avatar SRH N.V. Finance, Insurance, And Real Estate
  • Location: UTRECHT 
  • Founded: 1987-05-25
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    SNS REAAL NV Annual Report The original Annual Report was drafted in Dutch. This document is an English translation of the original. In the case of any discrepancies between the English and the Dutch text, the latter will prevail.


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    1 SNS REAAL NV Annual Report Contents Key Figures SNS REAAL 2 7 Risk, capital & liquidity 66 1 SNS REAAL: from operational to 3 management SNS REAAL financial holding company 7.1 Risk management and governance 66 7.2 Capitalisation 66 2 Foreword 4 7.3 Liquidity management and funding 67 Update on the restructuring process of SNS REAAL 4 7.4 Credit ratings 67 SNS Bank 4 VIVAT 5 8 Risk, capital & liquidity 69 SNS REAAL 6 management SNS Bank 8.1 Summary and reader's guide 69 Outlook 6 8.2 Risk management restructuring 70 3 Corporate governance 7 8.3 Risk profile and risk appetite 72 3.1 The Executive Board 7 8.4 Capital management 77 3.2 Composition of the Supervisory Board 8 8.5 Credit risk 86 3.3 Report of the Supervisory Board 10 8.6 Market risk 103 3.4 Remuneration Report 18 8.7 Liquidity management and funding 109 3.5 Corporate Governance Code 23 8.8 Key non-financial risks 113 3.6 Management statements 24 9 Financial statements 117 4 Strategy & developments 26 Consolidated financial statements 118 SNS REAAL Notes to the consolidated financial statements 125 4.1 Strategy and organisation 26 Company financial statements 208 4.2 Nationalisation and measures of the European 27 Notes to the company financial statements 210 Commission 4.3 Our people 28 Other information 222 5 Strategy & developments 30 Post balance sheet events 222 SNS Bank Provision regarding profit or loss appropriation 222 Independent auditor's report 223 5.1 Business and economic environment 30 5.2 Developments in the regulatory environment 33 5.3 SWOT Analysis 35 5.4 Mission and strategy 36 5.5 Business and operational developments 39 5.6 Our People 49 6 Financial developments 53 6.1 Financial developments SNS REAAL consolidated 53 6.2 Financial developments SNS Bank 55 6.3 Financial developments insurance activities 60 6.4 Financial developments group activities (holding) 65


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    2 SNS REAAL NV Annual Report Key Figures SNS REAAL Key Figures SNS REAAL in € millions 2014 20131 2012 2011 2010 Result SNS Bank 151 184 88 257 162 VIVAT -605 -612 -147 193 242 Group activities -52 14 -100 -93 -71 Net result from classification VIVAT as discontinued operations2 -206 -- -- -- -- Property Finance -- -1,536 -813 -243 -593 SNS REAAL -712 -1,950 -972 114 -260 Other key figures SNS REAAL Total assets 124,806 125,935 133,663 131,836 127,713 Total equity 3,999 4,496 3,285 5,090 4,719 Double leverage 119.3% 114.9% 130.1% 115.1% 115.4% Number of internal employees (FTE) 6,368 6,379 6,724 6,928 7,113 SNS Bank Efficiency ratio SNS Bank 44.7% 50.0% 57.4% 49.9% 57.8% Return on equity 5.4% 7.1% Common Equity Tier 1 ratio (on a prudential consolidated basis)3 15.6% 15.1% Tier 1 ratio (on a prudential consolidated basis)3 15.6% 15.1% Total capital ratio (on a prudential consolidated basis) 3 2.7% 3.1% Leverage ratio (on a prudential consolidated basis)3 18.3% 16.6% 6.1% 9.2% 8.1% Common Equity Tier 1 ratio (stand-alone)4 18.3% 16.6% 7.7% 12.2% 10.7% Total capital ratio (stand-alone)4 18.4% 16.7% 9.3% 14.4% 16.7% Leverage ratio (stand-alone)4 3.8% 3.2% VIVAT (discontinued operation) Regulatory solvency 136.0% 172% 176% 203% 195% 1 The comparative numbers (2013) have been adjusted to reflect a change in segments in 2014. 2 Reported as part as group activities for segment reporting. 3 Capital ratios banking activities 2014 are calculated based on CRD IV (transitional, SNS Bank NV on a prudential consolidated basis) 4 Capital ratios banking activities 2014 are calculated based on CRD IV (transitional, SNS Bank NV stand-alone), comparative figures 2013 are calculated based on Basel II (SNS Bank NV on a stand-alone basis)


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    3 SNS REAAL NV Annual Report SNS REAAL: from operational to financial holding company 1 SNS REAAL: from operational to financial holding company SNS REAAL NV is the parent company of SNS Bank NV and REAAL NV. In this Annual Report, ‘SNS REAAL’ refers to the consolidated group SNS REAAL NV. The terms ‘SNS Bank’ and ‘Bank’ refer to the consolidated group SNS Bank NV. For comparison purposes, ‘SNS Bank’ (formerly ‘SNS Retail Bank’) refers to SNS Bank NV on a consolidated basis, excluding the results of Property Finance. ’REAAL’, ‘VIVAT’ and ‘Insurer’ all refer to the consolidated group REAAL NV. ‘VIVAT Verzekeringen’ is the trade name of parent company REAAL NV. The terms ‘SNS REAAL holding company’ or ‘the holding company’ refer to the financial holding company SNS REAAL NV, which comprises the ‘Group activities’. SNS REAAL’s banking and insurance activities target report of SNS Bank NV. Because of the announced sale the Dutch savings, investment, mortgage, insurance and of VIVAT, this annual report contains no information on pension markets through a wide range of brands. the strategy and risk management of the Insurer. Significant steps were taken in 2014 to disentangle the For a stand-alone representation of each subsidiary, holding, banking and insurance activities as part of the please refer to the separately published annual reports restructuring plan for SNS REAAL which was initiated of the subsidiaries SNS Bank NV and REAAL NV. after the nationalisation and approved by the European Commission on 19 December 2013. Staff departments SNS REAAL has its headquarters in Utrecht. Stichting that previously provided their services to the business administratiekantoor beheer financiële instellingen (NL units from the holding company were separated as much Financial Investments, ‘NLFI’) is the sole shareholder of as possible and allocated to the Bank or the Insurer. The SNS REAAL. Managing Boards of SNS Bank and VIVAT are now primarily responsible for business operations and strategy. Mutual financial ties have been reduced as much as possible, with SNS Bank and VIVAT increasingly operating as independent companies both operationally and financially. The disentanglement of the holding, banking and insurance activities entails that SNS REAAL develops from an operating to a financial holding company. The disentanglement will continue in 2015, ultimately leading to a holding company of a very limited size as regards the number of employees. In July 2014 SNS REAAL initiated the sales process of VIVAT’s insurance activities. At the end of 2014 this process was on track and on 16 February 2015 SNS REAAL announced the sale of VIVAT to Anbang Insurance Group. Completion of the sale, expected in the third quarter of 2015, is still subject to several conditions, including regulatory approval. After the sale, SNS Bank will remain as SNS REAAL’s only material subsidiary. Subsequently, in consultation with the Dutch State, SNS Bank will be transferred to the Dutch State. The plan is to privatise SNS Bank in due course. Eventually, SNS REAAL as a holding company will be dismantled and cease to exist. The disentanglement of SNS REAAL also affects the structure of this annual report. In line with the increasingly independent operations of the subsidiaries, operational and financial developments, strategy and risk management of SNS Bank NV are discussed. The relevant texts have been taken in full from the annual


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    4 SNS REAAL NV Annual Report Foreword 2 Foreword transaction implies that an important EC commitment of Update on the restructuring the restructuring plan has been met. process of SNS REAAL As VIVAT will be sold below book value, SNS REAAL will incur a significant loss on this transaction. Part of this In 2014, SNS REAAL continued on the path set out by loss is already recorded in the 2014 financial statements the restructuring plan, which formed the basis for the due to the classification of VIVAT as disposal group held final EC approval of the nationalisation of the company. for sale. This resulted in a write-off of the (in)tangible Following the transfer of the real estate financing assets of VIVAT of € 206 million at SNS REAAL level. activities of Property Finance (renamed Propertize) from SNS Bank to NLFI at the end of 2013, we focused on the In his letter to Parliament on 16 February 2015, the disentanglement of the holding, banking and insurance Dutch Minister of Finance announced that shortly after activities and started the sales process for VIVAT completion of the sale of VIVAT, SNS Bank will be Verzekeringen (VIVAT) in 2014. transferred from SNS REAAL directly to the Dutch State. This will enable SNS Bank to reinforce its capital position As part of the disentanglement, virtually all staff through the capital market on a stand-alone basis. functions at holding level were transferred to either SNS Bank intends to further strengthen and diversify its SNS Bank or VIVAT in 2014. The transfer of the risk financial position, with a view to future regulations, such management, finance, communications and compliance as the leverage ratio and the Bank Recovery and functions was completed by the end of 2014. The Resolution Directive (BRRD). SNS Bank is to be separation of IT-systems is still ongoing: we expect this privatised in due course. to be completed by mid-2015. The disentanglement also led to adjustments in the governance of SNS Bank and Following the transfer of VIVAT and SNS Bank, the VIVAT, including the appointment of new statutory holding company SNS REAAL will be dismantled. management boards for both entities. As a result of all this, SNS REAAL has been transformed from an operational holding into a financial holding. SNS Bank On 16 February 2015 we announced the signing of an In 2014, SNS Bank focused on regaining the trust of agreement for the sale of VIVAT to Anbang Group customers and improving its market share in retail Holdings Co. Ltd, a 100% subsidiary of Anbang mortgages and payments, while maintaining its market Insurance Group Co. Ltd. (Anbang), a leading Chinese share in savings. In addition, the process of insurance company. Under the agreement, Anbang disentanglement from SNS REAAL and the need to acquires 100% of the shares of VIVAT for a prepare for new laws and regulations led to a consideration of € 150 million. Furthermore, the solvency considerable work load. During the year, the bank of VIVAT will be strengthened to adequate levels through welcomed nearly 400 employees from the holding a capital injection. The total financial commitment of company followed by another 550 in January 2015. Anbang may still vary due to changes in the IFRS equity Furthermore, the bank introduced and implemented of VIVAT between 31 December 2014 and 30 June changes in governance and risk management, in order 2015, the anticipated effective date of the sale. to be well prepared for a stand-alone future. The transaction is not final as it is still subject to From a commercial point of view, SNS Bank showed a customary conditions such as regulatory approvals. solid performance in 2014. The brands of SNS Bank Also, in case of a strong decline in IFRS equity of VIVAT welcomed 231,000 new customers. On a net basis, the between 31 December 2014 and 30 June 2015, the number of customers rose by 98,000. At the same time, transaction may not materialise. The sale is expected to the customer satisfaction score of the SNS brand be completed in the third quarter of 2015. continued the improving trend that started after the nationalisation in 2013. Customer satisfaction scores at We are pleased with the sale of VIVAT to Anbang as the BLG Wonen and RegioBank remained stable. ASN Bank outcome of the sales process. With a new and continued to have one of the highest customer committed shareholder and a strengthened capital satisfaction rates in the industry, although slightly lower position, the interests of policyholders and employees of compared to year-end 2013. SNS Bank will continue to VIVAT will be safeguarded. Furthermore, VIVAT will fulfil strive for higher satisfaction scores: the ultimate aim is a an important role in expanding the insurance activities of positive Net Promoter Score for every banking brand. Anbang in the Netherlands. For SNS REAAL the


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    5 SNS REAAL NV Annual Report Foreword SNS Bank’s market share in new retail mortgages increased to 3.7% in 2014, compared to 1.8% in 2013. VIVAT However, the difference with our target of 5-8% indicates that there still is work to do in 2015 and beyond. The In 2014, VIVAT saw its gross premium income decline by market share in retail savings edged up to 10.7% and 3%. In individual regular premiums, market share was at was in line with our target of above 10%. 16.8% somewhat lower than the 19.3% of 2013 and market share in new group regular life premiums In 2014 SNS Bank posted a net profit excluding one-off declined to 7.4% compared to 14.6% for 2013. At 4.7%, items of € 294 million, up 12% compared to the adjusted the market share of new non-life premiums was also profit in 2013. lower than in 2013 (5.8%). This 12% improvement was mainly driven by higher net In the course of 2014, VIVAT welcomed nearly 500 interest income and lower impairment charges on loans. employees from the holding company, followed by Net interest income increased markedly driven by lower another 600 in January 2015. funding costs. Higher impairment charges on SME loans and other retail loans were more than compensated by VIVAT reported a net profit excluding one-off items of lower impairment charges on retail mortgages. This € 85 million for 2014, compared to € 135 million in 2013. positive development was supported by a cautious Adjusted for the impact of realised gains and losses on recovery of the Dutch housing market. The credit quality the investment portfolio and results on derivatives, the of the mortgage portfolio showed signs of improvements. underlying profit fell sharply to € 7 million from € 84 The inflow of new defaulting loans was lower compared million in 2013. Positive underlying results at Life to 2013. insurance were mostly offset by an underlying loss at Non-life insurance. The weak results are in part due to Operating expenses, excluding the impact of one-off lower technical results and lower cost margins. items, were 5% higher. The increase was mainly due to Furthermore, the de-risking of the investment portfolio in costs of regulatory projects and dis-synergies related to recent periods, in combination with falling market interest the disentanglement from SNS REAAL. The efficiency rates, led to a structural decline in investment yields. ratio adjusted for one-off items was 44.7% (2013: 43.5%). VIVAT posted a 2014 net loss of € 605 million (2013: net loss of € 612 million). The net loss was wholly driven by SNS Bank’s 2014 net profit was € 151 million and negative one-off items of € 690 million. These one-off included a € 76 million one-off charge for the resolution items mainly consisted of a € 648 million charge related levy on Dutch banks related to the nationalisation of to the IFRS LAT shortfall. SNS REAAL and a € 67 million goodwill impairment related to the acquisition of RegioBank in 2007. Based In 2014, the solvency ratio of VIVAT fell increasingly on the reported net profit, return on equity was 5.4%; short of our internal minimum target of 175%. Regulatory based on net profit excluding one-off items, it was solvency declined to 136% at year-end 2014 from 172% 10.6%. at the end of 2013. The decline was mainly due to the result of changes in models and cost parameters, partly SNS Bank's capital base consists almost entirely of core due to envisaged cost dis-synergies, valuation equity. The Common Equity Tier 1 ratio of SNS Bank NV adjustments of mortgages and other valuation changes. on a stand-alone basis increased further to 18.3% at Furthermore, unfavorable movements in the yield curve year-end 2014 from 16.6% at year-end 2013. This and increased interest volatility, especially in the fourth increase was due to profit retention and a decrease of quarter of 2014, contributed to the decrease in solvency. risk-weighted assets. The Common Equity Tier 1 ratio on a prudential consolidated basis amounted to 15.6% at As part of the sales process, VIVAT has focused on year-end 2014 (year-end 2013: 15.1%). The leverage balance sheet protection by further de-risking the ratio of SNS Bank on a stand-alone basis increased to investment portfolio. The main objective was to reduce 3.8% at year-end 2014, from 3.2% at year-end 2013. On sensitivity of solvency to changes in interest rates, equity a prudential consolidated basis, the leverage ratio markets and credit spreads under the Solvency II regime amounted to 2.7% at year-end 2014 (year-end 2013: and only to a lesser extent under the current Solvency I 3.1%). Taking into account the growing importance of regime. As a consequence, the development of the non-risk weighted capital ratios (MREL, TLAC), Solvency I ratio in 2014 does not fully reflect the SNS Bank intends to further strengthen and diversify its additional de-risking measures. capital base and tap financial markets for hybrid debt, once the sale of VIVAT has been completed.


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    6 SNS REAAL NV Annual Report Foreword For VIVAT, we expect the difficult market circumstances SNS REAAL to continue. In the first months of 2015, solvency has benefited from more favourable financial markets Excluding one-off items, SNS REAAL posted a net profit developments. However, given the pressure on earnings of € 327 million compared to € 388 million for 2013. The and the general low interest rate climate, we expect decline was driven by the lower profit excluding one-off solvency to remain tight in the first half of 2015. items at VIVAT and higher disentanglement and restructuring costs. Gerard van Olphen SNS REAAL reported a net loss for 2014 of € 712 million Chairman of the Executive Board SNS REAAL NV compared to a net loss of € 1,950 million for 2013. This included a net loss of the holding company (Group activities) of € 52 million, mainly consisting of disentanglement and restructuring costs. Furthermore, SNS REAAL took a one-off charge of € 206 million, consisting of the write-off of all intangible and tangible fixed assets of VIVAT following its classification as disposal group held for sale in December 2014. Thus, part of the anticipated book loss on the sale of VIVAT is already reflected in the 2014 financial statements, with the remaining book loss to be incurred in 2015. Outlook In 2015, we expect to complete the sale of VIVAT and to transfer SNS Bank from SNS REAAL to the Dutch State. The sale of VIVAT will result in a substantial book loss at SNS REAAL in 2015, while the transfer of SNS Bank could also result in a book loss. Proceeds of both divestments will be used to redeem the bridge loan provided by the Dutch State. We expect SNS Bank to continue to report satisfactory results in spite of the impact of regulatory developments, such as the implementation of an ex-ante European Deposit Guarantee Scheme and a European Bank Single Resolution Fund. Loan impairment charges are expected to decline gradually, supported by the improved prospects for economic growth in the Netherlands. Operating costs will continue to be impacted by regulatory costs and dis-synergies from the disentanglement. SNS Bank aims to further gradually increase its market share in new retail mortgages and intends to improve its capital structure in 2015. In 2014, SNS Bank announced its intention to sell its subsidiary SNS Securities NV. This divestment, if and when completed, is expected to result in a substantial loss compared to book value. At year-end 2014, the book value of SNS Securities was € 32 million.


