoperatingthe company policiesof so able, eitherdirectly orindirectly,to govern the control. Control ifBinckBankis to exist isdeemed Subsidiaries are entities over whichBinckBankhas the companyitems of anditssubsidiaries. the incomeassets andliabilities andexpense The consolidated financialstatementsthe include Basisofconsolidation 2. at the usualmarket rates. at fixed fee management ispayable plusvariable fees the basisofanagreedassessed on benchmark. A portfolio. willbe performance The management ofBinckBank’s ofpart management investment concluded B.V. withFlorint concerningthe were fair soldat value B.V.to Florint Acontract was the BinckSecuritiesB.V.of trading bond operations of incorporation,the remaining positionsinbonds Securities B.V.trading bond operations.time the At createdthe Binck buyout of fromthe management the unlistedcompany B.V., Florint acompany In 2007, BinckBankacquired aninterest of35%in the consolidated financialstatements. intercompanytransactions have beeneliminated in the year.and itssubsidiariesduring These There weretransactions betweenBinckBank also intereststhe companies in concerned. areto BinckBank’s eliminated inproportion Unrealisedtransactions withassociates gainson their contracts of arising out ofemployment. this groupthose and ofemployeesthan other yearthere weretransactions betweenBinckBank no to berelated Board Supervisory parties.the During the Boardthe Management and the membersof to associates,In addition BinckBankN.V. considers Related disclosures party 3. upon acquisition. receivables are recognisedthe balancesheet in Held-to-maturity investments aswellloansand transaction datethe relevant of purchase orsale. standard market conventions are recognisedthe at Financial andsoldinaccordance assetsbought with Recognitionthe balancesheet offinancialassetsin Financial instruments prevailing on thetransaction date. costs are converted intothe exchange euros at rate statement,the resultstransactions and onfinancial recognisedthe income in statement.the income In included inequityforthe relevant company is entity is sold,the deferred cumulative amount separate component ofequity. Ifanon-eurozone Translation differences are recognised directly ina weighted average exchange rate forthe year. the incometranslatedwhile statement is the at exchange rate prevailing date the balance sheet on BinckBank’s currency functional (theeuro)the at the eurozoneentities outside aretranslated into date,the reporting At the assetsandliabilitiesof likewise recognisedthe income in statement. fairitems carriedat valuethrough orlossare profit Currencytranslation differences onnon-monetary rates are recognisedthe income in statement. Differences relatingto movements inexchange rates prevailing date. the balancesheet on foreign currencies aretranslated the exchange at Monetary assetsandliabilitiesdenominated in currency’s exchange ratetransaction date.the on translated oninitialrecognitionthe functional at currency. Transactions inforeign currencies are the relevantthe basisof entity’s functional financial statements ofeachentity are measured on presentation currency. Itemsrecognisedthe in this beingBinckBank’s aswell as functional The consolidated financialstatements are ineuros, Foreign currencytranslation Recognition of andmeasurement 4. assets, equityandliabilities • The host contractthe financialinstruments Thehost of • concerned the financialasset of Theperformance • eliminates orsubstantially It reduces • recognition forthe following oneof reasons: waspurposes orifit designated assuchoninitial is heldforthroughtrading orlossifit profit fair isclassifiedascarriedat An instrument value through orloss profit Financial fair assetsorfinancialliabilitiesat value are expensed. through orloss, profit transaction where coststhe except forthe category fair whichiscarriedat value including directly attributabletransaction costs, fairof financialassetsandliabilitiesisat value, time.financial statementsthe at Initialrecognition the waythey are inwhich recognisedthe in to aspecificcategorythis determines assigned and On initialrecognition, financialinstruments are notional amount of the contract of notional amount andmovements in the underlying future on dependent settlement initial investmenta limitednet all, ornoneat with Derivatives are financial instruments requiring only regarded asbeingheldfortrading purposes. Derivatives heldonbehalfofclients are not • • provided: through orloss. profit This isonlypermissible the entire contract isrecognised fair at value contains oneormore embedded derivatives and the basisoffair ison management value. or investment strategy.to Reporting accordance withadocumented riskmanagement the basisofitsfairis assessedon value in different basis. of assetsorincome andexpenses ona the recognition ariseon which would otherwise inconsistencies inmeasurement andrecognition cost). option ofpremature amortised at settlement embedded derivative permissible(e.g. isnot separationthat financial instruments the of isevident oninitial recognitionit the of flows or the contractuallyinfluence on agreed cash the embeddedderivative hasasignificant
Annual report 2007 79 Annual report 2007 80 is recognisedthe income in statement. cumulative gain orlosspreviously showninequity to beimpaired.determined time, At such the the investmentof equityuntil isderecognised or Any gainorlossisshownasaseparate component for-sale financialassetsare measured fair at value. above categories. After initialrecognition, available- available forthe includedinoneof saleorare not arethat designatedfinancial assets asbeing Available-for-sale financialassetsarethose Available-for-sale financialassets impaired. the loansandreceivableswhen are derecognised or losses are recognisedthe income in statement cost,the effective using interest method. Gainsand an active market. They are recognised amortised at or determinablepayments quotedin arethat not Loans andreceivables are financialassetswithfixed Loans andreceivables any losses. impairment measuredthe effective using interest method, less investments are recognised cost, amortised at to doso.is inaposition Held-to-maturity them until maturityto hold specifically intends and as investmentsto maturityto beheld ifBinckBank payments andafixed maturity date are designated Financial assetswithfixed ordeterminable Held-to-maturity investments received are includedinotherincome. interest income.contributingthe net to Dividends on securitiesheldisincludedininterest income, fair valuethrough orloss. profit The interest earned gain/(loss)net onfinancialassetsandliabilitiesat recognisedthe income directlythe in statement as unrealised andrealised gainsandlossesare instruments are recognised fair at value. Both expensed asandwhenincurred. The financial recognition, attributabletransaction costs are price ofafinancialinstrument). Oninitial ratescertain orprices(e.g. aninterest ratethe or determining the present valuedetermining the cash flows. of orbyusingpricingmodels instrument current market value ofanother, essentially similar, recent commercialthe the markettransactions or in the most isestimatedthe basisof instrument on price isavailable,the fair valuethe financial of mid-price, excludingtransaction costs. Ifno market price andriskoff-settingthe positionsare carriedat price,the offer financialliabilities are carriedat instrument. Financialthe bid assetsare carriedat therethe market priceif isanactive market forthat The fair value isbasedon ofafinancialinstrument Determination offair value has expired. completedthe obligation or hasbeenremoved or relatingperformance the obligationto hasbeen the assoon the balancesheet be shownin involvedthe asset. with Financialto liabilitiescease recognised for aslongBinckBankremains controlthe asset, of continuesto be asset that the asset, i.e. retainsthem, transferred andhasnot transferred allrisks andrewards ofownership largely hasnot cash flows but from anasset transferredIf BinckBankhas to receive itsrights the transferred BinckBankhas to receive itsrights the • to receive BinckBankretainsthe right the cash • to havethe cash BinckBankceases to aright • if:the balancesheet is nolongershownin ofagroup ofsimilarfinancialassets) orpart asset (oracomponent ofafinancial A financialasset Derecognition offinancialassetsandliabilities controlthe asset. of the asset, i.e. retainsthem, transferred has but transferred allrisks andrewards ofownership largely or(b)not the asset ownership of largelytransferred allrisks andrewards of cash flows andhaseither(a) fromthe asset terms ofaspecificcontract; or entirety delaythe significant under andwithout obligation to pay themto a third in their party hasentered but flows into fromthe asset an flows fromthe asset; or selling the assets providedselling byway ofsecurity. which willnecessarilybeincurred inobtaining and executionthe collateral of the costs securityless takenthe cashflows of whichwillprobably ariseon collateral securityhasbeenprovided, account is future cashflows for from afinancialasset which computingthe present value the estimated of income statement losses. inimpairment In ratethe asset. of The lossispresentedthe in flows discountedthe originaleffective at interest the present valueand ofestimated future cash the differencethe asset’s between carryingamount ofanyThe amount lossismeasured impairment as transactions balances. andclient monitoring of nature ofclients’ investmenttransactions and the of aswellassessment creditworthiness process. This involves ofclients’ assessment the group’sobtained via lendingassessment Evidence aloanorreceivablethat isimpaired is (including any related facilities andguarantees). the lendingportfolio evidence of ofimpairment thereBinckBank assesseswhether isobjective Loans andreceivables assets. held-to-maturity investments andavailable-for-sale determined asfollows for loansandreceivables, indicated, ofanythe amount lossis impairment effectthe future on cashflows. is Ifimpairment losses are onlyrecognisedthere when isanadverse groups offinancialassetscollectively. Impairment offinancialassetsindividuallyor impairment evidence, provided byoneormore events, of thereBinckBank assesseswhether isobjective date,On aregular eachbalancesheet basisandat offinancialassets Impairment the liabilitysimultaneously. basis,settle onanet andsettle orrealisethe asset offthe amountsto set andanintention right to there when isalegallyenforceablebalance sheet ispresented amount the the net in each otherand Financial off assetsandliabilitiesare set against Offsetting offinancialinstruments net losspreviouslynet recognised directly in equityis there isevidence ofsuchasituation,the cumulative prolonged dropthe fair in valueto belowcost. If instruments,taken account is ofany or significant ofavailable-for-saleimpairment financial thereIn assessingwhether hasbeenany Available-for-sale financialassets regardless ofprobability. Losses basedonfuture events recognised, are not oraportfolio offinancialassets. financial asset accordingly usedasevidence ofa ofimpairment not objective indicators andsuchforecasts are regardBinckBank doesnot possiblefuture events as explained for loansandreceivables. measuredthe samemethodashasbeen using ofanythe amount lossis impairment assessed and Held-to-maturity investments are individually Held-to-maturity investments the originaleffectivethe basisof on interest rate. Interest income following isrecognised impairment losses. actual to reducein order variances betweenestimated and estimating future cashflows are regularly evaluated the assumptions usedin and The methodology losses. impairment off arethe income creditedto statement in subsequently collected after having beenwritten the reversal at cost the amortised date. Amounts exceed doesnot the asset of the carryingamount provisionthe income andin statement, provided Reversal lossisrecognised ofanimpairment the in previously recognised lossisreversed. impairment occurring afterthe initialwrite-down, the decrease canbeobjectively relatedto anevent lossdecreasesthe ofanimpairment amount and has beendetermined. If, period, inasubsequent the havethe loss of beencompletedthe amount and the necessaryprocedureswritten downwhenall loss.impairment The affected assetsare only provisionthe of isincreasedthe amount by the eventIn ofimpairment,the impairment
Annual report 2007 81 Annual report 2007 82 the risks arising out of the derivative of the risks arisingout positionsheld. balances, bankguaranteesto cover andsecurities collateralthe form withBinckBankin ofcash immediately. The clients have lodgedadequate transactions andpositionsiseffectedsuch the clients concerned with of settlement inrespect date.the balancesheet quoted priceat Financial recognised fair at value, measured accordingthe to the client’saccount andat risk. The positionsare forthe client’spositions initsownnamebut the resultantbehalf ofitsclients andholds BinckBank executes derivativestransactions on Derivative positionsheldonbehalfofclients original effective interest rate. for onanindividualbasis, impairment the using These loansandreceivables aretested periodically determine whetherfuture payment isprobable. periodically assessedfor complianceto and overdue. The newcontracts are, however, clients. Suchassetsaretreated nolonger as possible for renewed contractsto beconcluded with the caseofexistingIn loansandreceivables, is it Loans andreceivables underrenewed contracts statement. losswasimpairment recognisedthe income in relatedto anevent occurringafterthe previous fair value canbeobjectivelythe instrument of throughthe incomethe increase the statement if in relatingto variable-income securitiesare reversed directly inequity. Reversals losses ofimpairment recognisedare not through orlossbut profit investments inshares classifiedasavailable for sale Reversals lossesrelating ofimpairment to losses. impairment transferredthe income fromto statement in equity depreciation andamortisation. useful life ispresentedthe income in statement in ofintangibleAmortisation assetswithadefinite thereannually andadjustedif hasbeen achange. useful livesthe intangible assets are of assessed mayare anasset beimpaired. indicationsthat The the usefullifetested forthere and if impairment assets withadefiniteusefullife over are amortised definite oranindefiniteusefullife. Intangible Intangible assetsare determinedashaving eithera losses. andanyamortisation cumulative impairment intangible assetsare lesscumulative cost carriedat fair valuethe date ofacquisition. at Subsequently, assets acquired inabusinesscombinationtheir is on initialrecognition cost. at ofintangibleThe cost Intangible assetsacquired separately are measured Intangible assets BinckBank. to ensureamended consistencythose of with necessary,the accounting policiesofassociates are made paymentsthe associate. onbehalfof Where the associateon behalfof concerned orhasalready recognised unlessBinckBankhasacceptedliabilities associate fallsto nil, lossesare nofurther the investment of the carryingamount inan for resultsthe reported andchangesinreserves. If the investment of The carryingamount isadjusted reserves isrecognised directly inBinckBank’s equity. BinckBank’s share inchangesanassociate’s statement asshare inprofits ofassociates. results ofanassociate isrecognisedthe income in With equityaccounting, BinckBank’s sharethe in acquisition, lessany cumulative losses. impairment method. The itemincludesgoodwillpaidon associates are accounted forthe equity using haveBinckBank doesnot control. Investments in influence insomeotherway over but which to exercisein whichBinckBankisable significant the votingholds between20%and50%of rights or Associates are entities inwhichBinckBankgenerally Investments inassociates impairment during the year. during impairment there yet inuseorif areis not indications of coststested forthe asset is annuallyif impairment realised. the development of The carryingamount concernedbenefits fromthe project areto be the expected futureperiod inwhich economic Any suchcapitalisedcosts over arethe amortised andcumulativeamortisation losses. impairment lessany cost iscarriedat cumulativethe asset After initialrecognitionthe development of costs, to measurethe costs ispossible incurred it • adequatetechnical, financialandotherresources • future economic benefitsare achievable; • the BinckBank iscapable ofusingorselling • isBinckBank’s it intentionto completethe • technically is completionthis intangible asset of • that:can show isonlyrecognisedindividual project ifBinckBank results from development costs incurred onan statement asincurred. which Anintangible asset Research costs are recognisedthe income in follows: of software are recognised andmeasured as relatingThe activities to research anddevelopment still justifiable. the indefiniteusefullife ofwhether assessment is useful life isreassessed annually, includingan useful life withanindefinite ofanintangible asset unit. These intangible amortised. assetsare not The the level individually orat the cash-generating of test, to anannualimpairment subjected either Intangible assetswithanindefiniteusefullife are during development reliably. andforintangible asset itsuseorsale; and are availableto completethe development the of intangible asset; anduseorsellit; intangible asset sale; feasible, willbeavailable it that so for useorfor currency translation reserve. the company oractivity, includinggoodwilland proceeds of fromthe carryingamount disposaland areactivity measuredthe difference as the between the disposalofacompanyGains andlosseson or later date are recognisedthrough orloss. profit goodwill. Necessaryadjustments identified a at combinationthe of inan adjustment result periodafter reporting the business the first arethat identifiedof acquisition beforethe endof assets,time the equityandliabilitiesmeasured at the fairto Necessary adjustments value ofacquired recognised. reversed. ofgoodwillisnot Impairment the carryingamount,than lossis animpairment value in use.the recoverable If islower amount the higherofanasset’sis sellingpriceandits net the goodwillrelates.which The recoverable amount recoverablethe cash-generatingto of amount unit lossismeasuredthe An impairment byassessing the businesscombination. of fromthe synergy are that to benefit expected generating unitsorgroups ofcash-generating units combination isallocatedto BinckBank’s cash- test, impairment goodwillacquired inabusiness beimpaired. might the asset indicatethat Forthis frequently ifevents orchangesincircumstances tested forGoodwill is annually, impairment ormore andfaircost value isexpensed immediately. losses.impairment Anegative difference between lessany cost goodwill iscarriedat cumulative and contingent liabilities, ifpositive. Subsequently, acquired company’s identifiable assets, liabilities BinckBank’s fair sharethe net value of the of the businesscombination of the cost between and business combination ismeasuredthe difference as On initialrecognition, goodwillacquired ina are recognised fair at value. the acquiredand liabilitiesof company oractivities purchase method. The identifiable assets, equity All acquisitionsare accounted forthe using Acquisitions andgoodwill
