Annual report

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Five years in figures KAS BANK N.V.

Consolidated, in millions of euros 2008 2007 2006 2005 2004

Equity attributable to equity holders of the

bank 167.5 254.9 217.6 207.8 204.4

Own funds

(Equity attributable to equity holders of the bank

plus subordinated liabilities) 167.5 266.3 247.1 237.3 233.9

Total assets 7,360.2 8,371.8 6,448.5 7,774.0 6,036.8

Income

Interest 28.9 21.6 16.8 23.3 24.6

Commission 89.2 93.4 83.3 77.7 67.3

Trading/AFS investment income 10.9 32.9 28.5 19.1 16.8

Other income 0.6 26.2 1.7 0.4 0.1

129.6 174.1 130.3 120.5 108.8

Operational operating expenses 108.2 102.1 94.2 93.3 85.0

Impairment losses 73.4 4.7 0 0 0

Operating expenses 181.6 106.8 94.2 93.3 85.0

Result for the period before tax -52.0 67.3 36.1 27.2 23.8

Result for the period attributable to equity

holders of the bank -39.9 50.9 26.6 19.4 15.9

Figures per share of nominal value €1,00 (in euros)

Net asset value after proposed dividend 11.49 14.19 13.65 13.55 13.46

Basic earnings per share -2.70 3.41 1.79 1.32 1.09

Dividend 0.45 2.60 1.40 1.00 0.95

Share price, high 29.30 29.69 23.15 19.10 16.20

Share price, low 9.45 20.49 18.66 15.11 14.56

Share price, year-end 9.90 25.00 20.85 18.70 15.10

Ratios

Net return on average shareholders’ equity (%) -20.2 23.7 13.2 9.7 8.2

Efficiency ratio (operational operating

expenses/income) 81 76 77 77 78

Growth in basic earnings per share (%) -179 91 36 21 22

BIS ratio (average) * 15 16 17 17 23

* The BIS ratios over the years 2004–2007 are based on Basel I. The BIS ratio for 2008 is based on Basel II.

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ANNUAL REPORT 2008

The annual report and accounts have been prepared in the Dutch language. This document is a translation. Where differences arise between the English and Dutch texts, the latter takes precedence.

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Profile of KAS BANK N.V.

KAS BANK N.V. is a sound European bank specialising in a wide range of securities and investor services. KAS BANK's focus is on value-added services in the field of treasury, risk control and management information, which have evolved from our primary services of investment administration, custody, clearing and settlement. KAS BANK's main target groups are institutional investors (pension funds, insurance companies, investment funds and asset managers) and financial institutions (banks and brokers). KAS BANK does not provide active asset management services itself and is independent, guaranteeing its impartiality and autonomy. A low risk profile is an integral part of our services.

Client focus and operational excellence are central to KAS BANK: the client, and the faultless processing on which the client relies, is paramount. This is achieved by combining a proactive approach with advanced information technology and rigorous process control. KAS BANK uses a single central technology platform for all European markets with which it has direct connections.

KAS BANK, which has offices in Amsterdam, London, Frankfurt and Wiesbaden, employs approximately 800 staff and has been listed on the NYSE Euronext Amsterdam stock exchange since 1986. KAS BANK was founded in 1806.

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Personal notes

Situation as at 20 March 2009 Supervisory Board

D.J.M.G. Baron van Slingelandt (1946), chairman J.M.G. Frijns (1947), vice-chairman

C. Griffioen (1941) A.H. Lundqvist (1945) R.A.H. van der Meer (1949) H. Donkervoort (1953)

D.J.M.G. Baron van Slingelandt, chairman Profession/current principal position : None

Previous principal position : Member of the Executive Board of Rabobank Nederland and Chairman of the Managing Board of Rabobank International.

Other positions : Member of the Supervisory Board of IHC Merwede Holland B.V., Redevco Europe Services B.V. and Robeco Groep N.V.

First appointed : 2007

Current term of office expires : 2011

J.M.G. Frijns, vice-chairman

Profession/current principal position : Endowed Professor of Investment Theory at Amsterdam Free

University, lecturer in the post-graduate Corporate Governance course, chairman of the Corporate Governance Code Monitoring Committee Previous principal position : Chief Investment Officer and member of the Board of Directors of

Pensioenfonds ABP

Other positions : Member of the Supervisory Board of IMC International Marketmakers B.V., Bouwinvest B.V. and Nederlandse Waterschaps Bank N.V. (until April 2008); member of the Board of Directors of JP Morgan Funds (Luxembourg) and Rabo Ledencertificaten N.V.; member of the investment committee of PGGM and the Advisory Board of the Norwegian government pension fund

C. Griffioen

Profession/current principal position : None

Previous principal position : Member of the Executive Board and CFO of Koninklijke KPN N.V. Other positions : Vice-chairman of the Supervisory Board and chairman of the Audit

Committee of Tennet B.V. and N.V. Nederlandse Gasunie; chairman of the Supervisory Board of Berenschot Holding B.V.; vice-chairman of the Board of Trustees of Zorggroep Noorderbreedte; advisory member of the Managing Board of Deloitte.

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A.H. Lundqvist

Profession/current principal position : Chairman of the Executive Board of Eindhoven University of Technology.

Previous principal position : CEO of IBM Nederland N.V.

Other positions : Chairman of the Supervisory Board of Generali Verzekeringsgroep N.V., Surfnet B.V. and Surfdiensten B.V.; member of Supervisory Board of TIAS-Nimbas Business School; chairman of the Board of Trustees of St. Anna Zorggroep; member of the Science and Technology Policy Advisory Council.

Current term of office expires : 2009 R.A.H. van der Meer

Profession/current principal position : Professor of Finance at Groningen University; General Manager of P&C B.V./Lesuut Finance B.V.

Previous principal position : Member of the Executive Board of Fortis.

Other positions : Chairman of the Supervisory Board of Fortis Obam, Stadsherstel Den Haag N.V., Teslin Capital Management N.V. and vice-chairman of Corio N.V.; member of the Supervisory Board of European Asset Trust N.V., Fortis Investments SA, Van Hoogevest Groep B.V., GITP International B.V., Robein Bank N.V., Greenfield Capital Partners N.V. and J.P. Morgan (SICAV); member of the Executive Committees of

Administratiekantoor Van der Moolen N.V. and Corporate Express N.V. (Staples); member of the DSI Arbitration Commission; deputy member of the Enterprise Section of the Amsterdam Court of Appeal.

Current term of office expires : 2009 H

.

Donkervoort

Profession/current principal position : None

Previous principal position : Chairman of the Executive Committee of Dyade.

Other positions : General Manager of ID Management & Advies B.V.; member of the Supervisory Board of Woonborg.

The members of the Supervisory Board are Dutch nationals. Management Board

A.A. Röell (1959), chairman

N.E. Blom (1962), Chief Operational Officer H. Kadiks (1949)

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Managing Director L.G. Vis

Assistant Managing Director H. Brink

Internal auditor J. Voskuilen

Secretary to the Managing Board M.G.F.M.V. Janssen

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Dear shareholder,

The credit crunch had only a limited impact on KAS BANK in 2007, but 2008 showed that we were not immune to the crisis that was afflicting the financial sector, especially in the second half of the year.

