Economic Stabilization Advisory Group | April 9, 2009

Governmental Assistance to the Financial Sector: an Overview of the Global Responses (v6)

Governments across the world have taken, and continue to take, a variety of extraordinary measures to protect the financial sector and prevent a recession.

The measures fall into the following categories:

„ guarantees of bank liabilities;

„ retail deposit guarantees;

„ central bank assistance measures;

„ bank recapitalization through equity investments by private investors and Governments; and

„ open-market or negotiated acquisitions of illiquid or otherwise undesirable assets from weakened financial institutions.

The purpose of this publication is to provide an overview of the principal measures that have been taken in the major financial jurisdictions to support the financial system. The first version of this note was published on November 12, 2008. Since then, Governments in some jurisdictions have adopted further measures or amended measures previously adopted. The current version of the note takes into account those measures and is based on information available to us on April 8, 2009.

This publication does not cover various new regulatory restrictions on short selling. A separate Shearman & Sterling LLP publication, “Global Clampdown on Short Selling: an Overview”, deals with those measures as adopted in the major financial jurisdictions. A copy can be obtained at: http://www.shearman.com/esag_011609/.

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Table of Contents

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ARGENTINA...... 3 AUSTRALIA...... 5 AUSTRIA ...... 9 BELGIUM...... 15 BRAZIL ...... 22 BULGARIA...... 33 CANADA...... 34 DENMARK...... 37 ESTONIA...... 41 FINLAND ...... 42 FRANCE...... 46 GERMANY...... 51 GREECE3 ...... 59 HONG KONG ...... 63 HUNGARY...... 66 ICELAND ...... 73 INDIA ...... 78 IRELAND ...... 97 ITALY...... 100 JAPAN ...... 105 LUXEMBOURG ...... 110 THE NETHERLANDS...... 112 NEW ZEALAND...... 116 NORWAY...... 119 PEOPLE’S REPUBLIC OF CHINA...... 122 PORTUGAL...... 126 REPUBLIC OF KOREA...... 130 RUSSIA ...... 134 SLOVAKIA...... 145 SLOVENIA...... 151 SPAIN...... 155 SWEDEN...... 159 SWITZERLAND...... 163 UKRAINE...... 167 UNITED ARAB EMIRATES (“UAE”)...... 170 UNITED KINGDOM...... 172 UNITED STATES OF AMERICA...... 182

All additions and updates are noted in blue text.

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ARGENTINA1 SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES The Central Bank of Argentina Effective November 1, 2008, the The Argentine Government has set forth new conditions to grant Central Bank reduced by 10% reformed the private pension direct financial assistance to the minimum cash reserve system and nationalized the financial entities. requirement for checking pension assets managed by the account deposits in foreign country’s private pension fund In the event of non-compliance currency and by 5% the managers (AFJPs). As of with these conditions, requests minimum cash reserve January 1, 2009, the for financial assistance are requirement for demand and Administradora Nacional de la subject to the analysis and time deposits made upon a court Seguridad Social (“ANSES”) will approval of the board of order with funds arising from manage the funds deposited in directors of the Central Bank. cases pending before the court AFJPs. (amparos). To obtain direct financial Argentine regulators have assistance from the Central In addition, the following are the resolved to require the AFJPs to Bank, financial entities must minimum cash reserve sell approximately 1.8 billion have a liquidity ratio under 25%. requirements for time deposits in pesos (US$ 545 million) in The value of the assistance foreign currency and holding of Brazilian assets in order to granted shall be the requested securities in foreign currency, as provide liquidity to the Argentine amount, the amount necessary per the remaining terms: (i) up to market. to raise the liquidity ratio to a 29 days: 20%; (ii) from 30 to 59 maximum of 35%, the amount of days: 15%; (iii) from 60 to 89 the decrease of funding sources days: 10%; (iv) from 90 to 179 in the previous month, 20% of days: 5%; (v) from 180 to 365 the total projected assistance to days: 2%; (vi) more than 365 the financial system described in days: 0%. the monetary program, or the amount arising from the Finally, the Central Bank difference between the net worth reduced, effective November 1, of the entity and the debt 2008, 20% of the minimum cash resulting from operations reserve requirement for completed through the Central deposits, whatever their nature, Bank program to assist financial as assets of a mutual fund, in entities (whichever of these is foreign currency. the lowest).

The Central Bank assistance will be granted for 180 days, renewable for the same period, with an interest rate of 1.35 BADLAR rate (and 1.70 BADLAR rate in renewal cases).

Financial entities must make

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES prepayments depending on their liquidity ratio at the time.

1 This section is up to date as at 23 January 2009.

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AUSTRALIA SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT1 DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES On November 20, 2008, the The Government has passed Australia’s central bank (the No publicly announced RMBS Purchase Scheme Australian Government executed a legislation to give effect to its Reserve Bank of Australia) measures at this stage. 4 Deed of Guarantee which took effect proposal with respect to all periodically intervenes to The Government has from November 28, 2008 (the deposits of Australian banks, support the Australian dollar. established an A$8 billion “Guarantee”) and which put in place building societies and credit Residential Mortgage Backed the Australian Government unions and Australian Securities (“RMBS”) purchase Guarantee Scheme for Large subsidiaries of foreign-owned scheme that will apply to new Deposits and Wholesale Funding banks. (rather than existing) (“Guarantee Scheme”) for eligible issuances. Authorised Deposit-Taking The proposal takes effect Institutions (“ADIs”). through a “Financial Claims A$4 billion is available for the Scheme” (“FCS”). Under the Government to act as a Eligible ADIs will include: FCS, the Australian Prudential cornerstone investor for both Regulation Authority (“APRA”) bank and non-bank RMBS ▪ Australian owned banks; (as administrator of the FCS) issuances. must apply for the winding-up ▪ Australian ADI subsidiaries of of an ADI, and a declaration An additional A$4 billion is foreign banks; must be made by the available for non-bank ▪ Australian branches of foreign responsible Government issuances only. Issuances ADIs; and minister in order for the FCS to under this scheme have taken apply to that ADI (an “eligible place. ▪ credit unions and building ADI”). societies. Car Dealer Floor Plan An eligible ADI must make an Under the scheme, holders of Financing 3 application to the Reserve Bank of protected accounts with net The Australian Government Australia as administrator of the credit balances are entitled to has initiated the establishment Guarantee Scheme for an eligibility payment from APRA of the of a special purposes vehicle certificate ("Eligibility Certificate") in balance plus accrued interest (“SPV”) financing trust to respect of the relevant deposits or (subject to certain adjustments provide dealer floorplan wholesale funding liabilities. and compliance with the refinancing to eligible car Eligibility Certificates are issued at provisions of the FCS) up to a dealers affected by the exit the discretion of the Commonwealth maximum of A$1 million per from the Australian market of of Australia as guarantor. Once an depositor per institution. Also, two major car dealer financiers. Eligibility Certificate has been issued APRA is assigned the relevant in respect of a liability, it is published account holder’s right to claim this amount from the ADI. The SPV will raise capital by on the Guarantee Scheme website at selling its securitised assets http://www.guaranteescheme.gov.au. The amount of any deposit over (the dealer loans and related A copy of the Guarantee, the related A$1 million will not be covered rights) to the four major banks rules of the Guarantee Scheme, a list by the FCS, but may be in Australia, with the support of of eligible institutions information covered by the Guarantee a Guarantee from the relating to the application procedure Scheme described in the Commonwealth of Australia.

