Shareholder newsletter

Edition 23 - Annual review 2018

Dear shareholders,

In the year that it celebrated its 50th anniversary, I am delighted to report that Euroclear made remarkable progress in 2018.

The group delivered record levels of financial performance, with net profit rising 36% year on year to €322 million, while also completing several important corporate evolutions.

Having consulted with a number of shareholders and taken into consideration the implications of the corporate restructuring on the shareholder base as a whole, the Board envisages approving the payment of a dividend in the fourth quarter of 2019 under the form of an interim distribution.

As such, the Board is not recommending to shareholders to approve the payment of a dividend at the Annual General Meeting as part of the usual yearly profit allocation process. Instead, the Board will decide on an interim dividend in accordance with the Belgian Companies Code and Euroclear Holding SA/NV’s Articles of Association. The Board expects the timing of future dividend payments to revert back to normal after this exceptional payment has taken place.

As guidance, the Board indicates that a dividend in the order of magnitude of €55 per share (up 41% compared to 2017 full year dividend) would be consistent with the company distribution policy, and represent a slight increase in the pay-out ratio from 52% to 54%.

Corporate evolutions

A key focus for your Board this year has been overseeing several important corporate evolutions that Euroclear has been implementing. These have been focused on modernising the group’s governance, securing a stable regulatory environment ahead of Brexit, and undertaking preparatory work for a long-term liquidity initiative benefitting all shareholders.

The Board proposed amendments to modernise your company’s Articles of Association, which were subsequently ratified by shareholders. As a result, Euroclear now benefits from having a single class of ordinary shares with the principle of one share, one vote enshrined for all our existing shareholders.

In November, after almost unanimous approval from our shareholders, we successfully completed the relocation of the group’s ultimate holding company to Belgium, therefore guaranteeing that your Company’s legal seat remains located inside the European Union. With the transfer scheme becoming effective, each share in Euroclear plc was exchanged for an equivalent share in Euroclear Holding SA/NV.

Euroclear has long benefited from having a committed community of shareholders who are invested in the future vision for your group. Since 2017, we have welcomed several new shareholders who support the group’s model as an independent open architecture financial market infrastructure.

While the incoming shareholders have provided significant liquidity at market prices, your Board recognises the need to provide a long-term liquidity solution available to all shareholders and is currently reviewing potential options. We will keep  shareholders updated on our progress as and when appropriate.

Governance reform

In 2018, the Board embarked on a governance reform aimed at better reflecting the respective roles and responsibilities of the Boards of Euroclear SA and Euroclear Holding, and at improving their effectiveness.

The two Boards have been traditionally composed of a large number of same directors. Going forward, the two Boards will be composed of different directors (with the exception of the Chairman and the Deputy-Chairman, who will remain joint), and of a much smaller size. We plan to complete this reform by the 2019 general meetings.

Euroclear SA is the main regulated company of the group, subject to consolidated supervision by the National Bank of Belgium, and the Board is to set the strategic objectives and policies for the group and to oversee Euroclear SA’s compliance with all its regulatory duties. Euroclear Holding is the controlling shareholder of Euroclear SA, subject to limited  regulation, provided it does not intervene in the operational management of Euroclear group companies.

We started to implement that reform at the level of Euroclear SA/NV Board in 2018, as several directors resigned. It is proposed that, following the 2019 AGM the Board be composed of ten non-executive directors, with a diverse international origin and a broad business and area expertise; plus the three executive directors required by the Belgian law.

Meanwhile, the Board of Euroclear Holding recommends that the 2019 AGM elects a new Board of 12 directors (as all mandates expire), with three independent directors and nine directors proposed by our largest shareholders.

Corporate Social Responsibility

Euroclear’s business model is founded on the trust that clients place in us to deliver safe and reliable posttrade services that are open to all, and we have a responsibility to behave as a good corporate citizen.

In 2018, we published Euroclear’s first sustainability report, outlining our achievements in corporate social responsibility in accordance with the Global Reporting Initiative (GRI) Standards. This report sets out how we aim to continuously improve the workplace environment, including by developing a strong, diverse and inclusive corporate culture; contribute to a more ethical and sustainable marketplace; reduce the impact we have on the environment; and how our people contribute to the community. I strongly encourage you to read the report and its next iteration to be published in May 2019.

50 successful years and a bright future ahead

Over the past 50 years, Euroclear has built an important position at the centre of financial markets, contributing to their stability and efficiency. The strong performance in 2018, resulting in increasing shareholder returns, is testament to the success of Euroclear’s consistent strategy that continuously responds to the evolving needs of financial market participants.

On behalf of the Board, I would like to congratulate senior management, under the stewardship of Lieve Mostrey, and thank all the group’s colleagues for the steadfast delivery of the group’s customerfocused business strategy. 

Marc Antoine Autheman

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Thomas Churchill
Global Head of Corporate Communications
Tel: +32 2 326 7944

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Koenraad Geebels
General Manager, Euroclear Holding SA/NV
Tel: +32 2 326 1241

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