KAS BANK provides services for the wholesale market and its clients are all part of the financial sector. Although KAS BANK itself endeavours to maintain a low risk profile – it trades on only a small scale, does not act as asset manager and is not an active investor – it is not immune to the effects of the crisis. KAS BANK’s results in 2008 were adversely affected both by the failure of banks and other institutions and by the decline in some activities due to the crisis. The 2008 results also reflect the effect of the IFRS accounting rules, under which part of the losses due to the sharp fall in the prices of securities in the available-for-sale portfolio have to be recognised in the income statement. Despite the credit crisis, the operating result was still positive and only 20% down on 2007.

The outlook for 2009 is mixed: the credit crisis rolls on and is impacting heavily on the real economy, which has slipped into recession. Within our specialist field – asset and securities servicing – it is gratifying to note that KAS BANK’s ‘pure play’ model, based on independence and transparency, has proved its worth in this time of crisis. The reason: asset managers need objective administration and reporting of investments, coupled with risk-management services and securities custody, to provide a solid foundation on which they can depend. We are pleased to report that KAS BANK’s core services, both basic and value-added, functioned well. Our European platform for the settlement of securities transactions on both existing and newly opened stock exchanges functioned in accordance with our expectations at the height of the unrest on the financial markets. Although we are unable to give any forecast for 2009, that strengthens our confidence in the current year, when the focus will be on restoring our profit performance and cautiously advancing our present market position.

We offer our apologies for the negative overall result and thank you for your loyalty to KAS BANK and your undiminished support in 2009.

A.A. Roell

Chairman of the Managing Board KAS BANK N.V.

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Information for shareholders

Attendance at the General Meeting of Shareholders

The shareholders and depositary receipt holders attending the General Meeting of Shareholders on 23 April 2008 represented just over 50% of the voting capital. Stichting Administratiekantoor Aandelen KAS BANK (‘KAS BANK Registrar’s Office’), acting on behalf of holders of depositary receipts who do not attend the meeting in person, therefore represented less than 50% of the voting shares. All depositary receipt holders attending the meeting were automatically given voting rights by KAS BANK Registrar's Office. All resolutions at the meeting were adopted by acclamation.

Meeting of depositary receipt holders

A meeting of KAS BANK depositary receipt holders was held for the first time on 13 October 2008. This was an information meeting, the main business of which was a presentation by the Executive Committee of Stichting Administratiekantoor Aandelen KAS BANK (Registrar’s Office) on developments in corporate governance. The meeting resulted in several changes relating to depositary receipts. The object of the Registrar's Office has been revised and now states that its principal object is to foster the interests of the depositary receipt holders, taking into account the interests of the company, the related enterprise and all stakeholders. The members of the Executive Committee of the Registrar's Office will in future be appointed by the Executive Committee itself. The Constitution of the Registrar's Office has been revised accordingly.

Listing

The ordinary shares, in the form of depositary receipts, have been listed on the Official Market of the NYSE Euronext Amsterdam N.V. stock exchange since 1986. KAS BANK is included in NYSE Euronext’s Amsterdam Smallcap Index (AScX).

Dividend policy

The dividend policy, which was discussed at the 2005 General Meeting of Shareholders, is unchanged. While maintaining adequate flexibility in exceptional circumstances, our target is a long-term pay-out averaging 60– 80% of the profit. It is proposed that no dividend be declared for 2008 apart from the interim dividend that has already been paid.

5% holdings

The following institutions have given notification of holdings of 5% or more in KAS BANK pursuant to the Financial Supervision Act and the Decree on Disclosure of Control and Major Holdings in Listed Companies.

- Aviva plc 12.7%

- Stichting Pensioenfonds Zorg and Welzijn 11.0%

- Delta Deelnemingen Fonds N.V. 10.0%

- Parcom Quoted Equity Management B.V. (ING Groep N.V.) 7.9%

- Stichting Pensioenfonds ABP 6.9%

Standard & Poor’s ‘A–’ rating

KAS BANK was given an ‘A–’ long-term rating and an ‘A–2’ short-term rating by Standard & Poor’s in 2008. The rating outlook was classed as ‘stable’.

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KAS BANK N.V. share price

Movements in the (indexed) price of KAS BANK depositary receipts over the past ten years are compared with the AEX Index in the graph below.

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KAS BANK N.V. share price (indexed, 31-12-1998 = 100)

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AEX Index (indexed, 31-12-1998 = 100)

Figures per KAS BANK share

During the past year, the price of KAS BANK shares has fallen by around 60% from €25.00 (at year-end 2007) to €9.90 (at year-end 2008). The basic earnings per KAS BANK share in 2008 were €2.70 negative (2007: €3.41 positive). On average, around 14,000 KAS BANK shares were traded daily on NYSE Euronext Amsterdam. The figures per KAS BANK ordinary share can be found in the 'Five years in figures' summary.

2009 calendar

26 February 2009 - announcement of 2008 figures - analysts' meeting

26 March 2009 - publication of 2008 annual report 22 April 2009 - Annual General Meeting of Shareholders 20 August 2009 - publication of 2009 interim figures

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100

150

200

250

300 31-12-1998

31-12-1999

29-12-2000

31-12-2001

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30-12-2005

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31-12-2007

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2010 calendar

4 March 2010 - announcement of 2009 figures - analysts' meeting

25 March 2010 - publication of 2009 annual report 21 April 2010 - Annual General Meeting of Shareholders

23 April 2010 - ex-dividend quotation of KAS BANK N.V. depositary receipts 27 April 2010 - record date for determination of dividend entitlement 5 May 2010 - 2009 final dividend payable

26 August 2010 - publication of 2010 interim figures - analysts' meeting

27 August 2010 - ex-dividend quotation of KAS BANK N.V. depositary receipts 31 August 2010 - record date for determination of dividend entitlement 8 August 2010 - 2010 interim dividend payable

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Report of the Supervisory Board

To the General Meeting of Shareholders

We regret to report a disappointing financial result for 2008. KAS BANK, too, has been hit by the storm that has raged through the financial markets. In this annual report, we explain openly the causes of our negative result, consistent with our striving towards a transparent organisation and an open debate with our shareholders and other stakeholders in KAS BANK.

2008 financial statements

The Supervisory Board discussed the 2008 financial statements with the Managing Board and the external auditors. The 2008 financial statements were prepared by the Managing Board and have been examined by the external auditors KPMG Accountants N.V., whose unqualified report thereon can be found on page 113 of this report. We recommend that you adopt the 2008 financial statements at the General Meeting of Shareholders on 22 April 2009.

With regard to KAS BANK's profit retention and distribution policy, which has been discussed with you, we propose that a dividend be declared for 2008 of €0.45 per ordinary share of € 1.00 nominal value. This sum already having been paid as interim dividend, we propose not to pay a final dividend for 2008.

We also propose that the members of the Managing Board be discharged of liability for their management and the members of the Supervisory Board for their supervision in 2008.

