Annual report 2010 - at BinckBank

binck.com

Annual report 2010 - at BinckBank

Annual report 2010


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.


Contents

BinckBank overview 2

Profile BinckBank 2

Key figures 3

Key events in 2010 5

Chairman’s message 6

Vision, mission, strategy and objectives 8

Information for shareholders 15

Financial calendar 2011 19

€ 75.2 million

Adjusten net profit in 2010

433,538

Number of accounts in 2010

8.9 million

Number of transactions in 2010

Report of the executive board 22

Review of 2010 22

Review of the financial results 23

Retail business unit 26

Professional Services business unit 29

Subsidiaries, joint ventures and participations 31

Outlook 2011 33

Human resources 34

Corporate social responsibility 36

Executive board members 38

Risk & capital management 42

Key developments in 2010 42

Risk appetite 43

Risks for BinckBank 44

Risk management accountability 50

In control statement 51

Corporate governance 54

Introduction 54

The Code 54

The Banking Code 57

Article 10 of the Takeover Directive 58

Conclusion 58

1 Annual Report 2010

Report of the supervisory board 62

Statement by the chairman of the supervisory board 62

Composition of the executive and supervisory board 63

Meetings of the supervisory board in 2010 63

Meetings of the audit committee in 2010 64

Meetings of the risk and product

development committee in 2010 64

Remuneration of the executive board 65

Broad outlines of the remuneration report 65

Remuneration policy in 2010 65

Loans granted to members of the executive board 66

Consultation with the Works Council 68

Financial statements and dividend 68

Supervisory board members 72

Financial statements 76


BinckBank overview

2

BinckBank overview

Profile BinckBank

Founded in 2000, BinckBank N.V. (BinckBank) is an

independent online bank for investors. BinckBank is

ranked in the top 5 in Europe, and is listed on the NYSE

Euronext stock exchange in Amsterdam. Since 1 March

2006 the bank has been listed on the Amsterdam Midkap

Index (AMX). Its market capitalisation at the end of 2010

amounted to € 864 million, and the average daily

turnover in BinckBank shares in 2010 was 335,700 shares

(2009: 271,522).

BinckBank has the ambition of becoming the largest

online bank for investors in Europe. As the market leader

in the Netherlands, with a number 2 ranking in Belgium

and a 10% market share in the French online brokerage

market, BinckBank is well positioned to fulfil this

ambition. At the end of 2010 BinckBank had 433,538

accounts, of which 358,469 in the Netherlands, 41,584 in

Belgium and 33,485 in France. The total income from

operational activities amounted to € 185 million and the

adjusted net profit in 2010 was € 75 million. BinckBank

aims to distribute 50% of the adjusted net profit as

dividend to its shareholders each year.

BinckBank has two business units; Retail and Professional

Services. Retail provides services for private investors

under the labels Binck and Alex. Under the Alex label

BinckBank serves the Dutch private investor who wants

to get more out of his assets. In addition to an extensive

brokerage website, Alex offers online saving, asset

management, a mutual funds supermarket and

investment training. Under the Binck label we offer

services to the active independent private investor in the

Netherlands, Belgium and France.

We offer the private investor order execution at highly

competitive fees in combination with a number of

facilities such as a professional brokerage website

including real-time streaming of prices and news, order

book depth, research, advice and (technical) analysis. In

the Netherlands, Alex and Binck have repeatedly been

named ‘Best Online Broker’ by various independent

research agencies over the past years. In Belgium we

were elected ‘Best Educational Investment Institute’ and

in 2010 Binck was for the first time awarded the title

‘Best Broker’ by French investors.

In addition to private investors BinckBank also serves

more than a hundred professional parties. The

Professional Services business unit offers services to

investment managers, banks, insurers and pension

institutions in the Netherlands and Belgium, handling

the entire securities transaction and its associated

banking administration process on their behalf with the

use of our online product. Our Professional Services

customers can opt for a service provision agreement

with BinckBank, or they can make independent use of

the software supplied by our daughter company Syntel,

which allows customers to manage their own operations.

BinckBank has branches in the Netherlands, Belgium,

France and Spain, and had 565 FTEs in employment as of

31 December 2010. BinckBank also holds interests in

Syntel (software provider), ThinkCapital (producer of

trackers), BeFrank (pension accrual) and TOM (multilateral

trading platform).


Key figures

x € 1,000 FY10 FY09 Δ FY09

Customer figures

Customer accounts 433,538 373,574 16%

Retail 406,078 348,188 17%

Professional Services 27,460 25,386 8%

Number of transactions 8,854,215 9,617,181 -8%

Retail 8,268,167 9,144,980 -10%

Professional Services 586,048 472,201 24%

Assets under administration 14,124,667 10,942,742 29%

Retail 9,739,332 8,031,695 21%

Professional Services 4,385,335 2,911,047 51%

Income statement

Net interest income 43,587 43,825 -1%

Net fee and commission income 126,970 129,240 -2%

Other income 13,599 9,661 41%

Result from financial instruments 620 4,353 -86%

Impairment of financial assets 70 (857) -108%

Total income from operating activities 184,846 186,222 -1%

Employee expenses 45,480 43,185 5%

Depreciation and amortisation 34,798 35,939 -3%

Other operating expenses 44,223 43,388 2%

Total operating expenses 124,501 122,512 2%

Result from operating activities 60,345 63,710 -5%

Share in results of associates and joint ventures (1,386) (1,466) -5%

Other non-operating income 23 - 100%

Result before tax 58,982 62,244 -5%

Tax (14,837) (15,083) -2%

Net result 44,145 47,161 -6%

Result attributable to non-controlling interests 95 - 100%

Net result attributable to shareholders BinckBank 44,240 47,161 -6%

IFRS amortisation 28,196 28,196

Fiscal goodwill amortisation 2,792 2,792

Adjusted net earnings 75,228 78,149 -4%

Average number of shares outstanding during the year 74,080,265 74,897,706

Adjusted earnings per share 1.02 1.04 -2%

3 Annual Report 2010

Balance sheet & capital adequacy

Balance sheet total 3,216,768 2,930,010 10%

Equity 468,913 480,359 -2%

Total available capital 131,257 95,569 37%

BIS ratio 23.9% 18.4%

Solvency ratio 15.7% 13.0%

Cost / income ratio

Cost / income ratio 67% 66%

Cost / income ratio excluding IFRS amortisation 52% 51%


4

Adjusted net profit

Interest & commission income

80

78

75

200

in € million

70

60

64

in € million

150

100

40.6

43.8 43.5

50

50

101.1

129.2 126.9

40

2008 2009 2010

0

2008 2009 2010

Commision income

Interest income

Number of transactions & accounts

Assets under administration

10

9.6

8.9

500

16

8

7.2 434

400

12

4.4

in million

6

4

2

273

374

300

200

100

in thousands

in € billion

8

4

1.1

5.0

2.9

8.0

9.7

0

2008 2009 2010

0

0

2008 2009 2010

BinckBank overview

Number of transactions

Solvency

Number of brokerage accounts

Retail

Professional Services

Information per BinckBank share

28%

23.9%

€ 1.1

€ 1.04

€ 1.02

24%

20%

17.2%

18.4%

€ 0.9

€ 0.83

16%

€ 0.7

12%

8%

13.6%

13.0%

15.7%

€ 0.5

€ 0.41

€ 0.52

€ 0.51*

4%

2008 2009 2010

€ 0.3

2008 2009 2010

Solvency ratio

BIS ratio

Adjusted earnings per share

Dividend per share

* 2010 figures are subject to approval of the General Meeting of Shareholders


Key events 2010

February

12 February

SNS Bank and

BinckBank sign

letter of intent for

BPO outsourcing

October

17 October

Binck launches Fund

Investments in

Belgium

March

September

April

May

July

22 March

Binck named ‘Best

Broker’ in the

Netherlands by IEX

Netprofiler

6 April

Binck lowers rates in the Netherlands

11 May

Binck launches ProTrader: the trading

platform for the highly active investor

21 May

Petercam selects BinckBank as

custodian bank

6 July

BinckBank and Delta

Lloyd join forces

with BeFrank on the

pension market

9 July

BinckBank cancels 1,568,928 shares

13 July

ABN AMRO Clearing Bank N.V. new

shareholder for TOM

30 September

SNS Bank and BinckBank sign BPO

contract

30 September

Binck introduces

SRD in France

November

December

18 October

iPhone app launched for Alex

4 November

Alex Academy and

Alex Asset

Management granted

Golden Bull award

10 November

BinckBank acquires 60%

interest in ThinkCapital

15 November

Introduction Squawkbox for Binck

ProTrader

18 November

Binck named best broker in France by

the readers of MoneyWeek

26 November

ThinkCapital wins the

VEB Silver Investment

Fund Award 2010 for

the AMX tracker

26 November

Binck named ‘Best Broker’ in the

Netherlands by Beursbulletin

30 November

Launching of Fund Investments in the

Netherlands

1 December

Launching of iPhone app for Binck

ProTrader

14 December

Binck named ‘Best Broker in the

Netherlands’ by Brokertarieven

5 Annual Report 2010


BinckBank overview

6

Chairman’s message

Dear readers,

With an adjusted net profit of € 75 million, BinckBank can once again look back on a good year. Despite

transaction volume falling by 8% due to decreased market sentiments, the adjusted net profit only fell by four

percent in comparison to record year 2009. The fall in commission income from transactions was partly offset

by an increase in other fee and commission income, including fees from asset management operations and BPOservices.

This is a next step in the implementation of our strategy to develop supplementary activities in addition

to brokerage, as a result of which our results will become increasingly less dependent on market volatility and

investor sentiment. The adjusted net profit for 2010 amounted to € 1.02 per share. In accordance with its dividend

policy, BinckBank will ask its shareholders to approve a 50% distribution of the adjusted net profit in dividend,

which amounts to a final dividend of € 0.27 per share and a total dividend of € 0.51 per share.

In the course of 2010 BinckBank has strengthened its positions in the countries in which it operates. The number

of Retail accounts in the Netherlands grew by 12% to 331,686. In Belgium 8,150 new Retail accounts were opened;

a 25% increase. Binck in France was also successful, achieving an 86% growth (11,328 new brokerage accounts)

and expanding its scope of services and products on offer. Following the introduction of the highly successful

‘Service de Règlement Différé’ (SRD) product, the number of transactions in the fourth quarter of 2010 grew

substantially, as a result of which our French online brokerage market share rose to more than 10%. Moreover,

the readers of MoneyWeek investment magazine named Binck ‘Best Broker’ in France. In the Netherlands many

innovations were introduced, among which Binck ProTrader, Mutual funds supermarket, the iPhone app and the

Squawkbox. The Squawkbox provides an online platform for our customers in which they can monitor and

discuss market events and trading strategies with professional moderators. Alex Asset Management once again

proved highly successful in 2010; achieving good results for our clients as well as an increase in assets under

management of 82% to € 610 millions.

Various new business development initiatives were taken in the course of the year, such as the joint venture with

Delta Lloyd. BeFrank is a new pension administrator who, much like BinckBank, provides high-quality, transparent

services at a low cost. With the acquisition of ThinkCapital in November 2010, BinckBank has secured a means of

responding to the fast growing Exchange Traded Funds (ETFs or trackers) market. ThinkCapital and BinckBank

have joined forces for the purpose of permanently charting trackers in the Netherlands. BinckBank disposes of a

distribution network and ThinkCapital will be responsible for product development.

Our Professional Services business unit showed good results for 2010. Total assets under administration during

the past year increased by 51% to € 4.4 billion, while the result from operating activities increased by 53% to

€ 6.8 million. Independent investment managers in 2010 transferred a larger portion of the assets managed by

them to BinckBank, while new investment managers also chose to transfer their brokerage-related transactions

to BinckBank. In September, SNS Bank and BinckBank ratified their agreement to outsource both execution and

administration of securities orders for SNS Bank customers to BinckBank.


We plan to continue with the introduction of new products and innovation of our services in 2010. January

already saw the introduction of Shares, our online community, which is supported by the Dutch Investors’

Association (VEB) and the Flemish Federation of Investment Clubs and Investors (VFB). This platform enables

investors, both customers and non-customers, to interact and share experiences. BinckBank also made its choice

of the next country in which it plans to start. We have decided to expand our activities into Italy as from mid

2012. Italy is one of the key European brokerage markets and in more fields than one can be compared to the

Dutch market. Our research indicates that there is room for a specialised player like BinckBank.

Based on BinckBank’s results and developments, we are optimistic about our prospects and continued expansion.

However, the results will depend strongly on the stock market activities by our customers. The volatility and

direction of the market are important in this respect, so it is not possible for us to provide concrete expectations

regarding our results for 2011. BinckBank will continue to focus on further growth of its customer base, both in

the Netherlands and abroad, in order to achieve its ambition.

I would like to thank all customers and shareholders for their trust in BinckBank and our employees for their

commitment during the past year.

Amsterdam, 10 March 2011

Koen Beentjes

Chairman of the BinckBank executive board

7 Annual Report 2010


BinckBank overview

8

Vision, mission, strategy and objectives

Vision

An increasing number of consumers is turning to Internet search engines, communities and comparison sites to

discuss and compare products and services. Consumer influence is on the rise; the Internet and social media such

as Twitter provide them with the means to voice their opinions and directly influence organisations worldwide.

The image of companies nowadays is increasingly determined by consumers whose experiences are published on

the Internet. As online brokerage is rapidly becoming a commodity product, we believe that tomorrow’s online

broker will only be able to distinguish himself by developing products and services that offer an added value. In

addition, transparency and openness are steadily becoming key consumer factors in the provision of financial

services. Only an approach such as ours will result in the envisaged levels of customer satisfaction.

In addition to private investors, BinckBank also provides services for professional parties. Within this group we

have seen a growing need for fast and cheap order execution and a reliable custodian bank. We also see that

more and more banks and insurers are outsourcing their securities operations. For them the process of executing

securities transactions and subsequent administrative processes is a costly and labour-intensive affair. Moreover,

a growing number of professionals find it difficult and complicated to keep up and comply with the financial

sector’s ever changing legislation and regulations. Illustrative in this context is the fact that in 2010 the financial

sector had to cope with several amendments of the (Dutch) Securities Book-Entry Transfer Act, MiFID II, Consumer

Credit Act, commission transparency regulations and the new Banking Directives.

Mission

Ever since its incorporation, BinckBank’s mission has

been to amaze investors by offering them more than

they expect. One of BinckBank’s objectives is to

continuously exceed customer expectations in the fields

of product, pricing and service. For this reason we aim to

provide private investors in the retail industry with the

same technical investment tools as professional

investors. In the B2B market BinckBank offers partnerships

with professional parties to enable them to profit

from the economies of scale of the BinckBank platform,

to use its excellent infrastructure and to help them at all

times in meeting ever more complicated legislation and

regulations.

By doing so BinckBank aims to achieve high levels of

customer satisfaction and so create maximum customer

and shareholder value. Our ambition is to continuously

amaze our customers by providing high-quality products

and a customer-focused approach at competitive prices.

We strive to have customers whose satisfaction about

our services will make them ambassadors for BinckBank.

Ambition

BinckBank is an online bank for investors and ranks

among the 5 largest online brokers in Europe. It is our

ambition to become Europe´s largest online bank for

investors in terms of number of brokerage accounts,

transaction volume, profit and geographical scope.

Strategic objectives

BinckBank’s strategic targets can be defined as follows:

Retaining reputation & trust

BinckBank relies on the trust of its (private) customers.

Due to its relatively short track record, the absolute

extent of its equity capital, its stock market listing and

the large number of customers and assets under

administration, BinckBank is sensitive to matters

involving confidentiality. That is why it is of vital

importance for us to safeguard our good reputation and

gain the trust of our customers. Ever since being

incorporated, BinckBank has been able to achieve high

levels of customer satisfaction by putting its customers

first.

Where does BinckBank stand at the end of 2010?

Of all the new accounts in 2010, 20% was generated by

our customers through member-gets-member

programmes, while our services achieved a score of 8 (on

a scale from 1 to 10) for customer satisfaction.

Expanding online brokerage (Retail)

The increase in BinckBank’s operating income was largely

driven by the online brokerage activities of our Retail

business unit (transaction income). In order to increase

this income, BinckBank plans to expand its online

brokerage activities as follows:

• Expansion in the Netherlands, Belgium and France by

introducing new products and services, and

• Geographical expansion in Europe


Our preferred model for international expansion is a

combination of a “greenfield operation” (independent

start-up) and accelerated growth through ‘add-on’

acquisitions, all depending on relevant local market

circumstances.

Where does BinckBank stand at the end of 2010?

During the past year BinckBank has realised a substantial

increase in the number of brokerage accounts in the

Netherlands (24,320 accounts, +11%), Belgium (8,150

accounts, +25%) and France (11,328 accounts, +86%).

BinckBank is market leader in the Netherlands.

In Belgium we rank second and in France we have

succeeded in securing a market share of more than 10%

of the online brokerage market within a period of two

years. This positions us in the French top 5.

In 2010, BinckBank made the decision on the fourth

country in which it wants to offer its services. BinckBank

plans to start in Italy by mid-2012, for which the necessary

preparations will be made in 2011.

Expanding outside online brokerage: pension accrual &

asset management activities

BinckBank’s long term target is to expand its services to

include pension accrual and asset management activities,

in which the income model is based on asset management

and administration. This will result in a more stable

income stream of BinckBank as a whole.

Where does BinckBank stand at the end of 2010?

In 2010 Alex Asset Management realised an 82% increase

in assets under management to a total of € 610 million.

Further steps were made during the year in the field of

pension accrual and asset management activities. In July

2010, BinckBank announced its plans to cooperate with

Delta Lloyd in the field of pensions by establishing the

´BeFrank´ joint venture. In November 2010, BinckBank

acquired a 60% interest in ThinkCapital, a Dutch ETFs

producer.

Continued growth with Professional Services

The Professional Services business unit provides the

following services:

• Services for independent investment managers

• Business Processing Outsourcing (BPO) services for

banks, insurance companies and pension institutions

• Independent broker desk

Where does BinckBank stand at the end of 2010?

The Professional Services business unit developed well in

2010. By the end of the year Professional Services served

more than one hundred independent investment

managers, with a combined value of assets under

management amounting to more than € 3.0 billion. Our

BPO services also developed successfully, and BPO

contracts were signed with SNS Bank and BeFrank.

Operational efficiency & safeguarding continuity of

services

BinckBank’s strategic target is to use the existing

infrastructure (back office & IT platform) as efficiently as

possible by processing as many transactions at a low cost

per transaction, thus optimising BinckBank’s profitability.

Exploiting the economies of scale and maintaining large

transaction volumes are essential to our long-term

competitiveness. It is therefore imperative that

BinckBank succeeds in attracting the highest possible

volume to its platform. There are several different ways

in which to enlarge the transaction volume:

• by increasing the number of account holders in

existing markets

• by introducing new, transaction-generating products

and services

• by granting professional customers access to

BinckBank’s infrastructure (BPO services)

• by adding new countries to the existing platform

Where does BinckBank stand at the end of 2010?

Central back office and IT platform

BinckBank has a central back office and IT platform in

Amsterdam that are used for processing all transactions,

including those from Belgium and France. This centralised

organisation for securities transactions and security

position administration is highly efficient and enables us

to process transactions at a low cost price. In 2010,

BinckBank introduced new data centres, which safeguard

the continuity of the services provided. In addition, they

facilitate the continued expansion of the company and

its profitability. During the year various projects aimed

at improving the quality and efficiency of our IT platform

were initiated. The process of developing our European

IT platform will continue throughout 2011, enabling us to

serve even more European markets in the future and

reducing the time to market for new products and

services.

9 Annual Report 2010

BinckBank’s objective is to expand its activities in all

three fields in the Netherlands and Belgium and to

provide these services in France in due course.


10

BinckBank overview

Foreign branches with a low fixed cost structure

BinckBank’s operations abroad are run through branches.

Since BinckBank only engages in front office activities

(sales and customer services) in its foreign branches, the

fixed costs of these offices are kept low. All other

activities are centralised in the Netherlands.

Continued focus on cost control

At BinckBank we believe that operational excellence is

the key to cost control. By continuously introducing

structural improvements for our methods of operation

we are able to keep our costs manageable. BinckBank’s

objective in this context is to maintain a cost/income

ratio excluding IFRS amortisation of approximately 50%.

For 2010 this ratio amounted to 52%.

Expertise

The employees of BinckBank have acquired high levels of

expert knowledge in processing and administering

securities transactions over the years. This knowledge

contributes towards higher levels of efficiency and the

continuity of our services.

BinckBank, the true

specialist in online

brokerage services

Maintaining a conservative financial policy

BinckBank maintains a conservative financial policy and

is prudent when it comes to investing the funds with

which it has been entrusted by customers. BinckBank’s

approach to capital management is aimed at maintaining

solid solvency and liquidity positions while continuously

searching for the right balance between the amount of

capital, return and risk. BinckBank’s objective in this

respect is to maintain a solvency ratio between 12% and

20%.

Attractive returns for shareholders

BinckBank aims to give its shareholders an attractive

Total Shareholder Return (TSR) (share price gain +

dividend).

Where does BinckBank stand at the end of 2010?

The dividend per share for 2010 amounted to € 0.51

(FY09 € 0.52) per share, while the dividend yield

amounted to 4.4% (FY09 4.1%). At the beginning of 2010,

BinckBank shares were valued at € 12.51. Their value at

31 December 2010 amounted to € 11.60.

Complying with changing legislation and regulations

BinckBank operates in regulated and supervised markets

in which all stakeholders need to be served correctly.

BinckBank is under the obligation to permanently comply

with the continuously changing legislation and

regulations of the financial sector (compliance).

Where does BinckBank stand at the end of 2010?

BinckBank has implemented various internal projects

that aim to keep BinckBank up to date and compliant

with these changing legislation and regulations.

Corporate social responsibility

By corporate social responsibility (CSR), BinckBank aims

to maintain and increase confidence in its sustainable

activities. The corner stone of our CSR policy is to put our

customers first in everything we do.

Where does BinckBank stand at the end of 2010?

In 2010, BinckBank drafted its CSR policy, in which the

following spear points were included:

• Sustainable investment

• Educating investors

• Secure Internet brokerage services

Our CSR policy is an integral part of BinckBank’s services

and is taken into consideration when decisions are made

concerning innovation and product development.

Where does BinckBank stand at the end of 2010?

During the whole year BinckBank’s capital position has

been adequate. BinckBank has sufficient Tier I capital at

its disposal for the continued expansion of activities. The

solvency ratio as at 31 December 2010 amounted to

15.7%, well within the target range of 12% - 20%.


Quantitative targets

All medium-term quantitative targets revised upwards

in 2009 remain unchanged. For the next three years, that

is up to 31 December 2013, BinckBank has set the following

targets:

Medium-term goals

Goals for

year-end 2013

Realisation at yearend

2010

Realisation in % at

year-end 2010

Dutch Retail brokerage accounts 330,000 242,210 73%

Belgian Retail brokerage accounts 90,000 40,907 45%

French Retail brokerage accounts 80,000 24,465 31%

Number of BPO agreements 10 4* 40%

Total savings assets € 1.5 billion € 1.5 billion € 718 million 48%

Total administered assets € 15 billion € 15 billion € 14 billion 93%

* of which 2 BPO contracts are not yet operational

Strengths, weaknesses, opportunities and threats

Strengths

Opportunities

• Market leader in the Netherlands and strong positions

in Belgium and France

• High levels of customer satisfaction and fast product

development/innovation

• Strong financial position/solvency and low risk profile

• Efficient central back office & IT platform (economies of

scale)

• Expert knowledge of securities transactions

Weaknesses

• Reliance on a relatively small group of Retail customers

• High fixed cost basis

• Widening the scope of services for Retail investors and

financial consumers in existing markets

• Geographical expansion in Europe

• Trend among professional parties to outsource

transaction processing and securities administration

• MiFID and the best execution requirements via TOM

Threats

• Declining investors’ sentiment

• Saturation of the Dutch market

• Increasing competition/price pressure

• Changing legislation and regulations

• Lack of specialised personnel

11 Annual Report 2010


United Kingdom

Population:

62.3 million

Retail Investors: 2.5 million

% using online banking: 46%

Internet access: 82%

Online brokers:

Barclays, HSBC, E*Trade,

Lloyds

Average price level: Flat fee / average

Most traded products: Spread betting, CFDs ,

FX

Scandinavia

Population:

24.6 million

Retail Investors: 1.8 million

% using online banking: 39%

Internet access: 90%

Online brokers:

Nordea, Nordnet, Saxo,

Avanza

Average price level: Very low

Most traded products: Shares, funds, ETFs and

bonds

Germany

Population:

82.3 million

Retail Investors: 2.6 million

% using online banking: 38%

Internet access: 79%

Online brokers:

DAB, Comdirect, Cortal

Consors, FlatEx

Average price level: Low / average

Most traded products: Shares, bonds, OTC and

warrants

Home Markets NL/BE/FR

Population:

91.8 million

Retail Investors: 3.3 million

% using online banking: 52%

Internet access: 74%

Online brokers:

Keytrade, Fortuneo,

Boursorama, Comdirect

Average price level: Average

Most traded products: Shares, options, warrants

and funds

BinckBank overview

12

?

map

Poland

Population:

38.5 million

Retail Investors: 0.5 million

% using online banking: 6%

Internet access: 58%

Online brokers:

Supermakler, BPH,

mBank, IDMSA

Average price level: Very low

Most traded products: Local funds and shares

Spain

Population:

40.4 million

Retail Investors: 1.6 million

% using online banking: 35%

Internet access: 60%

Online brokers:

Renta4, Selftrade,

Bankinter

Average price level: Low / average

Most traded products: Funds, CFDs, warrants

Italy

Population:

58.1 million

Retail Investors: 2.3 million

% using online banking: 27%

Internet access: 50%

Online brokers:

Fineco, IW Bank, Directa

Average price level: Low / average

Most traded products: Shares and derivates

Switzerland

Population:

7.6 million

Retail Investors: 0.5 million

% using online banking: 16%

Internet access: 80%

Online brokers:

Swissquote, Postfinance

Average price level: High

Most traded products: Shares and funds

Source: CIA World Factbook, comScore data, company data


BinckBank in a European context

The European online brokerage landscape is fractured.

Various (Western) European countries have a number of

players, only a few of which operate on a European scale.

Some European brokers (partly) belong to large banks.

Their strategy as a rule differs from specialised players

such as BinckBank. Whereas BinckBank clearly focuses on

online brokerage and security-related services, the big

players are developing ever more towards being online

banks, focused on expanding their product range to

include, for example, current accounts, credit cards,

mortgage-related products and insurances. These

services are often offered with the support of product

knowledge provided by their parent companies. We

believe that such diversification is introduced at the

expense of their focus on actively investing customers,

which opens up opportunities for specialised players like

BinckBank.

European expansion into Italy

BinckBank expects to expand its European operations

halfway through 2012. Next to Dutch, Belgian, and

French investors BinckBank will offer Italian investors its

services. The Italian market is one of Europe’s largest

brokerage markets, generating on average about 45

million transactions annually. This number is three times

more than in the Netherlands. Italians, much like the

Dutch, trade heavily in derivatives. Italian rates lie

somewhere between the French and Belgian rates. The

two largest Italian players are Fineco (part of Unicredito)

and IW Bank (part of UBI Banca). The trend here is much

the same as in other European countries, in that large

companies tend to go from being online broker to being

online bank, thereby losing their focus on private

investors. Four small online brokers play the field in

addition to the two major players.

Competitors going from

brokerage to online banking

create opportunities for a

specialist like BinckBank

Market parties have already for a long time speculated

on European consolidation within the sector in order to

guarantee long term growth. We have not witnessed any

start of the consolidation process in 2010. Many brokers

belong to (large) banks that often partially finance their

own activities from liquidity surpluses generated by the

brokers in question. Brokers usually claim a limited

amount of the resources held by a bank, and as a rule the

value of a broker is limited in comparison to the total

value of the bank in question. Disposing of a broker is not

considered to be a solution for the possible restructuring

of the parent company’s balance sheets (please refer to

page 12 and 14 for an overview of peers and the European

online brokerage landscape).

13 Annual Report 2010


BinckBank versus other European online brokers

BinckBank IW Bank Fineco Boursorama Keytrade Comdirect Swissquote Avanza Nordnet

Home market Netherlands (#1) Italy Italy France Belgium (#1) Germany (#1) Switzerland Sweden Sweden

Market capitalisation

(as per 31-12-10)

€ 864 million € 147 million Associate € 691 million Associate € 1,017 million € 785 million € 726 million € 395 million

Shareholders

• Delta Lloyd N.V.

(>10%)

• Boron

Investments

(>5%)

• Navitas B.V.

(>5%)

• Delta

Deelnemingenfonds

NV (>5%)

• Oppenheimer

Funds (>5%)

• UBI Banca

(80.5%)

• UniCredit

Group

(100%)

• Société

General

(55.5%)

• La Caixa

(20.9%)

• Crédit

Agricole

(100%)

• Commerzbank

(80.5%)

• M. Burki (14.5%)

• P. Buzzi (14.5%)

• Alken Fund

European

Opportunities

RACC (5.8%)

• J. Pfau (5.6%)

• M. Fontana

(5.5%)

• PEC Global

Equity Fund

(5.8%)

As per 31-12-2008

• Investment

AB Öresund

(21.4%)

• Sven

Hagströmer

(incl. fam.)

(7.3%)

• Lannebo

fonder (6.1%)

• Swedbank

Robur Fonder

AB (6.1%)

• E. Öhman J.

(30.2%)

• Premiefinans

AB (10.3%)

Number of accounts

(2009)

373,574 98,600 878,502 682,518 118,790 1,419,037 142,702 279,000 308,600

Net income (2009) € 186 million € 68 million € 265 million € 240 million € 42 million € 258 million € 66 million € 50 million € 89 million

Operating expenses

(2009)

Profit before taxes

(2009)

€ 123 million € 59 million € 175 million € 132 million € 14 million € 198 million € 38 million € 23 million € 64 million

€ 62 million € 9 million € 74 million € 70 million € 20 million € 76 million € 28 million € 27 million € 24 million

Other countries

• Belgium

• France

• United

Kingdom

• Austria

• Germany

• France

• Luxembourg

• n/a

• United

Kingdom

• Spain

• Germany

• Luxembourg

• Switzerland

• Austria • n/a • n/a • Norway

• Denmark

• Finland

• Germany

• Luxembourg

14

Source: in-house research and company data

BinckBank overview


Information for shareholders

BinckBank shares are traded continuously on NYSE Euronext Amsterdam and since 1 March 2006 have been

included in the Amsterdam Midkap Index (AMX), with a weighting as at 31 December 2010 of 2.32% of the index.

The share’s ISIN code reads NL0000335578 (Reuters: BINCK AS, Bloomberg: BINCK NA). In 2010 the share was

covered by analysts ABN AMRO, ING, KBC, Kempen & Co, Kepler Capital Management, Petercam, Rabo Securities,

RBS, SNS Securities and Theodoor Gilissen. The total number of shares outstanding as at the end of 31 December

2010 amounted to 74,500,000, with a market capitalisation of € 864 million (2009: € 954 million). Options on

BinckBank ordinary shares have been traded since 21 March 2006.

Key figures for BinckBank shares

2010 2009 2008

Earnings per share € 0.60 € 0.63 € 0.43

Adjusted earnings per share € 1.02 € 1.04 € 0.83

Dividend per share* € 0.51 € 0.52 € 0.41

Dividend yield in % (based on year-end closing quote) 4.4% 4.1% 7.5%

Net asset value € 6.30 € 6.31 € 6.20

Year-end share price BinckBank N.V. € 11.60 € 12.54 € 5.45

P/E ratio 11.4 12.1 6.6

AMX index 639 519 312

* 2010 figures are subject to approval of the General Meeting of Shareholders

Share price & volumes

2010 2009 2008

Opening price € 12.51 € 5.54 € 10.11

Highest price € 13.66 € 14.00 € 10.23

Lowest price € 8.91 € 5.35 € 4.10

Closing price € 11.60 € 12.54 € 5.45

15 Annual Report 2010

Share turnover 86,610,504 69,509,627 90,492,493

Turnover – high 4,844,483 1,215,751 2,287,767

Turnover – low 44,598 32,437 24,802

Average daily turnover 335,700 271,522 353,486


Share capital

2010 2009 2008

Authorised ordinary shares 100,000,000 100,000,000 100,000,000

Issued shares previous year-end 76,068,928 77,093,508 77,093,508

Number of shares issued during the year - - -

Number of shares cancelled during the year 1,568,928 1,024,580 -

Issued shares year-end 74,500,000 76,068,928 77,093,508

Number of priority shares 50 50 50

Average number of shares outstanding during the year 74,080,625 74,897,706 76,870,870

Market capitalisation year-end € 864,200,000 € 953,904,357 € 420,159,619

16

BinckBank shares

The BinckBank share price was relatively volatile in 2010.

The crisis on financial markets in May, the price reduction

at the Binck label, the first quarterly results that just

missed analysts’ forecasts and the rumours of a takeover

in October and December all affected the value of

BinckBank shares. BinckBank shares opened at € 12.51 on

1 January 2010 and subsequently peaked at

€ 13.66 following news of the outstanding financial

results in 2009.

Due to the financial crisis in May 2010, BinckBank shares

reached their lowest point at € 8.91. The shares then

recovered much of their value and at the financial year’s

end reached € 11.60. Calculated over the last three years,

the total annual shareholder return (TSR: dividend +

share price gain) averaged 8.5% (CAGR), compared to a

TSR of the AMX at 2,43% (CAGB).

BinckBank overview

BinckBank vs AMX

160%

140%

160%

140%

120%

120%

100%

100%

80%

80%

60%

60%

40%

40%

20%

20%

0%

0%

1-jan-08 31-mrt-08 30-jun-08 30-sep-08 31-dec-08 31-mrt-09 30-jun-09 30-sep-09 31-dec-09 31-mrt-10 30-jun-10 30-sep-10 31-dec-10

AMX Index (normalised)

BINCK


BinckBank share movements and volumes

€ 14.00

2009:

Record year for BinckBank in terms

of number of transactions and profit

end October 2010:

Takeover rumours

60,000

50,000

€ 12.00

share price

€ 10.00

€ 8.00

30 September 2008:

Launch of share

buy-back programme

October 2008:

Bottom of the

credit crisis

26 April 2010:

First-quarter results

lower than expected

by analysts

May 2010:

Financial crisis

40,000

30,000

20,000

Volume

€ 6.00

10,000

€ 4.00

0

Jan-08 Feb-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10

Volume

Koers Binck

Dividend policy

BinckBank’s articles of association stipulate – if and to

the extent that profit so permits – that an amount equal

to six times the nominal value of those shares (50 x € 0.10

x 6%) is to be distributed on priority shares. The Stichting

Prioriteit (the Foundation) then determines which part of

the remaining profit is held in reserve. This amount is not

distributed among the shareholders but added to the

reserves of the company. The profit remaining after the

reservation referred to is put at the disposal of the

general meeting of shareholders. This means that it is up

to the general meeting of shareholders to decide whether

the remaining profit is distributed, held in reserve or a

combination of both. Distributions may be made payable

in a value other than cash, such as ordinary shares,

subject to compliance with the relevant provisions of the

articles of association of BinckBank.

For profits to be put at the disposal of the general

meeting of shareholders, the company must in its own

opinion have obtained an adequate solvency position. If,

in accordance with the above, profit can be put at the

disposal of the general meeting of shareholders, the

Foundation will strive towards a pay-out ratio of 50% of

the adjusted net profit.

Dividend proposal 2010

The shareholders will be proposed to pay out a total

dividend for 2010 in cash to the amount of € 0.51 for each

share (50% of the adjusted net profit in 2010) less 15%

dividend tax. Since an interim dividend of € 0.24 was

paid out in cash for each share in August 2010, the

proposed final dividend amounts to € 0.27 in cash for

each share. No stock dividend will be distributed by the

company. Subject to approval by the shareholders on 26

April 2011, the shares will be listed ex-dividend on 28

April 2011. Payment of the final dividend will be effected

on 4 May 2011.

Shareholdings

Based on the Dutch Financial Supervision Act, five

shareholders as at 31 December 2010 possess shareholdings

with an individual interest exceeding 5%. These

shareholders are:

• Delta Lloyd N.V. (> 10%)

• Boron Investments N.V. (> 5%)

• Navitas B.V. (> 5%)

• Delta Deelnemingenfonds N.V. (> 5%)

• OppenheimerFunds Inc. (>5%)

At the end of 2010 the members of the executive board

of BinckBank held the following equity interests:

• Koen Beentjes: 19,872 shares

• Evert Kooistra: 20,876 shares

• Pieter Aartsen: 37,322 shares

• Nick Bortot: 51,984 shares

Shareholder’s Rights Act

As of 1 July 2010, the (Dutch) Shareholder’s Rights Act has

undergone several amendments. For the shareholders of

BinckBank this means, among other things, that the

shares need to be registered by no later than 28 days

prior to the general meeting of shareholders (AGM) and

that all documentation concerning the AGM’s agenda

must be made available by no later than 42 days prior to

the AGM taking place.

Investor Relations

BinckBank maintains an open information policy for

investors and others with a (financial) interest in the

company. BinckBank wishes to keep them informed

about company policy and corporate developments and

actively seeks a dialogue with its investors.

17 Annual Report 2010


This annual report is one of the means to achieve that.

All other relevant information, such as half-yearly

reports, quarterly reports, risk reports and background

information can be found at www.binck.com.

During the past year the members of the executive board

and investor relations had approximately 160 (2009: 140)

meetings with (potential) investors from Europe and the

United States. Following the publication of the first and

third quarterly results and the annual statements,

BinckBank will provide analysts and shareholders with

an explanation of the results by telephone. Other

interested parties will be able to follow this telephone

conference via our website. The material presented will

be published together with the press release on www.

binck.com. A transcript of the telephone conference will

be made available a few days after it has been held.

Following the publication of the half-year report,

BinckBank will invite analysts to a specially convened

meeting. This meeting can be followed via an audio

webcast on www.binck.com. All material presented at

the meeting as well as the relevant transcripts will be

published on our website. In addition, BinckBank provides

journalists with an opportunity to have the results

explained to them each quarter.

On 30 September 2010, BinckBank organised its very first

Investor Day. Owing to its success, the event will be

repeated on an annual basis. For 2011, the event is

scheduled to take place on 8 September.

Further inquiries about corporate issues and BinckBank

in general can be made at our Investor Relations

department.

Investor Relations

Anneke Hoijtink

Telephone: +31 20 522 0372

Mobile: +31 6 201 98 337

E-mail: ahoijtink@binck.nl

Twitter: twitter.com/BinckBank

BinckBank overview

18


Financial calendar 2011

april 2011

26

28

mAY 2011

2

4

julY 2011

25

26

28

First quarterly report 2011

General meeting of shareholders

Ex dividend

Record date dividend

Payment dividend

Half-year report 2011

Ex interim dividend

Record date interim dividend

Payment interim dividend

Investor Day

Third quarterly report 2011

Capital adequacy and risk

report 2011

august 2011

1

september 2011

8

oCtober 2011

24

31

19 Annual Report 2010


Our best performance remains

the word of mouth advertisement

by our customers

Report of the executive board

20


Gerjan de Lange

Director Marketing & Sales

21 Annual Report 2010


Report of the executive board

Review 2010

During the past few years we have seen a number of changes taking place on the Dutch online brokerage market.

Small, aggressive and price-cutting online brokers have accessed the (hyper) active investor segment of the

market, and online brokerage is turning more and more into a commodity product. It can only be expected that

our pricing will be rendered less effective in the future. For these reasons BinckBank will distinguish itself from

its competitors in other ways, for example by offering services that have important added value.

22

Report of the executive board

The first steps in this context were made by BinckBank in

2010 with the introduction of Binck ProTrader and the

Squawkbox for our highly active customers. Another

good example of the added value offered by BinckBank

to investors is the launching of our online community,

Shares. Customers and non-customers alike are offered a

platform via which they can exchange experiences and

trading strategies with each other that could result in

better investment decisions. Other initiatives taken by

BinckBank in 2010 include the founding of BeFrank, the

acquisition of ThinkCapital, the introduction of SRD in

France and the launching of the Mutual funds

supermarket in both the Netherlands and Belgium. All

the above are part of our strategy to generate more

income from assets and thus reduce our dependence on

income from transactions.

Online brokerage from

BinckBank is a unique

experience

In 2010 BinckBank introduced a number of measures to

further enhance its IT infrastructure. Improvements have

been made to the internal control framework, the

general measures of control for IT have been sharpened

and IT security has been reinforced. Now that the data

centre migration has been completed, the continuity of

our service provision is guaranteed even more.

In addition, more use has been made of the virtualisation

concept in which multiple software enviroments can be

maintained on the same hardware, which leads to

economies of scale. Within the IT division, dedicated

teams have been assembled for each of the business

units. These dedicated teams have been accommodated

with the various departments where day-to-day

management takes place. The primary objective of the

teams is to introduce new products and services.

At the end of the third / beginning of the fourth quarter

of 2010, BinckBank relocated to its new head office in

Amsterdam (Eurocenter). Acquiring these new premises

means that all BinckBank employees in Amsterdam are

now assembled in one building. This hugely contributes

towards internal communications and cooperation.


