The Dutch Banking Code

In September 2009, the Dutch Banking Association (NVB) published the Banking Code. The Banking Code lays out the principles by which Dutch banks should conduct themselves in terms of corporate governance, risk management, audit and remuneration.

Drawn up in response to a report entitled ‘Restoring Trust’, published in April 2009 by the Advisory Committee on the Future of Banks in the Netherlands, the Banking Code is a form of self-regulation that took effect on 1 January 2010 on a ‘comply or explain’ basis.

Shortly after the Banking Code was published, Yapi Kredi Bank Nederland N.V. launched an ‘impact assessment’ initiative to embed the Banking Code within the company. The impact assessment was carried out by its Management Board and overseen by Supervisory Board.

Within this assessment phase, necessary measures were taken, and as a consequence, Management Board ensured that, the strategy of Yapi Kredi Bank Nederland N.V. was in line with the Banking Code and the Banking Code will be applied to ensure the consistency of the Bank.

The impact assessment found that Yapi Kredi Bank Nederland N.V. already complies with most of the principles on Corporate Governance, Risk Management (including Yapi Kredi Bank Nederland N.V.’s Product Approval Process), Audit and Remuneration:

Focus on Customer:

• This is the cornerstone of our strategy. We will continue to focus on Customers and keep educating our employees on this respect. This is also a topic in the yearly appraisal.

Risk Management:

• Yapi Kredi Bank Nederland N.V. already has a separate Risk Committee within the Supervisory Board;
• A Product Approval Process is put into force that undergoes continual improvement;
• Yapi Kredi Bank Nederland N.V. does not sell complex products to its retail clients.

Audit:

• Yapi Kredi Bank Nederland N.V.’s internal audit function operates under an updated Audit Charter, approved by the Audit Committee, which ensures Yapi Kredi Bank Nederland N.V.’s Internal Audit function reporting to Supervisory Board, which has adopted all principles of the Banking Code.

Business Principles:

• In 2009 Yapi Kredi Bank Nederland N.V. updated its Business Principles;
• All Yapi Kredi Bank Nederland N.V.’s employees must uphold the Yapi Kredi Group Business Principles in their day-to-day business activities;
• The new Business Principles cover (and in places exceed) the principles of the Banking Code with respect to moral and ethical conduct;
• All members of Yapi Kredi Bank Nederland N.V.’s Supervisory Board, Management Board and committees promising to respect and enforce the Group Business Principles;
• All of the Bank staff including Members of the Management Board Banking have signed the moral and ethical conduct declaration as defined in the Banking Code.

Following the impact assessment, further steps have been taken in the following areas:

Remuneration:

• Yapi Kredi Bank Nederland N.V.’s remuneration is in line with the Banking Code. For example, there are no Option Plans and the yearly bonuses are lower than the 1 year salary;
• The objectives of the Banking Code will be the guiding principles for the Remuneration Policy.

Permanent Education:

• Supervisory Board members undergo a programme of permanent education: all Supervisory Board members participate in an annual Knowledge day and new Supervisory Board members undergo an introduction programme, in Dutch Corporate Governance;
• Management Board members currently participate in various educational events, such as Knowledge days, an AFM (Netherlands Authority for the Financial Markets) day, and the DNB (Dutch Central Bank) day. This was extended into a structural programme for permanent education.

Yapi Kredi Bank Nederland N.V. will report in more detail on the manner in which it applies the principles of the Banking Code in the Annual Report.