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT1 DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES and information relating to the claims previous column if the relevant The refinancing offered by the procedure, and a copy of an opinion fee has been paid by the SPV to eligible dealers is a given by the Australian Government eligible ADI. transitional arrangement only solicitor on the validity and for a period of 12 months after enforceability of the guarantee can The Government has indicated which the funding level of the be found at that the FCS will be SPV will run down. Funding http://www.guaranteescheme.gov.au. administered so that it applies has not yet been provided to to all deposits held in eligible eligible car dealers under this In addition to those deposits which ADIs by all types of legal scheme but it is expected to be are the subject of an Eligibility entities, regardless of where provided shortly. Certificate, in order to qualify for an the depositor resides. It will Eligibility Certificate, the wholesale also apply to deposits held in Commercial Property funding liabilities must fall into one of any currency. The FCS will not Support Scheme the following categories: (i) a bank apply to financial products that bill; (ii) a certificate of deposit or a are not deposit products, such The Australian Government transferable deposit; (iii) a as market-linked investment and the four largest domestic debenture; (iv) commercial paper; products. ADIs will establish a (v) a bond; or (vi) a note issued, corporation for the purposes of drawn or made by the eligible ADI. The deposit liabilities of the supporting the commercial Australian branches of foreign property assets of viable Certain other restrictions also apply ADI’s held by Australian Tax Australian businesses. to the types of wholesale funding Residents (as defined in the liability that will be guaranteed, previous column) are not The corporation will be 50% including: (i) the liability have a covered by the FCS. However, owned by the Commonwealth maximum term of 60 months; (ii) be deposits held in foreign ADIs of Australia and each of the unsecured; and (iii) must not be can be guaranteed under the four ADIs will own 12.5%. It ‘complex’. Liabilities with one or Guarantee Scheme described will initially be capitalised with more of the following features are in the previous column on A$4 billion contributed in likely to be regarded as complex: payment of the relevant fee. proportion to the shareholding of the participants. ▪ liabilities where the principal amount of the liability is not a fixed The corporation will provide sum but varies by reference to, or finance on fully commercial is derived from, the value of an terms for commercial property asset, index or commodity or is where the underlying assets linked to the credit standing of any and income streams are person; commercially sound.

▪ subordinated debt; Legislation is required to implement the measure. As at ▪ liabilities that may be converted the date of publication, the into equity; legislation has passed the ▪ liabilities that include any cross- Lower House of the Australian Parliament. An inquiry is to be

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT1 DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES default or acceleration clause; and held by the Upper House of the Australian Parliament, leading ▪ liabilities that include any rights to to a vote on the measure in demand prepayment of principal May 2009. or permit redemption prior to their maturity date except in certain permitted circumstances. The Australian Government has released guidelines on the interpretation of what is ‘not complex’, which can be found at http://www.guaranteescheme.gov.au.

Additional conditions also apply to the liabilities of the Australian branches of foreign ADIs (including that liabilities must not have a maturity after December 31, 2009, and the Guarantee only extends to deposits or borrowing liabilities held by a person treated as an Australian tax resident for the purposes of Australian tax law (“Australian Tax Resident”)). The additional conditions applicable to the Australian branches of foreign ADIs can also be found at http://www.guaranteescheme.gov.au.

Fees are payable in respect of the Guarantee, the quantum of which will be set by reference to the relevant issuer’s credit rating and will be the same regardless of the tenure of the debt securities.2

The Australian Government has announced that the Guarantee Scheme will be reviewed on an on- going basis and revised if necessary.

1 The Guarantee Scheme is not restricted to “inter-bank” debt but extends to all eligible term funding subject to the restrictions set out in the relevant Guarantee Scheme rules.

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2 The current fee is 70bps for AA rated firms, 100bps for A-rated firms and 150bps for BBB and unrated firms. The fee will be levied by the Reserve Bank of Australia on the eligible ADI on a periodic basis depending on the quantum of the liability. 3 A “protected account” is either:

„ an account where the eligible ADI is required to pay the account-holder, on demand or at an agreed time, the net credit balance of the account; or

„ another account or financial product prescribed by declaration. The Australian Treasurer has released a declaration of certain covered financial products which can be found at http://www.treasury.gov.au.

4 The Australian Government has indicated that its “Four Pillars” banking policy that restricts mergers between the four largest domestic ADIs will continue in force.

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AUSTRIA1 SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Under the Inter-Bank Market Deposit Guarantee Scheme The Financial Market Minimum capital Enhancement Act Stabilization Act requirements (Interbankmarktstärkungsgesetz – The Austrian deposit guarantee (Finanzmarktstabilitätsgesetz – IBSG) , up to €75 billion will be scheme does not provide for FinStaG) provides for up to €15 Under the amended BWG, the made available for state funding arrangements such as billion (or an additional amount FMA has to require a higher guarantees, sureties or similar capital held directly in deposit not utilized under the IBSG) for minimum capital if an adequate assumptions of liability. guarantee scheme accounts (ex recapitalization measures. limitation of the risks arising ante funds). By contrast, the Potential beneficiaries of the from banking transactions and Clearing Bank Austrian scheme provides for measures will be credit banking operations of a credit financing based on ex post institutions holding a license institution or group of credit To this end, a separate entity has contributions from member pursuant to the Austrian institutions does not exist and been established as a clearing banks forming part of the Banking Act (Bankwesengesetz proper recording and limitation house to facilitate the refinancing protection scheme of their - BWG), including branches of of those risks cannot be of banks on the inter-bank market respective trade organization foreign banks, and Austrian expected in the short term. (Oesterreichische Clearingbank (Fachverband). insurance companies. Such higher minimum capital AG – “OeCAG”). OeCAG is a requirements will be imposed by specialised bank owned by major If any protection scheme is Once the aims of the the FMA immediately in cases Austrian credit institutions (as at unable to pay out the recapitalization measures have where it is expected that other April 6, 2009 the main guaranteed deposits or claims been achieved, the State will measures will not be sufficient shareholders are Raiffeisen in full, the protection schemes of dispose of its equity stakes to to ensure the proper recording Zentralbank Österreich the other trade associations will private investors. and limitation of risks as well as Aktiengesellschaft (27.04%), Erste be obliged to make compliance with legal Group Bank AG (19.03%), proportionate contributions to There are, in principle, three regulations within due time. Unicredit Bank Austria AG cover the shortfall. In cases types of stabilisation measures (18.51%), Hypo-Banken-Holding where the protection schemes under the FinStaG: guarantees, State Ownership Gesellschaft.m.b.H. (12.66%), as a whole are unable to pay recapitalisations and Österreichische Volksbanken- out guaranteed deposits assumptions of liability. The The first and so far only Aktiengesellschaft (11.77%) and (claims) in full, the protection following measures may be Austrian bank taken over by the BAWAG P.S.K. (5.32%), 3- scheme originally concerned taken by the Federal Minister of Austrian state is the public Banken Beteiligung Gesellschaft must issue notes or, according Finance: sector lender Kommunalkredit m.b.H. (4.54%)). to the proposed stability Austria AG previously owned by measures, take out a loan to (i) issue of guarantees for Volksbank AG (50.78%) and the OeCAG shall collect deposits from meet the remaining payment liabilities of banks or insurance Franco-Belgian group Dexia banks or insurance companies or obligations. The Federal companies; (49%). The shares held by raise funds on the inter-bank Minister of Finance may Dexia and Volksbank AG were market and on-lend such funds to assume liability for such issue (ii) assumption of liability vis-à- transferred to the Austrian state banks and insurance companies or loan. vis banks or insurance for a total consideration of € 2. in line with market conditions. companies; The Austrian state now holds Recipient banks will have to pay Amendments to the existing 99.78% of Kommunalkredit interest, taking into account an scheme (iii) granting of loans to banks or Austria AG. The Austrian adequate fee for state guarantees. insurance companies or the Association of Municipalities The Austrian depositors’ provision of own funds (Gemeindebund) remains a