Annual report 2007 83 Annual report 2007 84 in the case of taxable temporary differences • wherethe deferred the tax liabilityariseson • temporary differences except: Deferredtax liabilitiesare recognised fortaxable all these financialstatements. in their carryingamount tax baseofassetsandliabilities the between temporary differences date the balancesheet at Deferredtax liabilitiesare recognised,the basedon Deferred tax applicable tax law. tax rates is computedthe basisofenacted on and from or paid tothetax authorities. The tax amount to beclaimed expected the amount are carriedat Tax assetsand liabilitiesfor current andprioryears Tax assetsandliabilities Tax residual value ofassetsare reviewed annually. useful lifethe asset.the usefullife of the Both and and calculated onastraight-line basisoverthe losses.impairment Depreciation isbasedoncost less cumulative depreciation andany cumulative computer hardware. These assetsare cost carriedat the company’s in equipment premises and term.long includesfixtures, It fittingsand ofBinckBank’sthe performance the in activities This itemcomprisesto beusedin assetsintended Property, andequipment plant will not reversewill not the foreseeable in future. temporarythe difference isprobablethat and it the reversaltiming of temporarythe difference of associates, whereto control BinckBank isable the connected withinvestments in subsidiariesand tax or thetaxable profit; affectthe operatingand doesnot before profit abusinesscombination isnot that transaction recognition oraliabilityin ofanasset initial recognitionthe initial ofgoodwillor lie. within whichestimatesthe fair of value probably disclosed, wherethe bandwidth possiblealongwith beachieved,measurement cannot the reason is assets are cost. carried at Ifreliable fair value thefair value bemeasured reliably, cannot the If losses. Otherinvestments are fair carriedat value. lessany cost are impairment amortised carriedat investments. The receivablesthis item includedin this itemareIncluded in otherreceivables andother Other assets tax authority.the same entity and and the deferred tax is related tothe same taxable deferred deferredtax assetsagainst tax liabilities thereif off is alegallyenforceableto set right assets andliabilitiesare presented amount asanet the incomeinstead ofin statement. Deferredtax directly inequityisaccounted for directly inequity tax law.applicable tax onitemsrecognisedThe liability issettled,tax rates basedonenacted and isrealisedthe or the asset the periodinwhich tax ratesthe to to beapplicable carried at expected utilised. Deferredtax assetsandliabilitiesare the deferred canbe which futuretax asset against taxable profits probablethat willbeavailable the in is date it andrecognisedthat sheet the extent to deferredtax assetsare the balance reassessed at deferred canbeutilised.tax asset Unrecognised be availablethe whichsomeorallof against sufficient probablethat taxable profitsis not will date andreducedthe balancesheet ifit assessed at the deferred of The carryingamount tax assetsis used. facilitiestax losscarryforwardsto be andunused temporary differences,deductible tax unused the deferred canbeutilised,tax asset the enabling taxable profits that willbeavailable which against tax losscarryforwards isprobableunused whenit temporary differences,tax facilities unused and Deferredtax assetsare recognised for alldeductible maturity of these liabilities to clients. maturitythese liabilities of heading ofinterest expenseto overterm the recognisedthe incomethe in statement under calculatedthe effective using interest method, is repayable,the amount depositedand amount cost.amortised Any differencethe net between costs incurred. They are subsequently carriedat value oninitialrecognition,transaction including securities. These liabilitiesare measured fair at embodiedindebt arethat to clients not liabilities Demand depositsrelateto non-subordinated maturitythe accounts of concerned. heading ofinterest expenseto overterm the recognisedthe incomethe in statement under calculatedthe effective using interest method, is repayable,the amount depositedand amount cost.amortised Any differencethe net between incurred. Savings are subsequently carriedat initial recognition,transaction costs including customers. Savings are measured fair at value on balances onsavings accounts ofpersonalbanking and demanddeposits. Savings comprisethe Funds entrusted ofclients consist saving accounts Funds entrusted amount. or cash-generating exceeds unit the recoverable loss isrecognised ofanasset the carryingamount if sellingpriceanditsvaluenet inuse. Animpairment The recoverablethe higherofanasset’s is amount the recoverable isestimated. the asset of amount therewhether are indications ofimpairment. Ifso, dateto determine inorder eachbalancesheet at ofBinckBank’sThe carryingamount tested assetsis ofassets Impairment there risk. which isanegligibleimpairment convertible into knownamounts ofcashandon maturitiesthree are of that months readily orless deposits(callmoney)short-term withoriginal comprise banks cashat sheet andinhand the balance the headingofcashin The itemunder Cash andcashequivalents pension insurer. The percentage payable isage- percentage ofemployees’ fixedto a salary ispaid plan.the defined contribution Under plan, a defined contribution planand adefinedbenefit Boardof itsManagement andstaff based ona BinckBank haspensionarrangements for members Pensions as aborrowing cost. time isrecognisedthe passageof provisionto due Where discounting isused,the increasethe in where appropriate,the liability.the risksto specific are discounted arate, at beforetax, reflects,that time valuethe of ofmoney is material, provisions ofanystatement reimbursement. net the effect If relatingto any provision ispresentedthe income in certain.reimbursement isvirtually The expense recognised asaseparate onlywhen asset provisionto bereimbursed, the reimbursement is obligation. IfBinckBank expects someorallofa the of estimatethe amount canbemadeof requiredthe obligationto settle and(iii)areliable resources embodyingeconomic benefitswillbe event;of apast anoutflowof isprobablethat (ii)it present obligation (legalorconstructive) asaresult A provision isrecognised if(i)BinckBankhasa Provisions effective interest method. calculated cost the using amortised carried at recognition, interest-bearing loansare subsequently attributabletransaction costs. After initial valuethe consideration of received lessdirectly All loansare carriedoninitialrecognitionthe fair at Other liabilities recognisedthe income in statement. BinckBank’s ownequityinstruments are not the purchase, sale, issueorwithdrawal of shares) are from deducted equity. Gainsorlosseson Equity instruments whichare reacquired (treasury Repurchase ofownshares arethe shareto charged premium account. The costs associatedthe issueofnewshares with Shareholders’ equity
Annual report 2007 85 Annual report 2007 86 together with a corresponding increase inequity, ofequity-settledcost transactions isrecognised, valuethe datethey are onwhich at granted. The employees ismeasured byreferencethe fairto ofequity-settledThe cost transactions with Equity-settled the company orbycashpayment. are settledeitherbyissuing equityinstruments of the form ofshare-based payments. These payments group ofBinckBankstaff receive remuneration in Members ofBinckBank’s Board Management anda Share-based payments the obligationswhich haveto bedirectly settled. the fairbenefits and of valuethe planassetsout of the asyet unrecognisedlosses less amended obligationthe unrecognised and gainsand actuarial the present valuetotal of the the definedbenefit of planis obligationthe definedbenefit under The net isexpensed cost service immediately. the benefitsare alreadythat extent vested,the past the benefitsbecomeperiod until vested. Tothe statement onastraight-line basisoverthe average isrecognisedservice asanexpensethe income in obligation whichrelatesamended benefit to past arethe amended, of the cost of portion that separate plans.the benefitsunderapensionplan If working livesthe the employees in participating divided overthe expected average remaining date.that plan assetsat These gainsorlossesare obligationthe fair and defined benefit valuethe of the greaterto morethan 10%of the amount of the precedingof year for eachplanseparately unrecognisedthe end gainsandlossesat actuarial as income cumulative orexpensethe net if method. gainsandlossesare Actuarial recognised creditthe projected unit basisusing an actuarial planare individuallydeterminedon defined benefit insured withapensionprovider. The coststhe of pensionplanwhichisalso has adefinedbenefit Through itssubsidiarySyntel BeheerB.V., BinckBank theythe year relate.to which related. The pensioncontributions are recognised in average number ofsharesthe inissueduring shareholdersthe weighted forthe periodby attributableto ordinarythe profit dividing The earningsperordinary share are calculated by Earnings perordinary share collateral securityare worthless. obligations andallassetsprovided byway of counterpartiestheir contractual default on potential risk, credit all that isassumed it the notes.disclosed in Inestimatingthe maximum these contingent liabilitiesfaced byBinckBankis maximum potential riskassociated credit with events whollywithinBinckBank’s not control. The or non-occurrence future ofoneormore uncertain existence willbeconfirmedthe occurrence onlyby their recognised because the balancesheet in Contingent are liabilitiesarethat not liabilities sheet the face shownon the balance Liabilities not of lease period. income statement onastraight-line basisoverthe lessee,the leasepayments arethe to charged the caseofoperatingIn leaseswhere BinckBankis Leasing date. balance sheet settled share-based payments each isdeterminedat share-based payments. The fair valuethe cash- of A liabilityisrecognised ofcash-settled inrespect Cash-settled period. that beginning andendof movement incumulative expense recognisedthe at the income statement forthe aperiodreflects will ultimately bevested. The expenseto charged estimatethatthe numberofequityinstruments of the vesting periodhasexpired andBinckBank’s best dateto which eachreporting the extentat reflects expense recognised for equity-settledtransactions rights become unconditional). The cumulative the awardto entitled (i.e.the datethese onwhich the relevanton which employees become fully conditionsservice are fulfilled,the date endingon over and/orthe performance the periodinwhich and liabilitiesheldfor sale. the cashflowsstatement includes fromthe assets translation differences are eliminated. The cashflow material, movements associated with currency months fromthe date ofacquisition. Where instrumentsthree with maturitiesthan ofless withcentraldeposit banks andotherfinancial together withfreelyhand available balanceson and financingactivities. Cashthe cashin includes flows are analysedaccordingto operating, investing these fundshavewhich beenapplied. The cash the waythe fundsand the source intoinsight of in method.the indirect This statement provides an The cashflowstatement hasbeenprepared using Cash flowstatement outstanding optionrights. possible dilutionresulting fromthings as such number ofsharesthe period, during adjustedfor ordinary shareholdersthe weighted average by attributableto calculatedthe profit bydividing period. The dilutedearningsperordinary share are are accounted fortrade as payables. BinckBank date.the balancesheet to up Invoiced instalments estimated costs coststhe actual for with aproject of completiontotal isdeterminedbycomparingthe date.contractthe balancesheet on The percentage to measurethe revenuemethod generated byeach the percentageBinckBank uses ofcompletion Work inprogress oncontracts forthird parties investments are recognised inother income. the fairand losseson valuethe other of to receive right payment isacquired. Realised gains other investments are recognisedthe assoon relates.the yearto whichit Dividendsreceived from The income from otherinvestments isattributedto investments. software,the incometogether with from other suppliedrelatingservices to hardware and the year ofgoodsand during inrespect parties Other income comprisesthird amountsto charged Other income provided.services non-recurring ormore regular basis, of inrespect payablethird parties,to respectively, whetherona received orreceivable andpaidor fromthird parties This itemcomprises commission, excluding interest, Commission income andexpense measuredthe effective using interest method. theyyear relate.to which Interest income is Interest income andexpense are recognisedthe in incomeInterest andexpense revenue canbereliably measured. the economicto BinckBankand benefitswillflow Revenues aretheir recognised isprobablethat ifit and measurement ofassets, equityandliabilities. the above accounting policiesforthe recognition they relate,to which period having dueregardto Income andexpense itemsare recognisedthe in General Recognition of andmeasurement 5. income andexpenses
Annual report 2007 87 Annual report 2007 88 is alsorecognised inequity. recognised directly inequity,tax the inwhichcase statement unless thetax relates to items tax expenseThe isrecognisedthe income in Tax made paymentsthe associate. onbehalfof the associateon behalfof concerned orhasalready recognised unlessBinckBankhasacceptedliabilities in anassociate fallsto nil, lossesare nofurther associates.the investment of the carryingamount If This concerns BinckBank’s sharethe results in ofits Share inprofits ofassociates in otherassetsorliabilities, respectively. revenue lessinvoiced instalments for eachproject recognisesthe positive ornegativethe balanceof the rights issue,totalling the proceedsThe acquisitionwas of of fundedout market. There were nootheracquisitionsin2007. management. Alexthe Dutch isprimarilyactive in saving, investment adviceandonlineasset alsoprovides suchasonline additionalservices It financial instruments, private serving investors. brokeran internet inshares, optionsandother Tradingthe Alex under label,the company as acts Beleggersbank was aRabobank Group operation. ofAlexactivities Beleggersbank. Alex On 31December2007, BinckBankacquiredthe Businesscombination 6. date was asfollows: the acquisition the goodwillasat liabilities and The fair valuethe identifiable assetsand of and keepingtransactions. account ofsecurities software for financialinstitutionsfor processing (Syntel), acompany specialisingindeveloping the acquisitionofSyntel2006 saw BeheerB.V. 2007 (seenote25). The rights issuewas completed on14December the issuecosts), of deduction andavailable cash. € 385 million(before Total - Transactioncosts - Purchase price Purchase priceandassociated costs and liabilities identifiable assets Fair valuethe of clients held onbehalfof Derivative positions Overlopende passiva Other liabilities Funds entrusted on behalfofclients Derivative positionsheld income Prepayments andaccrued Other assets equipment Property, and plant - Software taken- Deposits -base Customer - Tradingname Intangible assets Interest-bearing securities Loans andreceivables Banks Cash andcashequivalents ,8,9 1,278,962 1,586,595 1,278,962 1,835,153 x arvlecarrying fair value ,5,6 1,254,568 1,254,568 € 248,558 - 307,633 - 307,633 - 131,058 599,598 285,148 599,598 379,429 285,148 379,429 31313,193 11,201 13,193 11,201 11,242 11,242 - - 84,095 31,405 ,0 x 1,000 ,3 2,137 1,251 2,137 3,251 lxAlex Alex 5 155 155 22 391,440 amount € 386,900 1,000 4,540 € continuing operations would haveto amounted € continuing operations aftertax wouldhave been amounted to year, BinckBank’s for profit the year net would have the of combinationtakenthe start had placeat would have been assets, totalling the identifiedfor intangible of the amortisation would have been basis ofBinckBank’s accounting policiesAlex’s profit and commission income wouldhave been 2007, interestthe effect incomethe net andnet on 2007.takenthis acquisitionhad place1January If took placeon31December the acquisitiononly contributionto revenue andprofits for 2007, since makeThe acquisitionofAlex didnot any developed in-housebyAlex. clientsthe software (fundsentrusted) and the customerbase,the depositsreceived from which revenue willbegenerated:the name Alex, categories canbeidentified asbeingassetsfrom assets arisingfromthe acquisition, the following the integrationof the business. of the intangible Of the synergistic gainsachievableand oncompletion goodwill chieflyrepresentsthe value the staff of the Retailattributableto cash-generating unit. This the acquisitionofAlexThe goodwillpaidon is cashoutflow Net subsidiary cashacquiredthe with Net Cash paid the acquisition: Cash outflowassociated with Goodwill (seenote14) assets andliabilities: Fair valuethe identifiable of 157.6 million. 43.8 million. BinckBank’stotal revenues from € 64.9 million,64.9 respectively. Measuredthe on € 45.4 million and the profit on the profit millionand 45.4 € € € 21.4 million, contributionthe net 21.4 13.2 million.the business If 34.6 million.34.6 After adjustment € 23.4 million 23.4 (12,009) (391,440) 379,431 142,882 248,558