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    7 SNS REAAL NV Annual Report Corporate governance 3 Corporate governance 3.1 The Executive Board Duties and responsibilities, curricula vitae and other positions held Composition and duties Gerard van Olphen, Chairman of the Executive Board On the publication date of the Annual Report, the Gerard van Olphen (1962) has been Chief Executive Executive Board of SNS REAAL consists of: Officer and Chairman of the Executive Board since 4 • Gerard van Olphen (Chairman) February 2013. Until 1 July 2014, he was responsible for • Maurice Oostendorp (CFRO) the Group staff departments Group Audit, Corporate • Dick Okhuijsen Communications, Compliance, Security & Operational • Wim Henk Steenpoorte Risk Management, Corporate Strategy and Human Resources. As a result of the changes made to the Responsibilities of the Executive Board include the governance structure, transforming SNS REAAL from an preparation and implementation of SNS REAAL’s goup- operating holding company into a financial holding wide objectives and the development of operational company, he is, from the same date, responsible for the results, compliance policy, risk management policy, Group Audit and the general staff departments Human group communication, IT policy and personnel policy Resources, Corporate Communication and the resulting from these objectives. The Executive Board is Secretariat. also responsible for the separation of the Bank and the Insurer. As a result of the latter, SNS REAAL Before joining SNS REAAL, Gerard van Olphen held transformed from an operating holding company into a various positions at Achmea, including that of CFRO and financial holding company, formalised through a new member of the Executive Board. Gerard van Olphen governance structure as from 1 July 2014. The focus previously worked for REAAL where he was CFO of the thus shifted to strategic management and financial SNS REAAL group and chairman of the Managing Board management and control. The holding company ensures of Reaal Verzekeringen. adequate control of the group and is financially accountable for the entire group. The holding company Other positions held: chairman (until 12 July 2014) and is also ultimately responsible for the implementation of member of the Supervisory Board of Propertize NV, the restructuring plan, which includes three tasks: the member of the board of the Dutch Association of disentanglement of the Bank and the Insurer, the sale of Insurers and member of the Board of Stichting 'Weet wat the Insurer and the privatisation of the Bank. Effectively, je besteedt (Stay on top of your spending Foundation)'. this means that the separation is managed by the holding company and that the holding company defines Maurice Oostendorp, Chief Financial and Risk Officer the framework for an appropriate strategy for the Bank (CFRO) and the Insurer. Maurice Oostendorp (1956) has been Chief Financial and Risk Officer of the Executive Board since February The Executive Board takes decisions by a majority of 2013. Until 1 July 2014, he was responsible for the votes. Formal rules for the functioning of the Executive group staff departments Group Finance, Group Risk Board are set out in the Articles of Association of Management, Investor Relations, Fiscal Affairs and SNS REAAL and in a Regulations of the Executive Insurance, Treasury & Investment Management. As a Board, which also describes the division of duties and result of the changes made to the governance structure, responsibilities of its members. The Regulations were transforming SNS REAAL from an operating holding into approved by the Supervisory Board. The Regulations a financial holding, he is, from the same date, were amended as a result of the changes to the responsible for the group staff departments Group governance structure on1 July 2014. Members of the Finance, Group Risk Management, Group Compliance, Executive Board have agreed to the contents of the Fiscal Affairs, Legal Affairs Financial Holding, Investor Regulations and to comply with the rules contained Relations and IT & Change. The CFO and CRO of the therein. The Articles of Association and Regulations Bank and Insurer have a double reporting line, to both contain a list of resolutions that are subject to approval the chairman of the Board of Directors of the Bank and of the Supervisory Board and/or the General Meeting of the Insurer respectively, and the CFRO. Shareholders. Before joining SNS REAAL, Maurice Oostendorp held various positions at Coöperatie VGZ and ABN AMRO, including that of Chief Financial Officer and member of


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    8 SNS REAAL NV Annual Report Corporate governance the Executive Board at Coöperatie VGZ and Director • Jan Nijssen General of Group Finance at ABN AMRO. • Jan van Rutte • Ludo Wijngaarden Other positions held: Member of the Supervisory Board at NWB Bank, member of the Supervisory Board and Monica Milz has the German nationality. All other chairman of the Audit Committee of Propertize NV and members of the Supervisory Board have the Dutch member of the Advisory Board at Women in Financial Nationality. Services (WIFS). Members of the Supervisory Board are appointed for a Dick Okhuijsen term of four years. Reappointment for a subsequent Dick Okhuijsen (1965) joined the Executive Board in fouryear term is only approved after careful 2009 and focuses on the banking activities. consideration, and at most twice. When reappointing Supervisory Board members, due consideration is given Prior to joining SNS REAAL, he held several positions at to the profile of the Supervisory Board, the performance Nationale Nederlanden and ING Group, including that of of the individual concerned, terms of office and other CEO of ING Life Insurance in Japan and CEO of ING criteria to be determined. Czech Republic and Slovakia. The Supervisory Board meets at least six times a year in Wim Henk Steenpoorte accordance with a schedule drawn up annually. Wim Henk Steenpoorte (1964) has been a member of Supervisory Board resolutions are passed with a the Executive Board of SNS REAAL NV since 15 majority of votes. The Supervisory Board has adopted September 2011 and responsible for the insurance and Regulations that specify and supplements various asset management activities. provisions of the Articles of Association. These Regulations also list additional powers. All members of He has been with SNS REAAL NV since 2000. He the Supervisory Board have declared to agree to the became a member of the Executive Board of REAAL in contents of the Regulations and to abide by the rules 2006 and from 2009 he has held the position of CEO at contained therein. REAAL. Before joining SNS REAAL NV Wim Henk Steenpoorte worked as an ICT manager at Ogilvy The Supervisory Board has formed three committees Nederland and held various positions in the insurance from among its ranks. On 31 December 2014, the sector with the legal predecessors of REAAL. committees comprised the following members: Other positions held: member of the supervisory board • Audit Committee: Jos Nijhuis (Chairman), Jan of Meetingpoint BV, chairman of the supervisory board of Nooitgedagt, Jan van Rutte and Ludo Wijngaarden. Verenigde Assurantiebedrijven Nederland NV and • Remuneration and Nomination Committee: Ludo chairman of the supervisory board of Dutch Aviation Wijngaarden (Chairman), Jan Nooitgedagt, Pool, member of the board of the Non-life insurance Charlotte Insinger and Monika Milz. sector of the Dutch Association of Insurers, member of • Risk Committee: Jan Nijssen (Chairman), Jan the board of Stichting Internationaal Instituut voor Nooitgedagt, Charlotte Insinger and Jan van Rutte. Sociale Geschiedenis and member of the board of Stichting SIVI (Standardisation Foundation of Dutch The Supervisory Boards of SNS REAAL NV, SNS Bank insurers and their agents). NV, Reaal NV , SRLEV NV, Proteq Schadeverzekeringen NV and REAAL Schadeverzekeringen NV form a personal union, i.e. 3.2 Composition of the share the same members. Supervisory Board Curricula vitae, other positions held and Composition and appointment appointment terms On the publication date of the Annual Report, the Jan Nooitgedagt, Chairman Supervisory Board of SNS REAAL consists of: Jan Nooitgedagt (1953) has been working in the financial services sector for more than 35 years. From • Jan Nooitgedagt (Chairman) April 2009 to May 2013 he served as CFO and • Charlotte Insinger Executive Board member at Aegon NV. Prior to that, • Monica Milz Nooitgedagt spent 28 years working for Ernst & Young, • Jos Nijhuis where his positions included those of Chairman and


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    9 SNS REAAL NV Annual Report Corporate governance Managing Partner for the Netherlands and Belgium. Jos Nijhuis Nooitgedagt also serves on the Supervisory Boards of Jos Nijhuis (1957) is President of Schiphol Group. Prior NV Bank Nederlandse Gemeenten, Robeco Groep NV to that, he served as Chairman of the Executive Board of and Telegraaf Media Groep NV. He is Chairman of the PwC. Nijhuis is a non-executive board member of board of Vereniging Effecten Uitgevende Aeroports de Paris SA., non-executive director of Ondernemingen (VEUO) and Chairman of the Board of Brisbane Airport Corporation PTY ltd and a member of the Nyenrode Fund. the Supervisory Board of Aon Groep Nederland BV. In addition, he is a member of the Supervisory Council of Nooitgedagt was appointed as member and Chairman of Stichting Kids Moving the World and a member of the the Supervisory Board on 1 November 2013. He will step Supervisory Council of Stichting Nationale Opera & down at or before the first General Meeting of Ballet. Shareholders held after 1 November 2017. Nijhuis was first appointed as a member of the Charlotte Insinger Supervisory Board on 15 April 2009 and reappointed on Charlotte Insinger (1965) acts as an independent 6 June 2013. He will step down at or before the first management consultant and interim manager. Insinger General Meeting of Shareholders held after 6 June was a member of the Supervisory Committee of 2017. Stichting Rijnland Zorggroep until October 2014 and is a member of the Supervisory Council of Jan Nijssen Luchtverkeersleiding Nederland, Chairman of the Jan Nijssen (1953) is a partner and shareholder of Supervisory Council of Stichting World Expo Rotterdam Montae Groep (independent pension consultants). From 2025, Supervisory Board member of Ballast Nedam NV 1978 to 2005 Nijssen held various positions at Nationale and member of the Strategic Audit Committee of the Nederlanden and ING Group both in the Netherlands Ministry of Foreign Affairs, in which she fills an advisory and abroad. He was appointed as a member of the role. board of ING Netherlands and ING Europe in 1997 and 2000 respectively and as CEO of ING Insurance & Insinger was first appointed as a member of the Pensions for Central Europe in 2004. Nijssen is also a Supervisory Board on 15 April 2009, having been member of the Supervisory Board of Garanti Emeklilik nominated by the Dutch government. She was (Turkey), member of the Internal Supervision Committee reappointed on 6 June 2013. She will step down at or of the Shell Pension Fund, Chairman of the Board of before the first General Meeting of Shareholders held Directors of Three Wheels United (Bangalore, India), after 6 June 2017. Chairman of the Board of Stichting Duurzame Micropensioenen Ontwikkelingslanden (DMO) and Monika Milz member of the Supervisory Council of Prodeba BV. Monika Milz (1957) has been acting as a professional regulator and management consultant since 2011. She Nijssen was first appointed as a member of the has been working in the banking industry for thirty years, Supervisory Board on 13 September 2011. He will step having spent 20 years at ABN AMRO and in the period down at or before the first General Meeting of from 2000 to 2011 at Rabobank Group. Her area of Shareholders held after 13 September 2015. banking knowledge and expertise is the services provided to business customers on the one hand and Jan van Rutte HRM on the other. Milz has been serving in supervisory During the course of his long career Jan van Rutte positions for the last two decades and currently holds (1950) has served as Chairman of the Executive Board positions as member of the Supervisory Council of the of Fortis Bank Nederland, CFO of ABN AMRO and Amsterdam University of Applied Sciences Foundation, board member of the Dutch Banking Association (NVB). as Supervisory Board member of ConQuaestor Holding He is also a Supervisory Board member of ORMIT BV and as Chair of the Green Deal Board. Holding BV, member of the Supervisory Council of Stichting de Koninklijke Schouwburg in The Hague, Milz was appointed as a member of the Supervisory board member of the ABN AMRO Foundation and Board on 1 November 2013. She was appointed at member of the Supervisory Council of Stichting Health SNS REAAL NV in accordance with the reinforced right Center Hoenderdaal. of recommendation of the SNS REAAL Central Works Council. She will step down at or before the first General Van Rutte was appointed as a member of the Meeting of Shareholders held after 1 November 2017. Supervisory Board on 1 November 2013. He will step down at or before the first General Meeting of Shareholders held after 1 November 2017.


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    10 SNS REAAL NV Annual Report Corporate governance is responsible for the financial reporting of the group as a whole. The financial holding company is also primarily Ludo Wijngaarden responsible for the group in respect of the regulatory Ludo Wijngaarden (1947) served as Chairman of the authorities and ultimately responsible for the Executive Board of Nationale Nederlanden and member implementation of the restructuring plan. This means in of the Executive Board of ING Netherlands until 2008. practice that the holding company coordinates the Prior to that, he served as Chairman of the Executive separation and defines the frameworks for an Board of Postbank and the ING Retail division. He was appropriate strategy of the Bank and the Insurer. also Chairman of the Dutch Association of Insurers, member of the board of VNO-NCW and member the Effective 1 July 2014 the SNS REAAL Executive Board, Bank Council of De Nederlandsche Bank until October along with a small corporate workforce, is responsible for 2008. Wijngaarden is currently Chairman of the SNS REAAL’s consolidated interests, including Supervisory Board of Oasen NV, member of the integrated risk management. The change of Supervisory Board of the Rochdale housing corporation, SNS REAAL’s governance structure also resulted in a member of the board of DAK Intermediairscollectief and changed manner of supervision by the Supervisory member of the Advisory Board of Dutch Data Protection Board in the course of 2014. This change is described in Authority. the paragraph Composition and duties in this report. Wijngaarden was first appointed as a member of the The sale of SNS REAAL’s insurance activities Supervisory Board on 15 April 2009, having been constitutes an important measure of the restructuring nominated by the Dutch government, and reappointed plan. Significant steps were taken in the first six months on 6 June 2013. He will step down at or before the first of 2014 in the preparations for the sale of the Insurer. General Meeting of Shareholders held after 6 June The actual sales process was set in motion in the 2017. second half of 2014. Please refer to chapter Strategy and developments SNS REAAL for more information about the sales process. 3.3 Report of the Supervisory Board Themes Main topics and discussions on the Supervisory Board The year 2014 was dominated by the implementation of 2014 was not only marked by the preparations for the the restructuring plan as submitted to the European sale of the Insurer, but also by the Insurer’s vulnerable Commission in August 2013 and for which approval was financial position. The Executive Board has properly obtained in December 2013. In 2014 we continued to involved the Supervisory Board in – and has provided it work towards achieving the disentanglement of the Bank with periodic updates about – the situation regarding the and the Insurer of SNS REAAL. Insurer’s solvency, in which respect the Supervisory Board naturally also stressed the importance of further A considerable amount of time and resources was exploring the options for improving the solvency, capital devoted to the separation of SNS REAAL’s banking and position and earnings model. In addition to its insurance activities in the first six months of 2014, supervision of the Executive Board, the Supervisory resulting in major changes to SNS REAAL’s governance Board played a major advisory role for the Executive and organisational structures. The composition of and Board here. The Supervisory Board talked at length with division of duties in the Managing Boards of SNS Bank management about measures concerning balance sheet NV (the ‘Bank’) and VIVAT Verzekeringen (REAAL NV protection by further derisking the investment portfolio (the ‘Insurer’)) have changed. Staff functions have been and improving operational efficiency. The profitability of set up at the level of the Bank and the Insurer that were the insurance activities was also extensively discussed previously located at the group level. To this end, many as was the interdependence in the financing structure of of the employees of the Group staff departments who the Bank and the Insurer. Other topics brought up for used to work for both the Bank and the Insurer at the discussion were the changes in models and cost group level moved to the Bank or the Insurer in parameters, including the envisaged cost dyssynergies mid-2014. related to the disentanglement. The Supervisory Board periodically discussed these topics with other The Bank and the Insurer increasingly operated as SNS REAAL stakeholders, such as DNB, NLFI and the independent companies in 2014, which also transformed Ministry of Finance. SNS REAAL NV from an operating into a financial holding company in 2014. The financial holding company ensures the adequate management of SNS REAAL and


  • Page 13

    11 SNS REAAL NV Annual Report Corporate governance The Supervisory Board meetings also focused on the 1. the Supervisory Board of SNS REAAL NV; separation of SNS REAAL, i.e. the disentanglement and 2. the Supervisory Board of SNS Bank NV; and the related changes to the governance structure. 3. the Supervisory Boards of REAAL NV and SRLEV NV. During the meetings a lot of attention was also devoted to the strategy for the Bank, as well as to the ECB stress Starting in December 2014, the meetings of the test (AQR) and the impact that the sale of the Insurer will Supervisory Boards of REAAL NV and SRLEV NV were have on the Bank. combined with the meetings of the Supervisory Boards of Proteq Levensverzekeringen NV and Reaal Other major topics were the financial statements for the Schadeverzekeringen NV, both created on 6 November financial year 2013, the remuneration policy, 2014. SNS REAAL’s capital position, the EC commitments, risk management and risk appetite, customer interests, The meetings of the Supervisory Board committees of (blueprint of) the Integrated Control Framework, and the SNS REAAL NV, SNS Bank NV, REAAL NV, SRLEV NV, large number of current (strategic) projects within Proteq Levensverzekeringen NV and Reaal SNS REAAL. The paragraph Meetings of the Schadeverzekeringen NV, on the other hand, were still Supervisory Board in this report provides a more combined meetings, as in the period prior to 1 July 2014. detailed description of the content of the Supervisory Where applicable, the business to be transacted at the Board meetings in 2014. committee meetings is differentiated according to topics relating to the Bank, the Insurer or the financial holding Composition and duties company. This is reflected in the agenda of the relevant committee meeting. Composition The composition of the Supervisory Board has not In the Supervisory Board’s view, all Supervisory Board changed since 1 November 2013. With effect from 1 members are independent, which means that best November 2013, the Supervisory Board consisted of practice provision III.2.1 of the Corporate Governance seven (7) persons: Jan Nooitgedagt (Chairman), Code has been met. Charlotte Insinger, Monika Milz, Jos Nijhuis, Jan Nijssen, Jan van Rutte and Ludo Wijngaarden. They are also For more information on the composition of the members of the Supervisory Boards of SNS Bank NV, Supervisory Board and its members in 2014, please REAAL NV and SRLEV NV. On 6 November 2014, refer to paragraph 3.2 Supervisory Board. Supervisory Boards were set up both at Reaal Schadeverzekeringen NV and at Proteq Performance Levensverzekeringen NV. The aforementioned The Supervisory Board evaluates its own performance individuals also make up the Supervisory Boards of the annually. This year an external agency assisted in that latter two entities, which did not have a Supervisory evaluation, which focuses on the Supervisory Board’s Board until 6 November 2014 in connection with an own performance as well as on the performance of exemption granted by DNB. In consultation with DNB, individual committees and individual Supervisory Board the exemption was withdrawn and said Supervisory members, the relationship with the Executive Board and Boards were created. the effectiveness of lifelong learning. The evaluation took the form of individual interviews conducted by the SNS REAAL’s new management and organisational external evaluator, which also addressed the key issues structures were presented in May 2014 in anticipation of described above. Besides specific questions, these a definitively independent Bank and independent Insurer. interviews also gave ample opportunity to those Most staff members transferred either to the Bank or to interviewed to provide free input on the performance of the Insurer. This also had consequences for the Supervisory Board, the committees and the SNS REAAL: the holding company’s character changed individual Supervisory Board members. The evaluator and the emphasis shifted to strategic and financial then drafted a report containing the results of these management and control. SNS REAAL transformed from interviews. The Supervisory Board discussed this report an operating holding company into a financial holding in January 2015. The criteria applied in the evaluation company. This led to a different organisational structure revealed that the Supervisory Board performs its duties affecting governance, which in turn impacted the properly. In substantive and relational terms, the meeting procedures of the Supervisory Board in 2014. Supervisory Board is equal to its task. The report shows As from July 2014, the meetings of the Supervisory that this supervisory board membership a weighty one in Boards of SNS REAAL NV, SNS Bank NV, REAAL NV terms of complexity and demand on time and that the and SRLEV NV were no longer combined meetings. In members are very committed. The Supervisory Board each month stated, separate meetings were held of:


