Report of the
Managing Board
INTRODUCTION
The Managing Board is proud to report on this record year in NIBCapital´s history. Due to the strong growth of our results in 2003 and 2004, we have exceeded the financial targets, defined in our Medium Term Action Plan (2003-2007). This strong development underpins the view of the Managing Board that NIBCapital fulfils a clear client need: with our compact merchant banking business model we are an attractive option for an increasing number of clients.

MARKET CIRCUMSTANCES AND MARKET POSITION
Relatively weak economic conditions in Northwest Europe led to uncertainty and volatility in the corporate and financial markets in 2004. The less attractive risk return profile of the European stock markets resulted in an increasing demand for alternative investments, such as credits. A lack of supply of these alternative investments put continuing pressure on credit spreads.We expect this demand for alternative investments to continue. Potentially better economic conditions may lead to a more balanced supply and demand credit curve in the course of 2005, resulting in a more appropriate risk reward. NIBCapital has optimally benefited from these market circumstances.We believe that we perform at our best in volatile and uncertain markets, because of our in-depth knowledge of clients and markets, our selective focus, diversified income sources and strict risk management discipline.We are able to respond quickly and reallocate our resources if necessary. Our client and product franchises have strengthened in 2004, despite uncertain market circumstances and increased competition in most markets.We have been able to improve our league table positions in several segments, such as the Dutch M&A market, the Dutch ABS, MBS, CDO and CLO market, the international shipping and oil services industry, and the leveraged finance and PFI markets in the Benelux and the UK.

STRATEGY
Our strategy is derived from our clients' needs, our core competencies and our business values and principles.We focus on regional origination with a primary focus on Northwest Europe and global distribution, with the aim of optimising the use of our economic capital. Our human capital, as our core asset, is key in executing our strategy. Due to the better-than-expected financial performance, the existing Medium Term Action Plan 2003-2007 has been evaluated and adjusted with new and higher financial goals for 2005-2007. Consequently, the Managing Board and the Supervisory Board decided to evaluate strategic alternatives for NIBCapital, including an Initial Public Offering and a merger. The final outcome of this evaluation process is expected in the course of 2005.

CLIENTS
Our goal is to add value for our clients and to seek high quality client relationships. Our key success factor is our cross-functional client focus.We offer this through a fully integrated business model managed with four commercial Strategic Business Units (SBUs): Corporate Finance, Principal Investments, Financial Markets and Investment Management. Through a matrix organization model we combine client, market, and product expertise and creativity, and offer our clients integrated financial solutions to their complex issues. Our challenge is to anticipate our client’s needs, by understanding their business and the markets they operate in, and by reacting adequately to new developments in these industries. Our compact and professional organization, including a bank with a solid credit rating, puts us in a unique position to take advantage of growth opportunities in selected markets. Our innovative and entrepreneurial strategic partnerships add significant value to our business proposition.

CORE COMPETENCIES
NIBCapital has been building its merchant banking business model on a longstanding tradition of understanding and managing risk. Our impeccable reputation in the market is crucial to both our origination and distribution activities. This has resulted in strong client and product franchises in selected markets. We continue to expand our competencies geographically, primarily through organic growth.

HUMAN CAPITAL
Our people are our firm.We want to create a challenging and rewarding environment for our people, while upholding our business values of integrity, respect and professionalism, and our business principles.We constantly invest in our staff, through talent development programmes, state-of-the art evaluation processes and thorough selection processes, and by offering competitive compensation packages, including a substantial performance-related variable component.We aim to be an employer of choice.

NIBCapital had an excellent year in 2004, resulting in a net profit of € 175 million, an increase of 136 % compared to the € 74 million reported in the high performing year 2003. All our business lines showed an upward trend in performance both in terms of revenues and profits.We combined strong revenue growth with strict risk management and cost discipline.We also realized most of our non-financial targets for 2004 as explained below.

