Interviews:

Corporate Xpress (Staples)

Van Lanschot Bankiers N.V.

P-Solve

Generali verzekeringsgroep nv

BMW Financial Services

Report of the Managing Board

(Summary from KAS BANK’s

Annual report 2010)

Consolidated income statement

Consolidated balance sheet

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Profile of KAS BANK N.V.

KAS BANK N.V. is the independent European specialist in securities services and risk control and reporting services for

professional clients in the pensions and securities industry.

KAS BANK pursues a ‘pure play’ strategy. A low risk profile is integral to its services and is reflected in the quality of its balance

sheet and a solvency ratio which is well above the Basel III requirements, underlining the bank’s absolute neutrality and

independence.

Our role as a specialist in securities custody, clearing and settlement is complemented by compliance services, risk control

and management information. We view the market from our clients’ perspective. Outsourcing their administrative functions to

KAS BANK enables our clients to focus primarily on their own core activities. Tailor-made services and complete transparency

are paramount: this is achieved by combining a proactive approach with advanced information technology and rigorous

process control.

Founded in 1806 and listed on the NYSE Euronext Amsterdam stock exchange, KAS BANK is a European institution with a

strong international presence. KAS BANK has offices in Amsterdam, London and Wiesbaden and employs around 750 staff,

representing over 35 nationalities.

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Content

Preface 4

Interviews

Peter Martens, Director, Corporate Xpress (Staples) 5

Ieko Sevinga, Managing Board Van Lanschot Bankiers N.V. 6

Jonathan Lipton, Chief Operations Officer P-Solve 7

Frank de Lange, Manager Financial Accounting Generali verzekeringsgroep nv 8

Dr. Holger Bachmann, Head of Investment and Markus BB Baumgartner, Investment advisor BMW Financial Services 9

Personal notes 10

Report of the Managing Board (Summary from KAS BANK’s Annual report 2010) 11

Outlook 2011 14

Five years in figures KAS BANK N.V. 15

KAS BANK N.V. share price 16

Consolidated income statement 17

Consolidated statement of recognised income and expenses 18

Investment portfolio quality 18

Consolidated balance sheet 19

Disclaimer

Although the information in this Annual Review is drawn up with the utmost precision, no rights can be derived from it. This Annual Review was

not verified by accountants.

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Preface

Forecasting the future is and will

always be fraught with difficulty.

Those who had hoped at the

beginning of 2010 for a speedy

recovery of the financial markets

found by year-end that their

wishes had not been granted. In

reality, there are growing signs of

a twin-track process at the macro-

economic level: led by Germany, the northern members

of the European Union are starting to pick up again, but

the southern and more peripheral member states are still

in crisis and thus lack the means to nourish a sustainable

recovery. This situation is helping neither the stability of the

euro nor the interest-rate policy pursued by the European

Central Bank. 2010 was undoubtedly the year of the euro,

but not in a positive sense.

Since early 2010, when the markets lost confidence in

several member states of the European Union, practically all

financial policy activity has been concerned with restoring

their trust. The European Central Bank (ECB), supported by

Brussels, has done everything possible to protect the euro’s

value and mitigate the associated risk of sharply rising

inflation. As a consequence of these confidence-building

measures, the European banks have been under constant

pressure. Although the stress-tests they performed in the

summer of 2010 offered some respite, the fact that they

had a choice of whether or not to disclose their exposure

to central and lower governments in the PIIGS countries

(Portugal, Ireland, Italy, Greece and Spain) or the value

of their held-to-maturity investment portfolios points to

renewed turbulence in the future.

The ECB continued with its generous liquidity policy for banks

in the eurozone, so the original plan to tighten short-term

liquidities in early 2010 was not implemented. That in turn

had a direct effect on short-term interest rates, which were

kept down more or less artificially to a very low level. It also

impacted on the progress towards recovery of pension funds

and insurance companies in particular. On the European

stock exchanges, trading volume remained low and there

were few new introductions. Both trading volume and pace

of recovery fell short of expectations.

For KAS BANK, this meant that 2010 was not a good year

for profits. The bank performed well in terms of capital

adequacy, liquidity, client acquisition, client satisfaction,

cost reduction and risk management, but it was not enough

to fully offset the loss of revenue due to the low interest

rates and the low stock exchange trading volume.

There are, however, a number of important positive

developments to report, notably in the area of governance

and client satisfaction. The European stress-test for banks,

which KAS BANK performed on a voluntary basis, revealed

a solvency ratio of over 20%, which places it at the top of

the European league. KAS BANK will also be able to meet the

new revised Basel III capital requirements well before the

deadlines that have been set.

