Staff share in profits

Question discussed at the 2007 general meeting

The share in the Bank’s profits distributed to the staff or to institutions in its favour results from an allocation key laid down by the law and which must be adhered to (Article 32, 2, b) of the Organic Law). The staff’s share in the profits amounts to 8 p.c. of the annual profit surplus after allocation of the first dividend of 6 p.c. of the capital.

It cannot be deduced from the above that the individual share in the profit of a member of staff is very 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 therefore depends entirely on the employee’s salary and not on the profits made by the Bank. Thus, the share in the profits paid out to each member of staff is effectively comparable to the 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 wage costs.

The system has changed since the annual accounts for 2006, and the share in the Bank’s profits distributed to the staff or to institutions in its favour is now linked to the financial year during which it is earned.

The staff share in the profits for 2005 amounted to 28.7 million euro, 14.2 million of which has still been allocated to the same financial year (2005) under the old system. The balance of 14.5 million euro has been allocated to the 2006 financial year. The sum of 14.5 million euro paid up for the 2006 financial year was deducted from the wage costs and offsets the thirteenth month paid out to the staff. From a fiscal point of view, this is still a tax-deductible expense, so the Bank does not incur any tax disadvantage from it.

As regards the distribution of the Bank’s profits for the year 2006, the share owing to the staff or to institutions in its favour (19.5 million euro) is allocated to the 2007 financial year.