By starting several new activities, adding a number of new strategic partnerships, and continuing to invest in human capital and technology, we created a solid foundation for the further prosperous growth of the firm. For financial details and analysis, including the expected impact of the new IFRS reporting, we refer to the chapter Financial Results and to the Annual Accounts 2004.

NON-FINANCIAL TARGETS AND PERFORMANCE 2004

MEDIUM TERM ACTION PLAN

CORPORATE GOVERNANCE
As stated in our 2003 Annual Report, the Managing Board values the work carried out by the Corporate Governance Committee Tabaksblat, which resulted in a new Dutch Corporate Governance Code.We believe in a transparent and coherent corporate governance structure. Our corporate governance model is based on constructive and transparent cooperation between our Shareholders, our Supervisory Board with its five committees, our Managing Board with its several functional committees, and the Employees´ Council. This cooperation is laid down in a governance framework of charters, with clear guidelines for the assignment of duties and responsibilities, (financial) reporting, risk management and internal control, compliance, and remuneration policy.
In close cooperation with the Supervisory Board and the Shareholders, we have defined the company policy towards the Code. This policy is laid down in a detailed Policy Paper, which is published on our website. NIBCapital applies all principles and best practices of the Code, with the exception of the following best practices:

In 2004 we adjusted our charters and articles of association in order to comply with the Code. These adjustments and other implementation measures have been limited, as NIBCapital´s corporate governance structure and policy already met most of the principles and best practices before the implementation of the Code in 2004. Both this 2004 Annual Report and our company website include all requirements of the Code.

COMPOSITION OF THE MANAGING BOARD
As a result of the spin-off of NIB Capital Private Equity N.V.Mr. G.V.H. Doeksen resigned from the Managing Board on 1 April, 2004. On that same date, Mr. A.L.V. Dijkstra and Mr. J.L. van Nieuwenhuizen were appointed by the Annual General Meeting of Shareholders as members of the Managing Board of NIB Capital N.V.

COMMITTEE OF MANAGING DIRECTORS
NIBCapital's internal management model has been designed to support the merchant banking strategy, based on multi-disciplinary teamwork and transaction execution. The Committee of Managing Directors (CMD), comprises the four-man Managing Board and ten other Managing Directors, each responsible for a client or product (S)BU. In early 2005, the Supervisory Board approved the appointment of Mr. F. van Raab van Canstein and Mr. J. Besuijen as Managing Directors and new members of the CMD.

OWNERSHIP OF NIB CAPITAL BANK N.V.
In May 2004, NIB Capital N.V. acquired the 15% remaining shares of its main subsidiary NIB Capital Bank N.V. from the Dutch Government. This acquisition was already agreed upon by our Shareholders and the Dutch Government in 1999. NIBCapital now owns 99.99% of the legal and economic interest of NIB Capital Bank N.V.

OUTLOOK 2005
NIBCapital’s positioning for the coming years remains favourable as a result of our client-focused merchant banking business model.We see many opportunities for further growth. The positive development of the results in 2004 is a confirmation that our client strategy is effective.We will continue to execute our strategy as a Merchant Bank in order to realize our new medium term financial goals.
In view of market uncertainty and volatility, we prefer not to make any statements regarding NIB Capital’s net profit in 2005. On the basis of our growth plans we are confident about the development of the comprehensive return on net asset value in 2005.

The Managing Board would like to thank the clients of NIBCapital for their trust in our firm in 2004. As a client-oriented organization we will continue to pursue our mission to address our client needs creatively, professionally and effectively.
The Managing Board would like to express their gratitude to our staff for their enormous commitment and contribution to the excellent performance of NIBCapital in 2004.

THE HAGUE, 3 MARCH 2005

THE MANAGING BOARD
MICHAEL ENTHOVEN, Chairman
JURGEN B.J. STEGMANN, Vice-Chairman
ANTOINE L.V. DIJKSTRA
JAN. L. VAN NIEUWENHUIZEN