Review of the financial results

(x € 1,000) FY10 FY09 Δ FY09

Customer figures

Customer accounts 433,538 373,574 16%

Retail 406,078 348,188 17%

Professional Services 27,460 25,386 8%

Number of transactions 8,854,215 9,617,181 -8%

Retail 8,268,167 9,144,980 -10%

Professional Services 586,048 472,201 24%

Assets under administration 14,124,667 10,942,742 29%

Retail 9,739,332 8,031,695 21%

Professional Services 4,385,335 2,911,047 51%

Income statement

Net interest income 43,587 43,825 -1%

Net fee and commission income 126,970 129,240 -2%

Other income 13,599 9,661 41%

Result from financial instruments 620 4,353 -86%

Impairment of financial assets 70 (857) -108%

Total income from operating activities 184,846 186,222 -1%

Employee expenses 45,480 43,185 5%

Depreciation and amortisation 34,798 35,939 -3%

Other operating expenses 44,223 43,388 2%

Total operating expenses 124,501 122,512 2%

Result from operating activities 60,345 63,710 -5%

Share in results of associates and joint ventures (1,386) (1,466) -5%

Other non-operating income 23 - 100%

Result before tax 58,982 62,244 -5%

Tax (14,837) (15,083) -2%

Net result 44,145 47,161 -6%

Result attributable to non-controlling interests 95 - 100%

Net result attributable to shareholders BinckBank 44,240 47,161 -6%

IFRS amortisation 28,196 28,196

Fiscal goodwill amortisation 2,792 2,792

Adjusted net result 75,228 78,149 -4%

Average number of shares outstanding during the year 74,080,265 74,897,706

Adjusted net earnings per share 1.02 1.04 -2%

23 Annual Report 2010

Balance sheet & capital adequacy

Balance sheet total 3,216,768 2,930,010 10%

Equity 468,913 480,359 -2%

Total available capital 131,257 95,569 37%

BIS ratio 23.9% 18.4%

Solvency ratio 15.7% 13.0%

Cost / income ratio

Cost / income ratio 67% 66%

Cost / income ratio excl. IFRS amortisation 52% 51%


Adjusted net profit for 2010

The adjusted net profit for 2010 amounted to

€ 75.2 million. This is a 4% decrease in comparison to

record year 2009 (€ 78.1 million). Despite an increase in

the number of accounts by 59,964, the transaction

volume fell by 8% due to deteriorating investor

sentiments. The adjusted net profit per share amounted

to € 1.02 (FY09 € 1.04).

The adjusted net profit is the net result to be allocated to

BinckBank shareholders adjusted for IFRS depreciation

and amortisation and the tax saving on the difference

between the fiscal and commercial amortisation of the

intangible assets and goodwill acquired as a result of the

acquisition of Alex.

Funds entrusted

in € million

2,500

€ 76

€ 42

2,000

€ 718

€ 874

1 ,500

1 ,000

€ 1 ,464

€ 1 ,173

500

-

FY09 Q4

FY10 Q4

brokerage savings asset management

In 2010 market interest rates

were at historical lows

Collateralised loans

500

476

24

Report of the executive board

Net interest income

Despite the relatively unfavourable conditions in the

money and capital markets, 2010 net interest income of

€ 43.6 million was more or less the same as in 2009

(€ 43.8 million). For a large part of 2010 money and capital

market interest rates were at historical lows, meaning

that BinckBank had to be satisfied with substantially

lower returns on its investments. As a result of the

financial crisis, BinckBank moreover decided in May 2010

to be even more conservative with its investments,

which led to a further decrease in the return on its

investment portfolio. The negative effect of the lower

(re)investment yields was, however, offset by additional

interest income from an increase in funds entrusted, a

decrease in the percentage of the funds entrusted held in

savings accounts, an increase in collateralised lending of

16% to € 476 million and adjustments to the interest paid

on savings. The interest paid on the savings accounts

was brought in line with the lower yield on investments

in the first half of 2010.

in € million

450

400

350

300

250

410

FY09 Q4

FY10 Q4

Net fee and commission income

The net fee and commission income for 2010 amounted

to € 127.0 million, only € 2.2 million less than the net fee

and commission income for 2009 (€ 129.2 million).

Despite the 8% decrease in the number of transactions

from 9.6 million in 2009 to 8.9 million transactions in

2010, the drop in net fee and commission income was

limited to a mere 2%. The lower transaction-generated

income was largely compensated by an increase in other

commission income from, among others, Alex Asset

Management and Professional Services’ business unit

BPO contracts. This demonstrates BinckBank’s gain from

its strategy to generate more income from services other

than transactions in order to improve the stability of its

operating income.


Other income

Other income rose by 41% in 2010, reaching € 13.6 million

(FY09: € 9.7 million). The other income item includes the

income from Syntel. Licence sales increased at Syntel,

and usage of the expertise of the Syntel consultants rose

by both existing and new clients.

Total operating expenses

The operating expenses increased from € 122.5 million in

2009 to € 124.5 million in 2010 (+2%). The employee

expenses increased by € 2.3 million (+5%), mainly due to

the increase in staff by 39 fulltime employees (FTEs) to

565 FTEs. The reason for this increase lies mainly in the

expansion of operations undertaken by daughter

company Syntel (+22 FTEs). Depreciation and amortisation

fell by € 1.1 million (-3%) and the other operating expenses

increased marginally by € 0.8 million (2%). The cost/

income ratio (excluding IFRS amortisation) for 2010

amounted to 52%, which is virtually the same as in 2009

(51%).

Operating expenses

in € million

38

30

23

15

8

0

31.0 31.4

8.5 8.7

11.2 10.7

30.4

8.6

11.2

11.3 12.0 10.6

31.8

9.0

11.2

11.6

FY10 Q1 FY10 Q2 FY10 Q3 FY10 Q4

Employee expenses

Depreciation & amortisation

Other operating expenses

Share in results of associates and joint ventures

The share in results in associates and joint ventures

amounted to € 1.4 million negative (2009: € 1.5 million

negative). This concerns BinckBank’s share of start-up

losses for long-term initiatives TOM and BeFrank.

25 Annual Report 2010


Retail business unit

The Retail business unit focuses on private investors in the Netherlands, Belgium and France as well as Italy as

from mid-2012. In the Netherlands under the Alex and Binck labels. In Belgium and France, where we have been

active since 2006 and 2008 respectively, we work exclusively under the Binck label.

26

Report of the executive board

Retail services

The Retail business unit offers private investors various

different services in the field of online brokerage and

asset accumulation. Our largest customer group consists

of independent investors who use BinckBank to effect

securities transactions. In addition, we offer an online

savings product, asset management and the Mutual

funds supermarket under our Alex label.

Our mission is to amaze our

customers with the quality of

our services

BinckBank’s success lies in providing a combination of a

practical, fast and extensive website, competitive prices

and outstanding service. Moreover, we offer services

with an added value. This enables us to pursue the

highest possible level of customer satisfaction. Our

target is to provide our customers with the best possible

services and amaze them with the quality of our services.

Maintaining this approach will bind our customers to us

and stimulate them to transfer larger parts of their

capital to BinckBank as well as recommend us to other

investors.

Developments in 2010

In order to emphasize our leadership in pricing versus the

large banks, the rates under the Binck label were lowered

in the second quarter of 2010. In addition, we are

developing a European IT platform to be prepared for

further expansion into Europe. The European IT platform

enables us to link-up new countries to our centralised

back office.

A dedicated IT Retail team was assembled in 2010,

charged with the introduction of new products and

services. The team proved its worth and already in 2010

developed a number of new services.

Expansion of services

At the beginning of the year we launched a new trading

tool for highly active investors in the Netherlands: Binck

ProTrader. In addition, improvements were made to our

services in France by adding content, technical and

fundamental analyses, news feeds and the BinckTrader

application.

At the end of the third quarter the highly popular French

product ‘SRD’ was also added to our services in France.

These measures have ensured that our French product

range now rivals that of our competitors, but at more

competitive prices and at a superior service level. In

France, BinckBank was named ‘Best Broker’ by the

readers of MoneyWeek, a French investment magazine.

We consider this to be an acknowledgement for the

improvements introduced in France during the past year.

In the fourth quarter we launched the Mutual funds

supermarket in the Netherlands and Belgium. The

Mutual funds supermarket enables customers to invest

in a wide range of funds of regional and international

fund managers, for which we offer a free and specific

selection of the best-performing funds according to an

objective selection procedure. We also introduced an

iPhone application and the Squawkbox used by

customers under supervision of experienced traders

(acting as moderators) to discuss stock market

developments and exchange experiences and investment

strategies. Our customers have responded

enthusiastically to the concept. At the beginning of 2011,

with the support of VEB and VFB, we launched the online

community, Shares, for both customers and noncustomers.

Shares aims to become the true investment

community in the Netherlands and Belgium.

Relationship management

In order to be of even more service to our customers,

Binck’s Relationship management department was made

operational in June 2010. Relationship management

focuses on serving the 500 most active customers.

Alex Asset Management

Partly due to the financial crisis, we can see private

investors demanding more from their banks and asset

managers. There is clearly a need for reliability,

transparency and low costs. Private customers also wish

to retain more control on their ‘financial lives’. Alex Asset

Management responds to these wishes by comprehensively

and intelligibly offering customers a low-cost

asset management tool. This product was granted the

‘Golden Bull’ award in 2010.


Alex Academy

Moreover, Alex with its Alex Academy was granted the

‘Golden Bull’ award for the best educative investment

institution. In all, more than 25,000 investors participated

in various investment seminars and courses.

European expansion into Italy

In the course of 2010, BinckBank elaborately investigated

several countries to determine which of them would fit

the plans for European expansion. From all the countries

selected, Italy surfaced as the obvious choice. The main

reasons for selecting this country were:

• The Italian market is similar to the Dutch market.

Italian investors, like the Dutch, trade heavily in

derivatives, and particularly in futures.

• Italy, measured by the number of transactions, is one

of the largest online brokerage markets in Europe.

• The required infrastructure connects well to

BinckBank’s European IT platform, as a result of

which a link-up with our centralised back office and

IT infrastructure are possible and economies of scale

can be achieved.

BinckBank’s focus for 2011 in expanding into Italy will be

on obtaining the necessary permits, setting up the

organisation, process and systems design and commercial

organisation preparations. BinckBank expects to be fully

operational in Italy by the middle of 2010.

Retail business unit results

During the year, 57,890 accounts were opened within the

Retail business unit. The total number of accounts at the

end of 2010 amounted to 406,078, of which 331,686 in

the Netherlands, 40,907 in Belgium and 33,485 in France.

The Netherlands

A total number of 35,801 accounts were opened in the

Netherlands, of which 24,320 brokerage accounts, 7,829

savings accounts and 3,652 asset management accounts.

The assets under administration increased by 18% to

€ 8.1 billion.

Alex Asset Management once again had a very successful

year in 2010. The assets under administration increased

by 82% to € 610 million. These results have earned Alex a

place among the medium-sized asset managers in the

Netherlands.

Growth Alex Asset Management

in € million

620

570

520

470

420

370

320

270

220

170

120

70

413

FY 10 Q1

425

FY 10 Q2

476

FY 10 Q3

610

FY 10 Q4

Belgium

The Mutual funds supermarket was introduced in

Belgium in November. In total 8,150 accounts were

opened in Belgium in 2010, due to which the total number

of accounts at the end of the year amounted to 40,907.

The assets under administration increased by 37% to € 1.2

billion. The number of transactions this year turned out

fractionally lower than in 2009, amounting to 966,152.

France

During the past year major progress was booked in

expanding the product and service range for France. In

addition, several marketing campaigns were launched,

which increased the Binck brand awareness and resulting

in an increase in the number of accounts. The number of

accounts in 2010 increased by 71% to 33,485. Our French

customers are highly active investors who, in all, did

1,105,435 transactions during the past year.

Results from operating activities

The result from operating activities decreased by 13% to

€ 47.1 million, mainly caused by a 5% decrease in net fee

and commission income, which in turn was a result of a

10% decrease in the number of transactions. The

transaction-based income, however, was partially

compensated by an increase in income other than from

transactions, due to which the loss in net fee and

commission income amounted to a mere 5%. The net

interest income grew by 3% to € 38.7 million, mainly as a

result of an increase in collateralised loans.

27 Annual Report 2010


x € 1,000 FY10 FY09 Δ FY09

Customer figures

Customer accounts 406,078 348,188 17%

Netherlands 331,686 295,885 12%

Brokerage accounts 242,210 217,890 11%

Savings accounts 74,933 67,104 12%

Asset management accounts 14,543 10,891 34%

Belgium 40,907 32,757 25%

Brokerage accounts 40,907 32,757 25%

France 33,485 19,546 71%

Brokerage accounts 24,465 13,137 86%

Savings accounts 9,020 6,409 41%

Number of transactions 8,268,167 9,144,980 -10%

Netherlands 6,196,580 7,643,551 -19%

Belgium 966,152 973,059 -1%

France 1,105,435 528,370 109%

28

Report of the executive board

Assets under administration 9,739,332 8,031,695 21%

Netherlands 8,132,624 6,894,120 18%

Brokerage accounts 6,853,448 5,774,656 19%

Savings accounts 669,142 783,361 -15%

Asset management accounts 610,034 336,103 82%

Belgium 1,199,657 875,176 37%

Brokerage accounts 1,199,657 875,176 37%

France 407,051 262,399 55%

Brokerage accounts 357,996 171,578 109%

Savings accounts 49,055 90,821 -46%

Income statement*

Net interest income 38,706 37,689 3%

Net fee and commission income 112,437 118,934 -5%

Other income 964 1,124 -14%

Result from financial instruments - -

Impairment of financial assets 70 (207) -134%

Total income from operating activities 152,177 157,540 -3%

Employee expenses 33,416 33,656 -1%

Depreciation and amortisation 33,413 34,639 -4%

Other operating expenses 38,294 35,140 9%

Total operating expenses 105,123 103,435 2%

Result from operations 47,054 54,105 -13%

* Due to the new segmentation as from the second quarter of 2010, the comparative figures for the profit & loss account have been

adjusted.


Professional Services business unit

In 2003, BinckBank began providing services for professional parties besides private investors. BinckBank offers

them numerous solutions in the fields of order execution and securities administration. In all, BinckBank serves

more than a hundred professional customers consisting of independent investment managers, banks, insurance

companies and pension institutions. These services are offered both in the Netherlands and in Belgium.

The services provided by the Professional Services

business unit can be subdivided into three categories:

Services for independent investment managers

Customers of independent investment managers open a

so-called ´tripartite´ account with BinckBank and

authorise the investment manager to make investments

on his or her behalf. The investment manager

subsequently manages the portfolio in accordance with

the mandate and risk profile agreed on with the

customer. The customers of the investment manager at

all times have complete insight into their respective

portfolios.

BPO services for banks, insurance companies and pension

institutions

Banks and insurers can make 100% white label use of

BinckBank’s platform. With this service professional

parties can offer their customers execution-only services,

asset advice and asset management. These services are

offered both off and on balance. BinckBank takes care of

the entire order processing, securities administration

and (securities-related) payment transactions.

Everything is presented in the ‘look & feel’ of the bank/

insurer (website log-in, transcripts etc.). After Friesland

Bank became our first BPO customer in 2008, Robein

Leven became the first insurer on the BinckBank platform

in the summer of 2009. Currently there is a big demand

for BPO securities services. Partly as a consequence of

the financial crisis, financial institutions are searching for

solutions that will reduce their cost prices.

This way BinckBank runs no market risk, and best

execution for the customer is our only interest. In

addition, BinckBank offers a very wide range of nonlisted

investment funds (more than 30,000 funds in

2010) and cooperates with market makers and specialised

brokers in derivatives trading.

Developments in 2010

In the field of service provision for investment managers,

Professional Services welcomed several new customers,

among whom Petercam Nederland. Also, a contract was

signed with Financiële Diensten Amsterdam (FDA) for

the supply of data on a combination of equity research

and macroeconomic analysis. This independent research

combined with the independent broker desk is a unique

service for investment managers.

In 2010, Professional Services signed two BPO contracts.

The contract with SNS Bank was signed in September,

following elaborate contracting procedures. The

implementation of SNS starts with SNS Beursbeleggen

in the second quarter of 2011. In the second half of 2011,

SNS Fundcoach and the other SNS Fondsbeleggen labels

will be transferred. We expect to fully enjoy the revenues

of this contract as from the end of 2011. In addition,

Professional Services has signed a BPO contract with

BeFrank for the provision of services for order execution

and securities administration. Professional Services aims

to secure ten BPO contracts by the end of 2013. BinckBank

has currently signed four BPO contracts, which is in line

with our target of an average of two contracts a year.

29 Annual Report 2010

Independent broker desk

A team of specialists from our broker desk supports our

professional customers in the execution of orders.

Customers can trade in securities worldwide, with

BinckBank making use of global brokers. In addition,

Professional Services has its own bond desk, where a

team of experienced professionals execute bond orders.

Our bond desk is fully independent, and does not take

own positions on the markets.

More information about Professional Services can be

found at www.binckprof.nl and www.binckprof.be.


Professional Services business unit results

x € 1.000 FY10 FY09 Δ FY09

Customer figures

Customer accounts 27,460 25,386 8%

Netherlands 26,783 24,871 8%

Belgium 677 515 31%

Number of transactions 586,048 472,201 24%

Netherlands 555,983 455,912 22%

Belgium 30,065 16,289 85%

Assets under administration 4,385,335 2,911,047 51%

Netherlands 4,141,843 2,749,176 51%

Belgium 243,492 161,871 50%

Income statement

Net interest income 4,844 5,512 -12%

Net fee and commission income 14,557 10,306 41%

Other income 8 19 -58%

Result from financial instruments - -

Impairment of financial assets - -

Total income from operating activities 19,409 15,837 23%

30

Report of the executive board

Employee expenses 8,019 7,058 14%

Depreciation and amortisation 908 1,047 -13%

Other operating expenses 3,689 3,280 12%

Total operating expenses 12,616 11,385 11%

Result from operations 6,793 4,452 53%

* Due to the new segmentation as from the second quarter of 2010, the comparative figures for the profit & loss account have been

adjusted.

Professional Services once again grew significantly in

2010. The number of accounts increased by 8%, the

number of transactions by 24%, the assets under

administration by 51% and the operational result even by

53%. Although new customers transferred large parts of

their assets to BinckBank, it were mainly existing

customers that did so.

The operating expenses increased by 11%, mainly due to

the investment in personnel as a result of expansion of

the Professional Services business unit. The result from

operating activities in 2010 amounted to € 6.8 million.

The income from operating activities increased by 23%

from € 15.8 million in FY09 to € 19.4 million in FY10. The

net fee and commission income increased mainly as a

result of the increased number of transactions and the

new BPO contracts.


Subsidiaries, joint ventures and participations

Syntel B.V. (Syntel) has been a 100% BinckBank subsidiary

since 2006. Syntel develops and markets innovative

software with which financial institutions can process

and administrate every conceivable securities

transaction. One out of every two private securities

transactions in the Netherlands is processed by software

created by Dutch market leader Syntel, whose customers

include third parties next to Alex and Binck. As BinckBank

fully owns Syntel it does not rely on third party software

at the core of its services, namely securities transactions

processing and administration. In addition, Syntel

develops and markets financial data traffic software

components. Syntel software is fast, scalable and can

lead to significant cost reductions and efficiency gains

for users. Syntel software is used by numerous mediumsized

and large financial institutions, the latter of which

ING Bank was the first to buy a license in 2009. Other

users include WestlandUtrecht Bank.

More information about Syntel can be found at

www.syntel.nl.

On 9 November 2010, BinckBank acquired a 60% interest

in ThinkCapital, a Dutch producer of ETFs (trackers). The

remaining share capital is owned by Flow Traders, a

liquidity provider, and ThinkCapital’s management.

Trackers are index-monitoring products used in investing

that enable processing at a low cost. The expectations

are that the European tracker market will grow rapidly

within the coming years. The acquisition of ThinkCapital

is BinckBank’s response to the expanding market of

passive investments. ThinkCapital and BinckBank have

joined forces for the purpose of permanently charting

trackers in the Netherlands. BinckBank has the

distribution network and ThinkCapital will be responsible

for product development. In addition, ThinkCapital

focuses on index investing on the institutional market

for passive asset management. ThinkCapital’s current

offer includes five trackers that are geared to the Dutch

market. ThinkCapital intends to expand this offer to

other markets on which Binck operates.

ThinkCapital’s advantages above other foreign tracker

providers are that its legal structure is governed by Dutch

law and that from a fiscal point of view it has the FBI

(Fiscal Investment Institution) status. This enables

ThinkCapital to efficiently pass dividends received on to

investors, as opposed to foreign providers. On the basis

of the various tax treaties, this fiscal efficiency can be

applied to shares from the various countries the Dutch

state has tax agreements with, enabling investors

investing in those countries to profit as well. ThinkCapital

furthermore distinguishes itself from several competitors

by applying the method of physical replication.

This method involves replicating an index by making

sure that the shares from that index are actually part of

the fund, as opposed to the method of synthetic

replication whereby the exposure on a certain index is

obtained by entering into a swap agreement, a

construction that entails counterparty risk.

31 Annual Report 2010

More information about ThinkCapital can be found at

www.thinkcapital.nl.


On 6 July 2010, BinckBank and Delta Lloyd announced

their plans for a joint venture - BeFrank - in the field of

group pensions. The joint venture is partly made possible

by the approval given to the new Pension Institution

Contributions Act (PPI) of 21 December 2010 by the

(Dutch) Senate. The PPI focuses on the execution of

defined contribution pension schemes (‘defined

contribution’) in the second Pillar, making it a new

pension administrator on the Dutch market in addition

to existing insurers and pension funds. A PPI executes

pension schemes for its participants, but may not bear

any insurance risks itself. It may not, however, bear any

insurance risks. The risks must be separately covered by

an insurer.

Following the introduction of MiFID in November 2007 it

has become possible to establish alternative trading

platforms (MTFs). All (retail) banks have since then had to

implement an order execution policy in which a best

execution clause must be included. Banks are obliged to

extensively check the quality of execution for cost price

and performance. BinckBank has meanwhile

implemented best execution, among other things by

establishing TOM. In addition, TOM will eventually lead

to lower stock exchange costs for BinckBank when it is

used for trading in derivatives.

Major milestones in 2010 for TOM were ABN AMRO

Clearing Bank becoming a 25% shareholder in July

(BinckBank and Optiver both currently hold a 37.5%

share) and being granted the MTF trading license for

shares by the AFM on 8 October 2010.

32

Report of the executive board

The market for defined contribution pension schemes is

growing and its market share compared to defined

benefit schemes is increasing. Herein lie the opportunities

for BeFrank. Especially since pension schemes are unclear,

difficult to understand and expensive for most private

individuals. BeFrank’s response in this respect is similar

to that of BinckBank in that it enhances its products by

providing high-quality, transparent services at a low

cost. By doing so, BeFrank makes pension accrual and the

management expenses involved more transparent and

understandable for both employees and employers.

Major spearheads for 2011 are obtaining the MTF license

for derivatives and the NYSE Euronext Liffe stock

exchange membership. At the beginning of 2011, TOM

brought interlocutory proceedings against NYSE

Euronext Liffe because it refused to grant TOM a

membership. On 22 February 2011, the court ruled that

NYSE Euronext Liffe, subject to certain provisions, was

obliged to immediately grant the membership. TOM

expects to connect several new parties such as banks,

liquidity providers and platforms in 2011.

More information about TOM can be found at

www.tomtrading.eu.

BeFrank uses the strengths of its parent companies Delta

Lloyd and BinckBank by purchasing securities services

from BinckBank and pension administration from Delta

Lloyd. The total of start-up losses during the first three

years is expected to amount to € 6 million, of which

€ 3 million for the account of BinckBank as a 50%

shareholder.

More information about BeFrank can be found at www.

befrank.nl


Outlook 2011

BinckBank once again has a full agenda for 2011. In January we introduced Shares, our online community with

the support of the VEB and VFB, enabling us to bring investors, both customers and non-customers, in contact

with each other and offer them the opportunity to exchange investment experiences. BinckBank will also

actively participate in social media and online financial communities in 2011. In addition, BinckBank intends to

maintain its focus on the introduction and expansion of pension accrual and asset management services.

Measures to that effect have already been taken in 2010 with the introduction of the Mutual funds supermarket

in the Netherlands and Belgium, the founding of BeFrank and the acquisition of ThinkCapital. With these

initiatives, BinckBank aims to further distinguish itself from its competitors and become less dependent on

trading volumes.

BinckBank is meanwhile preparing for the introduction

of a new portfolio-based margin system for its most

active customers. This will enable margins to be better

tuned to the wishes of customers without affecting

BinckBank’s risk profile. The new system will be used

simultaneously with the current strategy-based system.

Our service offering to professional customers will also

be expanded. It will soon be possible to open a fully

automated securities giro account within the banking

environment. We also expect to be offering several

foreign currency accounts to our professional customers

in the near future.

The development of our European IT platform is expected

to be finalised in 2011. The result will be a modular, multifiscal

and multi-lingual platform that will enable

BinckBank to connect more European countries to its

central IT platform and back office. The next country to

be connected to our European IT platform will be Italy.

This is expected to take place halfway through 2012.

Based on BinckBank’s results and developments, we are

optimistic about our prospects and continued growth.

Our results, however, will depend strongly on our

customers’ activities on the market. The volatility and

direction of the market play an important role in this

respect. As a result we cannot provide concrete

expectations for our results in 2011. BinckBank will

continue to focus on the expansion of its customer base,

both domestic and abroad, in order to achieve its

ambitions.

33 Annual Report 2010


Human resources

At BinckBank everything revolves around the customer and amazing the customer. Our employees play a major

role in this respect. There are signs of a tight labour market next year. By professionalising our recruitment and

selection policy during the past year, we have prepared ourselves to deal with that situation. In addition, we

have improved our personnel policy in order to bind employees for long periods of time.

34

Report of the executive board

Employees - key figures

Due to BinckBank’s growth in general and that of Syntel

in particular, the number of FTEs in 2010 increased by 39,

going from 526 at the end of 2009 to 565 at the end of

2010. In 2010, BinckBank regrouped several of its

departments. This has lead to the transfer of a number of

employees from Operations and Other support to IT and

Retail.

BinckBank is an online bank for investors. This implies

that a large portion of our staff consists of IT

professionals. One of the general characteristics of the IT

sector is that it employs more men than women. This is

reflected by the proportion of men versus women at

BinckBank, where 84% of the FTEs are men.

Prepared for a tight labour market

We expect the labour market for certain positions to

tighten during the next few years. One of the measures

taken by BinckBank in this context has been the

introduction in 2010 of an auxiliary system for our

recruitment and selection process. This will enable us to

enter candidates into a database, monitor them, select

them and automatically contact them. In 2010,

approximately 3,200 people applied for a job with

BinckBank.

As of mid-2010 BinckBank HR also twitters new vacancies

to its followers via twitter.com/werkenbijbinck.

In addition, several measures were taken for the purpose

of retaining valuable members of staff and providing inhouse

education and training for new employees, mainly

IT professionals. One of these measures has been to

provide training for beginning IT professionals. BinckBank

offers them a basic training, after the successful

completion of which they are ready to receive further inhouse

training. Twenty-three aspiring IT professionals

were trained in 2010.

BinckBank, an attractive employer

We are a young, successful and dynamic company that

offers a pleasant and informal working environment and

ample room for initiative. BinckBank employs many

young, ambitious people with the desire to advance their

careers. The average age of our staff by the end of 2010

was 34. In order to prevent talented employees from

seeking employment elsewhere when they are ready to

make a next step in their careers, BinckBank gives them

the opportunity to advance internally by offering them

other positions that allow them to develop. An active

programme was developed for this purpose in 2010. In

all, 50 employees moved up to new positions within

BinckBank in 2010. The advantage here for BinckBank is

that we are able to retain employees for long periods of

time, thereby keeping all the knowledge and expertise

within the company. Postgraduates are offered

traineeships by BinckBank. Two trainees are engaged

each year. They complete a personalised two-year

programme.

FTEs by division

Proportion of men/women

200

600

180

160

156

174

500

96

94

140

132

400

120

100

80

60

76

66

113

79 78

65

100

300

200

430

471

40

20

24

28

100

0

Retail

Professional

Services

Operations IT Other

support

Syntel

0

2009 2010

2009 2010

men

women


Management/employee development

BinckBank is rapidly developing, and to enable our mostly

young managers to develop accordingly, a special

management development programme was launched in

2010. Workshops are held every two months for the

entire management during which current subjects

applicable to BinckBank in the field of leadership are

discussed. We also have various courses on offer for our

employees. These courses are purchased centrally, as a

result of which their contents form a near perfect match

for the knowledge that is required from both BinckBank

and its employees. The Alex Academy in 2010 provided

seven different investment courses for our staff.

BinckBank DNA

Over the past years, BinckBank has evolved into a

company with 565 FTEs. When we employ new staff we

make sure that they fit our company profile and that our

culture is preserved. BinckBank employees are

characterised, among other things, by their servicemindedness,

customer-friendliness and integrity. They

are also cost-aware, quality-minded, hard working and

passionate and happy in their work. Much consideration

is given to these aspects by us when we select new

employees and when our current staff is coached and

assessed.

We also regularly organise (sporting) events for the

purpose of enhancing mutual ties between our

employees, for whom it is also possible to buy taxfriendly

bicycles.

Relocation

By purchasing the offices in Barbara Strozzilaan at the

end of 2010, we have created a single location in which

the entire Amsterdam-based staff can be accommodated.

With the subsequent improvements in internal

communication and cooperation, our choice for a

centralised office has already proved its value. Much

consideration was given to interior design in order to

create a working environment in which our employees

feel comfortable and can work efficiently.

Pension

Our current pension contract expires in 2011. As a

shareholder in BeFrank we also examined the possibilities

for enabling our employees to take advantage of the

benefits provided by BeFrank. BeFrank can provide our

employees with low-cost online, real-time insight into

their accrued pension entitlements. Also, external

research performed by the Works Council proved BeFrank

to be the best provider. We have therefore decided to

place our pension contract with BeFrank in 2011.

Employees - vitality

At 3.1%, the absenteeism rate at BinckBank in 2010 has

been relatively low. This percentage is virtually the same

as in 2009. In 2010, management was trained in dealing

with sick employees. While relocating to our new offices,

extra attention was paid to providing a healthy menu in

the canteen and a contract was signed with a nearby

fitness centre for our employees to sport at a reduced

rate.

Collaboration with the Works Council

Throughout the year, the executive board held

constructive talks with BinckBank’s Works Council.

Among the issues discussed were the restructing of our

IT department and the founding of BeFrank. In addition,

several requests for consent were submitted to the

Works Council regarding changes in BinckBank’s terms of

employment, among which the new pension contract

with BeFrank.

35 Annual Report 2010

FTEs by age group

FTEs by country

300

250

200

237

267

600

500

400

2

14

24

3

27

30

4

27

32

150

100

50

163

154

73

66

55

44

300

200

100

502

466

435

0

14 18

< 24 25-34 35-44 45-54 55-64

2009 2010

0

2008 2009 2010

The Netherlands Belgium France Spain


Corporate social responsibility

Our services mainly focus on creating trust with our customers and offering them added value. BinckBank’s

service-mindedness is apparent in every last detail. Our customer service, for example, sees to it that incoming

calls are answered immediately and that e-mails are answered within the hour. Such details have been a part of

our approach ever since we started. In our vision, one of our core considerations is to make sure that our social

impact on people and society is positive and that it reflects the responsible manner in which we operate.

By explicitly formalising our CSR activities, BinckBank

provides an impulse for the execution of our CSR policy.

It also serves to provide everyone involved, both

internally and externally, with additional insight into our

operations, which in turn contributes towards improving

corporate transparency. The spear points of our CSR

policy are:

• Stimulating sustainable investment

• Educating investors

• Internet banking security

As BinckBank is an online bank for investors, providing

Internet security reaches far beyond internal measures

only. A secure customer PC environment is considered by

BinckBank to be a vital link in the security chain. Our

customers are actively informed about and stimulated in

securely accessing the Internet with their computers. In

addition, our service desks intend to provide our

customers with a list of computer security guidelines in

the near future. These directives will be actively

distributed via our website and service desk.

36

Report of the executive board

BinckBank will promote sustainable investment and has

a strong ambition to change current scepticism among

investors concerning sustainable investments. BinckBank

believes that making a breakthrough in this area will be

of significant impact.

BinckBank wishes to see its customers invest as

successfully as possible. That is why BinckBank offers its

customers various educational options in the form of

training and courses on investing. Customers can

participate in (online) seminars and training modules at

various degrees of complexity. More than 25,000

participants took part in the (online) seminars. In Belgium

and France we also offer such webinars. The aim is to

educate our customers in sound investment. The

investment courses were given 8 points (out of 10), with

the investment coaches scoring even slightly better at

8.5 points.

In the second half of 2010, BinckBank moved to its new

premises. The new building has been equipped with

several sustainable facilities: its cooling system uses

water from the Nieuwe Meer and it features several solar

panels. It also lies within easy reach of all forms of

(public) transport.

The new data centres will lead to considerably less

energy consumption. They were made operational in

2010. One of the key criteria in choosing between

suppliers has been sustainability. Equinix, being the

selected supplier, has a global reputation for being

innovative in the field of energy consumption efficiency.

They are currently in the process of obtaining a so-called

LEED certification for all of their branch offices and their

objective is to improve energy efficiency within the data

centre sector. This is expected to lead to a 30% reduction

in our energy consumption.

BinckBank is an online bank for investors. The majority of

its activities take place via the Internet and online. It is of

vital importance that BinckBank provides a secure

environment for the funds, other assets and personal

details of its customers. A number of measures have

been taken to ensure high continuity, stability and

performance levels for the services we provide. These

measures apply to various disciplines such as organisation

and policy, change management, software development

& performance and safeguarding the confidentiality and

integrity of information.


This page was left blank intentionally

37 Annual Report 2010


Executive board members

Pieter Aartsen, executive board member

(1964 – Dutch nationality)

Pieter has been an executive board member of BinckBank

since 2006, and is responsible for the Professional

Services business unit, ThinkCapital, TOM and the

BeFrank joint venture.

Pieter studied economics at VU University Amsterdam.

From 1990 to 2004 he worked at the KAS BANK, where he

held various positions within the Institutional Banking

division. He was appointed Head of Sales and Business

Relations Management for the Benelux countries in

1996. In 2001 Pieter became Head of Sales and Business

Relations Management for the UK, and in 2004 he joined

Deutsche Bank AG in London as Head of European

Securities Clearing and Vice President, with responsibility

for product development and sales of the clearing

product.

Evert-Jan Kooistra, executive board member and CFO

(1968 – Dutch nationality)

Evert-Jan has been an executive board member and CFO

of BinckBank since 2008. He is responsible for Finance &

Control, Operations, Risk Management, Treasury and

Internal Control.

He studied business economics at the Erasmus University

in Rotterdam and is a certified public accountant. Evert-

Jan has over 18 years of experience in the financial field,

including time spent at PWC and Shell. In his last position

he was financial director at the American company

International Game Technology.


Koen Beentjes, chairman of the executive board

(1961 – Dutch nationality)

Koen has been a member and the chairman of the

executive board since 2009. He is responsible for Human

Resources, Information Technology, Legal Affairs,

Compliance, Internal Audit, Investor Relations and Syntel.

Koen is a certified public accountant and had an

international career of over 20 years at the ING Group

and its predecessors. In the early days of his career he

was particularly active in the field of Finance & Control

at subsidiary companies of the ING Group. In 1994 he

took on responsibility for the acquisition of foreign retail

banks by ING. In 1998 he became a member of the

executive board of the Allgemeine Deutsche Direktbank

AG in Frankfurt am Main, Germany. Following his return

to the Netherlands Koen was appointed as general

manager of ING Card at the end of 2002.

Nick Bortot, board member

(1973 – Dutch nationality)

Nick has been an executive board member of BinckBank

since 2008, and is responsible for the Retail business

unit.

Nick studied business administration at Nyenrode

Business University and international affairs at the

University of Amsterdam. Nick has been involved with

BinckBank since its foundation in 2000, and he has held

positions as Head of Client Relations, Marketing & Sales

Director and as Managing Director of the successful

Binck in Belgium.


Risk management & capital management

40

Ed Lanen

Director IT


The main challenge facing our

IT department is to maintain

stability, availability and

performance of the platform

while continuing to innovate

41 Annual Report 2010


Risk & capital management

The European debt crisis lead to much unrest about the economic and budgetary position of the Eurozone and

almost throughout 2010 held stock markets in its grip. In July, 91 banks within the European Union were assessed

on their ability to survive future economic shocks. BinckBank voluntarily submitted to the European stress test

and came out with flying colours. With a Tier I capital of € 131.3 million and a BIS ratio of 23.9%, BinckBank

possesses sufficient financial reserves to withstand financial stress.

42

Risk management & capital management

Key developments in 2010

Capital adequacy

BinckBank’s capital adequacy position was above the

norm throughout the year. Its Tier I capital grew from

€ 95.6 million as at 31 December 2009 to € 131.3 million at

the end of 2010, an increase of 37.7%. The BIS ratio and

solvency ratio increased from 18.4% and 13.0% (as at the

end of 2009) to respectively 23.9% and 15.7% in 2010.

With these ratios BinckBank already complies with the

stringent capital requirements proposed by the Basel

Committee of Banking Supervision (BCBS), the full

implementation of which has been set for 2019.

Liquidity

BinckBank pursues a prudent liquidity risk policy by

virtue of which we are obliged at all times to maintain

sufficient liquidity buffers in cash to meet our customers’

demands for the liquid assets they hold. At the end of

2010 BinckBank had a sound liquidity position

(€ 208.6 million ex deposits and cash reserves DNB; 9.2%

of funds entrusted). There have been no material liquidity

incidents in financial year 2010, nor has there been any

reason for our liquidity policy to be adjusted.

Banking Code

The year 2010 was, among other things, marked by the

implementation of the product approval process in

accordance with the Banking Code. BinckBank’s product

approval process, besides focusing on duty of care,

particularly aims to control operational risks. This implies

that new products and services can only be introduced

following approval by the operational risk committee.

Much consideration in this context is given on the one

hand to the risk and return of the product, and on the

other hand to the risk appetite and BinckBank’s desired

risk profile as well as the extent of compliance with our

duty of care towards customers.

In addition, an independent risk and product

development committee has been installed as part of

the supervisory board, whose task it is to advise the

supervisory board about, among other things,

(substantial) changes in the bank’s risk profile regarding

new products, services and changing legislation. Finally,

the risk appetite for the various risk categories has both

been assessed by BinckBank’s executive board and

discussed with and approved by the supervisory board.

Investment policy

In the second quarter of 2010, following developments

on the European capital markets, BinckBank made the

decision to invest even more prudently. Consequently, its

investments in Spanish (government-guaranteed) bonds

were reduced from € 190 million to € 75 million, while its

investments in Spanish financial institutions worth

€ 52 million were cut back entirely. BinckBank’s

investments in Irish (government-guaranteed) bonds

worth € 160 million were also reduced in their entirety.

Proceeds were reinvested in German Öffentliche

Pfandbriefe with lower yields, due to the restructuring of

the investment portfolio. Öffentliche Pfandbriefe are

covered bonds that are issued by German banks and are

known to be a relatively stable and safe investment.

Operational risk capital requirement

In 2010 the capital requirement for operational risk under

Pillar I was adjusted. Until the end of

the first quarter, BinckBank was required to hold capital

equal to 15% of the operating income of the

previous financial year in conformity with the Basic

Indicator Approach. This strict measure (due to rapid

growth), however after consultation with DNB on the

increased quality of internal management and control

measures, no longer applies. As from 30 June 2010,

BinckBank applies the Basic Indicator Approach using the

average operating income for the previous three financial

years. This change has resulted in a lower capital

requirement for the operational risk under Pillar I.


Alex Asset Management

With Alex Asset Management BinckBank distinguishes

itself from other asset managers by pursuing an active

investment policy and executing automated investments

on the basis of technical analyses.

Alex Asset Management’s expansion reduces our

dependence on transaction-related income but also

alters BinckBank’s risk profile. The risk profile for asset

management services deviates from BinckBank’s regular

execution-only online brokerage activities. Possible risks

have been identified in relation to duty of care aspects,

operational risks and reputation damage. The duty of

care directives for asset management are more strict

than for execution-only services, as a result of which

additional responsibility rests with the asset manager.

BinckBank has covered this responsibility by establishing

the customer’s investment profile by means of a digital

intake prior to providing a service and having it digitally

signed by the customer. Each year BinckBank requires

asset management customers to update their investment

profile. BinckBank then on a daily basis checks whether

the customer’s investment profile is in line with market

developments and whether it corresponds with the

established investment profile and investment targets.

If necessary, automatic transactions are executed to

either expand or limit positions. This process is fully

automated and therefore does not rely on managers.

Operational risk mainly concerns our strong dependence

on the IT system, decision-making models and the

accuracy of data used, such as prices, trade volumes and

price-affecting corporate actions. The control framework

has been adjusted accordingly. Extensive checks and

tests are carried out by BinckBank every day as to

whether the effect of the decision-making models still

complies with the criteria. The reputation of Alex Asset

Management and therefore that of BinckBank might be

jeopardised if customers perceive their assets to be

managed incorrectly.

European stress test

In 2010, BinckBank voluntarily submitted to the European

stress test for banks, developed by the BCBS. The

outcome of the test for BinckBank was positive.

BinckBank’s Tier I ratio in all stress scenarios exceeded

the BIS ratio of 18.4% as at year-end 2009. In the worst

case scenario, including sovereign shock, the BIS ratio

came to 23.4%.

Risk appetite

Risk appetite is the extent to which BinckBank is prepared

to accept risks during regular business operations. Risk

appetite defines the balance between risk and return

and therefore affects the core of BinckBank’s operations.

Commercial interests and yields are weighed out against

the risks involved. Establishing the risk appetite for

BinckBank is not a statistic certainty, but rather a

dynamic process during which continuous adjustments

are made according to changing internal and external

circumstances. Risk culture and ‘tone at the top’ are

determining factors in this respect. It was demonstrated

in 2010 that defining the risk appetite had a positive

impact on company culture and operations; it created a

higher awareness among employees on the risk-return

ratio. The executive board includes external perception

in establishing the risk appetite: how does BinckBank

want to be perceived by key stakeholders such as

customers, shareholders, employees and supervisors?

