Bremer Kreditbank AG – - BKB Bank · 2 | 3 The success of BKB Bank has continued in 2014 to be...

Bremer Kreditbank AG – Annual Report

1

2014 – A Year of Positive ChangesAnother year lies behind us, a year that has fully confirmed the sustainability of our successful business policy. The change of shareholders was thoroughly prepared well in advance with the support of everyone involved. On 1st October 2014 it finally happened: KBC Bank Deutschland became Bremer Kreditbank AG – BKB Bank for short.

With regard to our growth strategy, our objective to significantly increase the capital base of the bank in 2014 once again has been achieved. In addition to our shareholders’ direct injection into the capital reserves, we succeeded in issuing a subordinated bond.

In this context we would like to extend our gratitude to our shareholders’ expertise. With that, our liquidity supply has never been better and the transition to our own rating system has been a great success.

Notwithstanding the high one-off expenditures as part of the change of name, we have generated an annual surplus of more than EUR 7m and therefore continue to play a successful part in a challenging market environment.

All in all, very good reasons to be pleased – and our customers have their confidence in BKB Bank confirmed.

We very much look forward to being by your side in 2015.

Yours,

Axel Bartsch, Chairman of the Executive Board

Preamble

Table of contents

Executive and Supervisory Boards 2

Bremer Kreditbank AG 3 1 Sustainability 3 2 Transparency 5 3 Change Management 5 4 Security 5 5 Appreciation 5 Clear Positioning and a unique Appearance 6

Balance sheet as per 31.12.2014 8

Income statement 10

Notes 11

Annex to the financial statements 30

Management Report 31 1 Fundamentals, business model, goals, strategy 32 2 Economic report 36 3 Subsequent events 44 4 Forecast 44 5 Risk report 46

Audit opinion 60

Report of the Supervisory Board 61

Contacts 64

Special functions 67

Legal notice 67

20,000

2000 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 2014

15,000

10,000

5,000

0

4,91

0

4,46

4 6,80

8

8,40

1

9,70

9

11,1

63

12,7

93 15,5

06

20,5

26

17,5

05

16,0

89

3,68

1

2,38

3

12,1

95

7,05

0

2000 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 2014

200,000

250,000

300,000

350,000

150,000

100,000

50,000

0

119,

680

124,

337

112,

881

56,3

05

134,

039

145,

196

187,

982

218,

482

239,

008

245,

220

251,

705

246,

542

258,

925

268,

736

368,

152

20,000

2000 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 2014

15,000

10,000

5,000

0

4,91

0

4,46

4 6,80

8

8,40

1

9,70

9

11,1

63

12,7

93 15,5

06

20,5

26

17,5

05

16,0

89

3,68

1

2,38

3

12,1

95

7,05

0

2000 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 2014

200,000

250,000

300,000

350,000

150,000

100,000

50,000

0

119,

680

124,

337

112,

881

56,3

05

134,

039

145,

196

187,

982

218,

482

239,

008

245,

220

251,

705

246,

542

258,

925

268,

736

368,

152

Net profit in kEUR

Equity/Profit participation capital/Subordinated liabilities in kEUR

The bank’s development in recent years

Bremer Kreditbank AG

P&L structure in kEUR 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 P&L structure in kEUR

Net interest income 9,653 14,729 18,578 25,847 29,933 31,787 34,904 40,757 59,474 72,370 69,076 69,506 68,546 63,709 57,350 Net interest income

Net commission income 8,186 8,292 8,462 7,267 6,929 7,328 7,646 8,860 8,416 8,360 8,396 9,568 8,706 7,901 6,380 Net commission income

General administration costs 13,318 14,178 14,423 13,776 14,714 15,370 17,904 20,244 22,995 23,051 22,878 24,114 27,827 29,077 35,773 General administration costs

Result from ordinary business 4,926 4,456 8,961 9,801 18,518 21,009 22,003 25,961 30,387 26,248 20,382 5,904 3,119 18,245 4,432 Result from ordinary business

Net profit 4,910 4,464 6,808 8,401 9,709 11,163 12,793 15,506 20,526 17,505 16,089 3,681 2,383 12,195 7,050 Net profit

Balance sheet structure in kEUR 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Balance sheet structure

in kEUR

Balance sheet total 506,414 1,309,405 1,190,250 1,630,649 1,685,767 1,918,644 2,039,301 2,434,886 2,634,069 2,381,060 2,543,446 2,587,179 2,607,737 2,187,591 1,825,152 Balance sheet total

Receivables from customers 367,550 730,270 863,688 1,011,543 1,155,120 1,297,354 1,589,639 1,852,675 2,219,199 2,010,861 1,954,358 2,057,291 2,138,086 1,924,421 1,483,780 Receivables from customers

Equity/ Profit participation capital/ Subordinated liabilities

56,305 112,881 119,680 124,337 134,039 145,196 187,982 218,482 239,008 245,220 251,705 246,542 258,925 268,736 368,152Equity/

Profit participation capital/ Subordinated liabilities

2 | 3

The success of BKB Bank has continued in 2014 to be based on 5 values:

1. SustainabilityBKB Bank is thinking in terms of generations and always acts in the interest of long-term success. These qualities are the reason why medium-sized enterprises have valued us for more than 150 years. And for more than 150 years the relationships with our customers have been based on trust, consistency, and mutual respect. A close proximity and personal contact are the two most important factors to us. This is why we have established branches in all economic centers throughout Germany. Here, our relationship managers serve our customers with our broad range of expertise and many years of experience.

Bremer Kreditbank AG Executive and Supervisory Boards


Executive Board Axel Bartsch (chairman) Executive board of the bank

Jens Rammenzweig since 1st February 2015 Executive board of the bank

Guy Snoeks until 31st January 2015 Executive board of the bank

Supervisory board Dr Ernst Thomas Emde (chairman) since 1st October 2014 Lawyer, Frankfurt am Main, Germany

Dr Dirk Hoffmann (deputy chairman) since 1st October 2014 Lawyer, Rum, Austria

Gernot Wilhelm Friedrich Löhr since 1st October 2014 Investment Professional, London, United Kingdom

Dr Manfred Puffer since 8th October 2014 Senior Investment Advisor, Mehrbusch, Germany

Brent George Geater since 1st October 2014 Investment Manager, London, United Kingdom

Sascha Säuberlich since 8th October 2014 Investment Manager, London, United Kingdom

Manfred Jarczak Employee representative for bank employees Bremer Kreditbank AG, Bremen

Konrad Markus Rempe Employee representative for bank employees Bremer Kreditbank AG, Bremen

Peter Steding since 11th December 2014 Employee representative for bank employees Bremer Kreditbank AG, Bremen

Dr Wolfgang Schrörs (chairman) until 30th September 2014 Managing partner Dr Schrörs Vermögensverwaltungsgesellschaft mbH & Co. KG, Bremen

Dr Klaus Ridder (deputy chairman) until 30th September 2014 retired

Dirk Mampaey until 30th September 2014 Senior General Manager Corporate Services KBC Bank NV, Brussels

Luc Gijsens until 30th September 2014 CEO Merchant Banking KBC Bank NV, Brussels

Our branches

Bremen head office

Hamburg

Berlin

Hanover

Düsseldorf

Frankfurt

Stuttgart

Munich

4 | 5

Customer proximity and continuity since 1863 Our bank was originally founded in 1863 as a loan society; from 1945, it continued operations as a joint

stock corporation under the name Bankverein Bremen AG. Following acquisition of the share majority by a Belgian bank, Kredietbank NV, in1982, the name was changed in 1990 to Kredietbank-Bankverein AG. Before then, branches had already been opened in Frankfurt (1986) and Düsseldorf (1988). These were joined in 1990 by a further branch in Berlin, followed in 1995 by one in Hamburg.

As a result of the merger of Kredietbank with CERA-Bank and ABB-Versicherungen, an insurance company, in 1998, the bank was renamed KBC Bank Deutschland AG in 1999. Additionally, a new branch was opened in Munich in the same year, followed by Stuttgart (2004) and Hanover (2008).

2013 – the year of our 150th anniversary – saw the signing of the sale of the bank to our new owners. With the approval of the supervisory authorities, the actual transfer took place on 1 October 2014. Since that date, the bank has operated under the name Bremer Kreditbank AG (BKB Bank).

Our history in brief

2014 Renamed as Bremer Kreditbank AG (BKB Bank) under a new ownership structure.

1999 Name changed to KBC Bank Deutschland AG.

1982 Acquisition by Kredietbank N.V., Brussels.

1945 Merged with the Bremer Kreditbank AG to the name Bankverein Bremen AG.

1872 Name changed to Bremer Gewerbebank AG.

1863 Grounding of the loan society Bremen.

Our detailed history can be found at our website www.bkb-bank.com



2. Transparency Transparency of the business and comprehensibility of our daily work are important keys to our successful cooperation, internally as well as externally with our customers. We always keep our employees and our customers up-to-date on current developments with meetings and workshops which take place on a regular basis. By means of various management options BKB Bank offers a high degree of flexibility and can quickly and appropriately respond to changes in the market environment.

3. Change ManagementNever stand still, move step by step towards the future – 2014 was the year to detach ourselves from an international banking group and to take the final step towards complete autonomy with all associated systems. Until then, some of them were still used as group applications. The implementation of an independent rating landscape, the transition of the reporting of our own funds to the credit risk standardized approach (CRSA) as well as the transition to completely independent systems for payment transactions play a significant role in this context. With this, we are ideally prepared for all demands that our ambitious growth targets entail.

4. SecurityWe are specialised on medium-sized enterprises and we consider our bank to be a medium-sized business as well. At the same time we certainly offer our customers the same securities as any other major bank. They include our membership of the Bundesverband deutscher Banken e. V. (Federal Association of German Banks), Berlin, and its deposit protection fund. Furthermore, we belong to the Entschädigungseinrichtung deutscher Banken GmbH (German Banks Compensation Scheme) and the respective local banking associations.

5. Appreciation The appreciation of our employees is a key element of our corporate philosophy. BKB Bank’s positive image has always depended on the individual commitment of each of our employees. Against the backdrop of the bank’s road to independence the multitude of extraordinary projects in 2014 could only be managed by highly motivated and qualified teams working hand in hand. Therefore, we would like to express our sincere gratitude to all employees.

6 | 7Bremer Kreditbank AG


As part of our change of name we have reviewed our self-image as well as the public perception. Following an intensive process with many discussions, numerous changes of perspectives, and a professional verification we have further developed our positioning, the brand values, and the brand essence and combined it all into a modern mission statement.

Our new brand identity has been put into an artistic context. Well-managed businesses are as unique as a piece of art. This also applies to good consultations in complex financial matters. This is why we provide our customers with individual solutions which perfectly fit into their framework.

Clear positioning and a unique appearance

The Art of optimum

financial solutions

For the presentation of our new brand identity and in order to achieve a unique and personal imagery we took pictures of our employees and used an art filter.

8 | 9Balance sheet

AssetsEUR EUR EUR Previous kEUR

(31.12.2013)

1. Cash and reserves a) Cash on hand b) Balances with central banks including at the German Central Bank EUR 76,766,325.40 c) Credit at post office banks EUR 0.00

322,676.3876,766,325.40

0.00 77,089,001.78

31612,492

0

2. Receivables from credit institutions a) due daily b) other receivables

6,668,284.2016,053,118.18 22,721,402.38

11,64330,148

3. Receivables from customers thereunder: secured by mortgages EUR 288,995,576.00 Public sector loans EUR 0.00

1,483,780,012.23 1,924,421

4. Bonds and other fixed interest securities a) Money market securities aa) from public sector issuers thereunder: eligible as collateral at German Central Bank EUR 0.00 ab) from other issuers thereunder: eligible as collateral at German Central Bank EUR 0.00 b) Bonds and other fixed-income securities ba) by public sector issuers thereunder: eligible as collateral at German Central Bank EUR 228,283,648.09 bb) from other issuers thereunder: eligible as collateral at German Central Bank EUR 0.00 c) own fixed-income securities Nominal value EUR 0.00

0.00

0.00

228,283,648.09

0.00

0.00

228,283,648.09

0.00 228,283,648.09

0

0

197,665

0

0

5. Investments thereunder: credit institutions EUR 279,232.42 thereunder: financial service institutions EUR 0.00

323,714.52 324

6. Shares in associated companies thereunder: credit institutions EUR 0.00 thereunder: financial service institutions EUR 0.00

51,129.19 51

7. Intangible assets a) Self-created industrial property rights and

similar rights and values b) Acquired concessions, industrial property rights and similar rights and values, as well as licences to such rights and values c) Goodwill d) Advance payments

0.00

610,760.660.000.00 610,760.66

0

51300

8. Tangible asstes 2,823,044.78 2,387

9. Other assets 6,928,281.21 7,370

10. Accruals and deferrals 2,541,349.66 261

Total assets 1,825,152,344.50 2,187,591

Balance sheet as per 31.12.2014 of Bremer Kreditbank AG, Bremen

LiabilitiesEUR EUR EUR Previous kEUR

(31.12.2013)

1. Liabilities to financial institutions a) due daily b) with agreed term or period of notice

6,302,997.41357,771,836.55 364,074,833.96

12,221759,866

2. Liabilities to customers a) Savings deposits aa) with agreed notice period of three months ab) with agreed notice period of more than three months b) other liabilities ba) due daily bb) with agreed term or notice period

868,946.55

4,965.61

221,397,280.22842,314,777.53

873,912.16

1,063,712,057.75 1,064,585,969.91

993

11

290,242829,274

3. Other liabilities 8,119,031.27 5,720

4. Accruals and deferrals 18,671.68 74

5. Provisions a) Provisions for pensions and similar liabilities b) Tax provisions c) Other provisions

9,902,919.440,00

10,299,259.28 20,202,178.72

8,63620

11,797

6. Subordinated liabilties 79,025,131.93 0

7. Profit participation capital thereunder: due within two years EUR 0.00

50,000,000.00 50,000

8. Equity a) Subscribed capital b) Capital reserve c) Retained earnings ca) Legal reserves cb) Reserve for shares to a controlling company or company with a majority holding cc) Revenue reserves cd) Other retained earnings d) Net earnings

102,258.38

0.000.00

101,809,559.92

14,502,794.21115,657,384.68

101,911,818.307,054,529.84 239,126,527.03

14,50390,126

102

00

101,81012,196

Total liabilities 1,825,152,344.50 2,187,591

1. Contingent liabilities a) Contingent liabilities from discounted bills of exchange b) Liabilities from guarantees and guarantee agreements c) Liability for the collateralisation of third party debts

0.00214,625,021.80

0.00 214,625,021.80

0431,224

0

2. Other obligations a) Repurchase obligations from non-genuine repurchase agreements b) Placing and underwriting obligations c) Irrevocable credit commitments

0.000.00

368,617,125.00 368,617,125.00

00

320,596

10 | 11Income statement | Notes

GeneralThe financial statements for the financial year of 2014 complied with the relevant provisions of the HGB (German Commercial Code). Furthermore, it also complied with the German Ordinance on Accounting Policies for Banks (RechKredV) as well as the German Stock Corporation Act (AktG).