  • Page 14

    12 SNS REAAL NV Annual Report Corporate governance seeks to consider the interests of all parties concerned alert. The Supervisory Board assumes responsibility and of all stakeholders in a careful and well-balanced where necessary and desired; one example is the manner. The Supervisory Board is properly composed formation of the Technical Consultation. The cooperation and has sufficient expertise. Communication between between the Supervisory Board and the Executive Board the Supervisory Board, Executive Board and the Board is good. Communication between the Supervisory Board of Directors is effective. Areas for improvement are and the Executive Board is good. The Supervisory Board meeting (time) management and, occasionally, drawing and the Executive Board are both open to each other’s clearer conclusions. Given the situation, there is much opinions. discussion about downward risks and perhaps too little about upward potential. The Supervisory Board holds the view that the Executive Board in its entirety, but its individual members too, have Cooperation shown particular commitment and engagement in 2014. The Executive Board members work well together and Cooperation with committees operate effectively. The Executive Board has The Supervisory Board has three committees: the Audit expeditiously and thoroughly accomplished the Committee, the Risk Committee and the Remuneration disentanglement, initiated the sales process for the & Nomination Committee. Working relations between the Insurer and prepared the Bank’s strategy. Supervisory Board and its committees in 2014 were good. The committee meetings deal with subjects in Cooperation with external experts depth, allowing for a careful preparation for the External expertise is requested when considered Supervisory Board’s decision-making. Feedback on the necessary for the Supervisory Board to properly perform content of the committee meetings is provided at the its supervisory duties, hence the regular contact meeting of the Supervisory Board, so that all between the Audit and Risk Committees with the Supervisory Board members are fully up to date and external auditor and actuary. Furthermore, the decisions can be made with due care. Supervisory Board has its own legal and financial advisors to consult with, when necessary. The The ‘Technical Consultation’ was set up in the final Supervisory Board has engaged a financial advisor and quarter of 2014. Consisting of four Supervisory Board a legal advisor specifically for the sale of the Insurer. members designated by the Supervisory Board to that end, the Technical Consultation serves to safeguard the SNS REAAL has appointed its external auditor, KPMG Supervisory Board’s close involvement in the sale of the Accountants NV, for an indefinite period. SNS REAAL Insurer. This allows the Executive Board to intensively must engage a new external auditor by 2016 as a and frequently inform the Supervisory Board, enabling consequence of the Accountancy Profession Act (Wet the Supervisory Board to adequately perform its duties op het accountantsberoep), for which it is making and to advise the Executive Board as well as to preparations. The eligible firms have been identified and supervise the process. Setting up the Technical a tendering procedure will be conducted prior to the Consultation is an effective way of putting this closer appointment. involvement into practice and of addressing the greater need for information. Of course, the Technical Consultation has no independent decision-making Personnel powers: it has a preparatory role for the benefit of the full The Supervisory Board and the Remuneration & Supervisory Board’s decision-making process. To this Nomination Committee frequently discussed end, the minutes of the Technical Consultation are SNS REAAL’s HR policy and the appraisal of shared with the full Supervisory Board. In 2014, the SNS REAAL personnel. The impact of the Technical Consultation met three times. disentanglement of SNS REAAL is another major topic for the Supervisory Board and the Remuneration & Cooperation with the Executive Board Nomination Committee. The Supervisory Board supervises and advises the Executive Board by taking a critical stance where The Supervisory Board and the Central Works Council necessary, giving advice where required and giving have regular meetings. Monika Milz, who has been support where possible. The Supervisory Board appointed as Supervisory Board member in accordance ascertains whether the resolutions adopted or to be with the reinforced right of recommendation of the adopted by the Executive Board are well-founded and SNS REAAL Central Works Council, has regular have been or will be based on careful deliberations. The meetings with the Central Works Council’s day-to-day evaluations of both the Executive Board and the management, together with Jan Nijssen and the Supervisory Board reveal that, this way, the Supervisory Chairman of the Supervisory Board. In 2014 eight Board makes the Executive Board better and/or more consultations took place, including attending a meeting


  • Page 15

    13 SNS REAAL NV Annual Report Corporate governance of the Central Works Council. These regular duties, on the other hand, did change as a result of consultations involved constructive discussions, such as SNS REAAL’s new governance structure as from 1 July the change of the legal employer status. This helped 2014. The responsibilities of Gerard van Olphen and bring this change to a successful close. Maurice Oostendorp changed. The responsibilities of Dick Okhuijsen and Wim Henk Steenpoorte were more 2014 saw many changes having an impact on staff on clearly defined as a result of their roles of Chairmen of the back of the separation of activities. Despite the the Managing Boards of the Bank and the Insurer, sometimes uncertain circumstances, the 2014 employee respectively. Please refer to paragraph 3.1 for more survey revealed that satisfaction has remained stable information on the Executive Board and its members. compared to the previous year and that enthusiasm and commitment have increased again, commitment even Meetings of the Supervisory Board strongly so. A difference in response can be observed General here between employees of the Bank and the Insurer. As in 2013, the Supervisory Board met a few times more than usual in 2014. This was related, among other The preparations for the disentanglement and the sale of things, to the 2013 year-end close, the Insurer’s the Insurer largely form an addition to our staff’s regular vulnerable financial position, the sales process of the work. SNS REAAL is proud to see that the hard-working, Insurer, the Bank’s strategy and the ECB stress test. open and direct culture has survived. The Supervisory Board greatly appreciates the commitment of Frequency SNS REAAL’s employees. Despite the far-reaching In line with the annual schedule, formal meetings of the developments SNS REAAL and its staff are still going Supervisory Board are held eight times per year. Similar through, employees are constantly giving their all and to 2013, many additional meetings were held in 2014, express confidence in the management. The both in person and by telephone. The additional Supervisory Board trusts that employees will hold on to conference calls were largely scheduled on account of their commitment in 2015, even after their transfer to a the sales process of the Insurer, providing the new employer effective 1 January 2015. Supervisory Board with full updates on an almost weekly basis. Composition of the Executive Board The composition of the Executive Board has not As a consequence, the frequency of Supervisory Board changed since 4 February 2013. The division of their meetings including conference calls was as follows:


  • Page 16

    14 SNS REAAL NV Annual Report Corporate governance Month Number Description January One (informal meeting) Combined meeting of the Supervisory Boards of SNS REAAL NV, SNS Bank NV, REAAL NV and SRLEV NV. February Three Combined meetings of the Supervisory Boards of SNS REAAL NV, SNS Bank NV, REAAL NV and SRLEV NV. March Two Combined meetings of the Supervisory Boards of SNS REAAL NV, SNS Bank NV, REAAL NV and SRLEV NV. April Two Combined meeting of the Supervisory Boards of SNS REAAL NV, SNS Bank NV, REAAL NV and SRLEV NV. May Two In May, separate meetings of (i) the SNS REAAL NV Supervisory Board, (ii) the SNS Bank NV Supervisory Board and (iii) the Supervisory Boards of REAAL NV and SRLEV NV were held. In addition, a combined conference call was held by the Supervisory Boards of SNS REAAL NV, SNS Bank NV, REAAL NV and SRLEV NV. June Two Combined meetings of the Supervisory Boards of SNS REAAL NV, SNS Bank NV, REAAL NV and SRLEV NV. July Two Combined meetings of the Supervisory Boards of SNS REAAL NV, SNS Bank NV, REAAL NV and SRLEV NV. August Three A (i) meeting of the REAAL NV and SRLEV NV Supervisory Boards, (ii) meeting of the SNS REAAL NV Supervisory Board. A (i) meeting of the SNS Bank NV Supervisory Board, (ii) meeting of the SNS REAAL NV Supervisory Board. A combined conference call of the Supervisory Boards of SNS REAAL NV, REAAL NV and SRLEV NV. September Two Meetings of the SNS REAAL NV Supervisory Board. October Six Conference calls of the SNS REAAL NV Supervisory Board. November Four A (i) meeting of the SNS REAAL NV Supervisory Board, (ii) meeting of the SNS Bank NV Supervisory Board and (iii) meeting of the REAAL NV and SRLEV NV Supervisory Boards. Three conference calls of the SNS REAAL NV Supervisory Board. December Two A (i) meeting of the SNS REAAL NV Supervisory Board, (ii) meeting of the SNS Bank NV Supervisory Board and (iii) meeting of the Supervisory Boards of REAAL NV, SRLEV NV, Proteq and Reaal Non-Life. A conference call of the SNS REAAL NV Supervisory Board. Total 31 Attendance customer experience. These customer experiences are Despite all the additional meetings that were scheduled offered throughout the group and consequently pertain on short notice, the entire Supervisory Board was to all business units within the Bank and the Insurer. generally present. As a rule, absent Supervisory Board They may include (i) listening in on calls at SNS members gave input on the business to be transacted to Customer Service or REAAL Customer Service, (ii) the Chairman of the Supervisory Board beforehand, or to visiting a RegioBank office and (iii) attending a meeting the entire Supervisory Board. Based on a normal of the Zwitserleven customer panel. The majority of the frequency of eight meetings per year, the attendance Supervisory Board members attended a customer rate was high. This attests to the Supervisory Board’s experience right away in 2014. These customer high level of commitment. experiences will be evaluated in 2015, which evaluations will translate into feedback on the relevant experiences Content of the meetings within the entire Supervisory Board and will be used to Until 1 July 2014, updates were given on the further improve the items on the menu. SNS REAAL business units at every regular Supervisory Board meeting. After 1 July 2014, these updates were Throughout the year, the Supervisory Board paid given at the Supervisory Board meetings of the entities attention to the control of the various risks within the concerned. company. Internal control was under pressure, in part as a result of (i) a major workload increase ensuing from The discussions on the business updates also focused new legislation and regulations, which also sparked a on the theme of Putting customers’ interests first, in strong rise in regulatory questions and requirements, the which regard the Supervisory Board checked the separation of banking and insurance activities and the continuity of customer service. Additional attention was sales process of the Insurer, (ii) changes to the ITC devoted to this subject during a lifelong learning session infrastructure (user, data and application migration), (iii) in May. Following this session, the Supervisory Board organisational changes and (iv) large projects, such as requested that customer experiences be offered to the the ECB’s Asset Quality Review. The Supervisory Board Supervisory Board members. This resulted in a menu, supervised the individual components that are used to as it were, in September 2014, from which the control risks and their effectiveness. In the new Supervisory Board members can annually select a governance structure, the Managing Boards of the Bank


  • Page 17

    15 SNS REAAL NV Annual Report Corporate governance and the Insurer started giving substance to an Integrated ‘Content of the meetings’ above) and (iii) the retail bank Control Framework. of the future. Partly in light of the disentanglement of the banking and Presence of the Executive Board insurance activities, the Supervisory Board focused on Meetings are opened (the first 30 minutes) without the interconnected components in the financial structure members of the Executive Board attending. After the of the holding company and the operating companies meeting has been called to order, the Supervisory Board and the intra-group positions in particular. In the autumn meets in the presence of the members of the Executive of 2014, the Supervisory Board devoted particular Board. At the beginning of 2015, a Supervisory Board attention and time to the solvency of the Insurer during meeting was held without any Executive Board members its meetings. attending. One of the topics discussed at that meeting was the external evaluation (refer to the section on In 2014, the Supervisory Board also focused on the: Performance). • 2013 full-year results, the annual report and the financial statements of SNS REAAL NV for 2013 Presence of the external auditor (February and March) The external auditor is present at all Audit Committee • various aspects relating to the Bank and Insurer meetings and at least once a year at a meeting of the separation, including employee and IT aspects and Risk Committee. In 2014, the external auditor did not risks (throughout the year) attend any meetings of the Risk Committee. In early • management changes at the Bank and the Insurer 2015, a Risk Committee meeting was held that the (February) external auditor did attend. The external auditor has a • governance structure of the Supervisory Board standing invitation to attend meetings of the Supervisory (March and April) Board. In February 2014, the external auditor was • amendments to the regulations of the Executive present at part of the plenary meeting of the Supervisory Board, the Bank and Insurer Managing Boards and Board. the Supervisory Board and its committees (May and September) and the amendment to the Articles Committee meetings of Association of REAAL NV, SRLEV NV, Proteq With effect from 11 November 2013, the Supervisory Levensverzekeringen NV, Reaal Board has the following three committees: Schadeverzekeringen NV and SNS Bank NV (May) • Audit Committee • sales process of the Insurer and alternative • Risk Committee scenarios in case the sale did not materialise (in • Remuneration & Nomination Committee the second half of the year) • communication with various stakeholders Below is a description of the duties of the various • Bank’s strategy (March) and preparations for the committees. More details on the composition of the Bank’s stand-alone position (September) committees and the regulations of each committee are • assessment of an Integrated Control Framework available at www.snsreaal.nl. (under development) (November) • discussion on data management; Every committee prepares the decision-making of the • monitoring actions ensuing from the EC Supervisory Board in respect of the duties assigned to it restructuring plan (throughout the year) and reports to the Supervisory Board. • establishment of Supervisory Boards for Proteq Levensverzekeringen NV and Reaal Audit Committee Schadeverzekeringen NV (October) The composition of the Audit Committee (AC) was as • 2015 – 2017 Operational Plan (August and follows as at 31 December 2014: Jos Nijhuis December) (Chairman), Jan Nooitgedagt, Jan van Rutte and Ludo Wijngaarden. Apart from the AC members, meetings In addition, feedback on the meetings held by the were attended by the Chairman of the Executive Board, committees and the Technical Consultation is provided the CFRO, the Company Secretary, the Group Audit during the Supervisory Board meetings. Director, the Group Finance Director and the external auditor. As a result of the changes made to the Lifelong Learning sessions governance structure, since 1 July 2014 the CFO of In 2014, the Supervisory Board (together with the SNS Bank NV has attended the AC meeting discussions Executive Board) followed three lifelong learning on SNS Bank NV and the CFO of VIVAT Verzekeringen sessions, focusing on (i) cybercrime, (ii) Putting has attended the AC meeting discussions on VIVAT customers’ interests first (in this respect, see also Verzekeringen. Of course, the AC may also invite others


