Annual report 2007 Annual r BinckBank N. epor BinckBank N.V. t 2007

Transcription

1 Annual report 2007

2 Where reference is made in this annual report to BinckBank, it refers to BinckBank N.V. Where reference is made in this annual report to Alex, it refers to Alex Beleggersbank, formerly part of Coöperatieve Raiffeisen-Boerenleenbank B.A., which BinckBank N.V. acquired in Where reference is made in this annual report to Syntel, it refers to the subsidiary Syntel Beheer B.V. This document is a translation of the Dutch original and is provided as a courtesy only. In the event of any disparity, the Dutch version shall prevail. No rights may be derived from the translated document. As last year, the illustrations in this annual report trace the route from a stock exchange to BinckBank, taking in 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 similar journey in Antwerp, from where we run our Belgian operations. Starting at ❶ the remains of the old trading 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

3 1 Contents Profile, mission and strategy of BinckBank...2 Results in brief...4 Key figures Chairman s letter...8 Shareholder information...10 Important events in Report of the Management Board...16 CVs of Management and Supervisory Board members...26 Report of the Supervisory Board...28 Acquisition of Alex...36 Corporate Governance...40 Risk management...50 In-control statement...58 Personnel and organisation...62 Financial Statements 2007 BinckBank N.V. Consolidated Financial Statements Consolidated balance sheet...70 Consolidated income statement...71 Consolidated cash flow statement...72 Consolidated statement of changes in equity...74 Notes to the consolidated financial statements...75 Notes to the consolidated balance sheet...92 Notes to the consolidated income statement Financial risk management Company Financial Statements Company balance sheet Company income statement Company statement of changes in equity Notes to the company financial statements Notes to the company balance sheet Other information Auditors report Statutory provisions in respect of priority shares (articles 15 and 21 of the Articles of Association) Statutory provisions in respect of appropriation of profit (article 32 of the Articles of Association) Proposal for appropriation of the result...154

4 Profile, mission and strategy of BinckBank 2 Profile BinckBank is a full-service online bank for investors, ranked in the top five in Europe. We offer our clients fast, low-cost access to all the important financial markets around the world, online advice and asset management services, online savings, insourcing of administrative processing of securities and cash transactions and extensive market information. BinckBank is the largest independent Dutch online broker which is listed on Euronext Amsterdam. BinckBank has offices in the Netherlands and Belgium and will shortly open an office in France. It employs 481 people (year-end 2007). BinckBank was founded in 2000 had 214,000 account holders at year-end. BinckBank s activities are divided between two business units: Retail and Professional Services. Retail Retail provides services for independent private investors under two labels, Binck and Alex. Under the Binck label, we serve the active independent investor via a comprehensive investment website, including real-time streaming of prices and news, order book depth, research, advice and analysis. Under the Alex label, we serve the more affluent investors; as well as a comprehensive investment site, we also offer these investors an online savings account and online advice and asset management tools. Both Binck and Alex have been named by various independent research institutes as the best and cheapest providers of online investment services in the Netherlands on several occasions in recent years. Professional Services Professional Services provides services for professional clients such as asset managers and banks, including an online product which handles the processing of securities and cash transactions and the entire securities-related administration process on their behalf. Professional clients of this business unit have the option of entering into a service agreement with BinckBank or purchasing the software needed to execute these processes themselves. Vision The internet has changed the market for investment services dramatically, both for private investors themselves and for the relationship between service providers and investors. The internet enables investors to make better-informed choices and makes it easier and quicker for them to invest on stock exchanges and in products of their choice, thereby offering an attractive alternative to traditional investment services. Consequently, online investment is a growing market, especially in the countries of southern Europe.

5 3 The Internet has also changed the relationship between new and existing providers, enabling new players to enter the market at relatively low cost and compete with the established players. The Internet makes it easier for consumers to find and compare products and services from new and existing players. The ability to select products and services via comparison websites and discuss them in newsgroups is helping consumers to make rational choices based on price, quality or a combination of the two. The image of a company is no longer defined solely by its marketing campaigns and is increasingly being determined by the consumer as he surfs the web. Client satisfaction will therefore become an increasingly significant factor in companies future growth. Mission BinckBank seeks to maximise shareholder value by maximising customer satisfaction. Business strategy By offering our clients a high-quality product at low prices, in combination with our intensive client focus, we make them ambassadors for our services. We create shareholder value for investors in BinckBank by concentrating on growing our customer base and maximising customer satisfaction. By maximising customer satisfaction, we aim to maintain our market leadership in online investment in the Netherlands and grow into the largest European full-service online bank for investors. Because higher transaction volume will ultimately help to reduce the cost per transaction, we envisage growing consolidation among providers of online brokerage in Europe in the medium term, with larger players making more cross-border acquisitions, as some French and German players have already done on a small scale. A similar trend has already been experienced and is still continuing on the more mature US online brokerage market. Focusing primarily on independent private investors, BinckBank seeks further growth in online investment advice, asset management and savings for private investors. Our strategy is designed to achieve market leadership in services to asset managers in the Netherlands and broaden our services to include banks by insourcing securities order execution, securities administration and securities-related payments (BPO, or business process outsourcing). Our business strategy envisages international expansion of all our activities.