In accordance with § 244 of the HGB (German Commercial Code), all amounts are quoted in Euro.

The only subsidiary of Bremer Kreditbank AG, with a share capital of EUR 51,129.10 (100 kDM), is Vermögensverwaltungsgesellschaft Merkur mbH, Bremen, hereinafter called Merkur.

Merkur shall be managed jointly with Bremer Kreditbank AG. A profit and loss transfer agreement has been concluded between Bremer Kreditbank AG and Merkur as the 100% subsidiary and this is also recognised for tax purposes. In the reporting year the profit of kEUR 8 that was generated was paid to Bremer Kreditbank AG.

Merkur‘s balance sheet totals contributed kEUR 1,051 on reporting day, of which kEUR 859 related to property ownership. This corresponds to 0.06% of the balance sheet total of Bremer Kreditbank AG.

In accordance with § 296 para. 2 of HGB (German Commercial Code) the preparation of consolidated financial statements was not necessary due to the minor importance of the subsidiary.

Notes

EUR EUR EUR Previous kEUR(31.12.2013)

1. Interest Income from a) credit and money market transactions b) fixed interest securities and debt register claims

79,097,863.836,135,499.29 85,233,363.12

100,4187,762

2. Interest expenses 27,883,130.34 57,350,232.78 44,471

3. Current income from a) shares and other non-fixed interest securities b) investments c) shares in associated companies

0.0017,280.00

0.00 17,280.00

017

0

4. Income from profit pools, profit transfer agreements 8,375.88 11

5. Commission income 12,550,039.04 14,550

6. Commission expenses 6,170,451.26 6,379,587.78 6,649

7. Other operating income 1,678,184.70 2,610

8. General adminstration costs a) Personnel axpenditure aa) Wages and salaries ab) Social contributions and expenses relating to pension schemes and benefits thereunder; for pension schemes EUR 1,554,999.12 b) other administration costs

15,467,798.66

3,576,017.32 19,043,815.98

16,728,832.17 35,772,648.15

14,659

2,322

12,096

9. Depreciation and value adjustments for tangible and intangible asstes 854,847.48 767

10. Other operating expenses 1,396,584.70 1,739

11. Depreciation and value adjustments on receivables and certain securities as well as additions to provisions for credit losses 22,977,233.79 31,685

12. Income from profits from write-ups on investments, shares in associated companies and also securities held as fixed assets 0.00 7,265

13. Result from ordinary business 4,432,347.02 18,245

14. Extraordinary income 6,400,000.00 0

15. Extraordinary expenses 142,999.00 143

16. Extraordinary result 6,257,001.00 6,257,001.00 143

17. Tax from income and from earnings 3,604,383.89 5,877

18. Other taxes not shown in position 10 34,915.22 3,639,299.11 30

19. Net profit 7,050,048.91 12,195

20. Accumulated income from previous year 4,480.93 1

21. Net earnings 7,054,529.84 12,196

Income statement for Bremer Kreditbank AG, BremenPeriod from 01.01. to 31.12.2014

12 | 13

Accounting and valuation methodsThe securities held as fixed assets will be valued according to the lowest value principle (§ 253 para. 3 HGB).

The receivables were basically valued at nominal value; the difference between the amount paid out and the nominal amount is shown as accruals and deferrals in the balance sheet and is periodically recognised as income.

We have formed suitable individual loan loss provisions and provisions for all risks that are foreseeable in the credit business. Latent credit risks have been taken into consideration by a general loan loss provision (GLLP). The calculation of the GLLP is based on the FMF letter dated 10th January 1994, whereby the balance sheet notes were recorded in the assessment basis of the GLLP in accordance with the statements of the IDW (Institut der Wirtschaftsprüfer – Institute for Auditors).

Tangible fixed assets as well as intangible assets are valued at cost, reduced by scheduled depreciation in accordance with the expected useful life.

The low-value assets are recorded as compound items and depreciated according to § 6 para. 2a EStG (German income tax law).

Liabilities are carried at the repayable amounts. The difference between the nominal value and the issue value of liabilities is included in the accruals and deferrals and written off periodically.

Provisions for uncertain liabilities and potential future losses have been recorded in an adequate amount. Therefore provisions with a remaining term of more than one year were discounted (§ 253 sect. 2 HGB).

Provisions for pension and similar obligations were valued according to the projected unit credit method. For the calculation on 31st December 2014, the average market interest rate of 4.58%, published by the Bundesbank (Federal bank), for a residual term of 15 years, annual wage increases of 1.5% and annual pension increases of 2.0% as well as the 2005G guidelines compiled by Klaus Heubeck were assumed.

We have made use of the option to accumulate the balance of 2,144,985.00 EUR of the initial valuation according to BilMoG (German Accounting Law Modernisation Act), Art. 67 para. 1, s. 1 EGHGB (Introductory Law to the German Commercial Code) over 15 years, so that on the reporting date of 31st December 2014, compared to 31st December 2009, EUR 714,995.00 will be additionally deferred. The remaining balance of EUR 1,429,990.00 will be accumulated in the period of 1st January 2015 to 31st December 2024.

Based on the existing asset surplus and using the option according to § 274 HGB (German Commercial Code) no deferred tax liabilities were reported. The surplus of deferred tax assets mainly results from deductible temporary differences in the balance sheet positions “tangible assets” and “provisions” for which there are no taxable temporary differences. The valuation of deferred taxes is measured using the rates of taxation that are specific to the country or company and which is expected to be valid at the

Notes

time of realisation. A tax rate of 31.63% was used for the company (which includes corporation tax of 15.90% including a solidarity tax contribution and a trade tax rate of 15.73%).

The other provisions include in particular provisions for human resources and for the credit business.

The currency conversion for assets and liabilities in foreign currency is carried out in accordance with § 340h HGB in conjunction with § 256a HGB (German Commercial Code). Receivables and liabilities in a foreign currency were valued at the time at the foreign exchange reference rates published by the European Central Bank on reporting day. The bank uses the option of special coverage. All currency positions (assets, liabilities and pending transactions) are overtaken in a controlled currency position and by currency. The results are shown in the income statement under “other operational incomes” or “other operational expenses”.

The valuation of currency risks is carried out using the “Luxembourg model”. Therefore the currency forward transactions are split into the spot rate that is subjected to the currency risk and the swap rate that is subjected to the interest rate risk. The spot rate was converted at the prevailing foreign exchange average rate.

There was no risk of a change in the swap rate that needed to be balanced on the reporting day.

In accordance with its hedge strategy, the banks forms valuation units according to § 254 HGB to hedge currency risks from currency options and to hedge interest rate risks from caps, floors and collars. This refers to micro hedges (critical term match). Due to the creation of valuation units for all options transactions, the received and paid premiums with their book value are detailed in the positions “other assets” and “other liabilities”. The bank therefore avoids negative valuation effects of a total of kEUR 3,424 which consist of the following:

The derivative products were valued, in so far as they did not relate to hedging transactions, according to the principle of individual valuation of open positions. These derivatives form part of the management of the bank book as individual transactions. On reporting day it was not necessary to create a provision.

in kEUR Other assets Other liabilities

Caps, Floors, Collars -422 16

FX options -856 2,130

Notes

14 | 15

Balance sheets items (expressed in kEUR) 2014 2013

Assets 3.b)

Other receivables from credit institutions 16,053 30,147

of which a remaining term of

• up to three months 28 3,543

• more than three months and up to 1 year 67 8,533

• more than 1 year and up to 5 years 5,079 6,663

• more than 5 years 10,879 11,408

Assets 4.

Receivables from customers 1,483,780 1,924,421


• up to three months 185,885 241,201

• more than three months and up to 1 year 120,901 98,293


• more than 5 years 203,364 249,632

• with unspecified term 389,910 594,971

Assets 5.b)

Bonds and other fixed income securities 228,284 197,665



• more than three months and up to 1 year 0 59,405


• more than 5 years 0 0

Balance sheets items (expressed in kEUR) 2014 2013

Liabilities 1.b)

Liabilities to other credit institutions withagreed term or notice period 357,772 759,866





• more than 5 years 12,260 10,784

Liabilities 2.a)

Liabilities to customers from savings deposits 874 1,004


• up to three months 869 993

• more than three months and up to 1 year 5 11

• more than 1 year and up to 5 years 0 0


Liabilities 2.b)

Other liabilities to customers 1,063,712 1,119,516


• due daily 221,397 290,242



• more than 1 year and up to 5 years 224,727 0


Breakdown by maturity of assets Breakdown by maturity of liabilities

Selected positions from the balance sheet and income statement

Notes

Notes

16 | 17

Statement on relationships with associated companiesThe relationships with associated companies on balance sheet day are detailed in the following table.

Bonds and other fixed interest securitiesThe banks stock of securities consists of fixed assets as well as liquidity reserve. All stocks are pledged as collaterals to the ECB. The portfolio contains German, Belgian and Dutch issuers exclusively.

On 01st January 2014 the historic acquisition costs of the fixed assets amounted to kEUR 72,300 of which nominally kEUR 64,200 (historic acquisition costs: kEUR 65,912) matured in 2014. Due to the fact that there were no further additional purchases, the stock aggregated to a total of kEUR 6,000 (historic acquisition costs: kEUR 6,388) on 31st December 2014. Avoided depreciation did not arise by way of calculation. The hidden reserves of fixed assets add up to kEUR 62.

By additional purchases the liquidity reserve was increased by the nominal amount of kEUR 240,000 to maintain the possibility of refinancing at the ECB, whereby kEUR 180,000 of the same stock matured. The liquidity reserve portfolio was depreciated in the amount of kEUR 2,952.

As per December 31st 2014 the stock consequently arises to a total of kEUR 228,284, which consists of

• the fixed assets with a book value of kEUR 6,234 (previous year: kEUR 6,265) and• the liquidity reserve with a book value of kEUR 222,050 (after depreciation).

Shares in associated companiesThe bank is associated with the following companies:

It relates to a 100% participation in Vermögensverwaltungsgesellschaft Merkur mbH, Bremen (subscribed capital 51 kEUR (100 kDM). There is a control and profit and loss transfer agreement. In 2014 kEUR 8 were received by the bank.

Asset values in kEUR 2014 2013

Receivables from credit institutions 0 7,145

Receivables from customers 1,000 14,531

Other assets 10 10

Liabilities to credit institutions 0 183,068

Liabilities to customers 351 1,866

Liabilities from guarantees andwarranty agreements 0 0

Nominal value in kEUR 2014 2013

Derivatives with credit institutions 0 1,019,857

in kEUR 2014 2013

Opening balance 197,665 133,022

Sales 0 -94,531

Purchases 251,105 166,998

Disposals -215,912 -6,430

Loss on redemtion -1,281 0

Depreciation -2,952 -3,831

Pro rata interest components -341 2,437

Balance sheet 228,284 197,665

in kEUR 2014 2013

Historic acquisition costs 51 51

Additions 0 0

Disposals 0 0

Accumulated depreciation 0 0

Net book value 51 51

Shares in associated companies

Nominal value in kEUR

Percentageof total

Book valuein kEUR

Vermögensverwaltungsgesellschaft Merkur mbH, Bremen 51 100% 51

Total 51 51

Notes

Notes

18 | 19

InvestmentsThe bank has the following investments:

Intangible assets

The amortization for the financial year was kEUR 326 (previous year: kEUR 233).

in kEUR 2014 2013

Historic acquisition costs 324 324

Additions 0 0

Disposals 0 0

Accumulated depreciation 0 0


in kEUR 2014 2013

Historic acquisition costs 3,175 2,714

Additions 424 460

Disposals 4 0

Accumulated depreciation 2,984 2,661


Tangible assets

The amortization for the financial year was kEUR 528 (previous year: kEUR 533, of which kEUR 16 for low-value assets (previous year: kEUR 16).

The real estate and buildings shown are used for bank purposes.

