The strength of the Financial Markets SBU is that it combines the financial expertise and market know-how of NIBCapital, and that of its strategic partners around the world. The SBU’s strategy is based on five pillars:
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Integrated entrepreneurial approach – with Investment Management, and other SBUs and strategic
partners – to client driven trading, marketing and product development in equity, credit, hedge funds
and interest rate derivatives, as well as ABS, CDO, RMBS and CMBS transactions
Global distribution capability, both via NIBC´s own network and that of its strategic partners
Focus on client related revenues and diversification of income sources through new partnerships, new
products, new business and new locations
Efficient capital usage and increased asset velocity
Diversification of funding sources.
The increase of operating income by 5% is due to higher trading results in structured credits and a
substantial growth of client-related derivatives and hedgefund transactions. The non-interest component
of operating income remained flat at around 50%. The Financial Markets activities were the basis for the
growth of fees and assets under management for Investment Management. Total volume of mortgage
origination was at an all time high level in 2004, with a volume of € 4.9 billion (€ 2.4 billion in 2003). The
positive development of results was partly offset by the 2004 losses of the 50% joint venture NIBC
Petercam Derivatives. The results of this joint venture are fully consolidated as a minority interest.
The strong increase of expenses is due to the increased number of staff, investments in technology and a
rise in variable compensation.
OUTLOOK 2005Financial Markets saw continuing top line growth in 2004, on the back of investments in distribution capabilities, risk management and human capital. The main qualitative targets for 2005, in order to keep a solid income growth, are:
TRANSACTION: KANTOREN FONDS NEDERLAND (KFN)In December 2004, NIBC completed the € 600 million refinancing for KFN, a Dutch property company specialising in the upper segment of the office market.The refinancing consists of a € 450 million commercial mortgage-backed securities transaction (‘CMBS’) and a € 150 unsecured revolving credit facility. The CMBS transaction, KFN Office Finance I B.V., is the first ever securitisation of Dutch office properties. KFN Office Finance I B.V. issued AAA-notes at a loan-tovalue of 51.5%. Ratings on the notes were given by S&P and Fitch. By using the structure of a CMBS, KFN was able to tap the international capital markets, significantly lowering its average funding costs and increasing its average debt maturity. This transaction underlines NIBCapital’s ability to create tailor-made solutions for its clients by combining product and sector knowledge with capital markets distribution. This transaction would not have succeeded without the teamwork of Mortgage Finance & Asset Securitisation, Client Coverage - Real Estate, Debt Products and Loan Syndications.