Annual report 2007 89 Annual report 2007 90 included an amount of included anamount In 2006, ondiscontinuedthe profit operations operations ondiscontinuedProfit Tax discontinued operations beforeProfit tax on Expenses Revenue as follows: the headingofdiscontinuedunder operations are The results presentedthe income in statement date. the balancesheet within 12months of operationsto have isexpected beencompleted segment. The demergerthe sharetrading of were previouslythe under reported Trading brokerage andprofessional services. The activities focus onBinckBank’s core activities, viz. onlineretail trading operations isconnected withanincreasing trading operations. This additional demergerthe of concerningthe demergerthe sharemanagement of negotiations werethe beingconducted with that the announcement On 27July2007came fair value ( Securities B.V.trading bond operations were soldat the remainingthe Binck positionsinbondsof company B.V. Florint time ofincorporation,the At the sharethe unlisted interest of35%in capitalof the operations B.V.to Florint BinckBankacquired an transferthe completed 2007with on1October of tradingdemergerthe bond operations of was previouslythe under reported Trading segment. The buyout.of amanagement wereThe activities tradingto demergethe bond operations bymeans On 19April2007, BinckBankannounceditsintention Assetsandliabilitiesheldfor sale 7. and discontinued operations € 4.2 million) to Florint B.V.to Florint million) 4.2 € 199,000 relating tothe x € 11416,192 11,114 905 (15,147) (9,025) ,0 x 1,000 ,5 783 1,556 1,045 2,089 072006 2007 53 (262) (533) € 1,000 inflow Total cash(outflow)/ net activities Cash flowfrom financing activities Cash flowfrom investing activities Cash flowfrom operating operations were asfollows: cashflows fromThe net the discontinued operations. tradingthe demergerthe of of announcement in intangible assetswere madeafterthe Investments inproperty, and andequipment plant Total liabilities Other liabilities ofsecurities Liabilities inrespect Total assets Other assets Property, andequipment plant Intangible assets securities Shares andothervariable-income Banks operations are asfollows: itemspresentedThe balancesheet asdiscontinued € million relatingto HIT, whichwas approximately included an impairment lossofapproximatelyincluded animpairment disposed ofin2006. total expensesThe in2006 operations ofHillsIndependent Traders Ltd (HIT), 1.3 millionaftertax. x € 003(27,712) 40,063 (27,712) 49,684 900 - (9,000) ,0 x 1,000 072006 2007 61 - (621) x € € 12,031 6,147 1,000 1,000 2,738 3,409 3,775 5,781 2007 1,864 € 188 423 1.8 on discontinued operations Diluted earningspershare on discontinued operations Ordinary earningspershare Earnings pershare (in Movement cash innet and cashequivalents Closing balanceofcash and cashequivalents Opening balanceofcash € ): 3,8)29,194 (34,282) 003(27,712) 40,063 ,8 1,482 5,781 .50.03 0.03 0.05 0.05
Annual report 2007 91 Annual report 2007 92 Notes to the consolidatedto Notes balancesheet rvt etrcl oe - Less: provision impairment Loans andreceivables, gross Other receivables Receivables collateralised bybankguarantees Receivables collateralised bysecurities Public loan sector Other loansandreceivables: Private callmoney sector Cash equivalents: The analysisisasfollows: - by securitiesandbankguarantees securities). (lendingagainst including overnight loansandoverdrafts arethat collateralised This itemcomprises receivables from private clients, sector 10. Loans andreceivables received avariablethese balancesat on rate basedonEONIA. ascollateralpartly forthe delivery riskonsecurities. Interest is three months. available balancesnot Credit ondemandserve The callmoney receivables have originalmaturitiesthan ofless available balancesnot Credit ondemand Call money balancesavailableCredit ondemand The itemcomprises: the bankregulators. by supervised heldinaccountsbusiness activities institutions withcredit This itemincludesallcashandequivalents relatingthe to 9. Banks offices. demand fromthe central banks incountries where BinckBankhas coins inforeign currency, andany balancesavailable credit on tender,This itemincludesallcashinlegal includingbanknotesand 8. Cash Assets 31 December2007 2,2 164,617 422,028 9,6 132,641 490,560 13,575 392,028 000113,171 30,000 ,6 16 3,952 5,000 1,163 2,144 5,000 x 9,6 183,593 497,762 164,617 422,028 € 9,6 141,609 498,867 9,6 183,593 497,762 ,2 5,672 9,522 115 (16) (1,105) ,0 x 1,000 31 December2006 37,871 € 42,000 1,000 value. risk management.the basisoffair ison reporting Management benchmark andinconnection withportfolio the selected against assessmentthe performance of is measured onadailybasis aspart maturities ranging fromto 3years. 0 The fair valuethe portfolio of concerns anactively managedportfolio ofbondswith individual value withgainsandlossesrecognisedthe income in statement The portfolio ofinterest-bearing fair securities whichiscarriedat - - - - This itemcomprises: 11. Interest-bearing securities no general provision. provisionThe impairment iscalculated onaspecificbasis. There is Position 31December asat Charged tothe year Accrued interest ondoubtfuldebts Recovered Added Position 1January asat provisionthe impairment The changesin were asfollows: execution ofcollateral (securitiesandbankguarantees). other receivables are outstandingamounts receivable after receivables underloansandreceivables isbasedonEONIA. The have unspecifiedmaturities. The interest rateto applying Dutch municipalauthoritymaturing in2008. The otherreceivables than 3months.of less loanconcernsto a The publicsector aloan The receivables relatingto cashequivalents have originalmaturities - Commercial paper(government-guaranteed) - Private institutions to credit loans - Government bonds/government-guaranteed loans Held to maturity: - Other bondswithspecifiedmaturity - Other bondswithunspecifiedmaturity Available for sale: -bonds Other - Government bonds/government-guaranteed loans Financial fair assetsat valuethrough orloss profit Trading portfolio 31 December2007 0,3 67,828 - 900,232 - 599,598 - 144,629 123,988 68548,445 16,875 ,2 - 1,337 7,710 7,025 1,289 6,828 - 1,056 1)(2) (16) 9- 49 - x 0,3 67,828 900,232 € ,0 x 1,000 ,0 16 (2) 1,105 1,089 618 16 31 December2006 10,336 € 1,000
Annual report 2007 93 Annual report 2007 94 euiistaigprflo- applyhedgeaccounting. BinckBank doesnot prices obtainedfrom aregulatory body. market, i.e. quotedpricesonastockexchange,traders’ pricesor The derivatives are fair carriedat value, basedonpricesinanactive sale. year-endportfolio asat 2007hasbeen includedinassetsheldfor of thetrading operations, the remaining amount of thetrading faircarried at value.the planneddiscontinuation Inconnection with tradingthe portfolio concernThe positionsheldin listedsecurities Derivatives trading portfolio Securities trading portfolio This itemcomprises: 12. Shares andothervariable-income securities any ofavailable-for-sale impairment assets. loss. As in2006,the assetswas noneof soldin2007, norwasthere takestax effectto equity chargedthis the amount account of of directly inequity(2006: to sale assetsamounting for redemption in2012. In2007, fair valuethe available-to- losseson bonds. The bondswithspecifiedmaturitythis portfolio are in due the prevailingthe basisof on interest 10-year rate ongovernment portfolio are aninterest at rate whichisrevised everythree months The bondswithunspecifiedmaturitythe available-for-sale in the commercial paper. the aboveAll securitiesare listed, except forthe private loansand date. balance sheet value,the the quotedmarket priceson measuredthe basisof on The available-for-sale interest-bearing securitiesare fair carriedat € € 155,000 aftertax). The calculationthe of 693,000 (aftertax) were recognised 31 December2007 324,937 104 63 63 x € ,0 x 1,000 324,937 63 31 December2006 24,833 € 1,000 31 December 2007 Carrying asat amount impairment Cumulative and amortisation Cost Amortisation period(years) 31 December 2007 Carrying asat amount Amortisation - Disposals Acquisition ofAlex Investments 1 January 2007 Carrying asat amount 14. Intangible assets Carrying 31December asat amount Share inprofits ofassociates Investments Carrying 1January asat amount the investmentsThe changesin inassociates were asfollows: afterProfit tax Total expenses Total income to associatesthe groupAmounts owed by Total liabilities Total assets Financial information for B.V. Florint operations. value.The investment asset net iscarriedat the BinckSecuritiesB.V. buyout of management trading bond company B.V., Florint acompany createdthe inconnection with In 2007, BinckBankacquiredthe unlisted aninterest of35%in 13. Investments inassociates 1458,9 3,0 ,8 5,2 407,014 152,929 6,783 131,802 84,095 31,405 407,014 152,929 6,783 131,802 84,095 31,405 1458,9 3,8 0231299410,650 152,929 10,233 131,988 84,095 392,691 31,405 142,882 3,251 131,058 84,095 31,405 aeetutdbs otaeGowl Total Goodwill Software base entrusted Name 05-1 5 5-10 10 5 16 340 (3,636) - (3,450) (186) (955) - - 3,767 11,511 1,166 - (769) 8,881 2,601 (186) 1,700 - - 930 ------ud Customer Funds 31 December2007 ,1 - 2,217 2 - - - - 525 - 228 644 951 489 0- 80 - 81 x 0,1 11,511 407,014 € ,0 x 1,000 0 - 605 0 - 605 31 December2006 - € 1,000
Annual report 2007 95 Annual report 2007 96 The changesinintangible assetsin2006were asfollows: ot- 31 December 2006 Carrying as at amount impairment Cumulative and amortisation Cost 31 December 2006 Carrying asat amount Amortisation Disposals Acquisition ofSyntel Investments 1 January 2006 Carrying asat amount aeetutdbs otaeGowl Total Goodwill Software base entrusted Name 3 ,0 ,8 11,511 8,881 1,700 930 11,511 8,881 - 1,700 - 930 - 261 (2,681) - (2,681) (732) - 956 - 10,236 - - 8,881 (732) 425 - 956 - 930 ------ud Customer Funds 3 ,8 ,8 14,192 8,881 4,381 1,051 930 - - 1,051 - - outsourcing (BPO) Business process Syntel Retail individual cash-generating units: the followingThe goodwillhasbeenallocatedto maythe carryingamount beimpaired. indicatethat frequently ifevents oraltered circumstances tested forGoodwill is annuallyormore impairment test Goodwill impairment price of the earn-out 2007 resulted of inanadjustment Syntel in2007and2008. Syntel’s in performance the grossprice dependingon margin generated by for Syntel comprises aninitialpriceandearn-out identifiable assetsandliabilities. The purchase price in 2007andSyntel in2006overthe fair valuethe of ofAlexto acquirethe activities Beleggersbank paid Goodwill relatesthe excessto the purchase price of hourly rate staff reflecting onlydirect costs. capitalised byBinckBankassoftware anaverage at software development projects have been BinckBank’s operations. these to The hourscharged Syntel-developed software for supporting by Syntel,to itsclients, whichissold aswell Software includesproprietary software developed relating tothistransaction amounted to nil in 2007. the separatelyof identified intangible assets completed on31December2007. The amortisation The acquisitionofAlex Beleggersbankwas € 1,166,000. 5,2 8,881 152,929 - 142,882 ,3 2,033 2,033 6,848 8,014 072006 2007 beyond five-year horizon Expected rate growth Discount rate 2006: beyond five-year horizon Expected rate growth Discount rate 2007: The following assumptions have beenused: expectations. market estimatesassumptions against andmarket and 2%. hascompared Management the principal extrapolated, rates usinggrowth ofbetween0% beyondthe five-year horizon have been formanagement targets. setting The cashflows years, basedonfinancialestimates usedby made ofcashflowprojections over aperiodoffive the valueunits isbasedon inuse. Usehasbeen The recoverablethe cash-generating of amount in use Principal assumptionsusedincalculatingthe value on private investors. the Netherlands,retail in activities their focus with Alex withBinckBank’s Beleggersbankare aclosefit acquisition ofAlex Beleggersbank. of The activities Retailthe concernsthe goodwillarisingon the cash-generatingThe goodwillallocatedto unit The cash-generating Retail unit ealSne BPO Syntel Retail BPO Syntel Retail 22 05%10.51% 10.51% 12.2% %2 0% 2% 2% .8 10.64% -2% 9.68% 0%-
Annual report 2007 97 Annual report 2007 98 Costs basedonstandardised costs forthe year • Estimated salesbasedonforthe year • were: test the goodwillimpairment purposes of the cashflowprojections forthe arriving at in The principalassumptionsusedbymanagement 2007 in useofSyntel/BPO 31December asat activities Principal assumptionsusedincalculatingthe value Commission income andexpensethe basedon • interest Interestthe actual margin basedon • Natural lapserate andinflowofnewprivate • were: test the goodwillimpairment purposes of the cashflowprojections forthe arriving at in The principalassumptionsusedbymanagement in useofAlex 31December2007 Beleggersbankasat Principal assumptionsusedincalculatingthe value an annualrate ofincrease of3%. year,immediately precedingthe budget applying ratean annualgrowth of2%. year,immediately precedingthe budget applying conditions. and adjustedfor expected changesinmarket fourthe experiencethe past yearsbased on of commission income andexpensetransaction, per the averagetransactionsexpected and numberof allowing for expected market conditions. margin achieved over fourthe past years, entrusted andinvested. the amountstransactions offunds andin discountedthe expected numbersof in years,the numberofclients in the growth with fourinvestorstrendsthe past the of basedon The changesin2007were asfollows: 15. Property, andequipment plant The changesin2006were asfollows: Depreciation periodinyears Carrying 31December asat amount impairment Cumulative depreciation and Cost Carrying 31December asat amount Depreciation Acquisition ofAlex Additions Carrying 1January asat amount Carrying 31December asat amount impairment Cumulative depreciation and Cost Carrying 31December asat amount Cumulative depreciation ondisposals Depreciation Acquisition ofSyntel Disposals Additions Carrying 1January asat amount equipment equipment itrsCmue te Total Other Fixtures Computer itrsCmue te Total Other Fixtures Computer 466 336 5 (7,957) (5) (3,336) (4,616) 431 276 1 (7,028) (1) (2,101) (2,726) - (4,301) - (2,101) ,6 ,6 36,342 14,299 13 6,342 18 13 5,060 8,396 1,269 5,060 5,885 1,269 ,8 ,3 89,641 2,047 18 - 4,537 - 5,086 2,047 35 60 4 (929) (4) (610) (315) 50 69 1 (1,170) (1) (659) (510) n hardware and n hardware and 7 ,6 2,137 2,521 2,613 - - 17 1,764 2,095 1,811 373 426 785 8 ,1 72,613 17 2,613 286 17 1,811 1,829 1,722 - 785 - 18 1,811 96 785 1,441 933 190 263 896 755 31 December2007 x € ,4 2,613 6,342 ,0 x 1,000 31 December2006 € 1,000
Annual report 2007 99 Annual report 2007 100 income statement canbeanalysedasfollows: The deferredtax assetsandliabilitiesrecognised the consolidatedthe consolidated in andin balancesheet Total deferredtax assets: Availabletax losscarryforwards Pension liabilities Deferred tax assets: Taxable temporary differences bonus shares for Syntel staff Temporary difference relatingto Deferred tax liabilities: tax (credit) of recognisedtotal amount The directly inequitywas beingcontinued not For basis,tax expense onapermanent the activities the on seenote7. Totaltax expense/tax burden Effecttax losscarryforwards of utilised Tax-exempt components profit previously recognised Effecttax losscarryforwards of not Prior yeartax adjustments (in othercountries) Effect ofdifferenttax rates Standard tax rate is asfollows: The reconciliationthe effective of tax ratetax rate the consolidatedthe to with applicable financialstatements 16. Tax mutPretg mutPercentage Amount Percentage Amount ,4 ,6 ,1 2,900 4,310 2,963 6,843 17.5% 4,944 13.5% 4,785 430 1.% 290 (10.3%) (2,900) (12.2%) (4,310) ,7 ,0 ,0 2,900 4,304 2,900 6,774 29.6% 8,338 25.5% 9,023 0720 072006 2007 2006 2007 0720 062006 2006 2007 2007 aac he Income statement Balance sheet 8)(0)2 - 27 (109) (82) 0 .%130.3% 103 0.3% 108 8)(0)2 - 27 (109) - (82) - (0.1%) (36) 96 6 63 69 43 (1.5%) (0.7%) (413) (184) - - - - € 3,210,000 (2006: 31 December2007 x € ,9 5,443 7,396 ,0 x 1,000 € 286,000). 31 December2006 € 1,000 (2006: € of availabletax losscarryforwards was recognised (2006: fromthe deferreddeducted tax assetsashaving beenutilisedin2007. of total amount A an additionaldeferred of tax asset to Binck BelgiëN.V. returnedto profitability in2006,to recognise possible makingit deferredtax assetsamounting Due after >5years years Due in1–5 Due in<1year Of which: Carrying 31December2007 asat amount Utilised Added Carrying 1January2007 asat amount the deferredThe changesin tax assetsandliabilitieswere asfollows: 19.9 million(2006: € 2.9 million in that year.that 2.9 millionin In2007,the basisofrevised on future expectations profit for BinckBelgiëN.V., € 21.1 million). € 8.5 million). year-endtax losses asat total The to 2007amounted € 4.3 millionwas recognised.4.3 ofapproximately Anamount € 2.9 million), correspondingtax lossesof to iblte assets liabilities eerdDeferred Deferred 0 2,963 109 2)(430) (27) a tax tax 25,455 1,388 62 20 26,843 82 -- 4,310 - € € 6.8 millioninrespect 19.9 million € 0.4 millionwas0.4
Annual report 2007 101 Annual report 2007 102 custo - - - Prepaid expenses andamounts accruing Uncleared cheques Commission receivable Interest receivable This itemcomprises: 18. Prepayments andaccruedincome value. the absenceofareliableare in cost measurement carriedat offair Inmaxxa B.V. andLPECapital B.V.than 5%. ofless These investments The otherinvestments concern intereststhe share in capitalof Other investments 31December asat Acquisition Disposal Impairment Other investments 1January asat the otherinvestmentsThe changesin were asfollows: Other receivables Trade receivables Receivables relatingto securitiessold, yet delivered not but and comprise: Other receivables have maturitiesthan oneyear ofless Other investments Other receivables The itemcomprises: 17. Otherassets 31 December2007 3694,969 2,872 23,659 17,064 ,6 38,020 7,660 38,049 7,689 ,0 - 1,399 698 2,594 1,609 2,392 1,051 36,805 1,131 6,413 38,020 7,660 1 164 116 929 88 29 29 29 29 x € 3694,969 23,659 ,8 38,049 7,689 ,0 x 1,000 31 December2006 (69) 14 (4) € 1,000 ie-noescrte - - Profit-sharing bond yet settled transactions not ofsecurities Liabilities inrespect Liabilities relatingto financialinstruments: 22. Other liabilities - Shares andvariable-income securities - Fixed-income securities Trading portfolio: analysed asfollows: trading activities.the securitiesare All listed. The itemcanbe positions insecuritiesrelatingto This itemcomprisesthe short 21. ofsecurities Liabilitiesinrespect Clients’ demanddeposits Clients’ savings account balances 20. Funds entrusted Equity andliabilities client’s risk. BinckBank’s forthe client’s ownnamebut the account andat The derivative positionsheldonbehalfofclients are heldin 19. Derivative positionsheldonbehalfofclients the loan is demanded during the calendaryear,the loanisdemandedduring the lendersare not penalty. noticeandwithout and demandedwithout Ifrepayment of to 31December 2008.2005 Repaymentthe loanmay of bemade hasamaturitythree of yearsIt three and months from 1October The profit-sharing bondisaloanprovided byagroup ofemployees. Other Trade payables the purchase pricefor of Part Syntel stillpayable Tax andsocialsecuritycontributions Other liabilities: ,7,2 383,543 383,543 1,772,822 1,148,048 31 December2007 2,7 - 624,774 39412,737 13,904 ,8 1,320 1,080 ,6 830 1,884 3,029 1,261 2,165 9,818 3,750 2,034 - ,7,2 383,543 1,772,822 x 5,4 108,415 455,240 € 27121,061 32,751 49414,057 14,984 27121,061 7,004 32,751 17,767 ,0 x 1,000 - 31 December2006 27,755 23,671 4,084 € 27,755 1,000
