Annual report 2008
BinckBank N.V. Vijzelstraat 20 1017 HK Amsterdam Netherlands P.O. Box 15536 1001 NA Amsterdam Netherlands T +31 20 522 0330 F +31 20 522 0340 E [email protected] I www.binck.com An nu al r ep ort 20 08 Bin ck Ba nk N .V.BinckBank N.V. Vijzelstraat 20 1017 HK Amsterdam The Netherlands Correspondence address P.O. Box 15536 1001 NA Amsterdam The Netherlands Tel: +31 (0)20 606 26 66 Fax: +31 (0)20 320 41 76 Internet: www.binck.com
BinckBank N.V., established in Amsterdam and entered in the Trade Register of the Amsterdam Chamber of Commerce under no. 33 16 22 23.
Investor Relations
Tel: +31 (0)20 522 03 72 Email: [email protected]
Colophon
Coordination and production Imprima (Nederland) bv Photography
Eveline Renaud, Amsterdam Where reference is made in this annual report to Ô BinckBankÕ , it denotes BinckBank N.V. Where reference
is made in this annual report to ÔAlex BeleggersbankÕ , it denotes what was formerly part of Coš peratieve Raiffeisen-Boerenleenbank B.A. (Ô RabobankÕ ), which BinckBank N.V. acquired in 2007. Where reference is made in this annual report to ÔAlexÕ , it denotes the label under which the Alex Beleggersbank services are provided. Where reference is made to Ô SyntelÕ , it denotes 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.
Continuing the theme of previous annual reports, the illustrations this year again trace the route from BinckBank to a stock exchange, taking in historical and other landmarks, to symbolise the links our clients have with the stock exchange through BinckBank. In previous years, we were in Amsterdam, where our main office is located, and Antwerp, where we have our Belgian branch. This year, we are in Paris, from where we run our French operations. Starting at ➊ the BinckBank branch, our route takes us via ➋ La DŽ fense to ❸ the Arc de Triomphe. Passing ➍ the Eiffel Tower, photographed from the TrocadŽ ro, we cross the Seine on ➎ Pont Alexandre III and make our way to ➏ the Louvre. Our journey ends at ❼ Le Palais Brongniart, the old stock exchange building. The people in the photographs are our colleagues from the Paris branch.
1 Annual R epor t 200 8 BinckBank overview ... 2 Profile of BinckBank ... 3 Key figures ...4 Chairman’s message ...8 Important events in 2008. ... 10 BinckBank N.V. shares ... 11
Vision, mission, strategy and objectives ... 16
Strengths, weaknesses, opportunities and threats ... 19
Report of the Management Board ... 21
Report of the Management Board ... 22
Risk management under Basel II and Pillar III disclosure ... 32
In-control statement ... 52
Personnel and organisation ... 54
Corporate social responsibility ... 58
Report of the Works Council ...59
CVs ... 61
CVs of Management Board members ...62
CVs of Supervisory Board members ... 66
Report of the Supervisory Board ... 69
Corporate governance ... 75
Introduction ... 76
Legal structure ... 77
Management Board ... 78
Supervisory Board ... 78
Summary of the 2008 remuneration report ...79
Compliance with the Dutch Corporate Governance Code ...83
Supervisory Board ...84
Anti-takeover defences ... 85
Article 10 of the Takeover Directive Decree... 85
Financial statements ... 87
Other information ...166
Definitions and ratios ... 170
2 Annual R epor t 200 8
B i n c k B a n k o v e r v i e w
3 Annual R epor t 200 8
BinckBank is a full-service online bank for investors, ranked in the top five in Europe. As an online broker, we offer our clients fast, low-cost access to all the important financial markets around the world. As an online bank for investors, we help our clients look after their capital with our online advice and asset management services and online savings. We offer our professional clients fast, low-cost order execution and administrative processing of securities and cash transactions, in the form of insourcing (BPO) or licensing of the appropriate software.
BinckBank is the largest independent Dutch online bank for investors which is listed on NYSE Euronext Amsterdam. BinckBank has offices in the
Netherlands, Belgium, France and Spain and employed 559 people as at year-end 2008 (year-end 2007: 481).
BinckBank was founded in 2000 and had 293,236 brokerage and savers as at year-end 2008, of whom 267,668 in the Netherlands, 22,486 in Belgium and 3,082 in France. BinckBank’s activities are divided between the Retail and Professional Services business units.
Retail
Retail provides services for private investors under the Alex and Binck labels. Under the Binck label, we serve in particular the active and experienced independent investor, for whom we provide order execution at very low cost together with a range of facilities such as an investment website, including real-time streaming of prices and news, order book depth, research, advice and analysis.
Under the Alex label, we serve private investors who want to make the most of their capital. For these investors we offer a comprehensive investment site, an online savings account and online advice and asset management products. We also provide training courses for clients to help them improve their investing skills.
The Binck and Alex labels have been named by various independent research institutes as the best and cheapest online brokers in the Netherlands on several occasions in recent years.
Professional Services
Professional Services provides services for asset managers and banks. Our online product handles the processing of securities transactions and the relating banking administration process, from order execution to administrative processing, on behalf of our professional clients. The business unit’s clients have the option of entering into a service agreement with BinckBank or using software, supplied by Syntel to execute these processes themselves.
4 Annual R epor t 200 8 2008 2007* Change % Customer figures Customer Accounts 293,236 214,323 37% Retail 284,709 206,933 38% Professional Services 8,527 7,390 15% Number of transactions 7,151,244 6,600,000 8% Retail 6,807,997 6,335,000 7% Professional Services 343,247 265,000 30% Funds entrusted (€) 6,065,852,540 8,165,805,000 (26)% Retail 5,001,484,037 6,855,821,000 (27)% Professional Services 1,064,368,503 1,309,984,000 (19)% Income Statement (x € 1,000)
Net interest income 40,640 41,387 (2)%
Net fee & commission income 101,181 110,942 (9)%
Other operating income 6,162 5,504 12%
Results on investments 1,230 286 330%
Impairment losses (reversals) financial instruments (205) (1,625) (87)%
Total revenue from operating activities 149,008 156,494 (5)%
Employee expenses (38,443) (37,569) 2%
Depreciation and amortisation (31,789) (3,188) 897%
Other operating expenses (37,316) (33,956) 10%
Total expenses (107,548) (74,713) 44%
Result from continuing operations 41,460 81,781 (49)%
Share in result of associates 520 80 550%
Result before tax 41,980 81,861 (49)%
Income tax expense (8,941) (16,637) (46)%
Tax % 21% 20%
Result after tax from continuing operations 33,039 65,224 (49)%
Result after tax from discontinued operations 106 1,556 (93)%
Net result for the year 33,145 66,780 (50)%
IFRS amortisation 28,196 -
Fiscal goodwill amortisation 2,792 -
Adjusted net profit ** 64,133 66,780 (4)%
Key fi gures
*) The comparative figures for 2007 are the pro forma combined results of BinckBank and Alex, i.e. the reported results of Binck and Alex are combined.