We are also working to reinforce the ‘customer f irst’

principle that applies to all our clients across the KAS BANK

organisation. The Client Service Reviews we conducted in

2010 are proving to be a particularly valuable tool in this

regard. Our clients’ constructive suggestions are helping us

to further improve our services and respond more effectively

to the market’s needs, to which end we have again taken a

range of practical steps in the early months of 2011. We

thank our clients most sincerely for their active involvement

in helping us to raise our standard of service still further.

Lastly, we thank our shareholders for their continued

support for the bank though this severe economic crisis. We

understand better than anyone that interaction between

clients, staff and shareholders is key to the bank’s success.

A.A. Röell

Chairman of the Managing Board

KAS BANK N.V.

5

Peter Martens, Director, Corporate Xpress (Staples)

According to the Investment Policy and Risk Management Committee (chaired by prof. dr. Frijns)

pension fund managers must be in effective control at all times. What actions has your organisation

taken to achieve this?

We have first made an inventory of the current approach. The management is of the opinion that we are in control. At our fund we focus on the continuity of the asset management process, which means the operational risks in particular must be decreased. The available qualified manpower within the affiliated organisations will decrease in the coming years so professional help must be sought. On the one hand by appointing a fiduciary manager who will be responsible for the execution of the asset management and on the other hand by appointing a risk manager who fulfills the risk management duties (strictly separated from the fiduciary manager’s duties) by order of the pension fund management.

What role do KAS BANK’s services play?

For the execution of the risk management function KAS BANK already performs several duties for our organisation. This range of duties will be further expanded to include the complete execution of the risk management function. The risk manager report to the pension fund management and maintains daily contact with both the fiduciary manager and the director of the administrative bureau.

How can KAS BANK further support you in your current activities?

It is paramount in general that the entire asset management process is well monitored, which requires an optimum insight into the investment portfolio. KAS BANK can fulfill a supporting role in this process. For example if the relevant asset manager is not (yet) capable of providing the value of the underlying investments on a daily basis.

What trends and developments do you anticipate in the coming years and how do you expect

KAS BANK to support you?

Increased transparency of the asset management process for all stakeholders within the pension fund. The expectations are that all parties should have a real-time insight into the actual investment portfolio. Let’s call it “Mypensionfundinvestments.nl”. KAS BANK can play an important role in this process.

Peter Martens InterviewSince 1970 Stich­ting Pensioenfonds Corporate Express (Staples) has been m a n a g i n g t h e pension liabili ties of employees of

the former Corpor ate Express companies (now Staples) in the Netherlands.The fund aims to provide pensions and retirement benefits to partici pants, former participants and beneficiaries.

KAS BANK pro vides Pension fund Corporate Express (Staples) the services Investment Accounting, Perfor mance Meting, IMS Dashboard, Currency Overlay and Global Custody.

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Ieko Sevinga

Ieko Sevinga, Managing Board Van Lanschot Bankiers N.V.

Basle III will increase capital requirements for trading positions and complex securities. Van

Lanschot has announced its readiness for Basle III. What do you expect from the implementation

of Basle III in the coming years? What will be its influence on the financial playing field?

The implementation of Basle III will have consequences for the profitability of financial institutions, the nature of the activities they undertake and their risk appetite. Due to the implementation of Basle III many financial institutions must raise capital or other funding, which will result in increased pressure on the capital markets. In the end, the playing field for financial institutions will become smaller. This will, among other things, result in a reconsideration of the strategic choices that financial institutions have made and the corresponding income models.

Last year, a large number of European banks – either voluntarily or on the advice of the Committee

of European Banking Supervisors (CEBS) – executed stress tests. These tests were designed to

measure whether European banks can withstand a major economic shock. What relevance does the

stress test have for Van Lanschot?

The stress test has provided the market with insight into the ability of individual banks to withstand possible future stress scenarios. We believe that this transparency will have a positive influence on returning stability to the market and the further recovery of faith in the market.

Van Lanschot is a medium-sized bank with a clear business model, a low risk profile and a specific

service. What role do you think specialist banks like Van Lanschot will play against a background of

increased economies of scale in the financial services industry?

Van Lanschot consciously chooses a size that takes account of the correct balance between complete and high-quality advice and a personal approach with short communication lines. That is what distinguishes us from other parties and this is where our strength lies. We provide financial services to our clients with the requisite attention and care, with great professionalism and discretion. The personal relationship is paramount and independence forms the basis of our business model.

What will be the most significant developments for Van Lanschot in the coming years, and how can

KAS BANK support you?

Van Lanschot wants to be the best private bank in the Netherlands and Belgium. In our strategy we choose to focus on private banking, increasing our commercial strength, permanently investing in the quality of our services and maintaining a solid profile. If we make a comparison to KAS BANK’s area of expertise, Van Lanschot faces the challenge of capitalising on the significant changes in the asset servicing industry in the coming years, amongst which Target2Securities stands out. Besides, we must also implement several changes in response to legislation. Our expectation is that KAS BANK, as a specialised custody provider, can be of great value to Van Lanschot in meeting these challenges.

