Report of the Managing
Board for 1995
Our Annual Review for 1995 contains our
views on the Dutch real estate market, so
that we shall confine ourselves here to a brief
account of the past year's developments at
FGH BANK, the realty bank.
Recapitalization
A financial reorganization was carried out in the second
half of 1995. On August 1, 1995 the rights to earnings
accrued since 1987 were transferred to AEGON N.V.
The preference shares (NLG 135 million) were also
withdrawn at the end of last year. These changes
restored the solvency ratio (known as the BIS ratio) to
around 11%, which is more usual for the Netherlands.
The shareholders' equity declined from
NLG 809.1 million to NLG 473.3 million.
Amendment to the
Articles of Incorporation
In order to permit this recapitalization, the Articles of
Incorporation were amended and totally revised
pursuant to a resolution of the Extraordinary General
Meeting of Shareholders on August 31, 1995.
The amendment to the Articles of Incorporation
comprises:
withdrawal of all preference A shares totalling
NLG 135 million
redemption of the existing rights to earnings by
AEGON N.V. and the resulting amendment to the rules
on appropriation of earnings
transfer of the company's registered place of business
from Amsterdam to Utrecht.
The certificate of no objection required by law for this
amendment to the articles was obtained by decision of
November 3, 1995, under number N.V. 3602.
The amendment to the articles took effect on
December 29, 1995.
Financial Results
The gross result declined to NLG 139.5 million in 1995
(1994: NLG 167.7 million). The reason was the decline
in shareholders' equity during the year and the negative
balance of other revenue and expenditure.
The gross result on the core business improved slightly.
The net result of FGH BANK was NLG 104.6 million
(1994: NLG 125.6 million).
In accordance with Article VI (1) of the 'Act dated
March 17, 1993 concerning the provisions governing the
financial statements prepared by banks' an additional
write-down has been applied to the item 'Loans' up to
1994. With effect from January 1, 1995 the additonal
write-down was transferred to the shareholders'
equity in order to provide a clearer view of the equity
base. As a result of this change, both Loans and
Equity reserves increased by NLG 133 million.
The interest income includes a non-recurrent revenue
item of NLG 21.6 million (1994: NLG 23.5 million)
earned from lending activities and derived from
prepayment penalties.
Income from securities and non-consolidated
participating interests increased from
NLG 5.5 million in 1994 to NLG 9.4 million in 1995,
mainly as a result of sales of real estate in America.
The NLG 4.2 million earned from financial
transactions consisted mainly of proceeds from the
sale of our stake in PT Bank Papan Sejahtera, in
Indonesia.
Operating expenses increased by NLG 11.7 million
in 1995, partly as a result of allocations to various
provisions totalling NLG 8 million.
The consolidated loan portfolio amounted to
NLG 6.5 billion at the end of 1995
(1994: NLG 6.9 billion).
At the end of 1992 the company was unexpectedly
confronted with a claim by the Dutch Ministry of
Finance concerning the sale in the early 1980s of a
number of companies with fiscal replacement
reserves. FGH BANK strongly disputes this claim
which could amount to some tens of millions of
guilders. We are supported in this view by the expert
opinion of our advisers. We are therefore confident of
the outcome of the proceedings which have now been
initiated by the Ministry.
Treasury
During the reporting period more than
NLG 735 million of funding was arranged with a
term longer than two years in order to provide new
loans and for refinancing purposes.
Organization and Personnel
On March 14, 1995 an Extraordinary General Meeting
of Shareholders appointed Mr. J.B.M. Streppel as
Chairman of the Managing Board.
Mr. W.A.J.M. van der Heijden has now been appointed
as delegated Supervisory Director.
