report of the supervisory board

This Annual Report presents the developments and results of NIBC Bank N.V. (NIBC Bank or NIBC). The year 2007 has been a turbulent year for NIBC Bank. During the first quarter, NIBC Holding N.V. (NIBC Holding) prepared for a listing on Euronext Amsterdam. However, in light of the volatile market conditions, it was decided not to approach the capital markets for an IPO. Furthermore, NIBC Bank suffered a non-recurring mark-to-market loss on its US ABS investment book in the first half year of 2007, a part of which relates to the sub prime-related portfolio. In August 2007 the shareholders of NIBC Holding N.V. entered into an agreement with Kaupthing Bank hf. (Kaupthing) to sell and purchase the entire share capital of NIBC Holding. However, due to the instability in the financial markets, NIBC Holding and Kaupthing have determined not to proceed with the acquisition. The continuing business of NIBC Bank performed well, posting a profit after tax of EUR 242 million.

annual accounts and dividend proposal

The annual accounts were drawn up by the Managing Board and audited by PriceWaterhouseCoopers Accountants N.V., who issued an unqualified opinion dated 21 February 2008. The Supervisory Board advises and proposes that the Shareholders adopt the 2007 annual accounts at the Annual General Meeting of Shareholders on 20 March 2008. In 2007 the Bank paid an extraordinary dividend of EUR 85 million to NIBC Holding in respect of a project to de-risk the US sub prime exposure (project Onca). This transaction involved Onca 2007-1, Ltd. (Onca), a company incorporated under the laws of the Cayman Islands where NIBC Holding subscribed for an amount of USD 248 million for preference shares in Onca. A subsidiary of NIBC Bank sold to Onca its entire portfolio of residential US ABS CDOs and US home equity loans. Subsequently, NIBC Holding paid an extraordinary dividend in kind (in the form of preference shares in Onca) and in cash to its shareholders. Since 24 August 2007, NIBC Bank and NIBC Holding no longer have any exposure to the sub prime-related portfolio. In this respect, please refer to the financial results section under Balance Sheet and Ratios. Subject to approval of the annual accounts and the profit appropriation, this extraordinary dividend will be the final proposed dividend in respect of the financial year 2007. Conditional upon the approval of shareholders referred to above, the Supervisory Board endorses the proposed dividend.The Supervisory Board also recommends that the Annual General Meeting of Shareholders discharge the Managing Board and Supervisory Board for their respective management and supervision during the financial year 2007.