Annual report 2007 103 Annual report 2007 104 tlsd- 31December Balance asat Utilised Released to income 1January Balance asat the provisionThe changesin for onerous contracts were asfollows: (i) Onerous contracts Pensions Onerous contracts 24. Provisions payable. Staff coststhis headinglargely under comprise staff bonuses Total Other Commission Accrued interest Accrued stockexchangetransaction costs and Staff costs This itemcomprises: 23. Accrualsanddeferred income 2007 and2008. capital ofSyntel dependsonSyntel’s gross margin overthe years the purchasethe share pricerelating of the acquisitionof Part to the entire loanwas repaid inJanuary2008. Meeting ofShareholders. Withthe bondholders,the agreement of payable afterthe financialstatementsthe General adoptionof by the year.during The interest forto 15%, 2007amounts andwillbe in the result forthe result year.that in of Anamount interest payablethe endofeachyear iscalculated at andrecognised BinckBank’s andvarying profit net between0%and15%. The agreed,the interest rate with payable on beingdependent the fullcalendaryear. Aschedulefor interest payments hasbeen BinckBank’s andat lent the amount of only inrespect disposal for to receiveentitled year.that of interest inrespect Interest ispaid € 240,000 was repaid 31 December2007 2127,993 1,896 22,152 13,106 ,9 1,407 460 447 3,783 2,992 1,454 1,343 3,257 4 199 512 146 445 199 246 199 416 270 146 5)(210) (53) x € 2127,993 22,152 ,0 x 1,000 1 445 416 31 December2006 (103) € 1,000 iblte nurdwt custo fSne - - Closing position Actuarial gainsandlosses Benefits paid Employee contributions Interest cost Current cost service - Liabilities incurred withacquisitionofSyntel Opening position the present obligation: valueChanges in the definedbenefit of Total pensionliabilities Unattributed cost service past Unrecognised gainsandlosses actuarial Fair value ofplanassets Present value obligation ofdefinedbenefit Pension liabilities: plan. the definedbenefit of inrespect balance sheet The following liability hasbeenrecognisedthe consolidated in Balance 31December asat Added Acquisition ofSyntel Balance 1January asat the pensionprovisionThe changesin were asfollows: (ii) Pensionliabilities the expected futureto rate ofincreasethe rent. in income in2007. The discount ratethis provisionto isequal applied likelyto exceed the costs. was Anamount accordingly releasedto will bereducedthe economic asandwhen benefitsare deemed 2010, October but remainingthe lease, periodof whichexpires on1 period forthe provision which the hasbeenformedto isequal economicto begenerated benefitsexpected the contract. by The rented office space,the wherethe coststhe leasearethan of higher The provision for onerous contracts hasbeenformed of inrespect 31 December2007 7 246 - 270 246 4- 24 x € 155 (1,576) (1,585) ,0 x 1,000 ,3 1,822 1,831 - 1,822 1,822 1,831 22 - (292) 8 - 246 186 270 1)- (17) 0- - 50 82 - 24 31 December2006 246 € 1,000 1,822 -
Annual report 2007 105 Annual report 2007 106 eieetae65 2.0% 5.30% table 1994 multipliedby30% GMD Indexation discretionary. withagereduction of2yearsthe benefitsisnot of table 1995–2000 mortality GBM/V 4 There are noothermaterial assumptions. actuarial Retirement age Expected pay rises Expected return onplanassets Discount rate Incapacity risk Life expectancy the above assumptionsusedinmeasuring The actuarial itemswere asfollows:: the planassetsisheldorusedbyBinckBank. None of The planassetsare managedbyaninsurance company.the investmentto influence BinckBankisunable policy. to makeBinckBank expects contributions of - Total Expected return onplanassets Interest cost Current cost service expense:Net benefit Closing position Benefits paid Contributionsthe year during –employees Contributionsthe year during –employer Plan assetsacquired withacquisitionofSyntel Actual return onplanassets Actuarial gainsandlossesonplanassets Expected return onplanassets Opening position Changesthe fair in value ofplanassets: for men and1year for women, before andafter retirement age € .60% 155,000 to the defined benefit planin2008. the definedbenefit 155,000to 31 December2007 28 - (268) 4- 64 x € ,0 x 1,000 ,8 1,576 1,585 - 1,576 24 - (204) 0 - - 204 186 - 180 6)- (64) - (17) 2- 82 - 50 31 December2006 € 1,000 1,576 former Boardthe the Management inconnection with memberof recognised in2006.total of100,000 A shares wereto a issued in2006. ofperformance inrespect element The expense was Boardthe Management asavariablemembers of remuneration On 29January2007,total of19,508shares a was grantedthreeto a3-for-2 rights apriceof issueat with December2007, 46,256,105 shares were issuedinconnection 14 nominal value of total of77,093,508A ordinary shares were inissue, eachwitha Issued share capital 25. Equity 2007 was the amounts andsold. bought The quotedshare year-end priceasat € wasthe average measured at purchase priceofapproximately treasurythe 129,137 shares of carrying amount (as year-end at 2007) to otherreserveschargedthe average at purchase price. The treasury shares124,008 were issued. The issued shares were 253,145, acquired anaverage at purchase priceof 1January2007,As at treasurythe numberof shares heldwas Closing balance Issued to staff Issuedto Syntel staff Exercise ofoptionsbyformer Board Management Member Issuedto existing Board andManagement members Opening balance Treasury shares distributable. The share premium isexempt fromtax andinprinciplefreely Share premium of value Binckholds50prioritysharesStichting (withanominal Prioriteit Number ofshares 31December asat Issue Number ofshares 1January asat 3.78. treasury of sharesThe changeinequityrespect reflects € € 0.10 pershare). 10.11 (2006: € 0.10. The share capitalisfullypaidup. On € 11.00). € 8.32 pershare. € 3.78. In2007, ubrAon NumberAmount Amount Number 1000 7 - - 378 (100,000) 2,3 47 5,4 (956) 253,145 (487) 129,137 31 December2007 5,4 96 9,5 (1,121) 296,855 (956) 253,145 1,0)7 1,9)49 (12,890) 74 (19,508) 450 7-- - 17 (4,500) 3,2)116 (30,820) - - 62615- 30,837,403 30,837,403 77,093,508 46,256,105 30,837,403 x 6,1 71,289 466,816 € 9,9 20,855 392,395 ,0 x 1,000 ,0 3,084 7,709 47 (956) (487) 31 December2006 € 1,000
Annual report 2007 107 Annual report 2007 108 non-eurozone subsidiaries. differencestranslation arisingon the financialstatements of of The foreign currencytranslation reserve comprises exchange Closing balance Movement Opening balance (i) Foreign currencytranslation reserve Otherreserves (iii) Reserve for unrealised results (ii) Foreign currencytranslation reserve (i) These comprise: Other reserves the year. The retained reserve profit forthe undistributedprofit includes Closing balance forProfit the year to otherreservesAdded Opening balance Unappropriated profit the arrangement on29December2006. income overthis period. total, In 30,820 shares were issuedunder fromto 2010. 2007 the arrangement of The cost to willbecharged the conditionsthis awardwhich attachedto areto befulfilled runs of staffthe subsidiarySyntel of acquired in2006. The periodin the form ofBinckBankshares was conditionally awardedto agroup staff onanon-recurring basis,their job. dependingon Abonusin Board,the Supervisory various numbersofshares were grantedto exercise ofoptionrights granted. In2007, following adecisionby 31 December2007 2,0)(13,609) (24,009) 50424,297 24,612 35,044 36,177 24,009 24,009 13,609 32,155 32,155 24,009 132 (649) (1,342) 15 97 (125) 0 334 237 209 334 334 209 x € 50424,297 35,044 24,009 32,155 ,0 x 1,000 31 December2006 € 1,000 were granted in2007andnoneexpired. then outstanding optionswerethe adjusted.prices of Nooptions the rights issueon14December2007,the numbersandexercise exercisedto acquire 100,000 shares at related expense isincludedinstaff costs. In2007, optionswere trading daysto calculate volatility, andaninterest rate of3%. The valuing options,the sharethe previous which uses priceson 150 € These optionswere granted in2004,total valuethey hada when of December2009. 21 su fsae oSne tf - employees were outstanding: shares 34,703 at the company granted Boardthe Management and/orto membersof 31December2007,As at the followingto acquire options shares of Share options The otherreserves are inprinciplefreely distributable. Closing balance Appropriation for ofprofit previous year Payment ofinterim dividend Payment offinaldividend Exercise ofoptions Proceeds fromthe saleofrightstreasury attaching to shares Issue ofsharesto Syntel staff Issue ofsharesto management Rights to shares Opening balance (iii) Otherreserves thereserves available for distribution. at were nosalesin2006or2007. This reserve inarriving isdeducted available-for-sale financialassets. tax-deductible.The lossis There The reserve comprisesthe fair value gainsandlosses, aftertax, on Closing balance Tax onunrealised results onavailable-for-sale financialassets Unrealised results onavailable-for-sale financialassets Opening balance (ii) Reserve for unrealised results 27,000. This valuationthe Black&Scholes formula isbasedon for € 2.24. Inconnection with € 2.30, expiry date 31 December2007 61724,612 13,609 36,177 24,009 19,076 24,612 429 (3,361) (4,889) (4,299) (8,874) (649) (1,342) 14 - (154) (441) (494) (930) (649) 2 - 342 422 535 286 237 7)(49) (74) x € ,0 x 1,000 31 December2006 (116) € 1,000
Annual report 2007 109 Annual report 2007 110 2006. Syntel staffthe equity-settled under programme on29December year incontinued service.total of30,820 A shares wasto issued madeavailableamount to eachemployee beingreleased for each employee ofSyntel for aperiodoffour years,the with25%of recognised asanexpense providedthe recipient remains an BinckBank share price(cashsettlement). This bonuswillbe sharesthe (equitysettlement) basedon anamount orincashat arrangement, eachemployeeto bepaideitherinBinckBank opted of 28Syntel employees.this bonus time ofacceptance the At On acquisitionofSyntel, abonusschemewas agreed withagroup Bonus schemefor Syntel staff amount foramount to shares rights these freeto shares nowamount expense isincludedinstaff costs. total reserves of The inrespect € granted andareservation hasbeenmadefor of the amount to the rightsother reserves of inrespect ‘free shares’ havethat been shares, of anamount reserve.the above ofstockoption to inrespect Inaddition amount team havetreasury management fromthe shares beendeducted team on4March 2008. the to sharesThe issuedrightsto basis,that 30,500to shares rightsthe management wereto issued 2008,the closingpriceofBinckBankshares when was are published.the 2007results,the caseof In datethat was 3March the daythe closingpriceon onwhichBinckBank’sto annualresults the shareswhich concerned are issuedisdeterminedwithreference team. the management grantedthe membersof to The priceat sharesto amounting the variable of ofremuneration, element As part stockoption Rights to shares 106,000 for rights grantedto Syntel employees. The related € € 246,000 (2006: 183,000 (2006: € 535,000 (2006: € 194,000, making thetotal € € 57,000) wasto added 285,000) have been € 342,000). € 8.07. On Notes to the consolidatedto Notes income statement Stock exchange andclearingcosts –professional Stock exchange andclearing costs –retail Professional services Commission expense Professional services Retail Commission income: The itemcanbeanalysedasfollows: transactions andrelated ofsecurities inrespect services.parties Commission comprises fees for for performed third services andby 27. Commission institutions. credit Other interest expense balancesonaccounts relatesto debit with Other interest expense Interest onprofit-sharing bondloan Interest oncallmoney Interest onfundsentrusted Interest expense institutions. credit Other interest income relates balancesonaccountsto credit with Interest fair onfinancialassetsat valuethrough orloss profit Other interest income been recognised Interest onloansandreceivables for whichprovisions have Interest onavailable-for-sale financialassets Interest onheld-to-maturity financialassets Interest oncallmoney Interest onclients’ overdrafts Interest income This itemcomprisesthe following: expense onoverdrafts. interest, aswellinterest income balancesorinterest oncredit and borrowing ofmoney, providingthey are ofasimilarnatureto This includesallincome andexpense itemsrelatingthe lending to 26. Interest x € 59735,801 45,997 10,392 17,945 26918,691 11,543 22,609 54,492 12,735 14,259 41,757 68,606 15,885 52,721 15,568 15,568 28,070 25,382 5,679 7,885 10,281 11,836 0155,176 10,125 ,0 x 1,000 ,2 1,330 5,818 1,922 6,428 4,347 9,781 - 174 2,688 1,887 2007 8 107 198 182 162 358 1,472 436 893 9- 49 524 - € 1,000 2006
Annual report 2007 111 Annual report 2007 112 The number at year-endThe numberat 2007was 481(includingstaff 2006:the acquisitionofAlex) addedwith (yearend 223). The average numberofemployees in2007, Board,the Management includingmembersof was 243(2006: 195). Average numberofemployees The research coststhe developmentthe subsidiary Syntel and capitalisedby costs not to amounted Other staff costs Rights to shares Social securitycharges Pension contributions –definedcontribution plan plan expense –definedbenefit Benefit sharingandbonuses Profit Wages andsalaries 30. Staff costs dividends received from otherinvestments. date ofacquisitionin2006.this headingare Alsoincludedunder the subsidiarySyntel. Syntel’s revenues were recognised asfromthe relatingsupply ofgoodsandservices to hardware andsoftware of Included here forthe third arethe amounts parties to charged 29. Other income through orlossoninitialrecognition. profit financial assetsandliabilitiesdesignated fair asbeingat value the fairtogether withgainsandlosseson and salesvalue of this headingarethe gainsandlossesonpurchasesIncluded under Financial fair assetsat valuethrough orloss profit Derivatives trading result This itemcomprisesthe following: 28. gain/(loss) fair onfinancialassetsandliabilitiesat Net valuethrough orloss profit x € 7409,057 17,450 7409,057 17,450 5,895 10,635 ,0 888 5,504 ,0 x 1,000 ,6 947 760 693 2,769 1,341 1,325 2007 8 - 286 3 343 419 - 535 641 204 - - 286 245 1- 41 € 118,000. € 1,000 2006 A.M. van Westerloo Board member) (former Supervisory Ch.J. Langereis J.K. Brouwer C.J.M. Scholtes Board member) (former Management A.E. Teeuw P. Aartsen K.J. Bagijn T.C.V. Schaap ownership ofsharesthe company in 31December2006are asat asfollows: Detailsthe remuneration of Board Boardtheir to Management Directors andSupervisory in2006 and paid L. Deuzeman A.M. van Westerloo J.K. Brouwer C.J.M. Scholtes P. Aartsen K.J. Bagijn T.C.V. Schaap ownership ofsharesthe company in 31December2007are asat asfollows: the remunerationDetails of Board Boardtheir to Management Directors andSupervisory in2007and paid Remuneration Board Board ofManagement Directors andSupervisory lmn lmn otiuinScrt shares Security contribution element element shares Security contribution element element ie aibePninSca BinckBank Social Pension Variable Fixed BinckBank Social Pension Variable Fixed 0 393,392 - - - 1,319,392 - 24 6 - 659,696 659,696 6 6 83 - 6 103 39 742 22 75 22 203 795 232 232 180 6,755 2,052,745 193 1,022.995 211 1,022,995 18 211 6 6 6 129 43 43 43 790 228 281 281 645 215 215 215 4---393,392 - - - 2024 2732 ------85202932 ------4
Annual report 2007 113 Annual report 2007 114 fixed salaryspread overtwo years. a bonusequivalentto approximately oneyear’s approved Board,the Supervisory by they for qualify the annualbudgets BoardManagement meet the remunerationthat, is the the members of if the variable of of The principleinrespect element accordingthe 2007remunerationto policy. the remuneration of fundamental part package medical expenses insurance, form donot a Secondary conditions ofemployment, suchas Board.Management remunerationthe sameforthe is allmembersof number ofBinckBankshares. The fixed andconsistingperformance ofabonusand reward for andmedium/long-term their short-term andavariableelement element,the latter beinga BinckBank’s Board Management consists ofafixed remuneration receivedthe membersof by the 2007remunerationUnder policy,the 2007 remuneration policy Hinkal BeheerB.V. Thimay B.V. nil): at the balance sheet date werethe balancesheet at granted Boardthe Management as to membersof ofloansetc. The amounts outstandinginrespect to clearancethe NederlandscheBank. by subject Meeting ofShareholders heldon19November 2007, the Extraordinary Board in Supervisory General Mr L. Deuzeman wasthe appointed memberof Board on25January2007.BinckBank Supervisory a periodoffour years. MrLangereis retired fromthe Meeting ofShareholders heldon26March 2006for the General Boardthe BinckBankManagement in in May 2008. was appointed MrAartsen memberof The contracts withMessrsSchaapandBagijnexpire ,0 - - - - - 3,507 4.3% 4.3% 1,753 1,754 07ae% 06ave % 2006 ave % 2007 € 3,507,000 (2006: if this occurs within fiveif years. be heldfor five yearstermination oruntil ofservice to refundthe incometax paid. The free shares must require Boardthe Management memberconcerned arethree soldwithin years,the company will the company.paid by these shares Ifsomeorallof the bonuspaidinBinckBankshares of willbe part the results forthe year. the The incometax dueon the datethe closingpriceon ofpublicationby of of shares awardedthis basiswillbedetermined on the formpaid in ofstockoptionshares. The number their cashbonus 25% andamaximumof50% Boardthe Management canhaveof aminimumof the 2007remunerationUnder policy,the members rise bymorethan 100%. share dulyheldifearningsperstockoptionshare will beawarded for eachBinckBankstockoption per share risebymorethan 50%andonefree share BinckBank stockoptionshares dulyheldifearnings one free share willbeawarded for everytwo three-year andeach thereafter, period 2005–2007 Accordingthe remunerationto policy, forthe period are achieved. (free shares) may beawarded iflonger-termtargets Additional shares free offinancialconsideration three be heldfor shares years. must least at in BinckBankshares (stockoptionshares). These their cashbonus of to receiveperiod may opt part to staythe companyexpected with for anextended Boardthe Management whoareMembers of of 25%basicsalary. to amaximum members acashbonusamounting may, itsdiscretion, at award Boardthe Management Board’sManagement control, Board the Supervisory for exampleto external circumstances beyondthe the results. fullyachieved, isnot target the If due the bonusifjustifiedby to maximum uplift of25% Board may,Supervisory itsdiscretion, at applya the 2007remunerationUnder policy,the a defined contribution defined pensionplan. a BoardThe Management membersare covered by future forthe achievement oflong-termobjectives. reserves recognised for free shares payablethe in (2006: werethe incometo charged statement in2007 € Messrs Schaap, BagijnandAartsen, amounts of uplift of25%inrecognitionthe goodresults. of For to award Board decided Supervisory the maximum adopted annualbudget,the the basisofwhich on the achievementthe previouslybeen basedon of the company.by This variable remuneration has remuneration,to amounting ( remuneration awardthe form in ofshares taketheir variableto Board 50%of membersopted Board,the Supervisory the Management eachof remuneration was gross annualsalaryof Boardthe Management Each received memberof a the formin ofacarallowance. their remuneration of part ispaid that This means the company’sto those applying commercial staff. use ofacompany carunderarrangementsto similar their duties,of have MessrsBagijnandAartsen the remuneration policy, exceptthat, giventhe nature 2007 hasbeenfinalisedinaccordancethe with The remuneration Boardthe Management for of Implementation of2007remuneration policy € 40,000, 67,000). this The incometax dueon € 29,000, € 40,000 and € € 29,000 of andnil)inrespect 134,000. Inconsultation with € 215,000.variable The € 16,000, respectively, € 73,000, willbepaid
