Report of the Employees’ Council

For the Employees’ Council the year 2005 was interesting and challenging given our involvement in the strategic review the organisation went through. In order to enable both the organisation and the Employees’ Council to come to balance decisions and recommendationss in the context of that strategic review we developed a comprehensive set of criteria (the yardstick) which we could use to assess different scenarios. Another key area of involvement for the Employees’ Council in 2005 were the various changes in the Bank’s remuneration policy and programs. Finally significant time has been spent on the nomination of three members of the new Supervisory Board.

Without a doubt the highlight of the year was the ultimate agreement during the summer leading to the acquisition of NIBC by a financial consortium organised by J.C.Flowers & Co. LLC. In the months preceding this important event the Employees’ Council was closely involved in the process. To this end the Employees’ Council developed a yardstick against which the new strategic options could be assessed. Th is included taking a critical look at important issues such as employment, conditions of employment, the new scope of development of the Bank and all the people involved.

During a number of very well attended sessions all employees of the Bank were given the opportunity to raise additional points of attention or priorities.

In addition to the yardstick, the Employees’ Council considered it its responsibility to negotiate an acceptable Social Protocol addressing possible negative social consequences as a result of the change of ownership of NIBC.

As a result of all these efforts and of numerous discussions with the Managing Board of NIBC the Employees’ Council decided to give a positive advise on the Bank’s decision to enter into a Share Purchase Agreement on August 9, 2005.

In this respect it is important to note that J.C.Flowers & Co. LLC, as the co-ordinator of the consortium of investors, expressed a strong belief in the benefits of establishing a long-term investment relationship with NIBC and its stakeholders. The reputation and quality of the consortium is beyond any doubt, all of them having leading positions in their relevant markets.

As stated in the annual report of 2004 the now former shareholders of NIBC introduced a so-called Liquidity Event Plan (LEP). This plan enabled all employees of the Bank to benefit from the value they had helped to create. The plan was funded from a share of the proceeds realised by the former shareholders in the event of anIPO or a sale of more than 50% of NIBC. The change of ownership of NIBC created such an event in 2005. The Bank created an opportunity for employees to invest their entitlements under the Liquidity Event Plan, the Stock Appreciation Rights Plan (SARs 2003 and 2004) and the Deferred Cash Plan (stemming from the 2004 Total Compensation review) in a new remuneration program called NIBC Choice.

NIBC Choice, being a new remuneration program, was subject to approval by the Employees’ Council. Naturally the Employees’ Council welcomed the opportunity for all employees to invest in NIBC and as a consequence NIBC today has, alongside the shareholders-consortium, over 600 new shareholders.

In accordance with current legislation, the Employees’ Council has the right to nominate one third of the members of the Supervisory Board. In the case of NIBCthis means the right to nominate three members of the Supervisory Board. The Employees’ Council is pleased that towards the end of 2005 it was able to identify and nominate two outstanding Board Members, Mr W.M. van den Goorbergh and Mr. C.H. van Dalen. The nomination of a third member of the Supervisory Board is expected in the first half of 2006.

In the year under review there were numerous contacts between the Managing Board, the BU Human Resources and the Employees’ Council.Even in the exceptional situation of disagreement, it proved possible to maintain the usually harmonious and professional labour relations within our organisation.With this in mind the Employees’ Council looks forward to another challenging year in 2006.

Emile Bakker, Chairman of the Employees’ Council
Hans Nagtegaal, Vice-Chairman of the Employees’ Council