Annual Report ABN AMRO Group N.V. 2010 Important notes to the reader Introduction This is the Annual Report for the year 2010 of ABN AMRO Group, which consists of ABN AMRO Group N.V. and its consolidated subsidiaries. The Annual Report consists of the Managing Board report, Supervisory Board report, and the Consolidated Financial Statements. Presentation of information The financial information contained in this Annual Report has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). The current structure of ABN AMRO Group is a result of various steps taken over the past period, ultimately resulting in the Legal Merger between ABN AMRO Bank and Fortis Bank Nederland as subsidiaries of ABN AMRO Group as at 1 July 2010. The basis of presentation, including the accounting for the different steps leading to the creation of ABN AMRO Group, is described in the Basis of presentation and Structuring of ABN AMRO sections on pages 136 and 137. As a result of the integration, the current segment reporting is still subject to minor changes. All figures are presented in euros (EUR), which is the presentation currency of ABN AMRO, rounded to the nearest million (unless otherwise stated). All year-end averages in the Annual Report are based on month-end figures. Management does not believe that these month-end averages present trends materially different from those that would be presented by daily averages. Certain figures in this document may not tally exactly due to rounding. In addition, certain percentages in this document have been calculated using rounded figures. This Annual Report excludes the direct interest held by the State of the Netherlands (Dutch State) in the so called shared assets included in RFS Holdings B.V. 1 Definitions of important terms used throughout this report ABN AMRO or the Group EC Remedy refers to ABN AMRO Group N.V. incorporated on refers to the divestment of the EC Remedy Businesses 18 December 2009 (“ABN AMRO Group” or by ABN AMRO Bank Standalone in order to satisfy the “the Company”) and its consolidated subsidiaries. conditions imposed by the European Commission for approval of the integration of FBN with ABN AMRO Bank Standalone ABN AMRO Bank through the Legal Merger. refers to ABN AMRO Bank N.V. (formerly known as “ABN AMRO II N.V.”). EC Remedy Businesses refers to New HBU II N.V. and IFN Finance B.V. ABN AMRO Bank Standalone refers to ABN AMRO Bank N.V. in the period between FBN the Legal Demerger on 6 February 2010 and the Legal Merger refers to the legal entity Fortis Bank (Nederland) N.V., on 1 July 2010, which contained the Dutch State-acquired previously named Fortis Bank Nederland (Holding) N.V., businesses of ABN AMRO Holding. which merged with ABN AMRO Bank Standalone pursuant to the Legal Merger. ABN AMRO Holding refers to ABN AMRO Holding N.V. and its consolidated RBS N.V. subsidiaries, which was acquired by the Consortium and refers to The Royal Bank of Scotland N.V., formerly known renamed RBS Holdings N.V. upon the Legal Separation. as ABN AMRO Bank N.V. prior to the Legal Demerger. RBS Holdings N.V. is part of The Royal Bank of Scotland Group plc. Legal Demerger refers to the legal demerger effectuated on 6 February 2010 Ageas in accordance with the demerger proposal filed with the refers to ageas SA/NV (formerly known as Fortis SA/NV) Amsterdam Chamber of Commerce on 30 September 2009, and ageas N.V. (formerly known as Fortis N.V.) together. thereby demerging the majority of the Dutch State-acquired businesses held by RBS N.V. into ABN AMRO Bank BNP Paribas Fortis Standalone. refers to Fortis Bank SA/NV, a consolidated subsidiary of BNP Paribas Group. Legal Merger refers to the legal merger effectuated on 1 July 2010 between Consortium ABN AMRO Bank Standalone and FBN. ABN AMRO Bank refers to The Royal Bank of Scotland Group plc was the surviving entity and FBN was the disappearing entity. (“RBS Group”), Ageas and Banco Santander S.A. (“Santander”), which jointly acquired ABN AMRO Holding Legal Separation on 17 October 2007 through RFS Holdings B.V. refers to the transfer on 1 April 2010 of the shares of (“RFS Holdings”). ABN AMRO Bank from ABN AMRO Holding to ABN AMRO Group N.V. Dutch State refers to the State of the Netherlands. Shared assets refers to assets and liabilities that have not yet been settled Dutch State-acquired businesses between the Consortium members and in which each of refers to the businesses of ABN AMRO Holding acquired the Consortium members has a joint and indirect interest. by the Dutch State. 