What are their expectations regarding risk profile, risk

appetite and return? BinckBank’s executive board uses

the various meetings it convenes with stakeholders to

analyse their perceptions and expectations. The risk

appetite is the single most important parameter within

the BinckBank Enterprise Risk Management System and

therefore the starting point for risk management. The

executive board establishes the risk appetite at least

once a year and adjusts it when necessary.

BinckBank has a moderate

risk appetite

BinckBank, much like other financial institutions,

depends on the trust of its private clients. Its relatively

short track record, the absolute extent of its equity

capital, its market listing and the large number of clients

render BinckBank sensitive to ‘trust issues’. Such issues

must at all times be avoided and resulted in BinckBank

adopting a low risk appetite in relation to its reputation,

the adequacy of capital (solvency), its liquidity position

and the integrity and rights/obligations of customers.

The classifications for risk appetite for strategic risks,

business risks, credit risks and operational risks varies

from low to moderate. The risk appetite established for

BinckBank in general can be qualified as moderate.

43 Annual Report 2010


BinckBank risk profile

BinckBank a moderate risk appetite in order to minimise

the negative impact of unexpected occurrences on its

income and Tier I capital. Our risk profile is limited by our

focus on execution-only brokerage activities, dynamic

and systematic asset management and our offer of an

uncomplicated savings product. BinckBank pays a lot of

attention to risk management. Adequate measures of

control and reporting and information systems are all

part of our risk management process. Defining the risk

appetite, identifying risks and implementing or adjusting

relevant measures of control are all continuous processes

within BinckBank. Risk management is also affected by

changing market conditions and the increasing

complexity of legislation and regulations.

Capital per risk type

in € million

30

25

20

15

10

5

0

13.4

17.9

0.2 0.1

27.9

26.0

8.9

8.3

6.3

12.6

1.0 1.0 1.0 1.0

2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010

Credit risk Market risk Operational risk Interest risk Concentration

and margin risk

Required capital Pillar I

Required capital Pillar II

Counterparty risk

Liquidity risk

44

Risk management & capital management

Risks for BinckBank

Strategic & business risks

International economic (cyclical) circumstances and the

effects of the credit crisis continue to affect financial

markets worldwide and therefore BinckBank’s

operational result. Other factors with a possible negative

influence on BinckBank’s income include the loss of

customers, declining trade volumes, lower average order

values and price pressure due to competition. BinckBank

operates in a highly competitive environment in which

competitors, among whom large financial institutions,

enjoy considerable name awareness and ample financial

means. In addition, the number of small, aggressive and

price-fighting online brokers is growing. BinckBank does

everything it can and makes substantial investments to

both maintain its customer portfolio and attract new

investors. BinckBank’s operational result and capital can

also be negatively affected by deficits due to

unfavourable corporate decisions, the incorrect

execution of corporate decisions and insufficient

response to business climate changes in general and

markets relevant to the company in particular. Customer

trust remains a core element in BinckBank’s policies and

everything is done to minimise the risk of reputation

damage.

Required capital per risk type

BinckBank to a certain degree is prepared to accept risks

that are related to the services and banking activities

provided. Several risk types may relate to a specific

service or banking activity. Investments, for example, are

inherently sensitive to credit risk, market risk and

liquidity risk. Pillar I provides guidelines for calculating

the minimum capital requirement which the regulator

requires a bank to maintain to cover credit, market and

operational risks.

Under Pillar II, BinckBank identifies additional risks to

which it is exposed and determines the amount of capital

it requires. The figure ‘Capital per risk type’ shows the

risks to which BinckBank is exposed and the amount of

capital required to cover the residual risk by type.

Strategic and business risk are not reflected in the capital

requirement but are covered by the checks & balances in

the BinckBank Enterprise Risk Management System and

the capital requirement for operational risk.

A description of each risk type is given below:

Credit risk

Credit risk is the risk of a counterparty and/or issuing

institution involved in trading in or issuing a financial

instrument defaulting on an obligation and thus harming

BinckBank financially.

Credit risk relates to items included in the balance sheet

under cash, banks, financial assets (including

collateralised lending) and other assets. With these

balance sheet items, the most important consideration

is the creditworthiness of the counterparty (except

collateralised lending, because these items are fully

covered by securities as collateral).

BinckBank deals prudently with the funds entrusted by

its customers. Funds entrusted not used for collateralised

loans are invested in the market in a responsible and riskaverse

manner (investment portfolio). The credit risk on

liquid assets and investments is carefully monitored by

the treasury department, which reports to the CFO and

Risk Management on a daily basis and periodically

renders account within the treasury committee.


Investments are made within a set of limits for each

counterparty as determined by the treasury committee.

Investments in the investment portfolio are made in

accordance with conditions laid down by the treasury

committee, which are based on a minimum liquidity

position of 5% of the funds entrusted.

In 2010, the average solvency weighting of the investment

portfolio increased to 7.5% (2009: 5%). This was due to

the restructuring of the investment portfolio, among

which the cutting back of the exposures in Spanish and

Irish bond positions. The proceeds of the sale of these

bonds (with a 0% solvency weighting) were

predominantly reinvested in German Öffentliche

Pfandbriefe with a weighting of 10%. As a result, the

solvency weighting of the investment portfolio

increased. The capital requirement in 2010 under Pillar I

for credit risk increased to € 17.8 million (2009:

€ 13.4 million).

BinckBank invests in a

responsible and risk-averse

manner

Although collaterised loans have increased by 16.1% to

€ 476.2 million, this did not lead to a higher credit risk

capital requirement, since sufficient securities collateral

is provided for future changes in value.

Concentration risk arises when there is an excessive

concentration of investments in specific funds for

customers with non-diversified investment portfolios.

The collateral is in this case too dependent on one or

more names. If an issuing institution is liquidated, the

consequences are considerably greater than if the credit

is extended on a more widely spread portfolio. Risk

Management carries out specific daily monitoring for

undesirably high concentrations in customers’ portfolios.

If necessary, measures are taken in accordance with our

policy to limit excessive concentrations. In the event of

excessive concentration, a decision can be made to

reduce the credit granted to the customer in question.

In addition, the credit committee may decide to limit the

concentration level for a specific fund by increasing the

haircut on the fund in question. In 2010, BinckBank saw

concentration within the entire collateralised loan

portfolio increase, and with it the concentration risk. The

capital requirement for concentration risk consequently

increased from € 3.6 million to € 9.1 million.

Customers with a collateralised loan agreement are

monitored by Risk management with respect to their

available spending limit (ASL). The ASL is the balance of

the weighted value of the collateral received from the

customer less the customer’s obligations in the form of

collateralised lending and margin requirements. There is

a shortfall in the ASL if the collateral in the customer’s

portfolio no longer provides sufficient cover for the

customer’s obligations. As soon as a negative ASL is

identified, the deficits procedure is initiated. Use of a

deficits procedure is a statutory requirement. The

deficits procedure used by BinckBank is as follows:

BinckBank checks for each customer whether the

collateral sufficiently covers the collateralised loans and/

or margin requirements (margin and current orders) on a

daily basis. BinckBank does this by calculating the

customer’s ASL. In the case of a negative ASL, the

customer must make up the deficits within five business

days. If there is a deficits as a result of futures positions,

this must be made up within one day. If the customer’s

ASL is still negative at 15:00 hours on the last day on

which the deficits must be made up, BinckBank will start

to liquidate the customer’s securities positions on its

own volition. Securities positions will be liquidated until

the ASL in the customer’s account is returned to a positive

value.

The margin is an amount that the writer (seller) of an

uncovered option or future is required to deposit as

collateral for the risk of the position. It forms a basic

guarantee that the investor can meet all possible

obligations arising from the position. The size of the

margin depends on the financial risk of the position. As

the value of an option or future may fluctuate, the

margin requirement is not a constant. The risk therefore

exists that the margin maintained by the customer turns

out to be insufficient in respect of the assumed

obligations. The margin requirement may therefore lead

to a credit risk on the customer. The level of the margin

requirement is partly determined by the margin

percentages established by Risk Management on the

basis of the historical movements of the underlying

share or index.

45 Annual Report 2010


46

Risk management & capital management

Risk Management carries out daily analyses of market

movements and updates the margin percentages at least

once a month. Due to the declining volatility in the

financial markets, the margin requirement for written

options was reduced by BinckBank in the course of 2010.

This led to a significant increase in the open written

option positions. The open margin position of our

customers in 2010 increased by 24.4% to

€ 270 million (year-end 2009: € 217 million). The capital

requirement for margin risk increased by € 2.8 million to

€ 3.6 million.

Neither the concentration risk nor the margin risk are

reflected in the Pillar I minimum credit risk capital

requirement. For this reason, BinckBank itself imposes

an additional capital requirement under Pillar II. In 2010,

the capital requirement rose by € 6.3 million, from

€ 6.3 million at the end of 2009 to € 12.6 million at the

end of 2010.

Counterparty risk forms a part of the risks on settlements.

For the majority of transactions executed by BinckBank’s

customers, trading is done on (regulated) markets such

as NYSE Euronext and TOM, for which a central

counterparty (CCP) is engaged. As a result, counterparty

risk is nil. Within the Professional Services business unit,

only a limited part of transactions is executed directly by

a counterparty (broker). These so-called ‘Over The

Counter’ (OTC) transactions can be susceptible to credit

risk (also market risk) due to non-settlement, and are

executed with due regard for counterpart limits.

Counterparty limits are approved by the credit

committee, after which Risk Management sees to it that

they are complied with.

The capital requirement under Pillar II for counterparty

risk at the end of 2010 amounted to € 1 million (2009:

€ 1 million). No loss was incurred on current settlements

in 2010. Therefore there has been no reason to adjust the

capital requirement for counterparty risk.

Market risk

BinckBank’s market risk can be divided into interest-rate

risk and currency risk.

Interest-rate risk emerges from the possibility that

market rates might negatively affect future profitability.

A gradual adjustment of the market rates (yield curve)

affects future interest income from collateralised loans

and the investment portfolio as well as the interest

payments made by BinckBank on savings and brokerage

accounts.

BinckBank manages this risk in relation to its banking

activities by actively matching the maturities of its

assets and liabilities within certain limits. The effect of a

gradual interest-rate movement on BinckBank’s

profitability is assessed on the basis of an Earnings at

Risk model and is outlined in note 42 on page 126 of the

financial statements.

In addition to gradual movements, the yield curve can

also demonstrate sudden movements (interest-rate

shocks). Interest-rate shocks affect the value of

BinckBank’s investment portfolio. In order to absorb any

losses arising from a sudden negative interest shock

combined with customers’ withdrawals of funds

entrusted, due to which a part of the investment

portfolio is liquidated, capital is retained by BinckBank

under Pillar II.

Currency risk is the risk presented by movements in the

value of items denominated in foreign currencies due to

movements in exchange rates. It is BinckBank’s policy

not to take foreign-exchange trading positions. Foreignexchange

positions arising out of operating activities

must be covered by Treasury on the same day as they

become known. Because of this BinckBank is hardly

exposed to any market risk.

The capital requirement for market risk is expressed

under Pillar I (currency risk) and Pillar II (interest-rate

risk). The capital requirement for currency risk under

Pillar I amounts to € 0.1 million (year-end 2009:

€ 0.2 million). The capital requirement for interest-rate

risk under Pillar II amounts to € 8.3 million (year-end

2009: € 8.9 million) and has decreased due to a shorter

investment portfolio duration.

Operational risk

Due to the nature of its operational activities, BinckBank

has a high inherent operational risk. Some of the major

determinants of this risk are the large number of

administrative transactions that have to be processed

every day, the fact that all communication takes place via

the Internet and the fact that frequent software

adjustments have to be made due to changing

circumstances. Additionally, a number of unexpected

events may occur in BinckBank’s operational processes,

due to which losses are incurred or the achievement of

targets is hindered. Processes, systems and people can

fail, employees may fraud, incidents might occur and daily

processes might be interrupted by a calamity or system

failure (IT risk). The risks emerging from such occurrences

are all operational risks. Losses due to operational risk

cannot be avoided. As a buffer for uncovered (unforeseen)

losses, BinckBank maintains a required capital for

operational risk.


IT risk

As BinckBank’s business operations strongly depend on

IT, a significant part of its operational risks are IT risks.

Shortcomings in the field of IT may result in a significant

threat to critical company processes and the service

offering to customers. IT risks therefore indirectly form a

threat to BinckBank’s equity position and results. A large

number of measures of control have been taken to

reduce these risks, among which: organisation and

policy, security management, incident & problem

management, test, change & configuration management

and continuity.

One of the key components of that policy is a recurring

penetration scans, at which a third party is asked by

BinckBank to attempt breaking in to BinckBank’s systems

with the aid of the latest technologies and methods. The

test results are discussed by the operational risk

committee and may lead to a further tightening of policy

and/or controls.

BinckBank pursues a proactive

security policy

Some of the main IT risk components and relevant

measures taken are:

Organisation and policy

This concerns first, the risk that the IT policy and IT

organisation inadequately reflect the organisational

strategy and second, the risk that the IT organisation and

IT policy are not (or not adequately) structured

and formulated to reflect the business processes and the

existing information and data processing, with the

result that the processes and the provision of information

are not adequately supported. BinckBank pursues an IT

Governance Model. IT Governance is evaluated

periodically or whenever necessary. In addition,

BinckBank has formulated an information security policy

that is actively implemented within the organisation. For

all significant IT risk control measures relating to issues

such as availability, incidents, problems and changes,

policy principles have been formulated, which are

monitored using Key Performance Indicators (KPIs) and

monthly reports are submitted to the operational risk

committee. Moreover, BinckBank has defined a process

for managing the resources required for the delivery of IT

services. BinckBank has also formulated a plan that

describes the current and future demand for IT services

and the IT resources required (and the necessary works

and costs to take these into operation).

Security management

Security management is designed to ensure that

information is accurate and complete, and that it cannot

be accessed by unauthorised users. As an internet bank,

BinckBank is by definition exposed to a significant

inherent risk of external fraud by online criminals.

BinckBank is fully aware of this risk and has therefore

formulated an access policy for its IT infrastructure,

systems, applications and data, which is approved by the

IT manager. BinckBank pursues a pro-active security

policy that is continuously evaluated.

Incident and problem management

Incident and problem management focuses on the

prevention of the risk of failures as a result of which the

service cannot (or cannot sufficiently) be restored as well

as of structural errors in the IT infrastructure and

on ensuring that incidents and problems are dealt with

correctly, completely and in a timely manner.

BinckBank mitigates this risk by means of an incident

management procedure that ensures that every IT

incident is analysed and prioritised, and that incidents

with a high level of urgency and impact are escalated

appropriately. Incidents and breakdowns are moreover

reported to the IT management team on a monthly

basis. BinckBank has also implemented a problem

management procedure. Problems are likewise reported

to the IT management team on a monthly basis.

Test, change and configuration management

BinckBank updates its systems and software on the basis

of the latest technological developments and the needs

of its customers. BinckBank therefore runs risks from

incorrectly and/or incompletely developed software,

unauthorised changes made to the IT infrastructure,

inadequate provision of information regarding IT

infrastructure and the incorrect, incomplete and/or

untimely processing of proposed alterations. One of the

control measures in place is that only personnel from the

Infra and Data Management departments are authorised

to implement approved changes to the production

processes. This can only be done within the constraints

of the defined change process. Moreover, BinckBank uses

separate development, trial and acceptance

environments for testing new software releases. Before

changes to production can be implemented, the changes

concerned must have completed the test management

procedure and have been approved by the test manager.

47 Annual Report 2010


48

Risk management & capital management

Continuity

The availability of the website and the underlying

systems are vital to BinckBank. The risk of the continuity

of (critical) operational processes and/or the company

being endangered due to unavailability of the IT

infrastructure (including applications and systems) is

reduced as follows: BinckBank has drawn up a business

continuity & disaster recovery plan, based on a business

impact analysis. BinckBank has a contingency facility and

at least once a year performs a contingency test. In order

to safeguard operational continuity, IT production and

contingency systems have been transferred to an

external data centre where extensive preventive

measures have been taken against the effects of heat,

fire, theft, damage, power cuts and natural disasters.

The data centre in question is Payment Card Industry

Data Security Standard (PCI DSS) certified. In addition,

BinckBank uses a back-up system and real-time

synchronisation of data with the data centre to secure

information that is crucial to the company. Daily

performance checks are carried out on critical backups

and further action is considered if a failure occurs.

Reports on system performance and availability are

submitted to management on a quarterly basis. Critical

systems are tested on performance every day before the

markets open, and monitoring software that has been

installed on critical systems enables those systems to be

permanently monitored for availability and performance.

BinckBank has a low to moderate risk appetite for

operational risk. Our internal target is to prevent the

annual operational losses generated by regular business

exceeding 1.0% of the gross fee and commission income.

Operational losses are considered to be:

• The financial result on out-trades and compensation

paid to customers

• Other direct losses due to faults in IT systems,

automated information processing and operating

processes.

The basic measures of control taken in view of other

operational losses comprise:

• Formal and comprehensive documenting of all

processes, including the operational IT processes

• Identifying and documenting the key controls and

KPIs for all processes

• Frequent reporting on KPIs by process owners to

management

• Frequent internal auditing for set-up, availability and

performance of the key controls and relevant

reporting to the management

• Monitoring of the follow up on shortcomings by the

operational risk committee and audit committee

The total operational loss for 2010 amounted to

€ 1.7 million (2009: € 1.1 million), 0.94% (2009: 0.61%) of

the total gross commission income. With these figures

BinckBank has achieved its internal target.

In accordance with the Basic Indicator Approach,

BinckBank holds capital for operational risk under Pillar I

at 15% of the average income from the preceding three

financial years. The capital requirement for operational

risk at the end of 2010 amounted to

€ 26.0 million (2009: € 27.9 million), a factor 15 of the

actual total loss in 2010 (2009: factor 25).

Liquidity and solvency

Liquidity risk

BinckBank gives high priority to the management of this

risk, in order to ensure that it always holds enough liquid

reserves and can always meet its fi nancial obligations.

Liquidity risk management is designed to take account of

the effects of BinckBank-specific stress factors, such as

negative publicity, increased trading activity by clients

(net purchases) and variation of competitors’ interest

rates.

BinckBank maintains liquidity buffers between 5% and

10% of the funds entrusted. Moreover, BinckBank can

temporarily replenish its liquidity reserves by using

alternative sources such as external REPO facilities and

the lending facility with DNB (Target 2). The REPO and

lending facility are both fully available as BinckBank

possesses a liquid and high-quality investment portfolio.

At the end of 2010, a major part of the investment

portfolio can be used for supplementary liquidity. In the

most extreme case BinckBank can decide to sell

(liquidate) its investment portfolio to release the

required liquidity.

BinckBank retains liquidity risk capital so that it can fulfil

its obligations if a part of its investment portfolio needs

to be liquidated due to unforeseen circumstances and at

unfavourable conditions. The capital requirement under

Pillar II for this risk at the end of 2010 amounted to

€ 1 million (2009: € 1 million).


Solvency

BinckBank’s approach to capital management is aimed at

maintaining a solid solvency position while continuously

searching for the right balance between the amount of

capital held and the risks to which that capital is exposed.

Our capital management contributes towards the

systematic analysis and improvement of BinckBank’s

return on activities. In organising its capital structure,

BinckBank observes the limits prescribed by DNB, Basel II

legislation and its own internal requirements for capital

adequacy. BinckBank’s Capital Adequacy & Risk Report

2010, among other things, contains a detailed explanation

of its policy on capital management. This report has

been published on www.binck.com.

BinckBank’s capital target is to keep the solvency ratio

between 12% and 20%. In addition, BinckBank has a

dividend policy in which 50% of the adjusted net profit is

paid out in dividend annually, subject to an adequate

solvency position.

A second round effect implies that the effects of the

stress scenario would also affect the amount of required

capital. A forced liquidation of the investment portfolio,

for example, would lower the required capital for credit

and interest-rate risks. Additionally, the credit risk on

customers’ portfolios would decline due to the forced

liquidation of positions held by customers at times of

stress. Taken together, these effects would result in a fall

of the available as well as of the required capital under

Pillar I and II. Required capital would drop from € 66.9

million to € 56.2 million. The BIS and solvency ratios

would come down to 11.3% and 8.0% respectively as a

result of the second round effects. These figures are well

within the requirements defined by DNB. The following

table shows the development of capital adequacy after

the combined stress scenario has actually occured

including the related second round effects.

In 2010, the available capital for solvency purposes

(Tier I) rose from € 95.6 million to € 131.3 million. This

increase comprises the amortisation on intangible assets

and allocations to the retained earnings.

BinckBank’s solvency and BIS ratio

28%

23.9%

24%

20%

17.2%

18.4%

16%

15.7%

12%

13.6%

13.0%

8%

4%

2008 2009 2010

49 Annual Report 2010

Solvency ratio

BIS ratio

Assessment of capital adequacy

At the end of 2010, stress tests were used to assess

BinckBank’s capital adequacy. The loss of capital under

the maximum combined stress scenarios amounted to

€ 74.9 million at the end of 2010. The Tier I capital of

€ 131.3 million at the end of 2010 would under those

circumstances drop to € 56.3 million. The loss from this

stress test was charged to the Tier I capital in order to

test its effect on the BIS and solvency ratios. This is

referred to as the so-called second round effect.


Capital position under maximum stress (2nd round)

(x € 1,000)

31 December

2010 stress

31 December

2010

Total available capital 56,337 131,257 -57%


Total required capital Pillar I+II 56,209 66,933 -16%

Pillar I required capital 39,771 43,983 -10%

Credit risk 13,672 17,884 -24%

Market risk 96 96 0%

Operational risk 26,003 26,003 0%

Pillar II required capital 16,438 22,950 -28%

Interest-rate risk 5,362 8,349 -36%

Liquidity risk 591 954 -38%

Total credit risk Pillar II 10,485 13,647 -23%

* Concentration risk 6,797 9,062 -25%

* Margin risk 2,689 3,585 -25%

* Counterparty risk 1,000 1,000 0%

Operational risk mark-up - - 0%

Business risk - - 0%

50

Excess / insufficient capital (Pillar I) 16,566 87,274 -81%

Excess / insufficient capital (Pillar II) 128 64.324 -100%

Risk management & capital management

BIS ratio 11.3% 23.9%

Solvency ratio 8.0% 15.7%

Risk management accountability

BinckBank provides insight into its capital and risk

management policies in a number of ways. They are

accounted for in BinckBank’s annual report and in its

annual Capital Adequacy & Risk Report, both available at

www.binck.com. BinckBank has chosen to publish its risk

report, pursuant to Pillar III of the Basel Agreement, on

its website once a year after the third quarter. The

frequency of publishing the risk report may be increased

if required due to specific circumstances. At the end of

the year, BinckBank gives an insight into its risk

management in the financial statements under note 42,

pursuant to the requirements of IFRS 7.

BinckBank’s executive board accounts for the effects of

its risk management during the year under review by

means of the annual ‘In Control Statement’ included in

this annual report.


In Control Statement

In Control Statement

In our Capital Adequacy & Risk Report 2010, as published

on 25 October 2010, chapter Risk Management & Capital

Management of the annual report on pages 42 through

50 and note 42 of the financial statements, we have

included a detailed description of these risks and

provided a risk management framework as well as

defined the executive board’s responsibilities.

In accordance with the best practice provisions referred

to in the Corporate Governance Code and with due

observance of the restrictions outlined below, we

confirm that our risk management and control systems

offer a reasonable level of security and that we are aware

of:

a) the degree to which the strategic and operational

objectives of BinckBank are realised,

b) that BinckBank complies with the applicable laws

and legislation and

c) our financial reporting does not contain any

substantive inaccuracies. We further state that our

risk management and control systems performed

satisfactorily in 2010.

Executive board statement

In accordance with article 5:25c of the Financial

Supervision Act (WFT), we state that according to the

best of our knowledge:

A. the financial statements faithfully represent the

assets, liabilities, financial position and result of

BinckBank N.V. and its affiliated companies; and that

B. the annual report faithfully represents the state of

affairs as at the balance sheet date and the running

of events during the financial year for BinckBank and

its affiliated companies, whose data have been

included in the financial statements, and that the

essential risks to which BinckBank N.V. is exposed

have been described.

Amsterdam, 10 March 2011

The Executive Board

Koen Beentjes, Chairman of the board

Evert Kooistra, board member and CFO

Pieter Aartsen, board member

Nick Bortot, board member

However, our internal risk management and control

systems cannot offer absolute security of achieving the

strategic, operational and financial objectives outright

nor that legislation is complied with at all times.

Furthermore, systems cannot prevent all human

(assessment) errors and mistakes. Accepting risks and

taking control measures is continuously subject to

making cost-benefit considerations, which in its turn is

inherent to entrepreneurship. We continue to pursue

further improvement and optimisation of our internal

risk management and control procedures.

51 Annual Report 2010

With no prejudice to our statement, we wish to point out

the following projects that are being implemented in the

context of our ambitions to achieve operational

excellence; completing the European IT platform, further

increasing the demonstrable effects of the measures of

control taken for our rapidly expanding foreign offices

and safeguarding the quality of the various models,

parameters and charts that are maintained within our

organisation, particularly within Alex Asset Management.


We deliver the best of Binck white-label

to professional parties

Corporate governance

52


Joost Walgemoed

Director Professional Services

53 Annual Report 2010


Corporate governance

Introduction

The financial crisis has lead to the introduction of new regulations aimed at improving the corporate governance

of banks and companies with a stock exchange listing. The Banking Code, the new Principles of DNB and AFM for

a controlled remuneration policy and the tightening of expertise control by those institutions are examples in

this respect.

54

Corporate governance

By governmental decree of 1 June 2010 the Banking Code

was given a legal basis equivalent to that of the Corporate

Governance Code (Code). By virtue of this decree banks

are obliged to disclose details about their compliance

with the Banking Code principles in their annual reports.

On 1 July 2010, the Shareholder’s Rights Act and the

Works Council Right to Speak Act came into force. The

Shareholder’s Rights Act contains provisions in the field

of rights to have issues placed on the agenda, terms for

convening a meeting and registration, contents of

notices to convene the general meeting of shareholders

and information published on websites prior to the

general meeting. The Works Council Right to Speak Act

aims to increase the role of employees in public

companies concerning, among other things, decisionmaking

processes for specific subjects discussed at

general meetings. BinckBank will, insofar as necessary,

adjust its Articles of Association in accordance with

these changes in legislation.

The legislative proposal on amendment and reclamation

bears particular relevance to remuneration policies.

Bonuses which, in retrospect, were paid out on the basis

of incorrect information (‘claw back’) and bonuses of

which payment cannot be justified on grounds of

unreasonableness or unfairness, are supposed to be

adjusted or reclaimed in the future. The following

paragraphs discuss the Code and Banking Code

recommendations.

The Code

The Code has a legal basis in that a listed company is

obliged to disclose information in its annual report

concerning compliance with the principles and best

practice stipulations of the Code, aimed at the executive

or supervisory board of the company. BinckBank largely

endorses the widely supported basic principles referred

to in the Code.

Each year, according to best practice provision 1.1 of the

Code, the main features of the corporate governance

structure of the company, partly on the basis of the

principles referred to in the Code, must be described in a

separate section of the annual report. This section must

furthermore explicitly indicate the degree to which the

best practice provisions referred to in the Code are

adhered to, the degree to which they are not adhered to

and why. This “apply or explain” principle has a legal

basis. This chapter extensively deals with the aforesaid

best practice provision 1.1 of the Code. The provisions in

this chapter can at the same time be considered to be the

corporate governance statement referred to in article

2:391, paragraph 5, of the Dutch Civil Code.

Legal structure

General

BinckBank is a public limited company listed on NYSE

Euronext (Amsterdam). BinckBank has a number of

Dutch subsidiaries and participating interests as well as

a foreign subsidiary. BinckBank further has office

branches in Belgium, France and Spain.

BinckBank operates under the supervision of both DNB

and the AFM. Due to a legal restructuring of the group in

2011, its foreign subsidiary Binck België N.V. will be

liquidated. It’s activities have been transferred to

BinckBank N.V.

Shares, the issue of shares, voting rights and shareholder

structure

Shares

The authorised capital of BinckBank consists of

74,500,000 ordinary listed shares and 50 priority shares

with a nominal value of € 0.10 each. The priority shares

represent 0.00007% of the issued capital, are registered,

not listed and held by the Prioriteit, the Priority Binck

Foundation (in this annual report further referred to as

‘the Priority’).


Special (controlling) rights are attached to the priority

shares, as stated in the Articles of Association of the

company. These Articles of Association can be found on

our website at www.binck.com. The position of the

Priority will be discussed later in this chapter. No

depositary receipts have been issued for BinckBank

shares.

Issue of shares

The annual general meeting of shareholders supervises

the issue of shares and is entitled to transfer that power

to a different company body for a maximum term of five

years. When ordinary shares are issued, each shareholder

has a pre-emptive right in proportion to the total value

of his shares, subject to statutory provisions.

No pre-emptive rights are attached to shares issued a) to

employees of the company or group company or b) for a

consideration other than in cash. The pre-emptive right

can be limited or excluded by resolution of the general

meeting. The pre-emptive right can also be limited or

excluded for a certain term by the other company body

referred to above, provided that this body has the power

to limit or exclude the pre-emptive right by resolution of

the general meeting, subject to a maximum of five years.

A resolution by the general meeting to limit or exclude

the pre-emptive right or to transfer or withdraw this

power requires a majority of at least two-thirds of the

votes cast if less than half of the issued capital is

represented at the meeting. The resolution referred to

can only be adopted by the general meeting if put

forward by the Priority.

Voting rights

Each BinckBank share gives the right to cast one vote.

Resolutions are adopted by a simple majority of the

votes cast, to the extent that no larger majority is

prescribed by law or the Articles of Association.

BinckBank applies a registration date in accordance with

the Shareholder’s Rights Act.

Shareholder structure

The shareholders who, regarding their interest in

BinckBank, have issued a statement by virtue of chapter

5.3 of the Financial Supervision Act (WFT) have been

listed on page 17 of this report. No shareholders’

agreements have been entered into between BinckBank

and the major shareholders involved.

Anti-takeover defences

The Priority holds 50 priority shares in BinckBank. By

virtue of the Articles of Association, the Priority fulfils a

role in many important decisions.

The powers of the Priority consist of initiating specific

general meeting resolutions and granting prior approval

to specified resolutions. In addition, the Priority has

direct powers, such as determining the number of

executive and supervisory board members.

In short, the objective of the Priority is to protect the

management and the course of events at BinckBank

from influences which might negatively affect the

independence of the company and its affiliated

companies, and to promote a positive course of affairs in

management. The board of the Priority consists of three

members. Board member A is appointed by BinckBank’s

supervisory board, Board member B is appointed by

BinckBank’s executive board and board member C is

appointed by board members A and B together. Messrs

C.J.M. Scholtes (Chairman of the supervisory board), K.N.

Beentjes (Chairman of the executive board) and J.K.

Brouwer (member of the supervisory board) act as board

members A, B and C respectively.

The executive and supervisory board see no reason to

initiate any limitation and/or removal of the powers of

the Priority. The executive and supervisory board believe

that maintaining the position of the Priority is beneficial

to the continuity of BinckBank and the policies pursued

by the bank in the short and long term, subject to careful

consideration of the interests of those involved in the

company.

The powers of the Priority form an integral part of the

Articles of Association of the company. Therefore, strictly

speaking, there is no question of a (potential) ‘deployable

anti-takeover measure’ as meant by best practice

provision IV.3.11 of the Code. When exercising its powers,

the Priority, with due observance of its objectives under

the Articles of Association, is obliged to protect the

interests of the company and its affiliated companies

and in doing so consider the qualifying interests of the

parties involved. The manner in which the Priority uses

its powers in each case depends on specific facts and

circumstances.

55 Annual Report 2010


56

Corporate governance

Executive Board

BinckBank has a two-tier board system, meaning that

execution and supervision are assigned to the executive

board and the supervisory board of BinckBank

respectively. BinckBank believes that this structure

promotes a secure system of checks and balances, within

which the executive board is responsible for the day-today

management as well as the short, medium and longterm

strategies of the company, whereas the supervisory

board supervises the executive board and advises it.

Personal Union

BinckBank and a number of its subsidiaries are subject to

a Personal Union at the board level in the sense that,

under the Articles of Association for BinckBank, (the

majority of) BinckBank’s executive board members also

act as executive board members for its subsidiaries. The

Personal Union promotes uniformity in company policy

and strategy.

Task of the executive board

The executive board is charged with managing the

company, subject to limits established by the Articles of

Association.

Regulations for the appointment, suspension and

dismissal of executive board members

Members of the executive board of BinckBank are

appointed or re-appointed by the general meeting on the

basis of a non-binding list of nominees put forward by

the Priority. A member of the executive board is

appointed or re-appointment for a period that runs from

the day of (re)appointment to the end of the annual

general meeting held in the fourth calendar year

following the calendar year of (re)appointment or such

earlier date as established at the time of (re)appointment.

Members of the executive board may at all times be

suspended or dismissed by the general meeting.

Members of the executive board can equally be

suspended by the supervisory board. Such suspensions

can be revoked by the general meeting. A suspension can

be extended more than once but may never last longer

than three months.

Supervisory board

The supervisory board is charged with supervising the

policies pursued by the executive board and the general

course of events of the company and its affiliated

companies. The supervisory board highly values close

involvement with the company’s development.

In exercising its duties the supervisory board is guided by

the interests of the company and its affiliated companies

and for that purpose weighs the relevant interests of

those involved in the company.

The supervisory board also considers the social aspects

of entrepreneurship relevant to the company in executing

its duties. It also advises the executive board. The

supervisory board is furthermore charged with all duties

assigned to it by virtue of law and the Articles of

Association.

Members of the supervisory board are appointed or reappointed

by the general meeting on the basis of a nonbinding

list of nominees put forward by the Priority. A

member of the supervisory board is appointment or reappointment

for a period that runs from the day of (re)

appointment to the end of the annual general meeting

held held in the fourth calendar year following the

calendar year of (re)appointment or such earlier date as

established at the time of (re)appointment.

Annual general meeting of shareholders

The annual general meeting of shareholders has the

duties and powers vested in it by virtue of law and the

Articles of Association. Its powers extend to, among

other things, appointing and dismissing executive and

supervisory board members. The Priority often plays an

important role in relation to the powers of the general

meeting of shareholders. For instance, the appointment

of executive and supervisory board members is made on

the basis of a non-binding list of nominees put forward

by the Priority.

Compliance with the Code

BinckBank is obliged to disclose the degree to which it

adheres to the best practice provisions of the Code in the

Corporate Governance chapter of its annual report,

listing the reasons and the extent of non-compliance if it

does not (‘apply or explain’ principle). BinckBank adheres

to the best practice provisions of the Code, among which

best practice provisions II.3.2 – II.3.4 and III.6.1 – III.6.4,

with the exception of the best practice provisions set out

below.

Remuneration of the executive board

A new remuneration policy (Remuneration Policy 2010)

was established during the annual general meeting of

2010.


The Remuneration Policy 2010 is partly based on the

inclusion of relevant social developments. In view of the

nature of the company, the Remuneration Policy 2010

was drafted with as much consideration for the contents

of the various Code, Banking Code and Principles for a

controlled remuneration policy as possible.

By virtue of best practice provision II.2.13 of the Code, the

remuneration policy overview, as envisaged by the

supervisory board for the next and subsequent financial

years, had to contain certain information.

BinckBank applies best practice provision II.2.13 of the

Code only if and to the extent that publication does not

relate to competition-sensitive information, such as

financial and commercial targets. In the opinion of the

executive board and the supervisory board disclosing

such information is not in the best interest of the

company and its stakeholders. The same applies to the

main elements in contracts between members of the

executive board and the company, as referred to in best

practice provision II.2.11 of the Code, to the extent that

those elements contain market-sensitive information

that has to be disclosed following conclusion of those

contracts. It should be noted that specific information

contained within the Remuneration Policy 2010 is made

available in arrears. The supervisory board is thus

accountable to the general meeting for performance

appraisals of the executive board.

The Banking Code

General

The Netherlands Bankers’ Association (NVB) on 9

September 2009 drafted the Banking Code in reply to the

Restoring Trust (Naar herstel van vertrouwen) report

issued by the advisory committee on the Future of Banks

(“the Maas Committee”). The Banking Code can be seen

as a measure of self-regulation and applies to all banks

with a banking license granted under the Financial

Supervisions Act. The Banking Code aims to enhance

governance within banks, improve their risk management

and auditing and promote the implementation of a

sound remuneration policy.

Deviations

Article 6.3.3 of the Banking Code stipulates that, insofar

as relevant, a substantial part of any variable pay is

granted conditionally and is paid out at least three years

later.

BinckBank is a relatively young, fast developing company

and therefore subject to (frequent) change. The

usefulness and feasibility in formulating long-term

remuneration targets for the executive board members

are therefore limited. The Remuneration Policy 2010 for

this reason proceeds for a 2/3 part from long-term

targets whose realisation (and payment of the

appropriate variable pay) is assessed on an annual basis

by the supervisory board. If a variable long-term payment

is granted, the executive board member in question is

bound to a lock-up period of five calendar years, even if

his employment contract expires prematurely. The

supervisory board reports to the general meeting of

shareholders on the manner and outcome of its

assessments.

Article 3.2.3. of the Banking Code stipulates that each

executive board member is obliged to sign a moralethical

statement. The text of that statement must be

made publically available and must be published on

BinckBank’s Internet site. It serves as a guideline for the

conduct of the employees of BinckBank. A model

statement is included in the explanatory notes to the

Banking Code. Each bank is entitled to supplement that

statement at its own discretion. BinckBank has used this

option. Ever since its incorporation, BinckBank has been

able to distinguish itself by setting its own independent

and self-supporting course, which is characterised by a

strong customer-focus and a high degree of transparency

combined with sound operational management.

BinckBank’s executive board members have adjusted the

moral-ethical statement to optimise its relevance to

BinckBank’s profile and character as well as the

appropriate legislation and regulations. The moralethical

statement can be found at www.binck.com.

57 Annual Report 2010

The Banking Code came into force on 1 January 2010 and

is enshrined in the law. Banks, in their annual reports and

in the same manner as applicable to compliance with the

Code, are obliged to disclose the extent to which they

adhere to the Banking Code.


58

Corporate governance

Article 10 of the Takeover Directive

a) Page 54 and 55 of this annual report contains a capital

structure overview, which shows the different types

of shares, the rights attached to those shares

(including special controlling rights), obligations and

the percentage of the issued capital that is

represented by each type of share;

b) The transfer of shares is not subject to limitations

imposed by the company;

c) Participating interests in the company to which a

duty to report applies in accordance with chapter 5.3

of the Financial Supervision Act (WFT), have been

listed on page 17 of this annual report;

d) Special controlling rights attached to shares held by

the Priority are listed on page 54 and 55 of this annual

report;

e) Regulations vesting a right in employees to subscribe

to or obtain shares in the capital of the company or

its affiliated companies are supervised by the Internal

Audit and Compliance departments;

f) Voting rights attached to shares of the company are

not limited. No depository receipts for shares have

been issued;

g) The company is only aware of a limitation for the

transfer of shares in BinckBank arising from the

Remuneration Policy 2010 and comparable limitations

imposed on other employees of BinckBank.

h) The manner of appointment and dismissal of

members of the executive board and supervisory

board and the provisions for amendment of the

Articles of Association are described in the Articles of

Association of the company and explained in outline

on pages 56 of this annual report. For the Articles of

Association please refer to www.binck.com;

i) The powers of the executive board, in particular

concerning the issue of company shares and the

acquisition of shares by the company, are listed on

page 54 and 55 of this annual report. For further

information please refer to the Articles of Association

of the company and the minutes of the general

meeting of shareholders at www.binck.com;

j) The service contract entered into with Friesland Bank

N.V. in 2006 stipulates that the contract may be

immediately terminated if a change of control takes

place within BinckBank. In the joint venture

agreement entered into with Delta Lloyd

Levensverzekering N.V. on 6 July 2010, a change of

control clause has been included which, among other

things, allows the other party to terminate the

agreement. The service agreement entered into with

SNS Bank N.V. on 30 September 2010 stipulates that

the agreement may be immediately terminated if a

change of control takes place within BinckBank;

k) Information on the redundancy arrangements for

members of the executive board has been included in

the 2010 Remuneration Report.

Conclusion

BinckBank complies with virtually all Code and Banking

Code provisions. We believe that all deviations have been

soundly motivated.


This page was left blank intentionally

59 Annual Report 2010


Report of the supervisory board

60

Jim Tehupuring

Manager Academy


In 2010, more than 25,000

investors took part in the courses

and seminars of the Academy

61 Annual Report 2010


Report of the supervisory board

Statement by the chairman of the supervisory board

Dear reader,

It is with great pleasure that we present the financial statements drawn up by the executive board of

BinckBank N.V. The financial statements have been duly audited by and discussed with our external auditors

Ernst & Young Accountants LLP on the basis of their report of findings. The approved auditor’s report has been

included on pages 164 and 165. The financial statements were approved by us on 10 March 2010 and we present

them to you for adoption by the general meeting of shareholders on 26 April 2011.

We endorse the proposed dividend payment of € 0.51 (2009: € 0.52) per share in cash, amounting to a gross

amount of € 37.9 million (2009: € 39.3 million), to be paid out of the profit of the closed financial year, the

remainder of € 6.2 million is to be added to other reserves. As per 2 August 2010 an interim dividend of € 0.24 per

share was already distributed. Despite less favourable market circumstances, BinckBank has succeeded in

achieving a healthy financial result in 2010. Many new products and services have been launched for the benefit

of our customers, and our European ambitions for expansion are being achieved through our branches in

Belgium and France. Due to good management by the executive board and other managers as well as the

dedication, expert knowledge and input of all the employees, BinckBank has been able to achieve its major

ambitions for 2010. We thank the executive board and staff for their dedication and involvement.