Corporate governance

The latest developments in corporate governance were discussed with the shareholders at the 2008 General Meeting of Shareholders. In response to questions and comments arising at that meeting and a request by one of the depositary receipt holders, a meeting of depositary receipt holders was held towards the end of 2008 at which the current status of corporate governance at KAS BANK was discussed by the Executive Committee of KAS BANK Registrar’s Office and the depositary receipt holders. It was resolved at that meeting to make a number of recommendations regarding the Registrar’s Office which were supported by the Supervisory Board. The object of the Registrar’s Office has been revised and now states that its principal object is to foster the interests of the depositary receipt holders and the members of the Executive Committee of the Registrar's Office will in future be appointed by the Executive Committee itself. Further information on the company's corporate governance structure is given in the separate section of this report on page 119.

Composition of the Managing Board

Mr. R.J. Kooijman has been appointed Chief Financial Officer (CFO) of KAS BANK with effect from 1 January 2009 and will be appointed to the Managing Board by the Supervisory Board with effect from the date of the General Meeting of Shareholders, 22 April 2009. The General Meeting of Shareholders will be notified of the proposed appointment. Mr. Kooijman succeeds Mr. J.S.A. van Scheijndel, who left the company on 1 September 2008 to embark on a new career in risk control and asset management outside KAS BANK. The Supervisory Board owes Mr. Van Scheijndel a great debt of gratitude for his contribution to the professional development and sustained growth of the company over many years.

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succeed Mr. Kadiks on the Managing Board, following the latter’s departure from KAS BANK with effect from 1 September 2009.

Supervision and advice

The Supervisory Board met with the Managing Board on nine occasions in 2008. Given the Supervisory Board’s concerns regarding the exceptional circumstances experienced during the year, the frequency of Supervisory Board meetings was about 50% higher than normal. The main topics addressed at these meetings were the consequences of the credit crisis for KAS BANK, the configuration and functioning of the risk control and monitoring systems in the changed financial market, the risks associated with the company’s operations and the company’s strategic plans, including the acquisition of Delta Lloyd Investment Managers GmbH in Germany. Particular attention was paid to the financial results, performance analyses, the reporting process in relation to targets and the budget and the sensitivity of the results to external circumstances. Other important agenda items were the composition of the Managing Board and remuneration policy. The ICT structure was discussed at length, as were the reports of the rating agencies and analysts. Regular presentations were given to brief the Supervisory Board members on specific issues.

Risk management was the main focus in 2008. It had been found at the height of the financial crisis that the risk controls were not able to accommodate the extreme market volatility in all conditions. In collateral

management in particular, major fluctuations in the value of the collateral and less than optimum diversification resulted in losses on execution of collateral following the insolvency of a counterparty. To avoid any repetition, a comprehensive risk management programme was launched within KAS BANK at the end of 2008 and its implementation is being actively monitored by the Supervisory Board. To ensure that KAS BANK complies as closely as possible to best practice in the market, the FIRM system developed by the Nederlandsche Bank (DNB) is used for risk analysis and management. The FIRM system analyses the bank’s primary and secondary processes with reference to a framework covering the ten most significant risk categories for financial

institutions.

One of the meetings was held in the absence of the Managing Board, at which the Supervisory Board discussed its own functioning and that of the Managing Board and the relationship between the Supervisory Board and the Managing Board.

Members of the Supervisory Board attended two consultation meetings of the Employees' Council at which the bank's general state of affairs, its results and other developments were discussed.

General Meeting of Shareholders

The business of the Annual General Meeting of Shareholders on 22 April 2009 is outlined in the agenda with explanatory notes.

Principles of remuneration policy/remuneration report

The current remuneration policy for the Managing Board was adopted and approved by the General Meeting of Shareholders on 25 April 2007 and is posted on KAS BANK's website. The remuneration of the individual members of the Managing Board is set by the Supervisory Board on the recommendation of the Appointments and Remuneration Committee, which uses KAS BANK's Internal Audit department to determine the components of the variable remuneration.

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and third quartile and is reviewed every two years in the light of developments in the market. In view of the fixed term of his contract of employment, a different remuneration structure has been agreed with one member of the Managing Board, Mr. Kadiks, covering both fixed and variable elements.

The annual short-term bonus of members of the Managing Board is determined with reference to a number of performance criteria set by the Supervisory Board. The basis of these criteria was defined in 2007 by the General Meeting of Shareholders as part of remuneration policy and can be consulted on the company’s website. In the light of the company’s results in 2008, the Managing Board has waived the short-term bonus. The long-term bonus does not become unconditional for three years. The award becomes unconditional after three years if the performance target of 10% average annual growth in earnings per share has been achieved. Under the agreed pension plan for the Managing Board, which is a defined-contribution (DC) scheme, a fixed contribution of 24.9% was paid into each member’s pension and life-course savings plan. The company also bore the cost of incapacity benefit insurance for members of the Managing Board.

A change-of-control clause has been agreed with the two new members of the Managing Board, under which they are entitled to one year’s salary in the event of a change of control. This clause will also be included in the contracts with the other members of the Managing Board.

Composition of the Supervisory Board

The Supervisory Board consists of six members. All the members of the Supervisory Board are independent within the meaning of the Corporate Governance Code and none is a former member of the Managing Board. The members of the Supervisory Board receive no profit-related remuneration. None of the members of the Supervisory Board holds KAS BANK shares or options.

The Supervisory Board has formulated a membership profile that defines its size and composition. The membership profile for the Supervisory Board was discussed at the General Meeting of Shareholders in 2004 and 2005 and is posted on the company's website. A properly constituted Supervisory Board should encompass knowledge of or experience or familiarity with information and communications technology, accounting

organisation, national and international banking, securities and derivatives, social policy, national and international business, the workings of institutional investors and financial institutions and the (European) securities industry.

The duties and procedures of the Supervisory Board are defined in by-laws, which are posted on the company's website.

The members of the Supervisory Board retire by rotation. Messrs. P. Ribourdouille and C. Griffioen were due to retire by rotation at the 2008 General Meeting of Shareholders. Mr. Ribourdouille chose not to offer himself for reappointment and Mr. Griffioen did offer to stand for reappointment. Mr. Ribourdouille had served on the Supervisory Board for eight years, for seven of those years as its chairman. The Supervisory Board thanks Mr. Ribourdouille for his commitment, for his expertise and for his exceptional contribution to the development of the company during his time on the Board.

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a term of two years with effect from the same date. No other candidates were nominated by the General Meeting of Shareholders. The Supervisory Board appointed Mr. Van Slingelandt as chairman and Mr. Frijns as vice-chairman of the Supervisory Board.

Messrs. R.H.A. van der Meer and A.H. Lundqvist are due to retire by rotation from the Supervisory Board at the end of the General Meeting of Shareholders on 22 April 2009. Both have offered themselves for reappointment. Committees formed by the Supervisory Board

The Supervisory Board has formed three committees: the Risk Management Supervision Committee, the Audit Committee and the Appointments and Remuneration Committee. The task of the committees is to prepare for decision-making by the Supervisory Board.