Annual report 2007 115 Annual report 2007 116 Less: repurchased shares on1January Number ofshares inissueon1January ondiscontinuedProfit operations oncontinuingProfit operations The calculationthe earningspersharethe following: of isbasedon rights, for example. adjusted for possibledilutioneffectsto outstandingoption due average numberofordinary sharesthe period inissueduring attributableto ordinarythe profit shareholders the weighted by The dilutedearningsperordinary share are calculated bydividing period. weighted average numberofordinary sharesthe inissueduring forprofit the periodattributableto ordinary shareholders the by The basicearningsperordinary share are calculatedthe bydividing 33. Earnings perordinary share (euros) Total – depreciation attributedto discontinued andamortisation operations – property, (15) and equipment plant – intangible assets (14) This itemcomprises anddepreciation amortisation on: 32. Depreciation andamortisation directly associatedthe promotion with ofBinckBankproducts. commercials,the marketing expenses alsoincludeothercosts fromthe costs involving ofadvertising Apart radio and TV Total Miscellaneous overheads Outsourcing Membership fees ICT Provision ofinformation Premises Marketing This itemcomprisesthe following: 31. Otheroperating expenses ,9 1,575 1,699 1,172 1,054 752 865 3,896 1,898 2,585 1,812 1,868 5,109 0 81 392 200 718 15 (327) (185) 2 1,170 732 929 955 0874330,837,403 30,837,403 0542830,540,548 30,584,258 x 2315 (296,855) (253,145) € 4108,212 14,190 05923,226 30,599 8212 14,190 ,9 1,575 1,699 ,0 x 1,000 ,5 783 1,556 2007 .80.79 0.98 € 1,000 2006 Interim dividendfor 2007: Final dividendfor 2006: Dividend onordinary shares: the year Declared andpaidduring 35. Paid andproposed dividend the earningspershare. to sharesThe rights were fair issuedat value dilute andsodonot Average numberofshares inissue Share issue Exercise ofoptions Stock optionsharesto management issued Weighted average numberofshares relatingto: (*) were issued on4March apriceof 2008at As areward forthe results achieved in2007, 30,500to shares rights completionthese financialstatements. of shares were datethe datethe reporting conducted and of between transactionsNo otherinordinary shares orpotential ordinary Diluted earningspershare ondiscontinued operations (euros) Diluted earningspershare oncontinuing operations (euros) Number ofshares usedfor calculation ofdilutedearningspershare Number ofshares potentially fair issuedat value Average fair value (euros) Average exercise price(euros) Number ofoptionsgranted, yet exercised not but Average numberofshares inissue 34. Dilutedearningspershare (euros) Earnings pershare ondiscontinued operations (euros) Earnings pershare oncontinuing operations (euros) for fulldetails, seenote25. The abovetotal numbersdisclosed numbersarethe basedon (*) in note25,the datetaking account of ofdistribution. € € 0.29 (2005: 0.14 (2006: € € 0.16) € 0.11) 8.07 pershare. 2898630,551,278 32,829,886 2866230,652,533 32,856,642 30,551,278 32,829,886 x ,6,1 - 2,160,313 € 738- 10,730 67,308 18,007 403125,000 34,073 3138,250 13,173 737 (23,745) (7,317) ,0 x 1,000 ,7 4,889 8,874 07 12.75 10.71 ,9 3,361 4,299 2007 .80.79 0.98 .80.79 0.98 .50.03 0.76 0.05 2.42 0.93 2.30 .50.03 0.76 0.05 0.93 € 1,000 2006
Annual report 2007 117 Annual report 2007 118 aeCuty20 2006 ofirrevocableLiabilities inrespect facilities ofcontractsLiabilities inrespect of suretyship andguarantees Contingent liabilities 2007 37. Contingent liabilities Belgium the marketsthe individualrelatedthey and the financialpositionof operate. inwhich parties nil). concerningthe needforThe judgement suchprovisions ismadeeachyear of the basisofanassessment on Netherlands year-end Country 2007, recognise BinckBankdid not provisions any baddebt for receivables from related (2006: parties Transactions withrelated are conducted parties oncommercialterms andconditions market andat prices. Asat Terms andconditionstransactions withrelated of parties UnitedKingdom Netherlands Netherlands Board have influence. significant Netherlands The group ofrelated includesassociates Board wherethe BinckBankManagement parties andSupervisory Netherlands Binck SecuritiesB.V.trading bond operations (seenote7). liquidation. B.V., Florint incorporated 2007, on1October the continuation is footing onanindependent the of ofHillsIndependent The activities Traders Ltd. were soldoff in2006. The companythe process isin of Hills Independent Traders Ltd. Binck BelgiëN.V. Stichting Effectengiro Binck Bewaarbedrijf BinckBankB.V. B.V. Florint Syntel BeheerB.V. Binck SecuritiesB.V. Name The consolidated financialstatementsthe following include BinckBankrelated parties: 36. Related disclosures party Final dividendfor 2007: Dividend onordinary shares: recognised 31December) asaliabilityat (not Proposed for approvalthe General by MeetingofShareholders shares). € shares year-end asat 2007(77,093,508). Aninterim dividendof The dividendfor 2007hasbeencalculatedthe newnumberof on collateral shouldprove worthless. Guarantees includebothcredit-substituting andnon-credit-substituting allitscounterpartiesthat their contractual shoulddefaultthe assumption on obligations andallexisting The above figure representsthe maximumpotential riskfor credit these products on BinckBankattachingto in relationto loans. The underlyingvalue presentedthe facethese products isnot on the balancesheet. of of Tothe requirements meet of itsclients, BinckBank offers products suchascontracts ofsuretyship andguarantees 0.06 was already madepayable in2007( € 0.15 (2006: € 0.29) € 0.14 on30,837,403 x € 1548,875 11,564 ,0 x 1,000 neetInterest Interest ,2 - 2,423 072006 2007 2007 0%100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 5 - 35% -- € 1,000 2006 below. Syntel reports the Professional but,included in business unit Services rendered inconnection withservices to BinckBank, the operationsthose inothercountries. beingmadebetween a distinction the Netherlandsand in Syntel is other countries,the administrative including muchof effort. The secondary segmentation isgeographical, with professional insecuritiesandderivatives services transactions for professional investorsthe Netherlandsand in isabrokerunit for private clients (mainlyonlinebrokerage). The Professional provides businessunit Services the following and businesssegmentsactivity are identified: Retail andProfessional Services. The Retail business different risks andgenerates different revenues from othersegments. segmentationThe primary isbasedon inaspecificeconomicsupplies products orservices area (i.e. ageographical segment) andisexposedto (i.e. eithersuppliesspecificproducts orservices that ofBinckBank abusinesssegment) or isapart A segment 38. information Segment financial positionorprofitability. the outcomesaftertaking legalcounsel that are – unlikelyto have material adverse effects onBinckBank’s or impendinglawsuits, Boardthe Management believes the basisofinformation –on currently available and BinckBank isinvolved invariousthe outcome legalproceedings. ofcurrentto predict possible isnot Althoughit Lawsuits Longerthan five years to fiveOne years than oneyearLess the outstandingliabilitiesisasfollows:The agedanalysisof (2006: relatingto office rents andoperating leasepayments forthe vehicles in2007was approximately into operating leasecontracts forthe vehicle forthan five fleet periodsofless years. The combined expense The company hasleasesonoffice premisesthe Netherlands, in Belgium, France andSpain. hasalsoentered It Lease commitments The contingentthis represents liabilities total approximately ofanyamount custodyfee and dividendcommission onexceeding additionallypaidbyeachclient limits. set fee anddividendcommission ofAlex paidbyeachclient Bottom-Lineonentrythe the agreement into plus terminatesthe amended If BinckBank VEB agreement,the custody to to pay equal willbeliable anamount it acquisition ofAlex. and(iv) BinckBankwouldassumeRabobank’s cost at responsibilitiesthe contract under followingthe products offered was extended, wouldhenceforwardthe services (iii) beprovided for aprofitable fee insteadof the following aspects: the product (i) VEB Bottom-Linewasto Alex changed Bottom-Line,the range (ii) of 2003, substitutingRabobank for BankLabouchere N.V. The agreement was recently most amended asregards concerningthe provision ofbrokerageto services VEB members. The agreement was amendedon28March On 22December1995, BankLabouchere N.V., aformer ownerofAlex, and VEB concluded anagreement variable interest. Securityhasbeenprovidedthe irrevocable forthe majorityof facilities yet utilised. not whichhaveto clients but yet beenutilised. not These facilities willhave beengranted for afixed periodandat giveto anywill not future rise cashflows. The irrevocable facilities mainlycomprise linesmadeavailable credit guarantees. cases, Inmost guaranteesthey to expirethem and canbeexpected acallbeingmadeon without € 1.3 million). € 674,000 underRetail. These costs have information beeneliminatedthe segment in presented x € 1,000 1,544 6,656 3,560 € 10 million. € 2.1 million
Annual report 2007 119 Annual report 2007 120 a 16 Investment assets Liabilities 13 Carrying ofassets amount 10 for profit the year Net Tax 30 Operating before profit tax - Share inprofits ofassociates 31 fromProfit operations 29 17 32 Total expenses losses Impairment Operating expenses ofotherinvestments Impairment Depreciation andamortisation 27 Other operating expenses 26 Staff costs Total revenue 28 Other income fairliabilities at valuethrough orloss profit gain/(loss)Net onfinancialassetsand Commission expense Commission income Interest expense Interest income Business segmentation Depreciation andamortisation Investment assets Carrying ofassets amount Total revenue Geographical segmentation oe20 0620 0620 0620 0620 2006 2007 2006 2007 2006 2007 2006 2007 2006 Note 2007 ,8,6 1,6 0,0 8,5 ,8,6 0,2 ,4 41122960549,321 2,289,610 44,101 620,610 6,147 2,756,426 56,845 505,220 12,031 2,283,463 189,154 563,765 400,700 2,744,395 211,073 316,066 584,568 1,882,763 352,692 2,159,827 2,4)(397 1,7)(,7)(448 1,1)(,2)(517 4,5)(34,058) (43,453) (15,147) (9,025) (34,060) (42,364) (18,911) (10,635) (15,147) (34,428) (15,936) (9,025) (4,974) (2,423) (18,913) (10,579) (1,746) (33,339) (13,937) (4,974) (8,212) (23,849) (18,691) (10,579) (14,190) (22,609) (13,939) (1,153) - (22,760) (1,756) (7,059) - (12,434) (18,691) (22,609) (7,148) (8,350) (11,543) (14,259) 0532,5 ,4 ,2 5342,7 ,8 ,4 73329,215 37,393 1,045 2,089 28,170 35,304 2,820 4,741 63,273 25,350 80,846 30,563 16,192 54,492 11,114 68,606 47,081 - 69,732 16,226 7,794 28,510 - 658 15,320 39,287 441 54,492 54,412 68,606 15,568 12,736 28,069 15,885 3,132 41,756 6,780 52,721 12,436 21,289 109 109 109 2 (1,089) - - 2 (1,089) - - (21,394) (24,544) (12,337) 2 (7,094) (9,057) (1,089) (17,450) (3,263) (8,090) (5,441) (5,794) (10,599) (9,360) (265) (475) (5,176) (10,124) (1,814) (4,499) (3,362) (5,625) ,8 ,7 ,0 0 ,8 ,7 2 ,0 2,678 6,909 - 621 2,678 6,288 402 3,003 2,276 3,285 96 106 73 49 169 155 15 37 184 (1,962) (1,884) (387) (185) (1,575) (1,699) (489) (733) (1,086) (966) 286---286- ealPoesoa Total Professional Retail ,7,6 2,7 7,2 06027435563,765 2,744,395 40,690 372,126 523,075 2,372,269 ,0 8 ,0 8 ,0 888 5,504 - - 888 5,504 888 5,504 - 4884,7 ,0 ,1 97247,081 69,732 2,610 4,904 44,471 64,828 0720 0720 072006 2007 2006 2007 2006 2007 otnigoeain icniud Total Discontinued Continuing operations ,2 ,3 53 ,9 1,575 1,699 2,678 6,288 36 60 75 177 1,539 1,624 2,618 6,111 ehrad te onre Total Othercountries Netherlands Services 6)-(9 (69) - - - (69) - (69) 0592,2 ,5 8 21524,009 32,155 783 29,215 37,473 1,556 1,045 23,226 2,089 30,599 28,170 35,384 475 494 53 22 538 (5,206) (5,318) (262) (533) (4,944) (4,785) 80---80- 1181,9 14415,799 11,434 15,799 11,148 operations lending to centrallending government andlocalauthorities investment portfolio ofbonds. AllofBinckBank’s the investments riskon also incursacredit inits institutions.local authoritiesandcredit BinckBank advances are grantedto central government and the collateral against insecurities, loansand for risk.the credit from granting Apart credit the standard approachBinckBank hasdecidedon risk,credit market riskandoperational risk. the requirementsimplementing to with respect eased. offers BaselII various approaches for risk)have securities(credit to clients against been capital requirements matching BinckBank’s lending to cover ofcapital amount operational risks,the includeagreater must the balancesheet although but, for BinckBank, effectthe net isbeneficial; representstougher requirements for many banks BinckBank witheffect from 1January2008. BaselII 2007andwillbeimplemented January by 1 effectively. The newrulescameinto operation on banksto managebankingrisks inorder more introduce newcapitaladequacy requirements for bankingindustryguidelines The newBaselII Basel II integrated. by Alex andbyBinckBankare beingevaluated and processesmanagement adoptedandimplemented currently undergoing careful appraisalthe risk and policyandorganisationRisk management is constitute anongoingprocess withinBinckBank. updating ofappropriate control measures The identification ofrisksthe creation and and process.management systems andincorporatingthe risk of limitsare part control measures, systemsandinformation reporting systems.and employsriskmanagement Adequate devotes considerable attentionto riskmanagement both profits andequity islimited. BinckBank ofunexpected eventsthe impact profilethat on so variety ofrisks.the risk to minimise BinckBankaims ofitsoperationsthe conduct In BinckBankfaces a 39. Financial riskmanagement marked improvement. ratioBIS inJanuary2008consequently showeda of either0%or10%followingthe acquisition. The assets were converted into assetswithaweighting BinckBank’streasury policy,these the majorityof carried a20%riskweighting. Inlinewith acquisition ofAlex, whoseassetspredominantly 31December2007wasas at the connected with 8% ratioto almost The dropthe BIS in underBaselII to ourshareholders andclients alike.is important the bank the financialsoundnessof higher because banks. BinckBank’s internal capitalstandards are ratio) ownfunds(BIS total actual isgenerally 8%for weighted accordingto risk. The standard forthe andoffthe balancesheet.sheet These assetsare assets, bothpresentedthe face onthebalance of BinckBank’s capitaliscomparedthe bank’s with lay downminimumcapitalrequirements.(DNB) the Nederlandsche Bank The guidelinesissuedby maximum shareholder valuethe otherhand. on capital ratiosthe onehandandhighreturns on plus capital structure, strikingabalancebetweensound BinckBank’sthe optimising policyisaimedat Capital management market riskandoperational risk. the to use has opted ‘basic indicator approach’ for rating credit a AA- (S&P orequivalent). BinckBank to borrowers least institutionsis withat and credit