  • Page 18

    16 SNS REAAL NV Annual Report Corporate governance to a meeting. The external actuary was present at one Remuneration & Nomination Committee meeting in February 2014. In 2014, the AC convened The Remuneration & Nomination Committee nine times. (ReNomCo) consists of: Ludo Wijngaarden (Chairman), Charlotte Insinger, Monika Milz and Jan Nooitgedagt. In 2014, the AC discussed and assessed in particular The meetings are attended by the Chairman of the the structure and operation of SNS REAAL’s financial Executive Board, the CFRO, the HR Director and the reporting and the corresponding audits, with due Company Secretary. In 2014, the committee convened attention to new IFRS rules (including IFRS 10), nine times. compliance with the EC commitments, the Insurer’s solvency, the financial and audit reports, tax issues, the The ReNomCo’s duties are selecting and nominating internal reports by Group Audit and management on persons for appointment to the Executive Board, the subjects including data quality, model validation, Managing Boards of the business units and the application of the Banking and Insurance Codes, the Supervisory Board and preparing the decision-making Integrated Control Framework and the results of the with regard to the remuneration policy applicable to the Operational Plan, as well as the evaluation of the Executive Board members, the Managing Boards of external auditor and the preparations made for the SNS Bank NV and REAAL NV and senior management engagement of a new auditor as from 2016. Further, the and with regard to the principles of the remuneration reports and activities of the external auditor and the policy for all other SNS REAAL personnel. More details external actuary, including the annual plan, the mandate on the main principles of the remuneration policy, of the external auditor and Group Audit and the including the reporting on this subject, are provided in management letter were discussed at length. The the Remuneration Report. In 2014, the subjects external auditor is present at every AC meeting, enabling discussed by the ReNomCo included the following: the good dialogue between the AC members and the Key Performance Indicators (KPIs) for the Executive external auditor. The Chairman of the AC also maintains Board, the Managing Boards of SNS Bank NV and regular contact with the internal and external auditors. REAAL NV and senior management (including ex ante risk analysis), the adjustment of SNS REAAL’s senior Risk Committee management structure, including the composition of the The composition of the Risk Committee (RC) was as Managing Boards of the Bank and the Insurer, the total follows as at 31 December 2014: Jan Nijssen amount and payment of the variable remuneration for (Chairman), Charlotte Insinger, Jan Nooitgedagt and Jan senior management, with due attention being given to van Rutte. Apart from the RC members, the RC the bill in respect of remuneration in the Dutch financial meetings are attended by the Chairman of the Executive sector (wetsvoorstel beloningsbeleid financiële Board, the CFRO, the Company Secretary, the Group ondernemingen), which took effect in 2015 and which Audit Director, the Group Risk Management Director and imposes a maximum bonus of 20%, ex post risk analysis the Corporate Compliance Manager. As a result of the of the SNS REAAL remuneration policy and its changes made to the governance structure, since 1 July execution, evaluation of the Supervisory Board and the 2014 the CRO of SNS Bank NV has attended the RC Executive Board and their profiles, monitoring and meeting discussions on SNS Bank NV and the CRO of safeguarding continuity in management, reporting on the VIVAT Verzekeringen has attended the RC meeting annual assessment of the remuneration policy in 2013 discussions on VIVAT Verzekeringen. Of course, the RC and the Regulation on Sound Remuneration Policies may also invite others to a meeting. In 2014, the pursuant to the Financial Supervision Act 2014. committee convened five times. Financial statements The RC is primarily involved in preparing and assessing On 2 April 2015, SNS REAAL published its annual the financial and non-financial risk policies and the results 2014. Both the 2014 annual results and the operation of risk management. In 2014, the RC devoted financial statements were discussed in several meetings its attention to risk appetite, risk reports, litigation risks, of the AC and the Supervisory Board prior to their compliance with applicable codes and the risk aspects of publication. KPMG, the external auditor, issued an the remuneration policy. It particularly focused on the unqualified auditor’s report on the financial statements. Insurer’s solvency position and the ITC consequences The financial statements will be presented to the Annual ensuing from the separation of the Bank and the Insurer. General Meeting of Shareholders of 28 May 2015. Using the Integrated Control Framework that the Bank and the Insurer have begun to set up, the RC will gain an even better understanding of the risk aspects. Closing words The Supervisory Board wishes to express its gratitude and appreciation to all employees of SNS REAAL, in


  • Page 19

    17 SNS REAAL NV Annual Report Corporate governance particular for their engagement and commitment. Great demands have been placed on them over these last months, both inside and outside the office. Exceptional dedication was also demanded of SNS REAAL’s management this year. Despite everything, working relations with the Supervisory Board were good. The Supervisory Board wishes to express its appreciation for this, too. Utrecht, 29 April 2015 On behalf of the Supervisory Board Jan Nooitgedagt, Chairman


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    18 SNS REAAL NV Annual Report Corporate governance • The remuneration matches the risk profile of 3.4 Remuneration Report SNS REAAL and the risk profile of the relevant person holding the position. Introduction • The policy is in accordance with and contributes to The remuneration report sets out the remuneration of the sound and effective risk management and does not members of the Executive Board and the Supervisory encourage taking more risks than acceptable to the Board of SNS REAAL NV. For more information on the Company. remuneration policy of SNS REAAL, please refer to the • The total remuneration package reflects the section Corporate Governance and to the Report on requested output of the relevant person holding the SNS REAAL Indentified Staff Remuneration Policy on position. the website of SNS REAAL at www.snsreaal.nl. • The purpose of the policy is to attract and retain good employees, taking SNS REAAL’s specific The remuneration policy complies with the relevant legal position into account. requirements, the Dutch Corporate Governance Code, • The policy contributes to the realisation of the the Banking Code, the Insurance Code, the Regulation strategy and long-term interests of SNS REAAL. on Sound Remuneration Policies pursuant to the • There is an appropriate ratio between the fixed and Financial Supervision Act 2014 and the Dutch ‘Act on variable remuneration. the Limitation of Liability DNB and AFM and the • The policy is as consistent as possible for the entire Prohibition of Bonuses for State Supported Companies’. group to encourage the exchange and movement of staff to other positions. In 2014 the Remuneration policy was compliant with all • The revised earnings model and the situation that the requirements of the Act on Remuneration Policies of the Company is in give cause for remuneration to Financial Undertakings (Wbfo), which came into effect be moderated. on 7 February 2015. Governance This remuneration report is structured as follows: The SNS REAAL Group Remuneration Policy contains a 1. Basic principles and governance governance framework which includes the division of 2. Remuneration policy of the Executive Board duties and responsibilities in relation to the remuneration 3. Actual remuneration of the Executive Board for 2014 policy of SNS REAAL. The parties concerned are the 4. Remuneration policy of the Supervisory Board Supervisory Board, the Remuneration & Nomination 5. Actual remuneration of the Supervisory Board for Committee of the Supervisory Board, the Executive 2014 Board and various staff departments. In addition, the Risk Committee of the Supervisory Board discusses the Basic principles and governance remuneration policy of SNS REAAL from a risk management perspective once a year. In the event of a Basic principles material change to the remuneration policy, SNS REAAL The remuneration policy frameworks have been laid will perform scenario analyses (or have them performed) down in the ‘SNS REAAL Group Remuneration Policy’. that will show what the effect of the new policy would be The SNS REAAL Group Remuneration Policy is under different economic conditions. applicable to all SNS REAAL business units and Supervisory Board and Remuneration & Nomination employees, including the Executive Board. Committee The Group Policy reflects how SNS REAAL wishes to The Supervisory Board is responsible for the deal with remuneration. It responds to, and gives remuneration policy for the Executive Board, the direction to, the numerous current developments in the Managing Boards of SNS Bank NV and REAAL NV and area of remuneration. senior management, and approves the principles of the remuneration policy for other employees (SNS REAAL The SNS REAAL Remuneration Policy is based on the Group Remuneration Policy). The Supervisory Board following principles: approves policy proposals and submits these to the • The remuneration policy is compliant with current shareholder where necessary. legislation and regulations. • The remuneration policy is characterised by its Every year the Supervisory Board evaluates the design consideration of all of the Company’s stakeholders: and operation of the remuneration policy, and is customers, employees, shareholder and society. responsible for the execution and evaluation of the • The remuneration is transparent. remuneration policy of the Executive Board.


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    19 SNS REAAL NV Annual Report Corporate governance Policy proposals are presented by or on behalf of the Remuneration policy of the Executive Executive Board and are submitted to the Supervisory Board with advice from the Remuneration & Nomination Board Committee. The Remuneration & Nomination Committee also directly supervises the remuneration of higher Remuneration components management staff with control functions. Members of the Executive Board enter into a contract with SNS REAAL for the duration of a four-year term of The Remuneration & Nomination Committee is assisted office. For Board members appointed after 1 January by independent remuneration experts if it so desires. 2013, this contract takes the form of a contract for services. Executive Board The Executive Board is responsible for all specific The remuneration of the Executive Board members remuneration schemes that are laid down in the consists of the following components: SNS REAAL Group Remuneration Policy, with the • Fixed annual income; exception of the remuneration policy for the Executive • Variable remuneration (not applicable during State Board, the Managing Boards of SNS Bank NV and aid/nationalisation); REAAL NV and senior management. The Executive • Pension contribution; Board approves policy proposals and submits these to • Other fringe benefits. the Supervisory Board where necessary. The remuneration components are explained in more In exceptional situations (not concerning the Executive detail later in this remuneration report. Board itself), the Executive Board has the discretionary power to depart from the remuneration policy as adopted, with reasons, to the extent that this is Remuneration benchmark permissible under legislation and regulations. On 4 February 2013, the fixed salary of the Executive Departures are submitted to the Supervisory Board for Board members was positioned just below the median assessment in advance. level of the established labour market reference group. The Executive Board has a number of specific A new benchmarking exercise for the Executive Board responsibilities, such as decision-making regarding the took place in December 2014 in relation to: application of the reasonableness test to senior 1. The Financial market: a group of (listed) Dutch management and other Identified Staff, the approval of financial institutions; benchmarks for the Managing Boards of the Bank and 2. The Cross Industry market: a group of medium- Insurer, senior management and the other employees sized (listed) Dutch non-financial institutions. (market competitiveness of the total remuneration) and the approval of particular features for the Managing The total remuneration (fixed + variable) of the chairman Boards of the Bank and Insurer, senior management and of the Executive Board lies 61% below the median level other Identified Staff, such as exit and welcome of the Cross Industry market and 50% below the median packages. level of the Financial market. The fixed remuneration of the chairman of the Executive Board lies 11% below the Staff departments median level of the Cross Industry market and 30% Via a remuneration working group and a remuneration below the median level of the Financial market. steering group, various staff departments jointly supervise the remuneration policy and compliance in The total remuneration (fixed + variable) of the members that respect. The relevant departments are Risk, of the Executive Board lies 52% below the median level Compliance, Finance, Legal Affairs and Human of the Cross Industry market and 43% below the median Resources. level of the Financial market. The fixed remuneration of the members of the Executive Board lies 4% below the Group Audit performs independent research into the median level of the Cross Industry market and 26% purpose and execution of the remuneration policy below the median level of the Financial market. periodically. In addition, it was determined that the members of the Executive Board are not entitled to the granting and/or payment of variable remuneration as long as SNS REAAL falls within the scope of the Dutch ‘Act on the Limitation of Liability DNB and AFM and the


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    20 SNS REAAL NV Annual Report Corporate governance Prohibition of Bonuses for State Supported Companies’. ante risk analysis) and report to the Remuneration & As soon as SNS REAAL falls outside the scope, the Nomination Committee, after which adjustments can be Supervisory Board will engage in talks with the made. The performance targets are eventually set by the shareholder(s) and the Executive Board regarding an Supervisory Board. amendment of the remuneration policy in respect of variable remuneration. The performance targets are derived from the long-term strategic goals of SNS REAAL and have due regard for The remuneration policy (and the actual remuneration) the desired risk profile. for the Executive Board is more austere than prescribed in the Banking Code and the Insurance Code. When performance targets are determined, all of SNS REAAL’s stakeholders, such as customers, Performance targets employees, the shareholder and society, are considered, where relevant and possible. Performance targets are set for Executive Board members on an annual basis. The performance targets The extent to which the performance targets have been must meet several requirements (requirements pursuant achieved by the members of the Executive Board is to laws and regulations, supplemented by a number of determined by the Supervisory Board after the end of requirements set by the Supervisory Board). each performance period. The control departments Risk and Compliance and the The table below provides an overview of the targets of staff departments Finance and HR check the the Executive Board. performance targets prior to the performance period (ex Executive Board targets 2014 Target Doelstelling Weigt1 Financial 1 Financial results 22% 2 Operational expenses 14% Non-financial 3 Putting customers’ interests first 15% 4 Employee satisfaction 15% 5 Marketshare 8% 6 Strategic Projects2 26% Total 100% 1 This is the average weight of the targets of the Executive Board members (the weight differs per Executive Board member). 2 These projects are directed at the disentanglement of the group, the sale of the Insurer and other EC Commitments. Fixed annual income Executive Board are not entitled to variable remuneration as long as SNS REAAL falls within the The total fixed annual income of the chairman of the scope of this Act. Executive Board is € 550,000. For the other members of the Executive Board, the total fixed annual income is € 440,000. The fixed remuneration stated in the table Pension contribution showing the remuneration of the members of the The members of the Executive Board participate in the Executive Board seems higher as social security costs same pension scheme as all SNS REAAL employees. are included in addition to the fixed annual income. This pension scheme is laid down in the Collective Labour Agreement of SNS REAAL. Thus, the members In accordance with the Dutch ‘Act on the Limitation of of the Executive Board also pay the 4.5% member’s Liability DNB and AFM and the Prohibition of Bonuses contribution to be paid on the pensionable remuneration for State Supported Companies’, the members of the in accordance with the Collective Labour Agreement. Executive Board are not entitled to an increase in fixed Pensions are not awarded on a discretionary basis. annual income (with the exception of collective salary increases) as long as SNS REAAL falls within the scope Future change to pension scheme of this Act. A few important changes to SNS REAAL’s pension scheme will be implemented on 1 January 2015. These Variable remuneration changes are directly related to adjustments in the fiscal framework for pension accrual (known as the Witteveen In accordance with the Dutch ‘Act on the Limitation of framework 2015). Liability DNB and AFM and the Prohibition of Bonuses for State Supported Companies’, the members of the


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    21 SNS REAAL NV Annual Report Corporate governance Pension accrual for pensionable income above receive payments of no more than the total fixed salary € 100,000 ceased on 1 January 2015. All employees to for one year. whom this applies will now receive the employer’s portion of the premium above € 100,000 (which was The other fringe benefits are in line with the conditions previously paid to the pension fund) in the form of a that apply to the majority of the employees. gross supplement of 16.35%. This change does not result in an increase in costs. The supplement Actual remuneration of the Executive arrangement will be evaluated after three years. Board for 2014 The other changes, such as the reduction in pension The Executive Board has four members: accrual below € 100,000, are not compensated. 1. Gerard van Olphen, Chairman of the Executive Other fringe benefits Board SNS REAAL took out two insurance policies for the 2. Maurice Oostendorp, CFRO members of the Executive Board that are regarded as 3. Wim-Henk Steenpoorte, member of the Executive income: disability insurance and term life insurance. The Board corresponding premiums are paid for by SNS REAAL. In 4. Dick Okhuijsen, member of the Executive Board the table presenting the remuneration of the members of the Executive Board, these premiums form part of the The table below provides an overview of the total 'Other' component. remuneration paid to each member of the Executive Board. In the event of termination of employment at the initiative of SNS REAAL, the members of the Executive Board will Gross remuneration of the Executive Board Fixed Salary1 Pension2 Other Total in € thousands 2014 2013 2014 2013 2014 2013 2014 2013 G. van Olphen (chairman) 559 510 96 88 21 2 676 600 M.B.G.M. Oostendorp 449 409 77 70 23 2 549 481 D.J. Okhuijsen 449 451 77 82 26 27 552 560 W.H. Steenpoorte 449 451 77 82 37 48 563 581 R.R. Latenstein -- 48 -- 8 -- 4 -- 60 F.K.V. Lamp -- 40 -- 7 -- 3 -- 50 Total Executive Board 1,906 1,909 327 337 107 2,340 excluding crisis taks levy 86 2,332 Crisis taks levy -- 195 Total Executive Board 2,340 2,527 1 The fixed annual income includes holiday pay, 13th month bonus, health insurance scheme and social security contributions. 2 Other’ includes: 1. Disability insurance premium and term life insurance premiums (the amount of disability insurance and term life insurance is based on the grossed up benefit for the employee). 2. The benefit of the private use of a company lease car (this component only applies to Mr Steenpoorte). 3. Anniversary bonus (this component only applied to Mr Steenpoorte for 2013). The income received by Mr Van Olphen and Mr Share ownership Oostendorp in 2013 pertained to a period of 11 months The remuneration policy for the Executive Board (i.e. with effect from 1 February 2013). Further, the provides for a partial payment of the variable increase in ‘Other’ for Mr Van Olphen and Mr remuneration in the form of ‘phantom shares’ (share Oostendorp is explained by the fact that the disability substitutes). insurance and term life insurance policies commenced in 2014 and the premiums for both policies were therefore However, in accordance with the Dutch ‘Act on the paid for the first time in 2014. Limitation of Liability DNB and AFM and the Prohibition of Bonuses for State Supported Companies’, the As in previous years, no variable remuneration was paid members of the Executive Board are not entitled to to the members of the Executive Board for 2014. variable remuneration as long as SNS REAAL falls within the scope of this Act. No variable remuneration has been awarded to the Executive Board for the last


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    22 SNS REAAL NV Annual Report Corporate governance few years, and therefore no shares or phantom shares outstanding on 31 December 2014. It concerns a have been awarded to the Executive Board either. residential mortgage loan to Mr Steenpoorte. This loan was provided in the course of ordinary business and Loans under terms and conditions that also apply to other members of staff. The table below provides an overview of the loans granted to members of the Executive Board that were Loans to members of the Executive Board Outstanding as at 31 December Average interest rate Redemptions on mortgages in € thousands 2014 2013 2014 2013 2014 2013 W.H. Steenpoorte 1,036 1,073 4.1% 4.2% 37 100 Total 1,036 1,073 0 0 37 100 Remuneration policy of the Supervisory Board The table below provides an overview of the annual remuneration (excl. 21% VAT) of the Supervisory Board and the allowance per committee. in € Fixed annual remuneration of Supervisory Board chairman 45,000 Fixed annual remuneration of Supervisory Board member 30,000 Member of Remuneration & Nomination Committee 3,250 Member of Risk Committee 3,250 Member of Audit Committee 7,000 Fixed annual expense allowance for Supervisory Board Chairman 2,156 Fixed annual expense allowance for Supervisory Board member 1,617 A new benchmarking exercise for the Supervisory Board a member of the Supervisory Board lies 29% below the took place in December 2014 in relation to: median level of the Cross Industry market and 29% 1. The Financial market: a group of (listed) Dutch below the median level of the Financial market. For the financial institutions; Supervisory Board, the remuneration per committee lies 2. The Cross Industry market: a group of medium- 36% below the median level of the Cross Industry sized (listed) Dutch non-financial institutions. market and 37% below the median level of the Financial market. The fixed remuneration of the chairman of the Supervisory Board lies 22% below the median level of The following table provides an overview of the total the Cross Industry market and 28% below the median remuneration of the individual members of the level of the Financial market. The fixed remuneration of Supervisory Board.