6 Results in brief 4 Reflecting the very rapid growth in our Retail and Professional Services business units, BinckBank posted a record net result of 32.2 million in 2007, compared with 24.0 million in 2006 (+33.9%). Revenues were 48.2% higher at 69.7 million, from 47.0 million in The 2007 profit includes a deferred tax asset of 4.3 million (2006: 2.9 million) in respect of the increase of a tax loss carryforward available and an upgraded profit forecast for Binck België N.V. This revenue is included in the taxation item. Total expenses were 82.1% higher at 34.4 million, compared with 18.9 million in The 2007 expenses include approximately 0.9 million in respect of integration costs of around 0.8 million already incurred for setting up the French operation. The cost/income ratio increased to 49% from 40% in 2006, mainly due to the consolidation of Syntel and the growth of the Belgian operation. We continued to invest in system availability and scalability in Profit before tax for the Retail business unit amounted to 30.6 million, compared with 25.4 million in 2006 (+20.6%). Total revenues increased to 54.4 million from 39.3 million in 2006 (+38.5%), while expenses rose to 23.8 million in 2007 from 13.9 million in 2006 (+71.1%). Professional Services generated a profit of 4.7 million, compared with 2.8 million in 2006 (+70.1%). Total revenues rose to 15.3 million from 7.8 million in 2006 (+97.4%), while expenses increased to 10.6 million, compared with 5.0 million in 2006 (+112.7%). The management buy-out of the Trading business unit s bond-trading operation was completed on 1 October Preparations were also made for hiving off the share-trading activities and talks are currently in progress on a management buy-out. In accordance with IFRS, the former Trading business unit s results are accounted for in profit on 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 Income statement ( 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) Share in profits of associates 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, Minority interest (500) (906) Net profit for the year 32,155 24,009 13,609 2,808 (10,277) Employees at year end*

7 5 As a consequence of the acquisition of Alex, the number of employees increased sharply to 481 as at year-end 2007, compared with 223 employees as at year-end 2006 (excluding Alex). 80,000 70,000 60,000 Revenue Expenses Net Profit 50,000 40,000 30,000 20,000 10, ,

8 6 Key figures 2007 Financial information by business unit x 1,000 Retail Professional Total Discontinued Total Services activities Interest income 21,289 12,436 6,780 3,132 28,069 15, ,511 16,226 Interest expense (5,625) (3,362) (4,500) (1,814) (10,125) (5,176) (475) (265) (10,600) (5,441) Commission income 52,721 41,756 15,885 12,736 68,606 54,492 68,606 54,492 Commission expense (14,259) (11,543) (8,350) (7,148) (22,609) (18,691) (22,609) (18,691) Net gain/(loss) on financial assets and liabilities at fair value through profit or loss ,148 15,799 11,434 15,799 Other income 5, , , Total Revenue 54,412 39,287 15,320 7,761 69,732 47,048 11,114 16,192 80,846 63,273 Staff costs (9,360) (5,794) (8,090) (3,263) (17,450) (9,057) (7,094) (12,337) (24,544) (21,394) Other operating expenses (12,434) (7,057) (1,756) (1,153) (14,190) (8,210) (1,746) (2,423) (15,936) (10,633) Depreciation and amortisation (966) (1,086) (733) (489) (1,699) (1,575) (185) (387) (1,884) (1,962) Impairment of other investments (69) (69) (69) Operating expenses (22,760) (13,937) (10,579) (4,974) (33,339) (18,911) (9,025) (15,147) (42,364) (34,058) Impairment losses (1,089) (1,089) (1,089) Total expenses (23,849) (13,937) (10,579) (4,974) (34,428) (18,911) (9,025) (15,147) (43,453) (34,058) Profit from operation 30,563 25,350 4,741 2,787 35,304 28,170 2,089 1,045 37,393 29,215 Share in profit of associates Operating profit before tax 35,384 28,170 2,089 1,045 37,473 29,215 Tax (4,785) (4,944) (533) (262) (5,318) (5,206) Net profit for the year 30,599 23,226 1, ,155 24,009

