Report of the Management Board

Recent events and outlook

Despite the adverse market conditions in 2008, BinckBank has continued to grow in terms of client base and number of transactions executed and has remained highly profitable, which strengthens our confidence in the future. Our targets are unchanged, except our target for the Dutch market which we have raised from 200,000 to 275,000 brokerage accounts in the medium term. More information on our objectives is given on page 17 of the annual report, under the heading 'Vision, mission, strategy and objectives'.

BinckBank's future performance will of course depend on developments on the financial markets. Opinions vary widely as to the likely duration of the credit crunch. Positive scenarios envisage the market stabilising in 2009 and staging a cautious recovery thereafter, while negative scenarios predict a protracted depression. In the latter case, the company's commission income would inevitably be affected. BinckBank's management will therefore continue to focus on cost control/reduction, sustained organic growth in all the countries in which BinckBank has a presence and the generation of more commission-independent revenue, such as interest income, asset management and investment advice fees and income from the distribution of third-party products. A good example of the latter is the cooperation agreement that BinckBank entered into with ING in 2008 for the distribution of Sprinters. The launch of an 'investment fund supermarket' is also planned for 2009, which will give our clients a choice not only of securities but also of a wide range of investment funds. As well as commission income, these services will earn fees from the providers whose products we distribute. The aim is to generate income in the future that is less dependent on the stock market climate.

Conditions on the money market at present do not favour sustained strong growth of our savings product under the Alex label. However, when the money market returns to normal, we shall be well placed to benefit, given our low-cost structure, and our target for savings deposits therefore remains unchanged at € 1.5 billion.

The bad start made by the equities markets in 2009 impacted on BinckBank in the form of lower commission income in the first two months of the year. The free Sprinter transactions will temporarily lower the average income per transaction. Uncertainty as to the duration of the unstable market conditions make it virtually impossible to give a reliable revenue forecast, but BinckBank expects continued growth in its client base in 2009 with only a very limited increase in costs.

At the end of January, part of the öffentliche Pfandbriefe in the investment portfolio were sold at net book profit of over € 3 million. The risk premiums for all asset classes have risen sharply in the past period, which means that returns on bank bonds, for example, are relatively very high at present. BinckBank takes the view that the current return on and risk profile of loans of this kind are sufficiently attractive and are consistent with BinckBank's conservative investment policy. Part of the current investments maturing in 2009 will therefore be invested in this paper, up to a maximum of 20% of the investment portfolio. The investment policy regarding the remaining 80% will be unchanged.

The Retail business unit's focus in 2009 will be on further growth in the current activities, broadening the product range (including repositioning Alex as an online bank for investors) and raising the pace of international expansion through development of the services in France.

The objective for Professional Services is to grow to market leadership in the Netherlands and Belgium in services for asset managers. Professional Services will continue to develop as a recognised leader in the delivery of BPO services, to which end it will seek to conclude new BPO contracts in 2009 and 2010. Syntel is expected to make a positive contribution to the result again in 2009 and to continue on the growth path on which it embarked in 2008. We have high hopes of the best-execution service project we are working on in conjunction with Optiver.

We expect the best-execution service platform to come on stream in mid-2009. Although the platform will require initial investment and will incur start-up losses, it is expected to result in lower costs per transaction.  We expect the best-execution service initiative to be cost neutral in 2009.

After the end of 2008, the company has sold its 35% interest in Florint B.V. (the former bond trading activities).

A start will be made in 2009 on integrating the BinckBank and Alex Beleggersbank platforms by creating a hybrid system which retains the best applications of both systems. Alex and Binck investing clients will not be inconvenienced by this exercise. Although the system integration project and related establishment of new data centres will require a substantial investment in 2009, it will yield significant cost savings in 2010 and beyond.

To safeguard the company's controllable growth while continuing to guarantee the best services to our clients, investments will be made in the company's infrastructure in 2009, including the integration of the BinckBank and Alex Beleggersbank platforms as described above. The company expects to make investments in property, plant and equipment of € 10-12 million in 2009, which can be funded from BinckBank's own resources.

Although the current market conditions will slow the process, BinckBank expects consolidation among online brokers on the European market similar to that experienced on the US market. BinckBank will therefore continue to pursue organic growth, but will investigate any opportunities for acquisitions in Europe which may arise. If BinckBank needs additional equity to finance an acquisition, we shall consult with our shareholders and seek their approval.

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