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    23 SNS REAAL NV Annual Report Corporate governance Gross remuneration (excluding 21% VAT) of the Supervisory Board As Supervisory Board member1 As member of a committee2 Total in duizenden euro's 2014 2013 2014 2013 2014 2013 J.J. Nooitgedagt (from 45 7 16 3 61 1-11-2013)3 10 C.M. Insinger 30 30 8 14 38 44 J.C.M. van Rutte (from 30 5 12 2 42 1-11-2013) 7 M.R. Milz (from 1-11-2013) 30 5 5 1 35 6 J.A. Nijhuis 30 30 9 9 39 39 J.A. Nijssen 30 30 5 5 35 35 L.J. Wijngaarden 30 30 12 12 42 42 R. Zwartendijk (until 1-2-2013)4 -- 4 -- 1 -- 5 H.W.P.M.A. Verhagen (until -- 29 -- 7 -- 1-11-2013)5 36 R.J. van de Kraats (until -- 25 -- 10 -- 1-11-2013) 35 J.E. Lagerweij (until 1-11-2013) -- 25 -- 4 -- 29 P.S. Overmars (until 1-11-2013) 6 -- 37 -- 15 -- 52 225 257 67 83 292 340 1 Supervisory Board is the fixed annual remuneration for membership / chairmanship / vice-chairmanship of the Supervisory Board . 2 Committee is the annual remuneration for membership of one or more committees, including the fixed annual expense allowance. 3 Mr Nooitgedagt has been chairman of the Supervisory Board since 1 November 2013. 4 Mr. Zwartendijk was chairman of the the Supervisory Board until 1 February, 2013. 5 Ms Verhagen was vice-chairman of the Supervisory Board from 1 February 2013 until 1 November 2013. 6 Mr. Overmars was vice-chariman of the Supervirory Board until 1 February2013 and chairman from 1 February until 1 November 2013. In 2014 no loans were granted to members of the Supervisory Board, and at 31 December 2014 no loans were outstanding to members of the Supervisory Board. 3.5 Corporate Governance Code All Dutch listed companies are required to comply with the Corporate Governance Code (the ‘Code’). The full text of the Code is available at www.commissiecorporategovernance.nl. Although the Code is no longer officially applicable to SNS REAAL NV due to the nationalisation, SNS REAAL NV continues to adhere to the Code. SNS REAAL NV reports on compliance with the Code in the Annual Report in accordance with the ‘comply or explain’ principle and currently complies with all of provisions of the Code. For more relevant information on the way in which SNS REAAL NV applies the Dutch Corporate Governance Code, please refer to the website of SNS REAAL.


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    24 SNS REAAL NV Annual Report Corporate governance 1 July 2014 new and transparent risk organisations were 3.6 Management statements set up both at the Bank and at the Insurer, which included the appointment of a Chief Risk Officer (CRO) 3.6.1 In-control statement on the respective Managing Boards of the Bank and Insurer. With this organisational change, the In 2014 the SNS REAAL Executive Board paid management of financial and non-financial risks, as well undiminished attention to the steady further as the management of compliance and legal affairs, improvement of the structure and effectiveness of the were transferred to the CRO. The CFO and CRO report internal risk management and control systems within the to both the CFRO of the group and the Chairman of the company. The Executive Board hereby declares that it Managing Boards of the Bank or the Insurer. has ascertained, with a reasonable degree of assurance, that the material risks SNS REAAL is facing have been The SNS REAAL Executive Board is responsible for the described and that appropriate measures have been set-up, existence and operation of an integrated risk taken to mitigate these risks. This assurance is based on management system geared to controlling risks such the risk management organisation described in the that they do not impede SNS REAAL in achieving its chapters SNS REAAL Risk Management and SNS Bank objectives. However, this system cannot offer absolute Risk Management. The effectiveness of the essential assurance that material inaccuracies, fraud or conflicts control measures is reviewed at regular intervals. with legislation and regulations can be prevented. SNS REAAL has established a structured process of internal in-control statements with corresponding evaluation by the Executive Board, which has been 3.6.2 Statement on control over shared with the Supervisory Board. The following material risks have been identified, and mitigating financial reporting measures have been defined, for SNS REAAL: We believe that the internal risk management and control systems of the SNS REAAL holding company, • Through the current low capitalisation of VIVAT is the Bank and the Insurer provide a reasonable degree of SNS REAAL extra vulnerable to potential losses. assurance that the financial reporting is free of material Therefore it is important that VIVAT increases its misstatement and that the risk management and control capitalisation to the desired level; systems functioned properly in the reporting year. • SNS REAAL does not have certainty as to whether or not the sale of VIVAT will materialise and what The Bank and the Insurer are responsible for performing the proceeds will be. the control activities and, thus, for the accurate and true and fair recording of the transactions and reporting in SNS REAAL pursues controlled and responsible that respect. The SNS REAAL holding company is business operations and notes that various parts need to ultimately responsible for the internal risk management be improved in that respect. These improvements are and control systems as a whole. The internal risk mainly aimed at strengthening the risk governance, management and control systems concerning financial redesigning processes based on value chain reporting are an integral part of the overall risk management, improving data quality and the management and control systems. accountability for internal control. SNS REAAL thus ensures that processes are carried out adequately, Key elements in the control of financial reporting risks reporting is reliable, laws and regulations are observed are: and that SNS REAAL is demonstrably in control. • A system of financial key controls within the financial accounting and reporting departments During 2014 the ambition of SNS Bank and VIVAT with monitors the proper operation of the financial regard to controlled and responsible business operations reporting management and control system. was determined and the resulting starting points of the • Partly based on the results from the key controls, Integrated Control Framework were adopted. A flying the financial reporting is assessed by the various start was also made with the implementation of these financial and risk committees at the Bank and the starting points in the business operations. In 2015 the Insurer. After approval by the Executive Board, the various initiatives, improvement measures and change findings of the financial reporting process, together programmes will lay a robust foundation on which to with the financial reporting, are discussed by the achieve a higher control maturity level. Audit Committee and the Supervisory Board. • The internal auditor examines the operating As from 1 July 2014, SNS Bank and VIVAT have been effectiveness of this system. Moreover, the external operating under an independent and tightened auditor reports on the system of financial key governance structure within SNS REAAL. As a result, on controls insofar as it is part of his duties for the


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    25 SNS REAAL NV Annual Report Corporate governance audit of the financial statements. The findings are discussed with the financial and risk committees at the Bank and the Insurer, the Executive Board and the Audit Committee. Utrecht, 29 April 2015 Executive Board G. van Olphen (chairman) M.B.G.M. Oostendorp D.J. Okhuijsen W.H. Steenpoorte


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    26 SNS REAAL NV Annual Report Strategy & developments SNS REAAL 4 Strategy & developments SNS REAAL Following the sale of VIVAT and the transfer of 4.1 Strategy and organisation SNS Bank to the Dutch State, maintaining SNS REAAL no longer adds value. In line with the obligations arising SNS REAAL’s strategy laid down in the from the restructuring plan, SNS REAAL will eventually be dismantled. restructuring plan The business units of SNS REAAL are preparing for a Whether this strategy will be successfully executed separate future. As a result, SNS REAAL no longer has depends on both the timeframe and the proceeds from an operational strategy for the group as a whole. For the the sale of the insurance activities and the transfer of strategy of SNS Bank NV we refer to chapter 5. Due to SNS Bank. Financial market developments may play an the announced sale of REAAL NV this annual report important role here. Further uncertainties are found in does not contain any information on the strategy of the potential complications or delays in the final stage of the Insurer and in this respect we refer to the separate actual disentanglement of the holding company and the annual report of this entity. banking and insurance activities. The disentanglement did go according to schedule in 2014. Please refer to SNS REAAL’s financial strategy follows the main section 7.1 (Risk management and governance) for a principles of the restructuring plan as approved by the more detailed discussion of the main risks associated European Commission in December 2013. At the end of with the execution of the strategy. 2013, the property finance activities of Property Finance were separated from SNS Bank NV, and significant Far-reaching consequences for the progress was made in the course of 2014 in the operational and financial disentanglement of the holding organisation company and the banking and insurance activities, The disentanglement of SNS REAAL has far-reaching which were two important conditions set by the consequences for the organisation. For example, almost European Commission. all employees were transferred from the holding company to either the Bank or the Insurer in 2014. On 1 In July 2014 the sales process of the insurance activities January 2015, the legal employer status of employees was initiated and on 16 February 2015, SNS REAAL changed and almost all employees entered the employ announced the sale of VIVAT to Anbang Insurance of either the Bank or the Insurer and only a very limited Group. Completion of the sale, expected in the third number of employees was still employed directly by the quarter of 2015, is still subject to several conditions, holding company. These measures were implemented in including regulatory approval order to transfer the administrative structure from the holding company to the Bank and Insurer, which was In his letter to Parliament on 16 February 2015, the one of the conditions of the European Commission. Dutch Minister of Finance announced that SNS Bank, Where necessary, the operating entities still provide shortly after completion of the sale of VIVAT, will be services to the holding company on the basis of service transferred from SNS REAAL directly to the Dutch State. level agreements. This will enable SNS Bank to reinforce its capital position through the capital market on a stand-alone basis. The transition of employees was accompanied by SNS Bank intends to further strengthen and diversify its substantial changes to the governance of the banking financial position, with a view to future regulations, such and insurance activities. The holding company’s role as the leverage ratio and the Bank Recovery and was reduced accordingly (see section 7.1). Resolution Directive (BRRD). The implications of sale of REAAL NV, the intended The Dutch State will transfer SNS Bank to Stichting NLFI transfer of SNS Bank NV and further disentanglement of as soon as possible. Preparations will subsequently be SNS REAAL NV, SNS Bank NV and REAAL NV are made for the privatisation of SNS Bank. The Minister of disclosed in note 12 Post balance sheet events to the Finance will inform the Parliament when SNS Bank is company financial statements. ready for this. The transfer to the Dutch State is expected to take place shortly after completion of sale of VIVAT. The transfer of SNS Bank requires approval from the European Central Bank.


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    27 SNS REAAL NV Annual Report Strategy & developments SNS REAAL • SNS REAAL is to refrain from making any 4.2 Nationalisation and measures payments on hybrid debt instruments outstanding of the European Commission at the time of the EC decision, unless those payments stem from a legal obligation, and will not repay or buy back those instruments without prior Minister’s decree approval from the European Commission. On 1 February 2013, the Minister of Finance (‘the • Restrictions apply to the remuneration of Minister’) decreed (‘the Decree’) by virtue of Articles 6:2 employees and senior management until the end of and 6:4 of the Financial Supervision Act to expropriate: the restructuring period or until SNS REAAL has • all issued shares in the capital of SNS REAAL; repaid the State aid. • all core Tier 1 capital securities issued by • SNS REAAL undertakes to transfer the SNS REAAL to Stichting Beheer SNS REAAL administrative structure currently borne by the (‘Stichting securities’); holding company to the Bank and the Insurer. • all subordinated bonds of SNS REAAL and • SNS REAAL undertakes to phase out all financial SNS Bank, including the participation certificates interdependence between the Banking and the issued by SNS Bank; Insurance activities. • subordinated private debts of SNS REAAL and SNS Bank. Role of NLFI in governance structure Stichting administratiekantoor beheer financiële All shares, Stichting securities and subordinated bonds instellingen (NLFI) holds 100% of the shares in were expropriated for the benefit of the State. The SNS REAAL NV since 31 December 2013. NLFI is expropriation of subordinated private debts was effected responsible for the management of the shares and by expropriating the liability capital components of exercising all rights attached to the shares, including SNS REAAL and SNS Bank corresponding to those voting rights, in accordance with the provisions of the debts for the benefit of Stichting Afwikkeling law and the articles of association of NLFI. Despite Onderhandse Schulden SNS REAAL (Private Debt owning all voting rights attached to the shares, all Settlement Foundation SNS REAAL, ‘Stichting AOS’). significant and fundamental decisions require – in By way of an immediate measure SNS REAAL NV was accordance with the provisions of the law and articles of appointed sole director of Stichting AOS. association of NLFI - prior approval from the Minister. Following expropriation of the shares, Stichting Pursuant to legal and statutory provisions, NLFI does not securities, subordinated bonds and subordinated private have the right to dispose of or encumber the debts referred to above, the Dutch State submitted a shares; these rights can only be obtained after receiving restructuring plan to the European Commission in 2013, formal authorisation from the Minister. the key elements of which were the sale of the Insurer and – in line with the Nationalisation Decree in 2013 – the separation of Property Finance. Dividend policy SNS REAAL has a reservation and dividend policy that European Commission decision is adopted and may be amended by the General Meeting of Shareholders (NLFI). The Executive Board On 19 December 2013, the European Commission gave may, subject to Supervisory Board approval, make a final approval for these measures of the Minister, based proposal to that end. on the restructuring plan submitted by the Ministry of Finance on 19 August 2013. Propertize In its decision of 19 December 2013, the European Property Finance was separated in late 2013. On 1 Commission imposed a number of conditions and January 2014, Property Finance changed its name to restrictions on SNS REAAL that, unless provided Propertize BV. As an independent organisation split off otherwise, apply until the end of the restructuring period from SNS REAAL, Propertize focuses on a run-off of the in late 2017. The principal conditions and restrictions property finance and the real estate in its portfolio. are: • An acquisition ban applies for a period of three Propertize fully refinanced itself for an amount of € 4.1 years starting from the date of the EC decision. billion in early 2014 by issuing State-Guaranteed • SNS REAAL is not permitted to advertise the fact Medium Term Notes totalling € 2.3 billion. Furthermore, it that it is State-owned or make any reference to the issued Commercial Paper Notes to institutional investors State aid received in its communications with under a funding programme with a State guarantee up to existing and/or potential customers or investors. the funding programme’s maximum issue amount of


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    28 SNS REAAL NV Annual Report Strategy & developments SNS REAAL € 4.1 billion. On 4 April 2014, Propertize fully repaid the them and to familiarise them with all aspects of the Bank € 4.1 billion in funding to SNS Bank. SNS Bank NV’s or the Insurer. For example, the Bank had a credit risk on Propertize was hedged by means of a housewarming and employees of the Insurer were guarantee from the State in the period from 1 January invited to participate in drop-in lunches during which the until 4 April 2014. Insurer’s new name was announced. Claims and legal actions The transfer of most of the group staff also signalled the start of a holding company with a changed function. At the time that this annual report was drawn up, no SNS REAAL is and continues to be ultimately court proceedings had (yet) been initiated against responsible for managing the SNS REAAL group, now SNS REAAL and/or SNS Bank other than those stated in with an emphasis on strategic and financial management the note Legal Proceedings in the financial statements. and control. To this end, the Executive Board works with a limited number of colleagues of Group staff Resolution levy contribution departments for whom the legal employer status As part of the measures following the nationalisation, the changed to SNS Bank NV and REAAL NV with effect Minister asked all banks to make a contribution in the from 1 January 2015. This is a special situation in which form of a one-off resolution levy. SNS Bank’s a team of people work together on an assignment that is contribution in 2014 was € 76 million, which was charged as unique as it is clear. to the 2014 result. Employees remains satisfied and committed More than 81% of the employees participated in the 4.3 Our people annual employee survey, which SNS REAAL conducted for the last time in 2014. Despite the numerous changes Staff consequences of the separation employees were still satisfied with their work, and 2014 was dominated completely by the disentanglement commitment to the organisation even saw an increase. of the Bank and the Insurer. After the European The Bank and the Insurer each had their own points for Commission approved our restructuring plan in improvement; see the chapter ‘Our people’ in the annual December 2013, we worked hard last year on further reports of SNS Bank NV and REAAL NV for more positioning the Bank and the Insurer as independent details. companies. To this end, the governance structure was modified in the first six months of the year and staff Committed Works Council functions were set up within the Bank and the Insurer The Central Works Council is closely involved in the that were previously situated at group level. separation of SNS REAAL into a Bank and an Insurer. Subsequently, Group staff who used to work for the Based on its role, it views the employees as important Bank and/or the Insurer at group level moved to either stakeholders. Retaining as many jobs as possible, both the Bank or the Insurer. With effect from 1 January 2015, in the short and medium to long term, is an essential the legal employer status of almost all employees position of the Central Works Council. They brought this changed from SNS REAAL NV to SNS Bank NV or topic to the attention of the Executive Board, the REAAL NV Supervisory Board and the Ministry of Finance. The great commitment of our staff, their flexibility and In early 2014, the Central Works Council issued positive cooperation in this turbulent year facilitated a separation advice on the disentanglement of the first selection of without any major problems and almost complete Group staff departments and their allocation to the Bank employee satisfaction with the new working and the Insurer. At the same time, positive advice was environment. Information meetings about the separation issued on the restructuring of the Bank and the Insurer. were well-attended and clear. Honest information The advice was drafted in close consultation with the contributed to the success. works councils of the Bank, the Insurer and the Group staff departments. February 2014 saw the start of the allocation process, the placement of Group staff with the Bank or the The Central Works Council and the works councils of the Insurer. Orientation sessions were organised for Group Bank and the Insurer kept a close eye on the staff in order to facilitate the transition. The Bank and the disentanglement process. An agreement monitor set up Insurer shared their plans for the future, their strategy by the Central Works Council and directors was used to and their ambitions during these sessions. In spring check how each Group staff department was working most of the Group staff transferred to the Bank or the towards the separation. The monitor includes Insurer. Various activities were organised to welcome agreements on for example the increasing workload and