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES The Federal Minister of Finance protection scheme has been (Eigenmittel) to the entity; shareholder with 0.22% of the will be entitled to (i) guarantee amended with effect from shares. liabilities of OeCAG and October 1, 2008. Bank deposits (iv) acquisition of shares (ii) assume liability for losses of natural persons will be (whether in a capital increase or incurred by OeCAG in connection protected in their entirety until from existing shareholders) or with such arrangements for a December 31, 2009 (the convertible bonds; and limited period of time. The IBSG protection scheme’s cover does not specify any maximum obligation was previously limited (v) transfer of assets of the period of time for such state to an amount of €20,000 per company by way of a merger guarantees given under (i). The depositary and bank). pursuant to § 235 of the Stock Austrian state has issued Following the Commission’s Corporation Act (Aktiengesetz – guarantees of up to € 4 billion for proposal, the coverage level for “AktG”). All such measures OeCAG, which covers all losses bank deposits of natural should earn a return in line with occurring on or before December persons may be guaranteed up market conditions. 31, 2010 and resulting from to a maximum amount of transactions entered into on or €100,000 from January 1, 2010. If there is a risk that the bank or before October 31, 2009. insurance company cannot fulfill For claims of small companies their obligations vis-à-vis their OeCAG accepts money market (mainly partnerships and small creditors and the above deposits (Geldmarkteinlagen) for corporations which meet the mentioned measures are not terms of up to 12 months less one criteria of Section 221 (1) sufficient or are not available in day. In the same maturity band, Austrian Companies Act due time, the Federal Minister of OeCAG will also offer interbank (Unternehmensgesetzbuch – Finance shall, in consultation money market securities UGB) the protection scheme’s with the Federal Chancellor, be (commercial paper) with a federal cover obligation has been authorized to expropriate the government guarantee up to an increased to the maximum owners of the bank against aggregate amount of € 5 billion. amount of €50,000 per payment of an adequate depositary and bank. The compensation where required to The Austrian government’s claims of all other creditors will protect the national economy guarantees for OeCAG’s loan continue to be limited to the from severe disruption. A spate assets and for the commercial maximum amount of €20,000 entity (Finanzmarktbeteiligung paper programme are subject to a per depositary and bank Aktiengesellschaft des Bundes guarantee fee of 50 basis points (subject to further exemptions, – FiMBAG) was set up to carry on the guaranteed amount. e.g. for “big” companies, claims out such recapitalization are not guaranteed at all).For measures. The FiMBAG is legal entities the scheme’s indirectly owned by the Republic The allowable lending exposure of cover obligation remains limited of Austria. OeCAG under the investment to 90 % of the guaranteed rules of the Austrian Banking Act deposit, so that an amount of up Such recapitalization measures (Bankwesengesetz – BWG) , to € 45,000 is paid out to small may be provided by the state in amounts to a maximum total of € companies and small the form of participation capital 10 billion, based on the present partnerships, and an amount of (Partiziptaionskapital). From a regulatory capital of € 180 million up to € 18,000 to other legal regulatory perspective and the loan maturity cap of 12 entities (subject to further participation capital is treated as

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES months less one day. Should loan exemptions). Tier 1 capital. The most defaults by borrowers cause prominent deal is Erste Group OeCAG’s regulatory capital to fall The deposit guarantee only Bank's intended €2.7 billion below the legally required level, applies to deposits in EEA capital injection in the form of the Federal Government pledged currencies (e.g. not to deposits participation capital. But also up to € 4 billion of equity to in US$). other Austrian Banks such as OeCAG. This pledge covers loan Volksbank (up to a maximum defaults arising on or before 31 nominal amount of € 1 billion), December 2010 and resulting from Raiffeisen Zentralbank transactions entered into on or Österreich AG (amounting to before 31 December 2009. approximately € 1.75 billion), Hypo Group Alpe Adria (in the Clearing Platform amount of up to € 1.5 billion) and Bank Austria announced to To ensure the efficient make use of the state money. organisation and market-oriented However, there is no publicly execution of fund raising and available information that any of lending, OeCAG together with these deals has closed yet. Oesterreichische Kontrollbank Participation capital is treated as (OeKB) has established a web- core Tier 1 capital for regulatory based clearing and auction purposes. Its structure is, in platform. Planned auctions have principle, similar to preference already been conducted over the shares without voting rights clearing platform. Results and attached. further information are available on the OeCAG website The Commission (/de/Seiten/default.aspx). communication on the recapitalisation of financial institutions in the current Bond Issues financial crisis issued on December 5, 2008 (C(2008) The Federal Minister of Finance is 8259 final) sets out a certain empowered to guarantee notes entry level price for (according to § 1 para 1 no 10 recapitalisations measures. BWG) issued by banks with a Following this, it has to be maturity of up to three years, distinguished between under certain circumstances the fundamentally sound banks and duration can be extended up to 5 distressed banks. In case of years. According to § 1 para 1 no fundamentally sound banks an 10 BWG banks authorized to average required rate of return perform banking activities may of 9.3% on ordinary shares (e.g. issue securities in order to invest participation capital) relating to the proceeds in banking activities. Euro area banks is required. A This provision does not apply to minimum average rate of 8%

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Austrian insurance companies. may apply if (i) the participation capital is repaid at 110% of its Under this scheme the Republic of face value and (ii) where the Austria provides specific State capital injections are on guarantees for (i) single bond equal terms with significant issues, (ii) bond issues under a participation (30% or more) of debt issuance programme, (iii) private investors (only one third bond issues under a medium term of the private investors may be note programme and (iv) issuance existing shareholders). of notes under commercial paper programmes. In such case, the distribution of dividends to existing The guarantees issued by the shareholders (Altaktionäre) is Republic of Austria are limited to 17.5% of distributable unconditional and irrevocable. profits as long as the State Sample forms of these guarantees capital injection lasts. This can be downloaded from the limitation will not apply if the website of the Federal Ministry of conditions at (i) and (ii) above Finance. As at February 21, are met (redemption above face 2009, notes issued by Erste Bank, value and significant Kommunalkredit Austria AG, participation of private Raiffeisen Zentralbank Österreich investors). AG and ÖsterreichischeVolksbank have been guaranteed under this Recapitalization measure for scheme. For instance, in March distressed banks require an 2009 Raiffeisen Zentralbank average rate of return of 10% Österreich AG issued a fixed-rate with no payment of dividends. bond with a volume of €1.25 billion with a tenor of three years The stability measures confer guaranteed by the Republic of additional rights on the Austrian Austria. Financial Market Authority (Finanzmarktaufsicht – FMA), Obligations guaranteed by the which will be authorized to lay Republic of Austria qualify for zero down rules pursuant to which risk weighting for capital adequacy banks will be required to take on purposes pursuant to §§146ff additional funds that are suitable Solvability Regulation for the current risk situation and (Solvabilitätsverordnung). This that go beyond the statutory applies for obligations minimum requirements. denominated in euros only. According to a regulation issued The amount of single facilities by the Federal Minister of issued under this scheme is not Finance on October 30, 2008 restricted, but the total issuing the assumption of liability for

