On 1 January 2010 the Banking Code  published by the Netherlands Bankers’ Association came into effect. The Banking Code consists of a set of principles how Dutch banks should conduct themselves in the areas of corporate governance, risk management, audit and remuneration policies. The Banking Code is in principle a form of self-regulation on a ‘comply or explain’ basis. In June 2010, with retroactive effect to 1 January 2010, the Banking Code has been classified as a code of conduct in the meaning of the Dutch Civil Code (Burgerlijk Wetboek). The Banking Code applies to banks in possession of a banking license granted under the Dutch Act on Financial Supervision (Wet op het financieel toezicht).

In the document Compliance with the Banking Code by GE Artesia Bank  for each principle it is indicated whether or not GE Artesia Bank complies with the Banking Code.

Client’s interests
One of the topics of the Banking Code is that banks must put the client and the interests of the client first. Putting the client first and putting the client interests first are two different concepts. Putting the client first is often seen as having processes in place that ensures adequate service and good reachability of the bank. Putting the client interests first goes further and is also about the content of advice given and the composition of the products offered by the bank.

GE Artesia Bank has a different profile from most banks in the Netherlands. The private clients of GE Artesia Bank have freely investable assets of more than €250.000,-. The products offered to the private clients consist of investment services, deposits and credit lines that are based on securities or other assets.

In view of the above, GE Artesia Bank deals with a relatively small number of clients, therefore it can gain a detailed picture of their individual situation and the opportunities available to them. GE Artesia Bank offers personal service, tailor-made advice and short lines of communication, allowing GE Artesia Bank to take decisions quickly. All clients have their own account manager, who is fully aware of the client’s personal situation.

Customer centricity and addressing the customers’ interests is the key part of GE Artesia Bank’s client approach. GE Artesia Bank continuously investigates how to monitor and how to improve the customer approach beyond customers’ satisfaction measurement.

Permanent education program
Each member of the management board participates in a permanent education program with the objective of keeping the expertise of the members of the management board up to standard and increasing their expertise where necessary.

This education relates to relevant developments within GE Artesia Bank and the financial sector, corporate governance in general and in the Dutch financial sector in particular, the duty of care to clients, integrity, risk management, financial reporting and the audit process. Possible topics for next courses could be integrity and the duty of care or financial reporting and developments under IFRS and Basel III.

Moral and ethical conduct declaration
Each management board member has, conform the Banking Code,
undersigned a moral and ethical conduct declaration .

The principles set out in the moral and ethical declaration will be integrated in the permanent education plan for all employees and are part of employment agreements since 1 September 2010.

In addition all employees of the GE Group, including the management board of GE Artesia Bank, subscribe to the moral and ethical code of GE called the ‘Spirit and Letter’.

Self-evaluation
The supervisory board will hold an annual self-evaluation. In addition the functioning of the supervisory board shall be evaluated under independent supervision once every three year. The involvement of each member of the supervisory board, the culture within the supervisory board and the relationship between the management board and the supervisory board shall be part of this evaluation.

In the beginning of 2011 the functioning of the supervisory board was evaluated under independent supervision for the first time.

The degree of risk acceptance will be proposed by the management board and submitted to the supervisory board for approval at least once a year. Although risk management is a recurring agenda item in every supervisory board meeting, a formal risk committee has been formed from the ranks of the supervisory board in accordance with the principles set out in the Banking Code.

GE Artesia Bank has an appropriately arranged risk management function that is in line with the banking industry and GE Capital standards.

All newly offered products have to undergo a formal approval process prior to launch on the market.

GE Artesia Bank complies with the principles of the Code with regard to audit.
Internal audit within the bank is an independent function. The head of the internal audit reports directly to the chairman of the management board and has a direct reporting line to the chairman of the audit committee.

Internal audit takes the initiative in arranging meetings with De Nederlandsche Bank and the external auditor at least once a year to discuss each other’s risk analysis and findings and each other’s audit plan at an early stage.

The meetings between internal audit, the external auditor and De Nederlandsche Bank in principle take place in Q2 and Q4.

GE Artesia Bank is part of GE Group and follows GE remuneration & compensation policies.

Prior to the implementation of the Banking Code, GE Artesia Bank already had a remuneration policy in place that was in line with most of the core principles of the Banking Code. Part of GE Artesia Bank’s standard remuneration policy in 2010 is that the variable remuneration may never exceed 100% of the fixed remuneration paid per annum, which is a core principle of the Banking Code.

GE’s compensation programs (salary, bonus, stock, long-term performance awards, etc) take into account the general business and socio-political environment in which compensation decisions are made. GE’s compensation of executives and senior officers is designed to achieve the right balance of incentives to appropriately reward and retain the best executives and maximize their performance over the long term. GE Artesia Bank applies remuneration and compensation practices in line with the philosophy described above and the principles applied in the Dutch industry standards & regulations. On defining compensation for the management board as well as other employees the company takes into account market data both inside and outside of the financial sector as well as professional experience and value for the local business and the GE Group. In line with the philosophy described above, GE Artesia Bank is not able to ensure that every member of the management board will have an income slightly below the median level for comparable positions in the Dutch financial market, as recommended in the Banking Code.

The remuneration policy in relation to restricted stock units and options plans for employees and executives of GE Artesia Bank differs from the principles of the Banking Code. This is mainly based on the fact that employees or executives of GE Artesia Bank will not be awarded restricted stock units and/or options in the share capital of GE Artesia Bank, but may be awarded with restricted stock units and/or options in the share capital of GE Company, if the employee or executive is eligible based on the performance criteria.

The restricted stock units will provide the employee or executive with the opportunity to receive one share of GE Company common stock at a future date, provided that certain conditions are fulfilled. At each interval on the annual anniversary of the grant 20% of the restricted stock unit will become GE Company common stock. Until such time as the restrictions lapse the grantee will receive a cash amount, equivalent in value to the per share quarterly dividend payment made to the shareholders of the GE Company only.

The options entitle the employee or executive to purchase from the GE Company one share GE Company common stock, at the option exercise price. At each interval on the annual anniversary of the grant 20% of the options will become exercisable. In order to exercise the total amount of options at least 5 years will pass.