Foreign currency positionThe foreign currency positions are broken down as follows:

in kEUR

Real estate and buildings

Operating and business equipment

Tangible assets Total

2014 2013 2014 2013 2014 2013

Historicacquisition costs 4,237 4,237 4,657 4,794 8,894 9,031

Additions 0 0 988 370 988 370

Disposals 0 0 579 506 579 506

Accumulated depreciation 2,977 2,900 3,503 3,608 6,480 6,508

Net book value 1,260 1,337 1,563 1,050 2,823 2,387

Investments Nominal value in kEUR

Percentageof total

Book valuein kEUR

AKA Ausfuhrkreditgesellschaft mbH, Frankfurt am Main 85 0.42% 256

Bürgschaftsbank Bremen GmbH, Bremen 33 1.01% 23

Liquiditäts-Konsortialbank GmbH, Frankfurt am Main 40 0.02% 26

S.W.I.F.T. Society for Worldwide Interbank Financial Telecommunication SCRL, La Hulpe, Belgien

19 0.01% 19

Total 324

in kEUR 2014 2013

Receivables from credit institutions 14,520 18,906

Receivables from customers 55,304 67,782

Other assets 4 2

Liabilities to credit institutions 2,258 40,497

Liabilities to customers 37,619 4,062

Other liabilities 1 1

Contingent liabilities 34,636 63,634

Notes

Notes

20 | 21

Other assets and liabilitiesThe other assets totalling kEUR 6,928 consist mainly of receivables to the tax office amounting to kEUR 901, currency adjustments of kEUR 206 as well as receivables from interest rate swaps amounting to the value of kEUR 1,055. Furthermore, the receivables from currency options totalling kEUR 1,731 and paid premiums from caps, floors and collars totalling kEUR 487 as well as paid margins of kEUR 600 are shown here. In addition, this position includes pre-paid expenses of kEUR 1.194.

The other liabilities totalling kEUR 8,119 mainly relate to liabilities from interest swaps amounting to kEUR 1,497 as well as premiums received from currency options totalling kEUR 1,997 and caps, floors and collars amounting to kEUR 596 as well as received margins of kEUR 3.400.

Collateral transferred for liabilitiesWith regards to liabilities to credit institutions, assets amounting to kEUR 340,494 which were used as collateral, were transferred.

On the balance sheet date securities amounting to kEUR 226,613 (open market operations) and receivables totalling kEUR 178,879 (at the German Federal Bank) were in the custody account.

On the balance sheet date, the overall utilisation date at the German Federal Bank stood at kEUR 322,942.

Accruals and deferrals for assets/liabilitiesThe deferred expenses and accrued income of kEUR 2.541 mainly consist of the disagio of subordinated liabilities amounting to kEUR 2.257 as well as other smaller accruals.

The deferred income and accrued income of kEUR 19 is made up of accruals from promissory notes amounting to kEUR 14 and income from forfaiting transactions totalling kEUR 5.

Subordinated liabilities In 2014 for the first time “subordinated liabilities” amounting to kEUR 79,025 were revealed out of a private placement. These liabilities are composed of bearer debentures equivalent to kEUR 77,688 and a convertible loan totalling kEUR 1,337.

The bearer debentures are denominated in Euro and were equipped with an interest rate of 9%. The duration amounts to 10 years and is going to end in October 2024. The issue price was at 97%. Attributable interest and disagio with a total of kEUR 1,227 were booked to the account of interest expenses.

The convertible loan amounts to kEUR 1,336 and has no fixed duration and no interest rate.

For both positions there is a contract including the mentioned conditions.

Profit participation capitalThe profit participation capital of kEUR 50,000 was guaranteed by a contract concluded on 19th March 2001 with KBC Bank NV. On 30th September 2014 the maturity was extended to 30th September 2019.

All profit participation rights meet the requirements for the classification as Tier II-capital.

Share capitalShare capital amounts to EUR 14,502,794.21 and is divided into 567,300 bearer shares. The shares are issued in bearer form and are contributed to:

• Texas Bildung Holding GmbH & Co. KG, Freiburg im Breisgau• Champ Luxembourg Holding S.à r.l., Luxemburg/Luxemburg• GIM Strategische Investition VI S.à r.l. Luxemburg/Luxemburg

After the change of the bank’s articles of association on 1st October 2014 there’s no further authorized capital.

Capital reservesAt the beginning of the financial year 2014 the stock of capital reserves totalled EUR 90,126,115.89. The possibility of rising the capital reserves by deposits was used in 2014 in compliance with §272 (2) No. 4 HGB (German commercial code). These increases are presented as follows:

• EUR 1,868,030.86 by the former shareholder, the KBC Bank N.V., Brussels• EUR 23,293,432.63 by the new shareholder in relation to their stake of share capital

Further a discount of EUR 369,805.30 was rebooked from the convertible loan of Champ II Luxembourg Holdings S.à r.l. Therefore the capital reserves amount to EUR 115,657,384.68 as per 31st December 2014.

Retained earningsThe stock of other retained earnings remained unchanged with EUR 101,809,559.92.

Notes

Notes

22 | 23

Contingent liabilities and other financial obligationsThe contingent liabilities (off-balance sheet) consist of no individual contributions that are of major importance with regards to the bank‘s overall activity. This relates solely to transactions as part of customer credit transactions. The bank uses risk classification and early warning indicators to assess the probability of default. On this basis it can determine the risk of default of contingent liabilities.

With regards to long-term rental agreements with fixed terms of up to 2019, other financial obligations amount to kEUR 1.410.

There were no other financial obligations of major importance on reporting day.

Contengencies not reported on the balance sheetRegarding our share in the Liquiditäts-Konsortialbank GmbH there is no additional funding liability anymore. The Liquiditäts-Konsortialbank is in liquidation – the execution of the liquidation is scheduled for 2015.

Other obligationsWith regards to irrevocable credit commitments, this refers to confirmed book credits, of which kEUR 20,000 has a remaining term of up to one year and kEUR 348,617 a remaining term of more than a year. Individual positions that are of importance with regards to the bank‘s overall activity are not included.

Other administration costsMajor costs consist of IT charges of kEUR 2,243, IT-support of kEUR 2,226 (including kEUR 1,390 to the former parent company), due diligence costs of kEUR 1,877, other consulting fees of kEUR 1,659, compulsory contributions of kEUR 1,138, expense for buildings of kEUR 1,302, expenses for cost reimbursement to the former parent company of kEUR 765, recruitment costs of kEUR 486, expenses for human resources services of kEUR 457, advertisement of kEUR 455, travel expenses totalling kEUR 433, audit costs of kEUR 426 and legal expenses of kEUR 302.

Extraordinary expenses and income Extraordinary expenses exclusively relate to the pro rata accumulation of the difference in the BilMoG initial assessment of the pension provision with the context of art. 67 EGHGB (Introductory Act to the German Commercial Code). Extraordinary income includes the purchase price from the sale of parts of the bank to our former parent company.

Other operational costs and incomeWith regards to the other operational costs, these mainly include the expense of allocating the pro vision for damage caused by contract breach totalling kEUR 568 and the interest paid for pension pro visions in accordance with BilMoG amounting to kEUR 488.

The other operational income mainly consists of net gains from the currency valuation totalling +kEUR 1,112. Furthermore the position shows cost reimbursement of kEUR 104 and reimbursement for appraisal expenses amounting to kEUR 128.

Tax from income and profitThe position taxes on profit and loss that amount to kEUR 3,604 mainly consists of the anticipated tax expenditure for the financial year.

Notes

Notes

24 | 25

Forward transactions Fair values of derivative financial instrumentsAs part of derivatives trading, the following outstanding types of transactions existed on the day of reporting:

The price risks resulting from forward transactions are monitored and limited in the context of the relevant control model

Nominal amount in EUR up to 1 yearRemaining term

1-5 yearsRemaining term

over 5 yearsRemaining term Total

Interest related swaps

Interest rate swaps 143,324,243 424,473,337 94,384,901 662,182,481

EUR 143,324,243 409,987,408 75,126,974 628,438,625

other currencies 14,485,929 19,257,927 33,743,856

Cap 94,732,566 208,593,056 5,009,756 308,335,378

Floor 2,666,666 16,666,666 19,333,332

Currency-related swapsForward exchange transactions 650,634,210 99,302,579 749,936,789

USD 355,213,630 7,885,218 363,098,848

PLN 133,705,777 69,599,096 203,304,873

RON 28,380,374 16,000,000 44,380,374

GBP 32,217,419 32,217,419

SEK 29,191,853 29,191,853

JPY 21,803,032 5,818,265 27,621,297

other currencies 50,122,125 50,122,125

Cross currency swaps 51,844,430 51,844,430

Foreign exchange options 276,238,056 19,808,937 296,046,993

USD 265,782,130 19,808,937 285,591,067

GBP 4,761,904 4,761,904

other currencies 5,694,022 5,694,022

Cross-IRS 17,822,255 18,331,666 36,153,921

Every working day the bank provides the market values for the derivatives using the external computer programme PMS, which is provided by much-net AG in Bonn. The current cash value of the cash flows is classed as the market value of a transaction. The calculation that is carried out is based on current exchange rates, yield curves and volatility factors, provided that it relates to option contracts. This market data is provided by Thomson Reuters.

At the end of the year the relatively high market values, in particular for the partial portfolios of interest rate swaps and currency forward transactions, are the result of an isolated view of these portfolios without considering the parts of the entire portfolio that appear in the balance sheet.

On the one hand, the bank operates the derivative business with customers. Therefore the transactions undertaken by the customers are immediately covered by the banks, until 30th September 2014 in particular within KBC Group. These transactions themselves, and also in the group, represent a closed position, from which only the present value of the margin leads to marginal market values.

On the other hand, derivatives are used to manage the balance sheet structure. Market risk of financial fixed interest transactions and/or currency exchange related transactions is primarily eliminated or reduced on an individual transaction level by using interest rate swaps. Furthermore, hedges are also used, e.g. foreign currency transactions with fixed interest rates of under 1 year are swapped into corresponding Euro transactions using currency forward transactions. This takes place in the light of the bank not wanting to enter into considerable interest rate positions in foreign currencies and by using the swap the management can be carried out in Euro. Hedging transactions do not qualify as valuation units in the context of § 254 HGB (German commercial code).

If the financial positions were also to be evaluated using a fair value approach, negative market values of the derivatives would be compensated by positive fair values of the balance-sheet transactions. A provision for anticipated losses as part of the loss-free valuation of the bank book did not need to be formed as the bank as a whole, taking into consideration the expected refinancing, risk and administrative costs, showed a positive present value for the entire interest rate book.

The bank uses the present value approach for proof of the loss-free valuation.

kEUR Negative fair value

Positivefair value Total

interest rate swaps (incl. cross IRS) -21,031 12,378 -8,653

caps (incl. caps from collars) -59 59 0

floors (incl. floors from collars) -21 21 0

Forward currency transactions -14,174 14,789 615

Currency options -3,108 3,108 0

Notes

Notes

26 | 27

Other information

EmployeesNumber of active employees as an annual average:

Employee statistics as of 31st December 2014(excluding board)

Male Female Total

119 67 186

MandatesMandates of Board of Directors were not observed.

Existing investments in the Bremer Kreditbank AktiengesellschaftIn accordance with §20 para. 1 AktG (German Stock Corporation Act) it was disclosed by the shareholders, that the following ownership investments of the direct and indirect parties are above thethreshold of 25%.

Type of investment Investor

Direct Texas Bildung Holding GmbH & Co.KG, Freiburg im Breisgau

Indirect Teacher Retirement System Of Texas, Austin, TX/USA

Direct GIM Strategische Investition VI S.à r.l., Luxemburg/Luxemburg

Indirect Grovepoint Capital LLP, London/UK

Indirect Grovepoint Investment Management GP Limited, St Peter Port/Guernsey

Direct Champ Luxembourg Holdings S.à r.l., Luxemburg/Luxemburg

Indirect BRH Holdings GP, Ltd., Georg Town/Cayman Islands

Indirect AGM Management, LLC, Wilmington, DE/USA

Indirect Apollo Global Management, Wilmington, DE/USA

Indirect APO (FC), LLC, The Valley, Anguilla/BWI

Indirect Apollo Principal Holdings VII, GP, Ltd, Georg Town/Cayman Islands

Indirect Apollo Principal Holdings VII, L.P., Georg Town/Cayman Islands

Indirect Champ GP, LLC, Wilmington, DE/USA

Indirect Champ L.P., Ugland House/Cayman Islands

Age in yearsMale Female

Number % Number % Number Total %

up to 25 1 0.8 2 3.1 3 1.6

up to 45 54 45.4 31 47.7 85 46.2

up to 65 64 53.8 32 49.2 96 52.2

Gesamt 119 100.0 65 100.0 184 100.0

Notes

Notes

28 | 29

Executive Board Axel Bartsch (chairman) Executive board of the bank

Jens Rammenzweig since 1st February 2015 Executive board of the bank

Guy Snoeks until 31st January 2015 Executive board of the bank

Supervisory board Dr Ernst Thomas Emde (chairman) since 1st October 2014 Lawyer, Frankfurt am Main, Germany

Dr Dirk Hoffmann (deputy chairman) since 1st October 2014 Lawyer, Rum, Austria

Gernot Wilhelm Friedrich Löhr since 1st October 2014 Investment Professional, London, United Kingdom

Dr Manfred Puffer since 8th October 2014 Senior Investment Advisor, Mehrbusch, Germany

Brent George Geater since 1st October 2014 Investment Manager, London, United Kingdom

Sascha Säuberlich since 8th October 2014 Investment Manager, London, United Kingdom

Manfred Jarczak Employee representative for bank employees Bremer Kreditbank AG, Bremen

Konrad Markus Rempe Employee representative for bank employees Bremer Kreditbank AG, Bremen

Peter Steding since 11th December 2014 Employee representative for bank employees Bremer Kreditbank AG, Bremen

Dr Wolfgang Schrörs (chairman) until 30th September 2014 Managing partner Dr Schrörs Vermögensverwaltungsgesellschaft mbH & Co. KG, Bremen

Dr Klaus Ridder (deputy chairman) until 30th September 2014 retired

Dirk Mampaey until 30th September 2014 Senior General Manager Corporate Services KBC Bank NV, Brussels

Luc Gijsens until 30th September 2014 CEO Merchant Banking KBC Bank NV, Brussels

Executive and Supervisory Boards RemunerationIn 2014 the total remuneration of the Executive Board was kEUR 2,017 and kEUR 125 for the Supervisory Board.