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES volume covered under this notes issued by banks pursuant scheme may not exceed €75 to the IBSG and stability billion, excluding payments on measures pursuant to the coupons and expenses. The FinStaG can be linked to Republic of Austria guarantees corresponding, appropriate fresh notes issued until June 30, conditions. These conditions 2009 – an extension of this period may relate to: is subject to prior approval of the European Commission. ▪ the sustainability (Nachhaltigkeit) of the business Beneficiaries model of the benefiting company; The beneficiaries of the stability measures are credit institutions ▪ the allocation of funds holding a license pursuant to the provided to the benefiting Austrian Banking Act company, with a particular view (Bankwesengesetz – BWG) on the lending needs of small- (including branches of foreign and medium-sized companies banks) and Austrian insurance and the provision of mortgage companies. Credit institutions and loans to private households; insurance companies rendering services in Austria by using the ▪ the remuneration of directors, EEA single passport regime will employees and third parties not benefit from the IBSG. retained for carrying out their tasks; General Provisions ▪ minimum capital requirements § 2 para 5 FinStaG will also apply of the benefiting company; to such measures (providing for possible conditions attached to ▪ the distribution of dividends; stability measures). ▪ the preservation of jobs at the No claims of banks or insurance company benefiting from the companies against the State may stability measures; be assigned or pledged to third parties and shall be subject of an ▪ the avoidance of distortion of attachment (Pfändung). Moreover, competition; the IBSG does not confer a right on banks or insurance companies ▪ the calculation and amount of to claim any such stabilization interest/(guarantee) fees measures from the state. payable by the company receiving such funds; The scheme is scheduled to expire by December 31, 2009. ▪ the scope of information to be

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES However, state guarantees issued provided by the benefiting under the IBSG before this date company; and will not be affected. ▪ the content of the declaration to be published by the directors and the supervisory board of the benefiting company (such declaration must also contain an undertaking to comply with such conditions).

1 On December 10, 2008 the European Commission approved the Austrian stability measures aimed at stabilizing the financial markets. According to the Commission guidelines on the recapitalization of financial institutions in the current financial crisis, the general principles applicable to the overall design of recapitalization measures are the objective of recapitalization, soundness of the beneficiary bank, remuneration, exit incentives (e.g. restrictive dividend policy), in particular with a view to the replacement of State capital by private investors. The Commission found the Austrian scheme to be in line with the recently up-dated guidance on state aid, in particular on pricing. The Commission therefore concluded that the package was an adequate means to restore a serious disturbance of the Austrian economy and as such compatible with Article 87(3)(b) of the EC Treaty.

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BELGIUM PURCHASES OF TROUBLED SPECIAL CENTRAL BANK RECAPITALIZATION FINANCIAL ASSETS OR GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES State guarantee Bank deposits National Bank of Belgium Ethias Group Rescue of Fortis: KBC Group

A. The Belgian Government has On November 14, 2008, the A. The Royal Decree of On October 20, 2008, the Increase of capital in the Fortis A. On October 27, 2008, the implemented by means of a law Belgian Government September 29, 2008 provides Belgian federal government and Bank by the BelgianState in the Belgian government agreed of October 15, 2008 and a Royal implemented the legal basis for explicitly that the National Bank the Flemish and Walloon amount of €4.7 billion on upon a cash injection in order to Decree of October 16, 2008, the guaranteeing bank deposits of of Belgium can be the regional governments decided to September 29, 2008, which strengthen the financial position legal basis pursuant to which it up to €100,000 – an increase of beneficiary under a Belgian law jointly finance a € 1.5 billion brought the shareholding of the of KBC Bank, under which the can guarantee the agreements €80,000. floating charge (business capital increase of Ethias Group, Belgian State to 49% of the Belgian State will purchase non of Belgian financial institutions, pledge) in order to secure loan a Belgian banking and insurance capital. transferable core capital facilities made available to the company. As a result of such financial holding companies and (i) The first tranche of € 50,000 The Belgian State bought the securities worth € 3.5 billion financial market or otherwise. capital increase, each of the their issuing vehicles (the is guaranteed via the Deposits remaining 50% + one share of issued by KBC Bank to increase Before the said Royal Decree, a three governments holds a “guaranteed entities”) provided and Financial Instruments Fortis Bank from Fortis Holding the tier 1 ratio of KBC Bank floating charge could only be blocking minority of 25% plus 1 that: Protection Fund, which initially for a total consideration of above 10% and the solvency made available to pledgees that share in return. only covered amounts up to € €4.7 billion in cash.1 A portfolio ratio of KBC Insurance to 280%. (i) the agreements are made 20,000 in case of insolvency of qualified as a credit institution in of structured products with fair The transaction closed on with financial institutions or other financial institutions or the European Union or as a In return for the capital injection, value of €10.4 billion was December 19, 2008. professional counterparties; investment companies. financial institution otherwise the three governments will transferred by Fortis Bank to a authorised to take floating receive a stake in the Ethias The securities qualify as core separately-managed entity (ii) the agreements expire on or (ii) The second tranche of € charges in accordance with the group that will give them a tier 1 capital and provide an jointly owned by the Fortis before October 31, 2011; 50,000 is covered via a newly Belgian Royal Decree of 9 preferential claim on future annual dividend payment equal Group (66%), the Belgian State established vehicle, the Special October 1995 (limited list of profits. The three governments to the higher of: (24%) and BNP Paribas (10%). (iii) the agreements have been Deposits and Life Insurance beneficiaries). have priority in receiving entered into or renewed Protection Fund. This fund dividends of up to 10% of their - € 2.51 per security, non The Belgian Government between October 9, 2008 and covers amounts up to € 100,000 B. The Royal Decree of January investment. cumulative, payable annually; reached an agreement with BNP October 31, 2009; in case of insolvency of financial 12, 2009 (with effect as of This state aid has been Paribas on the subsequent institutions (or insurance January 22, 2009) amends the - 120 % of the dividend paid on approved by the European transfer of 75% of Fortis Bank (iv) the guaranteed entity has companies). In the case of articles of association of the the ordinary shares in 2009; Commission for a maximum SA/NV in exchange for new taken sufficient measures in insolvency of a financial National Bank of Belgium in period of six months. The shares to be issued by BNP respect of its financial situation, institution, the € 100,000 such way that the Belgian State - 125 % of the dividend paid on temporary character of the 2 its solvency and liquidity guarantee by the Special guarantees the repayment in full Paribas for a value of the ordinary shares from 2010 authorization is due to the position; and Deposits and Life Insurance of all loan facilities granted by €8.25 billion; the Belgian State onwards. condition that the Belgian Protection Fund is reduced by the National Bank of Belgium will continue to own the authorities have to submit to the (v) the State guarantee is the € 50,000 guarantee of the made available in order to remaining 25% of the company. The dividend will only be paid if Commission a restructuring plan justified in the interest of the Deposits and Financial ensure the stability of the a dividend is due on ordinary aimed at restoring the long-term Belgian economy and the Instruments Protection Fund financial system, including all BNP Paribas will acquire 100% shares. If KBC decides to buy viability of the Ethias group by protection of private savers. (mentioned under (i) above), losses related to the granting of of Fortis Insurance Belgium for a back the securities, it would April 20, 2009. and will consequently only be such loan facilities. total consideration of have to pay 150% of the issue The Belgian Minister of Finance used second. €5.73 billion in cash, subject to price. In case KBC requests the will determine the terms and final closing adjustment. The conversion of the securities into conditions of the State Government of the Netherlands ordinary shares, the Belgian guarantee, such as the acquired Fortis Bank Nederland State can request repayment of