**) Net profit adjusted for IFRS amortisation and the additional tax benefit on the difference between the commercial and fiscal amortisation of intangible assets and goodwill acquired on the purchase of Alex.
5 Annual R epor t 200 8 2008 2007* Change %
Normalised adjusted net profit (x € 1,000)
Adjusted net profit** 64,133 66,780 (4)%
Elimination one-off tax benefit - (4,310)
Elimination integration costs Binck & Alex 4,613 -
Elimination discontinued operations (106) (1,556)
Normalised adjusted net profit 68,640 60,914 13%
Information per share & ratios
Earnings per share € 0.43 € 0.98
Adjusted earnings per share € 0.83 -
Dividend per share € 0.41 € 0.21
Cost Income ratio 72% 48%
C/I ratio excluding IFRS amortisation 53% 48%
C/I ratio excluding IFRS amortisation & integration costs 50% 48%
Balance sheet (x € 1,000)
Cash and balances with central banks 39,289 9,522
Banks 244,412 422,028
Financial assets, investments 1,578,224 1,398,662
Intangible and tangible assets 387,556 413,356
Other Assets 328,913 512,858
Customer deposits 1,747,699 1,772,822
Financial Liabilities, Provisions, Other liabilities 353,054 516,788
Equity 477,641 466,816
Balance sheet total 2,578,394 2,756,426
*) The comparative figures for 2007 are the pro forma combined results of BinckBank and Alex, i.e. the reported results of Binck and Alex are combined.
**) Net profit adjusted for IFRS amortisation and the additional tax benefit on the difference between the commercial and fiscal amortisation of intangible assets and goodwill acquired on the purchase of Alex.
6 Annual R epor t 200 8 0 10 20 30 40 50 60 70 80 2006 2007 2008 Net profit Profit BinckBank*
Normalised adjusted net profit
* The comparative figures for 2007 are the pro forma combined results of BinckBank and Alex, i.e. the reported results of Binck and Alex are combined.
In eur
o millions
16%
84%
Retail Professional Services
Profit before taxes by segment
0.00 0.20 0.40 0.60 0.80 1.00 1.20 2006 2007 2008
Net Earnings Per Share
Additional adjusted Earnings Per Share *)
In eur
o
Earnings Per Share
* Net profit adjusted for IFRS amortisation and the additional tax benefit on the difference between the commercial and fiscal amortisation of Intangible assets and goodwill acquired on the purchase of Alex.
In eur
o millions
Issued share capital Reserves *)
Share premium Unappropriated profit Development equity BinckBank
* The treasury shares are subtracted from the reserves for presentation purposes.
0 100 200 300 400 500 600 2006 2007 2008 In eur o millions
Interest income, Net Commission income, Net Other income Result on investments Impairment losses (reversals) financial instruments 0 20 40 60 80 100 120 140 160 180 2006 2007 2008
Income segregation BinckBank *
* The comparative figures for 2007 are the pro forma combined results of BinckBank and Alex, i.e. the reported results of Binck and Alex are combined.
In eur o millions 0 20 40 60 80 100 120 140 160 2006 2007 2008 Employee expenses Other operating expenses Depreciation and amortisation
7 Annual R epor t 200 8
Business segmentation 2008 2007* Change %
(x € 1,000)
Net interest income 40,640 41,387 (2)%
Retail 37,187 39,106 (5)%
Professional Services 3,453 2,281 51%
Net commission income 101,181 110,942 (9)%
Retail 92,981 103,407 (10)%
Professional Services 8,200 7,535 9%
Other operating income 6,162 5,504 12%
Retail 960 - 100%
Professional Services 5,202 5,504 (5)%
Investments result 1,230 286 330%
Retail 933 286 226%
Professional Services 297 - 100%
Impairment losses (reversals) on financial instruments (205) (1,625) (87)%
Retail (205) (1,625) (87)%
Professional Services - -
Total income from operating activities 149,008 156,494 (5)%
Retail 131,856 141,174 (7)%
Professional Services 17,152 15,320 12%
Staff costs (38,443) (37,569) 2%
Retail (30,992) (29,479) 5%
Professional Services (7,451) (8,090) (8)%
Depreciation & amortisation (31,789) (3,188) 897%
Retail (31,157) (2,455) 1169%
Professional Services (632) (733) (14)%
Other operating expenses (37,316) (33,956) 10%
Retail (34,686) (32,200) 8%
Professional Services (2,630) (1,756) 50%
Total operating expenses (107,548) (74,713) 44%
Retail (96,835) (64,134) 51%
Professional Services (10,713) (10,579) 1%
Result from continuing operations (before tax) 41,460 81,781 (49)%
Retail 35,021 77,040 (55)%
Professional Services 6,439 4,741 36%
Cost / income ratios
Cost Income ratio 72% 48%
C/I ratio Retail 73% 45%
C/I Professional Services 62% 69%
*) The comparative figures for 2007 are the pro forma combined results of BinckBank and Alex, i.e. the reported results of Binck and Alex are combined.
8 Annual R epor t 200 8
Dear shareholders, clients, colleagues and other readers,
I look back with mixed feelings on 2008, our eighth year. BinckBank has achieved what I consider a good result in one of the worst-ever years for the stock market but, not least because of the constant media attention, the credit crisis looks set to continue. Every day, a multitude of experts, professionals, traders, analysts and pundits of every hue give us the benefit of their insights. We at BinckBank have kept well clear of the cameras and speaking platforms – not because we think the financial consumer is not looking for yet another opinion, but because our time is better spent on growing our business and
supporting our clients in these difficult times on the stock markets. That is the only way we can prove to shareholders and clients that they can continue to count on BinckBank even in a credit crisis.
2008 was a year of challenges and hard work. But thanks to the unflagging enthusiasm and motivation of our staff and, equally important, the loyalty of our clients, some of whom have had a hard time on the stock markets during these difficult days, it was a successful year. It was gratifying to see former competitors BinckBank and Alex Beleggersbank joining forces to face a new common enemy: the credit crunch. We thank our clients and our colleagues most sincerely for their confidence and dedication.
The adverse stock market sentiment inevitably had a severe impact on our share price, not least because BinckBank falls into the financial and small cap categories. We strive constantly to increase shareholder value, by growing the business – and hence the profit – combined with paying an
attractive dividend. Given BinckBank’s strong capital position and as a sign of our commitment to our shareholders, we launched a share buy-back programme in the middle of the credit crunch. In combination with the growth in the business and the rising trend in our financial results, this programme will provide further support for our share price.
BinckBank is focusing on growing the business by maximising client satisfaction, which will expand
both the client base and the transaction volume, thus creating shareholder value for investors in BinckBank. In 2008, for example, we introduced a competitive online savings account, launched our services in France, introduced business process outsourcing (BPO) services, launched Alex Bottomline, developed online Alex Academy training courses to help clients manage risk more effectively and made further improvements to our products and services in response to suggestions from clients. Alex and Binck again received recognition for their efforts in 2008, when they were named best online broker in the Netherlands in several third-party surveys.