62

Report of the supervisory board

In 2010, we, the members of the supervisory board, enrolled in an advanced educational programme that was

specially developed by Ernst & Young in response to the Banking Code. Among the subjects discussed were IT and

Corporate Governance. The executive board members also took part in a number of courses and training sessions

focusing on their respective fields of expertise.

Amsterdam, 10 March 2011

C.J.M. Scholtes (Chairman)


Composition of the executive and supervisory board

Members of the executive board of BinckBank are

appointed by the general meeting on the basis of a nonbinding

list of nominees put forward by the Priority. At

the annual general meeting of 2010, Mr Aartsen was reappointed

as a member of the executive board for a term

of four years. The executive board of BinckBank currently

consists of Messrs Beentjes, Aartsen, Kooistra and

Bortot. The CVs of the members of the executive board

have been included on page 38 and 39 of this annual

report.

At the annual general meeting of 2010, Mr Van Westerloo

was re-appointed as a member of the supervisory board

for a term of four years. Messrs Scholtes and Deuzeman

will offer themselves for re-election as members of

BinckBank’s supervisory board at the general meeting of

2011. If Messrs Scholtes and Deuzeman are re-elected,

the supervisory board will consist of Messrs Scholtes,

Brouwer, Deuzeman and Van Westerloo. Information on

the members of the supervisory board as referred to in

best practice provision III.1.3 of the Code and can be

found on page 72 and 73 of this annual report.

The composition of the supervisory board is such that

the members, both in relation to each other, the

executive board or any other particular interest, can

operate independently within the framework of the

supervisory board profile. The supervisory board believes

that the independence criteria referred to in best practice

provision III.2.1 of the Code have been met.

The members of the supervisory board have attended

virtually all meetings. Reasons for their absence must be

limited to circumstances beyond their control. The

availability of the members of the executive and

supervisory boards for interim consultations has proved

satisfactory.

Meetings of the supervisory board in 2010

In 2010, the supervisory board met six times during

regular, combined meetings with the executive board.

The meetings were held in the months of February,

March, April, July, October and December. In addition,

the chairman and, on certain occasions, an individual

member of the supervisory board conducted frequent

informal consultations with members of the executive

board. In addition, the supervisory board met twice

during separate meetings. The number of meetings

reflects the supervisory board’s close involvement with

the company. A similar schedule for meetings will be

maintained by the supervisory board in 2011.

The agendas for the meetings covered virtually all

aspects of management and were always prepared by

the chairman of the supervisory board in consultation

with the chairman of the executive board. Among the

issues discussed were strategy, the interests of all

stockholders especially those of the customers and

shareholders, the primary risks facing the company, the

outcome of executive board appraisals concerning the

set-up and the effect of internal risk management and

control systems, and significant changes. Other issues

such as budget, internal and external financial quarterly,

interim and annual reports were also discussed.

Particular consideration was given to the division of

tasks for the supervisory board members and

subcommittees, risk appetite by the executive board,

decision-making processes concerning the international

expansion into Italy, the joint venture with Delta Lloyd

(BeFrank), the progress of TOM, the acquisition of

ThinkCapital, key-staff remunerations, CSR policy,

volatility of the revenue model, competitive position and

domestic and international price developments for

online brokerage services. Recurring topics, such as

regular progress reports and audit reports (discussed in

the presence of the external auditor) were also discussed

during the meetings of the supervisory board.

The meetings were characterised by an open, amicable

atmosphere with sufficient room for constructive

criticism. As a result, the supervisory board was able to

excel in the performance of its supervisory and advisory

duties. Those attending the meetings experienced the

chairmanship conducted by the chairman of the

supervisory board as satisfactory.

The quality of the documents up for discussion during

the meetings of the supervisory board and the combined

meetings with the executive board was good and

available in a timely fashion. This enabled a valuable

exchange of views regarding all relevant developments

and risks within operational management, policy and

strategy, due to which a sound decision-making process

was safeguarded.

In the absence of the executive board the supervisory

board discussed its own functioning as a whole and that

of its individual members and committees, the effect of

permanent education as referred to in principle 2.1.8 of

the Banking Code as well as all conclusions that needed

to be drawn. In accordance with the Banking Code,

performance by the supervisory board was assessed

under the supervision of an independent, professional

third party, namely Mr P.M.L. Frentrop, who is known to

be an expert in the principles of good corporate

governance.

63 Annual Report 2010


Partly in view of the above, the assessment was

conducted as part of a plenary session against the

background of the profile, composition and competence

of the supervisory board as well as that of its individual

members. These assessments were obviously carried out

with the necessary prudence.

Supervising the provision of financial information by the

company, based on a recommendation by the audit

committee to that effect, is a task carried out by the

supervisory board. All meetings were attended by the

Chairman of the executive board and the CFO of

BinckBank.

64

Report of the supervisory board

Again in the absence of the executive board, the

functioning of the executive board as a whole and that

of its individual members have been discussed by the

supervisory board. In making its assessments, the

supervisory board had to evaluate whether all executive

board members would be individually competent

enough to meet the stringent professional requirements

of DNB. These assessments were also made as part of a

plenary session.

The supervisory board has concluded unanimously that

the executive board and its individual members

performed well last year. The executive board operates

as a well-attuned team in which the individual members

performed well, continuing to pay attention to the

specific areas of expertise assigned to them and

operating from a broad, communal platform of

responsibility. Within this context, the exchange of

specific information regarding these areas of expertise

between the individual members of the executive board

as well as between the executive board and the

supervisory board, has been both timely and of high

quality, enabling those involved to properly perform

their duties. Since the members of the executive board,

each operating from their own specific background, have

pro-actively and intensively exchanged information and

experience, they have succeeded in implementing the

principles of collective management.

Meetings of the audit committee in 2010

The supervisory board has appointed an audit committee

from among its members, consisting of Messrs Brouwer

(chairman), Scholtes and Deuzeman. The meetings are

attended by the chairman of the executive board, the

CFO, the Internal Accountancy Service (IAD) manager

and the Compliance department manager. The audit

committee meets the prevailing independence

requirements and has sufficient members with the

required financial expert knowledge. The audit

committee met four times in 2010 during meetings held

in the months of February, June, September and

November.

The activities of the audit committee include supervising

the set-up, availability and functioning of the system of

internal control and risk management measures, followup

on the recommendations made by the external

auditor and IAD performance.

Focal points during the audit committee meetings were

the audits carried out by the IAD and Compliance

department, including the subsequent findings and

recommendations. The audit committee has assessed

the set-up, availability and functioning of the internal

control measures and found these to be adequate in

relation to the researched risk areas.

This year, as in 2009, considerable progress has been

made in implementing the internal risk management

system in a Governance-Risk-Compliance application.

The processes, risk and control measures have been

entered into this application and facilitate the creation

of a transparent record of the effectiveness of the

identified control measures. Special attention in 2010

was given to fiscal affairs, the segmentation overview

and the management letter and audit plan for 2010

drawn up by Ernst & Young.

In the third quarter of 2010, an external IAD quality

assessment was performed as part of what was in fact a

combined review on compliance with the applicable

regulations carried out by the Institute of Internal

Auditors (IIA), the Royal Netherlands Institute of

Registered Accountants (NIVRA) and the Netherlands

Association of Register EDP Auditors (NOREA). Their final

judgment was that the internal system of quality control

measures complies with the generally accepted

standards in the Netherlands and that the internal audits

are performed in accordance with the International

Standard for professional internal auditing.

The audit committee has fulfilled its preparatory task in

facilitating the integral supervisory capacity of the

supervisory board.

Meetings of the risk and product development

committee in 2010

At the end of 2009, a risk and product development

committee was installed next to the audit committee by

the supervisory board in accordance with the Banking

Code. This risk committee consists of Messrs Deuzeman,

Brouwer and Van Westerloo and is currently chaired by

Mr Deuzeman. The CEO and CFO of the executive board

as well as board member Mr. Bortot have seats on the

committee, as do the managers of the departments

involved. The tasks of the risk and product development

committee include advising the supervisory board on the

contents of the risk profile and company risk appetite.


This ensures that the risks involved are analysed properly

and dealt with correctly. The product approval process,

initiated in compliance with the Banking Code, provides

for supervision by the risk and product development

committee. This risk committee met four times in 2010,

in the months of March, June, September and November.

Special attention was given to the implementation of

the product approval process, the role of the Treasury

Department, investment policy, capital adequacy

assessment (ICAAP), the liquidity contingency plan

(ILAAP), the risks facing Alex Asset Management, the

outcome of the European stress test, the introduction of

new products such as SRD and a Mutual funds

supermarket and the plans for migrating (2011) customers

to the European IT platform.

Remuneration of the executive board

The Remuneration Policy for 2010 was laid down during

the annual general meeting of 2010.

The ensuing Remuneration Policy 2010 was drawn up

with due consideration for relevant social developments

and with as much consideration as possible for the

various recommendations as laid down in the Code, the

Banking Code and the Principles for a controlled

remuneration policy.

Outlines of the remuneration report

General

Best practice provision II.2.12 of the Code stipulates that

information must be included in the remuneration report

as to the manner in which the remuneration policy of the

preceding year has been implemented. In addition, it

must contain a remuneration policy overview for the

following and subsequent years as envisaged by the

supervisory board.

The remuneration report for calendar year 2010

(Remuneration Report 2010) can be found on BinckBank’s

website (www.binck.com).

Remuneration Policy 2010

Remuneration elements

The Remuneration Policy 2010 provides for the following

elements.:

a) fixed gross annual salary

b) variable short-term payment

c) variable long-term payment

d) pension provisions and a WAO-excedent insurance

e) car lease scheme and mobile telephone reimbursement

The contents of the Remuneration Policy 2010 and the

manner in which the remuneration policy has been

implemented by the supervisory board in financial year

2010 are described in the paragraphs below.

a) fixed gross annual salary

The fixed gross annual salaries are determined by the

supervisory board within a predefined framework

described in the Remuneration Policy 2010. In doing so

the supervisory board makes a distinction between the

tasks and responsibilities of the Chairman and those of

the other members of the executive board.

The gross annual salaries have not changed in comparison

to those of the preceding year, and, in accordance with

the Remuneration Policy 2010, have been set by the

supervisory board at:

K.N. Beentjes € 375,000

P. Aartsen € 300,000

E.J.M. Kooistra € 300,000

N. Bortot € 300,000

b) variable short-term payment

Variable short-term payment is a gross cash payment

which, in addition to the fixed gross annual salary, can be

awarded to an executive board member during a calendar

year (pro rata), subject to a maximum of 1/3 of the gross

annual salary. The extent to which a variable short-term

payment is awarded depends on how much of the

budgeted, adjusted net annual profit has been realised.

Variable short-term payments can only be awarded if at

least 80% of the budgeted, adjusted net annual profit

has been realised.

65 Annual Report 2010

Introduction

The remuneration policy for 2010 was laid down during

the annual general meeting of 2010 (Remuneration

Policy 2010). The Remuneration Policy 2010 serves as a

framework within which the remunerations for 2010 of

BinckBank’s executive board members have been

formalised by the supervisory board.

The quantitative target for 2010 of an adjusted net

annual profit of € 79.2 million has not been fully realised.

The adjusted net annual profit amounted to

€ 75.2 million. This figure represents 95% of the required

target and as such exceeds the minimum limit of 80% of

the budgeted, adjusted annual net profit. The supervisory

board has decided that 88% of the maximum variable

short-term payment is to be awarded.


66

Report of the supervisory board

c) variable long-term payment

Variable long-term payment is a variable, gross payment

with which the executive board is obliged to purchase

ordinary BinckBank shares which, in addition to the

fixed, gross annual salary and a possible variable shortterm

payment, can be distributed (pro rata) to an

executive board member. A variable, long-term payment

cannot amount to any more than a 2/3 part of the fixed,

gross annual salary.

The extent to which a variable long-term payment is

awarded depends in equal parts on the degree to which

respectively the qualitative and quantitative long-term

targets defined by the supervisory board have been

achieved according to the discretionary judgement of

the supervisory board. If a variable long-term payment is

awarded, the executive board member in question is

bound to a lock-up period of five calendar years.

The awarding of a variable long-term payment for 50%

depends on the long-term qualitative targets. These

targets relate to concrete projects that enable the

company to develop and expand. They include the

introduction of a Mutual funds supermarket in the

Netherlands and Belgium, the introduction of SRD in

France, the preparation of automating additional rollout

into new countries and the selection of a fourth country.

Professional Services has entered into new agreements

and TOM Broker BV has gone operational as MTF. Other

qualitative targets focus on internal control and relate to

system availability, contingency, defining future IT

architecture and improving and implementing various

reporting and risk management systems. The supervisory

board concludes that 83% of these quantitative targets

has been realised, and that therefore 83% of the

maximum required variable long-term payment is

awarded.

Whether the remaining 50% of the variable long-term

payment is awarded depends on the extent to which the

long-term qualitative targets concerning the long-term

development of the earnings per share (EPS), customer

satisfaction and the number of brokerage accounts have

been achieved. The supervisory board has concluded

that 65% of these quantitative targets have been realised

and that 65% of the maximum required variable longterm

payment based on those targets is therefore

awarded.

d) Pension scheme and WAO-excedent insurance

The executive board members participate in a pension

scheme in which 20% of the gross annual salary is paid

by the company towards a defined contribution scheme

in contributions. BinckBank pays 50% of the WAOexcedent

insurance contributions. This insurance entitles

those covered by it to receive 70% of their most recent

salary. The annual contribution amounts to 2.3630% of

the sum insured. The executive board members have

participated in this scheme in 2010.

e) Car leasing scheme and reimbursement of mobile

telephone expenses

The executive board members participate in BinckBank’s

car leasing scheme and are reimbursed for mobile

telephone expenses. The executive board members have

participated in this scheme in 2010.

Loans extended to members of the executive board

As at 31 December 2010, one executive board member

had been extended a collateralised loan, namely

Mr N. Bortot to the amount of € 339,000. At the end of

2009, there were two executive board members with

collateralised loans, namely P. Aartsen to the amount of

€ 20,689 and N. Bortot to the amount of € 124,825.

In all, this means that 74% of the variable long-term

payment has been awarded.


Remuneration overview for the executive board in 2009 and 2010

Remuneration

of the

executive

board in 2010

Fixed basic

remuneration

Pension

contribution

20%

Social

security

Short term

performancerelated

pay

2010 (cash)

Long term

performancerelated

pay

2010 (shares)*

Total

remuneration

(fixed +

variable)

Total

performance

related pay

2010

Variable as

a % of

fixed

remuneration

Shares

BinckBank

held at

year-end

2010

of which

shares in

lock-up

period

K.N. Beentjes € 375,000 € 75,000 € 7,387 € 110,398 € 184,563 € 294,961 € 752,348 79% 19,872 9,872

P. Aartsen € 300,000 € 60,000 € 7,387 € 88,318 € 147,650 € 235,968 € 603,355 79% 37,322 7,897

E.J.M. Kooistra € 300,000 € 60,000 € 7,387 € 88,318 € 147,650 € 235,968 € 603,355 79% 20,876 7,897

N. Bortot € 300,000 € 60,000 € 7,387 € 88,318 € 147,650 € 235,968 € 603,355 79% 51,984 7,897

Total € 1,275,000 € 255,000 € 29,548 € 375,352 € 627,513 € 1,002,865 € 2,562,413 130,054 33,563

* Members of the executive board are obliged to use the net value for the acquisition of shares BinckBank N.V. at the price of 27 April 2011, subject to a lock up

of 5 years

Remuneration

of the

executive

board in 2009

Fixed basic

remuneration

Pension

contribution

20%

Social

security

Performancerelated

pay 2009

(cash)

Accrual for

settlement of

remuneration

policy 2009

Accrual for

settlement of

remuneration

policy 2009***

after

maximisation

Maximisation

Banking

Codes

Total

performance

related pay

2009

Total

remuniration

(fixed

+ variable)

Variable

as a % of

fixed

remuneration

Shares

BinckBank

held at

year-end

2009

T.C.V. Schaap* € 141,667 € 28,333 € 2,284 € 0 € 0 € 0 € 0 € 0 € 172,284 0% nvt

K.N. Beentjes** € 250,000 € 50,000 € 4,568 € 84,375 € 280,424 -€ 114,799 € 165,625 € 250,000 € 554,568 100% 10,000

P. Aartsen € 300,000 € 60,000 € 6,852 € 101,250 € 336,509 -€ 137,759 € 198,750 € 300,000 € 666,852 100% 22,214

E.J.M. Kooistra € 300,000 € 60,000 € 6,852 € 101,250 € 336,509 -€ 137,759 € 198,750 € 300,000 € 666,852 100% 5,768

N. Bortot € 300,000 € 60,000 € 6,852 € 101,250 € 336,509 -€ 137,759 € 198,750 € 300,000 € 666,852 100% 39,280

Total € 1,291,667 € 258,333 € 27,408 € 388,125 € 1,289,952 -€ 528,077 € 761,875 € 1,150,000 € 2,727,408 77,262

* stand down on 28 April 2009 – after having stand down, Mr Schaap remained affiliated to the company for some time at a fee of € 65,000

** appointed as a member of the executive board on 28 April 2009 – fixed remuneration rounded off to whole months

*** the member of the executive board is obliged to use the net value for the acquisition of Binckbank N.V. shares at the price of 27 April 2010, subject to a lock-up period of 4

years

Remuneration of members of the supervisory board and

committees in financial year 2010

During the annual general meeting of shareholders held

on 26 April 2010, it was decided that the following

remunerations were to be applied to the members of the

supervisory board as from 1 January 2010.

Supervisory board

Annual remuneration:

- Chairman of the supervisory board € 40,000 gross

- Member of the supervisory board € 26,000 gross

The commissions for the members of the supervisory

board were paid out in conformity with the above.

The tables below provide overviews of the remunerations

for the members of the supervisory board, the audit

committee and the risk and product development

committee and of the remaining terms of appointment

for the individual members of the supervisory board.

67 Annual Report 2010

Committees

Annual committee compensation:

- Chairman of the audit committee € 8,000 gross

- Member of the audit committee € 6,000 gross

- Chairman of the risk and product development

committee € 8,000 gross

- Member of the risk and product development

committee € 6,000 gross


Remuneration overview for the members of the supervisory board in 2009 and 2010

Remuneration of the

supervisory board 2010

Fixed remuneration

member of SB

Fixed

remuneration

member of AC

Fixed

remuneration

member of RPC

Total

Shares BinckBank

held at year-end

2010

C.J.M. Scholtes € 40,000 € 6,000 € 46,000 -

J.K. Brouwer € 26,000 € 8,000 € 6,000 € 40,000 -

A.M. van Westerloo € 26,000 - € 6,000 € 32,000 -

L. Deuzeman € 26,000 € 6,000 € 8,000 € 40,000 -

Total € 118,000 € 20,000 € 20,000 € 158,000 0

Remuneration of the

supervisory board 2009

Fixed remuneration

member of SB

Fixed

remuneration

member of AC

Total

Shares BinckBank

held at year-end

2009

C.J.M. Scholtes € 40,000 € 4,000 - € 44,000 -

J.K. Brouwer € 26,000 € 6,000 - € 32,000 -

A.M. van Westerloo € 26,000 - - € 26,000 -

L. Deuzeman € 26,000 € 4,000 - € 30,000 -

Total € 118,000 € 14,000 - € 132,000 0

Overview of the terms of appointment for the members of the SB

Overview of contract terms

SB members

Date

of (re)appointment

Date of

contract expiry

C.J.M. Scholtes 19-4-2007 AGM 2011

J.K. Brouwer 28-4-2009 AGM 2013

A.M. van Westerloo 26-4-2010 AGM 2014

L. Deuzeman 19-11-2007 AGM 2011

68

Report of the supervisory board

Consultation with the Works Council

Mr Scholtes, on behalf of the supervisory board, on 7 May

2010 attended a meeting with the Works Council. The

supervisory board highly values its relationship with the

Works Council and has found contact with its members

to be constructive and valuable.

Financial statements and dividend

The 2010 financial statements were discussed and

adopted by the supervisory board during their meeting

of 10 March 2010 with the executive board and Ernst &

Young, the external auditors. An auditor’s report was

issued by Ernst & Young. The financial statements will be

submitted to the annual general meeting of shareholders

for adoption on 26 April 2011.

The proposed dividend for 2010 amounts to € 0.51 per

ordinary share. Bearing in mind the previously paid out

interim dividend of € 0.24, the proposed final dividend

amounts to € 0.27 per ordinary share less 15% dividend

tax, to be made payable on Monday 4 May 2011.

Supervisory board

Amsterdam, 10 March 2011

C.J.M. Scholtes (Chairman)

J.K. Brouwer

L. Deuzeman

A.M. van Westerloo


This page was left blank intentionally

69 Annual Report 2010


From left to right: Dhr. Leo Deuzeman, Dhr. Hans Brouwer, Dhr. Kees Scholtes and Dhr. Fons van Westerloo


CVs of the supervisory board members

Kees J.M. Scholtes, Chairman

(1945 – Dutch nationality)

Hans K. Brouwer

(1944 – Dutch nationality)

72

Report of the supervisory board

Mr Scholtes has been a member of the supervisory board

for BinckBank since 2004 and was re-appointed for a

term of four years during the annual general meeting of

shareholders of 19 April 2007. Mr Scholtes will be

proposed for re-appointment during the annual general

meeting of shareholders on 26 April 2011. The supervisory

board has appointed Mr Scholtes chairman of its board.

Mr Scholtes is a former director of Postbank N.V., NMB

Postbank N.V. and ING Bank N.V., a former member of the

executive committee of ING Asset Management B.V. and

a former supervisory director of various investment

funds at Postbank N.V., NMB Postbank N.V. and ING Bank

N.V. In addition, Mr Scholtes was a former supervisory

director for Parcom N.V., Barings Private Equity Holding,

Euroclear Nederland (predecessors in title Niec and

Necigef) and RBC Dexia Securities Services N.V. (former

CDC Labouchere Securities Services N.V.) and a former

member of the board of the Amsterdam Stock and

Options Exchange (now NYSE Euronext). Mr Scholtes was

also project manager during the formation of the Dutch

Securities Institute and the Financial Services Foundation.

Mr Scholtes is currently also chairman of the supervisory

board for IBUS Company N.V., a director of finance

company Colonade B.V. and member of the investment

committee of Kunst en Cultuur Pensioen en Levensverzekering

Maatschappij N.V.. As a member of the

Enterprise Division’s Investigating Committee he is

involved in monitoring the policies and state of events at

Fortis and VDM.

Number of shares held in BinckBank at the end of 2010: 0

Mr Brouwer has been a member of the supervisory board

of BinckBank since 2004 and was re-appointed for the

maximum term of four years during the annual general

meeting of shareholders on 28 April 2009.

In 1981, following a military career as cavalry officer, Mr

Brouwer took up employment with the ABN Bank, during

which time he was involved in various activities, among

which the reorganisation of senior kader recruitment

and training, the reorganisation of lending operations

and foreign office development in regions such as

Europe, the Middle East and the Far East. In 1988, Mr

Brouwer was appointed board member of the Amsterdam

Stock Exchange Association (VvdE), where he was

responsible for regulations, trade supervision and – as a

special project – restructuring the entire Amsterdam

Stock Exchange Association organisation. Following the

successful restructuring of the organisation, Mr Brouwer

was appointed general director of the Amsterdam Stock

Exchange Association in 1991. After the successful merger

between the Amsterdam Stock Exchange and EOE

Options Exchange into Amsterdam Exchanges (AEX) on 1

January 1997, he was appointed director of Amsterdam

Exchanges N.V. and general manager of AEX-

Effectenbeurs N.V.

Shortly before the merger with the Paris and Brussels

stock exchanges (2002) – Euronext – Mr Brouwer

withdrew from his position at Euronext and has since

held a number of supervisory directorships at Van Meijel,

Nobel, BinckBank and Vital Innovators. He is also a

member of the supervisory board for Vita Valley. At the

request of, among others, the World Bank, Mr Brouwer

and a team of stock exchange specialists accompanied

the set-up and further expansion of stock exchanges in

various countries. A similar project was also completed

in Baku/Azerbaijan. Mr. Brower is also chairman of the

foundation AMINDHO, cultural and economic, reltaions

Netherlands-Indonesia and chairman of the foundation

‘Jazz orchestra of the Concertgebouw‘.

Number of shares held in BinckBank at the end of 2010: 0


Leo Deuzeman

(1952 – Dutch nationality)

Fons M. van Westerloo

(1946 – Dutch nationality)

Mr Deuzeman was appointed for a period of four years as

a member of the supervisory board of BinckBank during

the annual general meeting of shareholders on 19

November 2007. Mr Deuzeman will be proposed for reappointment

at the annual general meeting of

shareholders on 26 April 2011.

Mr Deuzeman is a business economist and was employed

by Deloitte as a chartered accountant from 1979 to 1986.

In the period 1976-1979, he was connected to the

University of Groningen as a scientific member of staff

with the Financial Department of the Faculty of Economic

Sciences. From 1990 to 1998 and from April 2003 to April

2007, he held the position of CFO at Kempen & Co N.V., at

which bank he fulfilled the role of director of finances

and administration from 1986 to 1990. In addition, Mr

Deuzeman was a managing partner of Greenfield Capital

Partners N.V from 1998 to 2003 and held positions as a

member of the board with Publifisque B.V.,

Managementmij Tolsteeg B.V., Kempen Management

B.V., Asmey B.V., Arceba B.V., Kempen Finance B.V., Global

Property Research B.V., Kempen Deelnemingen B.V.,

Greenpart B.V., Greenfield Management Services B.V.

and Nethave Management N.V. He was also a supervisory

director for Trustus Capital Management B.V., Engage

B.V., Cegeka N.V. and Kempen Custody Services N.V.

Mr Deuzeman currently also holds positions as a

supervisory director for the Blue Sky Group, Intereffekt

Investment Funds and Monolith Investment

Management in Amsterdam. He is the chairman of

Stichting Administratiekantoor Monolith Fund in

Amsterdam and is also chairman of the supervisory

board for Capital Guards in Rotterdam.

Mr Van Westerloo has been a member of BinckBank’s

supervisory board since 2004. He was re-appointed for a

term of four years during the annual general meeting of

shareholders on 26 April 2010.

Mr Van Westerloo formerly held positions as a member

of the Operational Management Committee for RTL

Group S.A., CEO of RTL Nederland B.V., CEO of SBS

Broadcasting B.V., director of RTL 5 and deputy manager

of broadcasting organisation AVRO.

Mr Van Westerloo holds supervisory directorships at

InShared BV (a subsidiary of Eureko/Achmea). He is also a

supervisory director for NOC/NSF and a member of the

supervisory board for Wereldomroep (Radio Netherlands

Worldwide). He is a member of the Advisory Council of

DDB Amsterdam B.V., Entertainment Studies Hogeschool

INHOLLAND, 3Stone bedrijfsmakelaars, ITV media and

Xsaga Events. He is also the chairman of the Press Council

Foundation, National Home Shopping Awards

Foundation and a member of the Wheel of Energy

Foundation. He is an ambassador for the Royal Dutch

Opera and a member of the supervisory board for the

Royal Concertgebouw Orchestra.

Number of shares held in BinckBank at the end of 2010: 0

73 Annual Report 2010

Number of shares held in BinckBank at the end of 2010: 0


Our objective is to continue to exceed

the expectations of our customers

Financial statements 2010

74


Matthijs Aler

Director Retail

75 Annual report 2010


Financial statements 2010 BinckBank N.V.

Consolidated financial statements

Consolidated statement of financial position ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 78

Consolidated income statement •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 79

Consolidated statement of comprehensive income •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••80

Consolidated statement of cash flow •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 81

Consolidated statement of changes in equity ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 83

Notes to the consolidated financial statements

1 General information •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••84

2 Accounting principles used for consolidation• •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••86

3 Related party disclosures ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 87

4 Recognition and measurement of assets, equity and liabilities ••••••••••••••••••••••••••••••••••••••••••••••• 87

5 Recognition and measurement of income and expenses• •••••••••••••••••••••••••••••••••••••••••••••••••• 96

6 Acquisition of business activities ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••97

76

Financial statements 2010

Notes to the consolidated statement of financial position

7 Cash and balances with central banks•••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••98

8 Banks ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••98

9 Financial assets and liabilities at fair value through profit or loss •••••••••••••••••••••••••••••••••••••••••••• 99

10 Available-for-sale financial assets •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••100

11 Loans and receivables •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••100

12 Held-to-maturity investments ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••100

13 Investmet in associates and joint ventures ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 101

14 Intangible assets ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 102

15 Property, plant and equipment ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 105

16 Current tax ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••106

17 Deferred tax ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 107

18 Other assets ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 108

19 Prepayments and accrued income •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 108

20 Derivative positions held on behalf of clients ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 108

21 Customer deposits •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 108

22 Provisions ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 108

23 Other liabilities •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••109

24 Accruals and deferred income ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••109

25 Equity •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••109

Notes to the consolidated income statement

26 Net interest income ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 113

27 Net fee and commission income •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 113

28 Other income •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 114

29 Result from financial instruments ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 114

30 Impairment of financial assets ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 114

31 Employee expenses ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 115

32 Depreciation and amortisation ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 115

33 Other operating expenses ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 116

34 Earnings per share •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 116


Other notes to the consolidated financial statements

35 Dividend distributed and proposed •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 117

36 Fair value of financial instruments •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 117

37 Classification of assets en liabilities by expected maturity ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••119

38 Related parties •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 121

39 Off balance sheet commitements ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 122

40 Events after balance sheet date ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 123

41 Segment information •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 123

42 Risk management ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 126

Company financial statements

Company balance sheet •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 148

Company income statement •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 148

Company statement of changes in equity••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 149

Notes to the company financial statements

a General •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 151

b Accounting policies •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 151

Notes to the company balance sheet

c Cash and balances with central banks •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 152

d Banks •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 152

e Loans and receivables •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 152

f Bonds and other fixed-income securities ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 153

g Equities and other non-fixed-income securities ••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 153

h Investment in associaties and joint ventures •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 154

i Intangible assets •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 155

j Property, plant and equipment •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 156

k Current tax ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 157

l Deferred tax •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 157

m Other assets •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 157

n Prepayments and accrued income•••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 157

o Customer deposits •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 158

p Other liabilities ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 158

q Accruals and deferred income ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 158

r Provisions••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 159

s Equity ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••160

77 Annual report 2010

Other notes to the company financial statements

t Note on audit expenses •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 162

u Off balance sheet commitements ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 163

v Remuneration of the executive board and the supervisory board •••••••••••••••••••••••••••••••••••••••••• 164

w Events after balance sheet date ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 164

Other data

Auditos report •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 165

Provisions of the articles of association regarding priority shares (articles 15 and 21) •••••••••••••••••••••••••••••••••• 166

Provisions of the articles of association regarding profit appropriation (article 32) • •••••••••••••••••••••••••••••••••• 167

Proposal for profit appropriation •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 167


Consolidated statement of financial position

Note 31 December 2010 31 December 2009

x € 1,000 x € 1,000

Assets

Cash and balance with central banks 7 105,972 48,936

Banks 8 177,316 179,692

Financial assets held for trading 9 169 -

Financial assets at fair value through profit and loss 9 13,856 37,294

Available-for-sale financial assets 10 1,599,700 1,511,903

Loans and receivables 11 496,266 410,169

Held-to-maturity financial assets 12 4,121 8,329

Investment in associates and joint ventures 13 3,067 1,953

Intangible assets 14 320,757 348,561

Property, plant and equipment 15 43,901 12,512

Current tax 16 4,949 1,972

Deferred tax 17 - 5,988

Other assets 18 13,050 14,286

Prepayments and accrued income 19 49,840 48,828

Derivative positions held on behalf of clients 20 383,804 299,587

Total assets 3,216,768 2,930,010

78

Financial statements 2010

Liabilities

Banks 8 25,610 -

Customer deposits 21 2,258,290 2,089,814

Financial liabilities held for trading 9 50 -

Financial liabilities at fair value through profit and loss 9 1,485 -

Provisions 22 1,268 2,660

Current tax 16 468 282

Deferred tax 17 12,695 14,490

Other liabilities 23 48,023 21,210

Accruals and deferred income 24 16,162 21,608

Derivative positions held on behalf of clients 20 383,804 299,587

Total liabilities 2,747,855 2,449,651

Equity attributable to:

Owners of the parent 25 468,986 480,359

Non-controlling interests (73) -

Total equity 468,913 480,359

Total enquity & liabilities 3,216,768 2,930,010


Consolidated income statement

Note 2010 2009

x € 1,000 x € 1.000

Income

Interest income 60,874 71,048

Interest expense (17,287) (27,223)

Net interest income 26 43,587 43,825

Fee and commission income 177,058 172,710

Fee and commission expense (50,088) (43,470)

Net fee and commission income 27 126,970 129,240

Other income 28 13,599 9,661

Result from financial instruments 29 620 4,353

Impairment of financial assets 30 70 (857)

Total income from operating activities 184,846 186,222

Expenses

Employee expenses 31 45,480 43,185

Depreciation and amortisation 32 34,798 35,939

Other operating expenses 33 44,223 43,388

Total operating expenses 124,501 122,512

Result from business operations 60,345 63,710

Share in results of associates and joint ventures 13 (1,386) (1,466)

Other non-operating income 6 23 -

Result before tax 58,982 62,244

Tax 16 (14,837) (15,083)

Net result 44,145 47,161

79 Annual report 2010

Result attributable to:

Owners of the parent 44,240 47,161

Non-controlling interests (95) -

Net result 44,145 47,161

Basic and diluted earnings per share (EPS) 34 € 0.60 € 0.63


Consolidated statement of comprehensive income

Note 2010 2009

x € 1,000 x € 1,000

Net result from income statement 44,145 47,161

Other comprehensive income

Exchange-rate conversion from foreign

associates

25 - (70)

Net gain/(loss) on fair value of available-forsale

financial assets

25 (21,070) 10,912

Gains and losses through profit and loss 25 (1,467) (4,093)

Tax on results through equity 25 6,138 (1,862)

Other comprehensive income, net of tax (16,399) 4,887

Total comprehensive income, net of tax 27,746 52,048

Result attributable:

Owners of the parent 27,841 52,048

Non-controlling interests (95) -

Total realised and unrealised results, after tax 27,746 52,048

Financial statements 2010

80


Consolidated statement of cash flows

2010 2009

x € 1,000 x € 1,000

Cash flow from operating activities

Net result for the year 44,145 47,161

Adjustments for:

Amortisation of intangible assets and depreciation of

property, plant and equipment

34,798 35,939

Provisions 1,280 2,567

Impairment losses on loans and receivables (189) 857

Movements in deferred tax 10,331 4,504

Share in undistributed results of associates and joint ventures 1,386 1,466

Other non-cash movements 101 32

Movements in:

Banks (assets) (5,780) -

Financial assets and liabilities held for trading (119) -

Financial assets at fair value through profit and loss 24,923 (261)

Loans and receivables (85,908) (182,651)

Taxes, other assets and prepayments and accrued income (2,753) (15,378)

Banks (liabilities) 25,610 -

Customer deposits 168,476 342,115

Tax liabilities, other liabilities, accruals and deferred income 21,553 (28,520)

Net cash flow from operating activities 237,854 207,831

Cash flow from investment activities

Available-for-sale financial assets (110,334) (206,852)

Held-to-maturity financial assets 4,208 4,229

Disposal of associates and subsidiary - 1,606

Investments in associates and joint ventures (2,500) (3,000)

Investments in intangible assets (2,081) (240)

Investments in property, plant and equipment (36,302) (9,216)

Net cash flow from investment activities (147,009) (213,473)

81 Annual report 2010


Consolidated statement of cash flows (continued)

2010 2009

x € 1,000 x € 1,000

Cash flow from financing activities

Buy-back of own shares (4) (17,988)

Sale of own shares 1,454 -

Non-controlling interests on initial recognition 22 -

Dividends paid:

• Final dividend preceding year (22,977) (15,773)

• Interim dividend current year (17,788) (15,670)

Net cash flow from financing activities (39,293) (49,431)

Net cash flow 51,552 (55,073)

Opening balance of cash and cash equivalents 228,628 283,701

Closing balance of cash and cash equivalents 280,180 228,628

Movement in cash and cash equivalents 51,552 (55,073)

82

Financial statements 2010

The cash and cash equivalents presented in the consolidated

cash flow statement are included in the balance sheet under

the following headings at the amounts stated below:

Cash 105,972 48,936

Banks 177,316 179,692

Banks – non-cash equivalents (3,108) -

Total cash equivalents 280,180 228,628

Cash flow from operating activities includes the following

items:

• Tax paid (17,814) (12,432)

• Interest received 58,591 68,491

• Interest paid (18,359) (33,573)

• Commission received 173,205 169,217

• Commission paid (52,235) (41,246)


Consolidated statement of changes in equity

x € 1,000

Issued

share

capital

Share

premium

reserve

Treasury

shares

Fair value

reserve

profit

Other

reserves

Unappropriated

Noncontrolling

interests

Total

equity

1 January 2010 7,607 386,978 (18,097) 13,789 47,161 42,921 - 480,359

Net result for the year - - - - 44,240 - (95) 44,145

Other comprehensive

income

- - - (16,399) - - - (16,399)

Total comprehensive

income

- - - (16,399) 44,240 - (95) 27,746

Payment of final

dividend

- - - - - (22,977) - (22,977)

Payment of interim

dividend

- - - - - (17,788) - (17,788)

Grant of rights to shares - - - - - 101 - 101

Sale of shares to

executive board and

- - 1,053 - - 401 - 1,454

employees

Buy-back of shares - - (4) - - - - (4)

Cancelled shares (157) (13,556) 13,713 - - - - -

Non-controlling

interests on initial

- - - - - - 22 22

recognition

Transfer of retained

earnings to other

- - - - (47,161) 47,161 - -

reserves

31 December 2010 7,450 373,422 (3,335) (2,610) 44,240 49,819 (73) 468,913

x € 1,000

Issued

share

capital

Share

premium

reserve

Treasury

shares

Fair value

reserve

Unappropriated

profit

Other

reserves

Noncontrolling

interests

Total

equity

1 January 2009 7,709 392,395 (5,628) 8,832 33,145 41,188 - 477,641

Net result for the year - - - - 47,161 - - 47,161

Other comprehensive

income

- - - 4,957 - (70) - 4,887

Total comprehensive

income

- - - 4,957 47,161 (70) - 52,048

Payment of final

dividend

- - - - - (15,773) - (15,773)

Payment of interim

dividend

- - - - - (15,670) - (15,670)

Grant of rights to shares - - - - - 101 - 101

Buy-back of shares - - (17,988) - - - - (17,988)

Cancelled shares (102) (5,417) 5,519 - - - - -

Transfer of retained

earnings to other

- - - - (33,145) 33,145 - -

reserves

31 December 2009 7,607 386,978 (18,097) 13,789 47,161 42,921 - 480,359

83 Annual report 2010


Notes to the consolidated financial statements

1. General information

Company information

BinckBank N.V., established and registered in the Netherlands, is a public limited liability company incorporated under

Dutch law, whose shares are publicly traded. BinckBank N.V. is officially domiciled at Barbara Strozzilaan 310, 1083 HN

Amsterdam. BinckBank N.V. provides conventional and internet broking services in securities and derivative transactions

for private and professional investors. In the following pages, the name ‘BinckBank’ will be used to refer to BinckBank N.V.

and its various subsidiaries.

BinckBank’s consolidated financial statements for the period ending on 31 December 2010 have been prepared by the

executive board and approved for publication pursuant to the resolution of the executive board and the supervisory

board dated 10 March 2011.

Executive board:

Supervisory board:

K.N. Beentjes (chairman)

C.J.M. Scholtes (chairman)

E.J.M. Kooistra (CFO)

J.K. Brouwer

P. Aartsen L. Deuzeman

N. Bortot A.M. van Westerloo

Presentation of the financial statements

The consolidated financial statements have been prepared in accordance with the International Financial Reporting

Standards (IFRS) adopted by the International Accounting Standards Board and endorsed by the European Commission.

84

Financial statements 2010

Unless otherwise stated, the consolidated financial statements are in euros, with all amounts rounded to the nearest

thousand.

Implications of new, amended and improved standards

New and amended IFRS standards and IFRIC interpretations effective in 2010

New or amended standards take effect on the date as stated by IFRS and after ratification by the EU, whereby earlier

application is permitted in some cases.

• IFRS 1 First-time adoption of International Financial Reporting Standards (revised), effective for financial years

beginning on or after 1 January 2010. Since BinckBank is not a first-time adopter of IFRS, the revised standard does not

apply.

• IFRS 1 First-time adoption of International Financial Reporting Standards – Additional exemptions for first-time

adopters, effective for financial years beginning on or after 1 January 2010. Since BinckBank is not a first-time adopter

of IFRS, the revised standard does not apply.

• IFRS 2 Share-based payments – share-based payment transactions settled in cash in a group, effective as of 1 January

2010. This change clarifies the scope of the standard and the treatment of share-based payment transactions settled

in cash within a group, and has no effect for BinckBank.

• IFRS 3 Business combinations (revised) and IAS 27 Consolidated and company financial statements (amended), effective

as of 1 July 2009. The changes pursuant to IFRS 3 (revised) and IAS 27 (amended) will be applied prospectively and affect

business combinations, loss of control over subsidiary companies and transactions with non-controlling interests. In

the revised IFRS 3, transaction costs that can be directly attributed to the acquisition are no longer allocated to the

purchase price of the business combination. In the revised IFRS 3, transaction costs that can be directly attributed to

the acquisition are no longer allocated to the purchase price of the business combination. In addition, IFRS 3 allows the

acquirer, on a transaction by transaction basis, to value any non-controlling interest at fair value on the acquisition

date, or at the proportionate interest in the fair value of the acquiree’s identifiable assets and liabilities.