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    29 SNS REAAL NV Annual Report Strategy & developments SNS REAAL good change management. In addition, the Central by the Central Works Council, along with its knowledge Works Council had monthly meetings with the Executive of and commitment to the organisation, has made it Board and Human Resources to discuss the overall possible to strike and maintain a sound balance between progress of the transition. The works councils also the interests of the organisation on the one hand and monitored all general arrangements, which had been laid those of employees on the other. down in a covenant. The constructive attitude adopted in numbers 2014 2013 2012 2011 Average number of FTE 6,374 6,607 6,827 7,002 Number of FTEs year-end 6,368 6,379 6,724 6,928


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    30 SNS REAAL NV Annual Report Strategy & developments SNS Bank 5 Strategy & developments SNS Bank This chapter discusses economic, industry-specific and regulatory developments. After that, our SWOTanalysis, mission and strategy are included. Then, the progress on the EC Decision is specifically addressed, followed by business, operational and financial developments. And lastly we address the developments in the field of human resource management in Our people. largest threats, as geopolitical tensions pose a 5.1 Business and economic significant risk to global economic growth. environment The Dutch economy is picking up and despite its low growth this development may still limitedly push down 5.1.1 Limited growth in Dutch economy unemployment levels and reduce the government deficit After two years of contraction, the Dutch economy in 2015 as inflation remains low. These trends were showed modest growth in 2014. The gross domestic already apparent in the final quarters of 2014. product in the Netherlands increased by approximately Macroeconomic improvements, in all their fragility and 0.7 percent, a shade below the 1percent growth limited scope, can be considered positive for SNS Bank projected for the entire euro area. A limited acceleration as well – the heightened economic activity may after all of growth is expected for 2015: 1.5 percent for the euro boost the number of mortgage, savings and payment area and 1.25 percent for the Netherlands. transactions and reduce the number of payment arrears. Mainly driven by exports in 2014 and 2015, Dutch 5.1.2 Long-term interest rates hit economic growth strongly relies on growth of the relevant international trade. Domestic spending is also record low believed to improve again in 2015. For the first time in a The ECB’s accomodating monetary policy, combined long period consumption will contribute to economic with persistently low inflation, increasingly translated into growth, albeit still to a very limited degree. exceptionally low European interest rates in 2014. The long-term interest rate even hit a record low in The increase in purchasing power on the back of falling December 2014. The German 10-year yield dropped average pension contributions and a stabilising housing below 0.7 percent, down from 3.4 percent five years ago. market play a major role here. Investments are expected Slightly above 10 basis points, the risk surcharge of to expand moderately, underpinned by the low interest Dutch yields, compared to German interest rates, is very rates, the economic upturn and rising occupancy rates. limited at the moment. A striking trend in 2014 was that However, the export of goods and services will be the the risk surcharges of Spanish and Italian bonds, for strongest-growing spending category in 2015 as well, example, also went down sharply, triggered by growing offering the most promising opportunities as well as the confidence in the eurozone and improvements in Gross Domestic Product Retail consumption (Percentage change compared to same period last year) (Percentage change compared to same period last year) 2 2 1 1 0 0 –1 –1 –2 –2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2013 2014 2012 2013 2014 Source: CBS Source: CBS


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    31 SNS REAAL NV Annual Report Strategy & developments SNS Bank government deficits and deficits in the balance of Unemployment payments. (Inter. definition seasonally adjusted) 10% Inflation (consumer prices) 8% 4.50% 6% 3.75% 3.00% 4% 2.25% 2% 1.50% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 0.75% 2012 2013 2014 Source: CBS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 5.1.3 Mortgage and housing markets 2012 2013 2014 Source: CBS show signs of cautious recovery Looking ahead to 2015, it would be fair to expect a The decline in house prices, which set in in 2008, came limited rise in long-term interest rates in lockstep with the to an end in 2014. Where 2013 still saw a 6 percent drop economic upturn. However, the ECB’s quantitative in average sales prices, prices showed an increase of 4 easing policy and the limited level of economic growth percent in 2014. We anticipate a similar increase in that is expected give cause to suspect that this will not 2015. The number of homes sold is likewise moving happen any time soon, at least not in Europe’s core upwards from its low point mid-2013, showing a 39 countries. It is quite likely that today’s low risk percent increase in the number of existing homes sold in surcharges of peripheral countries will rise if it turns out 2014. Still, pre-2008 levels are as yet a long way off. that their fundamental problems have not been solved in the short run. A moderate rise in house prices, a limited drop in unemployment, lower (mortgage) interest rates and a rising trend in the number of building permits granted are signs of a further cautious recovery of the Dutch housing market. However, a number of factors are dampening a more exuberant recovery. The National Institute for Family Finance Information for example, applies lower mortgage cost-to-income ratios for 2015, reflecting the maximum portion of income that may be spent on mortgage payments. Mortgage lenders have a legal Ten-year yield Dutch Government bonds in 2014 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 1st quarter 2nd quarter 3rd quarter 4th quarter Source: Bloomberg


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    32 SNS REAAL NV Annual Report Strategy & developments SNS Bank Number of houses sold Average sales price residential property (in €) 250,000 260,000 240,000 200,000 220,000 150,000 200,000 100,000 180,000 50,000 160,000 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 Source: CBS Source: CBS obligation to take these ratios as a basis in their mortgages. At the same time, however, credit losses mortgage calculations. Another dampening factor is the may also drop as the market picks up. gradual reduction of the maximum Loan-to-Value (LtV) for mortgages to 100 percent in 2018 (2015: 103 5.1.4 Rise in Dutch savings percent, including 2 percent property transfer tax) and In 2014 (based on end-of-November figures), Dutch the fact that many mortgages are still underwater. households added almost € 6 billion to their savings. At Approximately one million Dutch households have an the end of November € 331 billion was held in domestic outstanding mortgage debt that exceeds the value of savings accounts, up 2 percent from year-end 2013. their homes. Recovery is also held back by the gradual This boils down to a private household average of reduction of the National Mortgage Guarantee around € 44,000. Instant-access deposits saw the maximum, set to fall from € 265 thousand in 2014 to largest net inflow, but term deposits also experienced € 245 thousand in 2015 and € 225 thousand in 2016. limited inflow. The turnaround in the mortgage and housing markets The savings increase contrasts with the steady decline was also reflected in developments at SNS Bank in in interest rates on savings in 2014: the average interest 2014. Loans in default declined limitedly in the course of rate on instant-access deposits dropped from 1.4 2014 and the LtV of the mortgage portfolio improved percent at the beginning of 2014 to 1.2 percent at the slightly. Improved prospects in the housing market is end of the year. boosting competition among lenders, putting a limited degree of pressure on net interest income on new Total savings Savings rates (in € millions) (period of notice < 3 months) 340,000 3.0% 335,000 2.5% 330,000 2.0% 325,000 1.5% 320,000 1.0% 315,000 0.5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2013 2014 2012 2013 2014 Source: CBS Source: CBS


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    33 SNS REAAL NV Annual Report Strategy & developments SNS Bank Directive was implemented in the Financial Supervision 5.2 Developments in the Act (Wft) in 2014. The Regulation has direct effect. regulatory environment In 2014 non-risk-weighted capital ratios were given more attention, for which purpose the leverage ratio was In 2014, we faced many new developments in the developed within CRD IV. In addition, the Basel regulatory environment, especially in the area of banking Committee initiated consultation on credit, market and supervision (prudential regulations). The number of laws operational risk. and regulations applicable to us increased both at the national and the international level, which also created a Leverage ratio higher workload to fully and correctly implement the new The leverage ratio is defined as Tier 1 capital divided by rules in our organisation. We set up a Regulatory Board on and off-balance sheet items according to CRD IV. to safeguard the timely identification and implementation From 2018, this ratio is subject to a minimum of 3 of new regulations. Various working groups work under percent under CRD IV. Member states may deviate from this Board to further develop identification, this. A minimum of 4 percent will possibly apply to Dutch implementation and compliance monitoring practices. banks in the future. Besides the prudential regulations, we have worked hard The impact of non-risk-weighted requirements on on the implementation of laws and regulations applicable SNS Bank is relatively large as a retail bank with a large to the products and services provided to number of (mortgage) loans on its balance sheet with a our customers. These laws and regulations low risk weighting. Nevertheless, we expect to comply and prudential rules are shown in the figure below. with new regulations in time. We monitor the leverage ratio on a monthly basis. Putting customers' interests first Credit, market and operational risk consultations from Payment Services Directive 2 Basel Residential mortgage contracts Deposit Guarantee Scheme Rules issued by the Basel Committee are generally Bank accounts considered to be paving the road for European MiFID 2 Financial Supervision Act (Wft) regulations. In 2014, the Basel Committee initiated Consumer rights consultations focusing on the introduction of a capital Packaged Retail Investment Products floor in internal (Internal Rating Based) capital models Personal data protection and tightening of the standardised approaches for calculating credit, market and operational risks. When Robust bank Sound financial these new rules become final, they are likely to translate CRD IV/CRR sector into a further increase in capitalisation. Consultations IFRS BRRD FINREP Banking Union from Europe mainly pertain to further elaborations of PERDARR Single resolution previously published directives and regulations – not mechanism only the implementation standards of CRD IV/CRR, but also those of the BRRD (mentioned below). SNS Bank keeps a close eye on these consultations and avails itself of national and international opportunities for In the following sections, we will elaborate on the most the public to comment. important new prudential rules that are, or will be, applicable to SNS Bank: 5.2.2 BRRD The European Bank Recovery and Resolution Directive 5.2.1 CRD IV (BRRD) took effect on 1 January 2015. Its The Capital Requirements Directive IV (CRD IV) is a implementation in Dutch legislation has not yet been European Directive for the implementation of the Basel completed. III regulations published in 2011. The CRD IV laws and regulations have the biggest impact on SNS Bank. The The BRRD introduces a Minimum Requirement for own directive specifically monitors the reinforcement of the funds and Eligible Liabilities (MREL). The liability items capital and liquidity of banks and investment firms. CRD qualifying for the bail-in buffer are referred to as Eligible IV is supplemented by the implementing regulation Liabilities. These ‘own funds and eligible liabilities’ form Capital Requirements Regulation (CRR). Together, they a buffer to absorb losses. In this connection, the BRRD form the core of the new prudential framework. The is to introduce a bail-in regime with effect from 1 January


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    34 SNS REAAL NV Annual Report Strategy & developments SNS Bank 2016. This means that, in the event of a bank failure, first 5.2.4 FINREP the shareholders and lenders are ‘charged’ for an As part of the financial reporting to the regulatory amount of at least 8 percent of the balance sheet total or authorities (FINREP), SNS Bank must report new data 20 percent of the risk-weighted assets. Only then can for 2014. These data relate to assets that have been any public funds be used. pledged or used as collateral, repayment arrangements (forbearance) and loans in arrears. We have developed In line with this, the Financial Stability Board launched its a separate programme that allows us to provide the own proposal for what it refers to as a Total Loss information in accordance with the FINREP timelines set Absorbing Capacity ratio (TLAC). Like the MREL in the for that purpose. We have also set up work processes BRRD, it is a bail-in instrument. The TLAC is a standard and systems in order to meet the reporting requirements. loss absorption indicator, intended first and foremost for large, internationally operating systemically important financial institutions. This standard is still being 5.2.5 PERDARR developed. At year-end 2015, SNS Bank must comply with the PERDARR principles (Principles for Effective Risk Data SNS Bank is currently exploring the optimum capital Aggregation and Risk Reporting) developed by the Basel structure in view of the above regulatory developments. Committee on Banking Supervision. These principles are The capital and financing structure will be set up in such meant to improve the quality of systems that combine a way that saving accounts with a balance risk data and of systems that are used for internal risk exceeding € 100 thousand will not fall under the reporting, with the ultimate goal of strengthening risk 8% 'bail-in'. management and enhancing decision-making processes in banks. We have developed a programme to identify all We monitor the MREL on a monthly basis. The TLAC the corresponding and required technical and proposals are not yet applicable to SNS Bank, but we organisational changes and to properly manage their still keep a close watch on them. implementation. 5.2.3 IFRS In addition to rules on banking supervision, changes to IFRS standards and interpretations also affect us. The main change for the years ahead relating to us is the replacement of IAS 39 ‘Financial Instruments’ by IFRS 9. Expectations are that this new standard will have consequences for the classification and measurement of SNS Bank’s financial assets and liabilities. Please refer to the accounting principles in the financial statements for a further explanation of relevant IFRS changes in 2014 and future changes with a potential impact on SNS Bank’s financial statements.


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    35 SNS REAAL NV Annual Report Strategy & developments SNS Bank 5.3 SWOT Analysis


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    36 SNS REAAL NV Annual Report Strategy & developments SNS Bank Every single day, all of our staff are fully committed to 5.4 Mission and strategy the task of making the Netherlands financially resilient and doing this in a personal way. All those people SNS Bank’s strategy uses the Manifesto as a beacon together are building a society in which people can live guiding our thoughts and actions. Defining our mission of with confidence and optimism. banking with a human touch, the Manifesto lies at the heart of our key task and our vision. What form should SNS Bank has been a unique element in the Dutch banking take in today’s world and what role can financial landscape for almost 200 years now. All legal SNS Bank play in that regard? predecessors of the ‘Samenwerkende Nederlandse Spaarbanken’ (SNS), or Cooperating Dutch Savings 5.4.1 Banking with a human touch Banks, were associated savings banks or savings banks for the common good – banks whose local and social The verbatim text of the Manifesto is as follows: nature enabled them to know their customers and to be close to them. A society that allows people to live confidently and full of optimism and to do the things that benefit the next Today, SNS Bank shapes socially responsible banking generation – that is the kind of society we wish to build. by means of its Manifesto. The Manifesto is the key It is our raison d’être: to help every single individual – common denominator of the five SNS Bank brands (ASN in a personal way – to be financially resilient, each in Bank, BLG Wonen, RegioBank, SNS and his own way. ZwitserlevenBank). Accordingly, reaching back to our social roots, we are Banking with a human touch inspires us to be a socially taking our responsibility to shape the banking trade responsible bank, for our customers and for society, and based on what people really need. It means that our to break with existing conventions in the financial world. financial services are about benefit rather than return – about value rather than money. It particularly means that We have formulated the following three longer-term we are sincere in putting our customers’ interests first in ambitions to translate our views into specific goals: order to safeguard fundamental things in life such as • We are a people-oriented bank housing, education and a buffer for unexpected Both customers and staff give us high appreciation expenses, now and in the future. scores. • We are a social bank We also understand that the Netherlands today is very We create social value with simple, responsible diverse and that every individual wants to be ‘financially products and services and financial resilience resilient’ in his own way. That is why SNS Bank is a initiatives. In doing so, we strive for a profit level diverse family of brands: ASN Bank, BLG Wonen, SNS, that is appropriate for this role and ensures a sound RegioBank and ZwitserlevenBank. Together, yet each in financial basis for the Bank. our own way, we choose to build a future based on the • We are a sustainable bank principle of sustainability. We choose to offer people We are working towards the creation of a carbon- insight, clarity and prospects in finance, to make ‘good neutral bank, making our own business operations housing’ accessible and to reinstate sincere personal more sustainable and actively encouraging contact as the cornerstone of banking. We are customers to save energy. continuously inspired to work closely with our customers and develop simple services that bring back the human dimension in finance. We are a people-oriented bank We are a social bank We are a sustainable bank Our customers characterise SNS Bank Dutch people view SNS Bank SNS Bank is as people-oriented as a social bank climate neutral Our employees Our employees Our services Our services are We generate We proactively Our customers Our business Heading for apply ethical are and customer socially responsible help Dutch make the living operations are climate neutral principles to people-oriented services are responsible and returns with a people to environment climate neutral loans on the their business people-oriented add value for simple business improve their more balance sheet conduct customers model financial sustainable resilience


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    37 SNS REAAL NV Annual Report Strategy & developments SNS Bank In 2015, we will further elaborate these ambitions, By focusing on excellent customer experience, we aim to assess their feasibility and translate them into increase our customers’ appreciation and our market measurable targets and performance indicators (KPIs). shares. 2 Excellent business operations 5.4.2 Our strategy Flawless, perfectly streamlined business operations SNS Bank stands out from other banks through its focus make or break excellent customer experience. It is only on the Dutch retail segment: private individuals, self- when we do our work well and consistently that we can employed persons and SMEs. In our activities, we limit promise customers that we stand by every agreement ourselves to simple financial products that are within our we make and provide every product in the same manner area of knowledge and expertise. These are primarily and with the same level of quality and reliability. A high products in the areas of savings, payments and level of quality and reliability in our work will also push mortgages. In addition, we offer insurance products and down costs as error resolution costs are rare or non- investment funds. existent and risks can be controlled. We are close to our customers with our multi-brand With our single back office and our sound and flexible IT strategy. With our five brands (ASN Bank, BLG Wonen, organisation, we are well-positioned to achieve excellent SNS, RegioBank and ZwitserlevenBank) we wish to business operations at controllable cost. We still see deliver the right financial products and services to room for improvement here. For example, we aim to specific groups of people, whose various needs are also further improve our internal business operations by given due consideration in our distribution. For example, further elaborating and implementing our Integrated ASN Bank is an internet-only bank, BLG Wonen Control Framework and raising our data quality and data primarily distributes its products via independent management to a higher level. intermediaries, and SNS and RegioBank combine online and local presence, with RegioBank specifically targeting 3 Moderate risk profile the smaller communities. We seek to maintain a moderate risk profile, in part by focusing on the Netherlands and on specific product and All our brands are supported by a single back office, a target groups. Our risk is primarily fuelled by credit risk strong IT organisation and a central staff organisation, and, to a lesser extent, by market risk. We will further which enable us to work effectively and efficiently. Our explain these risks in Chapter 8 size, focus and flexible IT organisation ensure a short time to market, enabling us to introduce innovations One of our priorities is to reduce our risk costs for efficiently and quickly by means of a smart-follower residential mortgages by pursuing further improvements strategy. in the mortgage management process, planning, acceptance and management until redemption. In this We have set ourselves a number of strategic priorities vein, much attention was devoted in 2014 to preventive for the medium term: management in order to respond at an early stage to indications that a customer might run into mortgage 1 Excellent customer experience payment problems. We also redeveloped and Excellent customer experience is a basic condition to implemented our acceptance and credit risk models. The ensure that we win customers’ trust and that customers implementation of the Integrated Control Framework make a positive choice for one of our bank brands. Only also contributes to improving our risk profile. when customers are enthusiastic about us and our products and services, will they remain our customers or We furthermore aim to strike a healthy balance with encourage others to become customers. Customer sound capital ratios. With a sound Common Equity Tier 1 contact is key to customer experience and will therefore ratio of 18.3 percent (on a stand-alone basis), SNS Bank be given explicit attention. convincingly meets current requirements. New regulations will also set requirements in respect of non- Various improvements were made to optimise customer risk-weighted capital ratios as from 1 January 2018. As experience in 2014, for example in the management of SNS Bank is a retail bank primarily holding assets with a our mortgage portfolio in terms of customer retention as low risk weight, such ratios (such as the leverage ratio well as in respect of preventive management for and the MREL) are currently important factors in our customers who could use some help. Other examples capital management policy. In order to comply with these include innovations in the areas of mobile banking and future regulations, we intend to diversify and strengthen complaints management. Chapter 5.5 further describes our capital position with subordinated and senior the various initiatives taken to achieve excellent unsecured funding. customer experience, both at brand and Group level.