The Risk Management Supervision Committee is responsible for supervising the Managing Board with regard to all banking-related aspects of the company's internal risk control and monitoring systems, including credit risks, liquidity risks, market risks and operational risks. The Risk Management Supervision Committee met on three occasions in 2008. The main items on the agenda were the bank’s response to the credit crisis, risk control and internal risk models, developments in security and compliance within the bank, credit reporting and loss analysis. The Risk Management Supervision Committee consists of three members of the Supervisory Board: Messrs. R.A.H. van der Meer (chairman), D.J.M.G. Baron Van Slingelandt and J.M.G. Frijns.

The Audit Committee is responsible for supervising the Managing Board with regard to all accounting-related aspects of the company's internal risk control and monitoring systems, the quality, integrity and selection of the financial information provided by the company, the role and functioning of the Internal Audit department, the relationship with the external auditors, with particular reference to their independence, and the bank's ICT security. The Audit Committee met three times in 2008. The main items on the agenda were the annual and interim reporting, the ICT structure and internal audit. The Audit Committee consists of three members of the Supervisory Board: Messrs. C. Griffioen (chairman), R.A.H. van der Meer and A.H. Lundqvist.

The Appointments and Remuneration Committee is responsible for defining the selection criteria and appointment procedures for all members of the Supervisory Board and Managing Board and carrying out preliminary work in connection with appointments and reappointments to the Managing Board and Supervisory Board. The committee also submits proposals to the Supervisory Board relating to the remuneration policy and the remuneration of the individual members of the Managing Board. The Appointments and Remuneration Committee held five meetings in 2008, at which the business transacted included the preparation of proposals for the appointment of the new Managing Board member and new Supervisory Board member and the remuneration and pension provisions of the members of the Managing Board. The Appointments and Remuneration Committee consists of four members of the Supervisory Board: Messrs. A.H. Lundqvist (chairman) and D.J.M.G. Baron van Slingelandt and Ms. H. Donkervoort.

The minutes of all the meetings of the committees are submitted to the Supervisory Board, on the basis of which the chairman of each committee reports on its deliberations, findings and recommendations.

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Amsterdam, 20 March 2009 The Supervisory Board:

D.J.M.G. Baron van Slingelandt, chairman J.M.G. Frijns, vice-chairman

C. Griffioen A.H. Lundqvist R.A.H. van der Meer H. Donkervoort

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Report of the Management Board 2008 Results

Excluding exceptional items, operating profit was 21% lower in 2008 at €18.7 million (2007: €23.6 million). Reflecting the market unrest and lower stock-market prices, income was down €1 million at €132.3 million (2007: €133.2 million). Lower commission income was offset by higher interest income.

In line with expectations, operating expenses were 5.7% higher owing to investments in ICT, product development and service quality improvement. Compared with the second half of 2007, the increase in operating expenses in the second half of 2008 amounted to 1.2%.

Impairment losses on loans, including Lehman and one Madoff-related investment, bonds and equities in the available-for-sale portfolio, goodwill and two exceptional charges reduced the net result for 2008 by €58.7 million. Including exceptional items, the 2008 net result turned out at €39.9 million negative. This compares with a net profit in 2007, including exceptional income of €27.4 million, of €50.9 million.

The bonds, money market paper and equities in the available-for-sale portfolio are analysed by rating (Moody's) as follows: Available-for-sale portfolio 2008 % 2007 % In millions of euros P1–P2 100 15% 425 31% Aaa–Aa3* 510 75% 870 63% A1–A3 34 5% 21 2% Baa1–Baa3 10 1% 11 1% Equities 28 4% 42 3% 682 100% 1,369 100% *including approx. €10 million Tier 1 instruments

The 50% reduction in the available-for-sale portfolio compared with year-end 2007 is due largely to the placing of funds from maturing investments on very short interest terms in order to improve the bank’s liquidity.

Operating income

Compared with 2007, interest income was up 33.4% at €28.9 million (2007: €21.6 million), reflecting a wider interest margin on almost unchanged lending volume.

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Commission income was 4.5% lower at €89.2 million (2007: €93.4 million). Commission income is analysed as follows:

Commission income in millions of euros 2008 2007 change % Custody and investment management services 28.7 32.8 -4.1 -13%

Clearing and settlement 37.6 39.4 -1.8 -5%

Securities lending 17.2 15.5 1.7 11%

Other 5.7 5.7 0.0 0%

Total 89.2 93.4 -4.2 -5%

The 13% decline in income from custody and investment management services to €28.7 million (2007: €32.8 million) was due to the lower market prices.

The lower transaction volumes, especially in derivatives, translated into a 5% decrease in commission income from clearing and settlement in 2008, which turned out at €37.6 million (2007: €39.4 million).

Income from securities lending was 11% higher at €17.2 million (2007: €15.5 million), mainly due to better margins. In the deteriorating market conditions, income from securities lending declined in the fourth quarter of 2008.

Other commission income remained stable at €5.7 million, despite the loss of commission income from private banking from the second quarter of 2007.

The operating result on investments was 19% lower at €13.6 million (2007: €16.6 million).

Investment income in millions of euros 2008 2007 change % Trading - foreign exchange transactions 12.1 15.3 -3.2 –21%

Trading - securities and derivatives -0.3 0.8 -1.1 –138%

Investments – investment portfolio 1.8 0.5 1.3 260%

Total 13.6 16.6 -3.0 -18%

Income from foreign exchange trading was down 21% at €12.1 million (2007: €15.3 million), largely due to lower transaction volumes.

Operating expenses

Operating expenses in millions of euros 2008 2007 change %

Staff expenses 70.1 62.6 7.5 12%

Premises costs 3.6 3.2 0.4 13%

ICT costs 16.1 13.6 2.5 18%

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Staff expenses rose 12% in 2008 to €70.1 million (2007: €62.6 million), mainly due to the higher staff numbers in the first half of the year in connection with the investment in the quality of the services and product

development. Much of the increase in staff expenses reflects higher usage of temporary staff. The higher premises costs in 2008 mainly relate to the new premises in Germany. The increase in ICT costs reflects the investments in improving quality and raising the efficiency of a number of processes. General overheads were down €3.4 million at €9.6 million (2007: €13.0 million), due to lower consultancy fees and lower costs due to processing losses.

Part of the €1.2 million decrease in depreciation/amortisation in 2008 was related to the higher ICT expenses because, given the nature of the new contracts that have been entered into, more of the software costs are accounted for as ICT expenses instead of being capitalised.

Exceptional income and charges

The 2008 after-tax result reflects the negative effect of exceptional charges totalling to €58.7 million (€77.0 million gross). In 2007 the net effect of exceptional income and charges on the after-tax result was positive, amounting to €27.4 million (€35.5 million gross).

The effect of impairment losses on loans on the 2008 after-tax result amounted to €26.3 million. These included receivables from Lehman, for which the recovery rate has been further reduced, and an investment (indirectly) related to Madoff.