• IAS 39 Financial Instruments: recognition and measurement – eligible hedged items, effective as of 1 July 2009.

BinckBank has concluded that this change has no effect on its financial position and results, since it does not hold any

such hedged items.

• IFRIC 15 Agreements for the construction of real estate, effective as of 1 January 2009, does not apply to BinckBank.

• IFRIC 16 Hedges of a net investment in a foreign operation, effective as of 1 July 2009, does not apply to BinckBank.

• IFRIC 17 Distributions of non-cash assets, effective as of 1 July 2009, does not apply to BinckBank.

• IFRIC 18 Transfer of assets from customers, effective for transactions after 1 July 2009, does not apply to BinckBank.

• Improvements to IFRS standards (published in April 2009): this is a collection of minor amendments to a number of

IFRS standards which will not lead to any material adjustments for BinckBank. Improvements are only applied to the

extent they are ratified by the EU.

The following standards, amendments of standards and interpretations that have not yet taken effect or have not yet

been ratified by the European Union have not yet been applied by BinckBank:

• IFRS 9 Financial instruments, effective as of 1 January 2013. BinckBank does not expect to apply this standard before 1

January 2013 and is currently studying and evaluating its effects.

• IAS 24 Related party disclosures (revised), effective as of 1 January 2011. BinckBank does not expect to apply this

standard before 1 January 2011 and is currently studying and evaluating its effects.

• IAS 32 Financial Instruments: presentation – Classification of rights issues, effective for financial years beginning on

or after 1 February 2010. BinckBank has concluded that this change has no effect on its financial position and results,

since it has not issued any rights in foreign currency.

• IFRIC 14 requirements relating to minimum funding of an asset arising from a defined benefit pension plan, effective

for financial years beginning on or after 1 January 2011. BinckBank has concluded that this change has no effect on its

financial position and results, since it does not operate a defined benefit pension plan.

• IFRIC 19 Extinguishing financial liabilities with equity instruments, effective for financial years beginning on or after

1 July 2010, does not apply to BinckBank.

Changes in accounting principles

The principles for valuation and determination of the result are consistent with those applied in the previous year, with

additions relating to lease contracts and property, plant and equipment.

Change in presentation

In the second quarter of 2010, we changed the managerial responsibility for our subsidiary Syntel B.V. This responsibility

has been transferred from the board member responsible for the Professional Services business unit to the chairman of

the executive board. The results of Syntel are therefore no longer reported in the Professional Services business unit,

but are included in group operations. Furthermore, in order to improve the quality of the management information,

the allocation ratios of the indirect costs have been revised. The new segmentation reflects the revised managerial

responsibility. The comparative figures for 2009 have been adjusted accordingly.

85 Annual report 2010

Significant accounting judgements and estimates

The preparation of the financial statements involves making assumptions and estimates on the recognition and

measurement of assets and liabilities, contingent rights and liabilities and income and expense items. The most significant

assumptions for the future and other key sources of estimation uncertainty at balance sheet date that have a significant

risk of causing a material adjustment to the carrying amount of assets and liabilities are:

Fair value of financial instruments

Where the fair value of financial assets and financial liabilities cannot be obtained from active markets, it is arrived at using

valuation methods, including discounted cash flow models. Observable market data is used as the input to these models

wherever possible but, where this is not possible, judgements are required in determining fair values. These judgements

involve consideration of input factors including liquidity risk, credit risk and volatility. Changes in assumptions regarding

these factors can affect the fair value of financial instruments. The valuation of financial instruments is explained in

detail in Note 36.


Impairment of loans and receivables

BinckBank performs periodical tests to ascertain whether the fair value of the securities portfolio serving as collateral for

securities lending is sufficient to cover the loans. If the collateral provided by the securities portfolio is not sufficient to

cover the collateralised lending, this is an initial indication that an impairment has occurred. BinckBank makes individual

estimates of the future cash flows, proceeds from realisation of collateral net of transaction costs and the costs of

collecting the receivables. BinckBank assesses periodically whether any changes have taken place which necessitate an

adjustment of the provision for impairments.

Impairment of goodwill

BinckBank performs an impairment test on the carrying amount of goodwill at least once a year. This involves estimating

the value in use of the cash-generating units to which the goodwill is attributed. In order to estimate the value in use,

BinckBank makes an estimate of the expected future cash flows from the cash-generating unit and also determines a

suitable discount rate for calculating the net present value of those cash flows.

Fair value of identified intangible assets acquired with acquisitions

BinckBank measures the value of the identifiable intangible assets acquired with the acquisition of a company or business

activities. The measurement is performed using cash flow models and/or royalty models. BinckBank makes assumptions

and projections of future revenues and results in order to arrive at the cash flows and for determining the applicable

discount rate. Where the royalty method is used, an estimate is also made of the appropriate royalty percentage.

An impairment test is performed on each balance sheet date.

86

Financial statements 2010

Expected useful life of intangible assets and property, plant and equipment

BinckBank applies standard amortisation and depreciation periods for various groups of assets. BinckBank assesses each

individual asset periodically to establish whether the standard amortisation or depreciation period still corresponds to

the expected useful life of the asset concerned. Circumstances may occur during the use of the asset which may lead to a

situation in which the standard period no longer corresponds to the actual useful life. As soon as a deviation is identified,

the remaining carrying amount of the asset is written off over the revised remaining useful life on a straight-line basis.

Deferred tax assets

Deferred tax assets are recognised if it is probable that future taxable profits will be generated to allow the tax loss

carryforwards to be utilised.

2. Accounting principles used for consolidation

The consolidated financial statements include the assets and liabilities and the income and expense items of the company

and its subsidiaries. Subsidiaries are entities over which BinckBank has control. Control is deemed to exist if BinckBank is

able, either directly or indirectly, to govern the financial and operating policies of the company so as to obtain benefits

from its activities.

Subsidiaries are fully consolidated as soon as BinckBank obtains control. If BinckBank ceases at any point to control a

subsidiary, the subsidiary is deconsolidated immediately.

The accounting principles of the subsidiaries and their reporting periods are the same as those of BinckBank.

3. Related party disclosures

Unrealised gains on transactions with associates are eliminated in proportion to BinckBank’s interests in the companies

concerned.

There were transactions between BinckBank and its subsidiaries during the year. These intercompany transactions have

been eliminated in the consolidated financial statements.


4. Recognition and measurement of assets, equity and liabilities

Foreign currency translation

The consolidated financial statements are in euros, this being BinckBank’s functional as well as presentation currency.

Items recognised in the financial statements of each entity are measured on the basis of the relevant entity’s functional

currency. Transactions in foreign currencies are translated on initial recognition at the functional currency’s exchange

rate on the transaction date.

Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates prevailing on the

balance sheet date. Differences relating to movements in exchange rates are recognised in the income statement. Nonmonetary

items in foreign currencies measured at fair value are translated at the exchange rate at the moment the fair

value is determined. Currency translation differences on non-monetary items carried at fair value through profit and loss

are likewise recognised in the income statement. The results of financial transactions and costs are translated into euros

at the exchange rate prevailing on the transaction date in the income statement.

At the reporting date, the assets and liabilities of foreign associates are translated into BinckBank’s functional currency

at the exchange rate prevailing on the balance sheet date while the income statement is translated at the weighted

average exchange rate for the year. Translation differences are recognised directly in a separate component of equity. If

a foreign currency entity is sold, the deferred cumulative amount included in equity for the relevant entity is recognised

in the income statement.

Financial assets and liabilities

Initial recognition of financial assets and liabilities in the balance sheet

Financial assets and liabilities bought and sold in accordance with standard market conventions are recognised at the

transaction date of the relevant purchase or sale. Other financial assets and liabilities are recognised in the balance sheet

at the time of acquisition.

On initial recognition, financial instruments may be assigned to a specific category, their accounting treatment being

decided at that time. Initial recognition of financial assets and liabilities is at fair value, including directly attributable

transaction costs, except for the category which is carried at fair value through profit and loss, where the transaction

costs are expensed.

Derecognition of financial assets and liabilities

A financial asset (or a component of a financial asset or part of a group of similar financial assets) is no longer shown in

the balance sheet if:

BinckBank ceases to have a right to the cash flows from the asset; or

BinckBank retains the right to receive the cash flows from the asset but has entered into an obligation to pay them to

a third party in their entirety and without significant delay under the terms of a specific contract; or

BinckBank has transferred its rights to receive the cash flows from the asset and has either (a) largely transferred all

risks and rewards of ownership of the asset or (b) not largely transferred all risks and rewards of ownership of the

asset or retained them fully, but has transferred control of the asset.

87 Annual report 2010

If BinckBank has transferred its rights to receive the cash flows from an asset but has not largely transferred all risks

and rewards of ownership of the asset, or retained them fully and has not transferred control of the asset, that asset

continues to be recognised for as long as BinckBank remains involved with the asset. Financial liabilities cease to be

shown in the balance sheet as soon as the performance relating to the obligation has been completed or the obligation

has been removed or has expired.

Loans and receivables and the related impairments are written off if there is no longer any real possibility of being able

to recover the outstanding debt following realisation of the collateral.


Determination of fair value

The fair value of a financial instrument is based on the market price if there is an active market for that instrument.

Financial assets are carried at the bid price, financial liabilities are carried at the offer price and risk off-setting positions

are carried at the mid-price, excluding transaction costs.

For certain financial assets and liabilities, a quoted market price is not available. Various valuation methods are used

to obtain a fair value for these financial assets and liabilities, ranging from net present value calculations to valuation

models taking into account relevant price factors, including market prices of the underlying instruments referred to,

market parameters (volatilities, correlations, credit risks) and client behaviour. BinckBank only makes use of third-party

valuation models and does not make any estimates of its own with regard to the inputs used. All the valuation methods

employed are internally evaluated and approved. The majority of the data used in these valuation methods is validated

on a daily basis.

Valuation methods are inherently subjective. Measuring the fair value of certain financial assets and liabilities is

accordingly largely dependent on estimates. Valuation methods involve various assumptions with respect to price factors.

The use of other valuation methods and assumptions might produce estimates of fair values that are materially different.

Offsetting of financial assets and liabilities

Financial assets and liabilities are set off against each other and the net amount is presented in the balance sheet when

there is a legally enforceable right to set off the amounts and an intention to settle on a net basis, or realise the asset and

settle the liability simultaneously.

Accounting treatment after initial recognition

The accounting treatment after initial recognition depends on the categories described below.

88

Financial statements 2010

Financial assets or financial liabilities at fair value through profit and loss

An instrument is classified as carried at fair value through profit and loss if it is held for trading purposes or if it was

designated as such on initial recognition for one of the following reasons:

• It eliminates or substantially reduces inconsistencies in measurement and recognition which would otherwise arise

on the recognition of assets or of income and expenses on a different basis.

• The performance of the financial asset concerned is assessed on the basis of its fair value in accordance with a

documented risk management or investment strategy. Reporting to management is on the basis of fair value.

• The host contract of the financial instruments contains one or more embedded derivatives and the entire contract is

recognised at fair value through profit and loss. This is only permissible provided:

• the embedded derivative has a significant influence on the contractually agreed cash flows or

• it is evident on initial recognition of the financial instruments that separation of the embedded derivative is not

permissible (e.g. option of premature settlement at amortised cost).

Derivatives not held on behalf of clients are regarded as being held for trading purposes. Derivatives are financial

instruments requiring only a limited net initial investment or none at all, with future settlement dependent on the

underlying notional amount of the contract and movements in certain rates or prices (e.g. an interest rate or the price of

a financial instrument). Financial instruments are recognised at fair value. Both unrealised and realised gains and losses

are recognised directly in the income statement under Result from financial instruments.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market.

In BinckBank’s case, these items mainly concern current account loans collateralised by securities and short-term moneymarket

loans. After initial recognition the items are valued at amortised cost, using the effective interest-rate method.

Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired.

Held-to-maturity financial assets

Financial assets with fixed or determinable payments and a fixed maturity date are designated as investments to be held

to maturity if BinckBank specifically intends to hold them until maturity and is in a position to do so. Held-to-maturity

investments are recognised at amortised cost, measured using the effective interest-rate method, less any impairments.


Available-for-sale financial assets

Available-for-sale financial assets are those financial assets that are designated as being available for sale or are not

included in one of the above categories. After initial recognition, available-for-sale financial assets are measured at

fair value. Any gain or loss is shown, net of tax, as an unrealised result in the fair value reserve until the investment

is derecognised or determined to be impaired. At such time the cumulative gain or loss previously shown in equity is

recognised in the income statement in the Result from financial instruments.

Impairment of financial assets

On a regular basis and at each balance sheet date, BinckBank assesses whether there is objective evidence, provided by

one or more events, of impairment of financial assets individually or groups of financial assets collectively. Impairments

are only recognised when there is an adverse effect on the future cash flows. If impairment is indicated, the amount

of any impairment is determined as follows for available-for-sale financial assets, loans and receivables and held-tomaturity

financial assets:

Loans and receivables

BinckBank assesses whether there is objective evidence of impairment of the lending portfolio (including any related

facilities and guarantees). In the case current account loans collateralised by securities, there is an objective indication

if the fair value of the collateral is lower than the carrying amount of the current account loan. Evidence that a loan

or receivable is impaired is obtained via the group’s lending assessment process. This involves assessment of clients’

creditworthiness as well as assessment of the nature of clients’ brokerage transactions and monitoring of client

transactions and balances.

The amount of any impairment is measured as the difference between the asset’s carrying amount and the present

value of estimated future cash flows discounted at the original effective interest rate of the asset. The loss is presented

in the income statement in Impairment of financial assets. In computing the present value of the estimated future cash

flows from a financial asset for which collateral security has been provided, account is taken of the cash flows which will

probably arise on execution of the collateral security less the costs which will necessarily be incurred in obtaining and

selling the assets provided by way of security.

In the event of impairment, the impairment provision is increased by the amount of the impairment. The affected assets

are only written down when all the necessary procedures have been completed and the amount of the loss has been

determined. If, in a subsequent period, the amount of an impairment decreases and the decrease can be objectively

related to an event occurring after the initial write-down, the previously recognised impairment is reversed. Reversal of

an impairment is recognised in the provision and in the income statement, provided the carrying amount of the asset

does not exceed the amortised cost at the reversal date. Amounts subsequently collected after having been written off

are credited to the income statement in Impairment of financial assets.

89 Annual report 2010

The methodology and the assumptions used in estimating future cash flows are regularly evaluated in order to reduce

variances between estimated and actual losses.

Held-to-maturity financial assets

Held-to-maturity investments are individually assessed and the amount of any impairment is measured using the same

method as has been explained for loans and receivables.

BinckBank does not regard possible future events as objective indicators and such forecasts are accordingly not used

as evidence of impairment of a financial asset or a portfolio of financial assets. Losses based on future events are not

recognised, regardless of probability.

Available-for-sale financial assets

An investment in equities is considered to have been impaired if there is a significant or prolonged fall in the fair value to

below cost. An increase in value in the period after an impairment is reported in equity as a revaluation.


Investments in interest-bearing securities are assessed for impairment if there are objective indications of financial

problems at the issuer or borrower, there is no longer an active market, or there are other such indications. If there are

such indications, the cumulative net loss previously recognised directly in equity is transferred from equity to the income

statement in Impairments of financial assets. Reversals of impairments in subsequent years relating to interest-bearing

securities are reversed through the income statement if the increase in the fair value of the instrument can be objectively

related to an event occurring after the previous impairment was recognised in the income statement.

Loans and receivables under renewed contracts

In the case of existing loans and receivables, it is possible for renewed contracts to be concluded with clients. These loans

are no longer treated as overdue. The new contracts are, however, periodically assessed for compliance and to determine

whether future payment is probable. These loans and receivables are periodically tested for impairment on an individual

basis, using the original effective interest rate.

Acquisitions and goodwill

All acquisitions are accounted for using the acquisition method. The identifiable assets, equity and liabilities of the

acquired company or activities are recognised at fair value.

BinckBank measures the value of the identifiable intangible assets acquired with the acquisition of a company or business

activities. The measurement is performed using cash flow models and/or royalty models. BinckBank makes assumptions

and projections of future revenues and results in order to arrive at the cash flows and for determining the applicable

discount rate. Where the royalty method is used, an estimate is also made of the appropriate royalty percentage.

Earn-out arrangements may be agreed as part of business acquisitions. BinckBank makes an estimate of the earn-out

payments on the basis of the expected future results of the acquired companies. These earn-out payments form part of

the price paid for the acquired company. An annual assessment is made to determine whether the earn-out obligation

should be adjusted in the light of any changes to the development of the results. Adjustments to the earn-out calculations

after completion of the acquisition are recognised directly in the income statement.

90

Financial statements 2010

On initial recognition, goodwill acquired in a business combination is measured as the difference between the cost of

the business combination and BinckBank’s share of the net fair value of the acquired company’s identifiable assets,

liabilities and contingent liabilities, if positive. Subsequently, goodwill is carried at cost less any cumulative impairments.

A negative difference between cost and fair value is expensed immediately.

The valuation of a third-party interest in the acquired company is made at either the fair value on the acquisition date or

the proportional share in the identifiable assets and liabilities of the acquired company.

Goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the

carrying amount might be impaired. For this impairment test, goodwill acquired in a business combination is allocated

to BinckBank’s cash-generating units or groups of cash-generating units that are expected to benefit from the synergy

of the business combination.

An impairment is measured by assessing the recoverable amount of the cash-generating unit to which the goodwill

relates. The recoverable amount is an asset’s net selling price or its value in use, whichever is higher. If the recoverable

amount is lower than the carrying amount, an impairment is recognised. Impairment of goodwill is not reversed.

Necessary adjustments to the fair value of acquired assets, equity and liabilities measured at the time of acquisition that

are identified before the end of the first reporting period after the business combination result in an adjustment of the

goodwill. Necessary adjustments identified at a later date are recognised through profit or loss.

Gains and losses on the disposal of a company or activity are measured as the difference between the proceeds from

disposal and the carrying amount of the company or activity, including goodwill and currency translation reserve.

Transaction costs associated with an acquisition are recognised directly in the income statement.


Cash and cash equivalents

Cash and cash equivalents consist of cash, balances with (central) banks and short term deposits (call money) with

original maturities of three months or less that are readily convertible into known amounts of cash and on which there

is a negligible impairment risk.

Associates and joint ventures

Associates

Associates are entities in which BinckBank generally holds between 20% and 50% of the voting rights or in which

BinckBank is able to exercise significant influence in some other way but over which BinckBank does not have control.

Investments in associates are accounted for using the equity method. The item includes goodwill paid on acquisition, less

any cumulative impairments. With equity accounting, BinckBank’s share in the results of an associate is recognised in the

income statement as share in profits of associates. BinckBank’s share in changes in an associate’s reserves is recognised

directly in BinckBank’s equity. The carrying amount of the investment is adjusted for the reported results and changes

in reserves. If the carrying amount of the investment in an associate falls to nil, no further losses are recognised unless

BinckBank has accepted liabilities on behalf of the associate concerned or has already made payments on behalf of the

associate. Where necessary, the accounting principles of associates are adjusted in order to ensure consistency with those

of BinckBank.

Joint ventures

Joint ventures are entities over which BinckBank exercises joint control. This control is established in an agreement, and

strategic decisions regarding financial and operating policy are taken by unanimous vote.

Joint ventures are reported using the equity method from the date on which BinckBank has joint control for the first time

until the date on which this control ceases. Under the equity method, BinckBank’s share in the results of the joint venture

is reported in BinckBank’s income statement as share in results of associates and joint ventures. BinckBank’s share of

changes in a joint venture’s reserves is recognised directly in BinckBank’s equity. The value of the joint venture is adjusted

for these results and movements in reserves. If the carrying amount of the investment in a joint venture falls to nil, no

further losses are recognised unless BinckBank has accepted liabilities on behalf of the joint venture concerned or has

already made payments on behalf of the joint venture. Where necessary, the accounting principles of joint ventures are

adjusted in order to ensure consistency with those of BinckBank.

Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired

in a business combination is their fair value at the date of acquisition. Subsequently, intangible assets are carried at cost

less cumulative amortisation and any cumulative impairments.

Intangible assets are determined as having either a definite or an indefinite useful life. Intangible assets with a definite

useful life are amortised over the useful life and tested for impairment if there are indications that an asset may be

impaired. The useful lives of the intangible assets are assessed annually and adjusted if there has been a change.

Amortisation of intangible assets with a definite useful life is presented in the income statement in depreciation and

amortisation.

91 Annual report 2010

Intangible assets with an indefinite useful life are subjected to an annual impairment test, either individually or at the

level of the cash-generating unit. These intangible assets are not amortised. The useful life of an intangible asset with an

indefinite useful life is reassessed annually, including an assessment of whether the indefinite useful life is still justifiable.


The activities relating to research and development of software are recognised and measured as follows:

Costs of research are recognised in the income statement when they occur. An intangible asset arising from development

costs incurred in an individual project is only recognised if BinckBank can demonstrate that:

• completion of this intangible asset is technically feasible, so that it will be available for use or for sale

• it is BinckBank’s intention to complete the intangible asset and use or sell it;

BinckBank is capable of using or selling the intangible asset;

• future economic benefits are achievable;

• adequate technical, financial and other resources are available to complete the development of the intangible asset

and for its use or sale; and

• it is possible to measure the costs incurred during development reliably.

After initial recognition of the development costs, the asset is carried at cost less any cumulative amortisation and

cumulative impairments. Any such capitalised costs are amortised over the period in which the expected future economic

benefits from the project concerned are to be realised. The carrying amount of the development costs is tested for

impairment annually if the asset is not yet in use or if there are indications of impairment during the year.

Property, plant and equipment

Real estate for own use is carried at historical cost less cumulative depreciation and impairment losses. All other assets

recognised in the balance sheet as operating assets are carried at historical cost less cumulative depreciation and any

impairments.

92

Real estate and operating assets are subject to straight-line depreciation on the basis of useful life, taking account of the

residual value. The expected useful life is:

Real estate (own use) 50 years

Computer hardware 5 years

Fixtures, fittings and equipment 5-10 years

Other non-current assets 5 years

Financial statements 2010

If an asset consists of various ‘components’ with different useful lives and/or different residual values, the asset is divided

into these components and depreciation is applied separately.

Useful life and residual value are assessed annually. If it emerges that the estimated values differ from previous

estimates, the values are adjusted. If the carrying amount of an asset is higher than the estimated recoverable amount,

an impairments is recognised and charged to the income statement. Results on the sale of real estate and operating

assets, being the difference between the sale proceeds and the carrying amount, are recognised in the income statement

in the period in which the sale occurred.

Repair and maintenance costs are charged to the income statement in the period to which they relate. The costs of

significant renovations are capitalised if it is likely that additional future benefits will be realised from the existing asset.

Significant renovations are written off on the basis of the remaining useful life of the asset concerned.

Prepayments arising from an operational lease are recognised in investments in real estate. Amortisation of the leasehold

is applied on a linear basis over the remaining life to maturity.

Tax

Current tax

This item concerns tax assets and liabilities for current and prior years, carried at the amount expected to be claimed

from or paid to the tax authorities. The tax amount is computed on the basis of enacted tax rates and applicable tax law.


Deferred tax

Deferred tax liabilities are recognised, based on the temporary differences at the balance sheet date between the tax base

of assets and liabilities and their carrying amount in these financial statements. Deferred tax liabilities are recognised for

all taxable temporary differences except:

• where the deferred tax liability arises on the initial recognition of goodwill or the initial recognition of an asset or a

liability in a transaction that is not a business combination and does not affect the operating profit before tax or the

taxable profit;

• in the case of taxable temporary differences connected with investments in subsidiaries and associates, where

BinckBank is able to control the timing of the reversal of the temporary difference and it is probable that the temporary

difference will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, unused tax facilities and unused tax loss

carryforwards when it is probable that taxable profits will be available against which the deferred tax asset can be

utilised, enabling the deductible temporary differences, unused tax facilities and unused tax loss carryforwards to be

used.

The carrying amount of the deferred tax assets is assessed at the balance sheet date and reduced if it is not probable

that sufficient taxable profits will be available against which some or all of the deferred tax asset can be utilised.

Unrecognised deferred tax assets are reassessed at the balance sheet date and recognised to the extent that it is probable

that taxable profits will be available in the future against which the deferred tax asset can be utilised. Deferred tax assets

and liabilities are carried at amounts measured at the tax rates expected to be applicable to the period in which the

asset is realised or the liability is settled, based on enacted tax rates and applicable tax law. The tax on items recognised

directly in equity is accounted for directly in equity instead of in the income statement. Deferred tax assets and liabilities

are presented as a net amount if there is a legally enforceable right to set off deferred tax assets against deferred tax

liabilities and the deferred tax is related to the same taxable entity and the same tax authority.

Other assets

This item includes other receivables. The receivables included in this item are carried at amortised cost less any

impairments.

Work in progress

Work in progress relates exclusively to the external activities of the subsidiary Syntel. Work in progress is carried at

the cost of the work performed, plus a proportion of the expected final results based on progress and less invoiced

instalments, prepayments and provisions. For anticipated losses on work in progress, provisions are recognised as soon

as such losses are identified and are deducted from the cost, any already recognised profits also being reversed. The

cost comprises the direct project costs, made up of direct wage costs, materials, costs of subcontracted work, other

direct costs and charges for the hire and maintenance of the equipment used. The progress of the project is measured

on the basis of the cost of the work performed in relation to the expected cost of the project as a whole. Profits are

not recognised on work in progress before it is possible to make a reliable estimate of the final result. For each project,

the balance of the value of the work in progress less invoiced instalments and prepayments is measured. In the case of

projects on which the invoiced instalments and prepayments exceed the value of the work, this balance is included in

other liabilities instead of other assets.

93 Annual report 2010

Impairments of non-financial assets

The carrying amount of BinckBank’s assets is tested at each balance sheet date in order to determine whether there are

indications of impairment. If so, the recoverable amount of the asset is estimated. The recoverable amount is an asset’s

net selling price or its value in use, whichever is higher. An impairment is recognised if the carrying amount of an asset or

cash-generating unit exceeds the recoverable amount.


Derivatives positions held on behalf of clients

BinckBank executes derivatives transactions on behalf of its clients and holds the resultant positions in its own name

but for the client’s account and at the client’s risk. The positions are recognised at fair value, measured according to the

quoted price at the balance sheet date. Financial settlement with the clients concerned in respect of such transactions

and positions is effected immediately. The clients have lodged adequate collateral with BinckBank in the form of cash

balances, bank guarantees and securities to cover the risks arising out of the derivatives positions held.

Customer deposits

Savings comprise the balances on savings accounts held by clients. Savings are measured at fair value on initial recognition,

including transaction costs incurred. Savings are subsequently carried at amortised cost. Any difference between the net

amount deposited and the amount repayable, calculated using the effective interest-rate method, is recognised in the

income statement under the heading of interest expense over the term to maturity of the accounts concerned.

Demand deposits relate to non-subordinated liabilities to non-banks that are not embodied in debt securities. These

liabilities are measured at fair value on initial recognition, including transaction costs incurred. They are subsequently

carried at amortised cost. Any difference between the net amount deposited and the amount repayable, calculated using

the effective interest method, is recognised in the income statement under the heading of interest expense over the term

to maturity of these liabilities to clients.

94

Provisions

A provision is recognised if (I) BinckBank has a present obligation (legal or constructive) as a result of a past event; (II)

it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and

(III) a reliable estimate can be made of the amount of the obligation. If BinckBank expects some or all of a provision to

be reimbursed, the reimbursement is recognised as a separate asset only when reimbursement is virtually certain. The

expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the

time value of money is material, provisions are discounted at a rate, before tax, that reflects, where appropriate, the risks

specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised

as a borrowing cost.

Financial statements 2010

Pensions

BinckBank operates a pension plan for its executive board and employees based on a defined contribution system. In a

defined contribution system, a percentage of the employee’s fixed salary is paid as contribution to a pension insurer. The

percentage payable is age-related. The pension contributions are recognised in the year to which they relate.

Other liabilities

All loans are carried on initial recognition at the fair value of the consideration received less directly attributable

transaction costs. After initial recognition, interest-bearing loans are subsequently carried at amortised cost calculated

using the effective interest-rate method.

Shareholders, equity

The costs associated with the issue of new shares are charged to the share premium account.

Treasury shares

Equity instruments which are reacquired (treasury shares) are deducted from equity at the acquisition price including

transaction costs. Gains or losses on the purchase, sale, issue or cancellation of BinckBank’s own equity instruments are

not recognised in the income statement.

Off balance sheet commitments

Contingent liabilities are liabilities that are not recognised in the balance sheet because their existence will be confirmed

only by the occurrence or non-occurrence of one or more uncertain future events not wholly within BinckBank’s control.

The maximum potential credit risk associated with these contingent liabilities faced by BinckBank is disclosed in the

notes. In estimating the maximum potential credit risk, it is assumed that all counterparties default on their contractual

obligations and all assets provided by way of collateral security are worthless.


Leasing

Lease contracts whereby the risks and benefits relating to the right of ownership are held to a significant extent by the

lessor are designated as operating leases. Lease payments made in the capacity of lessee in relation to operating leases

are applied to the result during the lease period, after deduction of any premiums received from the lessor. BinckBank is

only involved in operational lease contracts as a lessee.

BinckBank has not entered into any financial lease contracts of material significance, either as lessor or as lessee.

Earnings per ordinary share

The basic earnings per ordinary share are calculated by dividing the profit attributable to ordinary shareholders for the

period by the weighted average number of shares in issue during the period. The diluted earnings per ordinary share are

calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of shares during

the period, adjusted for possible dilution resulting for example from outstanding option rights.

Cash flow statement

The cash flow statement has been prepared using the indirect method, in which cash flows are analysed according to

operating, investing and financing activities. In the cash flow from operating activities, the net result is adjusted for

income and expenses that have not resulted in receipts and expenses in the same financial year and for changes in

provisions and suspense items. Cash includes the cash in hand together with freely available balances on deposit with

central banks and other financial instruments with maturities of less than three months from the date of acquisition.

Where applicable, movements associated with currency translation differences are eliminated.

5. Recognition and measurement of income and expenses

General

Income and expense items are recognised in the period to which they relate, having due regard to the above accounting

principles. Revenues are recognised if it is probable that their economic benefits will flow to BinckBank and the revenue

can be reliably measured.

Interest income

Interest income consists of the interest on financial assets attributable to the period. Interest on financial assets is

measured using the effective interest-rate method based on the actual acquisition price.

The effective interest-rate method is based on the expected flow of cash receipts, taking account of the risk of premature

redemption of the underlying financial instrument and the direct costs and revenues, such as the transaction costs

charged and any discount or premium. If the risk of early redemption cannot be sufficiently reliably measured, BinckBank

assumes the cash flows during the entire term to maturity of the financial instruments.

Interest income on financial assets subject to impairment which have been written down to the estimated recoverable

value or fair value are subsequently recognised on the basis of the interest rate used to measure the recoverable value

by discounting the future cash flows.

95 Annual report 2010

Interest expense

This item includes the interest expense on all financial obligations and is measured on the basis of the effective interestrate

method.

Net fee and commission income

Commission income and expense comprises payments, excluding interest, received or receivable from third parties and

paid or payable to third parties, respectively, whether on a non-recurring or more regular basis, in respect of services

provided.

Other income

Other income comprises amounts charged to third parties during the year in respect of goods and services supplied

relating to hardware and software after deduction of sales expenses, together with income not classified under other

income items.


Work in progress on contracts for third parties

BinckBank uses the percentage of completion method to measure the revenue generated by each contract on the balance

sheet date. The percentage of completion is determined by comparing the total estimated costs for a project with the

actual costs up to the balance sheet date.

BinckBank recognises the positive or negative balance of the revenue less invoiced instalments for each project in other

assets or other liabilities, respectively.

Share in results of associates and joint ventures

This concerns BinckBank’s share in the results of its associates and joint ventures. If the carrying amount of the investment

in an associate or joint venture falls to nil, no further losses are recognised unless BinckBank has accepted liabilities on

behalf of the associate or joint venture concerned or has already made payments on behalf of the associate or joint

venture.

Tax

Tax is recognised in the income statement in unrealised results, unless the tax relates to items recognised directly in

equity, in which case it is recognised directly in equity.

6. Acquisition of business activities

On 9 November 2010 BinckBank acquired a 60% interest in the share capital and voting rights of ThinkCapital Holding B.V.

(hereinafter ‘ThinkCapital’). The acquisition enables BinckBank to benefit from the rapidly-increasing interest in indextracker

funds. ThinkCapital and BinckBank are joining forces with the intention of putting tracker funds on the map in the

Netherlands. Tracker funds are investment products that follow an index and can be managed at low cost. BinckBank will

provide the distribution network, while ThinkCapital will be responsible for product development. ThinkCapital will also

focus on index investing for the institutional market for passive asset management.

The fair value of the identifiable assets and liabilities and the goodwill as at the acquisition date are as follows:

96

Financial statements 2010

ThinkCapital fair value ThinkCapital carrying amount

x € 1,000 x € 1,000

Assets

Banks 13 13

Property, plant and equipment - 7

Deferred tax assets - 269

Other assets 199 199

Prepayments and accrued income 12 12

Total assets 224 500

Liabilities

Other liabilities 80 80

Accruals and deferred income 88 88

Total liabilities 168 168

Net capital 56

Non-controlling interests (40%) (22)

Acquired identifiable assets and liabilities 34

Purchase price 11

Purchase benefit (23)

Cash outflow on acquisition:

Cash paid (11)

Net cash acquired 8

Net cash outflow (3)

The acquisition was funded out of available financial assets.


The acquisition of ThinkCapital has been recognised using the acquisition method as described in IFRS 3. The gain realised

by BinckBank in the acquisition reflects the distribution capacity that BinckBank will provide. The gain from the acquisition

is recognised in the consolidated income statement under Other non-operating income. The non-controlling interest is

recognised at the fair value as at the acquisition date.

The share of ThinkCapital in the result of BinckBank from the acquisition date is a loss of € 311,000. The total operating

income for this period amounted to a negative sum of € 26,000. If the acquisition had taken place at the beginning of the

year, the result after tax of BinckBank would have been € 43.5 million. The total operating income of BinckBank would

have amounted to € 184.8 million.

No other acquisitions took place in 2010 or 2009.

97 Annual report 2010


Notes to the consolidated balance sheet

31 December 2010 31 December 2009

x € 1,000 x € 1,000

7. Cash and balances with central banks 105,972 48,936

This item includes all cash and any credit balances available on

demand from the central banks in countries where BinckBank has

offices.

8. Banks

Due from banks 177,316 179,692

This item includes all cash and cash equivalents relating to the

business activities held in accounts with credit institutions

supervised by bank regulators.

98

Financial statements 2010

This item comprises:

Credit balances available on demand 169,175 174,663

Call money 5,033 5,029

Receivable from DNB in relation to the Deposit Guarantee Scheme

for DSB Bank

3,108 -

177,316 179,692

The call money receivables have original maturities of less then

three months. Interest is received on these balances at a variable

rate based on market interest rates.

The development of the receivable from DNB in relation to DGS

DSB Bank is as follows:

Balance as at 1 January - -

Paid to DNB 5,780 -

Reclassification from provisions (2,672) -

Balance as at 31 December 3,108 -

In December 2010, BinckBank N.V. paid an initial gross contribution into the Deposit Guarantee Scheme (DGS) in relation

to the settlement of the bankruptcy of DSB Bank. The receivable in relation to the DGS for DSB Bank is a claim via DNB

on the estate of DSB Bank. Under the DGS, De Nederlandsche Bank (DNB) has so far paid € 3.5 billion to the account

holders of DSB Bank. DNB has charged this amount to the participating banks proportionally. In BinckBank’s case, the

total sum involved is € 15,625,000. The contribution to the DGS in any year is however capped at 5% of a bank’s own

funds, and the contribution BinckBank had to make in 2010 was thus only € 5,780,000. After settlement of payments

from the estate of DSB, the remainder will potentially be charged to BinckBank in subsequent years. The expected

total loss from the bankruptcy of DSB is unchanged in comparison to 2009 and is estimated by the Dutch Bankers’

Association at € 600 million. A provision of € 2,620,000 had already been formed in 2009 in relation to the expected

loss arising from BinckBank’s obligations under the DGS.


31 December 2010 31 December 2009

x € 1,000 x € 1,000

Due to banks 25,610 -

At year-end 2010 BinckBank has sweeping arrangements with

various banks whereby the debit and credit balances in a large

number of bank accounts are regulated with a fixed treasury contraaccount.

This is only visible on the statement for the next business

day; therefore at year-end 2010 BinckBank had an obligation in a

single bank account for a very short period.

9. Financial assets and liabilities at fair value with changes in fair

value through profit or loss

Financial assets held for trading 169 -

This item comprises:

SRD derivative receivables 169 -

169 -

Financial assets at fair value through profit and loss 13,856 37,294

This item comprises:

Equity positions in relation to SRD receivables 13,856 -

Bond position in the investment portfolio - 37,294

13,856 37,294

Financial liabilities held for trading 50 -

This item comprises:

SRD derivative payables 50 -

50 -

Financial liabilities at fair value through profit and loss 1,485 -

This item comprises:

Equity positions in relation to SRD payables 1,485 -

1,485 -

At the end of September 2010 BinckBank commenced its offering of SRD (Service de Règlement Différé) contracts in

France. An SRD contract is a transaction in a selected number of equities listed on Euronext Paris whereby payment for

shares purchased or delivery of shares sold may be deferred until the last trading day of the month. The corresponding

equity transaction in the cash market is executed by BinckBank in order to cover the price risk. If fact what happens

is that BinckBank advances the transaction sum to the client (in case of an SRD long) or the client is anabled to take a

short position (SRD short). Under IFRS, SRD receivables and payables are classified as a derivative and are recognised

as financial assets and liabilities held for trading purposes. Financial instruments are recognised at fair value. Both

unrealised and realised gains and losses are recognised directly in the income statement under result from financial

instruments. The corresponding positions in equities are classified as financial assets and liabilities at fair value

through profit and loss, because otherwise the treatment would not be consistent with the associated derivatives. Both

unrealised and realised gains and losses are recognised directly in the income statement under result from financial

instruments. Since BinckBank takes a position in equities which exactly offsets the SRD derivatives position held by the

client, there is a natural hedge of the price risk.

99 Annual report 2010


31 December 2010 31 December 2009

x € 1,000 x € 1,000

10. Available-for-sale financial assets 1,599,700 1,511,903

This item comprises:

Government bonds/government-guaranteed bonds 432,322 832,205

Other bonds 1,167,378 679,698

1,599,700 1,511,903

Movements in available-for-sale financial assets were:

Balance as at 1 January 1,511,903 1,298,233

Purchases 1,229,360 1,156,581

Sales (541,308) (396,879)

Redemptions (577,718) (552,851)

Revaluation gains and losses (22,537) 6,819

Balance as at 31 December 1,599,700 1,511,903

11. Loans and receivables 496,266 410,169

This item comprises receivables from private sector clients,

including overnight loans and overdrafts that are collateralised by

securities and bank guarantees (collateralised loans).

100

Financial statements 2010

The analysis is as follows:

Receivable from government institutions 20,000 -

Receivables collateralised by securities 470,741 407,627

Receivables collateralised by bank guarantees 5,453 2,412

Other receivables 558 805

Loans and receivables, gross 496,752 410,844

Less: impairment provision (486) (675)

496,266 410,169

The interest rate is based on EURIBOR or EONIA. Other receivables

refers to remaining amounts receivable after realisation of

collateral (securities and bank guarantees).

The changes in impairment provisions were as follows:

Balance as at 1 January 675 477

Added 32 315

Recovered (102) (108)

Write-offs (119) (9)

Balance as at 31 December 486 675

The impairment provision is calculated on a specific basis.

12. Held-to-maturity financial assets 4,121 8,329

The portfolio of interest-bearing securities classified as heldto-maturity

financial assets concerns government bonds with

remaining maturities of between 0 and 1 years.


31 December 2010 31 December 2009

x € 1,000 x € 1,000

13. Investment in associates and joint ventures 3,067 1,953

This item comprises:

TOM Holding B.V. 2,174 1,953

BeFrank N.V. 893 -

3,067 1,953

The development of this item was as follows:

Balance as at 1 January 1,953 2,675

Capital increases and acquisitions 2,500 3,000

Disposals - (1,056)

Redemption of loan to Accion N.V. - (550)

Write-down of loan to Accion N.V. - (650)

Result on associates and joint ventures (1,386) (1,466)

Balance as at 31 December 3,067 1,953

The item capital increases and acquisitions relates to

investments in TOM Holding B.V. and the incorporation of the

joint venture BeFrank N.V.

The item disposals relates to the sale of the remaining interest

in Florint B.V. to the other shareholders as agreed upon in

February 2009. At year-end 2009 the investment in and loan

to Accion N.V. was written down to nil. The revaluation of the

loan is recognised in the income statement under impairment

of financial assets.

Country Interest Share in

equity

Share in

result

Assets

Liabilities

excl.

equity

Associates 2010

TOM Holding B.V. NL 37.5% 2,174 (1,279) 6,564 767

Total 2,174 (1,279) 6,564 767

101 Annual report 2010

Associates 2009

Florint B.V. NL 0% - (29) - -

Accion N.V. NL 39% - (390) - -

Total - (419) - -

Share in

equity

Share in

result

Fixed

assets

Current

assets

Country

Interest

Longterm

liabilities

Current

liabilities

Total

revenue

Total

expense

Joint ventures 2010

BeFrank N.V. NL 50% 893 (107) - 1,848 - 62 - (284)

Total 893 (107) - 1,848 - 62 - (284)

Joint ventures 2009

TOM Holding B.V. NL 50% 1,953 (1,047) 1,525 2,992 - 611 51 (2,670)

Total 1,953 (1,047) 1,525 2,992 - 611 51 (2,670)


On 13 July 2010 it was announced that ABN AMRO Clearing Bank N.V. had acquired a 25% equity interest in TOM Holding

B.V. by means of a share issue. As a result of the investment by ABN AMRO Clearing Bank N.V. TOM Holding B.V. is now

classified as an associate rather than as a joint venture. Due to the dilution of the interest in TOM Holding B.V., on the

revaluation to net asset value a positive result of € 467,000 was realised, which is recognised in the income statement

under result from associates and joint ventures.