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    38 SNS REAAL NV Annual Report Strategy & developments SNS Bank A moderate risk profile cannot exist without sustained 5.4.3 Our Group-wide objectives profitability. Our actions in this respect are predicated on We have translated our strategy into the following the premise of a healthy balance between value for Group-wide objectives for the longer run: customers, staff and the shareholder and our • Satisfied customers: a positive Net Promoter Score contribution to society. In other words, we aspire to for all brands. maintain a profit level that is in line with our Manifesto • Satisfied staff: a Net Promoter Score of our staff in and business model and at the same time contributes to excess of 20. a healthy financial basis for a moderate risk profile. • Achievement of the desired market shares: new sales of our own mortgage products between 5 and 8 percent, savings more than 10 percent. • A Common Equity Tier 1 ratio of more than 14 percent, based on current regulations.


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    39 SNS REAAL NV Annual Report Strategy & developments SNS Bank factor as well as a business opportunity. This enhances 5.5 Business and operational ASN Bank’s relevance and ‘appeal’ also to those who developments were sceptical at first. However, other financial service providers (established as well as new ones) also capitalise on this development, creating more SNS Bank has several banking brands, each focusing competition in ASN Bank’s playing field. It has become on a specific target group based on its own mission with more important to have a distinctly competitive edge and a clear-cut and recognisable range of products and with to prove that the bank has really earned its sustainable services specifically tailored to that group. The reputation. That is why ASN Bank must continue to restoration of trust in these brands attests to their appeal invest in its clear positioning and pioneering role. to customers. In 2014, the SNS Bank brands welcomed 231,000 new customers (on a gross basis) including ASN Bank seeks to further strengthen its established 69.000 customers who chose one of the SNS Bank reputation and persistently live up to customers’ high brands to be their primary bank, through a current expectations. Responses it received from customers account. Adjusted for the impact of the sale of SNS about the nationalisation were reason for the bank to Fundcoach, inactive customers and the impact of a intensify its customer contact and to provide more customer due diligence project, SNS Bank realised a net information about its history and sustainable profile, as growth of the customer portfolio of 98,000. At year-end well as the ensuing philosophy and actions. Initiatives 2014, the total number of customers amounted to 2.8 such as the Manifesto and a more sustainable mortgage million. The total market share in savings increased from portfolio are a vital link in ASN Bank’s aim to be a 10.1 to 10.7 percent and the market share in mortgages credible, independent partner of SNS Bank. (number of new mortgages) rose from 1.8 to 3.7 percent. What does ASN Bank want to achieve ASN Bank is ambitious: although growth is not a goal in 5.5.1 Profile, ambitions and operational itself, the bank aims to have 1 million satisfied customers developments per brand within 10 years and € 20 billion in assets under management. ASN Bank wants to use this growth to make an even bigger difference in building a more 5.5.1.1 ASN Bank sustainable society. For 2015, this translated into a net growth target of 20,000 customers, € 500 million in For the world of tomorrow savings inflow and € 200 million in investment inflow. ASN Bank’s mission is to be a bank that contributes to a more sustainable society, based on its pillars of climate In addition, the bank is developing a business current change, human rights and biodiversity. ASN Bank fulfils account designed primarily for self-employed persons. this role by means of its investments, loans (including project loans) and sustainable investment funds. But Sustainable investment of savings also by joining forces with other organisations, sharing ASN Bank ‘in balance’ means that the bank wants to use knowledge, and addressing and helping solve social the growing share of customer savings to increase the issues, while also contributing to social and green share of sustainable loans to € 5 billion in 10 years. initiatives by facilitating the online sustainability Achieving this ambition and growing responsibly require community ‘For the World of Tomorrow’. major investments in capacity and expertise in 2014 and subsequent years. The main purpose is to obtain more ASN Bank positions itself as an independent bank. Its expertise in sustainable loans as well as in asset & independence is inextricably linked to its own liability management. To achieve responsible growth, it is sustainability policy and responsibility for comprehensive also necessary to safeguard the culture and commitment customer processes. ASN Bank customers want to know of employees; the permanent target is a high employee how their savings are used – it is the reason why they satisfaction score of more than 8. chose our sustainable bank. In addition, ASN Bank wants to make the right – socially responsible – Customer satisfaction investments to be true to its mission and be a bank that This growth will not affect the basic premise of securing helps create a more sustainable society. customers’ trust. The programme Putting customers’ interests first will be a further elaboration of current As sustainable banking is becoming ever more relevant, policy. ASN Bank strives for a customer appreciation competition is growing. The reason is that corporate score (Net Promoter Score, NPS) of more than 25 and a social responsibility is no longer something that customer satisfaction score of more than 8. companies do on the side: it has become a hygiene


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    40 SNS REAAL NV Annual Report Strategy & developments SNS Bank Carbon neutral by 2030 vulnerable. This is partly due to questions about the Carbon-neutral banking by 2030 is a key strategic investment of savings and its connection with priority for ASN Bank. By pursuing this goal the bank SNS REAAL. shows that banking activities can truly help protect the climate, which reinforces its reputation as a sustainable 5.5.1.2 BLG Wonen bank. To this end, ASN Bank has developed management methods that are due to be implemented in 2015. The bank engaged in conversation with various Feel at home parties to discuss this ambition, which was appreciated BLG Wonen believes that having your own home is a by parties within and outside the financial sector. basic condition for happiness and well-being. It is for this reason that, for the past 60 years, BLG Wonen has helped customers make their Housing Wishes come What did ASN Bank achieve in 2014 true. To this end, it works together with a network of Brand positioning independent advisers who provide Housing Advice. Surveys have revealed that customer trust is strong, Housing Advice is about more than just mortgages, even if ASN Bank’s sustainable reputation has become insurance and savings products – it enables people to more vulnerable due to questions about the investment build a home for themselves knowing that everything is of savings and its connection with SNS REAAL. taken care of, now and in the future. Customer base ASN Bank’s customer base showed net growth What does BLG Wonen want to achieve compared with 2013, bringing the total number of Brand positioning customers to more than 600,000. Most of them were BLG Wonen seeks to create a society in which every customers purchasing savings and/or payment products. person has a house where he feels at home. Before that As in 2013, 2014 also saw a growing interest among can be achieved, a diverse range of housing issues must customers in purchasing investment products. be resolved. BLG Wonen wants to be an authority in the areas of housing and finance. To this end, it makes a Savings social contribution to a healthy housing market by means ASN Bank’s proposition of saving at a sustainable bank of knowledge development about the housing market remains as popular as ever. Yet we see that the and a cross-sector network of players in the housing declining trend in interest rates on savings has a market. Making homes more sustainable is given relatively large impact on customers’ experience as to particular attention in this respect. the purpose of saving. The concept of interest was regarded as something positive in the past, but now Product volumes customers are wondering whether the cost of saving BLG Wonen’s product range includes mortgages, (bank) does not in fact outweigh the gain. In addition, we savings, term life insurance and home insurance, which perceived a clear trend towards withdrawing savings to are offered under the product names WoonLenen, repay a mortgage in 2014. Despite this trend, savings WoonSparen and WoonVerzekeren. In the years ahead, were up 4.3 percent from 2013. BLG Wonen will devote particular efforts to increasing its mortgage market share and maintaining its bank savings Investments position. BLG Wonen also actively wants to further 2014 saw a clear interest in the in-house funds offered develop home-related services, such as the Energy by ASN Bank. The total assets invested in these in- Saving Advice. house funds rose from € 1.6 billion in 2013 to € 2.0 billion at year-end 2014. In addition, ASN Bank’s ASN Distribution channel Duurzaam Milieu & Waterfonds won the Groene Stier Its sights firmly set on the collaboration with prominent (‘Green Bull’) award for best sustainable investment fund independent advisers, BLG Wonen is in the process of in 2014. building a network of top advisers. A quality segmentation programme and WoonAcademie training Customer satisfaction courses are used to monitor and guarantee the quality of Trust and willingness to recommend recovered since the advice. In this context, BLG Wonen develops specific nationalisation in early 2013 thanks to ASN Bank’s instruments to help advisers with their customer contact. customer service, online and offline customer BLG Wonen conducts regular adviser satisfaction engagement, transparent communication, as well as to surveys to measure advisers’ satisfaction with the the introduction of mobile banking. Surveys have collaboration. revealed that customer trust is strong, even if ASN Bank’s sustainable reputation has become more


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    41 SNS REAAL NV Annual Report Strategy & developments SNS Bank Customer contact strategy mortgage market since the nationalisation and has BLG Wonen will continue on the path taken as regards reactivated its network of advisers. consumer campaigns. It continually inquires into customers’ needs by means of customer panels and Savings customer satisfaction surveys. This information is used Savings grew. The growth of the savings portfolio slowed as input for a variety of projects that the bank is down in 2014 due to lower interest rates on savings on executing to make its business processes more the one hand and the cancellation of arrangements customer friendly and to enrich its customer contact. regarding ‘Golden Handshake’ severance payments on the other. In addition, more insurers launched What did BLG Wonen achieve in 2014 competitive initiatives that are successful in retaining Brand positioning expiration funds. With a view to increasing its brand awareness, BLG Customer satisfaction Wonen launched the consumer campaign ‘making Housing Wishes come true’. As part of the campaign, BLG Wonen’s NPS was -14 in 2014, up 6 percent from BLG Wonen was the official partner of the TV show RTL the first measurement the year before. The upward trend Woonmagazine, took part in the WoonBeurs home and of the past 18 months came to an end in the fourth design fair (70,000 visitors) and launched the online quarter of 2014. The average customer satisfaction platform woonwensen.nl, offering customers inspiration score remained virtually stable at 7.5 in the past two in respect of housing and finance. The Housing Wish years. Contests related to the campaign were a success, with more than 10,000 customers participating. 5.5.1.3 RegioBank BLG Wonen celebrated its 60th anniversary in 2014. The Nearby and committed celebrations included special local events for advisers RegioBank is a bank that works with 535 independent and Housing Wish Contests for customers. The values advisers having a franchise relationship with this brand. of living that BLG Wonen holds dear were underlined by As the name implies, RegioBank deliberately opts for Mr Blok, the Dutch Minister of Housing and the Civil offices in villages and small towns as people deserve to Service, in his foreword to the anniversary publication of have a local bank. They are served by local independent the same name. 4,500 copies of the book were advisers who know their customers and who know what published, and the book was offered to BLG Wonen’s is going on in the area. RegioBank offers a range of business relations. easy-to-understand products, serving retail customers and corporate clients in the areas of payments, savings Customer base and mortgages. BLG Wonen’s total customer base was more than 110,000 at the end of 2014, showing a small decline compared to 2013. Still, this was lower than the decline What does RegioBank want to achieve seen in 2012. Nevertheless, the customer volume is still Good opportunities are arising for RegioBank now that shrinking, which can partly be explained by the lower other banks are withdrawing from villages and small inflow of mortgage applications and an upward trend in towns by closing their offices. RegioBank deliberately the number of redemptions. chooses to remain the bank nearby. Home-related services Improving quality of life and self-reliance BLG Wonen was the first bank to launch the Energy In November 2014, housing minister Blok and Saving Advice (ESA), which serves to remove RegioBank signed a letter of intent, which provides that customers’ worries in four steps by introducing energy- the government is to support RegioBank in improving saving measures to limit their housing costs. ESA liveability in areas of current and projected population sessions were organised to train advisers in offering the decline. ESA. With this letter of intent, the government underlines the importance of RegioBank’s pilots with ATMs and Service Mortgages Desks. RegioBank is joining hands with municipalities, Despite the persistent lack of any solid improvement in local entrepreneurs, residents and advisers to offer housing market and mortgage market growth, BLG these in villages that now have to do without an ATM or Wonen posted good results. Its mortgage origination bank. By making personal financial services and cash was up 45 percent from 2013. The positive figures reveal available, RegioBank contributes to people’s financial that BLG Wonen has made a comeback on the self-reliance and to the local economy.


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    42 SNS REAAL NV Annual Report Strategy & developments SNS Bank VoordeBuurt 5.5.1.4 SNS The letter of intent also refers to the other liveability initiative that RegioBank has set up: the online platform VoordeBuurt. People who wish to make an active Perfectly normal. SNS contribution to their neighbourhoods can find inspiration SNS is a retail bank that chooses to be a bank for on this platform and propose solutions for improvement. ordinary Dutch consumers – a course that fits in well with SNS’s roots as a bank for the common good with a social purpose. It is a bank that shows that banking can What did RegioBank achieve in 2014 be different, more normal, and that wishes to surprise its Brand positioning customers with this. And if it is in their interests, SNS will RegioBank boasted a sharp increase in its brand break with unreasonable banking practices. Based on awareness in 2014 as well. Its constant presence on this ‘perfectly normal’ mindset, SNS wants to position radio and TV (via billboard advertising), door-to-door itself as a no-nonsense bank for ordinary Dutchmen and advertising and local visibility contributed to this growth. as a clear alternative to the major banks. The Zilvervlootparade allowed independent advisers to show in a playful way that they are ‘the local banks’. What does SNS want to achieve Customer base SNS explicitly wants to stand out in the banking market, The number of new savings and current-account showing customers that they really have a choice when customers grew sharply in 2014 as well. RegioBank’s selecting a bank in the Netherlands. The bank aims to customer base totalled more than 560,000 customers at prove this by offering unique products and services. It is the end of 2014. the bank’s ambition to be a larger, visible player, including in the mortgage and payments markets. In this Savings and payments respect, SNS takes on the role of challenger of the major Savings rose by almost 10 percent. banks. The savings products were again greatly appreciated. MoneyView, for example, again gave the Spaar-op-Maat Simple and easy-to-understand products Vrij savings account the maximum score of 5 stars for Presenting a clear and simple product range, SNS is flexibility. able to offer its customers comprehensive solutions for RegioBank also experienced strong growth of new payments, savings, (bank) savings, mortgages, current-account customers, in part triggered by the ‘get insurance, borrowing and profile investment. SNS € 50 for free with our current account’ campaign. actively invites customers to face-to-face meetings. Customers who make online comparisons can, for Mortgages example, use SNS’s online tool Voordeelvergelijker, In 2014, RegioBank reached and maintained a top 3 which clearly displays the rates that the major banks position in its segment with its competitive pricing. This charge for a range of financial products in the areas of means that it achieved its mortgage origination target. payment, savings and insurance. The objective is to increase the number of SNS products per customer by Customer satisfaction proactively giving advice, listening carefully and RegioBank won an award for ‘best management’ during discovering any additional wishes that customers may the Mortgage Event. For this ‘best management’ have. By taking on this advisery role, the bank intensifies category, research agency Gfk asked consumers with a the relationship with its customers. This should current mortgage about their experiences with their eventually translate into significant growth in product mortgage providers. RegioBank emerged as the best density among SNS customers. service provider, especially because of its advisers’ good after-sales service. Satisfied customers In order to achieve the commercial objectives that SNS RegioBankAdviseurs.nl has set itself, it is vital for customers to be satisfied with RegioBank introduced a new online commercial concept: the banking products, how they can purchase them via RegioBankAdviseurs.nl, linking prospective customers to the various sales channels, and SNS’s service and an Adviser. The website combines the Advisers’ communications. One way to improve customer distinctive features – nearby and truly personal – with satisfaction is to seamlessly connect the various contact the latest online technologies. This closes the gap options (website, mobile, shop, call centre, adviser). between the online and offline worlds and creates a Customers should find this completely natural and consistent focus on personal service. surprising at the same time. It is the customers who decide how, where and when they take care of their


