Question discussed at the 2006 general meeting

The share in profits of shareholders comprises two parts: a first dividend of 6 p.c. on the capital and a second dividend determined by the Council of Regency. This second dividend is the subject of a specific dividend policy. It is well known that the Bank pursues a stable dividend policy aimed at offering an annual dividend which grows at a slightly higher rate than inflation. The Bank thus protects its shareholders from the volatility of its results, which are heavily dependent on external factors such as the demand for banknotes and exchange rate movements.

The share in the profits allocated to staff or to institutions in its favour is not the result of a specific policy but of an allocation key laid down by the law and which must be adhered to (Art. 32, 2°, b) of the Organic Law). The staff’s share in the profits amounts to 8 p.c. of the annual profit surplus following allocation of the first dividend. 

When a financial year has generated substantial profits, the staff’s share in the profits (subject to the allocation key laid down by the law), may be greater than the total dividend (subject to a dividend policy). In financial years producing poor results, the opposite is true.

However, this principle does not in any way affect the justification for the dividend policy pursued, the clear aim of which is to separate the dividend from the volatile result.

Equally, it cannot be deduced from the above that the individual share in the profit of a member of staff is volatile and that it increases during years of substantial profits. In fact, it was decided on the basis of a collective labour agreement that each year each member of staff receives a share in the profits totalling 10 p.c. of his/her remuneration for the last calendar year. The amount received is thus strictly a function of the employee’s salary and not of the profits made by the Bank. Thus, the share in the profits paid out is effectively comparable to a thirteenth month’s pay given by other companies. 

This profit sharing is financed from the staff’s share in the profits. In years where this is insufficient, the amount outstanding is treated as part of the labour costs. 

Given the significant staff share in the profits for 2005, the Bank has decided to bring its accounting method more into line with the general accounting rules: starting with the 2006 annual accounts, the share of profits allocated to staff or institutions in its favour will be allocated in full to the financial year during which it is made. For 2005, the year of transition, a sum of € 14.2 million has been allocated to the 2005 financial year and the balance to the 2006 financial year.