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B2B business line

Business development in the B2B business line

ebase can look back on a successful financial year in 2011. Thanks to specific product solutions for the different market segments, it has been possible to attract additional portfolio holdings from renowned partners in the insurance and investment sectors. Furthermore, following implementation of a partner-specific white label variant, ebase’s figures have included the custody account customers of Commerzbank since the second quarter and the custody account customers of investment company KanAm Grund as well as those of another institutional partner since the fourth quarter. Under the cominvest brand, ebase has been continuing the direct business of Allianz Global Investors (AGI) for the com-invest custody account as of the fourth quarter of 2011. AGI made the decision to transfer this business to ebase.

ebase has expanded the range of products and services in line with the needs of its associated partners and their end customers. After the successful interlinking of custody account and investment accounts in the previous year, in 2011 ebase focused on extending the functionalities available in B2B-type banking. White label variants of our call money and fixed-term deposit accounts are now available and can be seamlessly integrated in the respective partner’s product offering. Furthermore, ebase met all of the technical requirements for interest rate sponsoring by partners. This allows insurance companies or financial intermediaries, for example, to offer their end customers attractive terms and conditions as part of interest rate campaigns. As of the second quarter, partners have also been able to make use of a twelve month fixed-term deposit in this respect.

ebase was particularly successful in its target segment of insurance companies and banks. Over the course of the year, insurance fund portfolios with a volume of around €330m, which are used for the underlying assets of fund policies, were transferred to OrderDesk custody accounts with ebase. In December 2011 ebase also took over the technical custody account management for an institutional partner for the first time. The solution for individual premium reserve accounts under a fund policy that was launched in the reporting year, met with a great deal of interest on the part of insurance companies. Direct insurer CosmosDirekt is already using this custody account solution for a new fund unit-linked pension product. The technical and organisational interlinking of a banking service with an insurer’s maturing policies is an innovation here. Due to the rising volume of funds paid out on maturing life insurance policies and low reinvestment rates, there was strong interest in the account solution already introduced in the previous year for the reinvestment of these funds. Thanks to the white label solution, insurance companies can integrate these services in their official process for maturing policies.

Focusing on financial intermediaries and investment advisers, ebase significantly expanded its ETF offering to include iShares-ETFs from BlackRock. These are not only suitable for savings plans like other ETFs, but can be integrated in capital-building payments (VL contracts) as well. ebase is the first provider of ETFs eligible for VL contracts in Germany. Furthermore, the ETF business moved over to a transaction-based price model, making ebase one of the most cost-effective providers of ETF savings plans in the German market. A Lombard loan facility was implemented in the fourth quarter as the logical further development of the link between account and custody account. An attractive interest rate and unrestricted use of the funds will form the basis of the future offering.

Custody accounts and portfolio volume

At the end of 2011, ebase maintained 899.7 thousand custody accounts for its institutional partners; this corresponds to an increase of 22.6%, or 165.8 thousand custody accounts, on the previous year (733.9 thousand custody accounts). The first-time inclusion of Commerzbank custody accounts, migration of the KanAm-Grund custody accounts and transfer of insurance fund portfolios contributed to this growth in particular. By comparison, occasional cancellations of custody accounts for capital-building payments following expiry of the corresponding VL contracts were of minor importance.

Custody accounts B2B as of 31.12.
Total assets under custody B2B as of 31.12.

At €16.56bn, the portfolio volume was slightly higher than the figure at the end of 2010 (€16.08bn). The additional volume from the inclusion of Commerzbank custody accounts and migration of institutional portfolio holdings was countered by market value-related price falls. The average portfolio volume dropped by 16.0% to €18.4 thousand (previous year: €21.9 thousand).

Over 83% of the custody accounts and account products were offered in a partner-specific configuration; this share is therefore up slightly on the previous year (around 80%). The weighting here shifted further towards white label products for insurance companies.

The portfolio assets administered for independent financial advisers, asset managers and liability umbrellas recorded a significant decline primarily as a result of price effects, but also in part because of net outflows. Despite the price falls, the portfolio volume at investment companies expanded overall due to the increase in the number of custody accounts.

The fund volume attributable to custody accounts for company pensions (bAV) grew during the course of the year by 0.8% to €1.21bn (end 2010: €1.20bn). The decisive factor was the higher average volume resulting from longterm asset accumulation.

Accounts and deposit volume

There was a modest increase in the deposit volume in the past year to €134m (end 2010: €131m). This weak growth was mainly due to the fact that the interest rate campaigns of 2010 were not continued in 2011. The number of deposit accounts climbed to around 68.6 thousand (end 2010: 54 thousand), with around 77% attributable to settlement accounts linked with the custody account.

Earnings situation in the B2B business line

Pre-tax profit in the B2B business line stood at €8.6m, up somewhat on the previous year (€8.3m). Earnings rose moderately to €43.4m (previous year: €42.3m), while there was a slightly disproportionately low increase in administrative expenses to €34.8m (previous year: €34.1m). Consequently there was little change in the cost/income ratio which stood at 80.2% compared with 80.5% in financial year 2010.

Net commission income decreased by 2.3% to €41.2m (previous year: €42.1m). After positive development in sales follow-up commission in the first six months, there were modest price-related declines as the year progressed. Moreover, the previous year’s figure included a non-recurring effect from the conclusion of negotiations on terms and conditions. The custody account fees were essentially unchanged on the figure for 2010.

Net interest income amounted to €888 thousand. The negative figure for the previous year (€–258 thousand) reflects the interest rate campaigns accompanying the market launch of B2B-type banking products.

The rise in the other operating result to €1.5m (previous year: €0.4m) is primarily due to the reversal of provisions and accruals. In the previous year, the relocation of ebase to new offices led to an increase in expenses.

The slight increase in administrative expenses stems from the 13.1% rise in other administrative expenses. This was particularly due to higher project and consulting costs relating to the various product and market initiatives at ebase. The rise was countered by the reduction in personnel expenses from €16.6m to €15.2m, which reflected cost-saving effects from the restructuring completed at the end of 2010.

Pre-tax profit B2B
Cost/income ratio B2B