The total remuneration for former members of the Executive Board and their surviving dependants was kEUR 184.

Pension obligations totalling kEUR 1,494 were set aside for these individuals.

On the balance sheet date credits were used as follows:

The credit incurred 6.5% interest.

Auditor‘s feekEUR 216 net (prev. yr. kEUR 236) was calculated for the audit of the financial statements, for other consultancy services kEUR 114 net (in prev. yr. kEUR 129), and for other services kEUR 8 net (in prev. yr. kEUR 8).

Proposal for appropriation of profitThe Executive Board proposes to use the retained profits for 2014 totalling EUR 7,054,529.84 to add EUR 7,050,000.00 to the other retained earnings. It proposes to carry over EUR 4,529.84 as profit to the new financial year.

Bremen, 12. Februar 2015

BREMER KREDITBANK AKTIENGESELLSCHAFT

THE EXECUTIVE BOARD

Bartsch Rammenzweig

Executive Board members kEUR 7

Notes

Notes

30 | 31

1 Fundamentals, business model, goals, strategy 32 1.1 Preamble 32 1.2 Shareholders 32 1.3 Strategy/Business Model 33 1.3.1 Target Groups 33 1.3.2 Products and Services 34

2 Economic report 36 2.1 Macroeconomic and industry-specific general conditions 36 2.1.1 Macroeconomic situation 36 2.1.2 Ifo Business Climate in Germany 36 2.1.3 Financial Markets 37 2.1.4 General Banking Market 38 2.1.5 SME Business of German Banks 38 2.2 Business performance 39 2.3 Results of operations 39 2.3.1 Commercial law perspective 39 (according to HGB – German Commercial Code) 2.3.2 Management reporting by division 41 2.4 Financial position 42 2.5 Net assets 43

3 Subsequent events 44

4 Forecast 44 4.1 Balance-sheet forecast 44 4.2 P&L forecast 44 4.3 Capital forecast 45

5 Risk report 46 5.1 Principles of the risk strategy 46 5.2 Risikomanagement 46 5.2.1 Organisation of risk management 47 5.2.2 Communication 48 5.2.3 Risk categories 49 5.3 Summary 59

Management Report

Annex to the financial statements | Management Report

According to article 89 of the EU Directive 2013/36/EU (Capital Requirements Directive, CRD IV), the requirements for the country-specific reporting (the so-called country-by-country reporting) have been transposed into German law in §26a KWG.

The above mentioned disclosure requirements refer to name, nature of actvity and geographical location, turnover, number of employees, profit/loss, taxes, as well as public subsidies of all foreign subsidiaries which are incorporated in the consolidated financial statements as part of the full consolidation.1

Although the Bremer Kreditbank AG has no foreign subsidiaries, it is, according to the interpretion by the German credit business, not exempt from disclosing this information.2 However, national branches do not have to be disclosed separately.3

Thereof, the determination of the turnover is based on the operating result (without value adjustments and administrative expenditures including interest surplus, commission surplus, trading result and other operating result).4

In order to determine the full-time equivalent of the employees reference is made to § 267 par. 5 HGB (German commercial code).5 According to this, the average of the numbers of full-time equivalent employees at each of the 4 quarter-endings of the financial year is to be used. This number incorporates 2 board members.

Losses are reported as negative numbers, profits as positive numbers.

Taxes have been calculated based on the German Corporate Tax Act and the German Trade Income Tax Act.

Bremer Kreditbank AG has not received any public subsidies, neither in 2014 nor before.

Overview:

* including other non-income taxes of 34,915.22 €

According to § 26a KWG respectively article 90 CRD IV the return on assets is defined as quotient of net profit and total balance sheet. The net profit as of 31/12/2014 was set as net profit in the financial statements6 by the Bremer Kreditbank AG.

1 Minutes “Deutsche Kreditwirtschaft: Aufsichtsdialog-Fachgremium Säule 3”, Punkt 92 Minutes “Deutsche Kreditwirtschaft: Aufsichtsdialog-Fachgremium Säule 3”, Punkt 153 Minutes “Deutsche Kreditwirtschaft: Aufsichtsdialog-Fachgremium Säule 3”, Punkt 134 Minutes “Deutsche Kreditwirtschaft: Aufsichtsdialog-Fachgremium Säule 3”, Punkt 45 Minutes “Deutsche Kreditwirtschaft: Aufsichtsdialog-Fachgremium Säule 3”, Punkt 56 Minutes “Arbeitskreis Basel II-Fachgremium Säule 3”, Punkt 38

Annex to the financial statements of Bremer Kreditbank AG

Return on assets = = =Net profit 7,050,048.91 €

0.39 %Total balance sheet 1,825,152,344.50 €

The audit opinion of our external auditor does not refer to the content of this annex.

Country Germany

Name Bremer Kreditbank AG

Nature of activity Financial institution

Geographical location Bremen/Germany

Turnover 64,037,076.44 €

Number of employees 178.76

Profit/loss before taxes 10,689,348.02 €

Taxes on profit* 3,639,299.11€

Public subsidies –

32 | 33

PreambleThe fiscal year 2014 was in some respects characterised by the change in shareholder structure on 1 October 2014. Out of KBK Bank Deutschland AG came Bremer Kreditbank AG, BKB Bank for short. With extraordinary efforts made by all colleagues and vigorously supported by the shareholders, BKB Bank has developed into a completely autonomous credit institution with no involvement in a banking group.

The management report is based on “German Accounting Standard No. 20” of the (group) management report.

Shareholders Following the disposal through the former sole shareholder KBC Bank NV, Belgium, three shareholders have had a direct holding of BKB Bank of more than 25% since 1 October 2014:

• Texas Bildung Holding GmbH & Co. KG, Freiburg in Breisgau• Champ Luxembourg Holdings S.à r.l., Luxembourg/Luxembourg• GIM Strategische Investition VI S.à r.l., Luxembourg/Luxembourg.

We have listed the underlying indirect participants in the notes.

None of the shareholders have a majority stake.

Strategy/Business Model In 2014 the bank has continued with the same stable and successful strategy employed by the bank for over a decade.

Target Groups We at KBC Bank Deutschland AG consider ourselves to be primarily specialists for the comprehensive support of small to medium sized corporate customers (“Mittelstand”) in Germany. We offer this service at our Bremen office and also in our branches in Berlin, Hamburg, Hanover, Düsseldorf, Frankfurt, Munich and Stuttgart. Our business approach is therefore “relationship oriented”. We strive for balanced and long-term customer relationships with a clear commitment to commercial banking. As a result we choose customers who can help us strive for a considerable market share in the target group or area and who will pay appropriately for the products and services offered.

With regards to our corporate customer division, our target customers have a turnover > €30m annually and as they operate on an international scale and have professional management, they give us the opportunity to fulfil our earnings expectations. Furthermore, we offer special product segments such as acquisition financing and real estate business.

Our Network-Desk activities, which were primarily services for international KBC Group customers situated in the KBC home markets, were run out of the Düsseldorf branch. However, since September 2014 they have not been continued as the staff who belonged to the Network-Desk as well as the customers were transferred over to KBC Bank NV.

As another target group, we understand wealthy private customers with liquid assets who are able or expected to invest over €200,000, as well as institutional and other interested parties/buyers of asset management products of the KBC Group.

1 Fundamentals, business model, goals, strategy

1.1

1.2

1.3

1.3.1

Management Report

34 | 35

Products and Services

Corporate CustomersWith regards to corporate banking, all forms of the traditional credit business form the basis for the business relationship.

The division of acquisition financing has been operated from our Frankfurt branch since the start of 2002. Following the successful market entry regarding initial participation in syndicated acquisition loans, we have established ourselves in the German LBO market within a short period of time. Today we are involved as arranger of acquisitions in the midrange segment.

In the real estate business division our emphasis is on real estate financing for professional customers in the core areas of project development and property investments.

In the central international business division we have experienced specialists at our disposal for our customers in the documentary business and export financing groups.

In documentary business, the product range on offer consists of:

• Import and export letter of credits,• Documentary collection,• Handling of international guarantees

as well as in export financing

• Forfeiting of receivables• Buyer credit• Bank-to-bank loans or• Pre-export financing

The medium and long-term export financing is regularly covered by different European Export Credit Agencies (ECA) against default risks. In addition to Euler Hermes Deutschland AG, our team of experts work with OeKB (Austria), SERV (Switzerland) or FINNVERA (Finland). As a shareholder of AKA Ausfuhrkreditgesellschaft mbH, Frankfurt (AKA), we can furthermore use and offer the entire product range of AKA.

Its multiple participation in syndicated transactions means the bank offers an excellent network of banking partners in the syndicated lending business. Our small and medium-sized German customers are able to take advantage of this network, the associated placement power, as well as our long-standing market expertise in the structuring of syndicated loans and bonded loans.

An experienced trading team operates the Treasury and Corporate Sales Business out of our Frankfurt branch. All interested small- and mid-caps are offered an additional benefit from research publications and products oriented towards the needs of the customer to all questions on interest rate, currency and liquidity management. In addition to the 10-hour trading window from 7.45 to 17.45, participation (as market maker) in the multi-bank platform 360 Treasury is also part of the service we provide.

1.3.2

1.3.2.1

1.3.2.2

The BKB Bank satisfies all the requirements that an independent, quick and safe implementation of the incoming and outgoing domestic and foreign payment system guarantees. A high quality and flexible service is guaranteed through a worldwide network of correspondence banks, bank accounts in various currencies and its own participation in all essential payment procedures, including S.W.I.F.T., TARGET2 and SEPA. For our clients we have a variety of e-banking solutions for paperless ordering and electronic statement of account requests, Multicash, BKB online banking or S.W.I.F.T. for Corporates, depending on customer need.

Private customers/Asset ManagementIn private banking, the focus on the acquisition of asset management mandates remains unchanged. Our offer of supervised traditional asset management deposits comprises a share of up to 80% in different strategies. The minimum size is €200,000. This offer is supplemented through the funds’ portfolio management with a minimum investment of €100,000.

We offer an asset management service, exclusively with the American shares called “Best Picks”, in co operation with the American brokerage house, Raymond James. This starts with a volume of US$250,000 and is exclusively offered in Germany.

Alongside the asset management mandate, there is another focus on the traditional consulting business. For security deposits that are individually managed, we advise our customers in almost all asset classes.

The asset management team has specialised in selling exclusive fund products for more than 10 years and has progressed to become an established force in the DACH region (Germany, Austria, Switzerland). From Germany and Austria, we offer our clients tailored investment strategies for every market environment to meet individual needs. Continuity and transparency in the service and products we provide are the basis of our success. We have a great expertise in country specific, regional and global investment solutions, which includes all major equity and bond markets.

KBC Asset Management NV (KBC AM) based in Brussels acts as strategic partner and is an approved bond expert. With assets of €89 billion, KBC AM belongs to the leading providers of investment solutions in the Belgium market. The services, which KBC AM feature Europe-wide in particular, include specialisation in local currencies, emerging market bonds and offsetting inflationary risks. The first-rate expertise of the bank in the management of assets reflects in regular awards through independent agencies like S&P and Morningstar.

1 Fundamentals, business model, goals, strategy

Management Report

36 | 37

Macroeconomic and industry-specific general conditions

Macroeconomic situationAt the start of 2014, the German economy was in excellent shape, economic growth was perhaps even higher than previously thought. The German economy boomed. The fall in unemployment, the competitiveness of the German economy and the balanced state budget promised a good year.

The total economic output in Germany then declined sharply in the following months. The economic trend fell below expectations. On the one hand there was the burden of the German economy, which the Euro zone only gradually recovered from, and the growth on third markets remained moderate. On the other hand, geopolitical tensions increasingly emerged as a stress factor.

From August 2014, leading economic experts warned against a long phase of stagnation, deflation and higher unemployment. Economists therefore called for further measures from the ECB in order to provide economic support of the monetary union. The German economy was hit by declining exports and inadequate investment. This was also, among other things, caused by the crisis in the Ukraine and the accompanying uncertainty.

As the year continued, the German economy started to stutter. The ZEW1 economic outlook for Germany fell in October by 10.5 points. It was the tenth successive drop for the index. ZEW financial market experts justified this with continued uncertainty due to the conflict with Russia as well as on recent disappointing figures on orders, production and foreign trade.

Towards the end of the year, the German economy gradually improved. The DIW2 economic indicator climbed up almost three points to 99.4 points in December, however it still remained under the 100 point threshold, which indicated an average growth in the German economy. The conditions for the domestic market looked brighter.

Domestic investment activity still held back however, due to the major economic risks. However support came from foreign trade. Exports performed robustly, also due to the weakening of the Euro.

Ifo Business Climate in GermanyAfter the ifo Business Climate Index fell several times in a row between June and September 2014, there followed an upward change in trend. Business sentiment improved three times in succession. By the end of the year, the corporate assessment had risen even more than business expectations.

Completely unimpressed by the previous government and the threatening political change in Greece, companies were showing renewed confidence.

1 Zentrum für europäische Wirtschaftsforschung (Centre for European Economic Research)2 Deutsches Institut für Wirtschaftsforschung (German Institute for Economic Research)

2 Economic report

2.1

2.1.1

2.1.2

2.1.3

The business climate for the manufacturing industry had further improved. The assessment of the positive business performance was only slightly reduced. The optimistic expectations of the industrial companies turned positive at the end of the year.