31 December 2010 31 December 2009

x € 1,000 x € 1,000

14. Intangible assets 320,757 348,561

The movements in 2010 were as follows:

Brand

Core Customer Software Goodwill Total

name deposits base

Balance as at 1 January 2010 18,843 67,276 105,218 4,295 152,929 348,561

Investments - - - 2,081 - 2,081

Disposals - cost - - - (715) - (715)

Disposals - cumulative amortisation - - - 715 - 715

Amortisation (6,281) (8,410) (13,291) (1,903) - (29,885)

Balance as at 31 December 2010 12,562 58,866 91,927 4,473 152,929 320,757

Cumulative cost 31,405 84,095 131,988 11,412 152,929 411,829

Cumulative amortisation and impairments (18,843) (25,229) (40,061) (6,939) - (91,072)

Balance as at 31 December 2010 12,562 58,866 91,927 4,473 152,929 320,757

Amortisation period (years) 5 10 5 - 10 5

102

Financial statements 2010

The movements in 2009 were as follows:

Brand

Core Customer Software Goodwill Total

name deposits base

Balance as at 1 January 2009 25,124 75,685 118,511 6,089 152,929 378,338

Investments - - - 240 - 240

Disposals - cost - - - (460) - (460)

Disposals - cumulative amortisation - - - 460 - 460

Amortisation (6,281) (8,409) (13,293) (2,034) - (30,017)

Balance as at 31 December 2009 18,843 67,276 105,218 4,295 152,929 348,561

Cumulative cost 31,405 84,095 131,988 10,046 152,929 410,463

Cumulative amortisation and impairments (12,562) (16,819) (26,770) (5,751) - (61,902)

Balance as at 31 December 2009 18,843 67,276 105,218 4,295 152,929 348,561

Amortisation period (years) 5 10 5 - 10 5

The items ‘Brand name’ and ‘Core deposits’ arise from the acquisition of Alex Beleggersbank in 2007. The item Customer

base arises from the acquisitions of Syntel in 2006 and Alex Beleggersbank in 2007.

Software includes purchased software and proprietary software developed by Syntel, which is sold to its clients, as well

as Syntel-developed software for supporting BinckBank’s operations. The hours charged to these software development

projects have been capitalised by BinckBank as software at an average hourly rate reflecting only direct staff costs.

‘Goodwill’ relates to the excess of the purchase price paid to acquire the activities of Alex Beleggersbank in 2007 and

Syntel in 2006 over the fair value of the identifiable assets and liabilities.


Impairment testing of other intangible assets

The various categories of intangible assets are tested annually or more frequently if events or changes in circumstances

indicate that the carrying amount, less applicable annual amortisation, may be impaired. In the first instance, the test

is made on the basis of the indicators mentioned in IAS 36.12, in addition to the indicators identified by BinckBank,

compared with the assumptions on which the measurement of the identified immaterial assets was based at the time of

the acquisition:

Intangible asset

Brand name

Core deposits

Customer base

Software

General

Indicator

Reputational damage to the Alex brand

Decision to limit the use of the Alex brand

Low customer deposits under the Alex brand compared to purchase date

Less interest margin compared to purchase date

Higher attrition rate in Alex accounts compared to purchase date

Lower average revenues per acquired account than forecast at purchase date

Decision to limit the use of the acquired software

Higher market interest rates, adverse effect on the discount rate

If the test reveals an indication of impairment, BinckBank performs a full calculation of the recoverable amount of the

cash-generating units. This calculation is made in the same way as that described for the calculation of the value in use.

Goodwill impairment test

Goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the

carrying amount might be impaired. The annual test as of 30 September 2010 gave no indication that the goodwill had

been impaired. As at 31 December 2010, there were no changes in the circumstances such as to indicate impairment.

The goodwill has been allocated to the following individual cash-generating units:

31 December 2010 31 December 2009

x € 1,000 x € 1,000

Goodwill

Retail (Alex Beleggersbank) 142,882 142,882

Syntel 8,014 8,014

Business process outsourcing (BPO) 2,033 2,033

152,929 152,929

Principal assumptions used in calculating the value in use:

The recoverable amount of the cash-generating units is based on the value in use. Use has been made of cash flow

projections over a period of five years, based on financial estimates used by management for setting targets. The cash

flows beyond the five-year horizon have been extrapolated, using growth rates of between 0% and 2%. Management has

compared the principal assumptions against market estimates and market expectations.

103 Annual report 2010

The following assumptions have been used:

2010 Retail Syntel BPO

Discount rate 10.35% 11.6% 11.6%

Expected growth rate beyond five-year horizon 2% 2% 0%

2009 Retail Syntel BPO

Discount rate 11.4% 11.4% 11.4%

Expected growth rate beyond five-year horizon 2% 2% 0%


Principal assumptions used in calculating the value in use of Alex Beleggersbank as at 30 September 2010

The principal assumptions used by management in arriving at the cash flow projections for the purposes of the goodwill

impairment test were:

• Natural attrition rate and inflow of new private investors based on the trends of the past five years and the budget,

including a multi-year forecast, respectively. The conservatively estimated growth in the number of clients discounted

in the expected numbers of transactions and in the amounts of customer deposits and funds invested.

• Interest margin based on the actual interest margin achieved over the past year, allowing for the long-term effect of

low interest rates.

• Commission income and expense, based on the expected average number of transactions and the average commission

income and expense per transaction. The average income, expense and number of transactions are based on the

averages in the previous year.

Principal assumptions used in calculating the value in use of Syntel BPO activities as at 30 September 2010

The principal assumptions used by management in arriving at the cash flow projections for the purposes of the goodwill

impairment test were:

• Estimated sales based on sales for the year immediately preceding the budget year, applying an annual growth rate

of 2%.

• Costs based on standardised costs for the year immediately preceding the budget year, applying an annual rate of

increase of 3%.

Financial statements 2010

104


31 December 2010 31 December 2009

x € 1,000 x € 1,000

15. Property, plant and equipment 43,901 12,512

The movements in 2010 were as follows:

Real estate

Fixtures,

fittings and

equipment

Computer

hardware

Balance as at 1 January 2010 - 459 12,046 7 12,512

Investments 24,998 8,182 3,122 - 36,302

Disposals - cost - (1,120) (1,949) - (3,069)

Disposals - cumulative depreciation - 1,120 1,949 - 3,069

Depreciation (333) (681) (3,896) (3) (4,913)

Balance as at 31 December 2010 24,665 7,960 11,272 4 43,901

Other

Total

Cumulative cost 24,998 9,294 18,522 18 52,832

Cumulative depreciation and impairments (333) (1,334) (7,250) (14) (8,931)

Balance as at 31 December 2010 24,665 7,960 11,272 4 43,901

Depreciation period in years 50 5 - 10 5 5

The movements in 2009 were as follows:

Real estate

Fixtures,

fittings and

equipment

Computer

hardware

Balance as at 1 January 2009 - 816 8,392 10 9,218

Investments - 113 9,103 - 9,216

Disposals - cost - - (3,592) - (3,592)

Disposals - cumulative depreciation - - 3,592 - 3,592

Depreciation - (470) (5,449) (3) (5,922)

Balance as at 31 December 2009 - 459 12,046 7 12,512

Cumulative cost - 2,232 17,349 18 19,599

Cumulative depreciation and impairments - (1,773) (5,303) (11) (7,087)

Balance as at 31 December 2009 - 459 12,046 7 12,512

Other

Total

105 Annual report 2010

Depreciation period in years 50 5 - 10 5 5

The investment in real estate includes prepayments in relation to a leasehold (operational lease) which expires on 15 April

2056. An amount of € 208,000 relating to amortisation of the leasehold is included under depreciation and amortisation

in 2010 (2009: nil).


31 December 2010 31 December 2009

x € 1,000 x € 1,000

16. Current tax

Current tax assets 4,949 1,972

The balance as at year-end relates mainly to the current year.

Current tax liabilities (468) (282)

These concern corporation tax payable by subsidiaries which are not part of

the tax group.

The reconciliation of the effective tax rate with the tax rate applicable to the

consolidated financial statements is as follows:

2010

Amount

2010

Percentage

2009

Amount

2009

Percentage

Standard tax rate 15,040 25.5% 15,872 25.5%

Effect of different tax rates (in

other countries)

44 0.1% 863 1.4%

Effect of substantial-holding

privileges

353 0,6% 374 0.6%

Effect of changes in tax rates (271) (0.5%) - 0.0%

Other effects on the tax rate (329) (0.5%) (2,026) (3.3%)

Total tax expense/tax burden 14,837 25.2% 15,083 24.2%

106

Financial statements 2010

The effect of changes in tax rates relates to the adjustment of the deferred

tax liabilities as a result of a change in the tax rate in the Netherlands from

25.5% to 25%.

The other effects on the tax rate include the various tax facilities used and

corrections to tax in previous reporting years.


31 December

2010

31 December

2009

17. Deferred tax

Composition

Deferred tax assets - 5,988

Deferred tax liabilities (12,695) (14,490)

Net deferred tax asset / (liability) (12,695) (8,502)

Maturity of deferred tax assets

< 1 year - 1,895

1 - 5 years - 4,093

> 5 years - -

- 5,988

Maturity of deferred tax liabilities

< 1 year (1,408) (5,614)

1 - 5 years (2,679) (3,293)

> 5 years (8,608) (5,583)

(12,695) (14,490)

1 January 2010 Movement via

income statement

Movement via

balance sheet

31 December

2010

Origin of deferred tax assets and liabilities

Tax loss carryforwards 5,988 (5,988) - -

Available-for-sale financial assets (5,268) 32 4,516 (720)

Goodwill and intangible assets (5,584) 165 (2,792) (8,211)

Depreciation period differences for

non-current assets

- 58 (2,958) (2,900)

Other (3,638) 2,428 346 (864)

Net asset / (liability) (8,502) (3,305) (888) (12,695)

1 January 2009 Movement via

income statement

Movement via

balance sheet

31 December

2009

Origin of deferred tax assets and liabilities

Tax loss carryforwards 5,980 8 - 5,988

Available-for-sale financial assets (3,406) - (1,862) (5,268)

Goodwill and intangible assets (2,792) - (2,792) (5,584)

Other (1,918) (1,426) (294) (3,638)

Net asset / (liability) (2,136) (1,418) (4,948) (8,502)

107 Annual report 2010

In 2010 BinckBank charged the deferred tax claims relating to deductible losses of foreign subsidiaries and branches

to the income statement in connection with the use of these losses or a revision to the future expectation of the use

of these losses. Deferred tax liabilities regarding losses of foreign branches already deducted in the Netherlands have

also been charged to the income statement. The total compensating tax losses at year-end 2010 were nil (2009: € 17.8

million).

The item Available-for-sale financial assets relates to the deferred tax on unrealised profits as a result of the revaluation

of the investment portfolio.

The Goodwill and intangible assets in the deferred tax liabilities relate to the differences between the commercial and

fiscal amortisation of the goodwill and intangible assets acquired due to the acquisition of Alex.

The Depreciation period differences for non-current assets relate to tax facilities with regard to accelerated depreciation

on certain investments in fixed assets in 2009 and 2010.


31 December 2010 31 December 2009

x € 1,000 x € 1,000

18. Other assets 13,050 14,286

This item comprises:

Trade receivables 4,448 1,783

Receivables relating to securities sold, but not yet delivered 7,270 11,755

Other receivables 1,332 748

13,050 14,286

Trade receivables, receivables relating to securities sold but

not yet delivered and other receivables have maturities of less

than one year.

19. Prepayments and accrued income 49,840 48,828

This item comprises:

Interest receivable 35,383 33,100

Commission receivable 9,772 5,919

Other prepayments and accrued income 4,685 9,809

49,840 48,828

Other prepayments and accrued income concern mainly

prepaid IT maintenance contracts, which are paid up to three

years in advance.

108

Financial statements 2010

20. Derivatives positions held on behalf of clients 383,804 299,587

The derivative positions held on behalf of clients are held in

BinckBank’s own name but for the client’s account and at the

client’s risk.

21. Customer deposits 2,258,290 2,089,814

This item comprises:

Demand deposits savings accounts 717,181 874,181

Demand deposits in current accounts 1,541,109 1,215,633

2,258,290 2,089,814

22. Provisions 1,268 2,660

This item comprises:

Obligations under the deposit guarantee scheme - 2,620

Other provisions 1,268 40

1,268 2,660

The movement in the provision for obligations under the

deposit guarantee scheme was as follows:

Balance as at 1 January 2,620 -

Addition charged to income 52 2,620

Reclassification to banks (2,672) -

Balance as at 31 December - 2,620

The provision concerns an estimate of the contribution

payable by BinckBank for the compensation of clients arising

from the deposit guarantee scheme.


The provision formed for the inability to pay and subsequent

bankruptcy of DSB Bank has been reclassified to the item banks

(see note 8) as a result of a payment of a gross contribution to

De Nederlandsche Bank in December 2010.

31 December 2010 31 December 2009

x € 1,000 x € 1,000

The movement in the other provisions were as follows:

Balance as at 1 January 40 93

Released to income (40) (53)

Addition charged to income 683 -

Other movements 585 -

Balance as at 31 December 1,268 40

The item other provisions includes onerous contracts,

restructuring and legal disputes.

23. Other liabilities 48,023 21,210

This item comprises:

Liabilities in respect of securities transactions not yet settled 34,939 10,942

Tax and social security contributions 3,319 2,605

Trade payables 6,474 3,044

Other liabilities 3,291 4,619

48,023 21,210

24. Accruals and deferred income 16,162 21,608

This item comprises:

Accrued interest 4,530 5,602

Employee expenses 6,832 9,144

Stock exchange and clearing costs payable 975 3,122

Other accruals and deferred income 3,825 3,740

16,162 21,608

Employee expenses under this heading mostly concern

performance-related pay to board members and employees

of BinckBank.

109 Annual report 2010

25. Equity 468,913 480,359

This item comprises:

Issued share capital 7,450 7,607

Share premium reserve 373,422 386,978

Treasury shares (3,335) (18,097)

Fair value reserve (2,610) 13,789

Unappropriated profit 44,240 47,161

Other reserves 49,819 42,921

Non-controlling interests (73) -

468,913 480,359


31 December 2010 31 December 2009

x € 1,000 x € 1,000

Number Amount Number Amount

Issued share capital 7,450 7,607

A total of 74,500,000 ordinary shares were in issue, each with

a nominal value of € 0.10. The share capital is fully paid up.

1,568,928 shares were cancelled on 9 July 2010. 1,024,580

shares were cancelled on 17 July 2009.

Balance as at 1 January 76,068,928 7,607 77,093,508 7,709

Cancellation of treasury shares (1,568,928) (157) (1,024,580) (102)

Balance as at 31 December 74,500,000 7,450 76,068,928 7,607

Stichting Prioriteit Binck holds 50 priority shares (with a

nominal value of € 0.10 per share).

Share premium reserve 373,422 386,978

Balance as at 1 January 386,978 392,395

Cancellation of treasury shares (13,556) (5,417)

Balance as at 31 December 373,422 386,978

The share premium reserve is exempt from tax.

110

Financial statements 2010

Treasury shares (3,335) (18,097)

Number Amount Number Amount

Balance as at 1 January 2,070,509 (18,097) 1,053,442 (5,628)

Issued to executive board and employees (120,495) 1,053 - -

Cancellation of treasury shares (1,568,928) 13,713 (1,024,580) 5,519

Buy-back of own shares 425 (4) 2,041,647 (17,988)

Balance as at 31 December 381,511 (3,335) 2,070,509 (18,097)

As at 1 January 2010, the number of treasury shares held was

2,070,509, acquired at an average purchase price of € 8.74.

425 shares were repurchased in 2010 at an average price of

€ 10.15, and 120,495 shares were sold to the executive board

and employees in connection with the settlement of the longterm

bonus scheme with an average purchase price of € 8.74.

1,568,928 shares were cancelled on 9 July 2010 at an average

purchase price of € 8.74. On 17 July 2009, 1,024,580 shares were

cancelled at an average purchase price of € 5.39. The carrying

amount of the treasury shares as at year-end 2010 was

measured at the average purchase price of € 8.74. The change

in equity in respect of treasury shares reflects the amounts

bought and sold. The quoted share price as at year-end 2010

was € 11.60 (2009: € 12.54).


31 December 2010 31 December 2009

x € 1,000 x € 1,000

Fair value reserve (2,610) 13,789

The reserve comprises the fair value gains and losses, after

tax, on available-for-sale financial assets.

This item comprises:

Unrealised profits 2,881 19,140

Unrealised losses (6,361) (83)

Tax on unrealised profits and losses 870 (5,268)

(2,610) 13,789

The movements in the fair value reserve were as follows:

Balance as at 1 January 13,789 8,832

Movement in fair value (21,070) 10,912

Realisation of revaluations through profit and loss (1,467) (4,093)

Tax on the movement in value 6,138 (1,862)

Balance as at 31 December (2,610) 13,789

Unappropriated profit 44,240 47,161

Balance as at 1 January 47,161 33,145

Addition to other reserves (47,161) (33,145)

Result for the year 44,240 47,161

Balance as at 31 December 44,240 47,161

Other reserves 49,819 42,921

These comprise:

(I) Foreign currency translation reserve - -

(II) Other reserves 49,819 42,921

49,819 42,921

(I) Foreign currency translation reserve

Balance as at 1 January - 70

Change - 12

Released to income - (82)

Balance as at 31 December - -

111 Annual report 2010

The foreign currency translation reserve comprises exchange

differences arising from translation of the financial

statements of foreign subsidiaries using a reporting currency

other than the consolidation reporting currency (€). The

liquidation of Hills Independent Traders Ltd. was completed

in 2009, whereby the foreign currency translation reserve is

released to income.

(II) Other reserves

Balance as at 1 January 42,921 41,118

Grant of rights to shares 101 101

Sale of shares to executive board and employees 401 -

Payment of final dividend (22,977) (15,773)

Payment of interim dividend (17,788) (15,670)

Appropriation of profit for previous year 47,161 33,145

Balance as at 31 December 49,819 42,921


Bonus scheme for Syntel staff

On acquisition of Syntel, a bonus scheme was agreed with a

group of Syntel employees. At the time of acceptance of this

bonus arrangement, each employee opted to be paid either in

BinckBank shares (equity settlement) or in cash at an amount

based on the BinckBank share price (cash settlement). This

bonus will be recognised as an expense provided the recipient

remains an employee of Syntel for a period of four years,

with 25% of the amount made available to each employee

being released for each year in continued service. A total of

30,820 shares was issued to Syntel staff under the equitysettled

programme on 29 December 2006. The equity settled

programme for Syntel was fully settled at year-end 2010.

31 December 2010 31 December 2009

x € 1,000 x € 1,000

112

Financial statements 2010

Long-term bonus scheme

A long-term bonus scheme was in operation from 1 January

2008 to 31 December 2009 under which the executive board

and a group of staff are granted rights to phantom BinckBank

shares, depending on the position of BinckBank relative to

the Total Shareholder Return reference group. The future

payment in cash depended on the development of BinckBank’s

share price (cash settlement) on condition that the recipient

remained an employee of BinckBank for three years following

the grant.

The long-term bonus scheme for the executive board and

employees was terminated and settled in May 2010, after

approval by the general meeting of shareholders. 120,495

shares were sold under this scheme at a price of € 12.08.

Number Amount Number Amount

Phantom shares as at 1 January 278,469 1,877 88,274 892

Phantom shares granted - - 201,391 1,098

Phantom shares reacquired (278,469) (1,877) (11,196) (113)

Phantom shares as at 31 December - - 278,469 1,877

Phantom shares granted to the executive board - - 140,888 934

Phantom shares granted to other employees - - 137,581 943

- - 278,469 1,877

201,391 phantom shares were granted to the executive board

and employees in 2009. At the time of the grant, the share

price was € 5.45. The value of the phantom shares at the time

of the grant was € 1,098,000.

On the settlement of the long-term bonus scheme in May

2010, 278,469 phantom shares were reacquired at an average

price of € 6.74. There were no outstanding rights to phantom

shares at year-end 2010.


Notes to the consolidated income statement

2010 2009

x € 1,000 x € 1,000

26. Net interest income 43,587 43,825

This includes all income and expense items relating to the

lending and borrowing of money, providing they are of a

similar nature to interest, as well as interest income on credit

balances or interest expense on overdrafts.

This item comprises:

Interest income

Balances with central banks 477 568

Financial assets at fair value through profit and loss 1,200 1,506

Available-for-sale financial assets 38,050 51,735

Held-to-maturity financial assets 221 384

Loans and receivables 20,840 16,420

Other interest income 86 435

60,874 71,048

The interest income recognised on non-performing loans is

€ 21,000 (2009: € 34,000).

Interest expense

Interest on customer deposits measured at amortised cost 17,036 26,919

Interest on accounts with credit institutions 251 242

Other interest expense 0 62

17,287 27,223

27. Net fee and commission income 126,970 129,240

Net fee and commission income comprises fees for services

performed for and by third parties in respect of securities

transactions and related services.

113 Annual report 2010

This item comprises:

Commission income

Transaction income 149,539 155,515

Other commission income 27,519 17,195

177,058 172,710

Other commission income includes distribution fees, custody

fees, management fees, performance fees and fees charged

for BPO services.

Commission expense

Stock exchange and clearing costs 33,618 32,837

Other commission expense 16,470 10,633

Other commission expense includes commission sharing

agreements

50,088 43,470


2010 2009

x € 1,000 x € 1,000

28. Other income 13,599 9,661

This item comprises:

Revenue from IT services 10,597 7,781

Other income 3,002 1,880

13,599 9,661

The item revenue from IT services net of cost of sales is

€ 3,828,000 in 2010 (2009: € 2,984,000). The item other

income includes fees for subscriptions and courses, currency

results, and other income and expense items that cannot be

accounted for under other items.

114

Financial statements 2010

29. Result from financial instruments 620 4,353

This item comprises:

Result from SRD (Service de Règlement Différé)

Result on SRD derivative positions 321 -

Result on SRD equity positions (321) -

- -

The SRD receivables and payables are classified as derivatives

and are recognised as financial assets and liabilities held for

trading. Movements in value are recognised directly in the

income statement under Result from financial instruments.

The corresponding positions in equities are classified as

financial assets and liabilities at fair value through profit or

loss. Movements in value are also recognised under result

from financial instruments.

Since BinckBank takes a position in equities which exactly

offsets the SRD derivatives position, there is a natural hedge

of the price risk.

Result from other financial instruments

Financial assets at fair value through profit and loss (847) 260

Available-for-sale financial assets 1,467 4,093

620 4,353

30. Impairment of financial assets 70 (857)

This item comprises:

Available-for-sale financial assets - -

Loans and receivables 70 (857)

Held-to-maturity financial assets - -

70 (857)

The impairment on loans and receivables in 2009 includes

a write-down of € 650,000 of a loan to Accion N.V. (see also

note 13).


2010 2009

x € 1,000 x € 1,000

31. Employee expenses 45,480 43,185

This item comprises:

Salaries 29,416 26,910

Social insurance contributions 4,020 3,437

Pension costs 2,524 2,408

Profit sharing and performance-related pay 4,502 6,623

Other employee expenses 5,018 3,807

45,480 43,185

The research and development costs not capitalised by the

subsidiary Syntel B.V. in 2010 amounted to € 238,000 (2009:

€ 34,000).

Average number of employees

The average number of employees in 2010, including members

of the executive board, was 610 (2009: 587). The number at

year-end 2010 was 646 (year-end 2009: 598).

The following expenses are included in employee expenses in

relation to associated parties (executive board and supervisory

board) .

Salaries 1,275 1,292

Social insurance contributions 30 27

Pension costs 255 258

Performance-related pay 1,003 1,150

Other employee expenses 158 132

2,721 2,859

The other employee expenses entirely relate to and exclusively

concern expenses in relation to the supervisory board. Details

of the remuneration paid to the individual members of the

executive board and supervisory board of BinckBank N.V. are

disclosed in the remuneration section of the annual report

(page 65). At year-end 2010, members of the executive board

had loans collateralised by securities on the general conditions

applying to employees of € 339,000 (2009: € 146,000).

115 Annual report 2010

32. Depreciation and amortisation 34,798 35,939

This item comprises depreciation and amortisation on:

Intangible assets 29,885 30,017

Property, plant and equipment 4,913 5,922

34,798 35,939

In 2009, revisions were made to the useful life of various

intangible assets and property, plant and equipment in

connection with the renewal of the data centres. This led to

a charge of € 1,754,000 to the income statement. Accelerated

depreciation was applied to a limited number of property,

plant and equipment items in 2009 and 2010 in relation to the

move to new offices.


2010 2009

x € 1,000 x € 1,000

33. Other operating expenses 44,223 43,388

This item comprises:

Marketing costs 16,696 13,299

IT costs 9,965 9,500

Audit and professional services 2,320 2,491

Premises costs 4,071 5,029

Communication and information costs 5,956 5,731

Miscellaneous overheads 5,215 7,338

44,223 43,388

The item miscellaneous overheads in 2009 includes costs

associated with obligations under the deposit guarantee

scheme.

34. Earnings per share

The basic earnings per ordinary share are calculated by

dividing the profit attributable to ordinary shareholders for

the period by the weighted average number of shares in issue

during the period.

116

Financial statements 2010

The calculation of the earnings per share is based on the

following:

Net result after tax 44,145 47,161

Result attributable to minority shareholders (95) -

Result attributable to shareholders of BinckBank N.V. 44,240 47,161

Number of shares in issue on 1 January 76,068,928 77,093,508

Less: repurchased shares on 1 January (2,070,509) (1,053,442)

73,998,419 76,040,066

Weighted average number of shares relating to (*):

Issued to executive board and employees 82,095 -

Repurchased (249) (1,142,360)

Average number of shares in issue 74,080,265 74,897,706

(*) The above numbers are based on the total numbers

disclosed in note 25, taking account of the date of movement

in equity.

Earnings per share (in €) 0.60 0.63

There are no rights outstanding that could lead to a dilution

of earnings per share. The diluted earnings per share are

therefore the same as the basic earnings per share, and

consequently are no longer separately disclosed in these

financial statements.

No other transactions in ordinary shares or potential ordinary

shares were conducted between the reporting date and the

date of completion of these financial statements.


2010 2009

x € 1,000 x € 1,000

35. Dividend distributed and proposed

Declared and paid during the year

Dividend on ordinary shares:

Final dividend for 2009: € 0.31 (2008: € 0.21) 22,977 15,773

Interim dividend for 2010: € 0.24 (2009: € 0.21) 17,788 15,670

40,765 31,443

Proposed for approval by the general meeting of

shareholders (not recognised as a liability as at 31 December)

Dividend on ordinary shares: 20,115 23,581

Final dividend for 2010: € 0.27 (2009: € 0.31)

36 Fair value of financial instruments

A significant proportion of the financial instruments are recognised in the balance sheet at fair value. BinckBank uses the

following three measurement levels for the classification and disclosure of financial instruments measured at fair value:

Level 1: Fair value based on price quotations in active markets

Level 2: Fair value based on observable market data

Level 3: Fair value not based on observable market data

31 December 2010

Level 1 Level 2 Level 3 Total

x € 1,000 x € 1,000 x € 1,000 x € 1,000

Financial assets held for trading - 169 - 169

Financial assets at fair value through profit and loss 13,856 - - 13,856

Available-for-sale financial assets - 1,599,700 - 1,599,700

Total assets 13,856 1,599,869 - 1,613,725

Financial liabilities held for trading - 50 - 50

Financial liabilities at fair value through profit and loss 1,485 - - 1,485

Total liabilities 1,485 50 - 1,535

31 December 2009

Level 1 Level 2 Level 3 Total

x € 1,000 x € 1,000 x € 1,000 x € 1,000

Financial assets held for trading - - - -

Financial assets at fair value through profit and loss - 37,294 - 37,294

Available-for-sale financial assets - 1,511,903 - 1,511,903

Total assets - 1,549,197 - 1,549,197

117 Annual report 2010

Financial liabilities held for trading - - - -

Financial liabilities at fair value through profit and loss - - - -

Total liabilities - - - -


Level 1: Fair value based on price quotations in active markets

The fair value of all financial instruments in this category is determined on the basis of published prices originating

from a stock exchange, broker or data provider providing that these prices reflect current and regularly occurring market

transactions. In BinckBank’s case, this concerns the equity positions relating to SRD receivables and payables.

Level 2: Fair value based on observable market data

The fair value of all financial instruments in level 2 is determined using a valuation technique for which the input is derived

from market prices; however there is no demonstrably active market. In this case the available prices are substantiated

mainly using market information such as interest rates and current risk premiums associated with the various credit

ratings.

In BinckBank’s case, this concerns the following financial instruments:

• Derivatives positions in relation to SRD receivables and payables.

This concerns OTC (Over The Counter) derivatives which are directly agreed with individual clients and not traded in a

separate market. The value is directly derived from the market prices of the underlying equities.

• Investment portfolio - bonds

The investment portfolio concerns liquid bonds that are mainly traded between professional market participants

without the intermediation of a regulated market. Prices are available from brokers on request. Transactions in these

bonds are not centrally registered or published by a stock exchange, and BinckBank is thus of the opinion that there is

no demonstrably active market. The comparative figures for 2009 have been adjusted accordingly. No financial assets

were reclassified from level 2 to level 1 in 2010.

Level 3: Fair value not based on observable market data

Any financial instruments in this category are individually assessed. Valuation is based on a management best estimate,

taking account of the last known prices and analysis by external valuation agencies. BinckBank has no financial

instruments in this category.

118

Financial statements 2010

Fair value

The following analysis compares the carrying amounts and fair values of all the financial instruments recognised in

BinckBank’s financial statements.

Carrying amount

Fair value

2010 2009 2010 2009

x € 1,000 x € 1,000 x € 1,000 x € 1,000

Financial assets

Cash and balances with central banks 105,972 48,936 105,972 48,936

Banks 177,316 179,692 177,316 179,692

Financial assets held for trading 169 - 169 -

Financial assets at fair value through profit and loss 13,856 37,294 13,856 37,294

Available-for-sale financial assets 1,599,700 1,511,903 1,599,700 1,511,903

Loans and receivables 496,266 410,169 496,266 410,169

Held-to-maturity financial assets 4,121 8,329 4,185 8,529

Total financial assets 2,397,400 2,196,323 2,397,464 2,196,523

Financial liabilities

Banks 25,610 - 25,610 -

Customer deposits 2,258,290 2,089,814 2,258,290 2,089,814

Financial liabilities held for trading 50 - 50 -

Financial liabilities at fair value through profit and loss 1,485 - 1,485 -

Total financial liabilities 2,285,435 2,089,814 2,285,435 2,089,814


37. Classification of assets & liabilities by expected maturity

The table below shows the assets and liabilities classified by expected remaining life to maturity.

As at 31 December 2010

< 12 months > 12 months Total

x € 1,000 x € 1,000 x € 1,000

Assets

Cash and balances with central banks 105,972 - 105,972

Banks 174,208 3,108 177,316

Financial assets held for trading 169 - 169

Financial assets at fair value through profit and loss 13,856 - 13,856

Available-for-sale financial assets 448,687 1,151,013 1,599,700

Loans and receivables 496,266 - 496,266

Held-to-maturity financial assets 4,121 - 4,121

Investment in associates and joint ventures - 3,067 3,067

Intangible assets - 320,757 320,757

Property, plant and equipment - 43,901 43,901

Current tax 4,949 - 4,949

Deferred tax - - -

Other assets 13,050 - 13,050

Prepayments and accrued income 49,840 - 49,840

Derivatives positions held on behalf of clients 383,804 - 383,804

Total assets 1,694,922 1,521,846 3,216,768

Liabilities

Banks 25,610 - 25,610

Customer deposits 2,258,290 - 2,258,290

Financial liabilities held for trading 50 - 50

Financial liabilities at fair value through profit and loss 1,485 - 1,485

Provisions 1,268 - 1,268

Corporation tax 468 - 468

Deferred tax 1,408 11,287 12,695

Other liabilities 48,023 - 48,023

Accruals and deferred income 16,162 - 16,162

Derivatives positions held on behalf of clients 383,804 - 383,804

Total liabilities 2,736,568 11,287 2,747,855

119 Annual report 2010

Net (1,041,646) 1,510,559 468,913


37. Classification of assets & liabilities by expected maturity (continued)

The table below shows the assets and liabilities classified by expected remaining life to maturity.

As at 31 December 2009

< 12 months > 12 months Total

x € 1,000 x € 1,000 x € 1,000

Assets

Cash and balanced with central banks 48,936 - 48,936

Banks 179,692 - 179,692

Financial assets at fair value through profit and loss 37,294 - 37,294

Available-for-sale financial assets 544,796 967,107 1,511,903

Loans and receivables 410,169 - 410,169

Held-to-maturity financial assets 4,154 4,175 8,329

Investment in associates and joint ventures - 1,953 1,953

Intangible assets - 348,561 348,561

Property, plant and equipment - 12,512 12,512

Current tax 1,972 - 1,972

Deferred tax 1,895 4,093 5,988

Other assets 14,286 - 14,286

Prepayments and accrued income 48,828 - 48,828

Derivatives positions held on behalf of clients 299,587 - 299,587

Total assets 1,591,609 1,338,401 2,930,010

120

Financial statements 2010

Liabilities

Banks - - -

Customer deposits 2,089,814 - 2,089,814

Provisions - 2,660 2,660

Current tax - 282 282

Deferred tax 5,614 8,876 14,490

Other liabilities 21,210 - 21,210

Accruals and deferred income 21,608 - 21,608

Derivatives positions held on behalf of clients 299,587 - 299,587

Total liabilities 2,437,833 11,818 2,449,651

Net (846,224) 1,326,583 480,359


38. Related parties

The consolidated financial statements include the following BinckBank related parties:

Country

Interest

year-end 2010

Interest

year-end 2009

Consolidated companies:

Syntel Beheer B.V. Netherlands 100% 100%

Bewaarbedrijf BinckBank B.V. Netherlands 100% 100%

Stichting Effectengiro Binck Netherlands - 100%

ThinkCapital Holding B.V. Netherlands 60% -

Binck België N.V. Belgium 100% 100%

Joint ventures:

BeFrank N.V. Netherlands 50% -

Associates:

TOM Holding B.V. Netherlands 37.5% 50%

Accion N.V. Netherlands - 39%

The group of related parties consists of consolidated companies, joint ventures, associates, and the executive board and

supervisory board of BinckBank. The interest presented is equal to the voting rights held in relation to the company

concerned.

Terms and conditions of transactions with related parties

Transactions with related parties are conducted on commercial terms and conditions and at market prices.

As at year-end 2010, BinckBank did not recognise any bad debt provisions for receivables from related parties (2009: nil).

The judgement concerning the need for such provisions is made each year on the basis of an assessment of the financial

position of the individual related parties and the markets in which they operate. No guarantees have been issued or

received with regard to related parties.

ThinkCapital Holding B.V.

An interest of 60% of the share capital of ThinkCapital Holding B.V. was acquired on 9 November 2010 (see note 6). A

credit facility of up to € 1,100,000 was provided in 2010 at market rates with an end date of 9 November 2014. € 250,000 of

the credit facility had been drawn down at year end. A sum of € 1,000 was charged in interest in 2010. BinckBank provided

premises, office data systems and administrative services to ThinkCapital Holding B.V. in 2010, for which an invoice was

issued in the amount of € 6,000. At year-end 2010, BinckBank had a receivable from ThinkCapital Holding B.V. of € 8,000.

121 Annual report 2010

BeFrank N.V.

In 2010 BinckBank invested € 1,000,000 into BeFrank for an interest of 50% in the joint venture with Delta Lloyd in the

field of defined contribution pension plans. An amount of € 40,000 was charged in relation to ICT services in 2010. At

year-end 2010, BinckBank had a receivable from BeFrank N.V. of € 51,000.

TOM Holding B.V.

BinckBank made an additional capital investment of € 1,500,000 in TOM Holding B.V. in 2010.

On 13 July 2010 it was announced that ABN AMRO Clearing Bank N.V. had acquired a 25% equity interest in TOM Holding

B.V. As a result of the participation by ABN AMRO Clearing Bank N.V., TOM Holding B.V. is now classified as an associate

instead of a joint venture.

BinckBank provided administrative services and premises to TOM in 2010, for which a fee of € 95,000 is recognised. At

year-end 2010, BinckBank had a receivable from TOM Holding B.V. of € 37,000.


Accion N.V.

The operations of Accion N.V. were terminated at year-end 2009. The company was liquidated in December 2010.

Stichting Effectengiro Binck

Stichting Effectengiro Binck was dissolved in December 2010.

No transactions involving the executive board or the supervisory board other than under contracts of employment took

place during the year. See note 31 on employee expenses and the general remuneration report on page 65 in the annual

report for further details.

Transactions with consolidated companies are fully eliminated in the consolidated financial statements.

31 December 2010 31 December 2009

x € 1,000 x € 1,000

39. Off balance sheet commitments

Contingent liabilities

Liabilities in respect of contracts of suretyship and guarantees 2,929 3,217

Liabilities in respect of irrevocable facilities - -

To meet the requirements of its clients, BinckBank offers products such as contracts of suretyship and guarantees in

relation to loans. The underlying value of these products is not presented on the face of the balance sheet. The above

figure represents the maximum potential credit risk for BinckBank attached to these products on the assumption that

all its counterparties should default on their contractual obligations and all existing collateral should prove worthless.

Guarantees include both credit-substituting and non-credit-substituting guarantees. In most cases, guarantees can be

expected to expire without a call being made on them and they will not give rise to any future cash flows.

122

Financial statements 2010

With acquisition of Alex Beleggersbank at the end of 2007, BinckBank also acquired the Alex Bottom-Line product, which

is an agreement with the Dutch Shareholders’ Association (the VEB). If BinckBank terminates the VEB agreement, it will

be liable to pay an amount equal to the custody fee and dividend commission paid by each client of Alex Bottom-Line on

entry into the agreement plus the amount of any custody fee and dividend commission additionally paid by each client

on exceeding set limits.

Lease commitments

The company has leases on office premises in the Netherlands, Belgium, France and Spain. It has also entered into

operating lease contracts for the vehicle fleet for periods of less than five years. The combined expense relating to office

rents and operating lease payments for the vehicles in 2010 was € 4.5 million (2009: € 4.5 million).

31 December 2010 31 December 2009

x € 1,000 x € 1,000

The aged analysis of the outstanding liabilities is as follows:

Within one year 2,780 4,178

One to five years 5,252 6,393

Longer than five years - 555

Legal proceedings

BinckBank is involved in various legal proceedings. Although it is not possible to predict the outcome of current or

impending lawsuits, the executive board believes – on the basis of information currently available and after taking legal

counsel – that the outcomes are unlikely to have material adverse effects on BinckBank’s financial position or profitability.


Deposit guarantee scheme

The deposit guarantee scheme is intended to guarantee certain deposits by account holders if a bank goes bankrupt.

The scheme provides security for deposits of up to € 100,000 and applies per account holder per bank. In case of a joint

account operated by two persons, the maximum applies per person. More or less all savings accounts, current accounts

and term deposits are covered. Equities or bonds are not covered. In case of a subordinated deposit, the principal sum is

not covered by the deposit guarantee scheme, although the interest on the principal is covered.

If a credit institution finds itself in difficulties and does not have sufficient funds to pay all or part of the guaranteed

amounts to its account holders, De Nederlandsche Bank will make up the difference. The total amount paid out by DNB

will then be recovered from the banks on a pro rata basis.

Investor compensation scheme

Despite the fact that all banks and investment firms in the Netherlands are subject to regulation by DNB and the AFM,

a bank or investment firm may encounter problems with payments. In this case, the investors compensation system

guarantees a minimum level of protection in the event that the bank or investment firm cannot meet its obligations

arising from the investment services it provides to its clients. The investors compensation scheme provides a guarantee

of up to € 20,000 per person per institution.

40 Events after balance sheet date

At the beginning of 2011, BinckBank announced it would be opening a branch in Italy in mid 2012.

41 Segment information

As an online broker, BinckBank offers its retail clients fast and low-cost access to all the world’s major financial markets.

Moreover, as an asset management bank, BinckBank provides support to its clients in the management of their assets

through online asset management services and online savings accounts. In addition to fast and low-cost order execution,

BinckBank also provides services to professional clients relating to the administrative processing of securities and financial

transactions by means of an outsourcing system (BPO), or through the licensing of the related software. The company has

offices in the Netherlands, Belgium, France and Spain.

The managerial responsibility for our subsidiary Syntel B.V. was changed in 2010. This responsibility has been transferred

from the board member responsible for the Professional Services business unit to the chairman of the executive board.

The results of Syntel are therefore no longer reported in the business unit Professional Services; they are included in

group operations. Furthermore, in order to improve the quality of the management information, the allocation ratios

of the indirect costs have been reviewed. The new segmentation reflects the revised managerial responsibilities. The

comparative figures for 2009 have been adjusted accordingly.