InterviewVan Lanschot is the oldest inde pendent private bank in the Netherlands. Its rich 270­year history serves as a firm founda­

tion for the bank’s current activities. Van Lanschot’s services focus on high­net­worth individuals in the Netherlands and Belgium and entrepreneurs in the Netherlands. In the institutional market Van Lanschot focuses on asset manage ment mandates, increasingly by means of comprehensive fiduciary investment solutions. At year­end 2010 Van Lanschot employed approximately 2,000 staff members, with total assets under management of € 35.4 billion.

KAS BANK acts as a Global Custodian and Clearing & Settlement Agent.

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P-Solve - Jonathan Lipton

Jonathan Lipton, Chief Operations Officer P-Solve

P­Solve was founded in 2001 and now advises over 130 institutional clients, varying in size from £2 million to £6 billion, and by

type across defined benefit schemes, defined contribution schemes, charities, corporates and asset managers. Advice is provided by a range of underlying businesses operating in areas which include investment advice and fiduciary management, risk management and derivatives.

KAS BANK provides Global Custody and Settlement Ser vices to P­Solve’s clients via a tri­party arrange ment.

Please tell us more about your activities

P-Solve was the first company to offer implemented consulting, or fiduciary management as it is more commonly referred to now, for defined benefit pension funds in the UK. Our first appointment was in the autumn of 2003. It was following the establishment of this business that we sought out a provider with the flexibility to provide the custodial services suited to the delivery challenges of this new way of meeting the needs of pension fund clients.

How has your relationship with KAS BANK developed?

We appointed KAS BANK in 2006. It was just as essential then, as it is now, that we identified a custodian that was committed to continually improving their servicing and technology capabilities in line with the evolving needs of ourselves and our clients, while maintaining stringent service and control standards.

Crucially, KAS BANK has not diverted from those core values that were the foundation of their appointment: namely that they remain a low risk, client service driven, specialist custodial service provider, who continue to demonstrate an ongoing commitment to risk management and mitigation.

How does KAS BANK support you in your current activities?

The role and responsibility of custodian banks has come under increasing scrutiny over the last few years, in particular the primary activity of safekeeping assets. Combined with KAS BANK’s specialist ‘pure player’ strategy, their operational capabilities provide assurance to our mutual existing clients and present a strong proposition that supports our engagement with potential new clients. With increasing volume and complexity in asset administration, and the requirement for enhanced settlement control, KAS BANK’s investment programme, personal attention and willingness to help provide pragmatic solutions continues to support our business model effectively.

What trends do you anticipate in the market in the coming years, and what do you expect from

KAS BANK in response?

The most important factor facing pension funds in 2011 is the continuing uncertainty around future growth prospects. Will the economic recovery pick up momentum? Are we facing inflation or deflation in the medium term? Looking forward, pension schemes will not be able to rely solely on the more traditional sources of return such as developed market equity, property and bonds. Instead, trustees will need to turn to new markets and return sources such as emerging markets, real alternatives (such as catastrophe insurance and carbon credits) and potentially derivatives to manage their risk exposure. The challenge for KAS BANK will be to administer an increasing variety of investments, especially alternatives and derivatives. With market conditions still unsettled for the foreseeable future, P-Solve’s ability to seize market opportunities and move promptly to implement asset allocation views will be an important influence on our success in preserving and growing our clients’ capital.

KAS BANK’s straight-through-processing will be central to achieving this whilst simultaneously managing transaction costs. However, while looking forward, the value of old-fashioned service remains central. Our clients are demanding more service in areas such as tax reclamation, corporate actions and settlement issue resolution. KAS BANK continues to rise to these challenges.

Interview

8

Frank de Lange

Frank de Lange, Manager Financial Accounting Generali Verzekeringsgroep nv

How has your relationship with KAS BANK developed?

In past years, we, like other financial firms, have been confronted with more strict requirements regarding reliability and quality of published figures and reports. In the course of 2009 it became clear that we could no longer continue to use our data systems and custodian for our investment portfolios. We then approached several large players in the market to inform us, however we quickly turned to KAS BANK, who convinced us of their added value. The decisive factor was that KAS BANK, beyond its custody and investment administration services, can also provide financial and administrative services, which enables us to draw up the financial reports on the basis of different reporting requirements. Think, for example, of IFRS, NL GAAP or tax basis. As part of an international group of companies it was of significant added value to us that other service providers could not offer this service. After the choice had been made in the fall of 2009, at the end of that same year we began the transition of the custody activities followed by the investment administration (including the determination of the daily net asset value (NAV) calculations of the Generali investment funds) and finally the financial administration. The majority of our services have been in top gear for quite some time now, and with regards to the financial administration we are currently making the final refinements.

What trends do you anticipate in the market in the coming years, and what do you expect from

KAS BANK in response?