In the wholesale market, the Business Climate Index rose for the third successive time at the end of the year. This can be attributed in particular to the obviously more favourable assessment, while the current business outlook of the wholesalers was evaluated less positively. On the other hand, the business climate has worsened in the retail sector.

In the construction industry, the business climate worsened only slightly, however it still remained at a very high level. Building firms decreased their positive assessments slightly, both for actuals and expectations.

Financial Markets In 2014, the development of the financial markets in Germany and Europe was also characterised by expansionary monetary policy measures from the European Central Bank. In two steps the central bank dropped the main refinancing rate from 0.25% at the start of the year to just 0.05%. For the first time the commercial banks have to pay a fee for their deposits with the ECB – which exceeds the minimum reserve. The excess liquidity of the banks has tended to drop over the course of the year.

In expectations of a longer lasting phase of expansionary monetary policy, the long-term interest rates started to nosedive. The yield on a 10-year government bond, which at the start of the year was still over 2% , slid below 0.6%.

In 2014, the stock markets experienced a rollercoaster ride. Initially, a favourable economic outlook ensured price gains. However, the recovery came to a standstill – affected by geopolitical uncertainty, among other factors. The geopolitical stimulus in the second half of the year ensured an increase in market prices.

On the foreign exchange market, the Euro came under pressure. At the start of the year, it was quoted against the US dollar at just under €1.40 per dollar. In comparison to the end of the year when it was valued at €1.25 per dollar.

Management Report

38 | 39

2.1.52.3.1

2.2

2.3

General Banking Market“Banking in Upheaval” was the theme of a conference at the trade journal Handelsblatt on 3 and 4 September 2014. The major issues within the sector were discussed there.

As in the previous year, 2014 was a difficult year for banks for various reasons. In the last three years, not even 6% of the banks earned their equity capital/costs. The costs are on average 30% too high. Contrary to popular opinion, it is not the result of recent increased capital requirements. The weakness of the banks‘ yield is a long-term development and the result of the decline in net interest and commission income measured relative to equity. The average cost-income ratio is now at roughly 70% of the same level as it was in 1970.

Focusing on the business model is the major driver in solving these structural problems. It offers up the potential to cut costs significantly. Many areas can only continue profitably with sufficient size and through economies of scale, something which will lead to a much increased diversification of the business model. In the future, the market will split up into global universal banks, regional institutions and specialists that will position themselves as having a competitive advantage such as customer access and possible customised savings using their production processes. There is further potential in the restoration of the core banking system and application environments, built up over many years, and in the considerable streamlining of the branch network.

The banking market is therefore in a period of considerable change. All institutions are going their various ways in order to survive long-term.

SME Business of German BanksAccording to a survey by Creditreform from April 2014, the equity ratio among small and medium-sized enterprises has further improved. Approximately one third of the firms surveyed can produce a regulatory capital backing of more than 30% of the balance sheet total. German firms have a solid financial base that has not been seen for years. The liability has also improved in light of improved payment practices by customers. Internal financing is therefore becoming easier for many companies.

Many medium-sized businesses also wanted to finance themselves via bonds. However, despite simpler access possibilities, this is hardly an alternative to loan financing. Due to the current high administration costs, this market is only suitable for large firms that can aim for appropriate issue volumes. In addition, a lack of transparency within the marketplace in the past has led to numerous cases of bankruptcy, so much so that this market is no longer a reliable source of funding. That medium-sized businesses even set up their own bank for financing, like the laser specialist and machine tool manufacturer Trumpf, will probably remain more an exception.

It is understandable that companies have moved away from banks. They experienced many institutions as partners with erratic mood swings. At first they made generous loans available, then withdrew them again for various reasons.

2.1.4 However in 2014 the market has ultimately been characterised by a large number of banks still offering medium-sized sufficient credit lines. The companies have recognised that, in view of the current levels of interests rates, equity is more expensive than borrowing. In the future the classic credit financing is also one of the fundamental future sources of financing for those medium-sized businesses who are thinking long-term.

There was therefore enough money in the market in 2014 and there was no credit crunch. However the competition was so intense, even for our clients, that the margins came under immense pressure.

Business performanceOverall, the bank can look back on a successful financial year in 2014. The equity base strengthened significantly and the liquidity position remained stable. Thus the bank has achieved the foundation for future growth.

The earnings after tax are €7.1m – despite considerable special factors in connection with the independence of the bank. It fell only marginally short of the earnings target for 2014 of €8.2m.

Results of operations

Commercial law perspective (according to HGB – German Commercial Code)In 2014, the bank was able to generate a net profit of €7,050,000, approximately €5.1m below the previous year, however above the annual profit from 2011 and 2012.

The important positions in the income statement are detailed below.

In comparison to the previous year, the interest income reduced by €22.9m and the interest expenses by €16.6m – as a result, the net interest income dropped by €6.3m. This is largely due to the decline in business and is in line with the condensed balance sheet. As a result of the restructuring in the securities portfolio, the interest income from fixed-income securities has reduced – overall the level of interest rates has also dropped further in 2014. Moreover, the interest expenses along with €3.0m interest from participating rights also include €1.2m for the subordinated bond for the first time in 2014.

The commission income and expenses was lower in 2014; this can be attributed above all to vastly reduced received and paid guarantee commission. The net commission income has overall reduced by €1.5m.

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2.3.2 Management reporting by divisionThe total gross income was €64.9m in 2014, namely €7.2m below that of the previous year, however €4.1m over the planned value. This reduction is largely due to the planned reduction of the balance sheet.

For the first time in 2014, the more balanced distribution of the liquidity costs impacted above all the corporate customer business: approximately €6.2m liquidity costs were redirected between corporate customers and the Treasury through the introduction of the liquidity transfer price system (LTPS).3

In the final analysis, gross revenues of all corporate customers were €54.8m, approx. €0.9m above the forecast value and about €13.5m below the previous year’s figure.

The income in the private customer business/asset management reached €3.3m and was therefore slightly above the planned and previous year’s level.

The treasury result of €6.6m was significantly higher than in the previous year due to the offsetting of liquidity costs. It was, however, significantly above the planned value – this is largely due to the fact that, particularly in the first half of 2014, the actual refinancing costs turned out to be less than had been accounted for in the LTPS.

3 The bar chart “Actual 12/2013” shows what the influences on the liquidity costs from the previous year were, provided that the liquidity costs had already been calculated in 2013.

Other operating income has reduced by €0.9m in comparison to the previous year, above all caused by lower price gains from the foreign exchange business.

General administration costs in 2014 were up €6.7m compared to the previous year – primarily driven by higher other administrative expenses. This includes €1.9m due diligence costs for further growth opportunities, €1.4m for the placement of subordinated bonds, €0.6m for the separation from KBC Group (primarily compensation payment for Transitional Services that were not utilised) as well as €0.5m for the complete independence of our rating landscape.

At €22,977,000, booked risk provision affecting the P&L is once again significantly down on the previous year’s figure, showing here a clear positive trend. The depreciation included therein and gains from securities in the liquidity reserve amount to €4,233,000, so €18,744,000 relates to the traditional credit business. Despite the improvement in comparison to the previous year this value remains above our expectations, however, it includes last adjustments as a result of the economic crisis. Due to the declining loan volume €1,625m of the global value adjustments in 2014 could be dissolved.

For the disposal of the business segment Network Desk, closely affiliated to the KBC Group, to KBC Bank NV, the bank has received extraordinary income equivalent to the purchase price of €6.4m.

3.3 3.0 3.2

Gross income other profitcenters (EUR mln.)

Private Banking/Asset Management

Treasury Other Income

6.6

3.7

0.3 0.1 0.2 0.2

Actual 12/2014

Actual 12/2013Budget 12/2014

Gross income Corporates (EUR mln.)

35.741.5

1.5 1.0 3.3

10.25.0

12.57.4 6.4 7.5

45.1

SME Network Desk AQF Real Estate

Actual 12/2014

Actual 12/2013Budget 12/2014

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2.4

2.5In 2014, the administrative costs from the management reporting perspective were significantly above target and previous year levels. This is for the most part due to the one-time impact, which is described in greater detail in chapter 2.3.1 Commercial law perspective (according to HGB – German Commercial Code), which amounted to a total of approx. €5m.

The cost/income ratio, which reflects the relationship of costs to earnings, is 56% and is therefore higher than in the previous year (42%). This is less surprising, but arises simply as a consequence from low income with slightly increased expenditures.

Financial positionThe bank’s capital position has improved in the financial year 2014.

Our bank continues to provide a subscribed capital of €14,503,000, which is subdivided into 567,300 bearer shares. The shares are issued in bearer form.

The capital reserves amounted to €115,657,000 and increased in 2014 by €23,663,000 from capital increases of the new shareholders as well as €1,868,000 from a capital increase of KBC Bank NV, Belgium.

The stock of revenue reserves remains at €101,912,000.

The bank now shows subordinated liabilities for the first time through the issue of an unsecured 10-year subordinate bond totalling €76.5m with a nominal yield of 9%, as well as the issue of an unsecured non-interest-bearing convertible bond with no fixed maturity totalling €1.7m. The balance sheet disclosure of 31 December 2014 shows €79,025,000. This is because on the one hand the pro rata interest rates for the subordinate bond of €1,188,000 have been included and, on the other hand, one part of the convertible bond (€370,000) is attributable to the capital reserve.

The participation rights capital of €50,000,000 was granted through a contract that was agreed on 19 March 2001 with the KBC Bank NV, Belgium. On 30 September 2014, the term of the participation rights was extended until 30 September 2019; the interest rate remains unchanged at 6%.

In order to guarantee the banking operations as well as its ongoing development, the bank continually invests in operating and business equipment and non-tangible assets. In the financial year 2014, no capital expenditure of particular significance was affected.

Net assetsBalance sheet totals reduced in the reporting year by approximately €362m to now €1,825m. The drop is largely due to the balance sheet totals target to closing, which was agreed between old and new shareholders.

Cash and reserves amount to €77m and are €64m above the previous year‘s value. The reason for this is a higher credit balance at the central bank for the purpose of liquidity reserve.

Receivables form customers have reduced in 2014 by €441m to €1,484m. Our expectation, to extend the business again immediately after closing, was not implemented due to a decline in demand for credit in the last quarter of 2014.

Receivables from credit institutions have almost halved in comparison to the previous year and amount now to €22.7m. Therefore the credit business with banks continues to play a subordinate role.

Bonds and other fixed interest securities increased in the financial year by €31m to €228m – it concerns exclusively German, Dutch and Belgian government bonds, all of which are ECB eligible and deposited in collateral accounts. They are designed to be able to participate in the cheapest refinancing programme of the ECB and represent, alongside the assets at the ECB, the liquidity reserve of the bank.

Liabilities to financial institutions have significantly reduced through the targeted reduction of the balance sheet total; they amount to €364m, about half that of the previous year’s value. This is largely due to the liabilities owed to KBC Group as well as the central bank.

Liabilities to customers have only slightly reduced in comparison to the previous year; however, the maturity structure has massively changed: At the end of 2014, the bank already has more than €240m worth of liabilities primarily from institutional depositors with a remaining term of over 18 months.

Contingent liabilities have decreased by €217m. This development is in line with the declining balance sheet business.

The increase in irrevocable credit commitments by €48m results predominantly from the reduction in the utilisation of the balance sheet within irrevocable loan commitments, so that the unused part is now shown with the irrevocable loan commitments.

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4.1

4.2

4.3

3 Subsequent events

4 Forecast

After the reporting date, there were no procedures that have had a material impact on the assets, finance or results of operations and are not taken into account in the financial statements.

The forecast for the year 2015 is based on the assumption of a continuation of the BKB Bank within the proved, long-standing strategy (going concern). The business planning for it was coordinated as usual with the Supervisory Board.

Balance-sheet forecastThe bank anticipates for the end of 2015 with a total balance sheet of €2,012m. If one considers that the security portfolio reduces to €100m, this represents a clear business expansion, above all with customer loans (planned value €1,821m). The refinancing for growth is possible with additional liabilities to banks (planned value €479m) and customers (planned value €1,139m).

P&L forecastBased on the business expansion, the bank expects a gross income for the financial year 2015 of €60.2m. The largest income share of €55.5m comes from the corporate customer business. In comparison to previous years, this represents a decline; if one considers, however, the cessation of the Network Desk activities, which the KBC Group took over completely from 1 October 2014 as well as the partial sale of the portfolios of the acquisition finance in August 2014, the bank is ultimately planning income growth.

The largest increase is planned for our SME business; here we anticipate in 2015 with income after deduction of liquidity costs of €39.0m. Income from acquisition finance should amount to €8.4m, income from real estate activities to €8.1m.

Income from corporate sales, which is included in the corporate client business, is expected to be somewhat reduced to €2.2m in 2015.

In the private banking business/asset management we anticipate for 2015 income of €3.3m and therefore remain at 2014 levels.

With the introduction of LTPS in 2014, the Treasury will be paid the liquidity costs that were caused by the profit centres. Meanwhile as the bank is organising the refinancing predominantly with a longer maturity, a large portion of the notional liquidity costs may accrue. Nevertheless, for 2015 we are planning a residual return from the transformation of interest rate and liquidity maturities of €1.3m.

After the considerable exceptional expenses in 2013 and 2014 in spinning off the bank, we anticipate a further administration cost of €29.3m for 2015.

The bank expects a risk provision, booked through P&L, of €12m for 2015.

We expect net profit for 2015 to be €6.0m and remain approximately €1.7m below 2014 results. However, in 2015, alongside the interest on participation rights capital of €3.0m, a total of €7.1m interest for the subordinated bond is also payable. This capital base forms the foundation for further growth opportunities.