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PURCHASES OF TROUBLED SPECIAL CENTRAL BANK RECAPITALIZATION FINANCIAL ASSETS OR GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES guaranteed amount and the fee Insurance policies (Holding) N.V., including Fortis’s the securities against a value of payable by the guaranteed interest in ABN AMRO and other between 115% and 150% of the entity, on a case-by-case basis. The newly established Special operations, for a total issue price, depending on the Deposits and Life Insurance consideration of €16.8 billion. timing of such conversion. B. In view of completing the Protection Fund guarantees guarantee measures amounts up to € 100,000 in the The afore-mentioned take-over The securities do not represent implemented pursuant to the case of insolvency of insurance scheme of Fortis by BNP share capital of KBC Bank, and Royal Decree of October 16, companies. Consequently, life Paribas was rejected by the consequently do not dilute the 2008 described under point A insurance policies are also meeting of shareholders of rights of existing shareholders, above, a Royal Decree was covered by means of a State Fortis Holding. The Belgian but include the right of the implemented on December 10, guarantee of up to € 100,000 Government and BNP Paribas Belgian State to have seats on 2008 pursuant to which the provided that the insurance reached a new agreement on the board of directors of KBC Belgian State can further company concerned has March 7, 2009. Bank. guarantee agreements of acceded to the Special Deposits Belgian financial institutions and and Life Insurance Protection The main features of the new B. Similar to the measures taken financial holding companies (the Fund guarantee. agreement are (i) the acquisition by the Belgian federal ‘guaranteed entities’) provided by BNP Paribas of 75% of Fortis government mentioned above, that: Bank and (ii) the acquisition by the Flemish government decided Fortis Bank of 25% of Fortis on January 22, 2009 to inject € 2 (i) the agreements are entered Insurance Belgium for € 1.375 billion in KBC by means of the into with a view to covering the billion financed by BNP Paribas. purchase of non transferable loss or risk of loss relating to As previously agreed upon, the core capital securities issued by assets owned by the price BNP Paribas pays for KBC. This will bring the tier 1 subsidiaries of the guaranteed Fortis Bank has been valued at ratio of KBC Bank from 8.5% to entity; € 9.4 billion. Fortis Insurance 10.5% has been valued at € 5.5. (ii) the agreements and the The next shareholders meeting In addition, an agreement was State guarantee contribute to to vote on this new agreement reached for a stand-by (non- avoid the exposure of the was scheduled for April 8/9, dilutive) core capital facility in guaranteed entity or its 2009. However, due to the the amount of € 1.5 billion. If subsidiaries to serious liquidity uncertainty of the outcome of needed, KBC may draw on this needs, in particular as a result of judicial proceedings relating to facility to maintain capital at a decrease in rating; the number of shareholders that adequate levels in the future. may vote on this new (iii) the guaranteed entity has agreement, the shareholders The terms and conditions of the taken sufficient measures in meeting has been postponed issue of the core capital respect of its financial situation, until April 28/29, 2009. securities will be similar to those its solvency and liquidity of the core capital securities position; and Dexia S.A.: issued to the Belgian State in The Belgian, French and December 2008. Consequently, (iv) ) the State guarantee is Luxembourg Governments and the core capital securities do not justified in the interest of the other investors invested a total represent share capital and no Belgian economy and the dilution of existing shareholdings

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PURCHASES OF TROUBLED SPECIAL CENTRAL BANK RECAPITALIZATION FINANCIAL ASSETS OR GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES protection of private savers. of €6.4 billion in Dexia,3 a takes place, but include the right specialist in lending to local of the Flemish government to The Belgian Minister of Finance governments in Europe. Dexia have two seats on the board of will determine the terms and announced on October 20, 2008 directors of KBC Bank. conditions of the State that it would seek regulatory guarantee, such as the approval to create a balance Kaupthing Bank - Interstate guaranteed amount and the fee sheet for its holding company loan from Belgium to payable by the guaranteed and merge its three national Luxembourg entity, on a case-by-case basis. balance sheets into one, indicating that it is intent on A federal Bill authorising the Dexia Bank State Guarantee avoiding a break-up along Belgian Minister of Finance to national lines. lend € 160 million to the Belgium (60,5% or € 90,75 Luxembourg government is billion), France (36,5% or € Following the authorization of awaiting final approval by the 54,75 billion) and Luxembourg the European Commission, the Belgian Federal Parliament. This (3% or € 4,5 billion) guarantee Belgian, French and loan facility forms part of the all new issues of bonds Luxembourg Governments reorganisation of Kaupthing subscribed for by institutional signed, on November 19, 2008, Bank Luxembourg SA and investors, interbanking deposits an agreement settling the intends to safeguard the and certain financial products modalities of the temporary repayment of deposits to the (with a duration of less then 3 guarantee plan granted by the clients of Kaupthing Bank years) for Dexia NV, Dexia Bank three States on October 9, 2008. Luxembourg SA, including the Belgium, Dexia Banque clients of its Belgian branch. Internationale Luxembourg and Dexia Crédit Local de France The terms and conditions of the until October 9, 2009. The State loan facility are subject to further guarantee can be extended for negotiations between the one year. Belgian and Luxembourg governments. Approval of the France (38%) and Belgium Bill is expected by the end of (62%) have also decided to April. grant a State guarantee to FSA, the US subsidiary of Dexia The Bill on the recovery of the Bank. Such guarantee will cover economy the financial product portfolio of FSA (US$ 16,5 billion, managed As a result of the financial crisis by FSA Asset Management) and within the framework of the against an initial loss of US$ 3,1 European recovery plan, the billion that exceeds the existing Belgian Government introduced financial reserves of US$ 4,4 a Bill on February 3, 2009 billion. The existing liquidities of providing for financial measures, FSA remain guaranteed by an social measures, measures existing guarantee facility of relating to work and measures

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PURCHASES OF TROUBLED SPECIAL CENTRAL BANK RECAPITALIZATION FINANCIAL ASSETS OR GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES Dexia Bank. concerning energy.

Fortis Bank State Guarantee The Bill on the recovery of the economy provides, amongst The Belgian government has other things, that: granted a State guarantee to the benefit of Fortis Bank for an - the holders of stock options amount of € 150 billion. can, in agreement with the company and subject to certain Flemish State Guarantee for conditions, expand the SMEs loan facilities timeframe pursuant to which they may exercise their options, The Flemish Government has without additional taxes being implemented a new guarantee charged. The extension is system for the benefit of SMEs however limited to options up to located in the Flanders region € 100,000; that are in need of funds but unable to obtain such funds - insurance policies against because of the lack of valuable commercial and country risks security. are exempt from Belgian insurance tax. The Flemish guarantees can be issued for the benefit of a BNP Paribas tax advantages Belgian company located in the Flemish region that qualifies as As part of the rescue of Fortis by an SME and in which no more BNP Paribas, BNP Paribas than 25% of share capital is held requested certain tax by a non-SME. Since the advantages from the Belgian Flemish Government Government. The Belgian guarantees the loan facility, the Government however loan must serve an investment responded that it cannot grant in the Flemish region and at tax advantages to one specific least two thirds of the loan must company. be in the form of a term loan (for more than one year). A one-way New ‘Chapter 11 alike’ fee is due by the SME in return restructuring law for the guarantee. Given the financial and As a rule, an SME can obtain economic crisis, and in order to such guarantee up to a protect debtors from their maximum amount of € 500,000, creditors in a more efficient and but exceptions are possible. The flexible way, the 1997 judicial guarantee can relate to composition law has been

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PURCHASES OF TROUBLED SPECIAL CENTRAL BANK RECAPITALIZATION FINANCIAL ASSETS OR GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES maximum of 75% of the replaced by the law of January repayment obligations of the 31, 2009 relating to the SME under the loan facility. The continuity of companies. This bank is responsible for seeking law has been in force since April coverage for the remaining 25%. 1, 2009.