BinckBank’s adjusted net profit for 2008 was € 64.1 million (€ 0.83 per share). Although the market conditions in 2008 were significantly worse than the year before, the number of account holders increased 37%, from 214,323 at the end of 2007 to 293,236 at the end of 2008. Transaction volume also increased, up 8% to over 7.1 million. There were few financial institutions which were able to match that rate of growth in the client base. BinckBank’s good financial result is partly the product of sustained growth, synergy gains accruing from integration with Alex Beleggersbank and constant focus on cost management.
In conclusion, I would like to address a personal word of thanks to you. At the shareholders’ meeting on 28 April 2009, I shall stand down as chairman, hand over to my intended successor Koen Beentjes and leave BinckBank. Kalo Bagijn, Hanneke Nieuwenhuis, Pim Bertens and I founded BinckBank in 2000 and it has been an intense pleasure working for the growth of the business ever since. It is now time for the organisation to welcome a new generation of Management Board members who can take it forward to the next phase of international expansion. In 2006, Pieter Aartsen assumed responsibility for the new Professional Services business unit. Benefiting from his specific experience in this field, the business unit has grown rapidly, BPO services have been added and new opportunities are being opened up by our best-execution service initiative. At the end of 2007, Evert Kooistra was appointed CFO, a new post which had become increasingly necessary in an environment which is growing increasingly
9 Annual R epor t 200 8
complex. Nick Bortot, who has been with BinckBank since the beginning and was responsible inter alia for our successful expansion into Belgium, succeeded Kalo Bagijn in May 2008, bringing new plans and an individual management style that suits the size of the Retail business unit. If the shareholders approve, Koen Beentjes will take over from me as Chairman of the Management Board on 28 April 2009. Koen Beentjes is a highly skilled banker who comes to us from ING Direct and has relevant international experience. BinckBank also has experienced, expert and motivated managers in the business units and staff departments. It has been a pleasure to work with this professional team which possess the right mix of skill and enthusiasm to lead BinckBank through a future full of new and significant
challenges. In that knowledge, I leave BinckBank with some sadness, but with peace of mind.
Thierry Schaap Chairman of the Management Board
10 Annual R epor t 200 8
Jan
Feb
Mar
May
Jul
Sep
Oct
Dec
10 JanuaryBinckBank announces its intention to appoint Evert Kooistra to the Management Board as CFO
28 January
Start of BPO services for Friesland Bank
February
Binck named ‘Best broker overall’ by IEX Netprofiler, with Alex in second place
3 March
BinckBank announces record profit for 2007
6 May
Nick Bortot (Retail) and Evert Kooistra (CFO) are appointed to the Management Board by the shareholders and co-founder Kalo Bagijn leaves the company
6 May
As well as an adjusted net profit of € 17.6 million, BinckBank announces in its first-quarter report that the synergy gains and operational benefits of the acquisition of Alex Beleggers-bank would be greater than expected and would be realised ahead of schedule
30 May
The last of the trading activities are hived off in a management buy-out and the Trading business unit ceases to exist
24 July
BinckBank and Optiver announce a joint venture to set up one of the first best-execution service in the Netherlands
September
Binck is awarded the Gouden Stier (Golden Bull) for the best internet broker in 2008 and Alex receives the same award as the best investment institution in 2008
9 September
BinckBank launches its services in France
10 September
Alex starts Alex Academy Online
29 September
BinckBank in Belgium opens 20,000th account
30 September
BinckBank opens share buy-back programme
October
Binck and Alex named the best brokers by Beursbulletin
10 October
Because of a sharp fall of share prices many investors start investing; BinckBank announces a sharp rise in the number of new investor accounts
15 October
1,000th investor account opened in France
24 October
BinckBank posts good third-quarter figures, with an adjusted net profit of € 46.1 million, and announces that as many investor accounts had been opened in the first three weeks of October as in the whole of the third quarter of 2008
December
Binck comes top in an online investment survey by Consumentenbond, the Dutch consumer association 0 1 2 3 4 5
Important events in 2008
Jul
25 JulyBinckBank announces the appointment of Koen Beentjes as COO and successor to Thierry Schaap
25 July
BinckBank announces adjusted net profit of € 31.4 million in its first-half report, despite adverse stock market climate
11 Annual R epor t 200 8
Listing
BinckBank ordinary shares are traded continuously on NYSE Euronext Amsterdam and have been included since 1 March 2006 in the Amsterdam Midkap Index (AMX), with a weighting as at 31 December 2008 of 2.83% of the index. The ISIN code is NL0000335578 (Reuters: BINCK AS, Bloomberg: BINCK NA). The shares were monitored in 2008 by
analysts at RBS, ING, Fortis, Kempen & Co, Petercam, Rabo Securities, SNS and Theodoor Gilissen Bankiers. The total number of shares in issue as at 31 December 2008 was 76,040,066, with a market capitalisation of € 420 million (2007: € 779 million). Options on BinckBank N.V. ordinary shares have been traded since 21 March 2006.
BinckBank N.V. shares
Figures per share 2008 2007 2006
Profit per share on continuing operations € 0.43 € 0.93 € 0.76
Profit per share on discontinued operations € 0.00 € 0.05 € 0.03
Total profit per share € 0.43 € 0.98 € 0.79
Adjusted profit per share € 0.83
Dividend per share* € 0.41 € 0.21 € 0.30
Net asset value € 6.20 € 6.07 € 2.31
Year-end BinckBank N.V. share price € 5.45 € 10.11 € 11.00
AEX Index 246 516 495
Price/earnings ratio 6.56 10.32 18.56
* Subject to approval by the General Meeting of Shareholders.
Share price and volumes (no.) 2008 2007** 2006**
Opening price € 10.11 € 11.00 € 6.87
Share price – high € 10.23 € 12.53 € 13.13
Share price – low € 4.10 € 9.18 € 6.45
Year-end price € 5.45 € 10.11 € 11.00
Total turnover 90,492,493 86,815,383 94,480,425
Daily turnover - high 2,287,767 3,041,189 2,322,616
Daily turnover - low 24,802 39,670 40,399
Average daily turnover 353,486 332,626 370,511
** Historical prices have been adjusted for the rights issue on 31-12-07.
12 Annual R epor t 200 8
BinckBank share price in 2008
BinckBank’s relative performance is measured against a peer group of international competitors which engage in more or less comparable activities and whose stock market profiles are similar to BinckBank’s. They are Avanza (Sweden), DAB Bank (Germany), Boursorama (France), Comdirect
(Germany), E*trade Financial (United States), Nordnet
Securities (Sweden), Optionsxpress (United States), Schwab (United States), Swissquote (Switzerland) and TD Ameritrade (United States). In fifth place in terms of total shareholder return (TSR), BinckBank’s share price performed better than average in 2008, compared with this group.