2 ABN AMRO Annual Report 2010 table of contents ABN AMRO at a glance 3 12 Sustainability 123 1 Chairman’s Review 7 13 Responsibility statement 125 14 Cautionary statement on Supervisory Board report 11 forward-looking statements 126 2 Supervisory Board review 12 Managing Board report 19 Annual Financial Statements 127 3 Strategy 20 Table of contents 129 4 Corporate governance 23 Other 261 5 Business overview 31 15 Composition of the Supervisory Board 262 6 Operating and financial review 47 16 Composition of the Managing Board 266 7 Risk management 62 17 Senior managing directors 270 8 Capital management 102 18 Works Council 271 9 Funding 108 19 Legal structure and ownership 273 10 Separation & integration 112 20 Abbreviations 274 11 Human resources 118 21 How to order reports 276 ABN AMRO at a glance 3 ABN AMRO at a glance Key facts and figures Key indicators 2010 2009 ▶ Underlying Net Profit (EUR million) 1,077 142 Key facts 2010 2009 ▶ Underlying Cost / Income ratio (%) 70 75 ▶ Branches in the Netherlands 508 654 ▶ Reported Net Profit/(Loss) (EUR million) -414 274 ▶ International presence (countries & territories) 28 29 ▶ Reported Cost / Income ratio (%) 92 76 ▶ Clients (retail, in million) 6.8 6.8 ▶ Assets under Management ▶ FTEs (at year-end) 26,161 29,551 (EUR billion) 164.2 149.7 ▶ Total assets (EUR billion) 379.9 386.5 Long‑term ratings ▶ Risk weighted assets (EUR billion) 116.2 ▶ S&P A ▶ Shareholders' equity (EUR billion) 12.1 8.7 ▶ Moody’s Aa3 ▶ Tier 1 ratio (%) 12.8 ▶ Fitch A+ ▶ DBRS A (high) Our Mission: ABN AMRO’s first-rate professionals always Our clients’ success is our success exceed expectations, creating highly satisfied clients. The success and satisfaction of our clients is the most important condition for our own success. Our top priority In a few words is to create enduring relationships with our clients. ABN AMRO is an all-round bank servicing retail, private and commercial banking clients. With a strong foundation By understanding the needs of our clients and putting our in the Netherlands, we support clients based in know-how of banking to work for them, we deliver services the Netherlands and abroad with our know-how of that match our clients’ ambitions. banking and specialist sector knowledge and a selective international network. ABN AMRO is also internationally We want to be an open and transparent bank, active in a number of specialist activities such as Energy, with understandable yet innovative products. Commodities & Transportation, Clearing and collateralised Finance (factoring and lease in Western Europe). We have a solid client base in the Netherlands and serve Our private banking business is market leader in our clients abroad where their business takes them. The the Netherlands and serves clients in 13 countries businesses of ABN AMRO are complementary and allow and territories. us to serve our retail, private and commercial clients well. 4 ABN AMRO Annual Report 2010 Our values ▶ Trusted – We strive for long-term client relationships and when we make a promise, we always live up to it ▶ Professional – We create solutions for clients that are simple, understandable and workable. We know our solutions, our clients and the environment they are part of ▶ Ambitious – We are never satisfied and are always stretching our boundaries and striving to achieve more for our clients Our goal: to achieve a collective result, not individual success. Healthy financial ambitions, Sustainable growth based yet a moderate risk profile on know‑how We are building an entrepreneurial bank that strives to live We aim to continue growing our market position in up to our clients’ expectations, each and every day, while the Netherlands and in specialised activities abroad. achieving healthy returns without taking risks that we do Our growth ambitions can only be reached by first-rate not understand. We always take a long-term sustainable professionals, hence our commitment to promoting the perspective in all our decisions. continuous personal and professional growth of our employees. At the same time, we always strive to exceed We intend to solidify the bank’s financial position in the our clients’ expectations, ensuring their satisfaction. years ahead by focusing on enhancing efficiency and We are a bank that is straightforward, yet disciplined reaping the benefits of the integration. Banking involves and respectful. risk-taking, but we will only take risks that we understand and can justify. We focus on the activities and markets in which we are strong. We want to be a bank that creates sustainable long-term value for all of ABN AMRO’s stakeholders – including clients, shareholders, employees and society at large. ABN AMRO at a glance 5 Our business proposition “To make the client feel truly “ To be a trusted advisor to “ To be the best commercial appreciated by ABN AMRO” our clients: professional, and merchant bank in independent, committed the Netherlands with the and transparent” most satisfied clients and Our Retail Bank is the number 3 player the best professionals” in the Netherlands, serving 6.8 million clients and offering professional Our Private Banking business builds advice and best-in-class products to on our market leadership in the Our Commercial & Merchant Bank retail clients in all stages of their lives.