Nineteen Belgian financial The law establishes a new institutions have already signed framework for debtors that face up for the Flemish guarantee continuity risks and seek court regulation, such as permission for a judicial restructuring. The aim of the - Bank J. Van Breda & Co; judicial restructuring is to enable the debtor to: - Dexia Bank; - conclude a settlement - Ethias Bank; agreement with two or more of its creditors. Such settlement will - Fortis Bank; be protected against certain avoidance rules in case of the - ING Belgium; debtor’s later bankruptcy. There is also a significant tax incentive, - KBC Bank; and as a waiver of debt agreed in the context of such settlement is not - Rabobank Shipping. taxable for the debtor, although remaining fully deductible for Belgian corporate creditors (subject to further rules to be provided for by a Royal Decree);

- obtain the consent of its creditors to a collective restructuring plan for a maximum of five years. If approved by the majority of the creditors representing the majority of the claims, this plan will be binding upon all creditors; and

- transfer the whole or part of its business or activities.

Key features of the new judicial

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PURCHASES OF TROUBLED SPECIAL CENTRAL BANK RECAPITALIZATION FINANCIAL ASSETS OR GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES restructuring procedure are:

- the flexible condition for opening of the procedure: a threat to the immediate or future continuity of the debtor's business or activities (or part thereof) is sufficient;

- debtor-in-possession: the debtor maintains, as a rule, the management over the company during the restructuring procedure;

- protecting the debtor and its assets: as of the request for a judicial restructuring, the debtor cannot be declared bankrupt or wound up by court order. In addition, any enforcement against the debtor’s assets for prior claims is prohibited; and

- restricted court involvement.

- the position of secured creditors is diluted in such a way that they cannot enforce their rights during a judicial restructuring. However, existing financial collateral and netting arrangements remain unaffected to the extent that these arrangements fall under the financial collateral Law of December 15, 2004.

1 More than 2,000 minority shareholders of Fortis Holding have challenged, before the Belgian courts, the validity of the decision of the board of directors of Fortis Holding to sell the shares in Fortis Bank to the Belgian State. The main objective of their legal action was to suspend the sale to the Belgian State. On November 18, 2008, the Commercial Tribunal of Brussels rejected such legal action insofar as it challenged the validity of the board of directors’ decision, but

LNDOCS01/595326.1 21

appointed an expert panel to assess if the sale price is ‘adequate’. Some shareholders have appealed this decision and the Court of Appeal of Brussels decided on December 12, 2008, to suspend the transfer of Fortis Bank and Fortis Insurance Belgium to BNP until a general meeting of shareholders votes on these transfers, on February 12, 2009 at the latest. As a result of this decision, until February 12, 2009, Fortis Bank will remain in the hands of the Belgian State - which cannot transfer the 50% plus one share to anyone, and Fortis Insurance Belgium will remain in Fortis Holding. The transfer of the portfolio of structured assets is also suspended. Notwithstanding, BNP must maintain its inter-bank relationship with Fortis Bank. An expert panel, appointed by the Court of Appeal, will assess whether the sale price is adequate considering market conditions. The Belgian Government is currently considering, based on its counsels’ advice, which step to take next. The expert panel has started its work and a first draft report is expected on January 30, 2009. Following the decision of the Court of Appeal, an extraordinary shareholders meeting has been convened by the board of directors of Fortis SA to be held on February 11, 2009 in Brussels. The shareholders will vote on (i) the appointment of new directors,(ii) the sale of Fortis Bank Nederland and Fortis Verzekeringen Nederland to the State of the Netherlands, (iii) the sale of 50%+1 share of Fortis Bank SA to the Belgian State, followed by the subsequent sale by the Belgian State to BNP Paribas of these shares, and the incorporation of a newco with the structured products of Fortis Bank and (iv) the sale of Fortis Insurance Belgium NV by Fortis Holding NV to BNP Paribas. At the general shareholders’meeting of Fortis held on February 11, 2009, the shareholders voted against the sale to BNP Paribas and the sale to the Government of The Netherlands. Consequently, negociation have been restarted and are currently still going on.

2 On October 13, 2008, the Belgian State declared that a special fund will be established to which the Belgian State will allocate a part of the possible increase in value and of the profits from its participation in BNP Paribas between the issuance of these new shares and the general assembly date of the BNP Paribas group which will decide on the 2013 dividend distribution. Natural persons that were Fortis shareholders on July 1, 2008 will have the possibility to receive shares in such fund subject to specific conditions and procedures. 3 Of the € 6.4 billion, the Belgian Federal Government, the 3 Regions and the 3 institutional shareholders (namely Gemeentelijke Holding NV, Arcofin CV and Ethias) have agreed together to jointly invest € 3 billion each for the following amounts: (i) the Belgian Federal Government invests € 1 billion, (ii) the 3 Regions invest € 1 billion, and (iii) the current institutional shareholders invest € 1 billion, each in the following amounts: Gemeentelijke Holding NV for € 500 million, Arcofin CV for € 350 million and Ethias for € 150 million. The Flemish Government declared on November 19, 2008 that it is ready to support Gemeentelijke Holding NV by granting a guarantee of up to € 200 million.