4 6 8 10 12 14
Dec-07 Jan-08 Feb-08 March-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08
Shar e price 0 5000 10000 15000 20000 25000 V olume 2 January 2008: highest intraday quote € 10.23 3 March 2008:
FY’07 results: Net profit
€ 32.2 mln (up 33.9%) 25 July 2008:
H1’08 results: Net profit € 15.5 mln (up 12.4%)
6 May 2008:
Q1’08 results: Net profit € 9.7 mln (up 39.6%)
30 September 2008:
New share buyback program announced. Target BIS ratio of 15%
24 October 2008:
Q3’08 results: Net profit € 22.9 mm (up 7.0%)
10 October 2008:
52 week low € 4.10
Volume Share price BinckBank
Peer group index BinckBank
0 20 40 60 80 100 120
Dec-07 Jan-08 Feb-08 March-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08
% change fr
om y
ear
-end
13 Annual R epor t 200 8
Share capital
The share buy-back programme
In a press release on 30 September 2008, BinckBank announced the start of a programme of buying back BinckBank ordinary shares with the aim of reducing the share capital. The target for BinckBank’s capital policy is a solvency ratio (BIS ratio) of between 12% and 20%. As part of its capital policy, it is BinckBank’s dividend policy in principle to distribute 50% of the adjusted net profit as dividend each year. BinckBank’s capital policy also envisages distributing surplus capital to the shareholders, in the form of dividend or by buying back the company’s own shares, if the BIS ratio approaches 20%. With the BIS ratio standing at 16.8% on 30 September 2008, the Management Board decided, with the approval of Stichting Prioriteit Binck, to start a share buy-back programme.
If the solvency ratio (BIS ratio) falls below 15%, the buy-back programme will be temporarily suspended until a sufficient capital buffer has been built up again. Shares are repurchased in accordance with the authority vested in the Management Board by the General Meeting of Shareholders of BinckBank on 6 May 2008. The shareholders will be invited to renew the authority to buy back shares each year.
Implementation of the buy-back
programme
BinckBank has entered into an agreement with Fortis Bank Nederland B.V. (‘Fortis’) under which Fortis will implement the buy-back programme independently, i.e. without BinckBank’s intervention, in accordance with the provisions of EU regulation 2273/2003 (safe harbour rules). The Compliance department is monitoring the conduct of the buy-back programme. In the period from 1 October 2008 to 31 December 2008, BinckBank repurchased 1,024,580 shares at an average price of € 5.39.
Dividend policy
BinckBank’s articles of association prescribe that, if and to the extent that the profit permits, a dividend will first be paid on the priority shares equal to 6% of their nominal value (50 x € 0.10 x 6%). The holder of the priority shares ‘Stichting Prioriteit Binck’ will then determine what part of the remaining profit is to be retained. That sum is not distributed to the
shareholders, but is added to the company’s reserves. The profit remaining after the appropriation to reserves by the priority shareholder is placed at the
Share capital 2008 2007 2006
Authorised share capital 100,000,000 100,000,000 100,000,000
Issued share capital at beginning of year 77,093,508 30,837,403 30,837,403
Shares issued during year - 46,256,105 -
Shares cancelled during year - - -
Issued share capital at year-end 77,093,508 77,093,508 30,837,403
Buy back of shares 1,053,442 129,137 253,145
Priority shares 50 50 50
Average shares in issue for year 76,870,870 32,829,886 30,551,278
14 Annual R epor t 200 8
disposal of the General Meeting of Shareholders, which can choose whether to distribute the
remaining profit, add it to reserves or a combination of the two. With due observance of the provisions of BinckBank N.V.’s articles of association, dividends may be paid in ordinary shares instead of cash.
The company may not place an amount of profit at the disposal of the General Meeting of Shareholders unless it considers that its capital is adequate. If, with due observance of the foregoing, an amount of profit is placed at the disposal of the General Meeting of Shareholders, the priority shareholder will use its best endeavours to ensure a pay-out ratio of 50% of the adjusted net profit.
2008 dividend proposal
The shareholders will be invited to approve a total dividend for the 2008 financial year of € 0.41 per share (50% of the adjusted net profit for 2008), net of 15% dividend tax. An interim dividend of € 0.20 per share in cash having been distributed in August 2008, the proposed final dividend will be € 0.21 per share in cash. The company will not pay a stock dividend. Subject to the approval of the General Meeting of Shareholders on 28 April 2009, the shares will be quoted ex-dividend from 30 April 2009. The final dividend will then be paid on 6 May 2009.
Shareholdings
Six shareholders have disclosed interests of over 5% as at 31 December 2008 pursuant to the Financial Supervision Act. These are Boron Investments N.V. (9.88%), Delta Lloyd Group (9.41%), Vereniging Friesland Bank (9.40%), J. Kluft (6.11%), Navitas B.V. (5.17%) and Aquiline Capital Partners (5.12%). The free float is 54.91%.
As at year-end 2008, the members of BinckBank’s Management Board held the following shares: - Thierry Schaap : 1,022,995 shares
- Nick Bortot : 39,280 shares - Pieter Aartsen : 22,214 shares - Evert Kooistra : 5,768 shares
Shareholders BinckBank
Shares repurchased 25% of average volume past 20 days Shares repurchased relative to permitted maximum
120,000 100,000 80,000 60,000 40,000 20,000
Sep 08 Oct 08 Nov 08 Dec 08 volume
Boron Investments N.V. 9.88%
Delta Lloyd Groep 9.41% Vereniging Friesland Bank 9.40% J. Kluft 6.11% Navitas B.V. 5.17% Aquiline Capital Partners 5.12% Free Float 54.91%
15 Annual R epor t 200 8
Investor Relations
Because it attaches great importance to maintaining a good relationship with investors and analysts, BinckBank endeavours to provide optimum
transparency and consistency in its communications. All published documents containing information on BinckBank’s performance, strategy and activities are posted in downloadable form on the website www. binck.com from the date of publication. The Management Board gives regular presentations for analysts and investors. BinckBank also maintains contact with investors and analysts via one-to-one conversations, presentations and conference calls. The agenda for the Annual General Meeting of Shareholders is posted on the website www.binck. com. Printed copies of the annual report are available from the company on request.
Investor Relations department Tel: +31 20 522 0372
Fax: +31 20 320 4176 e-mail: [email protected]
2009 financial calendar
Tuesday 28 April Annual General Meeting
Tuesday 28 April First-quarter results
Thursday 30 April Ex-dividend
Tuesday 5 May Record date
Wednesday 6 May Dividend payable
Monday 27 July Half-year results
Tuesday 28 July Ex interim dividend
Thursday 30 July Interim dividend
record date
Friday 31 July Interim dividend payable
16 Annual R epor t 200 8
Vision, mission, strategy and objectives
Vision
Internet brokerage: a growing market
The internet enables private investors to make better-informed choices and makes it easier and quicker for them to invest independently. Internet brokerage offers significant advantages over the more traditional channels (by telephone and/or via an account manager). For that reason, online brokerage is a growing market. This growth is expected to be stronger in the European countries south of the Netherlands.
The internet is changing competitive relationships and places the client first
The internet has also changed the relationship between new and existing providers, enabling new players to set up in business at relatively low cost and compete with the established players.