The financial sector has suffered some reputational damage in recent years. To regain the trust of the client it is vital that we as insurer first clearly define the added value of our products. As Generali we distinguish ourselves in the extremely competitive Dutch market mainly by keeping in close contact with our clients. Our clients are the central focus in everything we do. For example, we think along with the client and we are not satisfied until the client is. A sharp price and transparency are, of course, vital boundary conditions. For the Finance section of Generali this involves, among other things, being able to provide clear and reliable reports in the short term. Furthermore, we must also comply with the increasingly strict requirements set by the supervisory authority the Dutch Central Bank (DNB), while the upcoming implementation of Solvency II with effect from 1 January 2013 will also raise several challenges, particularly in the risk management area. That is why we are focusing within the organisation on improving the quality of our technical insurance system, i.e. the credit side of the balance sheet.

Furthermore, for the debit side of the balance sheet, particularly concerning the investment portfolios in custody and administered at KAS BANK, we – in cooperation with KAS BANK – are trying to improve the quality of the steering and management information of our investments regarding the stricter requirements of the supervisory authority and Solvency II. In the long term this will enable us to better inform our clients, the supervisory authority and shareholders about trends and developments regarding our investment portfolios, ideally on a daily basis. Considering the results that we have been able to realise in the past 18 months together with KAS BANK, we are convinced that the future has something good in store!

InterviewGenerali Verzeke­rings groep N.V. forms part of Generali Group, a globally operating insur er with ap­proxi mately 85,000

employees with its principal office in the Italian city of Trieste. Generali Group is the second largest insurer in Europe, has a very strong financial position and guarantees solvency, stability and reliability. One of every four Euro peans has at least one insurance policy at the Generali Group.The Generali Verzekeringsgroep in the Netherlands positions itself as the specialist in pension and loss­of­income insurance: “We do not make promises. We ensure!” In addition to pension and loss­of­income insurance, Generali also provides, private clients, entrepre­neurs and organisations with a broad range of damage and life insurance. The intermediary is our primary distribution channel. Over 2009, Generali achieved a turnover of EUR 610 million and profits of EUR 8.6 million. The investment portfolio amounted to EUR 2,749 million at year end 2009.

KAS BANK pro vides investment accounting and Financial admini stration and acts as a Global Custo dian.

9

Dr. Holger Bachmann en Markus BB BaumgartnerDr. Holger Bachmann, Head of Investment and Markus BB Baumgartner, Investment advisor BMW Financial Services

BMW Financial Services is a subsidiary of the Munich­based car manufactu­rer BMW. BMW Financial Services offers financial services, leasing, car insurance and portfolio management. KAS IS works with BMW Financial Services in the capacity of portfolio manager and advisor. KAS BANK’s full subsidiary company KAS Investment Services GmbH, Wiesbaden provides BMW Financial Services as Master KAG (Kapitalanlagengesellschaft), that acts, as fund administrator. BMW Financial Services is very successful in the German market as an asset manager. BMW Financial Services has eight mutual funds for which KAS  IS acts as the administrator.

KAS IS provides BMW Financial Services with fund accounting, NAV calculation, price publication, legal reporting to the BaFin, year­end statements.

Since 2008 KAS Investment Servicing GmbH (KAS IS) has been responsible for the fund

administration of the MultiManager Fonds 1-5, ComfortInvest Chance, ComfortInvest Perspektive

and ComfortInvest Substanz. How has the relationship developed since then?

Our relationship with KAS IS goes back several years, as the funds were launched in 2001 (MultiManager Fonds) and 2007/2008 (ComfortInvest) by Delta Lloyd Asset Managers, who were acquired by KAS IS in 2008. From the very beginning, our cooperation has been very positive, with KAS IS acting as administrator (Master KAG) of the funds and BMW Bank taking the role of fund advisor. We appreciate the informal and pragmatic, yet always professional, way of handling our requests and orders.

In previous years you have been a very successful asset manager in the German market. Some of

your funds received an A rating from the S&P rating agency. Furthermore, the MultiManager 1 and

the MultiManager 5 were rewarded with the “Deutschen Fondspreis”. How important are good

ratings and awards for you as an asset manager and fund distributor?

Just to complete the list: ComfortInvest Perspektive was voted “Best Sustainable Fund of Funds 2010” by Eco-reporter magazine. Performance, rankings and ratings play an essential part in distribution. As an asset manager, the professional recognition (and rigorous process!) in obtaining a qualitative rating is rewarding in itself, but for attracting investors and inflows ratings can be used to very good effect. We have included the S&P ratings and reports on our website as well as all our marketing material; towards the end of 2010 we launched a marketing campaign playing on the same angle, which resulted in net asset inflows across the board. How does KAS IS support you in your activities in the German market?