9 7 Chairman s letter Shareholder information Important events

10 Chairman s letter 8 Dear shareholder, In retrospect, 2007 was unquestionably an eventful and, more importantly, a good year for BinckBank. In terms of net profit and growth in our client base and transaction volume, it was a record year was also the year we took the decision to acquire Alex, a transaction that we completed at the end of the year. Although this acquisition will not affect our clients, the transaction will bring about a number of obvious changes at the operational level. At the end of 2005, we took the strategic decision to expand our core activity of online investment into other countries in the years ahead. Our decision was prompted by the success of BinckBank s services in our home market, in the expectation of being able to achieve similarly robust growth abroad. At that time, broadening our product range was a prospect for the longer term. Rabobank s decision to sell Alex suddenly brought that possibility within reach. Where BinckBank had focused in recent years on deepening its existing services, Alex had opted to broaden its range. The entrepreneurial spirit that characterises our organisation drove us to grasp that opportunity energetically, culminating in our successful acquisition of Alex. With this acquisition, we have taken an important step towards achieving our ambition of growing and developing into a full-service European online bank for investors. More information on our acquisition of Alex can be found on page 36. Our organisation s focus is on customer service, quality and cost control, all aspects in which we again invested much time and effort in We also worked hard on introducing our new BPO services, which are discussed in more detail in the report of the Management Board. Also in 2007, we brought our organisation into line with the new Basel II and MiFID (Markets in Financial Instruments Directive) regulations and upgraded our existing technology platform by reprogramming it in a more modern language. The agendas of the Management Board and Supervisory Board were largely dominated in the second half of 2007 by the acquisition of Alex and the related rights issue. The integration of Alex also requires substantial work, which means inter alia that we have had to postpone the start-up of our activities in France until mid The management buy-out of the former Trading business unit s bond trading activities took place earlier in the year and talks are in progress on a management buy-out of the remaining share trading activities. When that transaction has been effected, our organisation will be able to concentrate fully on our core activity: online investment. With the integration of Alex, the start-up of our activities in France, the sale of the remaining trading activities and the ongoing development of our services, 2008 promises to be another year of change and growth. We are looking closely at European developments in the online brokerage market and at the opportunities presented by MiFID. This is discussed in greater depth in the report of the Management Board. We are a client-focused organisation. Our clients tell us they are very satisfied with our services and demonstrate their satisfaction by introducing many new clients. We thank our clients for the confidence they place in us and our staff, who work every day to ensure that they stay satisfied. They

11 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

12 Shareholder information BinckBank shares in 2007 Year-end price in January 1 July 31 December Year-end price 2007* Year-end price 2006* Share price - high (06-11)* Share price - low (17-09)* 9.30 AMX year-end AMX year-end Change % 3.22% Share turnover 86,815,383 Turnover - high (31-10) 3,041,189 Turnover - low (28-05) 39,670 Average daily turnover 332, BinckBank s acquisition of Alex in 2007 was funded with a rights issue of 46,256,105 new shares. For each share held on 27 November, the shareholder received one subscription right. For every two subscription rights held, the shareholder was entitled to purchase three new shares at the issue price of 8.32 per share with a nominal value of This issue price represented a discount of approximately 24% on the theoretical ex-rights price of 10.98, based on the price of per share at close of trading on 26 November Shareholders exercised their subscription rights on 42,098,343 new ordinary shares. The remaining 4,157,762 new ordinary shares were placed by the joint global coordinators with international institutional investors at a price van Since the total proceeds from the remaining shares exceeded the total issue price by 2.18 per remaining share, the holders of unexercised subscription rights received 3.27 per unexercised right. As a result of the share issue, the number of outstanding ordinary shares as at year-end 2007 increased to 77,093,508, from 30,837,403 as at yearend The share capital is fully paid. Stichting Prioriteit Binck ( the priority shareholder ) holds fifty priority shares of 0.10 nominal value, which are not listed ( % of the shares issued). The average number of shares in 2007 was 32,829,886 (2006: 30,551,278). Market capitalisation ( million) Earnings per share Earnings per share Dividend Dividend * Adjusted prices after rights issue. Share capital Ordinary shares Year-ended Year-ended Authorised 100,000, ,000,000 Issued 77,093,508 30,837,403 Priority shares Authorised Issued Repurchased 129, ,145 On 31 December 2007, BinckBank held 129,137 shares in its own capital which had been repurchased at an average price of These shares will be used inter alia for the staff stock option plan and the remuneration of the Management Board.