Comparison websites make it easier for consumers to find and compare products and services from new and existing players, which they can discuss in online newsgroups. This helps consumers to make rational choices based on price, quality or a combination of the two, rather than choices based on brand name. In our view, the image of a company is thus no longer defined solely by its marketing campaigns and is increasingly being determined by consumer experience that is published on the internet. Client satisfaction will therefore become an increasingly significant factor in companies’ future growth. Internet brokerage is a high-volume low-price price business (economies of scale)
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 smaller scale. The reason is simple: higher transaction volume (bigger scale) will ultimately help to reduce the cost per transaction, which is essential to long-term competitiveness. A similar trend has already been experienced on the more mature US online brokerage market.
MiFID will change the relationship between stock exchange, liquidity provider and broker
The introduction of MiFID (Markets in Financial Instruments Directive) will change the relationship between stock exchange, liquidity provider and broker in the future. The requirement to execute orders at best price will result in the creation of alternative trading platforms and alliances between those parties.
Private clients want a bank that places the customer first
Now that the financial establishment has seriously betrayed his confidence, the private financial consumer is looking for reliable providers of transparent services who place the client’s interests first ahead of their own.
All private banks are looking to outsource securities administration
Because the processes involved in the execution and administration of securities transactions are often expensive and labour-intensive for banks, we expect them to seek to reduce their costs by increasingly outsourcing this work or using new software. Another cost-raising factor is the increasing regulation, creating an ever more complex environment which requires changes to their systems and processes.
Mission
BinckBank seeks to maximise shareholder value by maximising customer satisfaction.
Strategy
We aim to constantly surprise our clients with the high quality of our product, our intensive client focus and our low prices. This has our highest priority at all times, because we want our clients to be
ambassadors for our services and so help our client base to grow (25% of new clients opening an account with Binck have been introduced via an existing client). By focusing on achieving the highest possible client satisfaction and thus growing our client base, we are creating shareholder value for the investors in BinckBank.
17 Annual R epor t 200 8
Our ambition is to be the largest European full-service online bank for investors. Our strategy is built on five pillars:
I Further growth in our existing services, based on a financially scalable business model (transaction gathering with fully automated processing of transaction streams)
II Expansion of our banking activities within the investment universe (online bank for investors) and BPO activities within the Professional Services division
III International expansion driven by aggressive pricing and comparative advertising, followed later by broadening of the product range IV Constant cost control
V Financially conservative solvency and liquidity policy, aimed at steady profit growth
Objectives
Operational objectives
Our objective for the Retail business unit is to retain our market leadership in online brokerage in the Netherlands and grow into the largest European full-service online bank for private investors. We plan to do this by improving our products and broadening our product range. Our extended product range will include additional services for investors, such as; - online saving
- online advice and asset management - deployment of our distributive power and - an investment fund supermarket
Our ambition for the Professional Services business unit is to attain market leadership in services to asset managers in the Netherlands and Belgium, while growing our services to banks both by insourcing securities order execution, securities administration and securities-related payments (business process outsourcing) and by licensing software. We also intend to develop our presence in the securities transaction execution chain with our new best-execution services initiative.
Our strategy envisages expansion of our services within Europe.
Financial constraints on strategy
We seek to achieve steady growth in earnings per share while pursuing a very conservative capital policy.
The development of our earnings per share depends to some extent on developments on the financial markets. While this is a variable over which we essentially have no influence, we can reduce that dependence by focusing on variables we can affect, by growing our client base, applying rigorous cost control and broadening our product range and BPO services.
In difficult market conditions, we shall choose profitability support over short-term growth. Consequently, the marketing budget will be largely
I - Further growth existing services
Shareholder
Value
V - Conservative financial policy IV - ConstantCost control III - International Expansion
II - Expanding activities within investment
18 Annual R epor t 200 8
variable and will move with the financial results we achieve.
The objective in our capital policy is a solvency ratio of at least 15% and a secure liquidity position. Surplus capital will be returned to shareholders in dividend and via the share buy-back programme.
Targets
Our medium-term (2– 4 years) targets are:
Position as at 31 December 2008 1. 275,000 Dutch investment accounts 202,787 2. 40,000 Belgian investment accounts 22,486
3. 20,000 advice and asset
management accounts 8,136
4. total savings deposits of
€ 1.5 billion € 861 million
5. total client assets of € 10 billion € 6.1 billion 6. break-even level in France
19 Annual R epor t 200 8
Strengths
The quality of BinckBank’s services and products has been rated highly by clients and research bureaus over the years and the Alex and Binck labels are acknowledged as strong brands. BinckBank has more experience in online brokerage than any other institution in the Netherlands and has secured a very strong market position. Benefiting from this experience, it is well equipped to set up local, country-specific services outside the Netherlands, as it has already done in Belgium and France. Thanks to its constant focus on costs and careful planning of its European expansion, BinckBank has a low cost base. At the financial level, BinckBank’s business model is highly scalable, translating extra revenue into rising profits.
Weaknesses
The corollary of the financial scalability of the BinckBank business model is a mainly fixed cost base. When transaction volume is increasing, that is a significant advantage, but there is little room for correction if transaction income falls. The business is still largely dependent on transaction income, which in turn is affected by conditions on the financial markets. BinckBank’s market capitalisation and low share price may make it vulnerable to takeover. The current capital base does not allow sufficient scope for acquisitions.
Opportunities
There is scope for expansion in BinckBank’s current services and the company is well placed to achieve international organic growth in Europe. Because many major banks do not consider online brokerage to be part of their core business, there are good opportunities for these services in Europe. The same applies to BPO services. The best-execution project in conjunction with Optiver offers the prospect of further reductions in the cost per transaction (stock exchange charges).
Threats
A protracted recession triggered by the credit crunch represents the greatest threat to BinckBank today, because sustained negative market sentiment may impair the propensity to invest and distort conditions on the money market. Increased competition and heavier pressure on prices also represent a threat. There may be some risk of failure of the IT integration project and related integration of front-office and back-office processes and failure to grow the business in France. Lastly, at the more general level, there is always an operational management risk in a fast-growing business such as BinckBank.
20 Annual R epor t 200 8
22 Annual R epor t 200 8
Review of 2008
BinckBank’s focus in 2008 was again on providing the best possible services for existing clients on very attractive financial terms and growing our client base. We worked on integrating Alex Beleggersbank, making the organisation more manageable,
introducing our BPO services, launching our services in France and growing our Belgian operation. We also withdrew completely from equities trading for own account last year, which further lowered the company’s risk profile and allowed us to focus more management attention on the growth of the Retail and Professional Services business units. Our subsidiary Syntel again made a very useful
contribution to the result in 2008. At the same time, we were of course working hard to manage the effects of the credit crisis on BinckBank. With the acquisition of Alex Beleggersbank, BinckBank has more than doubled in size. To integrate the two organisations and create a new basis for manageable growth in the future, many changes and improvements have been made at the organisational, financial, operational and human resources level. For example, we invested in 2008 in improved and expanded management information, a new financial administration system, IT fall-back facilities and staff quality, with the aim of building a strong foundation for future growth. As for our progress in broadening and improving our product range, we introduced online saving and BPO services, developed the French operation and launched the online Alex Academy. The web version of the Alex Academy enables us to reach a far wider audience. The MiFID regulations which came into effect at the end of 2007 have opened up the possibility of establishing market places that offer a good and cheap alternative to the existing stock exchanges. BinckBank intends to avail itself of that opportunity in the future and signed an agreement with leading trading house Optiver in July, setting up a joint venture to provide a best-execution service. This service will be introduced in the course of 2009. By utilising available third-party technology and the existing expertise and skills of its joint venture partner, BinckBank will be able to offer even better execution of client orders. As well as complying fully
with the MiFID guidelines, this initiative will
generate substantial cost savings for the company in the future and hence further strengthen its
competitive position.
