committed to the real estate market in the longer
term and intends to continue to finance projects of
genuine merit. The fact that current conditions are
more difficult than they have been for some time is
precisely the type of challenge that a specialized
realty bank welcomes.
The performance of the Dutch arm of FGH BANK
in the financial year up to the end of 1990 was
extremely encouraging, both in terms of the volume
of business and profitability levels. The bank was
able to utilize its vast experience of the realty
market to good effect throughout the year.
A number of factors can be highlighted, which have
contributed to the volume of business the bank
managed to attract. More emphasis was focused on
providing additional services connected with the
management, maintenance and insurance of real
estate in addition to the bank’s traditional financing
and advisory services. FGH BANK was also able to
assist its clients with the purchase and sale of real
estate via its network of contacts.
Reaction to the reorganization program appe
ars to have been favorable, with the short fines of
communication being particularly valued. The
balance of services offered by FGH BANK is not
only geared to meeting the needs of property invest
ment funds, foreign and domestic investors, property
developers and professional realty brokers, but also
those of companies and institutions with large pro
perty interests such as retail chains, healthcare orga
nizations and housing associations.
In the new organization, the Friesch-
Groningsche Hypotheekbank N.V. and the affiliated
bank FGH Kredietbank N.V. and FGH assurantiën
B.V. will trade under the name of FGH BANK.
FGH assurantiën assists clients by acting as an inter
mediary on insurance matters. Also affiliated to the
FGH business group is B.V. Keizersveer, a realty
management company, which, among others, looks
after the property portfolios of Transveer B.V. and
Gemeenschappelijk Eigendom B.V. for the
AEGON insurance company.
Recessionary forces have been evident in the
American economy throughout much of the present
reporting period. The ensuing economic downturn
and the problems of the savings and loans industry
have had a serious effect on the realty market and
the banking sector. Conditions in the real estate
market in the northeast of the United States, where
the FGH Realty Credit Corporation Inc. (RCC)
operates, have been particularly difficult.
The willingness of some banks to lend large sums
for speculative property developments has left them
extremely exposed and has contributed to the crisis
of confidence confronting the industry. The down
ward spiral has been exacerbated by the sharp cut
off in the availability of investment finance which
occurred in the second half of 1990.
RCC, which operates on a similar concept to
that employed by FGH in the Netherlands, was for
ced to restrict the size of loans granted in relation to
underlying asset values during the course of 1990.
Despite the stricter financial controls, RCC could
not escape the general malaise in the real estate
market. A number of RCC’s clients were badly
affected by the fall in realty values, which reduced
RCC’s profitability in 1990. Increased provisions
were made for doubtful loans in the reporting year
and additional controls introduced. As yet, there are
no signs of recovery in the realty market and it is
assumed that it will take several years for activity to
return to normal levels.
REPORT OF THE EXECUTIVE BOARD
REVIEW OF ACTIVITIES