13 The rights issue at the end of the year to finance the acquisition of Alex increased shareholders equity to around 466 million, but decreased the core capital element of own funds because the intangible assets identified at the time of acquisition have to be deducted from shareholders equity to arrive at actual own funds. Actual own funds as at year-end 2007 were around 54 million (2006: 63 million). Listing BinckBank N.V. shares are traded continuously on Euronext Amsterdam. Under its active investor relations policy, the company visited many institutional investors in the Netherlands and abroad in During the preparation phase and the subscription period for the rights issue in particular, the company held many discussions with international institutional investors. BinckBank shares are now covered by several analysts from leading financial institutions in the Netherlands. The average daily turnover in 2007 was approximately 332,626, compared with about 370,511 in As in 2007, BinckBank is included in the Amsterdam Midkap index (AMX). The performance benchmark for BinckBank s share price is an index composed of a number of international competitors which engage in more or less comparable activities. These are Ameritrade, Charles Schwab, Comdirect, Swissquote, Boursarama and Avanza Dividend Under the company s dividend policy, 6% of the nominal value is paid on the priority shares (50 x 0.10 x 6%). The priority shareholder then determines what proportion of the profit is to be retained. This sum is not distributed to the shareholders, but is added to the company s reserves. The remainder of the profit is placed at the disposal of the General Meeting of Shareholders, which means that it can choose whether to distribute the remaining profit, add it to reserves or a combination of the two. Distributions may, according to the provisions of the Articles of Association, be paid in cash or entirely or partially in ordinary shares. Profit is placed at the disposal of the General Meeting only if doing so would not, in the priority shareholder s view, reduce the company s liquidity and capital adequacy to insufficient levels. If, with due observance of these conditions, a proportion of the profit is placed at the disposal of the General Meeting, the priority shareholder will aim in principle for a payout ratio of 50% of the adjusted net earnings per share (net earnings per share adjusted for the amortisation of intangible assets and the tax asset relating to the acquisition of Alex). An interim dividend of 0.06 was distributed in 2007 on 77,093,508 shares (or 0.14 on 30,837,403 shares). This interim dividend amounted to approximately 30% of the earnings per share for the first half of 2007 and was calculated on the new number of shares as at year-end 2007 (77,093,508). The shareholders will be invited to approve a final dividend of Binck Binck Peer Group Index MIDCAP Dividend WPA In % WPA 2007* % % % % ( 0.42) - * Subject to the approval of the General Meeting of Shareholders.

14 Key figures per BinckBank share There was a rights issue of 46.3 million new shares in December 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 Earnings in 1) 4) 5) (0.42) Dividend in Dividend yield in % Net asset value in 2) 3) Year-end share price in 6) Year-end price/earnings ratio ) 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 6) 2007 year-end closing price is adjusted price after rights issue Major shareholders and Management Board Four shareholders have disclosed interests of over 5% pursuant to the Act on the Disclosure of Major Holdings and Capital Interests in Securities-Issuing Institutions (Wet melding zeggenschap). These are Vereniging Friesland Bank (15.09%), Boron Investments (10.1%), Delta Finance Amsterdam (6.11%) and Navitas (5.17%). As at year-end 2007, the members of the Management Board of BinckBank N.V. held the following shares: - Thierry Schaap : 1,022,995 shares - Kalo Bagijn : 1,022,995 shares - Pieter Aartsen : 6,755 shares The shareholdings of Messrs. Schaap, Bagijn and Aartsen fall under the lock-up arrangements specified in the prospectus of 26 November 2007 issued in connection with the acquisition of Alex. Financial calendar April 2008 Annual report 6 May 2008 Q figures 6 May AGM 8 May 2008 Ex-dividend 9 May 2008 Record-date 12 May 2008 Dividend payable 25 July 2008 H figures 24 October 2008 Q figures Investor Relations Telefoon: Fax: IR@binck.nl