With the world transfixed by the credit crunch and reports from many financial institutions talking of nothing but losses, BinckBank posted a strong adjusted net profit of € 64.1 million (€ 0.83 per share) in 2008. This reflected the sharp rise in the number of new brokerage accounts, the fact that existing BinckBank clients continued to trade actively in volatile markets and the (cost) synergy gains accruing from the acquisition of Alex Beleggersbank. The € 64.1 million includes integration expenses of € 4.6 million and a positive contribution of € 0.1 million from discontinued operations. By way of comparison, adding together Alex Beleggersbank’s 2007 net profit (€ 34.6 million) and BinckBank’s 2007 net profit (€ 32.2 million including a non-recurring tax benefit of € 4.3 million and a positive
contribution from discontinued operations of € 1.6 million) gives a pro-forma combined net profit for Alex and Binck of € 66.8 million. On that basis, net profit in 2008 was € 2.7 million (4%) lower. After adjustment for these non-recurring effects, the pro-forma net profit was € 68.6 million in 2008 and € 60.9 million in 2007, an increase of € 7.7 million (13%) in 2008.
Because BinckBank specialises exclusively in securities-related services and pursues a very conservative investment policy, no impairments needed to be made on the investment portfolio in 2008. BinckBank’s sound capital position enables it to pursue a dividend policy under which 50% of the adjusted net profit is distributed each year as dividend and to buy back shares. A total of 1,024,580 BinckBank shares were repurchased in 2008. The repurchased shares will be cancelled, which will reduce the issued share capital.
2008 also brought changes in the composition of the company’s Management Board. Co-founder Kalo Bagijn stood down at the shareholders’ meeting on 6 May 2008 and was succeeded by Nick Bortot. Evert Kooistra was appointed to the Management Board as CFO at the same meeting. The present chairman and
23 Annual R epor t 200 8
co-founder Thierry Schaap is to step down at the coming shareholders’ meeting and will be succeeded by the present COO Koen Beentjes, subject to the shareholders’ approval. The Management Board is confident that, in its new composition including incumbent member Pieter Aartsen, it is well equipped to lead BinckBank to further successes in the future. The remuneration of the members of the Management Board in 2008 is explained in the context of the remuneration policy discussed on page 79 et seq of this annual report.
Although, compared with 2007’s avalanche of changes (including Wft, MifId, IFRS and Basel II), 2008 was a relatively quiet year for new legislation and regulations, the Finance & Control department still had to work hard to keep abreast of the changes, most notably in relation to IFRS and Basel II. Since acquiring Alex Beleggersbank, BinckBank finds itself in an increasingly complex environment.
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 and the extent to which BinckBank’s Management Board is in control can be found in the sections entitled ‘Risk management under Basel II and Pillar III disclosure’ on page 32 and ‘In control statement’ on page 52 of the annual report.
In accordance with the company’s dividend policy, the General Meeting of Shareholders on 28 April 2009 will be invited to approve the distribution of a final dividend of € 0.21 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 Wednesday, 6 May 2009. BinckBank N.V. shares will be quoted ex-dividend as from Thursday, 30 April 2009.
BinckBank and the credit crunch
After almost two years of the credit crisis and many bank failures, BinckBank has continued to prosper. BinckBank has never invested in toxic bonds (a generic term for bonds secured on doubtful collateral, such as sub-prime mortgages), does not need to take impairments on the investmentportfolio and does not require refinancing. The credit crisis is having little effect on BinckBank’s
conservatively invested portfolio or its solvency. Unfortunately, the ravages wrought by the credit crunch on the financial markets will affect BinckBank indirectly, through no fault of its own. The crisis, for example, had repercussions for the interest rate structure on the money market and investor sentiment on the stock exchanges. But the credit crunch also created opportunities: 2008 brought explosive growth in the number of BinckBank’s brokerage clients, who saw opportunities in the historically low prices. With governments and regulators working together to find solutions to the current financial problems, we are hopeful that the markets will stabilise again.
Alex Beleggersbank: acquisition,
integration and synergy gains
In the knowledge that the Alex Beleggersbank acquisition would be officially completed at the end of 2007, an integration plan was drawn upimmediately after the acquisition was announced in October 2007, so that the integration work could start as soon as the transaction was finalised. This work included reinvesting Alex Beleggersbank’s client assets, setting up a new organisational structure, retrieving certain activities which Alex Beleggersbank had outsourced to Rabobank, relocating and integrating personnel departments, harmonising the employment terms of staff with Alex Beleggersbank employment contracts (based on the Rabobank collective labour agreement) and those with BinckBank contracts, integrating processes and systems and adjusting/clarifying the positioning of the Alex and Binck labels.
Alex Beleggersbank’s assets under administration of € 1.2 billion were combined with BinckBank’s assets under administration on 31 December 2007 and reinvested in the first six weeks of 2008 in
accordance with the BinckBank investment strategy. The integration plan envisaged rapid integration of the personnel within 100 days, counting from 2 January 2008, in order to provide clarity for all employees regarding their jobs and reporting lines within the new organisation and BinckBank’s strategy. We felt that rapid integration at the human resources level was vitally important to minimise internal disquiet. The new organisational structure
24 Annual R epor t 200 8
and location policy were announced internally on 1 February 2008 and were fully implemented on 1 April and in early May, respectively. The new management cadre consists of a mix of BinckBank and Alex Beleggersbank staff. The main processes that had been outsourced to Rabobank were brought back in-house in the first half of 2008, generating substantial synergy gains. As regards harmonisation of terms of employment, a large number of staff were transferred to standard BinckBank employment contracts in the course of 2008. A new incentive scheme was also introduced for a number of key executives and agreement on compensation was reached at the end of 2008 with staff who, under their contracts of employment, were covered by the Rabobank collective labour agreement until the end of May 2009. Various processes and systems were also integrated in 2008. The most important of these projects was the integration of BinckBank and Alex Beleggersbank financial administration. The BinckBank and Alex Beleggersbank IT platforms will be integrated in 2009 and 2010. A campaign was launched to reposition the Alex and Binck labels in early 2009, profiling Alex as an online bank for investors.
When appointing managers to populate the new organisational structure, we applied the ‘best man for the job’ principle, recognising that Binck had proved in the past to be more effective in marketing and sales, while Alex Beleggersbank had been stronger in process organisation and structuring. By taking these attributes into account in the
integration process, we now have a good mix of BinckBank and Alex Beleggersbank managers in key posts, thus preserving the best of both worlds. This process inevitably resulted in a small number of redundancies among staff whose jobs were duplicated. Other jobs were lost due to the changes in the organisational structure, new corporate strategy and the physical relocation of a large number of staff. This exercise, which involved fewer problems and took less time than expected, has resulted in a robust organisational structure. In parallel with technical integration, there is scope for further process integration. These exercises will generate more cost savings and raise the quality of service to an even higher level.