The effect on the after-tax result of impairment losses on equities over the full year, including the further fall in the NYSE Euronext share price, amounted to €8.2 million. The effect on the net result of impairment losses on bonds in the available-for-sale investment portfolio amounted to €16.3 million, of which €5.7 million relates to Lehman. There were also impairment losses on five perpetual (long-term) bonds issued by investment grade banks.

The 50% write-down of goodwill, amounting to €5.2 million, relates to KAS Investment Servicing GmbH and reflects the changed market conditions. The effect is the same on the result before and after tax. Other exceptional items had a negative effect on the after-tax result amounting to €2.7 million.

In 2007, the proceeds from the transfer of the private banking activities, recognised in other income, accounted for most of the exceptional items of €35.5 million gross.

Capital adequacy

The capital adequacy ratio is determined by comparing the risk-weighted assets (and off-balance-sheet items) with actual own funds. The percentage given by this calculation is the BIS ratio. Actual own funds are made up of the core capital (Tier 1 capital) and the supplementary capital (Tier 2 capital). In 2008, the BIS ratio based on Basel II averaged 15% (2007: 16% on average, based on Basel I). As at year-end 2008, the BIS ratio was 18% (year-end 2007: 14%) and the Tier 1 ratio was 15% (year-end 2007: 13%).

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Strategy and objectives

2008 was an exceptionally difficult year for banks around the world. The credit crisis, which originated in the US mortgage market, rampaged through the financial services market, leaving in its train a serious loss of

confidence among investors and consumers and a huge loss of capital. The capital markets faced a financial crisis on a scale that had not been seen for a hundred years. At this stage, it is impossible to tell how the crisis will develop. Governments have announced massive support programmes, both to protect national interests and to restore confidence in the financial industry. The number of quoted banks that have not applied for government support pales into insignificance compared with the number that cannot survive without it. Never before have such events occurred with such rapidity and on such an unprecedented scale.

Our clients have maintained their confidence in KAS BANK. They have shown that they understand the unique nature of this crisis and appreciate the action we have taken to protect our clients’ interests and those of the bank. We can take pride in the knowledge that none of our clients has suffered material loss as a consequence of its relationship with KAS BANK, whether in the context of securities lending, clearing or settlement or other elements of KAS BANK’s services. At the height of the financial crisis, our independent and neutral business model proved its worth, both to our clients and in the market. The market’s appreciation will only increase in the aftermath of the crisis.

KAS BANK’s strategy is based on the ‘pure play’ concept. We focus fully and exclusively on value-added services and securities services for the wholesale market. We trade on only a small scale for our own account and do not provide active asset management services. Because we specialise exclusively in services for

professional clients relating to trading in securities and settlement of securities transactions, conflicts of interest with our clients cannot arise. Because we are completely independent, we can fully guarantee the

confidentiality and continuity of our services.

KAS BANK serves two clearly distinct market segments: institutional investors and financial institutions. The former segment comprises pension funds, insurance companies, asset managers, investment funds and charitable and related organisations. They mainly use our custody services and added-value services such as institutional risk management, treasury and reporting and information services. Basically, we help our

institutional clients to optimise the management of beneficial ownership of securities. We provide these services worldwide, in over 90 markets.

Financial institutions, such as banks, brokers, traders and active asset managers, mainly use our European clearing and settlement platform for uniform settlement of their transactions on all the markets on which they operate, significantly reducing the administrative burden associated with trading on several markets. Our virtual European capital market also enables them to trade on all equities and derivatives markets, on both the regulated exchanges and on alternative trading platforms (multilateral trading facilities or MTFs) with one collateral and margin facility. The emergence of MTFs is due to the European Markets in Financial Instruments Directive (MiFID) of 2007, which shifted the focus towards best execution. KAS BANK is active as a general clearing member on the principal MTFs and thus supports its clients on all the main European markets. In our organic growth strategy, we are still focused equally on institutional investors and financial institutions.

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are continuing to work on the development of outsourcing services which assist our clients with – or relieve them of the burden of – their administrative tasks and reporting requirements.

Trading volumes were volatile in 2008 and we expect this volatility to continue in 2009.

Growing European legislation and regulations and various projects occupy a great deal of the staff’s time and attention. We invest constantly in intensive training programmes to maintain the quality of our staff at a high level.

We expect growth in 2009 to be largely organic, most notably in Germany. KAS Investment Servicing, the new name of Delta Lloyd Investment Managers which was acquired in July 2008, has been fully integrated with KAS BANK and we are now able to work actively on growing our custody and securities administration business on the German market.

Risk control and monitoring systems

KAS BANK seeks to maintain a low risk profile through effective risk management in all relevant areas of its operations. The risk management system is based on three lines of defence:

 line management, which is responsible for identifying and controlling the risks in its processes and products;

 the Risk Management, Administrative & Corporate Development, Financial Control & Reporting, Compliance and Legal departments, which are responsible at bank level for analysis, policy preparation and

coordination of the management of the risks to which the bank is exposed; and

 the Internal Audit department, which performs an independent auditing and monitoring function.

The Asset & Liability Committee and Risk Management Committee determine the policy with regard to various classes of risk. In the second half of 2008 in particular, they focused closely on the effects of the credit crisis on the limits, the acceptance criteria and the improvement of collateral management.

A number of significant risks can be identified which are inherent in the bank’s strategy, profile and operations:

 Given KAS BANK’s strategic focus, it is dependent on the financial sector. The credit crisis does not affect only the regular services: it may also influence liquidity, counterparty risk and investment of assets.

 Although KAS BANK is diversifying its sources of income, its revenues are sensitive to transaction volumes in our clients’ securities trading activities and to stock market prices.

 KAS BANK is in competition with major international banks, which in some cases can place it at a disadvantage in terms of economies of scale and name recognition.

 We rely for the correct settlement of our clients’ transactions and for the quality of our services in general on the proper functioning of our automated systems and of communication with the infrastructure in the context of our European platform. Our systems and processes are closely interlinked.

 Given the bank’s specialist character, expertise and its embodiment in procedures, operating instructions and systems are vitally important.

 For the settlement of client’s securities transactions and payments, the bank holds collateral with (central) banks and clearing and settlement systems, which requires that our balance sheet is sufficiently liquid. Given the turmoil on the financial markets in the past year and the virtual drying-up of liquidity on the interbank market, special attention was paid to liquidity contingency planning.

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 Because most of the bank’s credit risk is hedged by collateral, collateral management is of primary importance, especially in times of great volatility.

 The bank is sensitive to developments in the external infrastructure and regulations and the (political) environment in the areas in which KAS BANK operates. State support for banks can distort competitive relationships and create an unlevel playing field.

 KAS BANK’s own position in securities is sensitive to price movements due to changing market, interest rate and credit conditions.

Qualitative and quantitative information on KAS BANK’s exposure to credit risk, market risk, liquidity risk, operational risk and compliance risk can be found in the ‘Risk management’ section on pages 73–92, which also discusses the purposes of and the principles and procedures used in measuring and controlling these risks. Given the dynamics of the relationship between the bank’s services and the environment in which it operates, the internal risk control and monitoring systems are being developed on a continuous basis. This development process will be pursued vigorously in the coming year.