Capital forecastWithin the framework of the annual capital planning process, the bank has looked at the risk bearing capacity for the next three financial years – as a result the bank is and remains sustainable. This is above all due to its solid capital resources.

In terms of the equity ratio, the bank expects a (core) Tier 1 capital ratio of >12% for 2015 as well as a total equity ratio of markedly > 15%.

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5.1

5.2

5 Risk report

5.2.1

Principles of the risk strategyOur corporate strategy, which consists of a strong focus on corporate banking business, cannot aim to rule out risk. On the contrary, the deliberate and controlled management of risk is becoming more and more important for the company to succeed. This requires that we recognise the risks at an early stage and that we are able to quantify them in order to develop the correct risk strategy:

• Risk avoidance abstain• Risk reduction introduce counter-measures• Risk limitation Protection via insurance• Risk acceptance take the risk

Taking this into consideration, there are two important guidelines for managing risks in our bank to consider before the individual risk categories are concreted and detailed.

1. With regards every trade, the opportunities and threats must be proportionate and the cost of the risk must be correct.2. We wish to use risk as an additional management tool and use available instruments for it.

Risk managementThe long-term success of the company depends on the efficiency of its risk management. Competitive advantages can be realised by managing risk in a controlled and deliberate manner. One important requirement for this is the company‘s ability to understand the company‘s own risk as an additional performance indicator and to put it into practice.

BKB Bank has outlined the strategic and operational aspects of the bank‘s risk management and made it an integral part of the business bahaviour. At the core of the development and implementation of our risk management system is the aim of creating scope for action that facilitates the long-term security of existing and creation of new potentials for success which in turn secures the bank‘s continued existence. This is achieved by recognising risks that threaten the company‘s existence at an early stage.

The risk management system implemented by the bank is an integral part of the overall planning, management and reporting processes in all relevant units and divisions and is aimed at the systematic identification, assessment, management and documentation of risks. Whilst taking certain risk categories into consideration, the risks of the divisions and operational units are identified and assessed in accordance with their probability of occurrence and level of loss. The assessment of level of loss is carried out whilst considering the effects of risk on operational units. In addition to the strategic orientation of the risk management, the bank has set up a monitoring system that ensures and guarantees the bank‘s continued existence and which will detect any threatening developments and confront them. The risk management system allows the Executive Board to detect significant risks at an early stage and to implement countermeasures. In so doing, the risk management system subjects the bank to continuous improvement. In 2014 many projects were launched to adjust the existing controlling tools to the new supervisory and strategic guidelines. The bank also uses external experts for support.

Every autumn the Executive Board and senior managers from various divisions of the bank continue to develop the business strategy as well as the risk strategy that is based on it. Based on the assessment of the current situation and the risk recently identified in the risk inventory, the focus is to assess the bank‘s current risk situation in light of external factors and market developments and to take action if necessary in order to prevent substantial loss.

Organisation of risk managementThe risk management and the definition of the risk strategy are independent of the internal jurisdiction in the Executive Board‘s responsibility. These tasks are partly delegated within the bank to credit risk management and risk controlling. Furthermore, the internal audit serves as an independent supervisory authority.

The bank has had a risk management system in place for years, which ensures the early detection and assessment of risks and applies the necessary control measures; this involves all market and specialist areas. It is regularly reviewed whether the legal requirements, in particular the Minimum Requirements for Risk Management (MaRisk) are fulfilled.

The internal audit unit is included in the risk management and controlling processes as an independent supervisory point, so that, if necessary, the necessary measures or actions can be implemented at an early stage. Its main task is the supervision of the adequacy and effectiveness of risk management measures. Furthermore, based on its position in the company, internal audit serves to provide impartial information and advice to the management team and the Supervisory Board and serves as the main contact for the external auditor.

The bank has appointed various committees to identify risks, to make assessments and decisions regarding risks. The main committees with regards to risk management are:

The Kredit Committee Bremen (KCB), which is made up of the full Executive Board, decides, depending on the size structure of our credit portfolio, over the predominant portion of the credits. In an advisory capacity, the manager of the credit advice department/Approval 2 (back office), amongst others, is involved in the decision-making.

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5.2.2

5.2.3

5.2.3.1

A member of the Executive Board, as well as managers from various divisions of the bank are members of the Operational Risk Committee (ORC). The ORC initiates risk inventories whose results are promptly consolidated in a risk inventory. It is responsible for the risk process, i.e. the identification and quantification of operational risks taken by the bank, and makes suggestions for individual control measures and oversees their implementation. The risk inventory is the basis for the effective management of risk by the Executive Board and is a control function for the Supervisory Board.

The asset and liability committee (ALCO) deals with the interest, currency and liquidity risk at least once a month. In addition to the Executive Board, the Treasury, the head of strategic methods and processes of bank management, the head of risk controlling, as well as (risk) controlling staff, are members of this committee.

The risk and audit committee (RAC) supports the Supervisory Board of the bank, monitoring the integrity, efficiency and effectiveness of the control mechanisms that are implemented within the bank as well as risk controlling. Furthermore, the RAC supervises the bank’s processes and procedures to ensure they comply with the law und regulatory requirements. The RAC comprises of three members of the Supervisory Board, which are elected for an indefinite amount of time. Permanent invitees are the Chief Executive Officer and the Head of the Risk Controlling department as well as the Head of Compliance and Internal Audit.

CommunicationThanks to transparency, reliability and the highest level of openness that allows dialogue from different perspectives, trust can be built amongst those involved in the risk assessment process. For this reason the bank initiates an ongoing and interactive process for presenting the risk management system and its results with all those who are involved in the process in the bank (management meetings, risk assessments, operational risk committee) as well as with those bodies with legal status (Board with credit committee and risk and audit committee) and those bodies who deal with the bank regulations.

The controlling department produces detailed quarterly reports regarding all risk areas of the bank for the risk report. The Executive Board forwards this report to all members of the Supervisory Board. Once a year the main changes to the business and risk strategy and the current risk situation are presented in the board meeting and the important aspects are discussed.

The risk and audit committee has unrestricted access to all information at the bank. It is entitled to consult the Head of Risk Controlling, the Head of Compliance, the Head of Internal Audit as well as external partners, also without the presence of the Executive Board.

Due to the significance of the risk management system for all bank employees, the Executive Board has set out the process in writing. These guidelines, as well as the business and risk strategy, are available to all bank employees via the Intranet (WIKI).

Risk categoriesWe, BKB Bank, have classified the following risk categories as significant, i.e. with medium or significant degree of risk:

• Counterparty default risk• Liquidity risk• Market risk• Operational risk• Other risk

When organising risk management, risk concentrations of main risks should also be considered. These are investigated and documented as part of the annual risk strategy when considering all areas of risk.

Counterparty default riskWe understand counterparty default risk as the risk of our customer or business partner defaulting – in particular due to deterioration in their credit rating. We differentiate between

• the credit risk or counterparty risk, where our contract partner is unable to meet its obligations and we incur a loss, also in the form of unrealised profits for pending transactions and

• the country risk that arises when contract partners who are based abroad, have transfer problems due to political or economic crises and therefore result in additional default risks for us.

The management and control of counterparty default risk has a high profile within the bank. In accordance with the company‘s policy focussing on small to medium sized corporate customers, the credit management is initially targeted at considering individual risks. The risk assessment is based on a fundamental credit rating analysis which forms together with the assessments for management quality, market position, branch situation as well as forecasts a detailed risk profile. The credit decision is always based on a credit term that includes both on and off balance sheet transactions as well financial instruments (with equivalent credit amount). Customers with economic dependencies are summarised in risk units.

With regards to credit and counterparty risk, several organisationally independent areas of responsibility take over the management task relating to counterparty default risk:

• The market segment comprises the acquisition and support for clients and is responsible for the preparation of vote 1

• Already incorporated into vote 1, the financial analysis and rating process is a more important element for objectively identifying risks through the operative credit function units “credit analysis and rating”

• Subsequent to vote 1, before the credit decision by the operative credit function units “credit advice/vote 2” takes place, a completely independent second vote

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• In addition, problem loans are monitored in a separate group “Problem Loan Management”

• In accordance with the size structure and the risk profiles of the credit portfolios, the vast majority of loans will be decided by the Credit Committee in Bremen (Management Board)

• The job of processing and monitoring collateral and credit is carried out in the separate Credit and Contract Processing department

• Risk controlling additionally monitors the risk management on a portfolio level

The risk assessment of the majority of borrowers is supported by different rating models, which determines the probability of default based on quantitative and qualitative corporate data. These results are the foundation of the risk assessment and the pricing.

In addition, the bank uses a RaRoC (Risk adjusted Return on Capital) as an important control parameter of the pre-calculation, in order to compare businesses with different degrees of risk and conditions that are commensurate with the risk. The RaRoC shows return on economic capital allowing for the risk and liquidity costs, as well as administrative costs.

In the context of risk reporting, loan volume is of primary importance, which, alongside utilisation of the balance sheet, also includes revocable and irrevocable credit commitments, guarantees and warranties that have been taken over, letter of credit obligations as well as credit equivalent values of derivatives.

Loan volume of corporate loans, which target our credit strategy – without taking into account the defaulted credit in this segment – has reduced from €3,485m to €2,823m. The attributable expected loss has dropped from €16.1m in the previous year to €12.4m. The average default probability4 of corporate loans is 1.78%. The decline is on the one hand due to the sale of the Network Desk activities and the partial sale of the portfolios of acquisition finance; On the other hand, the loan volume was reduced owing as well to the smaller total balance sheet target.

4 Refer to 1 year

The loan volume of the defaulted borrower in corporate lending on 31 December 2014 amounted to €204m (previous year €259m). The part of the loan volume not covered by valuable securities, or where no repayments are expected for it, is covered through appropriate risk provision in the form of specific loan loss provision or provisions in the credit business.

Diversification of risks within the corporate loan portfolio becomes clear in the distribution of credit volume (without non-performing loans) according to Expected Loss Rating classes (EL-rating classes). These not only take into account the default probability (PD) but also all eligible collaterals; guarantees, mortgages and cash collateral. The EL rating therefore better reflects the economic credit risk. The EL rating classes are based on the PD classes: 45%5 of the maximum PD rating class is the ceiling for the respective EL rating class. PD und EL rating classes of the default classes correspond to each other.

26% of the loan volume, which for the most part is made up of revocable loan commitments as well as loans, which are secured through in-house cash collateral or prime bank guarantees, are in the rating class 0 with default probability under 0.03%. A further 25% of the loan volume has the EL rating classes 1 and 2 (Low Risk), the main focus with 36% is the segment with medium potential for losses (Medium Risk). The proportion of loans with higher expected losses (High Risk) represents just 13% and, in accordance with our risk strategy, is not allowed to exceed 20%.

We carry out a sector breakdown by means of industrial classification of the Bundesbank (WZ2008). Different characteristics of “industries” are summarised. The four largest sectors – measured by management-related loan volume – make up a total of 44%: Machinery/Heavy Equipment (13%), Wholesale/Trader (12%), Construction/Building Material (11%) and Chemicals (9%). Our declared aim is to keep the share of individual sectors under 20% in order to maintain a diversified credit portfolio.

In order to avoid risk concentration, different class sizes were formed, depending on the existing equity capital, and limited.

A good 6% of our loans to SME have a maturity of more than 5 years. The limit for these is 15%.

5 45% meet the LGD standard for unsecured positions

2,248

2310

344

2,613

316 192364

SME AQF

Akquisitionsfin.

Loan volume Corporates (EUR mln.)

Network Desk Real Estate

Actual 12/2014

Actual 12/2013

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The loan volume in the areas of private banking, banks, KBC Group, Treasury and other areas totals €613m (previous year €420m), the associated expected loss was €49,000 (previous year €72,000). Since 1 October 2014 the credit business has not been listed separately with the KBC Group but has been shown predominantly in the “Banks” segment. The “Treasury” segment includes current government bonds from Germany, Holland and Belgium. On the whole these segments are significantly less risk relevant as corporate banking.

As of 31st December 2014 the portfolio of specific loan loss provisions amounted to €123m and was therefore with €5,858,000 higher than in the previous year.

In accordance with our business strategy there are only a few receivables to borrowers that are not assigned to Europe. Main country risks are strategically limited. As measured by management-related credit volumes and whilst considering which country the business partner or collateral issuer is based in, the majority consisting of 93% (previous year 91%) is distributed among three countries – Germany, Belgium and the Netherlands. Only 4% is distributed in countries with a B or C rating (see Fitch).

Our stress test considerations are based on different scenarios in which increased default probability or reduced recovery rates are used to simulate deteriorating economic conditions. With different spreads that affect the entire portfolio or part of it, the effects on expected and unexpected loss are measured and assessed.

Liquidity riskIn view of the separation of the BKB Bank from the international KBC Group, the liquidity supply in complete autonomy certainly represented one of the biggest challenges. Through the bank’s intensive preparations we can meanwhile look back over three months (after closing), in which the liquidity supply was guaranteed at all times without any problems. We have extended one part of the customer deposits to a maturity of over 18 months; furthermore in the meantime, other banks with liquidity facilities are available to us.

With regards to liquidity risk, the bank differentiates between

• the insolvency risk as the risk of being unable to meet the current or future payment obligations in full or on time,

• the refinancing risk (incl. foreign currency refinancing risk) as the risk of only being able to purchase refinancing resources at increased market interest rates and

• the market liquidity risk as the risk of only being able to liquidate assets at a discount on the market due to exceptional circumstances.