KAS IS is especially helpful when it comes to meeting regulatory requirements – for instance, currently all sales prospectuses must be adapted to modifications in German investment law, a task handled diligently for us by KAS IS. KAS IS is also in charge of supplying data providers and web portals with fund data such as daily NAV, volume and portfolio breakdown. Furthermore, KAS IS supports us in analyzing the existing portfolios and new investment ideas with regard to conformity to prospectus limitations and risk limits.

Interview

10

Personal notes

Situation as at 2 March 2011

Supervisory BoardR. Smit (1950), chairman

J.M.G. Frijns (1947), vice-chairman

A.H. Lundqvist (1945)

R.A.H. van der Meer (1949)

R. Icke (1957)

R. Teerlink (1961)

Managing BoardA.A. Röell (1959), chairman

R.J. Kooijman (1961), Chief Financial Officer

N.E. Blom (1962), Chief Operating Officer

S.A.J. van Katwijk (1964), Chief Commercial Officer

KAS BANK Registrar’s office (Stichting Administratiekantoor Aandelen KAS BANK)Drs. A. Baan, chairman

H. Zwarts

H. Scheffers RA

KDTC Registrar’s Office (Stichting Administratiekantoor Aandelen KAS BANK Effectenbewaarbedrijf)Mr. D.H. Cross, chairman

Mr. R.P. Voogd

R.J. Kooijman RA

Stichting Administratiekantoor Aandelen KAS Derivaten ClearingMr. D.H. Cross, chairman

Mr. R.P. Voogd

R.J. Kooijman RA

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Report of the Managing Board (Summary from KAS BANK’s Annual report 2010)

KAS BANK is continuing to work steadily on advancing and consolidating its leading position in wholesale securities services

in Europe in the field of transaction processing, custody and risk management. The strategy we have adopted to achieve this

objective is based on ‘pure play’. We have designed a business model that precludes any conflict of interest with clients and our

activities represent no threat to our clients in their area of specialisation. On the contrary, we regard our clients as partners

and work closely with them. This combination of ‘pure play’, financial solidity and client focus constitutes the critical added

value offered by KAS BANK.

‘Pure play’

* Focus on wholesale securities services • noactiveassetmanagement

• noactivetradingforownaccount

• noconflictofinterestwithclients

* Focus on core values • neutral

• transparent

• lowrisk,stable

* Client­driven • moreandbetterintegrationwithclientsbyfocusingon

specialism

Target groupsKAS BANK has operated exclusively on the wholesale market, serving only institutional investors and financial institutions,

since 2007. Within these client groups, the bank’s main focus is on Dutch pension funds, European broker services and the

German institutional market.

Our clients can be divided into six groups: pension funds (including their clients, such as participants, and their administrative

organisations), insurance companies, investment funds, asset managers, banks and brokers. Within these six groups, there

are a number of specific categories, such as lower-tier government, charitable institutions, family offices and housing

associations. We service retail clients solely via professional asset managers and brokers.

Products and services

Because KAS BANK is closely involved in all developments, in terms of both tax law and new products, affecting the Dutch

institutional market, we are able to respond swiftly and effectively to changes in supervision and regulation and changes

in the market. The focus is shifting increasingly towards all activities relating to beneficial ownership of securities, such

as investment administration, risk management and operational and objectivised implementation of investment policy.

KAS BANK offers a complete package of services in this area, tailored precisely to the needs of institutional investors.

KAS BANK can also extend its position in this segment in Germany, the United Kingdom and other European countries.

Our comprehensive range of securities-related services and products is divided into transaction servicing (supporting the

settlement of securities transactions in the broadest sense) and asset servicing (custody and management of securities,

including administration, valuation, monitoring and risk management). The bank’s central securities platform gives our

clients access to the entire European securities infrastructure in one system. The platform processes both securities and

derivatives, facilitates over-the-counter (OTC) transactions (unquoted securities) and monitors the clients’ risks as well as

the bank’s. Its centralised structure makes it easy to expand, in terms of both the number of infrastructure connections and

the diversity of the product range.

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KAS BANK operates mainly in Europe. The bank’s growth ambitions are concentrated mainly on the West European markets,

focusing in 2011 on Germany and the German-speaking markets as well as the Netherlands and the United Kingdom. Our global

network of close to 80 correspondent banks ensures high-quality services in all regions outside Europe. The primary function

of our offices in Amsterdam, London and Wiesbaden is to support institutional investors and financial institutions. Apart from

their commercial activities, the offices outside the Netherlands perform only the necessary minimum of administrative and

risk-management tasks; central management and processing are based in Amsterdam.

Environment/marketIn the Dutch institutional market, there has been evidence for some time of a trend towards consolidation among pension

funds, driven by the need to have a minimum size to meet the increasing demands placed on pension institutions. At the

same time, the number of pension administrators, among which insurance companies must also be counted, is growing. These

pension administrators take over a number of duties and obligations of small pension funds and integrate them into their

own operations. Similar processes are also seen in Germany and the United Kingdom.