Financial reporting risks

KAS BANK has adopted the International Financial Reporting Standards (IFRS) as from 1 January 2005. Further improvement of financial and risk-management information is kept under constant review by the bank.

The structure and functioning of the internal risk control and monitoring systems are regularly evaluated in the light of the bank's objectives and risk profile, assessed by internal and external supervisors and discussed with the relevant committees formed by the Supervisory Board.

In the light of the foregoing, it can be confirmed with reasonable confidence that the internal risk control and monitoring systems relating to reporting have functioned satisfactorily and that the financial reporting therefore contains no material misstatements.

It should be understood that, given their inherent limitations, the internal risk control and monitoring systems cannot:

 provide complete assurance concerning the achievement of strategy, objectives or chosen risk profile;

 prevent all material inaccuracies or instances of loss, fraud or non-compliance with legislation or regulations.

Developments

By continuously developing and maintaining its internal risk control and monitoring systems, KAS BANK ensures that its services are responsive to the dynamics of the environment in which it provides its services. Operational risk control is one of the areas on which particular attention is focused. Attention is also paid to quantifying the risks associated with and the risk-return ratio of its operations.

KAS BANK keeps abreast of developments in the field of auditing and compliance and contributes to meetings with regulators, the Netherlands Bankers' Association and accounting organisations. At the international level, KAS BANK’s processes comply with the recommendations of the Basel Committee on Banking Supervision and the Financial Action Task Force.

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2008 in retrospect

Quality and performance management

KAS BANK’s objective is reliable execution of its clients’ instructions. To optimise this process, a separate Quality and Performance Management group has been set up which is tasked with the structured recording and analysis of problems. The process is largely automated, running an application that was developed in-house. The next step will be for ‘quality circles’ to devise ways of improving the processes. Thanks to this approach, the operating results for our settlement and corporate actions processes improved greatly in 2008 compared with 2007.

In the context of quality management, a large-scale survey was conducted in October 2008 to measure our clients’ satisfaction with KAS BANK’s services. The average score was 7.05. The results are being used to deepen and broaden our understanding of the nature of client satisfaction.

SAS 70

As part of the SAS 70 process, a great deal of time and effort was again invested last year in verifying that we are in control of our operating and ICT processes and that we have embedded them adequately within the organisation. Systems were modified and checklists were developed to demonstrate that processes are under control. ‘Dashboards' are provided which enable managers to identify immediately where problems have arisen or potential problems may occur. Dashboards will be rolled out more widely within the organisation in 2009. Incorporation of these dashboards into KAS-Web also gives our clients faster access to more comprehensive information on the status of outstanding complaints.

SAS 70-II is a statement on auditing standards that is used worldwide to give assurance that processes are correctly managed and are under control. A type II statement covers the configuration, implementation and operation of the processes to which it relates. This is tested by both the internal and external auditors before the statement is issued. KAS BANK holds a SAS 70-II statement.

More securities infrastructure connections

Connections were established in 2008 with the Hong Kong, Luxembourg and Austrian stock exchanges and the Chi-X, Turquoise, Nasdaq/OMX Europe and BATS multilateral trading facilities (MTFs). In parallel with the emergence of MTFs (alternative electronic trading platforms), new clearing institutions such as EMCF and EuroCCP are offering their services. We endeavour to include all CCP-guaranteed equities of MTFs in our uniform clearing and settlement services, so that we can support our broker clients on all alternative markets on which they trade and to which they are affiliated.

Transactions on an MTF are settled via our single platform in Amsterdam. As with our direct connections to the regulated exchanges, clients can use cross-margining and cross collateral facilities, so that collateral extends over all markets. The clearing output of the new institutions is also seamlessly incorporated into KAS BANK’s uniform clearing output.

Our global network of over 90 correspondent banks was further expanded in 2008 to cover seven African countries. Considerable time was invested across the organisation in the successful implementation of ESES (Euroclear Settlement for Euronext Zone Securities), Euroclear S.A.’s new uniform settlement platform for France, Belgium and the Netherlands. As a Euroclear-affiliated institution, KAS BANK has been closely involved with ESES from the start.

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Addition Knowledge House

Following the cooperative arrangement made in 2007 between KAS BANK and the Addition Group in the area of ICT and temporary ICT staff, KAS BANK acquired a majority interest in Addition Knowledge House (AKH) in April 2008. As well as increasing KAS BANK’s ICT staffing flexibility, AKH also makes KAS BANK’s expertise in legacy migration available to third parties.

KAS BANK’s position on the institutional market

The inflow of new clients was in line with expectations and the outflow was low. Both new and existing clients are buying a wider range of the bank’s services, in particular our range of risk-management products. The credit crisis and the falling market prices translated into a sharp decline in the funding ratios of pension funds and insurance companies from the third quarter of 2008, which was reflected in heightened interest in KAS BANK’s services relating to advice on and assistance with managing interest-rate risk. The range of analyses and reports was significantly expanded with the introduction of ex ante risk analysis based on value at risk. Demand for currency overlay products as a means of hedging risk remained strong.

Investment management services

Via our Compliance Monitoring product, we provide information for pension and investment funds on the basis of 60 compliance parameters which enables them to assess the various financial instruments from different angles. These evaluation tools are also used by us in our role as custodian within the meaning of the Financial Supervision Act (Wft).

A growing number of institutional investors are developing policy on corporate social responsibility. Via our Sustainability Risk Screening product, we independently check the investments of pension funds and other professional players against a watch list of ‘prohibited’ investments which they compile. This provides both an effective means of control and a warning function, as elements in their sustainable investment strategy. The ASP model for outsourcing of investment administration by institutional investors, which was introduced in 2007, has now been fully integrated into our services. Via remote access to KAS BANK’s systems, clients can run their portfolio and cash management and generate analyses and reports independently without having to invest the associated ICT effort. This form of modular insourcing is unique in the Dutch institutional sector. There is also growing interest among asset managers in the outsourcing of investment administration and KAS BANK’s related services.

Expansion of services relating to Financial Assessment Framework

The new Financial Assessment Framework (abbreviated in Dutch to FTK), which came into operation in January 2007, was further refined by the Nederlandsche Bank (DNB) in 2008. The capital adequacy test and continuity analysis which pension funds are required to perform have been augmented with various simulations based on stress scenarios (post-shock value). KAS BANK provides a full range of services to help pension funds comply with the FTK requirements. On the basis of our analysis of the information provided by the pension fund, its fund managers and the underlying investments, we produce finished FTK reports ready for submission to DNB. New reporting requirements for investment funds have come into force in 2009. KAS BANK can also provide

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Asset pooling

Asset pooling (joint participation in an investment pool by institutional investors) is popular among Dutch professional investors. On the basis of our expertise in the tax-exempt investment vehicles known in Dutch as Fonds voor Gemene Rekening (mutual funds), we took over the administration and management of a number of pools last year. Structures of this kind reduce costs and offer more options in terms of management, purchasing and diversification.