15 Important events in March BinckBank N.V. included in Midkap Index 21 March Introduction of options on BinckBank N.V. shares 19 April Announcement of positive result of Belgian activities May Binck named best internet broker in Beurs.nl survey 15 July BinckBank in Belgium opens 10,000th investor account October Binck named best internet broker in BeursBulletin survey 1 October Completion of management buy-out of bond trading activities 10 October Announcement of exclusive acquisition talks with Alex 24 October BinckBank posts best-ever quarterly result 31 October Acquisition of Alex announced 19 November BinckBank shareholders approve acquisition of Alex and financing arrangements November Announcement of 3-for-2 rights issue worth 385 million 6 December BinckBank and Friesland Bank sign BPO agreement 10 December Management Board increases shareholding in BinckBank 11 December Announcement of successful rights issue 91% subscribed 11 December BinckBank announces placing of remaining shares in rights issue at per new ordinary share 31 December Acquisition of Alex by BinckBank completed

16 14

17 15 Report of the Management Board Report of the Supervisory Board Acquisition of Alex

18 Report of the Management Board 16 Review of 2007 We are pleased to report that BinckBank posted a record net profit of 32.2 million in The year also saw the expansion of our product range to include BPO services, preparations for the demerger of the trading activities and the Belgian operation s move into profit after only eighteen months. Although the preparations for the start-up of the activities in France were nearing completion, it was decided to postpone the launch until mid-2008 in view of the work associated with the acquisition of Alex, which has opened up a new route to future growth. With this acquisition, BinckBank has become the largest online broker in the Netherlands and has secured a place among the top five in Europe. We worked hard in the first half of the year on further improvements to the company s technology platform. By reprogramming in the more modern ASP/.Net language, we have improved the platform s scalability and flexibility. ASP./Net enables functionalities to be developed faster and more easily in response to market demand. The management buy-out of the bond trading activities of the Trading business unit was completed on 1 October Preparations were also made for the demerger of the share trading activities. The results of the share trading activities are accounted for in profit on discontinued operations and contribute to BinckBank s result until the time of sale. Disposal of these activities will enable us to concentrate more closely on growing our core activity of online investment within the Retail and Professional Services business units and will lower the company s risk profile still further. The growth of the Retail and Professional Services business units translated into a record net profit, to which all activities made a positive contribution. The positive contribution made by our subsidiary Syntel also exceeded expectations. The higher profit was largely the product of rapid growth in the number of new clients, the number of transactions they executed and the assets they entrusted to BinckBank. Market volatility was a factor in the high level of trading activity by our existing and new clients; although the AEX index ended the year only fractionally higher, there was considerable market turbulence throughout the year, mainly due to the sub-prime crisis which caused great uncertainty on the financial markets. As a consequence of the acquisition of Alex Beleggersbank in late 2007, its assets and liabilities are included in BinckBank s consolidated balance sheet but its financial result for 2007 is not included in BinckBank s income statement. Including the Alex clients, BinckBank s total number of accounts as at 31 December 2007 increased to 214,000. Together, the Alex and BinckBank clients generated 6.6 million transactions in The total number of BinckBank clients excluding Alex was 47.7% higher, rising to 79,900 at the end of 2007 compared with 54,100 at year-end Excluding Alex, BinckBank s clients generated 2.9 million transactions in 2007, compared with 2.1 million in 2006 (+38.1%). Including the Alex clients, total client accounts (in cash and securities) increased to 8.2 billion in Excluding the Alex clients, BinckBank s client 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%).