Annual report 2007 121 Annual report 2007 122 (based onBaselIruling) *) time ofacquisition. the intangiblethe assetsidentified of amount at The carrying Total capital Less: assets(seenote13) non-qualifying Core capital Less: otherintangible assets*) Less: goodwill Less: unrealised gainsandlosses(beforetax) Less: proposed dividend Total equity Other reserves Unappropriated profit Treasury shares Share premium reserve Issued andpaid-upshare capital x ownfundsisasfollows:the actual The structure of Risk-weighted assets Weighted itemswithotherrisks Weighted risk itemswithcredit – 100%riskweighting – 20%riskweighting – 10%riskweighting – 0%riskweighting risk Credit Total capitalratio/ ratio BIS supplementary capital Total ofcore capitalplus Core capitalratio Core capital x € € 1,000 1,000 negtdWihe negtdWeighted Unweighted Weighted Unweighted iiu culMnmmActual Minimum Actual Minimum 4,1 471-- - 197,988 33,789 - 197,988 64,585 168,944 535,125 89,545 - 14,741 535,125 447,727 147,414 764,296 2075,8 04853,695 53,695 20,428 10,214 54,282 54,887 52,087 26,044 0720 062006 2006 2007 2007 .%83 .%21.1% 21.1% 8.0% 4.0% 8.3% 8.4% 8.0% 4.0% 0720 062006 2006 2007 2007 5,8 255,350 231,777 651,088 639,411 16723,573 11,677 2932 (930) (8,881) (249,302) (152,929) 6,1 71,289 20,855 466,816 392,395 1,6)(8,875) (11,564) 42253,695 53,695 54,282 54,887 24,297 24,009 35,044 32,155 ,6 1,362 1,866 3,084 7,709 072006 2007 65 - (605) (956) (487) of oneday, oneweek andonemonth. cash flowprojections are madeovertime horizons can beinvested ininterest-bearing securities. The these funds daily basisanddecideshowmuchof the expected cashflows offundsentrusted ona The Treasury keeps aclose watch Department on money. with regardto cashbalancesand available call to beheld limits concerningthe minimumposition the stockmarkets.on hasset The management movements onclients’ accountsthe activities and Historical analysesreveal acorrelation between as possible,the assetscanbereadily liquidated. bonds. Bykeeping investmentsto short-term asfar interest-bearing securities, suchasgovernment deposits withfinancialinstitutionsandinlisted investthe fundsentrusted largely indemand the money market,and to BinckBankhas opted takethe capitalmarketchanges whichcan placein a dailybasis.transaction Given volumesthe the and securities affect offundsentrustedthe amount on and repayments ofloansandadvances against and credits oncurrent accountsthe borrowings and transactions. securities all carryingout The debits BinckBank dealswithalarge numberofinvestors, changes ininterest rates andexchange rates. isvulnerableto to whichit the extent liquidity and cost, factorsthe bank’s are inassessing important they fallliabilities asandwhen due, acceptable at obtain replacement fundingfor interest-bearing to maturitiesthe ability ofassets andliabilities predictable andare alsohighlyvaried. The transactions areliabilities because usuallynot matchingperfectly maturities ofassetsand to BinckBank. isunusualfor It banksto have assets andliabilitiesisoffundamental importance the maturitiesThe matching of of orotherwise Liquidity risk one week. available ondemandare assetsfalling duewithin available ondemand. Alsoconsideredto be liquidated investments havetreated been as or lossandassetsheldfor salerepresenting readily fairListed securitiescarriedat valuethrough profit date. balancesheet the assetsandliabilitiesasat of The followingtable presents the maturity calendar
Annual report 2007 123 Annual report 2007 124 Liquidity surplus/(deficit) auiyclna n<3>3 er>5yasTotal Total liabilities - >5years Accruals anddeferred income Other liabilities >1year Deferred tax liabilities ofsecurities Liabilities inrespect >3 Funds entrusted Liabilities <3 Total assets <5years Prepayments andaccruedincome months Other assets On Deferred tax assets months Tax Shares andothervariable-income securities demand Interest-bearing securities Loans and receivables Banks Cash Assets 31December2006 as at Maturity calendar Liquidity surplus/(deficit) auiyclna n<3>3 er>5yasTotal Total liabilities - >5years Accruals anddeferred income Other liabilities >1year Deferred tax liabilities >3 Funds entrusted Liabilities <3 Total <5years assets Prepayments andaccruedincome months Other assets On Deferred months tax assets Tax demand Shares andothervariable-income securities Interest-bearing securities Loans andreceivables Banks Cash Assets 31December2007 as at Maturity calendar ,3,6 ,0 7291,7 1,875,165 - 1,827,80 18,176 17,219 7,907 1,831,863 ,7,2 1,772,822 - - - - 1,772,822 0,8 2884412,0 3498,042 63 440,46 24,508 4,471 62,818 406,182 3,7)6,1 ,7 4586 57,581 63 24,508 4,471 62,818 (34,279) 8,4 383,543 - - - 183,593 - - 383,543 5,000 - 5,000 37,87 173,593 126,746 2,2 422,028 497,762 900,232 - - - - - 12,721 11,178 - 5,000 - - - 876,333 492,762 422,028 101----21,061 27,755 - - 38,020 - - 24,937 - - - 67,828 - 21,061 - - 27,755 - - 17,139 4,073 - 38,020 19,814 24,937 26,802 212----22,152 32,751 - - - - 23,659 ------22,152 32,751 - 23,659 ,5 ,0 7291,7 47,358 - 18,176 17,219 7,907 4,056 ,9 7,993 - - 4,969 - - 5,443 - - - 5,672 - 7,993 ------4,969 5,443 - 5,672 ,9 7,396 - 9,522 ------7,396 - 9,522 0 109 - - - - 109 0 7,56 100 2----82 - - 63 - - - - 82 - - 63 1---- 7----1, 3 9 ,6 32,963 63 2,369 398 133 4 ,4 ,5 6,843 - 5,455 1,041 347 1--- 0--- < 1year < 1year 440,461 827,807 164,617 7,660 investments ininterest-bearing securities. assets. There riskexposure isalso acredit the on headings ofbanks, loansandreceivables andother the includedunder the balancesheet the itemsin incur afinancialloss. riskisrelevantThis credit to andconsequentlyinstrument to causeBinckBank failto discharge anobligation relatingthe to and/orinstrument will the instrument the issuerof trading afinancial aparty that the risk riskis Credit risk Credit predict. future cashflowsto whichBinckBankisunable to to positionsassumedbyclients canlead rise financial statements. Exercise ofcontracts giving of clients have already beenaccounted forthe in paid relatingto derivative positionsheldonbehalf The cashflows ofpremiums inrespect received and 19) (note Derivative positionsheldonbehalfofclients Lending against securities Lending against Contingent liabilities(note37) Prepayments andaccruedincome Other assets Shares andotherfixed-income securities Interest-bearing securities Loans andreceivables Banks Cash aiu oltrlMxmmCollateral Collateral Maximum Maximum 9,6 ,8,9 3,4 462,183 132,641 2,280,496 490,560 072006 2007 of the collateral. presentsthe risk, taking intothe fair account value receivables are collateralised. The following analysis on movements inmarket prices. The loansand riskcouldmaximum credit bedifferent, depending date.the balancesheet riskon the credit The above amounts fair at value,the figures represent Where financialinstruments arethe includedin hasbeenfurnished. that provided byset-off agreementsthe collateral and the effectstaking account of riskreduction ofcredit riskisshowngross,The maximumcredit without associatedthe various with financialinstruments. table belowpresents risk The the maximumcredit risk Maximum credit securities securities otoi portfolio portfolio au f value of value of ,6,7 489,665 489,665 1,863,378 1,860,955 0,3 67,828 183,593 164,617 900,232 497,762 422,028 3694,969 23,659 ,2 - 38,049 2,423 5,672 7,689 9,522 072006 2007 324,937 63
Annual report 2007 125 Annual report 2007 126 units, coveringthe following riskcategories: risksmanaging credit the various within business BinckBank hasformulated basicpoliciesfor renewed contracts Loans andreceivables under possible for renewed contractsto beconcluded with the caseofexistingIn loansandreceivables, is it Loans andreceivables underrenewed contracts these accounts wasthan five older workingdays. procedure.throughthe normaldeficit Noneof provided for’ concern accounts with beingdealt The amounts presented as ‘overdue not but and advancesthe provision and for baddebts. table belowpresentsthe loans The the qualityof future payment isprobable. assessed for complianceto determine whether and The newcontracts are, however, periodically clients. Suchassetsaretreated nolonger asoverdue. Net loansandreceivablesNet provisionBad debt Total Provided for providedOverdue not for but Not yet due 2006 loansandreceivablesNet provisionBad debt Total Provided for providedOverdue not for but Not yet due 2007 x € ,0 x 1,000 072006 2007 713 77 € 1,000 margin requirementstime. any notice at without requirement.to alter BinckBankreserves the right the margin to adjust take will action Department the volatility,any changein the RiskManagement the historical volatility.based on there As soonas is necessary. the required of The amount margin is conditions,takes and immediate as action bychangingmarketdeficits brought about constantly monitorspositionsfor impending trading system. Department The RiskManagement margin beingcomputed automaticallythe by fromthe client’s spendinglimit,the of the amount guaranteeto bededucted (themargin) deposit derivatives andfutures, BinckBank requires a For clients withunhedgedwrittenpositionsin Margin requirement Concentration risk 4. Counterparty risk 3. Policy onadvances 2. Margin requirement 1. 6,1 8,9 38,049 38,049 183,593 38,049 183,609 164,617 183,575 7,689 164,617 7,689 164,617 497,762 7,689 498,867 422,028 497,207 422,028 422,028 ak eevbe assets receivables Banks assets receivables Banks 1)- (16) - - -16 - -18 - (1,105) - - 1,105 555 - - - on n Other Loans and Other Loans and securities ona dailybasis. Having suchaprocedure procedurethe lendingagainst to monitor deficit time prices. usesanestablished RiskManagement beingexceeded,to alimit would lead basedon real- theytransactions any if new permit system willnot control limit the Primary that isprovided the fact by basis andare enforcedtradingthe system. by forMaximum limitsare set clients onanindividual willadvanceamountstime. any notice at it without the reservesto alter vis-à-visitsclientsthe right Committee.the RiskManagement up by BinckBank accordingthe guidelinesdrawnto products isset ofadvancesThe amount forthe various usewith the client. riskvis-à-vis BinckBank incursacredit guaranteesthe securitiesaccount. on Insuchcases, to providethe purchase of securitiesor bank the required up to put margins,can beused to fund terms ofanappropriatethe contract. Suchadvances the collateraladvances against ofsecurities, under BinckBank offersthe possibilityofobtaining clients Policy onadvances closing ofpositionsonday 5. the forced by the deficit itself proceedto clear to makethe deficit, good action BinckBankwill havingthe deficit. failstakethe client flagged to If shortfall withinfivetrading days ofBinckBank’s isrequiredto makespending limit the good the to withrespect whose account isindeficit ofFinancialthe Conduct of Undertakings. Aclient the Decreethe Supervision 85 and86of on Sections procedure isastatutory requirementto pursuant margin requirements onadailybasis. Having sucha procedurethe currentto monitor established deficit usesan Department The RiskManagement method andmake adjustments where necessary. back-teststo measurethe validity the margin of periodicallycarriesout Department Management estimate offuture pricemovements. The Risk distribution asstandard,thus providing agood log-normal returns anormal shouldexhibit 1% ofcases. the historical5-day that This assumes within aclient’sthan shouldbeless spending limit occurring the probability ofadeficit that used is the margin method The basicpolicyunderlying by central government institutions. to credit and banks,to lower-tier publicauthoritiesif guaranteed to centralonly permitted governments andcentral policy, forto counterparties. any lending Lending is standards,observe strict treasurythe laiddownin one month). The Treasuryto has Department (generally overnight money andfor amaximumof each counterparty. This concerns lending short-term forto counterparties withinasystemoflimitsset Under itslendingpolicy, BinckBankextends credit to bankguarantees given andreceived. this headingaccordinglynotes under relate solely advances essentially involve counterparty risk. The the margin requirementsBoth the granting and of hasbeenextended.to whomcredit counterparty the defaultA counterparty ofa riskariseson Counterparty risk basis. riskonanindividual the credit BinckBank assesses collateral whichhaveto beseized. had includeany assetsprovided doesnot sheet as liquidation ofsecuritiesportfolios,the balance Since BinckBankproceeds immediatelyto advances. advances immediately,the policyon inlinewith necessary, of the maximum amount willadjust this situationmonitors onadailybasisand, if possible future pricemovements. RiskManagement advance provide doesnot sufficient cover for to the percentagethe bankiswilling on which Alteredthe limit market conditions that canmean on day 5. the forced by the deficit closingofpositions clear the deficit,good BinckBankwillitselfproceedto to makedeficit. failstakethe client to If action fivetrading days ofBinckBank’s havingthe flagged isrequiredto makelimit the shortfall within good the spending to withrespect account isindeficit ofFinancialConduct Undertakings. whose Aclient the of the Decreethe Supervision and 86of on is astatutory 85 requirementto Sections pursuant
Annual report 2007 127 Annual report 2007 128 established policy. excessiveto limit concentrations inlinewith categoriestakes where ofriskand action necessary to identify concentrationsbasis invarious tests onadaily performs Department Management investment is one-sided.that portfolio The Risk oragroupsingle client ofrelated clients and/or an risk, market riskorcounterparty riskinvolving a unacceptable level ofconcentrationthe credit in A concentration riskoccurswheneverthere isan Concentration risk amounts to standards. total portfolio ofbankguaranteesThe investment-grade rating accordingto S&P relates exclusively institutionswithan to credit its clients. The portfolio ofbankguarantees received bank guarantees from anissuingbankonbehalfof conditions,Under certain BinckBankwillaccept the counterparty’sbased on equityposition. two yearsthe individuallimitsare and also past havecounterparties must returned for aprofit the (S&Porequivalent).AA- Where applicable, havemust rating acredit than to orbetter equal the borrowerterm isonemonth and The maximum € 2,144,000. The followingtable presents risk, the credit analysedbysector. concentrationSector risk 07FnnilGvrmn rvt Ohr Total Other Private Financial Government 2007 te ses- - Total Other Contingent liabilities - Private Other assets variable-income securities Shares andother Financial Government Interest-bearing securities Loans andreceivables Banks Cash - - 2006 Contingent liabilities - Other assets variable-income securities Shares andother Interest-bearing securities Loans andreceivables Banks Cash ntttoso niiul private individuals or institutions ntttoso niiul private individuals or institutions 8,1 86018535,1 484,696 484,696 164,617 58,517 58,517 - 178,593 178,593 58,670 - 58,670 188,916 188,916 - 1,839,719 1,837,296 422,028 900,232 7,752 7,752 164,617 - - 495,185 492,762 745,461 - - 745,461 591,321 591,321 - 740,461 159,771 422,028 3355,7 5 67,828 853 - 53,670 13,305 ,2 96524,937 5,672 19,615 - - - - - 5,322 9,522 5,672 - - - 9,522 ---6363 oenet sector government- oenet sector government- guaranteed guaranteed ,0 7,9 183,593 - 178,593 5,000 497,762 - 492,762 5,000 80938,049 38,049 ------2,423 7,689 - 7,689 2,423 - - -
Annual report 2007 129 Annual report 2007 130 securities should be at least AA-. least securities shouldbeat provided byrating agencies. ratingThe credit the of investments ratings insecuritiesisbasedoncredit the of the creditworthiness of Assessment Interest-bearing securities in 2007 amounted to approximatelyin 2007amounted theoreticalbased ona modeland historicalevents) referring tothetheoretical maximum overnight loss prices. The average ‘haircut’ (a measurethe risk of including interest rates, exchange rates andshare rate volatility. Various factors affectthe market risk, to priceorexchange-financial instruments owing valuetradingthe andinvestment of portfolio of Market riskrefersthe riskofafallto the fair in Market risk 07AAA-AA Totaal Total (government-guaranteed) Commercial paper A- Private loans definite maturity Other bondswith indefinite maturity Other bondswith A loans government-guaranteed Government bonds/ 2006 AA- Total (government-guaranteed) Commercial paper AAA Private loans definite maturity Other bondswith indefinite maturity Other bondswith loans government-guaranteed Government bonds/ 2007 9,9 599,598 900,232 - 145,918 3,183 - 140,863 - 11,959 - 1,289 9,986 - - - 875,104 599,598 9,986 144,628 130,877 845-54436357,492 3,633 48,445 5,414 - - - 48,445 - 48,445 € A A -Totaal A- A AA- AAA 2.8 million ,3 1,337 7,710 - 3,633 1,337 4,077 - 7,025 ------7,025 - - ,4 ,8 6,828 3,183 3,645 - equivalent. their Standard &Poor’ssecurities basedon rating or the interest-bearingThe followingtable analyses model, positionsare assumedinreadilytraded derivatives. Basedon a carefully constructed risk actively managedportfolio ofinterest rate treasury ofits operations,As part BinckBankhasan Price risk amounts to the shareholders’ equityofBinckSecurities, which tradingBinck Securities operationsto isrestricted forthe all Trading activities. the The market riskon € 5.9 million. 5.9 BinckBank manages this riskinrelationBinckBank manages to its securities, otherliabilitiesandfundsentrusted. banks, loansandreceivables, interest-bearing the headingsof includedunder the balancesheet in profitability. The interest rateto items riskapplies movementsthe yieldcurve affecting in future Interest rate riskrefersthe exposureto to Interest rate risk scenario was fromthe derivatives positioninaworst-case the operatingmaximum reduction in deriving profit maximumlimit.preset 31December2007, Asat the scenariosareworst-case computed daily, witha to guarantee aminimumspread ofrisk, least at and for concentrations and liquidity ofpositionsinorder exceed and correlations)the maximumlossdoesnot than 1%ofcases(historicalmovements inless that calculated using a general model,the principle on listed derivatives. The maximumday-to-day riskis te iblte - Total liabilities Other liabilities Funds entrusted Liabilities Total assets Interest-bearing securities Loans and receivables Banks Cash Assets 07<1mnh>1mnh>1ya er er Total >5years >2years >1year >1month <1month x 2007 € 1,000 € 2 million. Additionally, standards are set € 0.4 million. 0.4 ,7,2 ,8 1,773,902 - - - 1,080 1,829.540 8,117 1,772,822 73,985 68,260 121,179 1,557,999 1,772,82 3,9 1,7 8207,8 ,1 900,232 8,117 73,985 68,260 116,179 5,00 633,691 492,762 422,02 9,51 2---- 8---- 8---- rate mix. The followingtable presents BinckBank’s interest (S&Porequivalent).than AA- higher institutions. ratingThe credit to or shouldbeequal the loansare government-guaranteed andcredit central banks, lower-tier publicauthoritieswhere chiefly inbondsissuedbycentral governments, the bonds.institutions issuing BinckBankinvests the of the creditworthiness the yieldcurve and in to movementsto gainsandlossesdue susceptible Board.the Management by The portfolio is investmentsThe actual the portfolio are in selected investments andavailable-for-sale investments). fixed-income securities(bothheld-to-maturity BinckBank hasaninvestment portfolio madeupof limits. maturities ofits assets andliabilitieswithincertain banking operations byactively matchingthe er<2yas<5years <2years < 1year 1,08 0--- 0--- 1,772,822 497,762 422,028 1,080 9,518