Efficient administration and high-quality information management are becoming increasingly important in the tightly

regulated environment of the pensions and securities industries. Risk-management implementation and monitoring in

particular are growing in importance as independent validation of the effective discharge of management responsibilities

and of being ‘in control’. The combination of the complexity and speed of introduction of the new rules imposed severe

stresses on the internal operations of the players affected. Tighter risk management will generate increased demand for

independent reporting and independent support for pension fund boards and their advisers. We are responding effectively by

continuously expanding, in both breadth and depth, our services as custodian and provider of risk management, monitoring

and reporting services.

KAS BANK has already taken over the investment guideline monitoring function required by the regulator on behalf of many

pension fund boards and pension departments. In this function, we offer audits of the investment process, the results and

the quality of valuations, giving the board the overview it needs of the operating risks inherent in the investment policy

implemented under its responsibility. We therefore envisage rising demand for our risk-management products and reporting

services within the institutional investor segment. Our proposition is strengthened by our independent position (we do not

offer asset management).

Tighter regulation is also reflected in the development of financial institutions having to pass their transactions through

central counterparties. The reserves requirements that have been announced for unquoted derivatives under Basel III

will further support and accelerate the move towards central settlement of these and other asset classes, creating more

opportunities for us to expand our services in the near future. We therefore intend to expand our in-house technical platform,

offering direct connections, into the markets where central clearing mechanisms are being introduced, as we did in 2010 for

the Scandinavian market.

Another consequence of increasing regulation is the growing pressure on the mid-office and back-office functions of regulated

institutions, which are increasingly seeking to outsource those functions and information management functions to specialist

providers like KAS BANK.

In trading, we predict that high-frequency traders will have a growing impact and that the traditionally wide spreads will

continue to narrow. We also expect further fragmentation of trading liquidity in 2011, although the pace of change will be

slow.

13

Other trends that are relevant to KAS BANK include the growing popularity of unquoted investments and exchange-traded

funds as active investment instruments. In terms of settlement, both instruments still rely heavily on non-automated

processes (involving higher operating risks). The automated services which

KAS BANK is developing to serve this need represent an advance in both quality and efficiency for our clients and prospects.

Due to the influence of the regulators, factors which are becoming increasingly important in the selection of custody and

administration services include the quality of the provider’s monitoring framework, its knowledge of local infrastructures

and tax law and the human factor in the advice and support provided for the client. Apart from these factors high-quality

service and a competitive price are also becoming increasingly important. Also, production and support need to be moved

back closer to the client.

A noteworthy development in this context is the changing profile of clients’ preferred type of custody organisation. They

increasingly favour specialists and compact organisations whose balance sheets (and hence the counterparty risk they

present) can be readily interpreted. As a specialist in settlement services with a strong liquidity position and a low risk profile,

KAS BANK is attractive to (larger) players which have made ‘a specialist with a sound reputation, close to home’ one of their

selection criteria. There is, for example, a growing demand for intensive operational assistance, including risk management,

on the part of KAS BANK’s clients, both financial institutions and institutional clients. To meet this demand, KAS BANK will

further define its positioning as a specialist provider of tailor-made services.

AcquisitionsThe credit crisis underlines once again the importance of specialisation and good risk management. With new regulations

and the greater client emancipation making wholesale securities services within Europe ever more complex, generic financial

institutions are increasingly looking to outsource their activities in this area. Such transactions are rather complicated and

are often not given the highest priority by the vendor, making it difficult to predict how fast the industry will ‘unravel’. What

is clear is that, as a specialist and ‘pure player’, KAS BANK is well placed to meet this demand. We occupy a unique position

particularly in Germany, where we have made two acquisitions in recent years. In both cases, our independence and neutrality

were significant additional factors in the vendor’s decision to outsource to KAS BANK. Once again, KAS BANK’s ‘pure play’

strategy proved its worth, because the absence of any conflict of business interest meant that the relationship with the vendor

could last for many more years.

In 2011, given the uncertainties now facing the financial industry, KAS BANK will concentrate mainly on further growth in

Germany. Acquisitions in other parts of Western and Northern Europe are not, however, being ruled out in advance. The

emphasis will be mainly on institutional portfolios. Any acquisitions will be financed out of the bank’s own funds, on condition

that they contribute to earnings per share.

Client value firstKAS BANK has always maintained close ties with its clients. Those links were drawn even closer in 2010 with the launch of

Client Service Reviews, in which almost our entire client base participated. The purpose of these reviews is both to eliminate

risks and irregularities and to further optimise the quality of our services. Several process and quality improvements have

already been made in consultation with our clients. Work on this project is proceeding with undiminished vigour in 2011.

14

Outlook for 2011

KAS BANK responds continuously to changes in the market and in primary and secondary legislation which are relevant to the

bank and its client groups. We either modify our existing products or develop new products to accommodate those changes.