The Executive Board determines the strategic guidelines and limits within which the Treasury (that is based in Frankfurt) takes over operational management. The Control department supervises the position and compliance with the limits and is responsible for the continuous development of the systems and the reporting. In the monthly ALCO meeting the bank‘s current liquidity situation as well as market developments are discussed and necessary actions outlined. Our concept of liquidity risk management consists of early warning indicators, an emergency plan as well as a stress test concept with several defined stress tests.

Due to our strategy we are focused on financing small to medium sized companies, acquisition finance and real estate financing. We are as such focused on lending business. On the other hand a broad-based private banking business is not our aim. The refinancing must therefore take place on the money and capital market.

A significant share of the refinancing funds come from customer deposits. As of the balance sheet date, almost 72% of our customer loans were refinanced through corresponding customer deposits. The ECB as well as third-party banks also play an important role. Moreover, at closing we have received a confirmed commitment from KBC Bank NV, Belgium, in which we can up until 30 September 2016 make use of €750m as well as €550m for a further year (until 30 September 2017). The line of the KBC Bank NV, Belgium was made use of only once up until closing.

To assess the insolvency risk we take into consideration all cash flow that affects liquidity as well as possible payment obligations from open credit lines and aggregate this in a funding matrix. We then compare this to the liquidity lines that are still open (liquidity cover potential) and determine the liquidity buffer. On this basis we assess the current and future liquidity situation using the given parameters. All parameters are periodically validated. The relevant adjustments are made, if necessary.

5.2.3.2

Loan volume Others (EUR mln.)

5 6

384

81

0

136

224197 Actual 12/2014

Actual 12/2013

Private Banking Banks KBC-Group Treasury

2014 Specific Loan Loss Provisions Provisions for risks General Loan Loss Provisions

01.01.2014 117,386 6,425 7,624

Utilization -15,531 -998 0

Reversal -3,377 -4,970 0

Additions 24,767 0 -1,625

31.12.2014 123,244 456 5,999

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As expected, the cash flows of the liquidity maturity statement were in the 6-month bucket a few weeks foreseeable above the early warning indicator (80%) shortly after closing, and in part over the limits of the liquidity bottleneck (90%). Measures for emergency planning were however initiated in advance: customer deposits were substantially extended in terms of maturity. Moreover, the capital was increased through the issuance of a subordinated bond.

As per 31 December 2014, the maximum utilisation of the potential liquidity coverage in the observation period of twelve months is 63% (on 30 December 2015). The remaining buffer to the potential liquidity coverage was on this day €386m. Until the early warning indicator is set off, about €176m remains. Numerous liquid and realisable assets are available, ensuring our permanent willingness to pay.

Furthermore, we have installed a range of quantitative and qualitative early warning indicators, which are set off when a piece of ad hoc information from the treasury and the Executive Board arrives.

The refinancing risk to be able to achieve additional liquidity at only raised interest rates is essentially explained by the extension of the credit spread for banks or by the deterioration of the own credit rating.

The extension of the credit spread for banks generally leads to a corresponding increase in reference rates (e.g. Euribor) in inter-bank trade. As we have agreed the majority of customer business on this basis or by collecting through interest rate hedges, we could pass on this extension.

A deterioration of our rating would lead to a relatively short-term increase in refinancing costs based on the high proportion of investments that are sensitive to interest. An increase in the cost of refinancing funds by one basis point is the equivalent of an additional expenditure of approx. €88,000 per year.

The market liquidity risk at BKB Bank relates to the securities portfolio that exclusively consists of Euro government bonds from European countries. As before, the ECB accepts all securities as security for participating in the tendering process so that we can assume liquidity in terms of refinancing. The sale of some bonds has also shown that a market exists further on and price reductions are only due to the credit risk of the issuers.

The German Federal Financial Supervisory Authority has issued a liquidity policy and the banks‘ adequate ability to pay is measured against this. The bank has adhered to this principle at all times in past years. During this year the ratio for the first maturity band for the reporting dates was between 1.22 and 2.99 (previous year 1.26 and 1.75).

The monitoring period of the Liquidity Coverage Ratio (LCR) began at the start of 2014. The bank reported the respective base data to the German Federal Bank (Bundesbank) on a monthly basis. A true limiting of this size is forecast for the third quarter of 2015 – the bank has however already clearly exceeded the minimum requirement of 60%.

The bank defined various liquidity stress tests that show whether the liquidity potential provided is sufficient given certain conditions. In doing so, we consider various long time frames, the bank‘s own and market-wide scenarios as well as historic and hypothetical cause-effect-chains. We also consider the additional liquidity risk as controllable under these stress conditions.

Market riskBy market risk we mean the risk of adverse changes in the market prices of tangible assets or financial securities that could result in potential losses.

BKB Bank is classed as a non-trading business, i.e. we don’t operate proprietary trading targeting short-term gains. As a consequence, our market price risks are tightly limited.

The risk of a change in the interest rates is classed as significant risk for the bank whilst currency risks have a lower priority. Options, equity price, real estate and commodity risks do not exist or are insignficant. The market risk that is relevant to the bank is managed by using derivative financial instruments amongst other things.

The risk of a change in the interest rate is mainly in the bank‘s banking book which includes all credits and deposits from commercial transactions, all taken and granted interbank transactions that are used for the bank‘s liquidity management, the liquidity reserves‘ securities as well as the concluded derivatives for hedging purposes.

The open interest rate position can be compared to the appropriate position limits on a daily basis through the processing of all asset-side and liability-side interest rate positions in the form of a fixed interest period.

A Value at Risk (VaR) analysis, as the most important control parameter, is carried out on the basis of historical simulation (review period 500 working days, confidence level 99% and holding period 10 days). The limit is €1,500,000 and was always met in 2014. Daily back testing confirms the forecasting quality of the system. We also move our interest rate curves in parallel by 0.10% (= 10 basis points)

5.2.3.3

-1,200

-1,000

-800

-600

-400

-200

0

01/15 02/15 03/15 04/15 05/15 06/15 08/15 09/15 10/15 11/15 12/15

Cashflows vs. Liquidity Cover Potential 31.12.2014 (in EUR mln.)

Cashflows (cumulative) Liquidity Cover Potential Limit (90%) Early Warning (80%)

5 Risk report

Management Report

56 | 57

as part of our BPV6 approach and subsequently calculate the given difference as the present value. The BPV limit is €1,000,000.

The bank carries out regular stress tests that are based on hypothetical assumptions and developments from historical crises.

Transactions that are currency rate linked are only concluded as part of the customer business and are mainly directly hedged with other banks. The total of open currency transactions must not exceed the €500,000 limit so that no significant currency risks can arise.

In monthly meetings the ALCO analyses the interest, currency and liquidity risk and decides upon the necessary next steps.

The bank does not currently participate in equity proprietary trading or commodity trading.

The daily monitoring of the proprietary position by the risk controlling department ensures all year round that there are no significant risks even under a worst-case scenario.

Operational riskWe define operational risk as the risk of losses that arise due to unsuitability or failure of internal processes and systems, people or as a result of external influences. We differentiate between organisation, technical resources, employees and external factors when determining possible causes of failure. We also consider external influences such as credit defaults that are due to the manipulation of the balance sheet.

To contain the operational risks and in addition to separating functions, the bank has also introduced controls to detect weaknesses at an early stage. The particular importance of the IT systems is taken into account in that the relevant back-up solutions are always available at short notice in the head office or back-up location of the bank. The effectiveness of these back-up systems is regularly monitored using various emergency plans and recovery scenarios.

The bank regularly examines whether its organisational structures comply with the minimum standard with regards to internal control and security measures. The results obtained during a continuous investigation are measured against this standard and adjusted if necessary.

We are continuously developing our risk process which helps to constantly improve our risk awareness in all divisions. In 2014 six risk self assessments were carried out in the areas “Loans”, “Accounting”, “Trading”, “Private Banking”, “Payments” and “Procurement”. The frequency of individual inventories is derived from a risk map that is continually updated and which assesses all processes/business segments according to their risk and the existing controls. The risk map allows also for a three year plan.

6 BPV = Basis Point Value

Identified risks are saved and assessed in the bank‘s risk inventory. The Executive Board decides on what steps are to be taken in every individual case. In case of risk mitigation, there is a central follow-up by the operational risk committee, which met a total of four times in 2014. The Board is briefed at least once a year on the results and decisions.

The bank runs a loss database in which all losses from operational risks are aggregated. In 2014 there were 10 cases of loss with a total net loss of €50,000.

The bank has also implemented the necessary early warning indicators with regards to operational risks which shall detect possible risks at an early stage. In human resources, for example, quarterly statistics on labour turnover, overtime and sickness are reported which alert exceptional trends using a traffic light system.

As part of the stress test process we are dealing with the outcome of three scenarios: following an epidemic 30% to 40% of our employees are absent, three large borrowers default due to manipulation of the balance sheet and we simulate a temporary interruption in the process of payment transactions. Furthermore, we calculate a quantitative stress test based on historic loss cases. The risks that result from this are controllable.

Other risksWith regards to other risks, the bank attributes only a medium risk potential to the risk from capital management; the remaining risks play a less important role. The scarce resource “capital” must be invested as best as possible. For this purpose the annual planning of the income statement is supplemented with a capital planning that indicates the trend of capital items and their consequences on the risk-bearing capacity over the next 3 years. Therefore regulatory changes, such as the current selective approach of subordinated capital, are also particularly necessary, so that action can be taken at an early stage, if necessary.

Risk-bearing capacityAs before the aim is to quantify the bank’s risks on the one hand and – if necessary, when considering the interactions (correlations) – to aggregate them in an overall risk profile. On the other hand, the coverage potential is also to be calculated that is to be available for absorbing risk in the event of risk.

The risk-bearing capacity is then always given when the coverage potential given exceeds the overall risk position. On the fixed dates of the analysis we compare how high the degree of utilisation of the risk coverage potential is.

5.2.3.45.2.3.5

5.2.3.6

5 Risk report

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58 | 59

The risk-bearing capacity of BKB Bank is guaranteed and monitored by three views. These are

1. the periodic, 2. the economic and finally 3. the regulatory

risk-bearing capacity.

The three-way split is in line with the separate accounting entities or interests of the target group between which there must be no inevitable identity. The risk-bearing capacity must be guaranteed in each of the listed perspectives.

From a periodic perspective, the confidence level is 95%. Therefore the concept is applied to possible risks for the current and next financial year (in the event of cut-off date of analysis being 31st December). This view regards the potential negative deviation of the results from the planned value in the results as a risk. To measure the risk coverage potential the bank uses a going concern approach, according to which, and other such approaches, only such equity components are assessed that are not linked to the compliance of the minimum solvency requirement for capital. On every reporting date, we review which capital ratio (core Tier 1 ratio, Tier 1 ratio or total capital ratio) constitutes a bottleneck.

The bank uses a liquidity approach in the economic view. The aim of this approach is to still be able to guarantee complete service to the creditors in the context of a fictitious sale of the bank, even if risks are incurred. The economical definition of risk always focuses on the present value risk for the asset value. Risks that are incurred correspond with a negative change in the asset value, i.e. calculating the economic risk quantifies the maximum extent of the negative asset value change, given the confidence level applied. A risk assessment period of 1 year and a confidence level of 99.5% is chosen when calculating the present value risk.

The supervisory assessment of adequate capital focuses on the ratio of capital to risk-weighted assets. The Bank has adequate capital if all capital ratios are maintained. For the internal risk management and thus the risk-bearing capacity, BKB Bank still uses the Internal Ratings Based Approach (IRB foundation), even though the external notification of capital has been carried out since 31 December 2014 according to the credit risk standardised approach (CRSA).

A stress test that assesses all risk types supports the analysis of the effects of a deep economic downturn on the risk-bearing capacity of the bank in the economic view. The specific delivery is in the form of a historical stress test in which the deep economic effects, as a result of insolvency of the investment bank, Lehman Brothers, have been studied by the bank on the key areas of risk.

The stress not only affects the significant risks of the bank but also affects parts of the risk coverage potential. With regards to the credit risk, we assume a PD increase of 56% and a credit spread increase of 472bp for liquidity risk. With regards to the market price risk from securities, we use historic changes in the evaluation of the change in interest rates that are dependent on the term and rating on the actual initial situation. When calculating the coverage potential under stress the hidden reserves/encumbrances from the interest book as well as from securities are calculated with stressed market data.

The risk-bearing capacity was quoted in all views, simulations and stress tests on the 31st December 2014 as well as during the year.

Concentration of riskWe regard concentration risks as those which arise from an uneven distribution of counterparties in credit or other business relationships or from the creation of sectorial or geographical business focusses and which are capable of generating such large losses that the institution’s solvency is threatened.

For the moment, we see important concentrations only with regard to the income: based on the strategic orientation of the bank, a large proportion of our income does apply to net interest and commission income that are mainly the result of lending transactions.

As part of our business model we strive to counter the risks in all areas, e.g. by expanding the commission business that is not credit dependant.

SummaryThe Executive Board believes that overall an effective control instrument has been established, which provides the management team and also the Supervisory Board on a regular basis with an up-to-date and detailed overview of the current and future risks to their business.

Capital ratios per 31.12.2014: IRB-Foundation CRSA

Core Tier 1 ratio 13.4% 13.6% (min. 4.0%)

Tier 1 ratio 13.4% 13.7% (min. 5.5%)

Total capital ratio 21.0% 20.9% (min. 8.0%)

5.2.3.7

5.3

5 Risk report

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60 | 61

Audit opinion1

1 This is a translation of the audit opinion issued in German. The latter is the sole authoritative version.

Business development and strategyIn many ways, the financial year 2014 was marked by the disposal of KBC Bank N.V. to a consortium of strategic investors (indirectly) as of 1st October comprising:

• Teacher Retirement System of Texas, USA • Investors of the Apollo Group and associated investors• Grovepoint Capital, London and Grovepoint Investment Management GP Limited, St Peter Port, Guernsey

As a result of the disposal, Bremer Kreditbank AG, BKB in short, emerged from the KBC Bank Deutschland AG.