19 This growth translated into revenues of 69.7 million, an increase of 48.0% compared with the 2006 figure of 47.1 million. The deferred tax asset has been increased by 4.3 million (2206: 2.9 million) in respect of a tax loss carry-forward available to BinckBank België N.V. and revised expectations of Binck België N.V. s future profits. This amount is included in deferred taxation. Total expenses rose to 34.4 million, compared with 18.9 million in 2006 (+82.0%). The expenses for 2007 include around 0.9 million in respect of integration costs already incurred and approximately 0.8 million for setting up the French operation. The cost/income ratio increased to 49% from 40% in 2006, mainly due to the consolidation of Syntel and the growth of the Belgian operation. Although the financing of the Alex acquisition increased shareholders equity, it reduced the solvency ratio to 8.3% (year-end 2006: 25%) under Basel I and approximately 12% under Basel II. This decrease is because the value of the intangible assets of and goodwill paid for Alex has to be deducted from BinckBank s shareholders equity to determine the actual own funds. In view of the growth of the organisation and the acquisition of Alex, the Management Board and Supervisory Board have decided to strengthen the Management Board by appointing Evert Kooistra as Chief Financial Officer. The forthcoming Annual General Meeting will be invited to approve Mr. Kooistra s appointment. His responsibilities will comprise finance, risk management and HRM, which have hitherto been discharged by Thierry Schaap, the Chairman of the Management Board. Co-founder Kalo Bagijn has decided to stand down from BinckBank s Management Board after long service with the company in order to pursue a 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 proposed for appointment by the shareholders as a member of the Management Board for a term of four years, subject to approval by the relevant regulators. BinckBank s Management Board will then consist of Messrs. Schaap, Aartsen, Kooistra and Bortot. Mr. Bagijn has agreed to continue his association with the company as a consultant. At the forthcoming Annual General Meeting, the shareholders will be invited to approve the extension of Mr. Schaap s contract of employment for two years. The remuneration of the members of BinckBank s Management Board is explained in greater detail in the section on remuneration policy as of page 32 of this annual report. BinckBank was affected in 2007 by new legislation and regulations under Basel II, the Markets in Financial Instruments Directive (MiFID) and the new Financial Supervision Act (Wet op het financieel toezicht or Wft). A number of policy measures were adopted in connection with the implementation of MiFID, including the adoption of (i) the know your client principle, (ii) a bestexecution policy, (iii) a conflict of interest policy, (iv) a client classification procedure and (v) an order allocation policy. Since 1 November 2007, BinckBank has been fully MiFID-compliant. A number of changes were also made to the know you client procedures in connection with Wft. Basel II includes a number of new rules for risk and capital management. BinckBank started work in 2007 on the development and implementation of a Basel IIcompliant capital policy, which became operational on 1 January Although Basel II requires additional capital to cover operational risk, the implementation of the Basel II rules improves the risk-weighted assets. The net effect of Basel II on BinckBank s capital ratios is positive. 17

20 18 BinckBank is exposed to various risks in the course of its activities. To identify and monitor these risks, BinckBank performs an annual risk analysis. The identification of risks and the implementation and modification of the relevant control measures is a continuous process within BinckBank. More information on risk management at BinckBank can be found in the sections entitled Risk management on page 50 and In control statement on page 58, which form an integral part of this annual report. The unrest on the financial markets due to the subprime crisis is not affecting BinckBank s investment policy (investment portfolio). The company pursues a low-risk investment policy, investing client accounts only in (government) bonds and call money with banks with a Standard & Poor s rating of AA or better. In accordance with the company s dividend policy, the General Meeting of Shareholders on 6 May 2008 will be invited to approve the distribution of a final dividend of 0.15 in cash. Assuming that this proposal is approved by the meeting, the dividend net of 15% dividend tax will be paid to holders of BinckBank N.V. shares on Monday, 12 May BinckBank N.V. shares will be quoted exdividend as from 8 May Retail: online brokerage for private investors The Retail business unit provides online investment services for independent private investors in the Netherlands and Belgium. In recent years, a number of new (foreign) providers of online investment services have entered the Dutch market and major Dutch banks 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. Aiming for maximum possible client satisfaction is an integral part of BinckBank s marketing policy, because a high level of client satisfaction means that existing clients act as ambassadors for BinckBank s services. BinckBank encourages this with annual member-get-member campaigns, rewarding both the existing client and the new client when the latter opens a new account. Approximately 25% of the new clients in 2007 were introduced by an existing client. The annual survey which BinckBank commissions from TNS NIPO showed that our name recognition has again increased, with assisted name recognition increasing from 74% in December 2006 to 83% in January 2008 and spontaneous name recognition improving from 47% to 55%. BinckBank also scored high on customer satisfaction, with a rating of BinckBank again achieved the highest scores in 2007 in leading independent polls, such as the Dutch broker surveys by Beursbulletin, Beurs.nl and Netprofiler 2. One remarkable finding of the Netprofiler survey was that almost 30% of online investors said they wanted to change their service provider and, of those, 45% were considering switching to BinckBank. The annual survey 3 of all Retail clients found that 95% of BinckBank s clients are satisfied to very satisfied with BinckBank s services. As well as the annual client survey, BinckBank also measures client satisfaction using the net promoter score method, which shows the ratio of promoters (satisfied clients) to detractors (dissatisfied clients). The net promoter score for 2007 was high, from which we may conclude that a large percentage of BinckBank clients would recommend our services to friends and colleagues. 1 TNS NIPO, January Beursbulletin.nl, beurs.nl, NetProfiler BinckBank client survey, January 2008