We have also started to broaden the pooling opportunities, particularly in the area of heterogenity (combinations of tax regimes) and international aspects. Our position as a European specialist is a clear advantage here.

Investment giro services

A start was made in 2008 on the creation of a uniform platform for the administration of various savings and investment products which, as well as the traditional investment giro services and registers of unit holders, will also include variants of lifestyle products such as save-as-you-earn and bank savings plans. Starting from these forms of saving, the full range of services from order execution to settlement can be provided efficiently.

Bank savings

We expanded our role as administrator of life-course savings plans and save-as-you-earn plans in 2008 with the addition of a bank savings product, which we offer in conjunction with external providers of these products. KAS BANK administers the savings accounts and acts as custodian within the meaning of the law. We thus provide support for all aspects of pension provision: insurance, pensions, life-course savings plans and investments.

Growth in charitable sector

To cater for the growing interest in ‘good works’ among companies and individuals, we have expanded our services to Dutch charitable institutions and thus allow their boards to concentrate more closely on their core activity: administering the donations policy of the funds they manage and reporting to the regulators. KAS BANK supports them with institutional risk management services, which enable them to meet the requirements of good and transparent administration.

Germany

KAS BANK Germany in Frankfurt formally opened for business on 1 January 2008, with the appointment of a local KAS BANK representative. The Frankfurt team had been operating for some time as a sales office serving financial institutions in Germany and Austria. It is now being built up into a full sales/client services team for the German-speaking markets and may in due course become the bridgehead for expansion into Eastern Europe. The first local Austrian (broker) clients, who use our services on both the local (Austrian) market and the European markets, were acquired in 2008. In early 2009, the Frankfurt office relocated to new premises in Wiesbaden, together with KAS Investment Servicing.

KAS Investment Servicing

KAS BANK strengthened its presence in Germany on 1 July 2008 with the acquisition of Delta Lloyd Investment Managers, which has been renamed KAS Investment Servicing GmbH (KAS IS). This transaction marks further progress towards our objective of advancing our position in selected markets through growth by acquisition.

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KAS IS is a Kapitalanlagegesellschaft or KAG, a German-regulated entity for the issue and administration of investment funds, whose sole business is the provision of fund administration and related services to German institutional investors.

United Kingdom

KAS BANK UK’s client base has been greatly broadened and deepened by strengthening the sales team and focusing on cross-selling of products and services. The number of new clients, among both institutional investors and financial institutions, increased significantly. There is growing demand for KAS BANK UK’s ‘one-stop service’ proposition – offering direct market access (DMA), clearing and settlement and back-office outsourcing. At the GL Net Forum and the Professional Pensions Show, two prestige events in the UK financial industry, British consultants and market participants showed great interest in KAS BANK’s transparent business and risk model. Institutional and professional investors see KAS BANK’s low risk profile and ‘pure play’ focus as a solid base on which to weather the current financial storm.

KAS BANK’s position on the financial institutions market

KAS BANK has maintained its strong position on the financial institutions (banks and brokers) market. High priority was given last year to improving our services to stockbrokers and tripartite clients and a separate account team was formed to serve this client group. Growth was also recorded in our services for asset managers.

Scandinavian countries

KAS BANK advanced its position as a clearing agent in the Scandinavian market (Sweden, Denmark, Finland and Norway) in 2008 with the introduction of clearing and settlement services for multilateral trading facilities (MTFs) that trade equities on those markets. Our services there are also based on our European settlement platform. Notification for Denmark and Sweden is in preparation.

The introduction in 2009 of a central counterparty on the national stock exchanges in Sweden, Finland and Denmark, as previously announced, will create further opportunities for KAS BANK to deploy its expertise in new markets.

Developments in ICT

The market demands faultless transaction processing and reporting by KAS BANK. For us to guarantee the quality and stability of our ICT systems, optimum configuration of the ICT process is critically important. KAS BANK has therefore invested considerable effort in the design and implementation of its ICT risk management and security programme and ensuring that the systems are under control. This has also placed greater demands on the practical demonstrability of controls and governance in relation to ICT. Several projects in the field of ICT process control and improvement have resulted in more effective use of available resources and demonstrable control of these processes.

KAS BANK’s ICT environment currently consists of a combination of mainframe applications and decentralised software, but we have made a start on gradually migrating our mainframe systems to a new ICT platform, which will enable us to respond even more quickly and efficiently to changes in the market. A comprehensive training programme is provided to prepare our ICT staff for the new environment.

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Part of the available ICT resources is invested in projects relating to compliance with regulations such as Basel II (for banks), MiFID (for securities transactions), SEPA (for payments) and ESES (for securities transactions). Operational targets for 2009

2009 will be another year of change for the European securities industry, the most important issues being European harmonisation, virtual stock exchanges, new settlement methods and electronic information. As a European specialist, we participate actively in the relevant consultative bodies.

KAS BANK plans to expand the number of direct connections to alternative stock exchanges in Europe and to intensify its commercial effort by setting up a central Sales & Business Development department directly below the Managing Board. The Institutional Investors, Financial Institutions Benelux and Global Banks & Brokers divisions have been combined into a single Relationship Management Europe division.

One area of concern is the securities lending market. Equities lending volume fell sharply in the last quarter of 2008 in response to the international credit crisis and is not expected to recover fully in 2009.

Institutional investors

In our services for institutional investors, the focus will continue to be on risk management and reporting. In the context of our institutional risk management (IRM) proposition, we are constantly developing new products and services such as collateral management for derivatives and in-depth information on the composition of the investment funds included in the client’s investment portfolio. This is an essential element in fully integrated counterparty risk reporting.

In custody services, KAS BANK occupies a distinctive place in the market by virtue of the strict segregation between custody and asset management. Against the background of the credit crisis, institutional investors are increasingly attracted to KAS BANK’s independent model and ‘pure play’ strategy. We are also looking forward to growth in the number of foreign asset managers choosing KAS BANK as an independent custodian.

Financial institutions

Players on the buy-side of the market are increasingly becoming Trading Member Firms of the existing and new MTFs. These clients can, of course, also use our uniform clearing and settlement services for the European market.

United Kingdom

We see clear growth potential in the UK in 2009. This refers in particular to our back-office services for financial institutions – and especially start-ups and medium-sized enterprises – that want to concentrate fully on their core activities. It means that they avoid having to invest in a full back-office facility while enjoying a complete range of scalable and fully featured services. We also plan to intensify our efforts in the institutional investor segment.

Germany

All the existing activities in Germany were operationally and functionally integrated into the overall KAS BANK organisation in early 2009. To complete the range of products for the German professional and institutional market, we are preparing to provide Depotbank (custodian bank) services. KAS BANK Germany will then act as ‘custodian within the meaning of the law’ for German institutional investors and investment funds. KAS BANK

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also offers a full range of services in Germany relating to clearing, settlement, custody and independent fund administration.

ICT division

The programme for 2009 includes the further professionalisation of the ICT services and the ongoing migration of the mainframe systems to the new ICT (development) environment. New projects and programmes will also be launched in the area of product development and efficiency improvement.

The total investment in ICT will be slightly lower than in 2008, but this will not have any material effect on KAS BANK’s ICT project schedule.