The synergy gains reflected in the revenues for 2008 relate to the higher returns on the Alex assets under
administration and the lower stock exchange and clearing expenses consistent with the larger combined BinckBank and Alex Beleggersbank transaction volume. Gains in terms of operating cost reductions in 2008 took the form of slower growth in staff costs, lower other administrative expenses due to the termination of contracts with external advisers and consultants, lower marketing costs thanks to more efficient planning and organisation campaigns and a reduction in other expenses reflecting higher quantity discounts on purchases consistent with the increased scale of the new organisation. We expect to achieve IT savings in 2010 and beyond. At the time of the acquisition, synergy and operational gains were expected to total € 18–20 million from 2010 onwards. Because the integration process has been easier and has progressed faster than originally expected, the gains have been higher and have been realised earlier. When an analysis of the synergy and operational gains was published in the half-year report, the expected gains as from 2010 were adjusted upwards, from € 18–20 million to € 22–26 million. We do not intend to publish figures on synergy and operational gains in future because, as the integration of Alex Beleggersbank into BinckBank progresses, they will become increasingly difficult to identify (more arbitrary).
On 31 December 2007, when it acquired Alex Beleggersbank’s activities, BinckBank valued Alex Beleggersbank’s identifiable assets and liabilities at fair value. The goodwill recognised on acquisition, which amounted to € 142.9 million, consists mainly of the value of the growth in the client base and the synergy gains that will accrue when the integration process has been completed. The goodwill is tested annually or more frequently (whenever indicated) for impairment. There were no impairment losses in the 2008 financial year.
The following intangible assets were categorised at that time as income-generating assets arising from the acquisition: 1) the Alex trade name (net carrying amount as at 31/12/08: € 25.1 million) 2) the client base (net carrying amount as at 31/12/08: € 118.5 million) 3) the assets under administration (net carrying amount as at 31/12/08: € 75.7 million) and 4) software developed by Alex in-house (net carrying amount as at 31/12/08: € 1.6 million). All these intangible assets were tested for impairment in 2008, paying particular attention to any indicators of
25 Annual R epor t 200 8
impairment loss, and the net realisable value of the intangible assets was compared with the net carrying amount as at 31 December 2008. These tests showed that no impairment loss had been sustained.
Integration costs of € 4.6 million were recognised in 2008. These consisted mainly of staff costs, partly in connection with redundancies to eliminate
duplication, and fees paid to external consultants who assisted with the integration process. No further specific integration costs are expected in 2009.
Retail
The Retail business unit provides online brokerage services for independent private investors in the Netherlands, Belgium and France. It provides these services in the Netherlands under the Alex and Binck labels and in the other countries under the Binck label only.
The Retail business unit’s primary focus is on achieving the highest possible client satisfaction (amazing our clients with the quality of our services) and the fastest possible growth in our client base. In 2008, the business unit was occupied at the same time with the integration of Alex Beleggersbank, the resultant expansion of the product range and the launch of BinckBank’s services in France.
BinckBank conducts regular surveys to measure its name recognition and perceptions of its services. The annual name-recognition survey which BinckBank commissions from TNS NIPO1
came up with a notable finding in 2008: Alex and BinckBank scored
significantly higher than the major banks for both ‘top of mind’ (‘what is the first name that springs to mind?’) and for spontaneous name recognition (‘which other names do you know?’). BinckBank also conducts a monthly survey of its own client base to measure client satisfaction2
. According to the latest figures, satisfaction among Alex and Binck clients is very high at 8.1. BinckBank also monitors client satisfaction using the net promoter score method, which shows the ratio of promoters (satisfied clients) to detractors (dissatisfied clients). As in previous years, the net promoter score for 2008 was high, from which we may conclude that a large percentage of BinckBank clients would recommend our services to friends and colleagues.
As well as its own surveys, the Alex and Binck labels also strive to achieve the highest possible scores in surveys by independent third parties. Both labels were again named as the best and cheapest online brokers in the Netherlands in several polls in 2008. The result of this year’s survey by Consumentenbond, the Dutch consumer association, was particularly gratifying: Binck came top with a score of 9.2 points, beating ten other banks and brokers.
1 TNS NIPO, January 2009
26 Annual R epor t 200 8
BinckBank witnessed unprecedented growth in the number of account holders in 2008. We started the year with 206,933 accounts, of which 23,560 were savings accounts. As at year-end 2008, BinckBank had 284,709 retail accounts, of which 56,745 were savings accounts, representing growth of 38% and 141%, respectively. Comparing 2008 with previous years, it is clear that the growth in new account holders in absolute numbers is accelerating year on year. This growth has taken place despite significantly lower marketing expenditure for BinckBank and Alex Beleggersbank combined in 2008 (€ 10.6 million) than in 2007 (€ 13.5 million). The accelerating pace of growth is due partly to investors opening accounts on the recommendation of existing clients and partly to the low prices in the second half of the year, which prompted many investors to enter the market. BinckBank was also successful in raising Alex’s rate of converting potential investors into actual account holders to the BinckBank level, through better management of the sales department.
BinckBank’s strategy was revised after the acquisition of Alex Beleggersbank. The acquisition enabled us to expand our range of services via the Alex label,
providing a strong foundation from which to pursue our ambition to be the leading European full-service online bank for investors. Additions to the range included an online savings account and online investment advice and management services. At the same time, we sharpened our focus on providing investment funds, utilising our distributive power and making essentially all services ultimately suitable for international deployment.
As part of our drive to expand the product range, we introduced an online savings account under the Alex label in 2008. Then, however, the savings account was only offered to clients with an investment account. The interest rate was raised in the first quarter of 2008 to make the savings account more attractive and in March 2008 the savings account was launched as a stand-alone product, supported by a national marketing campaign. This proposition generated a large number of new savings account holders. With marketing effort targeted on this specific group (cross-selling), we expect to be able in due course to persuade some of these clients to open an
investment account. Retail 2008 2007* Difference % Customer accounts 284,709 206,933 38% Netherlands 259,358 193,376 34% Brokerage accounts 194,477 162,357 20% Saving accounts 56,745 23,560 141%
Investment advice and management accounts 8,136 7,459 9%
Belgium 22,269 13,557 64% Brokerage accounts 22,269 13,557 64% France 3,082 - 100% Brokerage accounts 3,082 - 100% Transaction volume 6,807,997 6,335,000 7% Netherlands 6,226,719 6,001,572 4% Belgium 560,335 333,428 68% France 20,943 - 100% Funds entrusted (€) 5,001,484,037 6,855,821,000 (27)% Netherlands 4,593,797,617 6,427,559,000 (29)% Brokerage accounts 3,605,442,599 5,630,504,000 (36)% Saving accounts 861,239,541 624,629,000 38%
Investment advice and management accounts 127,115,477 172,426,000 (26)%
Belgium 389,201,440 428,262,000 (9)%
Brokerage accounts 389,201,440 428,262,000 (9)%
France 18,484,980 - 100%
Brokerage accounts 18,484,980 - 100%
*) The comparative figures for 2007 are the pro forma combined results of BinckBank and Alex, i.e. the reported results of Binck and Alex are combined.