Annual report 2007 131 Annual report 2007 132 purposes ofsettlingclients’transactions. securities markets andholdsonlyvery small positionsforthe operatethe foreign independently in exchange the exchange bears client risk. BinckBankdoesnot the coststhe operationspasses them. of to on The currencies immediately onbehalfofitsclients and BinckBank settlespositionsdenominated inforeign Currency risk million over aperiodofoneyear. would reduce BinckBank’s operating by profit drop acrossthe entire the otherhand yieldcurve on operating over profit aperiodofoneyear. Asudden produce againof one percentagethe yieldcurve would in point Takingthe above effects into account, anincrease of the interest income onfundsentrusted byclients. in revenues from reinvestment andanincrease in the relevant interest rates would meananincrease modified duration of0.34. However, anincrease in to portfolio would amount the yieldcurve. The valuethe investment of for anabsoluterise of onepercentage across point to approximately2007 would amount year-endthe portfolio asat The expected losson Cash Assets x 2006 te iblte ,2 1,320 - 1,320 - - - 383,543 Total liabilities Other liabilities Funds entrusted Liabilities Total assets Interest-bearing securities Loans andreceivables Banks € 1,000 € 6.2 millioninBinckBank’s € 900 million, witha € 2.9 million € 6.2 8,4 ,2 384,863 - 1,320 - - 411,374 - 383,543 22,140 4,073 62,685 322,476 ot ot er>2yas>5yasTotal >5years >2years >1year >1month < 1month 7,9 ,0 ,0 183,593 - 5,000 - 5,000 37,87 173,593 126,746 6451,1 ,7 710-57,492 - 17,140 4,073 19,814 16,465 5,67 2---- er<2yas<5years <2years < 1year 1------383,543 164,617 5,672 next page): next consolidated financialassetsandliabilities(see classification givesthe followingthe analysisof cost. amortised financial assetsorat This loans andreceivables orasavailable-for-sale orloss,profit asheld-to-maturity investments, as held fortrading purposes, fair at valuethrough designated asfinancialassetsorliabilities In accordance withIAS39, financialinstruments are as available for sale. statements, includingassetsandliabilitiesclassified instruments recognised inBinckBank’s financial amounts andfair valuesthe financial ofall The following analysiscomparesthe carrying Fair value 40. Financial instruments iblte nrseto euiis- Total Derivative positionsheldonbehalfofclients Provisions Accruals anddeferred income Other liabilities ofsecurities Liabilities inrespect Funds entrusted Financial liabilities Total Derivative positionsheldonbehalfofclients Prepayments andaccruedincome Other assets Shares andothervariable-income securities Interest-bearing securities Loans andreceivables Banks Cash Financial assets ,8,8 4,1 ,8,8 549,212 2,283,381 549,212 2,283,381 383,543 1,772,822 383,543 597,944 1,772,822 2,315,847 598,080 2,316,195 5,4 0,1 5,4 108,415 455,240 108,415 455,240 108,415 455,240 108,415 67,692 455,240 899,884 183,593 164,617 497,762 67,828 422,028 183,593 900,232 164,617 497,762 422,028 arigaon Fair value Carrying amount 2127932,5 7,993 21,061 22,152 32,751 7,993 21,061 22,152 32,751 4,969 23,659 4,969 23,659 ,8 80976938,049 7,689 38,049 5,672 7,689 9,522 5,672 9,522 0720 072006 2007 2006 2007 1 4 1 445 416 445 416 32,3 324,937 63 24,937 63 775-27,755 - 27,755
Annual report 2007 133 Annual report 2007 134 te iblte - - Thederivative positionsheldonbehalfofclients are 1) - Derivative positionsheldonbehalfofclients Accruals anddeferred income Other liabilities Funds entrusted - - Liabilities - Derivative positionsheldonbehalfofclients Prepayments andaccruedincome Other assets Shares andothervariable-income securities Interest-bearing securities Loans andreceivables Banks Cash Assets x 2007 Total assets Non-financial assets Total financialassets Total liabilities Shareholders’ equity Non-financial liabilities Total financialliabilities € with the client concernedthe client immediately.with transactions andpositionsarethe connected with settled date.the balancesheet prices on Cash differences faircarried at valuethe quoted measuredthe basisof on 1,000 1) 1) 1,772,82 ,7,2 5,4 493--2,282,965 - - 54,903 - 455,240 1,772,822 Loans and 497,76 422,02 1,9 2,5 2,9 0818176 2,316,166 63 8,117 40,841 623,498 723,857 919,790 eev au auiyast o aepurposes for sale assets maturity value receiv- be hog and through ables 2----- 2----- 8------,2 9,522 - - 9,522 - - - rfto liabilities or profit 6,1 2,9 ,1 900,232 - 8,117 - 623,498 268,617 455,24 455,24 tfi edt iaca vial rdn Total Trading Available Financial to Held fair At osat loss 0---- 0--- 212--22,152 32,751 - - - - 22,152 32,751 - 23,659 - 7,660 ------23,659 7,660 ------6363 amortised cost 2,756,426 2,756,426 1,772,822 497,762 422,028 440,260 455,240 455,240 466,816 6,645 te ses- - Derivative positionsheldonbehalfofclients Prepayments andaccruedincome Other assets Total liabilities Shareholders’ equity Non-financial liabilities Total financialliabilities prevailing interest rates. expected futurethe cashflows at calculatingthe present value the of The fair value ofloansisdeterminedby financial assetsisbasedonmarket prices. The fair value oflistedavailable-for-sale Thederivative positionsheldonbehalfofclients are 1) - - - Shares andothervariable-income securities Interest-bearing securities Loans andreceivables Banks Cash Assets x 2006 te iblte - - Derivative positionsheldonbehalfofclients Accruals anddeferred income Other liabilities ofsecurities Liabilities inrespect Funds entrusted Liabilities Total assets Non-financial assets Total financialassets € with the client concernedthe client immediately.with transactions andpositionsarethe connected with settled date.the balancesheet prices on Cash differences faircarried at valuethe quoted measuredthe basisof on 1,000 1) 1) Loans and 1,9 0,1 904--548,767 - - 29,054 - 108,415 411,298 183,59 164,61 4,1 0,1 8454,6 ,4 523598,051 35,273 9,047 383,54 48,661 48,445 108,415 348,210 27,75 eev au auiyast o aepurposes for sale assets maturity value receiv- be hog and through ables 3----- 7----- 5----- 3------rfto liabilities or profit 108,41 108,41 tfi edt iaca vial rdn Total Trading Available Financial to Held fair At osat loss 5---- 5---- ,6 4,969 38,020 - - - - 4,969 38,020 - - - - ,7 5,672 67,828 - 10,336 9,047 - - 5,672 48,445 ------,9 7,993 21,061 - - - - 7,993 21,061 - - - - amortised cost 49724,937 24,937 620,610 620,610 108,415 183,593 164,617 108,415 383,543 71,289 22,559 27,755 554
Annual report 2007 135 Annual report 2007 136 (before appropriation ofprofit) Company balancesheet a k l m i r j Total assets d Derivative c positionsheldonbehalfofclients f Prepayments andaccruedincome e Other assets h Tax g Property, andequipment plant Intangible assets Investments insubsidiariesandassociates Shares andothervariable-income securities Interest-bearing securities Loans andreceivables Banks Cash Assets oa qiys q o Total liabilities equityand Total equity n p Other reserves r Unappropriated profit Treasury shares Share premium Share capital Equity: Derivative positionsheldonbehalfofclients Provisions Accruals anddeferred income Other liabilities Funds entrusted Equity andliabilities oe31December2007 Note ,7,2 383,543 1,772,822 9,9 20,855 108,415 392,395 455,240 50424,297 24,009 35,044 32,155 4,703 6,056 21,106 30,845 ,0 3,084 7,709 47 (956) (487) 4 199 146 2,746,975 2,746,975 x ,8,5 502,916 2,280,159 € 5,4 108,415 455,240 10,141 57,492 405,795 183,593 154,652 850,645 497,762 411,062 6,1 71,289 466,816 2424,143 22,442 22,639 72,833 ,0 x 1,000 ,0 20,444 4,786 2,228 8,506 7,097 6,020 5,672 9,522 1- 51 31 December2006 574,205 574,205 € 1,000 Company income statement Profit forProfit the year Other results (aftertax) Share inresults ofsubsidiariesandassociates (aftertax) x € 21524,009 18,807 32,155 22,611 ,0 x 1,000 ,4 5,202 9,544 2007 € 1,000 2006
Annual report 2007 137 Annual report 2007 138 Company statement ofchanges inequity xrieo pin 25 25 31 December2007 25 25 Transfer ofretainedto otherreserves earnings 35 35 treasury shares Proceeds from saleofrights attachingto Costs ofshare issue Issue ofshares Exercise ofoptions Payment ofbonusshares Payment ofstockoptionshares Grantto shares ofrights Payment ofinterim dividend 25 Payment offinaldividend Total income andexpense forProfit the year Results recognised inequity directly Gains andlossesonexchange amn fbnssae 25 25 25 35 35 ofavailable-for-saleImpairment financialassets 31 December2006 Transfer ofretainedto otherreserves earnings Payment 11 ofbonusshares Payment of stock optionshares Grantto shares ofrights Payment ofinterim dividend 25 Payment offinaldividend Total income andexpense forProfit the year Results recognised inequity directly Gains andlossesonexchange assets (aftertax) ofavailable-for-saleImpairment financial 1 January2006 (x € 1,000) oeIse hr rauyUapo te Total Other Unappro- Treasury Share Issued Note 11 ,0 9,9 ( 392,395 7,709 ,8 085(5)2,0 42771,289 24,297 24,009 (956) 20,855 3,084 55,246 18,819 13,609 (1,121) 20,855 3,084 aia rftand profit capital ,2 8,2 384,850 - - - 380,225 4,625 hr rmu hrspitdrsre equity reserves priated shares premium share 2 422 - 422 (8,685) - 24,009 - 224 (24,009) - - 535 (154) - - (74) 535 - - (4,299) - (8,874) - (4,299) - - (8,874) 378 - - - - 74 (8,685) 31,337 - - (818) 32,155 (818) - - - (818) - - (125) 32,155 - - (693) - (125) - - --17--17 32,155 (693) ------1 16 - - - 342 (116) (49) 342 13,609 (3,361) - (13,609) (4,889) - (3,361) - - (4,889) - 116 - 23,951 49 (58) - - 24,009 (58) 97 - - (58) - - - 24,009 - - (155) 97 - - - - 24,009 (155) ------8)3,5 35,044 32,155 487) earnings retained 466,816 profits aftertax. subsidiaries andassociates aftertax andother statement showsthe share only inresults of Netherlands CivilCode,the company income the of the provisions 2:402 with ofArticle consolidated financialstatements. Inaccordance accountingthose usedforthe policiesas its company financialstatementsthe same using A.M. van Westerloo the NetherlandsCivilCode, BinckBankhasprepared J.K. Brouwer the optionprovidedUtilising 9ofBook2 byPart Presentationthe financialstatements of C.J.M. Scholtes P. Aartsen Board: Supervisory K.J. Bagijn T.C.V. Schaap Board: Management Amsterdam, Shareholdersto beheldon6May 2008. forthe General 2007willbeadoptedat Meetingof Board on 11March 2008. The financialstatements the Supervisory Boardthe Management and by forto aformal publicationtaken pursuant decision the company’sby Board Management and approved year ended31December2007have beenprepared BinckBank’s company financialstatements forthe BinckBank N.V. anditsvarious subsidiaries. pages,the name ‘BinckBank’to refer willbeused to transactions.account ofsecurities the following In financial institutionsfor processing andkeeping Beheer B.V. specialisesindeveloping software for and professional investors. The subsidiarySyntel securities andderivativetransactions for private conventional broking in andinternet services shares aretraded. publicly BinckBankN.V. provides Netherlands withitsdomicileinAmsterdam, whose BinckBank N.V. isacompanythe establishedin Company information General a. the companyto Notes financialstatements L. Deuzeman circumstances. transactions andeventssimilar insimilar accordancethose appliedbyBinckBank for with aretheir financialreporting in to policies applied companiesthe accounting arethe sameand value. asset net at datesthese The reporting of The investments ingroup companies are recognised Investments insubsidiariesandassociates company financialstatements. and, stated, unlessotherwise the to applyequally the consolidatedto the notes financialstatements the accountingDetails of policiescanbefound in General Accounting policies b.
Annual report 2007 139 Annual report 2007 140 Notes to the companyto Notes balancesheet Dutch municipalauthoritymaturing in2008. The otherreceivables than 3 months.of less loanconcernsto a The publicsector aloan The receivables relatingto cashequivalents have originalmaturities Less: provision impairment Loans andreceivables, gross Other receivables Receivables collateralised bybankguarantees Receivables collateralised by securities Public loan sector Other loansandreceivables: Private callmoney sector Cash equivalents: The analysisisasfollows: securities andbankguarantees. including overnight loansandoverdrafts arethat collateralised by This itemcomprises receivables from private clients, sector e. Loans andreceivables rate basedonEONIA. three months. Interest isreceived avariablethese balancesat on The callmoney receivables have originalmaturitiesthan ofless Call money balancesavailableCredit ondemand The itemcomprises: the bankregulators. by supervised heldinaccountsbusiness activities institutions withcredit This itemincludesallcashandequivalents relatingthe to d. Banks offices. demand fromthe central banks incountries where BinckBankhas coins inforeign currency, andany balancesavailable credit on tender,This itemincludesallcashinlegal includingbanknotesand c. Cash Assets 1,6 154,652 45,652 411,062 381,062 31 December2007 000109,000 30,000 9,6 132,641 490,560 ,6 16 3,952 5,000 1,163 2,144 5,000 x 9,6 183,593 497,762 154,652 411,062 € 9,6 141,609 498,867 9,6 183,593 497,762 ,2 5,672 9,522 115 (16) (1,105) ,0 x 1,000 42,000 - 31 December2006 € 1,000 any of available-for-sale impairment assets. loss. Asin2006,the assetswas noneof soldin2007, norwasthere takestax effectto equity chargedthis the amount account of of directly inequity (2006: to sale assetsamounting redemption in2012. In2007, fair valuethe available-to- losseson bonds. The bondswithdefinitematuritythis portfolio are in duefor the prevailingthe basisof on interest 10-year rate ongovernment portfolio are aninterest at rate whichisrevised everythree months The bondswithindefinitematuritythe available-for-sale in the commercial paper. the aboveAll securitiesare listed, except forthe private loansand date. balance sheet value,the the quotedmarket priceson measuredthe basisof on The available-for-sale interest-bearing securitiesare fair carriedat value. risk management.the basisoffair ison reporting Management benchmarkandinconnection withportfolio the selected against assessmentthe performance of is measured onadailybasisaspart maturities ranging fromto 3years. 0 The fair valuethe portfolio of concerns anactively managedportfolio ofbondswithindividual value withgainsandlossesrecognisedthe income in statement The portfolio ofinterest-bearing fair securitieswhichiscarriedat Held to maturity: Available for sale: - This itemcomprises: f. Interest-bearing securities receivables underloansandreceivables isbasedonEONIA. have unspecifiedmaturities. The interest rateto applying Financial fair assetsat valuethrough orloss profit - Commercial paper(government-guaranteed) - Private institutions to credit loans - Government bonds/government-guaranteed loans - Otherbondswithdefinitematurity - Otherbondswithindefinitematurity - Otherbonds - Government bonds/government-guaranteed loans € € 155,000 aftertax). The calculationthe of 693,000 (aftertax) were recognised 31 December2007 5,4 57,492 - 850,645 - 599,598 - 117,930 101,100 68548,445 16,875 ,2 - 1,337 7,710 7,025 1,289 6,828 x 5,4 57,492 850,645 € ,0 x 1,000 31 December2006 € 1,000
Annual report 2007 141 Annual report 2007 142 ipsl n isltos- the subsidiaryHillsIndependent Traders Ltd. were discontinued. In 2006, a100%interest was acquired inSyntel of the activities and 31December Position asat Exchange differences andothermovements Results forthe year Dividends andcapitalrefunds Disposals anddissolutions Capital increases andacquisitions Position 1January asat - Movementsthe year during were asfollows: h. Investments insubsidiariesandassociates applyhedgeaccounting. BinckBank doesnot prices obtainedfrom aregulatory body. market, i.e. quotedpricesonastockexchange,traders’ pricesor The derivatives are fair carriedat value, basedonpricesinanactive faircarried at value. tradingthe portfolio concernThe positionsheldin listedsecurities Derivatives trading portfolio Securities trading portfolio This itemcomprises: g. Shares andothervariable-income securities 31 December2007 28322,639 2,450 72,833 19,460 50,525 22,639 970 (3,541) (9,750) ,4 5,202 9,544 15 97 (125) 1- - 51 51 x € 28322,639 72,833 ,0 x 1,000 1- 51 31 December2006 (1,029) - € 1,000 The movements in2007were asfollows: i. Intangible assets maret- The movements in2006were asfollows: 31 December2007 - - Carrying as at amount impairment Cumulative and amortisation - Cost - period(years) Amortisation 31 December2007 Carrying as at amount Amortisation Disposals Acquisition ofAlex Investments 1 January2007 Carrying asat amount ot- - Alex’s assetsover identifiable net the purchase priceofAlex. Syntel. The increase in2007relatesthe excessto the fair of value of value ofSyntel’s assetsover identifiable net the purchase priceof The increase ingoodwill2006relatesthe excessto the fair of - - 31 December2007 - Carrying asat amount - impairment Cumulative and amortisation Cost 31 December2006 Carrying asat amount Amortisation Disposals Investments 1 January2006 Carrying asat amount 1458,9 3,5 ,0 5,2 405,795 152,929 6,308 131,058 84,095 31,405 1458.9 3.5 .0 5.2 405.795 152.929 6.308 131.058 84.095 31.405 1458,9 3,5 ,1 5,2 409,004 152,929 9,517 131,058 84,095 392,691 142,882 31,405 3,251 131,058 84,095 31,405 rn ud utmrSfwr odilTotal Goodwill Software Customer Funds Brand rn ud utmrSfwr odilTotal Goodwill Software Customer Funds Brand aeetutdbase entrusted name aeetutdbase entrusted name 51010 5 ,6 ,8 10,141 8,881 1,260 10,141 - 8,881 - 1,260 - - - - 329 (3,209) - (3,209) (565) - - 3,528 - 10,141 (565) 1,166 8,881 - 2,362 1,260 ------264 (2,644) - 12,785 8,881 (703) (2,644) 3,904 - 9,796 - 1,048 - 8,881 - (703) - 915 - - 1,048 ------31 December2007 x 0,9 10,141 405,795 € ,0 x 1,000 31 December2006 € 1,000
Annual report 2007 143 Annual report 2007 144 Carrying 31December asat amount Cumulative depreciation andimpairment Cost Carrying 31December asat amount Depreciation Additions Carrying 1January asat amount The changesin2006were asfollows Carrying 31December asat amount Cumulative depreciation andimpairment Cost Carrying 31December asat amount Depreciation Acquisition ofAlex Additions Carrying 1January asat amount The changesin2007were asfollows: j. Property, andequipment plant itrsadCmue te Total Other Computer Fixtures and Total Other Computer Fixtures and qimn hardware equipment hardware equipment 428 251 1 (6,810) (1) (2,591) (4,218) (7,596) (5) (3,161) (4,430) ,2 ,0 89,038 18 4,300 6,020 4,720 13,616 13 6,020 18 4,943 13 8,104 1,064 4,943 5,494 1,064 42 62 1 (1,115) (1) (642) (472) (786) (4) (570) (212) 0 ,0 72,228 17 2,228 1,664 1,679 1,709 17 - 18 502 1,709 1,429 922 502 232 742 2,137 2,441 2,228 - - 17 1,764 2,040 1,709 373 401 502 31 December2007 x € ,2 2,228 6,020 ,0 x 1,000 31 December2006 € 1,000 custo - - - reliable measurement offair value. the lowerare ormarket ofcost value carriedat the absenceofa in Inmaxxa B.V. andLPECapital B.V.than 5%. ofless These investments The otherinvestments concern intereststhe share in capitalof Other investments 31December asat Acquisition Disposal Impairment Other investments 1January asat the otherinvestmentsThe changesin were asfollows: Other receivables Receivables relatingto securitiessold, yet delivered not but Receivables from subsidiaries Other receivables have maturitiesthan oneyear ofless andcomprise: Other investments Other receivables The itemcomprises: l. Otherassets due. actually tax of the amount theythan arealthough to behigher expected 2005,the assessedamounts have 2006and2007 beenpaid Provisional corporationtax assessments have beenreceived for tax lossforthe 2004. relatesthe carrybackof to tax asset The k. Tax 31 December2007 ,7 20,415 8,477 ,1 19,094 1,136 6,413 1,781 ,0 20,444 8,506 ,7 20,415 8,477 8 185 283 929 88 29 29 929 29 x € ,0 20,444 8,506 4,786 7,097 ,0 x 1,000 31 December2006 (69) 14 (4) € 1,000