Examples include reporting on behalf of investment funds in accordance with the EU directive on Undertakings for Collective

Investments in Transferable Securities (UCITS), the introduction of the European Central Bank’s new Target2-Securities

uniform settlement system and the ongoing harmonisation of European payments. As well as modifying our own systems, we

also advise our clients on the potential consequences of such changes for their own operations.

The same applies to our role as adviser to institutional investors on the structure and implementation of investment

information and risk-management products. We are planning to expand this role in 2011. The KAS BANK Fund Desk supports

and advises new fund managers on the formation, administrative organisation and compliance monitoring of their new

investment funds.

The continuing unrest on the financial markets brings risks, but also good opportunities, because anomalies arise from

which KAS BANK can profit. In close cooperation with our clients, we are working to expedite the return of securities lenders

(pension funds and insurance companies) to the market.

In Germany, the trend towards the outsourcing of fund administrations and the consolidation of KAG and Depotbank functions

is continuing. As the only independent provider of both Master KAG and Depotbank services, we are looking forward to

further growth in our operations in Germany itself and in other German-speaking countries such as Austria and Switzerland.

Acquisition opportunities are under constant review.

We are continuing in 2011 to develop tailor-made solutions for UK pension funds and strengthen our position as an

independent partner for pension funds, sponsors and trustees. Because London will remain an important hub for firms

seeking trading opportunities on the European securities market, we foresee good growth potential for KAS BANK as a central

gateway to the European infrastructure, particularly for US brokers.

15

Five years in figures KAS BANK N.V.

Consolidated in millions of euros 2010 2009 2008 2007 2006

Equity attributable to equity holders of the bank 187.0 193.4 167.5 254.9 217.6

Own funds

Equity attributable to equity holders of the bank

plus subordinated liabilities 187.0 193.4 167.5 266.3 247.1

Total assets 6,017.3 6,329.7 7,360.2 8,371.8 6,448.5

INCOME

Net Interest 20.6 30.6 28.9 21.6 16.8

Net commission 69.7 74.4 87.4 91.7 82.1

Trading/AFS investment income 24.7 28.9 10.9 32.9 28.5

Other income 2.2 2.0 0.7 26.2 1.7

117.1 135.9 127.8 172.4 129.1

Operational operating expenses 97.5 104.4 106.4 100.4 93.0

Impairment losses -2.6 -0.3 73.4 4.7 -

Operating expenses 94.9 104.0 179.8 105.1 93.0

Resultaat over de verslagperiode voor belastingen 22.3 31.8 -52.0 67.3 36.1

Result for the period attributable to

equity holders of the bank 18.5 24.6 -39.9 50.9 26.6

Figures per share of € 1,00 nominal value

Net asset value after proposed dividend 12.83 13.27 11.49 14.19 13.65

Basic earnings per share 1.27 1.69 -2.70 3.41 1.79

Dividend 0.73 0.73 0.45 2.60 1.40

Share price, high 14.24 14.40 29.30 29.69 23.15

Share price, low 11.00 6.95 9.45 20.49 18.66

Share price, year-end 11.76 14.05 9.90 25.00 20.85

16

Five years in figures KAS BANK N.V.

Consolidated in millions of euros 2010 2009 2008 2007 2006

Ratios (%)

Net return on average shareholders’ equity 10,0 13,7 -20,2 23,7 13,2

Efficiency ratio (operational operating expenses/income) 87 79 81 76 77

BIS-ratio (average)* 21 21 15 16 17

* The BIS ratios for the years 2006-2007 are based on Basel I.

The BIS ratios for 2008-2010 are based on Basel II.

KAS BANK N.V. share priceMovements in the (indexed) price of KAS BANK depositary receipts over the past ten years are compared with the AEX Index

in the graph below.

KAS BANK (geïndexeerd, 29-12-2000 = 100)AEX-Index (geïndexeerd, 29-12-2000 = 100)

020

40

60

80

100

120

140

160

180

200

2010200920082007200620052004200320022001

17

Consolidated income statement

Non Opera­ Non Opera­ operating tional operating tional Total result result Total result resultIn thousands of euros 2010 2010 2010 2009 2009 2009

INCOMEInterest income 52,087 - 52,087 86,886 - 86,886Interest expense 31,474 - 31,474 56,301 - 56,301Net interest 20,613 - 20,613 30,585 - 30,585

Commission income 85,210 - 85,210 90,289 - 90,289Commission expense 15,533 - 15,533 15,928 - 15,928Commission 69,677 - 69,677 74,361 - 74,361

Trading Income 8,761 -217 8,978 12,780 -1,396 14,176Available-for-sale investments 15,906 5,522 10,384 16,133 6,270 9,863Result on investments 24,667 5,305 19,362 28,913 4,874 24,039