A segment is a clearly distinct element of BinckBank that provides services with a risk or return profile that is different

from the other segments (a business segment), or which provides services to a particular economic market (market

segment) that has a different risk and return profile to that of other segments. In terms of organisation, the operations

of BinckBank are divided into two primary business segments. The executive board determines the performance targets,

and authorises and monitors the budgets prepared for these business segments. The management of the business

segment is responsible for setting policy for that segment, in accordance with the strategy and performance targets

formulated by the executive board. The business segments are:

• Retail

• Professional Services

123 Annual report 2010

The Retail business unit operates as an (internet) broker for the private client market. The Professional Services business

unit provides brokerage services in securities and derivatives transactions on behalf of professional parties in the

Netherlands and abroad, including the provision of the majority of the related administration. All directly attributable

income and expenses are recognised within the Retail and Professional Services business segments, together with the

attributed costs of the group activities.


Group operations includes the departments directly managed by the executive board and for which the income and

expenses are not included in one of the other divisions.

This includes central Treasury results, including results on sales in the investment portfolio, external activities of the IT

department, which include the subsidiary company Syntel B.V. and extraordinary expenses, for example in relation to the

deposit guarantee system.

The managerial responsibility for the subsidiary ThinkCapital Holding B.V. is placed with the board member responsible

for the Professional Services business unit. As from the acquisition date therefore, the results of ThinkCapital Holding B.V.

are recognised in the result of the Professional Services business unit.

The same accounting principles are used for a segment as those described for the consolidated balance sheet and income

statement of BinckBank. The prices used for transactions between segments are the prices that would occur under

normal market conditions (‘at arm’s length’).

The results of associates and joint ventures are attributed to business segments to the extent that the business segments

exercise direct influence on the associates and joint ventures. All other results of associates and joint ventures are

recognised at group level.

Investments in intangible assets and property, plant and equipment are attributed to the business segments to the

extent that the investments are directly acquired by the business segments. All other investments are recognised at

group level.

Tax is managed at group level and is not attributed to the operating segments.

Syntel charged a sum of € 5,465,000 (2009: € 5,076,000) for services provided to BinckBank. These costs have been

eliminated in the segment information presented below and replaced by the allocation of the actual costs.

124

As was the case in 2009, no client or group of associated clients was responsible for more than 10% of the bank’s total

income in 2010.

Financial statements 2010


Business segmentation

x € 1,000

Retail

Professional

Services

Group

operations

Total

2010 2009 2010 2009 2010 2009 2010 2009

Interest income 55,069 64,091 5,515 6,029 290 928 60,874 71,048

Interest expense (16,363) (26,402) (671) (517) (253) (304) (17,287) (27,223)

Net interest income 38,706 37,689 4,844 5,512 37 624 43,587 43,825

Commission income 147,310 151,274 29,748 21,436 - - 177,058 172,710

Commission expense (34,873) (32,340) (15,191) (11,130) (24) 0 (50,088) (43,470)

Net fee and commission

income

112,437 118,934 14,557 10,306 (24) 0 126,970 129,240

Other income 964 1,124 8 19 12,627 8,518 13,599 9,661

Result from financial

instruments

- - - - 620 4,353 620 4,353

Impairment of

financial assets

70 (207) - - - (650) 70 (857)

Total income from

operating activities

152,177 157,540 19,409 15,837 13,260 12,845 184,846 186,222

Employee expenses (33,416) (33,656) (8,019) (7,058) (4,045) (2,471) (45,480) (43,185)

Depreciation and

amortisation

(33,413) (34,639) (908) (1,047) (477) (253) (34,798) (35,939)

Other operating expenses (38,294) (35,140) (3,689) (3,280) (2,240) (4,968) (44,223) (43,388)

Total operating expense (105,123) (103,435) (12,616) (11,385) (6,762) (7,692) (124,501) (122,512)

Result from business

operations

47,054 54,105 6,793 4,452 6,498 5,153 60,345 63,710

Share in results of associates

and joint ventures

(1,386) (1,466)

Other non-operating income 23 -

Result before tax 58,982 62,244

Tax (14,837) (15,083)

Net result 44,145 47,161

125 Annual report 2010

Total assets 2,396,899 2,284,137 318,644 235,936 501,225 409,937 3,216,768 2,930,010

Total liabilities 1,989,064 1,879,414 294,599 220,994 464,192 349,243 2,747,855 2,449,651


The analysis below shows the geographical distribution of income from operating activities and the property, plant and

equipment and intangible assets of BinckBank. Income is allocated on the basis of the country of domicile of the branch

where the account is opened, and the property, plant and equipment and intangible assets on the basis of the country in

which the assets are held.

Segmentation of continued operations by region

x € 1,000

Netherlands Other countries Total

2010 2009 2010 2009 2010 2009

Total income from

operating activities

166,947 177,426 17,899 8,796 184,846 186,222

Property, plant and

equipment and intangible

assets

364,493 360,797 165 276 364,658 361,073

42 Risk management

Introduction

In the conduct of their operations, banks face a variety of risks. Risk is defined as the probability that a particular event

could lead to a loss for a bank. Banks have to hold capital in order to be able to absorb potential losses in the event of an

unfavourable scenario, so that they can continue to conduct their business when such losses are incurred.

126

Financial statements 2010

BinckBank strives to achieve a moderate risk profile, so that the effects of unexpected events on profit and equity will be

limited. BinckBank devotes considerable attention to risk management and employs risk management systems. Adequate

control measures, reporting systems and information systems incorporating limits are part of the risk management

process. The identification of risks and the creation and updating of appropriate control measures constitute an ongoing

process within BinckBank. Risk management is itself an ongoing process which is affected by both changing market

conditions and the increasing complexity of legislation and regulation.

BinckBank published its Capital Adequacy & Risk Report (Basel II, Pillar III) on 25 October 2010, which describes the risks

and control measures relevant to BinckBank in detail. This report gives additional information on the basis of Pillar III. The

note on financial risks in the financial statements is based on the requirements of IFRS 7.

BinckBank’s risk management focuses on:

• Pillar I

• Credit risk

• Market risk

• Operational risk

• Pillar II

• Interest-rate risk

• Liquidity risk

• Credit risk

• Concentration risk

• Margin risk

• Counterparty risk

After a general section on risk and capital management, these types of risk are described separately below.


BinckBank’s risk profile

BinckBank has a fundamentally different risk profile from that of a traditional Dutch bank. Its banking operations are

relatively simple and concern the settlement of client transactions, the provision of collateralised loans secured by

securities portfolios that can be readily liquidated, the facilitation of payments to regular contra accounts at other

banking institutions, and interest-based activities relating to customer deposits. These activities are in general classified

as relatively low-risk. Transaction settlement, on the other hand, is a complex process. Each year, BinckBank processes

millions of administrative transactions for more than 400,000 accounts in a very large number of financial products

on several trading platforms through brokers and stock exchange memberships. This, together with BinckBank’s heavy

reliance on IT, translates into a relatively large operational risk.

Recent changes to capital requirements set by Basel Committee on Banking Supervision

The Basel Committee on Banking Supervision is developing a new guideline so that European banks are better able

to handle periods of financial stress. On 12 September 2010, an expert group advising the Basel Committee published

proposals containing a significant increase in the capital requirements. These reforms, together with the introduction of

a global liquidity standard, constitute the core of the global financial reform agenda.

The major changes are the following:

1. Additional capital solidity requirements

2. Additional Tier 1 capital requirements

3. Holding countercyclical capital buffers

4. Introduction of leverage ratio

5. Introduction of liquidity ratios

The implications for BinckBank are explained below in broad terms.

1. Additional capital solidity requirements

The capital of a bank can comprise Tier I, Tier II and Tier III capital. Tier I capital qualifies as the strongest, since its

components are equity capital and retained earnings. Under the new banking guideline, stricter requirements apply to

capital instruments for them to qualify as Tier I or Tier II capital. Tier III instruments are being phased out. BinckBank is

financed solely with Tier I capital and has an ample capital buffer.

2. Additional Tier I capital requirements

The package of reforms will lead to the minimum core capital increasing from 2% to 4.5%. On top of the 4.5% minimum,

banks will have to form an additional buffer of 2.5%, from Tier I capital. Although a bank can draw on this buffer in a

time of crisis, it can only do so if no dividend is distributed. Banks will want to avoid this scenario. In practice, therefore,

they will have to have 7% available as Tier I capital (from 2019 onwards), whereas currently this only needs to be 2%. As

BinckBank is financed solely with Tier I capital and its BIS ratio as at 31 December 2010 is 23.9%, we do not expect to have

to increase this type of capital.

127 Annual report 2010

3. Holding countercyclical capital buffers

On top of the new standard buffer of 7%, a countercyclical buffer is being introduced. In strong economic times, no more

than 2.5% has to be held as a buffer. Taking the average over the economic cycle, this means an additional requirement

of 1.25%. This additional capital is subject to less stringent solidity requirements, as the point of the buffer is to reserve

additional capital when things are going well financially. Given BinckBank’s current BIS ratio of 23.9%, it is unlikely to

need an additional capital reservation for the time being.

4 Introduction of leverage ratio

The Basel Committee is introducing the leverage ratio in addition to the existing capital requirements for risk-weighted

assets. It is the ratio of Tier I capital to the total gross credit exposure of a bank, including off-balance-sheet loans,

ignoring all types of risk weighting. In future, banks will not be allowed to have an exposure that exceeds 33 times their

equity capital. The Basel Committee will most likely implement this ratio as from 1 January 2018. BinckBank’s current

leverage ratio easily satisfies this criterion.


5 Introduction of liquidity ratios

The purpose of the liquidity coverage ratio is to boost the resilience of a bank’s liquidity in the short term. It works by

ensuring that sufficient high-grade liquid assets are held to survive an acute stress scenario lasting a month. In the case of

BinckBank, its investment policy is structured in a way that there are sufficient liquid assets to satisfy the stricter liquidity

requirements. An initial assessment shows that BinckBank has a liquidity ratio of approximately 700%, as against the

guideline of 100% that the Basel Committee on Banking Supervision specifies.

The net stable funding ratio is a test of the extent to which a bank allocates its funds to operations, including off-balancesheet

activities, taking liquidity risk factors into account. In this connection, a distinction is made between stable and

less stable types of funding in order to estimate the size of the stable funding. The stable funding is examined in the

light of all the bank’s operations, with a risk assessment being made in relation to the liquidity aspects. The value of

the net stable funding ratio provides an estimate of the ratio of available funds to required funds. BinckBank meets this

requirement comfortably, as its net stable funding ratio is double the liquidity requirement that is expected to be set. The

following table gives the schedule for the changes.

Summary

Over the next few years, the Basel Committee on Banking Supervision is expected to provide more clarity about the details

of the new capital and liquidity requirements. If a final decision is made or significant developments occur that affect

BinckBank’s capital position, we will address the issue in future Capital Adequacy & Risk reports. The above descriptions

of the new capital requirements therefore give only an indication of new developments in this area.

128

Financial statements 2010

Phase-in timetable

Phase-in arrangements (shading indicates transition periods) (All dates are as of 1 January)

2011 2012 2013 2014 2015 2016 2017 2018 2019

Leverage ratio

Supervisory

monitoring

Parallel run 1 January 2013 – 1 January 2017

Disclosure starts 1 January 2015

Migration

to Pillar I

Minimum common equity

capital ratio (after increased

3.5% 4.0% 4.5% 4.5% 4.5% 4.5% 4.5%

deductions)

Capital conservation buffer 0.625% 1.250% 1.875% 2.500%

Minimum common equity

plus capital conservation

3.5% 4.0% 4.5% 5.125% 5.750% 6.375% 7.0%

buffer

Phase in of deductions

from CET1 (inc. amounts

exceeding the limit for

20% 40% 60% 80% 100% 100%

DTAs, MSRs and financials)

Minimum Tier I capital 4.5% 5.5% 6.0% 6.0% 6.0% 6.0% 6.0%

Minimum totaal capital

(BIS ratio)

8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%

Minimum totaal capital plus

conservation buffer

8.0% 8.0% 8.0% 8.625% 9.250% 9.875% 10.5%

Capital instruments that

no longer qualify as noncore

Phased out over 10-year horizon beginning 2013

Tier I or Tier II

capital

Liquidity coverage ratio

Net stable funding ratio

Observation

period

begins

Observation

period

begins

Introduce

minimum

standard

Introduce

minimum

standard


Legal structure

BinckBank is public limited company listed on the Stock Exchange of NYSE Euronext Amsterdam. BinckBank has a number

of Dutch subsidiaries and one foreign subsidiary. BinckBank has obtained all the necessary licences for its activities.

BinckBank currently has branches in Belgium, France and Spain. The flows of funds with respect to these branch offices

are regulated centrally by the Treasury department. Treasury ensures that each branch continuously has adequate

liquidity so that clients in all countries can access their cash balances at all times. BinckBank is regulated by both DNB and

the AFM. Binck België N.V. and the foreign branches are also subject to regulation by local regulators.

BinckBank N.V.

37,5%

50%

60%

100% 100%

100%

TOM

Holding B.V.

BeFrank N.V.

ThinkCapital

Holding B.V.

Binck

België N.V.

BinckBank N.V.

Belgium branch

Bewaarbedrijf

BinckBank B.V.

Syntel

Beheer B.V.

100%

100%

100%

100%

TOM B.V.

BeFrank

PPI N.V.

ThinkCapital

Asset Mgt B.V.

BinckBank N.V.

France branch

Fintegration

B.V.

100% 100%

TOM

Broker B.V.

BinckBank N.V.

Spain branch

Syntel B.V.

Risk management organisation

In the current organisation, risk management is concentrated around the Chief Executive Officer (CEO) and the Chief

Financial Officer (CFO), who collectively manage the various departments involved in the management of risk. Each of

these departments has its own charter which defines its duties and responsibilities in relation to risk management. This

charter has been coordinated to avoid both duplications and gaps in the risk management mechanisms. The independence

of the various functions/departments is safeguarded by segregating the reporting lines.

The Governance Risk Compliance Framework is as follows:

Supervisory board

129 Annual report 2010

Audit Committee (AC)

Risk & product development

committee (RPC)

Regulators (DNB/AFM/CBFA/AMF)

Retail

Executive board

Marketing & Sales

Operations

IT

Professional

Services

Treasury

committee

Operational

risk

committee

Risk management

(escalation to RPC)

Finance & Control

Compliance

(escalation to AC)

Credit

committee

IAD

(escalation

to AC)

External Accountant

Treasury

Information security

(escalation to CEO)

1st line ‘of defence’ 2nd line ‘of defence’ 3rd line ‘of defence’


BinckBank operates according to the ‘three lines of defence’ principle, in which the business units have primary

responsibility for the management of risk. The first-line departments are supported and monitored by second-line

specialised departments, such as Risk management, Finance & Control, Compliance and Information security. The Internal

Audit Department (IAD) forms the third line of defence. The Audit Committee, Risk and Product Development Committee

and the supervisory board, together with the regulators and the external auditor, form the last link in the Governance

Risk Compliance Framework.

Risk management departments and committees

BinckBank has an organisational structure in which the segregation of duties is safeguarded.

There are also several consultative bodies and departments that are closely involved in the management of certain types

of risk, the most important of which are further explained below.

Treasury committee

The Treasury committee is mainly concerned with the management of liquidity risk, credit risk in the investment portfolio

and market risk (interest-rate risk and currency risk), and determines the investment policy for the interest-rate business.

This relates to matters such as strategic allocation of freely available funds to the investment portfolio and determination

of the funds to be held in cash. Regarding the funds to be held in cash, issues are dealt with such as the placement of call

money, the risk measure or rating policy in this respect and the exposure limits per counterparty and per sector.

130

Operational risk committee

Operational risk management is the responsibility of the Operational risk committee, which consists of representatives

of line management and specialist support departments. This committee manages risks relating to human factors and

structuring of business processes, such as information security risk, legal risk and compliance risk. Its principal tasks

include decisionmaking on sound and controlled operation, coordination and promotion of operational risk control and

design of the main business processes. The framework of standards and guidelines within which these decisions are

made has been configured by specialist support departments which support decisionmaking and policy implementation

by line management. This committee also has responsibility for giving the final approval of the introduction of ‘new

products’ as described in the Banking Code.

Financial statements 2010

Credit committee

BinckBank has a Credit committee which is mainly responsible for the management of credit risk in client portfolios,

including concentration risk, margin risk and counterparty risk. Matters dealt with at the meetings of the Credit

committee include: policy regarding the approval of collateralised lending, margin requirements, bank guarantees and

pledged accounts. The Risk manager has the option of escalating issues to the Risk and product development committee.

Risk management

The Risk management department is responsible for the day-to-day implementation of the policy formulated by the

Credit committee for the management of credit and market risk and reports directly to the CFO, the Credit Committee

and the Operational risk committee. Internal control exists to facilitate operational improvement, by supporting the

business units in defining their administrative organisation and internal control structures and verifying the existence of

risk control measures.

Finance & control department

The Finance & Control department is responsible for the timely administration and reporting of financial data to internal

and external stakeholders. This includes all mandatory reporting to DNB and AFM. The Finance & control department

reports directly to the executive board (CFO).

Compliance department

The Compliance department is responsible for monitoring compliance with the applicable codes of conduct and the

relevant securities legislation and regulation and is concerned primarily with management of integrity risk. Through

its code of conduct, insider trading regulations and whistleblower’s charter, BinckBank demonstrates the importance it

attaches to values such as integrity and dependability.


Information security department

BinckBank has an Information security department, which is responsible for formulating and implementing information

security policy. The Information security department has the option of escalating issues to the chairman of the executive

board.

Internal Audit Department (IAD)

In line with the definition of Internal Auditing by the Institute of Internal Auditors, the mission of IAD is to provide

independent and objective assurance. The purpose of the IAD is to perform assurance tasks in order to add value to and

improve the functioning of the internal organisation. The IAD thus contributes to the realisation of the organisational

targets by means of a systematic and disciplined approach for evaluation and improvement of the effectiveness of risk

management, control and governance processes. The IAD does not provide consulting services.

The IAD provides additional assurance with respect to:

• the effectiveness and efficiency of the business activities;

• the reliability and integrity of the financial and operational information and reporting;

• the safeguarding of assets; and

• compliance with relevant legislation and regulation.

The audits conducted by the IAD focus on the design, existence and operation of:

• the quality and effectiveness of the operation of governance;

• the risk management and control within the organisation and processes

• the automated systems and the control measures surrounding and embedded in these systems.

In addition to scheduled audits, audits may be conducted on the request of management or the audit committee.

The scope or operating area of the IAD includes all activities carried out under the responsibility of BinckBank. Joint

ventures are independent entities with their own licence and outside the scope of the IAD.

The IAD reports to the executive board of BinckBank; within the executive board, the IAD portfolio is the responsibility

of the chairman. In addition, the IAD has direct access to the chairman of the audit committee of BinckBank. The IAD’s

independence is safeguarded by this double reporting line and the fact that it is separate from the daily internal control

reporting line.

Supervision of activities

Supervisory board

The supervisory board discusses the strategy and the risks associated with the business each year, and, on the basis of

reports, assesses the structure and operation of the internal risk management and control systems.

131 Annual report 2010

Audit committee

The audit committee is responsible for overseeing the implementation and operation of the system of internal control and

risk management and monitoring the implementation of the external auditor’s recommendations and the functioning

of the IAD. Supervision of the provision of financial information by the company is the responsibility of the supervisory

board.

Risk and product development committee

The Risk and product development committee (RPC) advises the supervisory board on matters including the risk profile

and the risk appetite of BinckBank. It also monitors the adequacy of the liquidity and the capital, as well as establishing,

testing and analysing new products or changes to existing products and services with regard to the duty of care towards

the client. The RPC is moreover responsible for identifying, analysing and advising on all other material risks to BinckBank.


Capital management

The aim of capital management at BinckBank is to maintain a sound solvency position, seeking constantly to strike the

right balance between the equity capital it holds and the risks to which it is exposed. Since the introduction of Basel II,

BinckBank uses the complementary method to determine the adequacy of its capital. This involves holding capital for the

complementary risks identified by BinckBank, such as interest-rate risk, concentration risk, margin risk and counterparty

risk, in addition to the minimum capital requirements prescribed under Pillar I. The adequacy of this retained capital under

Pillar II is tested on a regular basis, which may lead to higher or lower internal capital requirements. The testing process

is known as the ICAAP (Internal Capital Adequacy Assessment Process). The ICAAP is used by BinckBank to determine its

internal capital (or ICAAP capital). The result of the ICAAP is expressed as the solvency ratio. BinckBank’s internal capital

target is to achieve a solvency ratio between 12% and 20%.

Capital adequacy

BinckBank continuously assesses the adequacy of its capital. During the past year it emerged that, as a result of the

growth of the business operations, the risks under Pillars I and II have increased further. Despite the increase in the capital

required under Pillars I and II, as a result of the strong increase in the bank’s Tier I capital the solvency ratio has risen from

13% as at 31 December 2009 to 15.7% as at 31 December 2010. The current level of Tier I capital is sufficient to continue

the growth in our activities and puts BinckBank in a sound position to cope with periods of financial stress. The capital

adequacy is assessed on a monthly basis, based on the capital requirements under Pillars I and II and results of a fixed

set of stress tests. The results provide information on the adequacy of the capital and the extent to which BinckBank can

continue its operations in the event of a stress scenario. The capital requirement under Pillar I is expressed in the BIS ratio.

The capital adequacy under Pillars I and II is expressed in the solvency ratio.

Financial statements 2010

132


Calculation of equity capital and actual Tier 1 capital

(x € 1,000)

31 December 2010 31 December 2009

Issued and paid-up capital 7,450 7,607

Share premium reserve 373,422 386,978

Treasury shares (3,335) (18,097)

Other reserves 47,209 56,710

Unappropriated profit 44,240 47,161

Non-controlling interests (73) -

Total equity 468,913 480,359

Less: goodwill (152,929) (152,929)

Less: other intangible assets (164,155) (192,537)

Less: fair value reserve 2,610 (13,789)

Less: proposed dividend (20,115) (23,582)

Core capital 134,324 97,522

Less: equity investments in financial subsidiaries (3,067) (1,953)

Total available capital (A) - Tier 1 131,257 95,569

Credit risk - Pillar I 17,884 13,391

Market risk (= currency risk) 96 197

Operational risk 26,003 27,933

Total required capital (B) - Pillar I 43,983 41,521

Interest-rate risk 8,349 8,906

Liquidity risk 954 975

Credit risk - Pillar II 13,647 7,266

Concentratierisico 9,062 5,439

Margin risk 3,585 827

Counterparty risk 1,000 1,000

Total required capital - Pillar II 22,950 17,147

Total required capital (C) - Pillar I + II 66,933 58,668

133 Annual report 2010

BIS ratio (= A/B x 8%) 23.9% 18.4%

Solvency ratio (= A/C x 8%) 15.7% 13.0%

Credit risk - Pillar I

Credit risk is the risk of a counterparty and/or issuing institution involved in trading in or issuing a financial instrument

defaulting on an obligation and thus harming BinckBank financially. Credit risk relates to items included in the balance

sheet under cash, banks, financial assets (including collateralised lending) and other assets. With these balance sheet

items, the most important consideration is the creditworthiness of the counterparty (except collateralised lending,

because these items are fully covered by securities as collateral).


Lending

BinckBank lends to central governments, lower-tier public authorities if guaranteed by central government, central banks

and other banks and credit institutions with a credit rating equal to or better than F1 (Fitch or equivalent). These are shortterm

loans with terms ranging from one day to a maximum of one month. BinckBank is exposed to counterparty risk (the

risk of default by a counterparty to which credit has been extended). BinckBank extends credit to counterparties within

a system of limits for each counterparty, which are set in advance by the Treasury Committee. Lending to counterparties

by the Treasury department is governed by strict rules, in accordance with Treasury policy and subject to internally set

limits on both the amount and maturities of loans to approved counterparties. The resultant credit risk is monitored via

regular credit reviews.

Investment portfolio - bonds

In the assessment of the creditworthiness of the investments in bonds, use is made of the long-term credit ratings

published by rating agencies. New investments must have a rating of AA- or higher. The credit rating of securities paper

must be at least A-.

Collateralised lending

Via a separate client agreement, BinckBank offers clients loans against securities collateral. Loans can be used to cover

the margin requirement on derivative positions, purchase securities or furnish bank guarantees against the brokerage

account. In all these cases, BinckBank is exposed to credit risk with respect to the client. Given the nature of the loans

and the collateral provided, however, the credit risk is limited. In the case of lending against the collateral of financial

instruments, the amount of credit advanced depends partly on the liquidity and price of the instrument in question.

Monitoring of credit risk is conducted by the Risk management department, which carries out automated checks on the

basis of real-time prices. The credit risk therefore resides in movements in value of the collateral received.

Credit risk - Pillar II

134

Financial statements 2010

Concentration risk

The Risk management department closely monitors undesirable concentration within client portfolios. Concentration

risk arises when there is an excessive concentration of investments in specific funds for clients with non-diversified

investment portfolios. The credit collateralised by securities is in this case too dependent on one or more names. The Risk

management department monitors such concentrations daily and takes action where necessary to moderate them. As at

31 December 2010, BinckBank has reserved € 9.1 million capital for this risk.

Margin risk

The clients of BinckBank can take positions in listed derivatives (options and futures). The credit risk arising from taking

short positions in options is covered by requiring clients to provide cover in the form of money and/or securities (margin

requirements). The Risk management department monitors that clients continue to meet their margin requirements.

At year-end 2010, the total margin requirement of clients was € 270 million (2009: € 217 million). Due to the declining

volatility in the financial markets, the margin requirement for written options was reduced by BinckBank in the course of

2010. This led to a significant increase in the open written option positions. Since the risk associated with written option

positions is not adequately expressed in the Pillar I minimum capital requirements, BinckBank has itself imposed a capital

requirement of € 3.6 million. This amount expresses the size of client deficits not covered by securities in the event of a

12.5% decline in the financial markets within a period of 5 trading days.

Counterparty risk

BinckBank is exposed to counterparty risk as a result of its institutional brokerage operations. This concerns a very limited

number of clients that have orders executed via BinckBank on an occasional basis. A maximum limit is established for each

counterparty in terms of the total outstanding settlements, based on the creditworthiness of the counterparty which is

individually established by Risk management. Risk management monitors these limits and notifies the counterparty if it

is approaching the set limit.

Counterparty risk is incurred in relation to a limited number of clients for which the risks lie mainly in cross-border

settlement. BinckBank’s Credit Committee has decided to reserve € 1 million capital for this risk. No stress testing is

performed for counterparty risk.


Maximum credit risk

The table below presents the maximum credit risk associated with the various financial instruments. The maximum

credit risk is shown gross, without taking account of the effects of credit risk mitigation provided by set-off agreements

and the collateral that has been furnished. The maximum credit risk in derivative positions for the account and risk of

clients is shown by the margin requirement as described above, and is not included in the table below.

2010 2009

x € 1,000 x € 1,000

Credit risk

Cash and balances with central banks 105,972 48,936

Banks 177,316 179,692

Financial assets held for trading 169 -

Financial assets at fair value through profit and loss 13,856 37,294

Available-for-sale financial assets 1,599,700 1,511,903

Loans and receivables 496,266 410,169

Held-to-maturity financial assets 4,121 8,329

2,397,400 2,196,323

Guarantees 2,929 3,217

2,400,329 2,199,540

The quality of the loans and advances and the provision for bad debts are shown in

the tables below:

Not yet due 496,194 410,039

Past due 558 805

Total 496,752 410,844

Bad debt provision (486) (675)

Net loans and receivables 496,266 410,169

Past due items are residual items remaining after realisation of the collateral

(securities and bank guarantees). The provision is formed on a case-by-case basis.

Loans and receivables by percentage covered:

Money-market loans 20,000 -

< 25% of the value of the collateral 77,081 75,037

between 25% and 50% of the value of the collateral 189,551 160,509

between 50% and 75% of the value of the collateral 205,122 171,635

> 75% of the value of the collateral 4,440 2,858

Past due 558 805

496,752 410,844

There are no items in arrears or for which provisions have been recognised in any of

the other categories of financial assets.

135 Annual report 2010

Loans and receivables under renewed contracts

In the case of existing loans and receivables, it is possible for renewed contracts to be

concluded with clients.

The new contracts are, however, periodically assessed for compliance and to determine

whether future payment is probable.

Loans and receivables under renewed contracts 61 74


Deficits procedure

Clients with a loan agreement are monitored by Risk management with respect to their available spending limit (ASL).

The ASL is the balance of the weighted value of the collateral received from the client less the client’s obligations in the

form of collateralised lending and margin requirements. There is a shortfall in the ASL if the collateral in the client’s

portfolio no longer provides sufficient cover for the client’s obligations. As soon as a negative ASL is identified, the

deficits procedure is initiated. Use of a deficits procedure is a statutory requirement. The deficits procedure used by

BinckBank is as follows:

BinckBank checks for each client whether the collateral sufficiently covers the collateralised loans and/or margin

requirements (margin and current orders) on a daily basis. BinckBank does this by calculating the client’s ASL. In the

case of a negative ASL, the client must make up the deficits within five business days. If there is a deficits as a result of

futures positions, this must be made up within one day. If the client’s ASL is still negative at 15:00 hours on the last day on

which the deficits must be made up, BinckBank will start to liquidate the client’s securities positions on its own volition.

Securities positions will be closed until the ASL in the client’s account is returned to a positive value.

Risk concentration per economic sector

The following table presents the credit risk, analysed by economic sector.

136

Financial statements 2010

Risk concentration per economic sector

as at 31 December 2010

x € 1,000

Financial

institutions

Government/government

guaranteed

Private

individuals

Other

private

sector

Cash and balances with central banks - 105,972 - - 105,972

Banks 177,316 - - - 177,316

Financial assets held for trading - - - 169 169

Financial assets at fair value through profit and loss - - - 13,856 13,856

Available-for-sale financial assets 1,167,379 432,321 - - 1,599,700

Loans and receivables - 20,000 476,266 - 496,266

Held-to-maturity financial assets - 4,121 - - 4,121

1,344,695 562,414 476,266 14,025 2,397,400

Guarantees - - 2,460 469 2,929

1,344,695 562,414 478,726 14,494 2,400,329

Risk concentration per economic sector

as at 31 December 2009

x € 1,000

Financial

institutions

Government/government

guaranteed

Private

individuals

Other

private

sector

Cash and balances with central banks - 48,936 - - 48,936

Banks 179,692 - - - 179,692

Financial assets held for trading - - - - -

Financial assets at fair value through profit and loss 37,294 - - - 37,294

Available-for-sale financial assets 842,742 617,215 - 51,946 1,511,903

Loans and receivables - - 410,169 - 410,169

Held-to-maturity financial assets - 8,329 - - 8,329

1,059,728 674,480 410,169 51,946 2,196,323

Guarantees - - 2,622 595 3,217

1,059,728 674,480 412,791 52,541 2,199,540

Total

Total


Risk categories of financial assets

Assessment of the creditworthiness of the financial assets and liabilities is based on credit ratings provided by rating

agencies.

Cash and loans to banks are classified on the basis of the short-term credit rating of rating agencies. For the investment

portfolio, the long-term rating is used. New investments must be rated at least AA-. Loans and receivables concern credit

provided against collateral to private individuals and SME clients. These are not rated by rating agencies. Collateralised

lending is not assessed on the basis of a rating, but on the quality of the collateral in securities.

Risk categories of financial

assets

as at 31 December 2010

x € 1,000

Cash and balances with

central banks

Short-term rating

F1+ F1 AAA

Long-term rating

between

AA+ en

AAbetween

A+ en A-

Unrated

Total

105,972 - 105,972

Banks - 174,208 3,108 177,316

Financial assets held

for trading

- - - 169 169

Financial assets at fair value

through profit and loss

- - - 13,856 13,856

Available-for-sale

financial assets

1,367,245 232,455 - 1,599,700

Loans and receivables 496,266 496,266

Held-to-maturity financial

assets

4,121 - - 4,121

Total 105,972 174,208 1,371,366 232,455 - 513,399 2,397,400

Risk categories of financial

assets

as at 31 December 2009

x € 1,000

Cash and balances with

central banks

Short-term rating

F1+ F1 AAA

Long-term rating

between

AA+ en

AAbetween

A+ en A-

Unrated

Total

48,936 - 48,936

Banks 385 179,307 - 179,692

Financial assets held

for trading

- - - - -

Financial assets at fair value

through profit and loss

37,294 - - - 37,294

Available-for-sale

financial assets

1,237,025 274,878 - 1,511,903

Loans and receivables 410,169 410,169

Held-to-maturity financial

assets

8,329 - - 8,329

Total 49,321 179,307 1,282,648 274,878 - 410,169 2,196,323

137 Annual report 2010


Risk concentration per country

The following table presents the credit risk, analysed by country.

Geographical distribution

as at 31 December 2010

x € 1,000

Cash and balances with

central banks

Germany Spain Ireland Other EU

countries

Non-EU

countries

Total

99,328 - - - 6,644 - 105,972

Banks 150,540 - 38 - 24,785 1,953 177,316

Financial assets held

for trading

- - - - 169 - 169

Financial assets at fair value

through profit and loss

- - - - 13,856 - 13,856

Available-for-sale

financial assets

91,410 1,418,905 73,535 - 15,850 - 1,599,700

Loans and receivables 470,823 569 461 158 10,976 13,279 496,266

Held-to-maturity

financial assets

4,121 - - - - - 4,121

Total 816,222 1,419,474 74,034 158 72,280 15,232 2,397,400

% distribution 34% 59% 3% 0% 3% 1% 100%

138

Financial statements 2010

Geographical distribution

as at 31 December 2009

x € 1,000

Cash and balances with

central banks

Netherlands

Netherlands

Germany Spain Ireland Other EU

countries

Non-EU

countries

Total

43,855 - - - 5,081 - 48,936

Banks 174,766 - 51 - 3,833 1,042 179,692

Financial assets held

for trading

- - - - - - -

Financial assets at fair value

through profit and loss

- 37,294 - - - - 37,294

Available-for-sale

financial assets

71,585 1,073,388 184,019 167,041 15,870 - 1,511,903

Loans and receivables 391,119 446 1,371 10 8,128 9,095 410,169

Held-to-maturity

financial assets

8,329 - - - - - 8,329

Total 689,654 1,111,128 185,441 167,051 32,912 10,137 2,196,323

% distribution 31% 51% 8% 8% 1% 1% 100%

The debt crisis in the PIIGS countries and the associated uncertainty led BinckBank to restructure its investment

portfolio in 2010 and to reduce its positions in Spanish and Irish bonds.


Credit risk weighting and capital requirement

This table presents the credit risk weight with the capital requirement according to the standard method of Basel II.

Credit risk standard

approach as at 31

December 2010

x € 1,000

Claims or

contingent

claims on central

governments or

central banks

Claims or

contingent claims

on regional

governments or

local authorities

Claims or

contingent claims

on financial

institutions

Claims or

contingent claims

on corporate clients

Retail claims or

continguent retail

claims

Risk weight Credit risk mitigation Riskweighted

0% 10% 20% 50% 75% 100% Substitution

Collateral

assets

Capital

requirement

(8%)

551,755 - - - - - - - - -

24,992 - - - - - - - - -

4,869 1,160,503 182,800 - - 2,345 153,261 12,261

- - - - - - - -

383,804 - - - 497,771 - (5,453) (492,318) - -

Past due items - - - - - 72 - - 72 6

Other receivables - - - - - 70,212 - - 70,212 5,617

Total 965,420 1,160,503 182,800 - 497,771 70,284 (3,108) (492,318) 223,545 17,884

Credit risk standard

approach as at 31

December 2009

x € 1,000

Claims or

contingent

claims on central

governments or

central banks

Claims or

contingent claims

on regional

governments or

local authorities

Claims or

contingent claims

on financial

institutions

Claims or

contingent claims

on corporate clients

Retail claims or

continguent retail

claims

Risk weight Credit risk mitigation Riskweighted

0% 10% 20% 50% 75% 100% Substitution

Collateral

assets

Capital

requirement

(8%)

893,555 - - - - - - - - -

7,958 - - - - - - - -

299 640,534 210,793 - - - 2,412 - 106,865 8,549

- - 50,675 - - - - - 10,135 811

299,587 - - - 412,660 - (2,412) (410,248) - -

Past due items - - - - - 130 - - 130 10

Other receivables - - - - - 50,262 - - 50,262 4,021

Total 1,201,399 640,534 261,468 - 412,660 50,392 - (410,248) 167,392 13,391

139 Annual report 2010


Pillar I – market risk

The only market risk to which BinckBank is exposed is currency risk. Currency risk is the risk presented by movements in

the value of items denominated in foreign currencies due to movements in exchange rates. It is BinckBank’s policy not

to take active foreign-exchange trading positions. Foreign-exchange positions arising out of operating activities must

be hedged the same day they become known. Because of the current system configuration within BinckBank, foreignexchange

positions arising from some client transactions are not visible until the next trading day. The currency risk on

these positions during this one trading day’s delay is regarded as an accepted risk. The maximum risk is approximately

€ 100,000.

Pillar I – operational risk

Operational risk is generally the result of deficiencies in the daily processing and settlement of transactions with clients or

other parties or in the procedures and actions designed to ensure prompt detection of errors, quantitative or qualitative

deficiencies or limitations in human resources, deficient decision-making due to inadequate management information

and non-compliance with internal control procedures.

The capital requirements are calculated using the basic indicator approach, which sets the capital requirement for

operational risk at 15% of the average total revenue in the three preceding financial years, as prescribed by the regulator.

In previous years, as a result of the rapid growth of BinckBank the capital requirements under Pillar I were calculated at

15% of the revenue in the preceding financial year.

140

Financial statements 2010

31 December 2010 31 December 2009

x € 1,000 x € 1,000

Income from operating activities in the year 184,846 186,222

Income from operating activities in the previous year 186,222 149,008

Income from operating activities 2 years ago 149,008 158,085

Principle for calculation of operational risk according to Basel II

(average of last three years)

173,359 164,438

Principle used internally by BinckBank 173,359 186,222

Operational risk % (basic indicator approach) 15% 15%

Capital requirement for operational risk 26,003 27,933

The internal target is for annual losses on normal activities due to operational risks not to exceed 1% of gross commission

income. ‘Losses due to operational risks’ here means:

• The financial result of out-trades and compensation paid to clients

• Other direct loss due to faults in IT systems, automated information processing and operating processes.

Losses due to operational risk in 2010 amounted to 0.94% of total gross commission income and thus remained within the

internal limit. Operational losses in 2009 came to 0.61%.

Operational risk management is built into the structure of the organisation, which embodies a number of the internal

control measures and principles that BinckBank uses to manage operational risk. The main elements are:

• Locate the responsibility for managing operational risk as close as possible to the processes themselves, i.e. with the

line management;

• Record the operating processes, risk management processes and organisational structure and their interrelationship

in writing;

• Embed procedures for reporting and escalation to management;

• Implement controls within each process chain to ensure accurate information, together with performance and risk

indicators;

• Learn from incidents and errors. Where possible, record the details of incidents that resulted (or almost resulted) in

losses and compare the records against the findings of risk assessments;


• Automated recording and execution of transactions with associated audit trails. Daily transaction and position

reconciliation, including reporting to management;

• Procedures for staff recruitment and mentoring and functional segregation and job descriptions for all employees

and departments;

• Clear reporting lines, recording of required management information and periodic internal consultation. Internal

control and internal audit studies, compulsory dual control for representation and contractual binding of the company;

• Maintenance of a capital buffer for losses arising from unforeseen (uninsured) events and check the adequacy of the

buffer with regular stress testing;

• Maintain an insurance portfolio including directors’ liability insurance, company liability insurance, inventory

insurance, buildings insurance and consequential loss insurance policies.

IT risk forms part of the operational risk of BinckBank. IT risk is the current and future risk to BinckBank’s financial position

and results posed by deficiencies in the technology employed. BinckBank depends on IT in general to a large extent.

Failures in IT could result in a significant threat to BinckBank’s capital and result. The IT organisation is designed to

manage that risk and incorporates a series of internal monitoring procedures covering IT policy, security policy, incident

management, change management and availability and performance management. BinckBank also has a fallback facility

which it can use in emergencies. Each year, BinckBank commissions external agencies to audit and report on specific

areas of its IT operations.

As an internet bank, BinckBank is by definition exposed to a significant inherent risk of external fraud by online criminals.

BinckBank is fully aware of this risk. BinckBank operates a highly active security policy, which is continually evaluated. An

important element of this policy is the annual ‘legal hack’ exercise, in which BinckBank invites a third party to attempt

to break into its systems.

Risks relating to outsourcing of business processes are current and future risks to the company’s financial position and

results posed by third-party provision on a structural basis of services which are part of BinckBank’s business processes.

BinckBank has outsourced the following processes: payroll processing and financial accounting for Belgium and France,

external custody of securities and some order execution. Service level agreements have been entered into for all

outsourced activities and are reviewed regularly.