Human resources

KAS BANK continues to invest heavily in the quality and standard of training of its staff, with the training budget remaining at 3% of the total payroll. Encouraging the acquisition and dissemination of knowledge within the organisation is high on the agenda. An Internal Mobility Centre has been set up to maximise the

organisation’s productivity and effectiveness, for example by moving staff temporarily to areas where there is a capacity shortage. In today’s market, it is more important than ever to adopt a flexible approach to the staff deployment and individual preferences. Temporary and agency staff are also used to provide the necessary flexibility.

Implementation of individual performance management will be completed in 2009. Performance management is a tool for translating the bank’s strategy into clear key objectives and key performance indicators (KPIs) for the entire organisation. All divisions, departments and groups enter into concrete performance agreements defining their contribution to the achievement of KAS BANK’s objectives and KPIs. These agreements in turn form the basis of the individual performance contract (IPC), in which the employee and the manager define how the employee is to progress in his or her personal development and what contribution he or she is expected to make to the result. All staff are covered by an IPC with effect from 2009.

Human Resources promotes a corporate culture of openness. Responsibility is devolved to the place and the people concerned, which instils a sense of urgency and strengthens the staff’s commitment to KAS BANK’s future as an independent European securities specialist.

Corporate social responsibility

KAS BANK attaches great value to corporate social responsibility (CSR), which is defined by MVO Platform, a network of Dutch civil society organisations and trade unions that are working together to promote CSR, as a results-driven process whereby a company assumes responsibility, across its entire supply chain, for the social, ecological and economic consequences of its activities, reports on those consequences and engages

constructively with stakeholders.

KAS BANK will also sign up to the ‘Principles for Responsible Investments’ (PRI), designed to help investors incorporate ESG (environmental, social and governance) factors into their investment decisions. Taking account of ESG factors will in time result in rising income and lower risks for all stakeholders.

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Practical steps include minimising CO2 emissions from our office premises and using the most climate-neutral possible office equipment and environment friendly cleaning materials. Steps to reduce paper consumption wherever possible are encouraged, including ongoing digitisation of our archives and publication of the annual report online instead of hard copy.

Corporate governance

The main outlines of the company’s corporate governance structure and recent developments in the field of corporate governance are discussed in the section on corporate governance on page 119.

Statement pursuant to Section 5, subsection 25.c, of the Financial Supervision Act The Managing Board affirms that the annual report provides a true and fair view of the company’s position on the balance sheet date and the course of affairs during the financial year of the company and the related enterprises whose figures are included in its financial statements and that the annual report describes the principal risks to which the company is exposed.

Amsterdam, 20 March 2009 Managing Board

A.A Roell, chairman N.E. Blom, COO H. Kadiks

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Consolidated income statement

Note Total Exceptional result Operational result Total Exceptional result Operational result In thousands of euros 2008 2008 2008 2007 2007 2007 Income Interest income 1 311,160 0 311,160 318,562 0 318,562 Interest expense 2 282,283 0 282,283 296,931 0 296,931 Net interest 28,877 0 28,877 21,631 0 21,631 Commission income 3 106,009 0 106,009 112,400 0 112,400 Commission expense 4 16,796 0 16,796 18,973 0 18,973 Net commission 89,213 0 89,213 93,427 0 93,427 Investments at fair value through

profit or loss 5 9,071 -2,684 11,755 16,087 0 16,087 Available-for-sale investments 5 1,815 0 1,815 16,773 16,251 522 Result on investments 10,886 -2,684 13,570 32,860 16,251 16,609 Other income 6 652 0 652 26,199 24,658 1,541 Total income 129,628 -2,684 132,312 174,117 40,909 133,208 Operating expenses Staff costs 7 70,141 0 70,141 63,308 700 62,608

Other administrative expenses 8 30,133 906 29,227 29,771 0 29,771 Depreciation and amortisation 9 7,902 0 7,902 9,075 0 9,075 Operational operating expenses 108,176 906 107,270 102,154 700 101,454

Impairment losses 10 73,423 73,423 0 4,702 4,702 0

Total operating expenses 181,599 74,329 107,270 106,856 5,402 101,454

Result for the period before tax -51,971 -77,013 25,042 67,261 35,507 31,754

Tax expense 11 -11,950 -18,290 6,340 16,325 8,147 8,178

Result for the period -40,021 -58,723 18,702 50,936 27,360 23,576

Attributable to:

Equity holders of the bank -39,933 -58,723 18,790 50,936 27,360 23,576

Minority interests 20 -88 0 -88 0 0 0

Earnings per share 12

• basic (in euros) -2.70 3.41

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Consolidated statement of recognised income and expense

In thousands of euros Note 2008 2007

Gains and losses on available-for-sale investments 37 806 -15,294

Revaluation of buildings 37 0 9,599

Changes in deferred tax assets and liabilities _37/38 _-2,416 _-2,018

Actuarial gains and losses on pensions 38 317 13,804

Changing current tax assets 37 2,894 0

Income and expense recognised directly in equity 1,601 6,091

Result for the period -40,021 50,936

Total recognised income and expense for the period -38,420 57,027

Attributable to:

Equity holders of the bank -38,332 57,027

Minority interests -88 0

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Consolidated balance sheet (before proposed appropriation of result)

In thousands of euros Note 2008 2007

Assets

Cash and deposits at the central bank 13 1,248,801 936,146

Banks 14 1,693,720 2,023,207

Loans and advances 15 2,433,933 2,353,276

Reverse repurchase agreements 16 732,641 1,402,608

Derivative financial instruments 17 386,095 169,273

Investments at fair value through profit or loss: 18

 Investments held for trading 5,583 0

 Investments classified as assets measured at fair value

through profit or loss 26,893 0

Available-for-sale investments 19 682,440 1,369,324

Property and equipment 21 50,690 51,439

Intangible assets 22 17,194 6,744

Deferred tax assets 23 2,897 8,736

Current tax assets 24 35,570 9,805

Other assets 25 24,119 27,521

Prepayments and accrued income 26 19,662 13,716

Total assets 7,360,238 8,371,795

Equity and liabilities

Banks 27 1,217,131 1,981,458

Funds entrusted 28 5,524,028 5,862,940

Derivative financial instruments 17 395,689 152,326

Deferred tax liabilities 23 9,856 12,446

Current tax liabilities 24 1,297 2,507

Provisions 29 906 1,000

Other liabilities 30 12,216 53,540

Accruals and deferred income 31 28,632 32,160

Employee benefits 32 3,055 7,137 Subordinated liabilities 33 0 11,344 Total liabilities 7,192,810 8,116,858 Share capital 34 15,699 15,699 Treasury shares 35 -25,417 -14,675 Share premium 36 21,569 21,569 Revaluation reserve 37 19,937 18,890 Other reserves 38 175,653 169,582 Unappropriated result 39 -39,933 43,872

Total equity attributable to the equity holders of the bank 167,508 254,937

Minority interests -80 0

Total equity 167,428 254,937

Total equity and liabilities 7,360,238 8,371,795