Other income 2,170 - 2,170 2,015 - 2,015Total income 117,127 5,305 111,822 135,842 4,874 131,000

OPERATING EXPENSESStaff costs 64,550 853 63,697 67,292 - 67,292Other administrative expenses 24,945 -695 25,640 28,881 805 28,076Depreciation expenses 7,996 - 7,996 8,121 - 8,121Operating expenses 97,491 158 97,333 104,294 805 103,489

Impairment losses -2,630 -2,630 - -261 -261 -Total operating expenses 94,861 ­2,472 97,333 104,033 544 103,489

Result for the period before tax 22,266 7,777 14,489 31,841 4,330 27,511Tax expenses 3,800 1,983 1,817 7,350 713 6,637

Result for the period 18,466 5,794 12,672 24,491 3,617 20,874Attributable to:Equity holders of the bank 18,455 5,794 12,661 24,581 3,617 20,964Minority interests 11 - 11 -90 - -90

Earnings per share - basic (in euros) 1.27 1.69- diluted (in euros) 1.26 1.67

18

Investment portfolio qualityIn millions of euros

The securities in the available-for-sale portfolio and the investments at fair value through profit or loss are analysed by

credit rating (Moody’s Investor Services) in the table below.

31-12-2010 Percentage of portfolio

31-12-2009 Percentage of portfolio

Aaa t/m Aa3 1,430 95% 1,339 93%

A1 t/m A3 27 2% 37 3%

Baa1 t/m Baa3 32 2% 40 3%

P1 t/m P2 - 0% - 0%

Shares 14 1% 28 2%

Total 1,503 100% 1,444 100%

As at year-end 2010, 95% of the investments had the highest rating (year-end 2009: 93%).

Consolidated statement of recognised income and expenses

2010 2009 Before After Before After In thousands of euros tax Tax tax tax Tax tax

Result for the period 18,466 24,491Revaluation of land and buildings in use by the company - - - -4,218 1,076 -3,142Gains and losses on available- for-sale investments 1,737 -421 1,316 23,826 -6,474 17,352Gains and losses on available- for-sale investments recognised in the income statement -13,664 3,484 -10,180 -8,191 2,089 -6,102Impairment losses Available-for-sale investments - - - 93 -24 69Actuarial gains and losses on pensions -7,938 2,024 -5,914 -3,872 987 -2,885Income and expense recognised directly in equity -19,865 5,087 -14,778 7,638 -2,346 5,292Total comprehensive income for the period 3,688 29,783

Attributable to: Equity holders of the bank 3,677 29,873Minority interests 11 -90Total comprehensive income for the period 3,688 29,783

19

Consolidated balance sheet

In thousands of euros 31-12-2010 31-12-2009

ACTIVACash and deposits at the central bank 731,545 469,340Banks 2,262,587 2,707,426Loans and advances 766,564 907,182Reverse repurchase agreements 524,111 584,346Derivative financial instruments 100,898 92,141Investments at fair value through profit or loss 176,328 154,630Available-for-sale investements 1,326,911 1,289,270Current tax assets 31,068 25,447Other assets 11,604 13,638Prepayments and accrued income 20,456 17,361Property and equipment 41,642 44,062Intangible assets 18,684 21,002Deferred tax assets 3,079 3,840Employee benefits 1,784 -

Total assets 6,017,261 6,329,685

EQUITY AND LIABILITIESBanks 2,056,755 2,328,351Fund entrusted 3,578,903 3,649,066Derivative financial instruments 124,998 116,144Liabilities at fair value through profit or loss 17,044 -Current tax liabilities 5,748 1,354Other liabilities 16,988 1,235Accruals and deferred income 18,926 22,686Provisions - 740Deferred tax liabilities 9,896 13,097Employee benefits 1,096 3,814 Total liabilities 5,830,354 6,136,487

Issued share capital 15,699 15,699Treasury shares -25,324 -25,417Share premium 21,569 21,569Revaluation reserve 18,181 27,688Other reserves 143,247 134,057Unappropriated result 13,644 19,772Total equity attributable to the equity holders of the bank 187,016 193,368Minority interests -109 -170Total equity 186,907 193,198

Total equity and liabilities 6,017,261 6,329,685

Contingent liabilities 27,211 30,844Irrevocable facilities 20,958 62,816

KAS BANK AMSTERDAMP.O. Box 240011000 DB AmsterdamThe Netherlands

Spuistraat 1721012 VT AmsterdamThe NetherlandsT: +31 20 557 59 11

KAS BANK LONDON5th Floor10 Old Broad StreetLondon EC2N 1AAUnited KingdomT: +44 20 7153 36 00

KAS BANK WIESBADENBiebricher Allee 2 65187 WiesbadenGermanyT: +49 611 1865 3800

www.kasbank.com

NETHERLANDS

NETHERLANDS

GERMANYUNITED KINGDOM