Report of the Management Board

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.

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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.

Our subsidiary Syntel had another successful year in 2008, with revenues and profit higher than in 2007. Syntel focused in 2008 on further improvements to the BPO software, to enable more new clients to be helped in the years ahead. Syntel also worked in 2008 on upgrading its Europort+ back-office product. Much time was spent on the investor giro module, which enables trading in investment funds, including trading periodically in fractional units for clients. The investor giro module was implemented at two banks in 2008. Syntel also worked on improving performance and extending functionality. By parallelising processes and using a modern infrastructure, EuroPort+ can now process over 100,000 transactions an hour. In product development, Syntel invested time and effort in EuroFront, an internet application interfacing with the back-office software. New modules were developed, including online ordering and payment modules, and real-time and streaming market data were integrated. A start was also made in 2008 on the development of a user-friendly investor giro interface.

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