27 Annual R epor t 200 8
Competition for savings intensified sharply in the Netherlands in the third quarter. In an effort to capture as much of the savings market as possible, several banks started offering unprecedentedly high interest rates: finding it difficult to borrow money owing to the credit crunch, they went hunting for private savings to fund their credit portfolios. Other banks – assisted by the trend on the interest rate market – were offering high-interest time deposits with very short maturities. In the third and fourth quarters, some savers used part of their capital to invest in the stock market, where prices were by now sharply lower. The combination of increased
competition and withdrawal of savings for investment purposes translated into a decrease in savings deposits in the second half of the year, despite the rapid growth in the number of savings account holders.
Lower priority was given to marketing for our online investment advice and management services in 2008, but we aim to address this aspect again in 2009. Existing account holders using these online services continued to benefit from the high quality of the product. Work also started in 2008 on growing BinckBank’s share of the investment fund market, supported by an advertising campaign. Both the online investment advice and asset management services and the investment fund supermarket will help to broaden the product range.
More use was made in 2008 of BinckBank’s distributive power. BinckBank’s account holders represent an attractive target group for many financial services providers. Because BinckBank clients always have complete freedom of choice of products, via the Alex and Binck investment sites, BinckBank maintains its independence. In 2008, for example, we entered into a cooperative venture with ING for the distribution of Sprinters, a product similar to ABN AMRO’s Turbos and Commerzbank’s Speeders. BinckBank receives recurring income via the capital that clients hold in Sprinters. We intend to make even greater use of our distributive power in future. As a result of this campaign 190,000 free Sprinters transactions were executed in 2009, which is expected to end 1 May 2009. BinckBank expects additional recurring income amounting to € 1–2 million as a result of the Sprinter transactions in addition to regular commission income on transactions.
The historically low prices have attracted a new group of investors, alongside the highly active and buy-and-hold investors. These are financial
consumers who have not invested before, but see the current low prices as a good opportunity to enter the market. Through the Alex Academy, Alex helps these clients make their new investment decisions and teaches them to manage the risks associated with investing. To supplement the traditional courses provided by the Alex Academy, an online version was launched in the second half of 2008 in order to reach a wider public.
The Belgian business is developing well. The number of brokerage accounts in Belgium grew from 13,557 to 22,269 in 2008 and the total number of transactions executed rose from 333,428 in 2007 to 560,335 last year. We intend to wait with the launch of a savings account in Belgium until conditions on the money market stabilise. The first steps in that direction have been taken in the form of action by the Belgian Ministry of Economic Affairs at the end of 2008 to cap the extremely high interest rate. Other products developed with a view to expanding the product range under the Alex label will be added
progressively to the range offered in Belgium, taking full account of system integration and local
competitive relationships.
The launch of the French services was successful. As in the Netherlands and Belgium, we are competing with the established order with aggressive pricing and comparative advertising campaigns, which have attracted considerable interest among French investors. By attuning our services fully to the needs of the French market, we have created a product that is attractive to the French online investor. As at year-end 2008, BinckBank had 3,082 French private investors as account holders.
Via the Alex branch in Spain which BinckBank acquired with Alex Beleggersbank, we are focusing – under the Alex label – on Dutch expatriates living in that country. In the near future, Alex in Spain will be turning its attention to Belgian expatriates.
28 Annual R epor t 200 8
Professional Services
The Professional Services business unit provides services for asset managers and banks.
The business unit provides online services for asset managers, including bank accounts for the latter’s clients (tripartite accounts) who have placed assets with the asset manager. The services also include execution and administrative processing of securities transactions and related cash streams. BinckBank can thus take care of all aspects of securities
administration for asset managers and their tripartite clients. Asset management clients are able to monitor all transactions in their portfolios fully online. This BinckBank proposition is unique in the Netherlands and by far the cheapest on the market. Our competitors are old-established and/or
fashionable names, which are considerably more expensive, offer fewer online facilities and/or are less specialised in these services because they are not a priority. BinckBank is able to set itself apart from the competition in this regard and is attracting a growing number of asset managers, with the result that the number of underlying tripartite clients is also growing steadily. Because the asset manager has to form a bond of trust with BinckBank as well as entering into a commercial agreement, it generally takes some time to finalise the contract and actually to switch the underlying tripartite clients. As at year-end 2008, Professional Services had 75 asset management clients in the Netherlands, representing 8,310 private investors and € 991.4 million in client assets. It is estimated that there are around 100 asset managers in the Netherlands.
BinckBank started offering these services in Belgium at the end of 2007 and invested considerable effort in 2008 in matching them more closely to the needs of the Belgian market. The services for Belgian asset managers were launched, in fully bilingual form, in mid-2008 and 22 asset managers, representing 217 underlying tripartite account holders and client assets of € 73.0 million, have since become clients. BinckBank’s competitive position in Belgium is even stronger than in the Netherlands, with the more marked price difference, our distinctive online services and our specialised focus working in BinckBank’s favour. The competition in Belgium consists of a relatively large number of players which do not regard these services as a core activity. In our
view, the competing services in Belgium are poorly automated and expensive.
Although Belgian asset managers also take time to build trust before committing themselves to a relationship with BinckBank and becoming active, good growth was recorded in the second half of 2008.
Professional Services is continuing to grow strongly despite the adverse market conditions. In these difficult times for the stock market, the lower prices have reduced the value of the client assets placed with many asset managers, and this directly affects the value of the assets they have placed with BinckBank. However, the strong growth in the number of new clients means that the assets still exceed € 1 billion.
Professional Services is aiming for market leadership in the Netherlands in the medium term (2– 4 years) and in Belgium in the longer term (over 4 years). Following the acquisition of Syntel, BinckBank started providing services for banks in 2006. In cooperation with BinckBank, Syntel expanded its business selling securities-related software to banks in 2007 with the addition of business process outsourcing (BPO) services. BinckBank can execute and settle securities orders for the bank and provide a complete range of fully automated securities administration and related banking administration services. These services differ from those provided for asset managers in that they are kept off BinckBank’s balance sheet: BinckBank only administers the cash and securities of customers of the BPO client. BinckBank’s target market is small to medium-sized banks. Dutch banks are showing considerable interest in BinckBank’s BPO services as a means of delegating the technically complex and often expensive securities process. Because signature of the cooperation agreement with the bank is preceded by intensive and often protracted preparations, only a small number of new clients can be added to the platform each year. Building on the successful start of the BPO services to Friesland Bank in early 2008 and given the progress achieved in integrating Alex Beleggersbank in 2008 and the fact that competition in securities BPO services has weakened, BinckBank will endeavour to sign up new BPO clients from the second half of 2009 onwards.