Pillar II – interest-rate risk

Interest-rate risk refers to the exposure to movements in the yield curve affecting future profitability. Interest-rate

risk affects items in the balance sheet recognised under banks, loans and receivables, interest-bearing securities, other

liabilities and customer deposits. BinckBank manages this risk in relation to its banking operations by actively matching

the maturities of its assets and liabilities within certain limits

141 Annual report 2010


Liabilities

Banks 25,610 - - - - - 25,610

Customer deposits 2,258,290 - - - - - 2,258,290

Financial liabilities held for trading - - - - - 50 50

Financial liabilities at fair value with movements

in value recognised in the income statement

- - - - - 1,485 1,485

2,283,900 - - - - 1,535 2,285,435

142

Financial statements 2010

Duration schedule

< 1 month > 1 month > 1 year > 2 years > 5 Noninterest

Total

as at 31 December 2010

x € 1,000

< 1 year < 2 years < 5 years years

bearing

Assets

Cash and balances with central banks 105,972 - - - - - 105,972

Banks 169,203 5,005 - - - 3,108 177,316

Financial assets held for trading - - - - - 169 169

Financial assets at fair value through

profit and loss

- - - - - 13,856 13,856

Available-for-sale financial assets 46,000 420,605 713,622 419,473 - - 1,599,700

Loans and receivables 496,266 - - - - - 496,266

Held-to-maturity financial assets - 4,121 - - - - 4,121

817,441 429,731 713,622 419,473 - 17,133 2,397,400

Duration schedule

< 1 month > 1 month > 1 year > 2 years > 5 Noninterest

Total

as at 31 December 2009

x € 1,000

< 1 year < 2 years < 5 years years

bearing

Assets

Cash and balances with central banks 48,936 - - - - - 48,936

Banks 174,692 5,000 - - - - 179,692

Financial assets held for trading - - - - - - -

Financial assets at fair value through

profit and loss

4,259 33,035 - - - - 37,294

Available-for-sale financial assets 41,901 603,678 310,894 555,430 - - 1,511,903

Loans and receivables 410,169 - - - - - 410,169

Held-to-maturity financial assets - 4,154 4,175 - - - 8,329

679,957 645,867 315,069 555,430 - - 2,196,323

Liabilities

Banks - - - - - - -

Customer deposits 2,089,814 - - - - - 2,089,814

Financial liabilities held for trading - - - - - -

Financial liabilities at fair value with movements

in value recognised in the income statement

- - - - - -

2,089,814 - - - - - 2,089,814


Sensitivity analysis of interest-rate risk

Interest-rate risk exists because of the possibility that changes in market interest rates can have a negative effect on

future profitability. The interest-rate risk of the banking operations can best be illustrated by means of a sensitivity

analysis. The sensitivity of the bank’s result and equity to parallel movements in the yield curve is reported to the Treasury

Committee on a monthly basis.

Risk of a gradual parallel movement of the yield curve

A gradual movement in market interest rates (the yield curve) has an effect on the future interest income from

collateralised lending and the investment portfolio, and on the interest BinckBank pays on savings and investment

accounts. BinckBank manages this risk in relation to its banking operations by actively matching the maturities of its

assets and liabilities within certain limits.

In these simulations at total level in euros the effect on the result is displayed of movements in the yield curve of +200,

+100, -100 and -200 basis points during a period of one year after the balance sheet date with an unchanged interest base.

The effect on the result before tax over periods of one and two years after the balance sheet date is shown in the table

below.

Sensitivity analysis of interest-rate result

Gradual parallel yield-curve movement in basis points

Over a period of 1 year

Effect on the result

31 December 2010 31 December 2009

x € 1,000 x € 1,000

+200 (1,416) (1,416)

+100 (697) (708)

-100 (96) 812

-200 643 3,380

Over a period of 2 years

+200 5,025 (3,322)

+100 269 (1,661)

-100 (3,987) 3,484

-200 (4,585) 11,192

Risk of a sudden parallel movement of the yield curve

In addition to gradual movements in the yield curve, sudden movements can also occur, known as interest-rate shocks. In

BinckBank’s case, interest-rate shocks are reflected in changes in value in the investment portfolio.

BinckBank has an investment portfolio made up of fixed-income securities which is diversified across various maturities.

The actual investments in the portfolio are selected by the Treasury Committee. The portfolio is susceptible to gains

and losses due to movements in the yield curve and the creditworthiness of the institutions issuing or guaranteeing the

bonds.

The effective interest rate on the portfolio of fixed-income investments classified as available for sale is 1.56% (2009:

3.12%).

143 Annual report 2010


The effect on capital of an interest-rate shock of 100 basis points is shown in the table below (before tax):

Effect on capital

Sudden parallel yield-curve movement in basis points

31 December 2010 31 December 2009

x € 1,000 x € 1,000

100 (24,400) (22,500)

-100 20,400 22,000

The above figures relate only to a movement in the unrealised result. This will only lead to losses if the bank is forced to

liquidate its investment portfolio as a result of substantial client withdrawals in combination with an interest-rate shock.

Pillar II – liquidity risk

Liquidity risk is the risk that BinckBank will have difficulty in meeting its financial obligations settled in cash or other

financial assets. BinckBank gives high priority to the management of this risk, to ensure that it always holds enough

liquid reserves and can always meet its financial obligations. Liquidity risk management is designed to take account

of the effects of BinckBank-specific stress factors – such as negative publicity, increased trading activity by clients (net

purchases) and variation of competitors’ interest rates.

The table below shows the value of the undiscounted liabilities classified by remaining contractual maturity.

144

Financial statements 2010

Remaining contractual maturity of liabilities

(undiscounted) as at 31 December 2010

x € 1,000

On

demand

< 3

months

> 3

months

< 1 year

> 1 year

< 5 year

> 5 year Total

Liabilities

Banks 25,610 - - - - 25,610

Customer deposits 2,262,820 - - - - 2,262,820

Financial liabilities held for trading - 50 - - - 50

Financial liabilities at fair value through

profit and loss

- 1,485 - - - 1,485

Total 2,288,430 1,535 - - - 2,289,965

Remaining contractual maturity of liabilities

(undiscounted) as at 31 December 2009

x € 1,000

On

demand

< 3

months

> 3

months

< 1 year

> 1 year

< 5 years

> 5 years Total

Liabilities

Banks - - - - - -

Customer deposits 2,095,416 - - - - 2,095,416

Financial liabilities held for trading - - - - - -

Financial liabilities at fair value through

profit and loss

- - - - - -

Total 2,095,416 - - - - 2,095,416

If clients withdraw their assets en masse or client assets are used collectively to invest, there is a risk that BinckBank will

be unable to meet its obligations to creditors. BinckBank’s liquidity risk policy therefore focuses primarily on managing

this aspect of liquidity risk.


The extent to which the maturities of assets and liabilities match is of fundamental importance to BinckBank. It is

unusual for banks to achieve complete maturity matching of assets and liabilities because transactions are frequently not

predictable and are also extremely diverse in nature. The maturities of assets and liabilities and the scope for replacing

interest-bearing liabilities as and when they mature in an economically acceptable manner are important factors for both

the assessment of the bank’s liquidity and the extent to which the bank is exposed to movements in interest rates and

exchange rates.

At the end of December BinckBank had an ample position in immediately available liquid assets. BinckBank also has

repo facilities with external banks to safeguard its liquidity position. Should these measures not be adequate, BinckBank

can use its Target 2 facility at the central bank to raise additional cash secured by the investment portfolio (marginal

lending facility). This avoids a situation in which due to high cash outflows, BinckBank is forced to liquidate its investment

portfolio at distressed levels.

BinckBank’s liquidity policy includes checks, warning limits and additional measures in the event of high cash outflow

due to client withdrawals or investments. The liquidity policy is formulated in a liquidity contingency plan.

The following measures are taken to cover liquidity risks:

1. Daily reports to the executive board and the members of the Treasury Committee regarding the liquidity position and

related cash flows for the next three days. In stress situations, these reports can be provided hourly.

2. Use of a system of early warning indicators.

3. Retention of 3%-10% of customer deposits in cash in bank accounts.

4. Alternative sources of liquidity:

a. Loan facility at DNB via Target 2,

b. Repo facilities,

5. Investment portfolio consisting of highly liquid bonds.

The following table presents the fair value of the financial assets and liabilities based on expected remaining maturity.

Assets maturing within two weeks are treated as being available on demand. Customer deposits are treated as available

on demand in the table. In practice, a longer maturity is allocated to these products. The positions as at year end are

representative of the positions during the year. In addition, the loan facilities and possibilities for liquidation of the

interest-bearing securities are shown. This concerns securities which can be traded in an active market or used as

collateral for a loan from DNB.

145 Annual report 2010


Maturity calendar

as at 31 December 2010

x € 1,000

Assets

Cash and balances with central

banks

On

demand

< 3 months > 3 months

< 1 year

> 1 year

< 5 years

> 5 years Total

105,972 - - - - 105,972

Banks 169,174 5,034 - 3,108 - 177,316

Financial assets held for trading - 169 - - - 169

Financial assets at fair value

through profit and loss

- 13,856 - - - 13,856

Available-for-sale financial

assets

- 86,514 362,173 1,151,013 - 1,599,700

Loans and receivables 476,266 20,000 - - - 496,266

Held-to-maturity financial assets - - 4,121 - - 4,121

751,412 125,573 366,294 1,154,121 - 2,397,400

Guarantees 225 55 236 2,413 2,929

751,412 125,798 366,349 1,154,357 2,413 2,400,329

146

Liabilities

Banks 25,610 - - - - 25,610

Customer deposits 2,258,290 - - - - 2,258,290

Financial liabilities held for

trading

- 50 - - - 50

Financial liabilities at fair value

through profit and loss

- 1,485 - - - 1,485

2,283,900 1,535 - - - 2,285,435

Financial statements 2010

Liquidity surplus / deficit on

basis of contractual maturities

Credit, lending facilities and

possibilities for liquidation

Liquidity surplus / deficit taking

account of credit, lending

facilities and possibilities for

liquidation

(1,532,488) 124,263 366,349 1,154,357 2,413 114,894

1,603,821 (86,514) (366,294) (1,151,013) - -

71,333 37,749 55 3,344 2,413 114,894


Maturity calendar

as at 31 December 2009

x € 1,000

Assets

Cash and balances with central

banks

On

demand

< 3 months > 3 months

< 1 year

> 1 year

< 5 years

> 5 years Total

48,936 - - - - 48,936

Banks 174,663 5,029 - - - 179,692

Financial assets held for trading - - - - - -

Financial assets at fair value

through profit and loss

- 4,259 33,035 - - 37,294

Available-for-sale financial

assets

- 88,903 455,893 967,107 - 1,511,903

Loans and receivables 410,169 - - - - 410,169

Held-to-maturity financial assets - - 4,154 4,175 - 8,329

633,768 98,191 493,082 971,282 - 2,196,323

Guarantees - 272 - - 2,350 2,622

633,768 98,463 493,082 971,282 2,350 2,198,945

Liabilities

Banks - - - - - -

Customer deposits 2,089,814 - - - - 2,089,814

Financial liabilities held for

trading

- - - - - -

Financial liabilities at fair value

through profit and loss

- - - - - -

2,089,814 - - - - 2,089,814

Liquidity surplus / deficit on

basis of contractual maturities

Credit, lending facilities and

possibilities for liquidation

Liquidity surplus / deficit taking

account of credit, lending

facilities and possibilities for

liquidation

(1,456,046) 98,463 493,082 971,282 2,350 109,131

1,557,526 (93,162) (493,082) (971,282) - -

101,480 5,301 - - 2,350 109,131

147 Annual report 2010


Company balance sheet (before appropriation of profit)

Note 31 December 2010 31 December 2009

x € 1,000 x € 1,000

Assets

Cash and balances with central banks c 105,970 48,934

Banks d 171,254 173,352

Loans and receivables e 496,266 410,169

Bonds and other fixed-income securities f 1,603,821 1,286,891

Equities and other non-fixed-income securities g 14,025 -

Investment in associates and joint ventures h 303,711 302,997

Intangible assets i 320,348 347,869

Property, plant and equipment j 43,520 12,226

Current tax k 4,949 1,970

Deferred tax l - 3,152

Other assets m 9,375 12,553

Prepayments and accrued income n 49,054 43,068

Derivatives positions held on behalf of clients 22 383,804 299,587

Total assets 3,506,097 2,942,768

148

Financial statements 2010

Liabilities

Banks d 25,610 -

Customer deposits o 2,258,290 2,089,814

Current tax k 6 6

Deferred tax l 12,695 12,680

Other liabilities p 341,424 37,404

Accruals and deferred income q 14,014 20,258

Derivatives positions held on behalf of clients 22 383,804 299,587

Provisions r 1,268 2,660

Total liabilities 3,037,111 2,462,409

Issued share capital 7,450 7,607

Share premium 373,422 386,978

Treasury shares (3,335) (18,097)

Revaluation reserve (2,610) 10,616

Legal reserves - 3,173

Other reserves 49,819 42,921

Unappropriated profit 44,240 47,161

Equity s 468,986 480,359

Total liabilities 3,506,097 2,942,768

Company income statement

2010 2009

x € 1,000 x € 1,000

Share in results in associates and joint ventures (after tax) 15,624 14,006

Other results (after tax) 28,616 33,155

Net result 44,240 47,161


Company statement of changes in equity

x € 1,000

Issued

share

capital

Share

premium

reserve

Treasury

shares

Revaluation

reserve

Legal

reserves

Other

reserves

Unappropriated

profit

Total

equity

1 January 2010 7,607 386,978 (18,097) 10,616 3,173 42,921 47,161 480,359

Unrealised gain on available-forsale

assets (after tax)

- - - (14,478) - - - (14,478)

Realisation of revaluations through

profit and loss

- - - 1,252 - - - 1,252

Reserve for revaluation of

associates

- - - - (3,173) - - (3,173)

Foreign currency translation - - - - - - - -

Result recognised directly in equity - - - (13,226) (3,173) - - (16,399)

Result for the year - - - - - - 44,240 44,240

Total income and expense - - - (13,226) (3,173) - 44,240 27,841

Payment of final dividend - - - - - (22,977) - (22,977)

Payment of interim dividend - - - - - (17,788) - (17,788)

Grant of rights to shares - - - - - 101 - 101

Sale of shares to executive board

and employees

- - 1,053 - - 401 - 1,454

Buy-back shares - - (4) - - - - (4)

Cancelled shares (157) (13,556) 13,713 - - - - -

Transfer of retained earnings to

other reserves

- - - - - 47,161 (47,161) -

31 December 2010 7,450 373,422 (3,335) (2,610) - 49,819 44,240 468,986

x € 1,000

Issued

share

Share

premium

Treasury

shares

Revaluation

Legal

reserves

Other

reserves

Unappropriated

Total

equity

capital reserve

reserve

profit

1 January 2009 7,709 392,395 (5,628) 6,616 2,216 41,188 33,145 477,641

Unrealised gain on available-forsale

assets (after tax)

- - - 6,769 - - - 6,769

Realisation of revaluations through

profit and loss

- - - (2,769) - (82) - (2,851)

Reserve for revaluation of

associates

- - - - 957 - - 957

Foreign currency translation - - - - - 12 - 12

Result recognised directly in equity - - - 4,000 957 (70) - 4,887

Result for the year - - - - - - 47,161 47,161

Total income and expense - - - 4,000 957 (70) 47,161 52,048

Payment of final dividend - - - - - (15,773) - (15,773)

Payment of interim dividend - - - - - (15,670) - (15,670)

Grant of rights to shares - - - - - 101 - 101

Buy-back shares - - (17,988) - - - - (17,988)

Cancelled shares (102) (5,417) 5,519 - - - - -

Transfer of retained earnings to

other reserves

- - - - - 33,145 (33,145) -

31 December 2009 7,607 386,978 (18,097) 10,616 3,173 42,921 47,161 480,359

149 Annual report 2010


Notes to the company financial statements

a. General

Company information

BinckBank N.V. is a company established in the Netherlands with its domicile in Amsterdam, whose shares are publicly

traded. BinckBank N.V. provides conventional and internet broking services in securities and derivative transactions for

private and professional investors. In the following pages, the name ‘BinckBank’ will be used to refer to BinckBank N.V.

and its various subsidiaries.

The company financial statements for BinckBank for the period ending on 31 December 2010 have been prepared by the

executive board and approved for publication pursuant to the resolution of the executive board and the supervisory

board dated 10 March 2011.

Amsterdam,

Executive board:

Supervisory board:

K.N. Beentjes (voorzitter) C.J.M. Scholtes (voorzitter)

E.J.M. Kooistra (CFO)

J.K. Brouwer

P. Aartsen L. Deuzeman

N. Bortot A.M. van Westerloo

150

Presentation of the financial statements

Utilising the option provided by Part 9 of Book 2 of the Netherlands Civil Code, BinckBank has prepared its company

financial statements using the same accounting principles as those used for the consolidated financial statements. In

accordance with the provisions of Article 2:402 of the Netherlands Civil Code, the company income statement shows only

the share in results of subsidiaries and associates after tax and other profits after tax.

Financial statements 2010

b. Accounting principles

General

Details of the accounting principles can be found in the notes to the consolidated financial statements and, unless

otherwise stated, apply equally to the company financial statements.

The statement as referred to in Articles 2:379 and 2:414 of the Netherlands Civil Code is filed with the Trade Register of

the Chamber of Commerce in Amsterdam.

Associates

The investments in group companies are recognised at net asset value. The reporting dates of these companies are the

same and the accounting principles applied to their financial reporting are in accordance with those applied by BinckBank

for similar transactions and events in similar circumstances.


Notes to the company balance sheet

31 December 2010 31 December 2009

x € 1,000 x € 1,000

c. Cash and balanced with central banks 105,970 48,934

This item includes all cash in legal tender, including bank

notes and coins in foreign currency, and any credit balances

available on demand from the central banks in countries

where BinckBank has offices.

d. Banks

Due from banks 171,254 173,352

This item includes all cash and cash equivalents relating to the

business activities held in accounts with credit institutions

supervised by bank regulators.

This item comprises:

Credit balances available on demand 163,113 168,323

Call money 5,033 5,029

Receivable from DNB in relation to the Deposit Guarantee

Scheme for DSB Bank

3,108 -

171,254 173,352

The call money receivables have original maturities of less

than three months. Interest is received on these balances at

a variable rate based on EONIA or EURIBOR. For the receivable

from DNB in relation to the Deposit Guarantee Scheme for

DSB Bank, see note 8 to the consolidated balance sheet.

Due to banks 25,610 -

At year-end 2010 BinckBank has sweeping arrangements

with various banks whereby the debit and credit balances

in a large number of bank accounts are regularised with a

permanent treasury contra-account. This is only visible on the

first statement for the following day; therefore at year-end

2010 BinckBank had an obligation in a single bank account for

a very short period.

151 Annual report 2010

e. Loans and receivables 496,266 410,169

This item comprises receivables from private sector clients,

including overnight loans and overdrafts collateralised by

securities and bank guarantees (collateralised loans). All

accounts receivable have a remaining maturity of less than

one year.

The analysis is as follows:

Receivable from government institutions 20,000 -

Receivables collateralised by securities 470,741 407,627

Receivables collateralised by bank guarantees 5,453 2,412

Other receivables 558 805

Loans and receivables, gross 496,752 410,844

Less: impairment provision (486) (675)

496,266 410,169


The interest rate is based on EURIBOR or EONIA. Other

receivables refers to remaining amounts receivable after

execution of collateral (securities and bank guarantees).

31 December 2010 31 December 2009

x € 1,000 x € 1,000

f. Bonds and other fixed-income securities 1,603,821 1,286,891

This concerns the investment portfolio consisting of:

Financial assets at fair value through profit and loss - 21,256

Available-for-sale financial assets 1,599,700 1,257,306

Held-to-maturity financial assets 4,121 8,329

1,603,821 1,286,891

Financial assets at fair value through profit and loss

This item comprises:

Other bonds - 21,256

- 21,256

152

Available-for-sale financial assets

This item comprises:

Government bonds/government-guaranteed bonds 432,322 667,364

Other bonds 1,167,378 589,942

1,599,700 1,257,306

This item concerns a portfolio of interest-bearing securities

with remaining maturities of between 0 and 3 years.

Financial statements 2010

This item comprises:

Deze post bestaat uit:

Government bonds/government-guaranteed bonds 4,121 8,329

4,121 8,329

The portfolio of interest-bearing securities classified as heldto-maturity

financial assets concerns government bonds with

remaining maturities of between 0 and 1 years.

g. Equities and other non-fixed-income securities 14,025 -

The trading portfolio comprises:

SRD derivatives payables 169 -

Equity positions in relation to SRD payables 13,856 -

14,025 -

In 2010 BinckBank commenced its offering of SRD (Service

de Règlement Différé) contracts in France. For further

information regarding this financial instrument, see note 9 to

the consolidated financial statements.


31 December 2010 31 December 2009

x € 1,000 x € 1,000

h. Investment in associates and joint

ventures

303,711 302,997

This item comprises:

Group companies 300,644 301,044

Other associates 2,174 -

Joint ventures 893 1,953

303,711 302,997

Movements during the year were as

follows:

Balance as at 1 January 302,997 285,236

Capital increases and acquisitions 5,513 7,112

Disposals and dissolutions - (1,373)

Dividends and capital refunds (17,250) (1,750)

Redemption of loan to Accion N.V. - (550)

Write-down of loan to Accion N.V. - (650)

Result in associates and joint ventures 15,624 14,006

Movement in revaluation reserve for

associates

(3,173) 957

Exchange differences and other

movements

- 9

Balance as at 31 December 303,711 302,997

The item capital increases and acquisitions

includes investments in TOM Holding B.V.,

the incorporation of BeFrank N.V. and the

acquisition of ThinkCapital Holding B.V.

The item disposals relates to the sale of

the remaining interest in Florint B.V. to

the other shareholders as agreed upon

in February 2009. At year-end 2009 the

investment in and loan to Accion N.V. was

written down to nil.

153 Annual report 2010

Statement of group companies

The following statement lists the group

companies.

Place Country Interest

year-end 2010

Interest

year-end 2009

Binck België N.V. Antwerp Belgium 100% 100%

Bewaarbedrijf BinckBank B.V. Amsterdam Netherlands 100% 100%

Syntel Beheer B.V. Reeuwijk Netherlands 100% 100%

ThinkCapital Holding B.V. Amsterdam Netherlands 60% 0%

For the other capital holdings, see note

13 to the consolidated balance sheet on

associates and joint ventures.


31 December 2010 31 December 2009

x € 1,000 x € 1,000

i. Intangible assets 320,348 347,869

The movements in 2010 were as follows:

Brand

name

Core

deposits

Customer

base

Software Goodwill Total

Balance as at 1 January 2010 18,843 67,276 104,846 3,975 152,929 347,869

Investments - - - 2,022 - 2,022

Disposals - cost - - - (359) - (359)

Disposals - cumulative amortisation - - - 359 - 359

Amortisation (6,281) (8,410) (13,105) (1,747) - (29,543)

Balance as at 31 December 2010 12,562 58,866 91,741 4,250 152,929 320,348

Cumulative cost 31,405 84,095 131,058 10,322 152,929 409,809

Cumulative amortisation and impairments

(18,843) (25,229) (39,317) (6,072) - (89,461)

Balance as at 31 December 2010 12,562 58,866 91,741 4,250 152,929 320,348

Amortisation period (years) 5 10 5 - 10 5

154

The movements in 2009 were as follows:

Brand

name

Core

deposits

Customer

base

Software Goodwill Total

Balance as at 1 January 2009 25,124 75,685 117,953 5,656 152,929 377,347

Financial statements 2010

Investments - - - 135 - 135

Disposals - cost - - - (460) - (460)

Disposals - cumulative amortisation - - - 460 - 460

Amortisation (6,281) (8,409) (13,107) (1,816) - (29,613)

Balance as at 31 December 2009 18,843 67,276 104,846 3,975 152,929 347,869

Cumulative cost 31,405 84,095 131,058 8,659 152,929 408,146

Cumulative amortisation and impairments (12,562) (16,819) (26,212) (4,684) - (60,277)

Balance as at 31 December 2009 18,843 67,276 104,846 3,975 152,929 347,869

Amortisation period (years) 5 10 5 - 10 5


31 December 2010 31 December 2009

x € 1,000 x € 1,000

j. Property, plant and equipment 43,520 12,226

The movements in 2010 were as follows:

Real

estate

Fixtures,

fittings and

equipment

Computer

hardware

Balance as at 1 January 2010 - 345 11,874 7 12,226

Other

Total

Investments 24,998 8,125 2,939 - 36,062

Disposals - cost - (958) (1,908) - (2,866)

Disposals - cumulative depreciation - 958 1,908 - 2,866

Depreciation and amortisation (333) (618) (3,814) (3) (4,768)

Balance as at 31 December 2010 24,665 7,852 10,999 4 43,520

Cumulative cost 24,998 8,231 17,464 18 50,711

Cumulative depreciation and impairments (333) (379) (6,465) (14) (7,191)

Balance as at 31 December 2010 24,665 7,852 10,999 4 43,520

Depreciation period in years 50 5 - 10 5 5

The movements in 2009 were as follows:

Real

estate

Fixtures,

fittings and

equipment

Computer

hardware

Balance as at 1 January 2009 - 679 7,952 10 8,641

Investments - 75 9,002 - 9,077

Disposals - cost - - (3,254) - (3,254)

Disposals - cumulative depreciation - - 3,254 - 3,254

Depreciation and amortisation - (409) (5,080) (3) (5,492)

Balance as at 31 December 2009 - 345 11,874 7 12,226

Cumulative cost - 1,064 16,433 18 17,515

Cumulative depreciation and impairments - (719) (4,559) (11) (5,289)

Balance as at 31 December 2009 - 345 11,874 7 12,226

Other

Total

155 Annual report 2010

Depreciation period in years 50 5 - 10 5 5

The investment in real estate includes prepayments in relation to a leasehold (operating lease) which expires on 15 April

2056. An amount of € 208,000 relating to amortisation of the leasehold is included under depreciation and amortisation

in 2010 (2009: nil).


31 December 2010 31 December 2009

x € 1,000 x € 1,000

k. Current tax

Current tax assets 4,949 1,970

Current tax liabilities (6) (6)

Net asset / (liability) 4,943 1,964

The balance as at year-end 2010 relates mainly to the

reporting period.

l. Deferred tax

Composition

Deferred tax assets - 3,152

Deferred tax liabilities (12,695) (12,680)

Net asset / (liability) (12,695) (9,528)

Origin of deferred tax assets and liabilities:

Available-for-sale financial assets (720) (3,634)

Goodwill and other intangible assets (8,211) (5,584)

Depreciation period differences for non-current assets (2,900) -

Other assets / (liabilities) (864) (310)

Net asset / (liability) (12,695) (9,528)

156

Financial statements 2010

m. Other assets 9,375 12,553

This item comprises:

Trade receivables 824 120

Receivables relating to securities sold, but not yet delivered 7,270 11,755

Other receivables 1,281 678

9,375 12,553

- of which receivables from group companies 141 -

Trade receivables, receivables relating to securities sold but

not yet delivered and other receivables have maturities of

less than one year.

n. Prepayments and accrued income 49,054 43,068

This item comprises:

Interest receivable 35,338 27,884

Commission receivable 9,772 5,919

Other prepayments and accrued income 3,944 9,265

49,054 43,068


31 December 2010 31 December 2009

x € 1,000 x € 1,000

o. Customer deposits 2,258,290 2,089,814

This item comprises:

Demand deposits savings accounts 717,181 874,181

Demand deposits current accounts 1,541,109 1,215,633

2,258,290 2,089,814

p. Other liabilities 341,424 37,404

This item comprises:

SRD derivative payables 50 -

Equity positions in relation to SRD payables 1,485 -

Liabilities in respect of securities transactions not yet settled 34,939 10,890

Tax and social security contributions 2,918 2,106

Amounts owed to group companies 294,403 17,465

Trade payables 6,455 4,167

Other liabilities 1,174 2,776

341,424 37,404

In 2010 BinckBank commenced its offering of SRD (Service

de Règlement Différé) contracts in France. For further

information regarding this financial instrument, see note 9 to

the consolidated financial statements.

q. Accruals and deferred income 14,014 20,258

This item comprises:

Accrued interest 4,530 5,602

Employee expenses 5,738 8,115

Stock exchange and clearing costs payable 975 3,122

Other accruals and deferred income 2,771 3,419

14,014 20,258

Employee expenses under this heading mostly concern

performance-related pay to board members and employees

of BinckBank.

157 Annual report 2010


31 december 2010 31 december 2009

x € 1,000 x € 1,000

r. Provisions 1,268 2,660

This item comprises:

Obligations under the deposit guarantee scheme - 2,620

Other provisions 1,268 40

1,268 2,660

The movement in the provision for obligations under the

deposit guarantee scheme was as follows:

Balance as at 1 January 2,620 -

Addition charged to income 52 2,620

Reclassification to banks (2,672) -

Balance as at 31 December - 2,620

The provision concerns an estimate of the contribution

payable by BinckBank for the compensation of clients arising

from the deposit guarantee scheme.

The provision formed for the inability to pay and subsequent

bankruptcy of DSB Bank has been reclassified to the item banks

(see note d) as a result of a payment of a gross contribution to

De Nederlandsche Bank in December 2010.

158

Financial statements 2010

The movements in the other provisions were as follows:

Balance as at 1 January 40 93

Released to income (40) (53)

Addition charged to income 683 -

Other movements 585 -

Balance as at 31 December 1,268 40

The item other provisions includes onerous contracts,

restructuring and legal disputes.


31 december 2010 31 december 2009

x € 1,000 x € 1,000

s. Equity 468,986 480,359

Issued share capital 7,450 7,607

A total of 74,500,000 ordinary shares were in issue, each with

a nominal value of € 0.10. The share capital is fully paid up.

1,568,928 shares were cancelled on 9 July 2010. 1,024,580

shares were repurchased on 17 July 2009.

Number Amount Number Amount

Balance as at 1 January 76,068,928 7,607 77,093,508 7,709

Cancellation of treasury shares (1,568,928) (157) (1,024,580) (102)

Balance as at 31 December 74,500,000 7,450 76,068,928 7,607

Stichting Prioriteit Binck holds 50 priority shares (with a

nominal value of € 0.10 per share).

Share premium reserve 373,422 386,978

Balance as at 1 January 386,978 392,395

Cancellation of treasury shares (13,556) (5,417)

Balance as at 31 December 373,422 386,978

The share premium reserve is exempt from tax.

Treasury shares (3,335) (18,097)

Number Amount Number Amount

Situation at opening date 2,070,509 (18,097) 1,053,442 (5,628)

Issued to executive board and employees (120,495) 1,053 - -

Cancellation of treasury shares (1,568,928) 13,713 (1,024,580) 5,519

Repurchased shares 425 (4) 2,041,647 (17,988)

Situation at end of financial year 381,511 (3,335) 2,070,509 (18,097)

As at 1 January 2010, the number of treasury shares held was

2,070,509, acquired at an average purchase price of € 8.74.

During 2010, 425 shares were acquired at an average price of

€ 10.15 and 120,495 shares were sold to the executive board

and employees in connection with the settlement of the

long-term bonus scheme with an average purchase price of

€ 8.74.

159 Annual report 2010

1,568,928 shares were cancelled on 9 July 2010 at an average

purchase price of € 8.74. On 17 July 2009, 1,024,580 shares

were cancelled at an average repurchase price of € 5.39. The

carrying amount of the treasury shares as at year-end 2010

was measured at the average purchase price of € 8.74. The

change in equity in respect of treasury shares reflects the

amounts bought and sold. The quoted share price as at yearend

2010 was € 11.60 (2009: € 12.54).


31 December 2010 31 December 2009

x € 1,000 x € 1,000

Revaluation reserve (2,610) 10,616

Situation at opening date 10,616 6,616

Unrealised result on available-for-sale financial assets (18,982) 8,139

Realisation of revaluations through profit and loss 1,252 (2,769)

Tax on unrealised gains and losses on available-for-sale

financial assets

4,504 (1,370)

Situation at end of financial year (2,610) 10,616

The reserve comprises the fair value gains and losses, after tax,

on available-for-sale financial assets. In the determination of

the freely available profit, any negative revaluation reserve is

deducted from the reserves available for distribution.

Legal reserves - 3,173

Revaluation reserve for associates

Balance as at 1 January 3,173 2,216

Movement (3,173) 957

Balance as at 31 December - 3,173

160

Financial statements 2010

The reserve comprises the movements in the fair value of

associates to the extent these are due to movements in equity

as a result of the revaluation of the available-for-sale financial

assets included therein.

Other reserves 49,819 42,921

These comprise:

(I) Foreign currency translation reserve - -

(II) Other reserves 49,819 42,921

49,819 42,921

(I) Foreign currency translation reserve

Balance as at 1 January - 70

Movement - 12

Released to income - (82)

Balance as at 31 December - -

The foreign currency translation reserve comprises exchange

differences arising on translation of the financial statements

of foreign subsidiaries using a reporting currency other than

the consolidation reporting currency (€). The liquidation

of Hills Independent Traders Ltd. was completed in 2009,

whereby the foreign currency translation reserve is released

to income.


31 December 2010 31 December 2009

x € 1,000 x € 1,000

(II) Other reserves

Balance as at 1 January 42,921 41,118

Grant of rights to shares 101 101

Sale of shares to executive board and employees 401 -

Payment of final dividend (22,977) (15,773)

Payment of interim dividend (17,788) (15,670)

Appropriation of profit for previous year 47,161 33,145

Balance as at 31 December 49,819 42,921

For details of the grant of rights to shares, see note 25 to the

consolidated financial statements.

Unappropriated result 44,240 47,161

Balance as at 1 January 47,161 33,145

Addition to other reserves (47,161) (33,145)

Result for the year 44,240 47,161

Balance as at 31 December 44,240 47,161

t. Note on audit expenses

The following fees were charged to the company, its

subsidiaries and other consolidated entities by the audit firm

Ernst & Young Accountants LLP and other divisions of Ernst

& Young as referred to in Section 2:382a of the Netherlands

Civil Code:

Ernst & Young

Accountants

Ernst & Young

other services

x € 1,000 x € 1,000 x € 1,000

2010

Audit of the financial statements, including audit of

statutory financial statements and other statutory audits of

368 - 368

subsidiary companies and consolidated entities

Other audit services 57 - 57

Other non-audit services - 7 7

425 7 432

Total

161 Annual report 2010

2009

Audit of the financial statements, including audit of

statutory financial statements and other statutory audits of

368 - 368

subsidiary companies and consolidated entities

Other audit services 113 - 113

Other non-audit services - 8 8

481 8 489


2010 2009

x € 1,000 x € 1,000

u. Off balance sheet commitments

Contingent liabilities

Liabilities in respect of contracts of suretyship and guarantees 2,816 3,217

Liabilities in respect of irrevocable facilities - -

To meet the requirements of its clients, BinckBank offers products such as contracts of suretyship and guarantees in

relation to loans. The underlying value of these products is not presented on the face of the balance sheet. The above

figure represents the maximum potential credit risk for BinckBank attached to these products on the assumption that

all its counterparties should default on their contractual obligations and all existing collateral should prove worthless.

Guarantees include both credit-substituting and non-credit-substituting guarantees. In most cases, guarantees can be

expected to expire without a call being made on them and they will not give rise to any future cash flows.

With acquisition of Alex Beleggersbank at the end of 2007, BinckBank also acquired the Alex Bottom-Line product, which

is an agreement with the Dutch Shareholders’ Association (the VEB). If BinckBank terminates the VEB agreement, it will

be liable to pay an amount equal to the custody fee and dividend commission paid by each client of Alex Bottom-Line on

entry into the agreement plus the amount of any custody fee and dividend commission additionally paid by each client

on exceeding set limits.

Lease commitments

The company has leases on office premises in the Netherlands, Belgium, France and Spain. It has also entered into

operating lease contracts for the vehicle fleet for periods of less than five years. The combined expense relating to office

rents and operating lease payments for the vehicle fleet in 2010 was € 4.5 million (2009: € 4.5 million).

162

Financial statements 2010

2010 2009

x € 1,000 x € 1,000

The aged analysis of the outstanding liabilities is as follows:

Within one year 1,774 3,395

One to five years 2,731 4,232

Longer than five years - 147

Legal proceedings

BinckBank is involved in various legal proceedings. Although it is not possible to predict the outcome of current or

impending lawsuits, the executive board believes – on the basis of information currently available and after taking legal

counsel – that the outcomes are unlikely to have material adverse effects on BinckBank’s financial position or profitability.

Deposit guarantee scheme

The deposit guarantee scheme is intended to guarantee certain deposits by account holders if a bank goes bankrupt.

The scheme provides security for deposits of up to € 100,000 and applies per account holder per bank, regardless of the

number of accounts held. In case of a joint account operated by two persons, the maximum applies per person.

More or less all savings accounts, current accounts and term deposits are covered. Equities or bonds are not covered. In

case of a subordinated deposit, the principal sum is not covered by the deposit guarantee scheme, although the interest

on the principal is covered.

If a credit institution finds itself in difficulties and does not have sufficient funds to pay all or part of the guaranteed

amounts to its account holders, De Nederlandsche Bank will make up the difference. The total amount paid out by DNB

will then be recovered from the banks on a pro rata basis.


Investor compensation scheme

Despite the fact that all banks and investment firms in the Netherlands are subject to regulation by DNB and the AFM,

a bank or investment firm may encounter problems with payments. In this case, the investors compensation system

guarantees a minimum level of protection in the event that the bank or investment firm cannot meet its obligations

arising from the investment services it provides to its clients. The investors compensation scheme provides a guarantee

of up to € 20,000 per person per institution.

v. Remuneration of the executive board and the supervisory board

The information on the remuneration of members of the executive board and members of the supervisory board is given

in the consolidated financial statements (page 115).

w. Events after balance sheet date

At the beginning of 2011, BinckBank announced it would be opening a branch in Italy in mid 2012. In the context of a legal

restructuring, the equity of Binck België N.V. was largely repatriated at the beginning of 2011.

163 Annual report 2010


Other data

To: the General Meeting of Shareholders of BinckBank N.V.

Independent auditor’s report

Report on the financial statements

We have audited the accompanying financial statements 2010 of BinckBank N.V., Amsterdam. The financial statements

include the consolidated financial statements and the company financial statements. The consolidated financial

statements comprise the consolidated balance sheet as at 31 December 2010, consolidated income statement,

consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated

statement of cash flows for the year then ended and notes, comprising a summary of the significant accounting policies

and other explanatory information. The company financial statements comprise the company balance sheet as at 31

December 2010, company income statement and company statement of changes in equity for the year then ended and

the notes, comprising a summary of the accounting policies and other explanatory information.

Management’s responsibility

Management is responsible for the preparation and fair presentation of these financial statements in accordance with

International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Dutch

Civil Code, and for the preparation of the management board report in accordance with Part 9 of Book 2 of the Dutch

Civil Code. Furthermore management is responsible for such internal control as it determines is necessary to enable the

preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

164

Financial statements 2010

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit

in accordance with Dutch law, including the Dutch Standards on Auditing. This requires that we comply with ethical

requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements

are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial

statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material

misstatement of the financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair

presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances,

but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also

includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates

made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion with respect to the consolidated financial statements

In our opinion, the consolidated financial statements give a true and fair view of the financial position of BinckBank

N.V. as at 31 December, 2010 and of its result and its cash flows for the year then ended in accordance with International

Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Dutch Civil Code.

Opinion with respect to the company financial statements

In our opinion, the company financial statements give a true and fair view of the financial position of BinckBank N.V. as

at 31 December, 2010 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code.


Report on other legal and regulatory requirements

Pursuant to the legal requirement under Section 2:393 sub 5 at e and f of the Dutch Civil Code, we have no deficiencies

to report as a result of our examination whether the management board report, to the extent we can assess, has been

prepared in accordance with Part 9 of Book 2 of this Code, and whether the information as required under Section 2:392

sub 1 at b-h has been annexed. Further we report that the management board report, to the extent we can assess, is

consistent with the financial statements as required by Section 2:391 sub 4 of the Dutch Civil Code.

Amsterdam, 10 March 2011

Ernst & Young Accountants LLP

Signed by N.G.D. Warmer

165 Annual report 2010


Provisions of the Articles of Association regarding priority shares (Articles 15 and 21)

The rights attached to the priority shares include the right to make non-binding nominations for appointment to the

company’s supervisory board and executive board and to take various other actions. The priority shares are held by

Stichting Prioriteit Binck, Amsterdam. This foundation’s board, which consists of three members, is appointed by the

supervisory board and executive board of the company.

The board members of Stichting Prioriteit Binck are:

C.J.M. Scholtes

J.K. Brouwer

K.N. Beentjes

166

Financial statements 2010

Provisions of the Articles of Association in respect of profit appropriation (Article 32)

1. The company may only make distributions to the shareholders if the company’s equity exceeds its issued and paid-up

share capital plus the reserves required to be held by law or by the Articles of Association.

2. Firstly – and only insofar as profits allow – an amount equal to six per cent (6%) of the nominal value of the priority

shares will be distributed on these shares.

3. The foundation will determine the extent to which the remaining profits will be transferred to reserves. Profits

remaining after application of subsection 2 and the first sentence of this subsection will be at the disposal of the

General Meeting of Shareholders. Any amounts not distributed will be transferred to the company’s reserves.

4. Withdrawals from distributable reserves may be made pursuant to a resolution by the General Meeting of Shareholders,

subject to the prior consent of the foundation.

5. The executive board may resolve to allow the company to make interim distributions, providing it demonstrates in the

form of an interim statement of assets and liabilities as referred to Section 105(4) Book 2 of the Netherlands Civil Code

that it complies with subsection 1 above and subject to the prior consent of the foundation. The distributions referred

to in this subsection may be made in cash, in shares in the company’s equity or in marketable rights thereto.

6. The General Meeting of Shareholders may resolve to declare that distributions on shares other than interim

distributions as referred in subsection 5 of this Article (whether at the shareholders’ discretion or otherwise) may,

instead of being made in cash, be made fully or partly (whether at the shareholders’ discretion or otherwise) in:

a. ordinary shares (which will, if desired and possible, be charged to the share premium reserve) or marketable rights

to ordinary shares, or

b. equity instruments of the company or marketable rights thereto. A resolution as referred to in the previous

sentence may only be passed after being proposed by the executive board and approved by the supervisory

board. A proposal to pass a resolution as referred to in b will be submitted only after consultation with Euronext

Amsterdam N.V.

7. No distribution will be made to the company in respect of shares it holds in its own capital or on shares for which the

company holds depositary receipts.

8. The calculation of the profit distributable on shares will disregard shares that are not eligible, pursuant to subsection

7, for such distribution.

9. Once a resolution to make a distribution has been passed, the amount will be declared payable within fourteen days.