Irrespective of the disposal, the bank continued its decade-long successful and stable strategy in 2014 and continued to position itself as a specialist for providing comprehensive advisory services to medium-sized customers in the German market. To support this customer group, the bank uses all forms of traditional lending business as well as documentary business services, export financing, payment transactions, treasury and corporate sales business. It also provides acquisition and real estate financing to professional customers. In the retail business, the focus remains on acquiring asset management mandates.

The overall positive business environment in 2014 and buoyant demand for credit allowed the bank to end the year with a satisfactory net profit of EUR 7.1 million despite eroding margins and to lay the foundation for future growth.

Activities of the Supervisory BoardThe Supervisory Board convened eight times in 2014, not least of all due to the disposal of the bank. Besides discussing the economic and financial development of the bank and its strategy and planning, the disposal to the new shareholders was the main focus of the Supervisory Board’s activities.

The Management Board reported regularly on the business policy and other basic questions regarding corporate management and planning, strategy, financial development and the bank’s profit situation, the bank’s risk management system and transactions and events which were of immense importance to the bank. Between the meetings the Supervisory Board was updated on key processes by the Management Board both in writing and verbally and the chairman of the Supervisory Board and the Management Board conferred on a regular basis The Supervisory Board is of the opinion that it was able to fulfil its responsibility of supervising and advising the Management Board in an appropriate manner.

In the first meeting on 5th March 2014, the audit reports of the auditors of the annual financial statements for 2013 were discussed at length and the balance sheet for the financial year 2013 was adopted. The Risk and Audit Committee, a sub-committee of the Supervisory Board also reviewed the reports on the same day. The Supervisory Board was able to ascertain that the auditors of the annual financial statements judged that the bank had given a suitable view of the company’s position which led to an qualified auditors’ opinion. Following the election of new members of the Supervisory Board at the annual general meeting held on the same day, a constituent meeting of the Supervisory Board was held. The Supervisory Board

Report of the Supervisory Board

Audit opinion | Report of the Supervisory Board

“We have audited the annual financial statements, comprising the balance sheet, the income statement and the notes to the financial statements, together with the bookkeeping system, and the management report of Bremer Kreditbank AG, Bremen, for the fiscal year from 1 January 2014 to 31 December 2014. The maintenance of the books and records and the preparation of the annual financial statements and management report in accordance with German commercial law are the responsibility of the Company’s management. Our responsibility is to express an opinion on the annual financial statements, together with the bookkeeping system, and the management report based on our audit.

We conducted our audit of the annual financial statements in accordance with Sec. 317 HGB [“Handelsgesetzbuch”: German Commercial Code] and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the annual financial statements in accordance with [German] principles of proper accounting and in the management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Company and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the books and records, the annual financial statements and the management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the annual financial statements and management report. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the annual financial statements comply with the legal requirements and give a true and fair view of the net assets, financial position and results of operations of the Company in accordance with [German] principles of proper accounting. The management report is consistent with the annual financial statements and as a whole provides a suitable view of the Company’s position and suitably presents the opportunities and risks of future development.”

Hamburg, 13 February 2015

Ernst & Young GmbHWirtschaftsprüfungsgesellschaft

Bühring MeyerWirtschaftsprüfer Wirtschaftsprüfer[German Public Auditor] [German Public Auditor]

62 | 63

appointed Dr Wolfgang Schrörs as chairman and Dr Klaus Ridder as deputy chairman. At the meeting, the shareholder reported on the status of the disposal process. The Supervisory Board was informed that the investors had since submitted all documents to the regulatory body for the approval process.

In the meetings on 21st May 2014 and 29th September 2014, the Supervisory Board was updated on the bank’s business development, the current risk situation and the status of the disposal process. It was able to ascertain that the bank’s business is progressing well and according to schedule despite the protracted disposal procedure and that the fluctuation rate among employees is minimal. At the meeting, the Supervisory Board in its current composition was informed that the disposal transaction will be closed on 30 September. The members of the Supervisory Board, Dr Wolfgang Schrörs, Dr Klaus Ridder, Luc Gijsens and Dirk Mampaey, subsequently resigned their positions with effect from 1st October 2014.

On 1 October 2014 an extraordinary shareholders’ meeting was held where – in addition to the renaming of the company – it was resolved that the Supervisory Board will comprise nine members in future, six of which will be from among the group of shareholders and three employee representatives. Supervisory Board members Dr Thomas Emde, Dr Dirk Hoffmann, Gernot Löhr, Brent Geater, Dr Manfred Puffer and Sascha Säuberlich were elected by the shareholders’ meeting.

Since the change in shareholder structure, four further meetings of the Supervisory Board have taken place, two in a written procedure where the Supervisory Board fulfilled its monitoring responsibilities according to the German Control and Transparency in Business Act (KonTraG).

In the constituent meeting of the Supervisory Board after the extraordinary shareholders’ meeting on 1st October 2014, the Supervisory Board elected Dr Thomas Emde as chairman of the Supervisory Board and Dr Dirk Hoffmann as deputy chairman. During the meeting the catalogue of transactions requiring approval was expanded and updated to ensure that the Supervisory Board is more closely involved in key procedures of the company.

In the telephone conferences on 20th October 2014 and 7th November 2014, the Supervisory Board learned of various key projects of its shareholders.

Key agenda items of the meeting on 27th November 2014 were the bank’s risk report as of 30 September 2014, the business and risk strategy for 2014/2015 and the business development in 2014 and the bank’s budget for 2015.


Committees of the Supervisory BoardThe Supervisory Board received regular updates on the activities of the committees. The Credit Committee conducted three plenary meetings and the Risk and Audit Committee conducted two plenary meetings. Since the change in shareholder structure as of 1 October 2014, the Credit Committee has conducted weekly meetings in the form of telephone conferences.

Annual financial statementsRepresentatives of the auditors of the annual financial statements participated in the Supervisory Board’s balance sheet meeting on 3rd March 2015, where they explained a few points.

The accounting, annual financial statements and the management report of the company for the period from 1st January to 31st December 2014 were audited by Ernst & Young AG Wirtschaftsprüfungsgesellschaft, Hamburg, and are issued with an unqualified audit opinion. The Supervisory Board acknowledged and approved the audit result. It reviewed the annual financial statements of 31st December 2014, the management report and the proposal of the Management Board regarding the appropriation of profit without objection.

Today the Supervisory Board approved and adopted the annual financial statements prepared by the Management Board. The Supervisory Board agrees with the proposal for the appropriation of profit.

The Supervisory Board thanks the Management Board and especially the employees and employee representatives for their high level of personal commitment which has led to the bank’s success in recent years.

Bremen, 3rd March 2015

THE SUPERVISORY BOARD

Dr Thomas Emde Chairman


64 | 65Contacts

Your contacts

Head Office BREMENBremer Kreditbank AG Telephone +49 (0) 421 - 36 84-0

Wachtstrasse 16 Fax +49 (0) 421 - 36 84-473

28195 BremenGermany

EmailWeb

[email protected] www.bkb-bank.com

Service for the Mittelstand

(SME)

Corporate banking – Bremen branchWachtstrasse 16 | D-28195 Bremen

Helke Friedrich, Relationship manager +49 (0) 421 - 36 84-340

Wilfried Monsees, Relationship manager +49 (0) 421 - 36 84-430

Corporate banking – Hamburg branchFerdinandstrasse 12 | D-20095 Hamburg

Marko Richling, Head of Northern Germany +49 (0) 40 - 30 20 02-15

Bernd Hintze, Relationship manager +49 (0) 40 - 30 20 02-18

Sven Hoffmann, Relationship manager +49 (0) 40 - 30 20 02-22

Daniel Hülsemann, Relationship manager +49 (0) 40 - 30 20 02-17

Marcel Ohrner, Relationship manager +49 (0) 40 - 30 20 02-11

Corporate banking – Berlin branchLietzenburger Strasse 69 | D-10719 Berlin

Gerd Sewerin, Head of Berlin +49 (0) 30 - 203 07-20

Sarah Berger, Relationship manager +49 (0) 30 - 203 07-11

Nico Steindamm, Relationship manager +49 (0) 30 - 203 07-10

Corporate banking – Hanover branchPodbielskistrasse 166b | D-30177 Hannover

Jochen Bieder, Relationship manager +49 (0) 5 11 - 6 55 05-111

Syndication

Pieter W. Ruhaak +49 (0) 69 - 75 61 93-25

Youssef Bouya +49 (0) 69 - 75 61 93-19

Corporate banking – Frankfurt branchVoltastrasse 81 | D-60486 Frankfurt

Pieter W. Ruhaak, Head of Frankfurt and Stuttgart +49 (0) 69 - 75 61 93-25

Jutta Nikolic, Relationship manager +49 (0) 69 - 75 61 93-23

Roland Gerbig, Relationship manager +49 (0) 69 - 75 61 93-29

Juan F. Riutort Magg, Relationship manager +49 (0) 69 - 75 61 93-49

Corporate banking – Stuttgart branchEpplestrasse 23 | D-70597 Stuttgart

Rudolf von Podewils, Relationship manager +49 (0) 7 11 - 63 37 04-11

Ebru Düzci, Relationship manager +49 (0) 7 11 - 63 37 04-10

Corporate banking – Düsseldorf branchKönigsallee 106 | D-40215 Düsseldorf

Thomas Kempe, Head of North Rhine Westphalia +49 (0) 2 11 - 130 75-32

Thomas Braun, Relationship manager +49 (0) 2 11 - 130 75-39

Anke Müller, Relationship manager +49 (0) 2 11 - 130 75-29

Thomas Wroblewski, Relationship manager +49 (0) 2 11 - 130 75-42

Simone Eckhardt, Relationship manager +49 (0) 2 11 - 130 75-34

Stefanie Schmidt, Relationship manager +49 (0) 2 11 - 130 75-40

Corporate banking – Munich branchOttostrasse 13 | D-80333 München

Dominique Bastian, Head of Bavaria +49 (0) 89 - 242 09 78-10

Alexander Koch, Relationship manager +49 (0) 89 - 242 09 78-14

Claudia Müller, Relationship manager +49 (0) 89 - 242 09 78-11

Simon Weißer, Relationship manager +49 (0) 89 - 242 09 78-17

Michael Brand +49 (0) 69 - 75 61 93-26

Thorsten Dill +49 (0) 69 - 75 61 93-12

Frank Kiesewetter +49 (0) 69 - 75 61 93-13

Michael Lichius +49 (0) 69 - 75 61 93-47

Norbert Loeken +49 (0) 69 - 75 61 93-24

Acquisition Financing

66 | 67

Special functions

Legal notice

Images / Rights of Use

HONORARY CONSUL KINGDOM OF BELGIUM IN STATE OF BREMENAxel Bartsch

Consulate

Wachtstrasse 16 Telephone +49 (0) 421 - 36 84-330

28195 BremenGermany

Fax +49 (0) 421 - 36 84-482

BREMER KREDITBANK AGJenny Lutz Telephone +49 (0) 421 - 36 84-327

ELBFEUER GMBHMittelweg 161HamburgGermany

www.elbfeuer.de

GEBR. KLINGENBERG & ROMPEL IN HAMBURG GMBH

Responsible for the contents

Concept/design/typesetting

Printing

All images and text appearing in this brochure are the exclusive property of the Bremer Kreditbank AG. Any use and/or processing of the images and the texts may only be used upon request and require the prior written consent.

Contacts | Special functions | Legal notice

Jürgen Mertens, Head of Real Estate Financing Frankfurt +49 (0) 69 - 75 61 93-16

Tibor Rajcsanyi +49 (0) 2 11 - 130 75-23

Klaus Fischer +49 (0) 89 - 242 09 78-20

Axel Kammeyer, Head of Private Banking +49 (0) 421 - 36 84-316

Jörg Baumhöfner, Private Banking +49 (0) 421 - 36 84-313

Hermann J. Müller, Private Banking +49 (0) 421 - 36 84-455

Jörg Schreiber, Private Banking +49 (0) 421 - 36 84-344

Nunzia Thiriot, Country Head of D/A/CH +49 (0) 69 - 75 61 93-73

Andrew Hinrichsen, Senior Sales Manager +49 (0) 69 - 75 61 93-36

Kerstin Happe, Asset Management +49 (0) 421 - 36 84-363

Kristina Worbs, Asset Management +49 (0) 69 - 75 61 93-35

Additional Services

Financial Institutions

Pieter W. Ruhaak +49 (0) 69 - 75 61 93-25

Jutta Nikolic +49 (0) 69 - 75 61 93-23

Youssef Bouya +49 (0) 69 - 75 61 93-19

Treasury

Andreas Glaser, Head of Treasury +49 (0) 69 - 75 61 93-70

Carl Baker +49 (0) 69 - 75 61 93-71

Corporate Sales

Sascha Massoth, Head of Corporate Sales +49 (0) 69 - 75 61 93-72

Andreas Dömel +49 (0) 69 - 75 61 93-72

Dietmar Kordel +49 (0) 69 - 75 61 93-72

International Business

Dirk Stamer, Head of International Business +49 (0) 421 - 36 84-422

Payment Services

Rüdiger Heidmann, Head of Payment Services +49 (0) 421 - 36 84-245

Real Estate Financing

Private Customers

Asset Management

Your contacts

The art of embedding

the future

into tradition.

The art of embedding

the future

into tradition.

Bremer Kreditbank AG – - BKB Bank · 2 | 3 The success of BKB Bank has continued in 2014 to be...

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