Annual report 2007 145 Annual report 2007 146 during the year.during The interest forto 15%, 2007 amounts andwillbe forthe result year.that in of Anamount interest payablethe endofeachyear iscalculated at and recognised BinckBank’s andvarying profit net between0% and15%. The agreed,the interest rate with payable on beingdependent the fullcalendaryear. Aschedulefor interest payments hasbeen BinckBank’s andat lent the amount of only inrespect disposalfor to receiveentitled year.that of interest inrespect Interest ispaid the calendaryear,the loanisdemandedduring the lendersare not penalty. noticeandwithout and demandedwithout Ifrepayment of to 31December2008.2005 Repaymentthe loanmay of bemade hasamaturitythree of yearsIt three and months from 1October The profit-sharing bondisaloanprovided byagroup ofemployees. Other Trade payables the purchase pricefor of Part Syntel stillpayable Tax andsocial securitycontributions Other liabilities: Profit-sharing bond yet settled transactions not ofsecurities Liabilities inrespect Liabilities relatingto financialinstruments: o. Otherliabilities Clients’ demanddeposits Clients’ savings account balances n. Funds entrusted Equity andliabilities Prepaid expenses Uncleared cheques Commission receivable Interest receivable This itemcomprises: m. Prepayments andaccruedincome € 240,000 was repaid ,7,2 383,543 383,543 1,772,822 1,148,048 31 December2007 2,7 - 624,774 383- 13,853 4,143 2,872 22,442 16,163 ,5 181 1,095 3,029 431 1,155 1,320 9,601 3,750 1,406 1,080 572 - 699 2,278 1,609 2,392 ,7,2 383,543 1,772,822 x € 0856,056 30,845 4,143 22,442 0856,056 4,736 30,845 15,912 1,320 14,933 ,0 x 1,000 31 December2006 € 1,000 tlsd- the expected futureto rate ofincreasethe rent. in income in2007. The discount ratethis provisionto isequal applied likelyto exceed the costs. was Anamount accordingly releasedto will bereducedthe economic as andwhen benefitsare deemed remainingthe lease, periodof whichexpires 2010, on1October but period forthe provision which the hasbeenformedto isequal economicto begenerated benefitsexpected the contract. by The rented office space,the wherethe coststhe leasearethan of higher The provision for onerous contracts hasbeenformed of inrespect 31December Balance asat Utilised Released to income 1January Balance asat the provisionsThe changesin for onerous contracts were asfollows: q. Provisions Total Other Commission Accrued interest Accrued stockexchangetransaction costs and Staff costs This itemcomprises: p. Accrualsanddeferred income 2007 and2008. capital ofSyntel dependsonSyntel’s gross margin overthe years the purchasethe share pricerelating of the acquisitionof Part to the entire loanwas repaid inJanuary2008. Meeting ofShareholders. Withthe bondholders,the agreement of payable afterthe financialstatementsthe General adoptionof by 31 December2007 1164,703 1,896 21,106 13,106 ,5 597 460 310 1,440 2,555 1,454 1,339 2,652 4 199 512 146 199 5)(210) (53) x € 1164,703 21,106 ,0 x 1,000 4 199 146 31 December2006 (103) € 1,000
Annual report 2007 147 Annual report 2007 148 sudt ytlsaf- end 2007was the amounts andsold. bought The quotedshare year- priceasat € wasthe average measured at purchase priceofapproximately treasurythe 129,137 shares of carrying amount (as year-end at 2007) to otherreserveschargedthe average at purchase price. The treasury shares124,008 were issued. The issued shares were 253,145, acquired anaverage at purchase priceof 1January2007,As at treasurythe numberof shares heldwas Closing balance Issued to staff to SyntelIssued staff Exercise ofoptionsbyformer Board Management Member to existing BoardIssued and Management members Opening balance Treasury shares distributable. The share premium isexempt fromtax andinprinciplefreely Share premium of value Binckholds50prioritysharesStichting (withanominal Prioriteit 3-for-2 rights apriceof issueat December 2007, 46,256,105 shares were issuedinconnection witha nominal value of total of77,093,508A ordinary shares were inissue, eachwitha Issued share capital s. Equity client’s risk. BinckBank’s forthe client’s ownnamebut the account andat The derivative positionsheldonbehalfofclients are heldin r. Derivative positionsheldonbehalfofclients 3.78. treasury of sharesThe changeinequityrespect reflects € 0.10 pershare). € 10.11 (2006: € 0.10. The share capitalisfullypaidup. On14 € 11.00). € 8.32 pershare. € 3.78. In2007, ubrAon ubrAmount Number Amount Number 1000 7 - - 378 (100,000) 31 December2007 2,3 47 5,4 (956) 253,145 (487) 129,137 (1,121) 296,855 (956) 253,145 1,0)7 1,9)49 (12,890) 74 (19,508) 450 7-- - 17 (4,500) x 6,1 71,289 466,816 108,415 455,240 € 9,9 20,855 392,395 ,0 x 1,000 ,0 3,084 7,709 47 (956) (487) 31 December2006 3,2)116 (30,820) € 1,000 non-eurozone subsidiaries. differencestranslation arisingon the financialstatements of of The foreign currencytranslation reserve comprises exchange Closing balance Movement Opening balance (i) Foreign currencytranslation reserve Otherreserves (iii) Reserve for unrealised results (ii) Foreign currencytranslation reserve (i) These comprise: Other reserves year. The retained reserve profit forthe undistributedprofit the includes Closing balance forProfit the year to otherreservesAdded Opening balance Unappropriated profit the arrangement on29December2006. income overthis period. total, In 30,820 shares were issuedunder fromto 2010. 2007 the arrangement of The cost to willbecharged the conditionsthis awardwhich attachedto areto befulfilled runs of staffthe subsidiarySyntel of acquired in2006. The periodin the form ofBinckBankshares was conditionally awardedto agroup staff onanon-recurring basis,their job. dependingon Abonusin Board,the Supervisory various numbersofshares were grantedto exercise ofoptionrights granted. In2007, following adecisionby former Boardthe the Management inconnection with memberof recognised in2006.total of100,000 A shares wereto a issued in2006. ofperformance inrespect element The expense was Boardthe Management asavariablemembers of remuneration On 29January2007,total of19,508shares a was grantedthreeto 31 December2007 2,0)(13,609) (24,009) 50424,297 24,612 35,044 36,177 24,009 24,009 13,609 32,155 32,155 24,009 132 (649) (1,342) 15 97 (125) 0 334 237 209 334 334 209 x € 50424,297 35,044 24,009 32,155 ,0 x 1,000 31 December2006 € 1,000
Annual report 2007 149 Annual report 2007 150 su fsae oSne tf - statements scheme for Syntel staff,the consolidatedto seenote25 financial Forthe optionrights, detailsof to shares rightsthe bonus and The otherreserves are inprinciplefreely distributable. Closing balance Appropriation for ofprofit previous year Payment ofinterim dividend Payment offinaldividend Exercise ofoptions Proceeds fromthe saleofrightstreasury shares attaching to Issue ofsharesto Syntel staff Issue ofsharesto management Rights to shares Opening balance (iii) Otherreserves thereserves available for distribution. at were nosalesin2006or2007. This reserve inarriving isdeducted available-for-sale financialassets. tax-deductible.The lossis There The reserve comprisesthe fair value gainsandlosses, aftertax, on Closing balance Tax onunrealised results onavailable-for-sale financialassets Unrealised results onavailable-for-sale financialassets Opening balance (ii) Reserve for unrealised results 31 December2007 61724,612 13,609 36,177 24,009 19,076 24,612 429 (3,361) (4,889) (4,299) (8,874) (649) (1,342) 14 - (154) (441) (494) (930) (649) 2 - 342 422 535 286 237 7)(49) (74) x € ,0 x 1,000 31 December2006 (116) € 1,000 statements are free from material misstatement. obtain reasonable assurancethe financial whether to requirements the audit and planandperform This lawrequires wecomplythat withethical inaccordanceconducted ouraudit withDutchlaw. financial statements basedonouraudit. We Our responsibilityto express is the anopinionon Auditor’s responsibility areestimatesthat reasonable the circumstances. in accounting policies; andmakingaccounting fraud orerror; andapplyingappropriate selecting free from material misstatement,to whetherdue presentationthe financialstatements are of that control relevantthe preparationto andfair designing, implementing andmaintaining internal Netherlands CivilCode. This responsibility includes: inaccordancethe report 9ofBook2 withPart and forthe preparation boardthe management of the NetherlandsCivilCode, 9ofBook2 with Part the EuropeanStandards asadoptedby Unionand accordance withInternational Financial Reporting fair presentationthe financialstatements of in isresponsibleManagement forthe preparation and Management’s responsibility statement forthe notes. the yearthen endedand 31December2007,at the company income statements comprisethe company as balancesheet and otherexplanatory notes. The company financial accountingand asummaryofsignificant policies and cashflowstatement forthe yearthen ended, income statement, statement ofchangesinequity consolidated 31December2007, asat balancesheet The consolidated financialstatements comprisethe statementsthe company and financialstatements. statementsthe consolidated of consist financial to 150). onpages70 out (as set The financial BinckBank N.V., Amsterdam, forthe year 2007 We havethe financialstatements audited of the financialstatements on Report Auditors’ Report BinckBank N.V. To: The General MeetingofShareholders of Other information Part 9 of Book 2 of the NetherlandsCivilCode. 9 ofBook2 Part forresult the yearthen endedinaccordance with BinckBank N.V. 31December2007, asat andofits givetrue andfair a the financialpositionof viewof In ouropinion,the company financialstatements statements the companyto financial Opinion withrespect Civil Code. the Netherlands 9ofBook2 Union andwithPart Reportingthe European Standards asadoptedby ended inaccordance withInternational Financial anditscashflowsand ofitsresult forthe yearthen position ofBinckBankN.V. 31December2007, asat statements givetrue andfair a the financial viewof In ouropinion,the consolidated financial statements the consolidatedto financial Opinion withrespect basis for opinion. ouraudit obtained issufficient andappropriateto provide a We evidence wehavethe audit believe that financial statements. well asevaluatingthe overall presentationthe of of accounting estimates madebymanagement, as of accountingthe reasonableness policiesusedand alsoincludesevaluatingaudit the appropriateness effectivenessthe entity’s of internal control. An the purposeofexpressingthe anopinionon are appropriatethe circumstances, in for not but statements proceduresthatto designaudit inorder preparation andfair presentationthe financial of considers internal control relevantthe entity’sto error.those riskassessments, Inmaking the auditor the financialstatements,to fraud whetherdue or the risks of ofmaterialassessment misstatement of the auditor’sdepend on judgment,the including the financialstatements.in The procedures selected the amounts anddisclosures evidence about audit involvesAn audit procedures performing to obtain
Annual report 2007 151 Annual report 2007 152 signed byN.G.D. Warmer for & Ernst Young Accountants Amsterdam, 11March 2008 the NetherlandsCivilCode. financial statements sub4of asrequired by2:391 the isconsistent board with management report the extent ofourcompetence,the that the NetherlandsCivilCode, eof part wereport,to sub5 the legalrequirementPursuantto under2:393 onotherlegalandregulatory requirementsReport 5. The Management Board TheManagement may resolveto allow 5. Withdrawals from distributablereserves may 4. Thefoundationto the extent willdetermine 3. Firstly –and onlyinsofar asprofits allow–an 2. Thecompany may onlymaketo distributions 1. 32) (Article of profit ofappropriationAssociation inrespect of Provisionsthe Articles of T.C.V. Schaap J.K. Brouwer C.J.M. Scholtes The Board Binckare: membersofStichting Prioriteit the company. Board Board andManagement the Supervisory of which consiststhree of members, isappointed by Binck,Prioriteit Amsterdam. This foundation’s Board, actions. The priorityshares are heldbyStichting Board,and Management taketo various and other the company’sto appointment Board Supervisory to make the right non-bindingnominations for the prioritysharesThe rights attachedto include and 21) 15 ofpriorityshares (Articles in respect ofAssociationProvisionsthe Articles of the companyto make interim distributions, the foundation.prior consent of General MeetingofShareholders,the to subject to aresolutionthe by be madepursuant company’s reserves. transferred distributedwillbe not the to General MeetingofShareholders. Any amounts the the disposalof willbeat subsection this sentence of the first 2and of subsection to reserves. Profits remaining after application the remainingwhich profitstransferred willbe these shares.distributed on nominal valuethe priority shares of willbe the (6%)of to sixpercent equal amount ofAssociation. the Articles by the reservesplus requiredto beheldbylawor exceeds itsissuedandpaid-upshare capital the shareholdersthe company’s if equity .Oncearesolutionto make adistributionhas 9. distributableon Thecalculationthe profit of 8. the companyto Nodistributionwillbemade in 7. TheGeneral MeetingofShareholders may 6. to the company. payable,then revert will the saidamount and isdeclaredthe datethe amount onwhich receive adistribution willlapsefive years after payable withinfourteen days.to Anentitlement been passed, willbedeclaredthe amount distribution. eligible, 7,to subsection pursuant for such shares willdisregard are sharesthat not depositary receipts. on shares forthe company which holds holdsinitsowncapitalor ofsharesrespect it Euronext Amsterdam N.V. submitted onlyafter consultation with to passaresolution asreferredto inbwillbe approved Board.the Supervisory by Aproposal Boardproposedthe Management and by sentence may onlybepassedafter being A resolution asreferredthe previousto in b. the companyequity instruments of or a. ordinary shares (whichwill, ifdesired and in: or otherwise) the shareholders’ (whetherat partly discretion instead ofbeingmadeincash, bemadefullyor shareholders’ discretion may, orotherwise) the (whetherat this Article 5of subsection than interim distributionsasreferredother in resolve distributionsonsharesto declarethat marketablethereto. rights cash, insharesthe company’s in equityorin referred maythis subsection bemadein to in the foundation.consent of The distributions the prior to 1above subsection andsubject compliesthe NetherlandsCivilCode with it that referred 105,to Section 4, subsection Book2, of interim statement ofassetsandliabilitiesas providing demonstrates it the form in ofan marketablethereto. rights shares, or reserve) ormarketableto ordinary rights possible,the shareto becharged premium
Annual report 2007 153 Annual report 2007 154 This proposal is not reflected in the balancesheet. reflectedThis proposal in isnot At shareholders’ disposal Less: Interim dividendpaidfor 2007 Less: Transferredto otherreserves in2007 Profit appropriationthen beasfollows: will dividend of the formthis in ofafinal proposedto distribute the Generalof MeetingofShareholders. is It of2007.in respect the disposal The remainder isat dividend of of an amount BinckhasproposedtransferringStichting Prioriteit result Proposal for appropriationthe of € € € 0.15 perordinary share. The profit 0.14 pershare hasalready beenpaid 16,274,000to reserves. Aninterim (16,274) 32,155 11,564 (4,317) Annual report 2007 155 Annual report 2007 156 Where reference is made in this annual report to ‘BinckBank’, it refers to BinckBank N.V. Where reference is made in this BinckBank N.V. annual report to ‘Alex’, it refers to Alex Beleggersbank, formerly part of Coöperatieve Raiffeisen-Boerenleenbank B.A., Vijzelstraat 20 which BinckBank N.V. acquired in 2007. Where reference is made in this annual report to ‘Syntel’, it refers to the 1017 HK Amsterdam subsidiary Syntel Beheer B.V. The Netherlands
This document is a translation of the Dutch original and is provided as a courtesy only. In the event of any disparity, the Correspondence address Dutch version shall prevail. No rights may be derived from the translated document. P.O. Box 15536 1001 NA Amsterdam As last year, the illustrations in this annual report trace the route from a stock exchange to BinckBank, taking in The Netherlands historical and other landmarks, to symbolise the links our clients have with the stock exchange through BinckBank’s investment services. Last year, we were in Amsterdam, where our main office is located. This year, we have mapped a Tel: +31 (0)20 606 26 66 similar journey in Antwerp, from where we run our Belgian operations. Starting at ❶ the remains of the old trading Fax: +31 (0)20 320 41 76 floor, our route takes us past the Grote Markt ➋ to the Scheldt quayside ➌ and thence to the diamond district ➍ and the Central Station ➎, ending at the BinckBank offices ➏ Internet: www.binck.com
BinckBank N.V., established in Amsterdam and entered in the Trade Register of the Amsterdam Chamber of Commerce under no. 33 16 22 23.
Investor Relations Tel: +31 (0)20 522 03 72 Email: [email protected]
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Coordination and production Imprima (Nederland) bv
Photography Eveline Renaud, Amsterdam Annual report 2007 Annual report Annual report BinckBank N.V.
BinckBank N.V.
Vijzelstraat 20 2007 1017 HK Amsterdam The Netherlands
P.O. Box 15536 1001 NA Amsterdam The Netherlands
T +31 (0)20 606 26 66 F +31 (0)20 320 41 76 E [email protected] I www.binck.com