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    43 SNS REAAL NV Annual Report Strategy & developments SNS Bank financial affairs. It goes without saying that customer Savings processes must be simple and error-free. Savings is also benefiting from SNS’s successful new course. The bank offers good interest rates on savings Cost efficiency in the shop organisation without imposing any conditions, and not just for long- SNS continues its efforts to enhance the cost term deposits. Despite lower market interest rates on effectiveness and distribution capabilities of its advisery savings, SNS has been experiencing a significantly organisation. SNS has no large offices, but small SNS higher inflow of savings customers since September. Shops. The franchise formula also makes the SNS’s savings were up more than 5.4 percent from organisation enterprising and cost-effective. 2013. One trend that can be observed, however, is that consumers choose to use part of their savings as an SNS is strengthening its distribution capabilities by additional early repayment of their mortgages. expanding the number of shops. Its ambition is to open around 50 more shops in due time and grow to over 230 Growth in the bank savings market was lagging as tax shops, approximately one-third of which staffed by SNS changes made it less attractive to opt for this product. employees and the rest run by franchisees. This was reflected in the bank savings balance at SNS, which dropped by 4.7 percent from 2013. What did SNS achieve in 2014 Mortgages Brand positioning Launched in September, the campaign ‘Perfectly SNS wants to be a bigger player in the mortgage market. Normal. SNS’ serves to support the new brand The bank is creating a distinct position as a mortgage positioning in the years ahead. Even in 2014 it resulted provider in the market by offering more competitive in a significant increase in brand preference and brand rates. It is the only bank to offer a selection of other consideration among consumers. lenders in addition to its own mortgages. These are This positioning is accompanied by proper evidence in complementary, offering the SNS customers and adviser the form of concrete products and services that testify to a better choice in finding the right mortgage. SNS’s leading role in serving ‘ordinary Dutchmen’. For Customer satisfaction example, customers do not need to work their way through an options menu when calling the call centre. Customer satisfaction (NPS) rose from -39 to -28, mainly Also, the bank is open on Saturdays and customers on the back of the new course and message, which are receive a replacement debit card within an hour if they highly appreciated by the target group. The satisfaction have lost theirs. of our staff also plays a major role in this, as satisfied and proud employees constitute a sound basis for Further, SNS asks customers to share their views on further improving services to our customers. banking matters and is receptive to comments it receives from the online Community or the Customer Panel. The 5.5.1.5 ZwitserlevenBank Community has more than 12,000 members. The bank’s message and services are clearly Saving for later appreciated: customer and product inflow are increasing. In partnership with Zwitserleven, SNS Bank offers savings products aimed at ‘saving for later’ under the Customer base name of Zwitserleven. These Zwitserleven savings The growth in the number of new savings and current- products are offered through ZwitserlevenBank, a trade account customers led to an increase of SNS’s total name of SNS Bank. ZwitserlevenBank has been customer base to nearly 1.5 million. operating in this way in the savings market since July 2013 and has demonstrated its ability to appeal to a Payments specific target group in what is known as the ‘mass In 2014, the Netherlands was reintroduced to receiving affluent’ segment. The strength of the Zwitserleven interest on current accounts. SNS has not charged any brand, the services provided as well as the interest rates high overdraft interest for the first three days of overdraft for savings play a key role in this respect, as customer since September 2014. The inflow in SNS Betalen was surveys have revealed. up 65 percent and the inflow for the switching service was no less than 150 percent. The private current account was awarded five What does ZwitserlevenBank want to achieve MoneyView stars for price and flexibility. Increasing market share By specifically focusing on its target group, ZwitserlevenBank expects to further increase its market share in savings in the near future.


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    44 SNS REAAL NV Annual Report Strategy & developments SNS Bank Further, the development of a mobile app is on the Board was to intensify contact with customers and staff. agenda to expand the range of services. A number of The brands followed up on this wish by creating a processes required improvement in order to make it programme for members of the Board of Directors and easier for customers to open a savings account. This is the Supervisory Board to visit the business units and to increase customer satisfaction and the percentage of meet employees and customers on site. satisfied applicants opening a savings account with ZwitserlevenBan Management and employees We also organised sessions with all our managers to What did ZwitserlevenBank achieve in 2014 discuss the Manifesto and strategy. Such sessions will Customer base again be held in 2015 to include managers (and their The number of customers welcomed by staff) in the further incorporation of the Manifesto in the ZwitserlevenBank was well above the figure projected. services we provide to our customers. Savings New employees are briefed about the Manifesto and Savings grew sharply, overshooting the target set for what form it is to take in customer contact, as they are 2014. ZwitserlevenBank has a favourable interest rate the ones who must put the theme of Putting customers’ position within its target group compared with its interests first into practice. The same information is competitors. It is no surprise, therefore, that a large given to new management team members transferring portion of this balance was deposited by this target from the holding company to the Bank. In recent months, group. we worked together with all managers to further implement the Manifesto themes. Customer satisfaction We started translating the Manifesto into HR policy, One year after its establishment, ZwitserlevenBank has defining three core competencies for all employees not yet performed an NPS measurement among its (Know Your Customer, Be Professional and Be savings customers. That said, other forms of customer audacious) that are also included in the appraisal cycle. surveys were conducted to improve services. Research The training of all new staff and the various talent is ongoing for 2015 to start NPS measurements. development programmes allocate time to giving employees pointers for taking the Manifesto from the mind to the heart. 5.5.2 Group-wide themes Brands Putting customers’ interests first The brands define Putting customers’ interests first each In 2014 as well, we strongly accentuated important in their own way, as a few examples show. aspects of our services to clearly express our commitment to actually putting customers’ interests first. In 2014, SNS embarked on its redefined course with a Our ways of promoting and safeguarding this in our new campaign entitled ‘Perfectly Normal. SNS’. Starting methods and the results achieved are reported to the from this strategy, SNS always aims to provide simple Netherlands Authority for the Financial Markets (AFM). A and easy-to-understand products and services that are self-assessment is also carried out each year. This leads of use and value to the customer. SNS demonstrated in to improvements, as will be discussed for each brand 2014 that banking can be different, more normal. In this individually. This self-assessment is also annually vein, SNS customers receive interest on their current shared with the AFM. accounts and the bank explains in easy-to-understand videos how particular products and services work. Since At various levels within the organisation and within our September, customers have been permitted to have an brands, we have taken initiatives to embed customers’ overdraft for three days per month without having to pay interests in our minds and actions. any overdraft interest. The rationale behind this is that half of people in the Netherlands occasionally have an Board of Directors and Supervisory Board unplanned overdraft for a few days. SNS finds it Committed to firmly anchoring the Manifesto’s unreasonable to immediately charge overdraft interest. philosophy, we also place the subject of Putting That said, however, the bank has no intention to promote customers’ interests first on the agenda at the top of our structural overdrafts and offers customers a range of company. A lifelong learning session was organised for tools to make them aware of any overdrafts. This the Board of Directors and the Supervisory Board to campaign was widely covered by the media and discuss the theme Putting customers’ interests first triggered both positive (‘bank that looks from my starting from various dilemmas. One of the wishes perspective’) and critical responses (‘should not expressed by the Board of Directors and the Supervisory encourage overdrafts’). The number of new customers


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    45 SNS REAAL NV Annual Report Strategy & developments SNS Bank with current accounts has grown substantially since SNS excellent result. ASN Bank’s NPS score nevertheless embarked on its new course and launched its campaign. showed a decline, which obviously is a point of focus. ASN Bank organised two regional ‘ASN Live’ events and NPS-score by brand the nationwide event ‘TomorrowToday’. The goal was to Brand 2014 2013 inspire and to have a broad debate about the SNS -28 -39 sustainability issues to which ASN Bank is committed. ASN Bank 12 19 Speakers from the worlds of business, science, RegioBank -7 -7 journalism, politics and owners of start-ups gave their BLG Wonen -14 -15 views on tomorrow’s world. The bank also personally engaged in conversation with customers and visitors. In the 2013 Annual Report was determined at the end of October 2013 (instead of year-end 2013). Teaming up with local communities, RegioBank installed ATMs in smaller villages. This is how RegioBank – co- Social and Green Housing initiator of the current public debate about the availability of ATMs – responded to a clear public need. In April 2014, we published our Housing Vision entitled ‘Sustainable Housing’ as part of our vision of During its transformation from ‘mortgage advice to a sustainability. It is also one of the key themes of the wide range of Housing Advice’, BLG Wonen inspired Manifesto. Our Housing Vision describes how the brands advisers in various ways to place the emphasis on aim to – and can – contribute to the two pillars: social customers’ housing wishes rather than on products. To living and green living in the Netherlands. The vision is this end, the brand launched the online inspiration every brand’s point of departure, both in respect of platform woondenken.nl, published a ‘home book’ and mortgage loans and in their services to retail customers. organised a series of workshops in the year of its 60th anniversary. In its own organisation, BLG Wonen made The Housing Vision explains what the brands mean by further progress in increasing its focus on customers and living well and how people’s living environment can be their interests. Customer panels were formed to improved. The vision also addresses the prevention of continuously assess the company’s services and customers’ payment difficulties in order to increase their measure customer satisfaction in an ongoing process. A financial resilience. This theme is reflected in how we customer satisfaction survey was commenced as well. handle preventive management in the area of mortgages. Based on customer surveys and customer feedback, Preventive Management for mortgages ZwitserlevenBank improved several key customer and communication processes for its online savings There are various reasons why it may be difficult for proposition (from application to availability of the savings customers to keep up with their monthly mortgage product). payments. They may be confronted with rising fixed charges, job loss, divorce or sickness, to name but a few. Problems may even get so out of hand that a Customer satisfaction with our brands customer is forced to sell his home. This is a very We measure customer satisfaction at all our brands on unfortunate turn of events for the customer in particular, the basis of the Net Promoter Score (NPS), a method to but also has consequences for the bank providing the indicate how many customers recommend a particular mortgage. provider to others. This method is widely used by service providers, including financial service providers. The In order to respond at an early stage to indications that a scores are expressed as a range from -100 to +100. customer might run into mortgage payment problems, Our brands include the other Dutch banks in the peer the brands BLG Wonen, RegioBank and SNS have set group for their NPS scores. up a Preventive Management service. Here, advisers and the Mortgage Support Team explore options to SNS showed marked improvement of its NPS score in make the mortgage affordable again and to keep it 2014 and BLG Wonen showed a slightly positive affordable so the customer can continue to ‘live at ease’. increase. RegioBank maintained its NPS position, which, Sometimes Budget Support is called upon to give at -7, is among the best of banks. Two banks in the customers a better understanding and more control of Netherlands have a positive NPS, one of which is ASN their income and expenses. The initiative may be taken Bank with an NPS of +12. This year, too, ASN Bank was by customers who contact us for Preventive judged to be the most customer-friendly bank in the Management or we ourselves proactively get in touch Netherlands for the fifth consecutive year. This is an with customers who may run an increased risk of arrears based on the information available to us.


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    46 SNS REAAL NV Annual Report Strategy & developments SNS Bank Preventive Management was launched in 2014. The will make existing homes more sustainable. The ESA following activities were undertaken in order to bring this report will be drawn up by certified consultants of the development to the attention of our customers. company Susteen, with which BLG Wonen collaborates. The report is to give insight into structural, electrical and Preventive Management mechanical improvement measures that homeowners 2014 can implement to save energy, along with the Letters sent by Prenetive Management number 10,028 corresponding payback periods and carbon reduction. E-mails sent on mortgage test tool number 10,243 Customers can take these measures to reduce their SNS Bank and BLG Wonen visits of number 42,656 energy bills, create more comfort and a healthier indoor mortgage test tool climate, and obtain an energy label for the home. BLG Wonen also introduced a training course for its own The Mortgage Support Team ultimately assisted 314 advisers, teaching them how to include ESA in their customers in 2014. The good news for both customers housing advice. Ten ESA courses were organised, and the Bank is that 83.2 percent of customers who attended by 144 advisers. received preventive support from us did not end up in procedures of the Special Credits department. We will Baseline measurement for energy labels continue to monitor this success rate, as it will be a key We performed a baseline measurement to determine the indicator going forward. energy labels of the homes funded by the individual brands. With the Housing Vision and the measurement Climate-friendly living results as our basis for improvement, we will set targets We are aware of the impact that lifestyle has on climate to make the mortgage portfolio more sustainable in the change and the environment. That is why we wish to years ahead. contribute to sustainable homes for private homeowners, for example by encouraging energy-saving measures The baseline measurement reveals that the energy and renewable energy production. labels of our mortgages roughly correspond to the Dutch average. At the moment, 50 percent of our homes have One of the first concrete activities we performed in this energy label A, B or C. The other half offers context was organising the second Meeting with Experts opportunities for improvement. Our aim is to raise the on More Sustainable Housing and Real Estate in June average energy label to a more energy-efficient level by 2014, in collaboration with the Fair Bank Guide and encouraging our customers to save energy. We do so by Rabobank. The objective was to share knowledge about giving them information, providing advice on how to save how to make homes and real estate in the Netherlands energy and by offering sustainable home loans and more energy efficient. products. Another specific example is that RegioBank, BLG Sustainable living 2014 (Energy labels residential homes in mortgage portfolio) Wonen and SNS supplemented their acceptance criteria with the statutory options (Temporary Rules for Mortgage G 3% A 4% Credit) to obtain additional mortgage credit for energy- efficient homes. F 9% B 13% SNS Bank signed an arrangement promoting energy- E 14% neutral renovations of private owner-occupied homes, which fits in perfectly with the Sustainable Housing programme. C 32% At the beginning of 2014, the government established D 25% the National Energy Saving Fund (Nationaal Total CO2 emissions: 1,150,799 tons Energiebespaarfonds) to extend Energy Saving Loans: affordable loans to private homeowners who wish to introduce energy-saving measures in their homes. The National Energy Saving Fund holds € 300 million, € 50 Financial resilience million of which were contributed by ASN Bank and the The financial resilience of our customers is one of our remainder by Rabobank and the government. priorities. We encourage people to become financially resilient first and foremost by the quality of our services. BLG Wonen will offer its customers Energy Saving The guiding principle in this respect is the concept of Advice (ESA) to encourage sustainable conduct, which Putting customers’ interests first. We seek to offer our


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    47 SNS REAAL NV Annual Report Strategy & developments SNS Bank customers insight, clarity and prospects to allow them to Our IT infrastructure helps us further carve out our make the right financial decisions, big or small, now and challenger role in the Dutch market, for example in terms in the future. Key elements of this service are: of convenience and low cost brought about by the high • Providing simple, accessible and safe products and degree of automation already achieved with the Straight- services; Through Processing (STP) of customer processes, in • Ensuring that customer experiences and respect of reliability by means of automating IT itself, complaints are used to introduce improvements; and thanks to digital innovations in key areas such as • Enabling customers to make responsible choices banking and mobile payments. by providing clear and understandable product information and/or appropriate advice; Our IT organisation’s two main tasks in 2014 were to • Systematically testing customers’ interests and ensure the continuity of services and to separate the customer integrity; Bank and Insurer IT systems. • Measuring and improving customer satisfaction. Continuity of services In order to increase people’s financial resilience and Ensuring the continuity of our services (24/7) to our independence, we are also committed to providing customers. Continuity and availability of IT systems is financial education to those who could use some crucial to our customers. The availability of our core additional help or understanding, whether they be adults, systems and our mobile and online channels was again youngsters or children. We do this through Stichting among the highest in the market in 2014. Geldinzicht, through our guest teaching programme and the website Eurowijs for primary schools, and by IT systems separation Bank and Insurer supporting the foundation Weet Wat Je Besteedt (Stay In 2014 we started an ambitious, 18-month programme on Top of Your Spending), aimed at secondary schools. to separate the Bank and Insurer’s IT systems within the In addition, SNS Bank NV employees participate in the framework of the disentanglement of SNS REAAL. We sector-wide initiative Bank voor de klas. execute this programme under our own management. Financial education The execution commenced in January 2014. In the first 2014 phase, running until July 2014, the physical Geldinzicht newsletter subscribers 327 infrastructure was split up and new infrastructure was set Eurowijs guest lessons number of lessons 466 up for the Insurer in two new data centres. Business number of participants 11,899 units and their corresponding applications were migrated Bank voor de klas guest lessons number of lessons 906 in the second half of 2014. The goal is to conclude the number of participants 22,650 entire separation in July 2015. 5.5.3 The importance of information IT objectives In part in response to the separation, attention will be technology (IT) devoted to three improvements in the IT domain in the Information technology (IT) is becoming increasingly years ahead: important in ensuring excellent customer experience and • professionalising the Finance & Risk information excellent business operations. The strong rise of our supply; we wish to utilise the consolidation and mobile services, especially in the area of banking, rationalisation opportunities created by the testifies to our customers’ great appreciation of digital separation; services. Our IT services have had a clear focus on • further implementing the Multi-Brand & Multi- customers and customer contact for decades now, which Channel / Single System architecture for has resulted in a customer-focused system. Thanks to a mortgages, savings, payments and services to high degree of standardisation and re-use and a long- support our ambition to grow; term horizon, SNS Bank boasts a modern technical • professionalising data management, for the infrastructure and a simple application environment. IT is purposes of improving data control and quality. developed and operated in-house on the basis of professionalism; application development control, for Information security and fight against example, has been certified at CMMI maturity level 3. The central IT organisation fulfils a leading role in setting cybercrime up the unique Multi-Brand & Multi-Channel / Single The use of IT and the dependence on it are still System architecture. increasing, which means that cybercrime may have a major impact on the security and continuity of our online banking and mobile banking channels. We saw


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    48 SNS REAAL NV Annual Report Strategy & developments SNS Bank continued growth in the attempts at cybercrime in 2014, including phishing, malware and Distributed Denial of Service (DDoS) attacks. Cybercrime is undeniably here to stay. Throughout 2014, we made continuous investments in the further strengthening of our resilience against cybercrime. Our cybercrime experts closely monitor cyber developments and take appropriate measures where necessary. Our short internal lines of communication enabled us to successfully counter these attacks in most cases and to minimise the inconvenience they caused for our customers. Collaboration with other financial institutions and public parties such as the National Cyber Security Centre (NCSC) is a vital element in setting up an effective defence against cybercrime. SNS Bank plays an active role in this respect.

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