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BRAZIL SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES No changes have been made to On September 24, 2008, the On October 2, 2008, the Foreign Exchange Market: the deposit guarantees rules. In Brazilian Central Bank (“BCB”) Brazilian Central Bank (the the event of a financial announced that the compulsory “BCB”) started to stimulate the The BCB has intervened in the institutions’ bankruptcy or reserve deposit rates relating to acquisition of credit portfolios of foreign exchange market insolvency, the Brazilian leasing transactions would be small financial institutions by (Mercado de Câmbio), with financial system currently relies kept in a 15% rate, even though authorizing the deduction of US$ 7.2 billion (spot on the Credit Guarantee Fund a BCB rule provided for the 40% of the compulsory reserve transactions), US$ 5.8 billion (Fundo Garantidor de Crédito), increase to a 20% rate in deposits to be made by the (financing export transactions), maintained by financial September 2008.7 BCB acquiring institutions. US$ 29.4 billion (swap institutions, to guarantee each estimates that such measure will transactions) and US$ 5.5 billion and all deposits in their bank keep R$ 8 billion in the On October 6, 2008, the (sale of US$ with repo accounts, with a maximum cap economy. Furthermore, on the Brazilian Government enacted obligation). of R$ 60,000.00 per bank same date, the BCB increased Provisional Measure No. 442 account.1 the reserve exemption limit (Medida Provisória 442)2, which Brazilian Sovereign Wealth (baseline) from R$ 100 million to authorizes the BCB to buy credit Fund: On March 26, 2009, the National R$ 300 million8, which if portfolios of financial institutions Monetary Council (the “CMN”) surpassed, causes the banks to that are facing difficulties and On December 24, 2008, under raised, by means of Resolution deposit in the BCB an “extra reduced the collateral for such Law No. 11,88718, the Brazilian No. 3.69231, the maximum cap compulsory reserve” portion an acquisition. Sovereign Wealth Fund (“FSB”) of the guarantee provided by the over the savings, spot and term was formally created. This fund FGC to investors that acquire time deposits. BCB estimates On October 16, 2008, the BCB will inject resources from the Bank Depositary Receipts that such a measure would extended the rules for the Brazilian Federal Government (CDB) from small and medium- inject R$ 5.2 billion into the compulsory reserve deposits. budget into investments mainly sized financial institutions. This economy. Besides selling their credit involving Brazilian companies cap was raised from R$ 60,000 portfolios and their interests in doing business abroad. to R$ 20 million per investor. On October 8, 2008, the BCB investment funds, smaller banks Export Financing: The CMN expects that this will reduced the compulsory reserve will be able to sell other assets deposit rates. The additional provide the economy with such as (i) fixed income On October 30, 2008, the CMN rates on spot and time deposits additional credit and reduce the securities, advances and other announced the increase, from were reduced from 10% to 5% banking spread, by raising the credits from individuals and non- R$ 3 billion to R$ 4 billion, of the (which should inject 13.2 billion competition among banks. financial and legal entities; and resources destined to the into the economy). Additionally, (ii) inter-finance deposit with Revitaliza Program, that grants the reserve exemption limit was warranties for the assets credit to Brazilian exporters. raised from R$ 300 million to described in the previous item or Besides increasing the amount R$ 700 million9 (with an 3 credit operations. of available funds, the CMN estimated impact of R$ 6.3 approved the end of the limit billion into the economy). On October 22, 2008, the that restricted the access to the Brazilian Government enacted credit for companies with annual On October 13, 2008, the BCB Provisional Measure No. 443 billing of over US$ 300 million. announced the plans for the (Medida Provisória 443)4, which Furthermore, the CMN approved integral release of the reserve permits Banco do Brasil S.A. the agreement between the BCB payments over time deposits, and the Brazilian Federal and the U.S. Federal Reserve,

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES inter-finance deposits and over Savings Bank (Caixa Econômica that establishes an US$ for the additional liabilities of call Federal) to acquire interests in Reais (R$) swap line of and time deposits, totalling private banks and construction US$ 30 billion, valid until R$ 100 billion.10 companies. Furthermore, the April 30, 2009. government reduced to zero the On October 14, 2008, the BCB Financial Transactions Tax Sale of US dollars for the established the reduction from (IOF) rate on foreign financing of ACC (Advances on 45% to 42% of the compulsory investments in the stock market Foreign Exchange Agreements reserve deposit to be made by and on foreign financing.28 – Adiantamento sobre Contrato the financial institutions to the de Câmbio) and broadening of BCB over the spot deposits On October 31, 2008, the BCB the PROEX (Export Financing without compensation (injecting modified the on-lending method Program). R$ 3.6 billion into the for the compulsory reserve R$ 10 billion was granted by economy).11 deposits regarding term deposits National Economical and Social from 100% in bonds to 30% in Development Bank (Banco On October 27, 2008, the BCB bonds and 70% in cash. This Nacional de Desenvolvimento allowed the deduction of the measure aims at stimulating Economico e Social-”BNDES”) reserve payment over call acquisitions of credit portfolios as working capital, pre-shipment deposits for banks that and other assets from small- of exports and bridge loans. voluntarily advance instalments and medium-sized financial of the ordinary contribution to institutions by large institutions.5 On January 29, 2009, the BCB the FGC (Fundo Garantidor de approved Instruction No. 367526, Crédito).12 which postponed to January 31, 2010, the term for the shipping On November 13, 2008, the of goods or for rendering of BCB announced a modification services related to “opened” in the payment method of the foreign exchange agreements additional enforceability of the regarding export transactions reserves over call, time and (previously, the time for closing savings deposits.13 This this type of exchange agreement payment, that was performed in was 360 days as of its cash and compensated by the execution, however, with this SELIC tax, shall be performed in measure, exporters who were public bonds from December 1. reaching the 360-days deadline The rates for the additional obtained a considerable enforceability continue to be 5% additional term) BCB expects to for call and time deposits and indirectly provide exporters with 10% for savings deposits, which more credit due to such totalizes a total amount of measure. R$ 40 billion. Such measure, according to the BCB, aims the Agriculture Financing: recomposition of the volumes of the reserves paid in bonds that On October 14, 2008, the CMN prevailed before the reserve increased from 25% to 30% the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES modifications were announced rate of mandatory application of on October 30.14 resources in the agriculture and animal husbandry sectors, the On November 25, 2008, the so-called rural eligibilities BCB announced new changes (elegibilidades rurais). to rules regarding the Therefore, banks shall have an compulsory deposits (private additional credit of R$ 4.5 billion and public banks that invest to finance these sectors. funds in BNDES’ inter-bank certificate of deposits (“CDI”) will Additionally, the following be able to deduct such amount measures were taken: from the compulsory deposits), acceleration of Banco do Brasil with an estimate of an additional S.A. disbursements; additional R$ 6.2 billion to the BNDES.15 resources from several funds, totalling R$ 5 billion; increase of On December 18, 2008, the the directed credit with reserves, CMN amended the by-laws of totalling R$ 5.5 billion; increase the FGC16, allowing the FGC to of the rural savings from 65% to invest a maximum of 50% of its 70%, totalling R$ 2.5 billion; net worth in the acquisition of permission for the indirect credit portfolios of small and financing of producers by means medium-sized banks. Before this of purchasing agro industries measure, such acquisitions by and trading CPRs (Rural FGC were limited to 20% of its Product Bonds); and grant a net worth. minimum price for the acquisition of products (stock In order to stimulate the formation – AGE), entitlement to acquisition of small-sized banks’ producers (difference among credit portfolios by larger market and minimum prices) financial institutions on and credits for December 26, 2008, the CMN commercialization for the next enacted Resolution No. crop. 3,67317, establishing that the On November 26, 2008, the new accounting rules for the National Monetary Council registration of financial assets by created special credit facilities banks will only be valid as of for the agriculture and animal January 1, 2010 (previously husbandry sectors, for the such rules were to be valid as of payment of up to 40% of the January 1, 2009). The CMN instalments of BNDES’ loans understands that the current due in 2008. (Amount of credit accounting rules are simpler and facility: R$ 500 million).16 therefore stimulate the acquisition of risky credit Investments and Production portfolios of small banks by

LNDOCS01/595326.1 25

SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES larger institutions. Financing:

On December 30, 2008 (in an Aiming at the financing of extraordinary meeting), the investments and production, the CMN decided to make changes following measures were taken: in the calculation of the financial the maintenance of the BNDES institutions’ Reference Networth goal of R$ 90 billion in credit; (Patrimônio de Referência) keeping the long-term interest relating to leasing transactions. rate (“TJLP”) at 6.25%; and With this measure, CMN granting the Merchant Marine expects an estimated impact of Fund an additional R$ 10 billion. R$ 40 billion into the economy. On January 22, 2009, the On January 21, 2009, the BCB Federal Government was Monetary Policy Committee authorized, by means of (“COPOM”) reduced the SELIC Provisional Measure No. 45325, basic interest rate from 13.75% to grant additional funds in an to 12.75% per year. COPOM amount of up to R$ 100 billion to expects to stimulate the the BNDES, for its lending economy by such reduction of activities. It is an attempt to the interest rate. More recently, ensure cheaper credit to on March 11, 2009, the COPOM companies, enabling them to reduced the SELIC basic keep their investment plans (i.e. interest rate from 12.75% to having Petrobras keep its 11.25% per annum. investment plans of R$ 20 billion for the next few years). On March 4, 2009, the CMN enacted Resolution No. 3.68929, Civil Construction Financing: allowing BCB to use its A Working Capital Line of international reserves for R$ 3 billion, of the Brazilian granting loans in foreign Federal Savings Bank has been currency to Brazilian banks. adopted. The CMN expects that this will enable Brazilian banks to grant On November 7, 2008, the loans in foreign currency to Brazilian Government enacted Brazilian companies with debts Provisional Measure No. 445,6 abroad. which authorizes the Brazilian Federal Savings Bank to use part of its dividends resulting from its profits in years 2008 to 2010 in a fund destined to assist the construction industry in

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Brazil.

On March 25, 2009, the Federal Government enacted Provisional Measure No. 45930, creating a new housing program named Programa Minha Casa Minha Vida (“PMCMV”) that will finance the construction of housing for low income families. It is estimated that Government funds will be available for the construction of up to one million houses. In addition, on March 30, 2009, the Brazilian Government enacted Provisional Measure No. 46034, which amended the taxation regime of the civil construction business, granting tax benefits to construction companies that adhere to the PMCMV housing program.

On March 27, 2009, the CMN approved, by means of Resolution No. 3.70632, the increase, from R$ 250,000 to R$ 450,000, of the maximum cap for real estate loans made by means of the Housing Financial System (Sistema Financeiro de Habitação). The CMN expects such measures to stimulate the civil construction sector.

On March 30, 2009, the Federal Government enacted Decree No. 6.80933, which suspended for three months the levy of IPI (excise tax) on several raw materials related to the civil construction sector.

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Auto Industry:

Two measures have been taken: R$ 4 billion was granted by Banco do Brasil S.A. to banks “linked to car manufacturers” plus resources from private banks (reserve) and credit lines have been directed to the motorcycle industry.

In addition to the abovementioned measures, the Brazilian Government enacted Decree No. 6,696 on December 17, 200819, establishing the reduction of PI rates (excise tax) levied on cars and trucks. The new rates will be valid until March 31, 2009. On March 30, 2009, the Federal Government enacted Decree No. 6.80933, which extended referred tax reduction until June 30, 2009. This is conditional on the auto industry retaining their employees and maintaining current levels of employment.

On March 30, 2009, the Federal Government enacted Provisional Measure No. 46034, which suspended the levy of COFINS (social contribution) on the gross income from the sales of motorcycles for three months.

Naval Industry:

On December 19, 2008, the Brazilian Government enacted Decree No. 6,70420, which suspended the levy of IPI (excise tax) on the acquisition,

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES made by Brazilian naval shipyards, of materials and equipments, with the purpose of building, maintaining, modernizing, converting or repairing of ships.

Small- and Medium-Sized Companies:

A R$ 5 billion credit line for small- and medium-sized companies was opened by Banco to Brasil S.A. to be used as working capital.

On January 28, 2009, the Brazilian Stock Exchange Commission (“CVM”) enacted, Instruction No. 477/09,27 which changed the rules of incorporation and management of Mutual Investment Funds in Emerging Companies (“FMIEE”), which invest in small- sized companies with great potential for development. Such Instruction intends to modernize the current rules regarding the FMIEEs and, thus, to stimulate the investments in emerging companies.

On February 12, 2009, the State of São Paulo Government announced its plans to “unburden” the private sector, specially benefiting micro and small companies. Among such measures, the easier access to credit from state entities (without guarantees requirements) and the reduction of financing interest rate are pointed out.

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Additionally, the State of São Paulo Government postponed until December 31, 2009 the reduction of ICMS tax for some sectors (such as food, cosmetics, etc.).

On March 6, 2009, Banco do Brasil S.A. reduced the interest rate of its credit line offered to small- and medium-sized companies. In addition, on March 17, 2009, the Banco do Brasil S.A. raised the Cartão BNDES Card’s financing limit from R$ 250,000 to R$ 500,000. The Cartão BNDES Card has low interest rates and is offered to companies which have an annual revenue of R$ 60 million or below.

Postponement of Tax Payment Dates and Acceleration of the Tax Credits Devolution:

The payment dates of the following taxes were postponed: IPI (tax on manufactured products) payment date postponed from the 15th to 25th; PIS/COFINS (social contributions) payment date postponed from the 20th to day 25th; and Withholding Income Tax payment date postponed from the 10th to the 20th. Furthermore, there was an acceleration of the tax credits devolution.

Changes to Income Tax:

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES The Brazilian Government created, by means of Provisional Measure No. 451/200821, two intermediate rates of the Income Tax paid by Individuals (“IRPF”). In addition to the current rates of 15% and 27.5%, the Government created rates of 7.5% and 22.5% aiming at reducing the amount of tax paid by several workers. By means of an answer to Public Consultation (”Solução de Divergência”) No. 1/200922, issued by the Brazilian Federal Revenue Service, IRPF will not be levied on vacation periods (as long as these periods do not exceed 10 days) “assigned” by employees to their employers in the course of one working year. This provides employees with a new tax exemption.

Changes to Tax on Financial Transactions:

On December 12, 2008, Decree No. 6.691/08 provided for the reduction from 3% to 1.5% per annum of rate of the Tax on Financial Transactions (“IOF”) levied on loans and financings granted to individuals.17

Minimum Wage

The Federal Government increased the minimum wage from R$ 415.00 to R$ 465.00. Such adjustment came into force on February 1, 2009.

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Infra-Structure

The Federal Government and private companies announced investments of approximately R$ 4.6 billion in the Santos port, in order to expand its loading capacity (government expects to create more than 5,000 jobs).

1 For Resolução CMN No. 3251/2004, see https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=104212266&method=detalharNormativo. For Resolução CMN No. 3400/2006, see https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=106276675&method=detalharNormativo. 2 For Provisional Measure No. 442, see: http://www.planalto.gov.br/ccivil_03/_Ato2007-2010/2008/Mpv/442.htm - to be voted in the Senate. Also see Resolução Bacen No. 3622 https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108098613&method=detalharNormativo. 3 Circular Bacen No. 3414. See https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108100557&method=detalharNormativo. 4 For Provisional Measure No. 443, see: http://www.planalto.gov.br/ccivil/_Ato2007-2010/2008/Mpv/443.htm. 5 Circular Bacen No. 3417/2008. See https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108105748&method=detalharNormativo. 6 For Provisional Measure No. 445, see https://www.planalto.gov.br/ccivil_03/_Ato2007-2010/2008/Mpv/445.htm. 7 The BCB had increased the percentage of the compulsory reserve deposits relating to leasing operations, starting at 5% in May, 2008 up to 25% in January 2009 (estimated). After the crisis, the BCB kept the compulsory reserve deposits relating to leasing transactions on a 15% rate, with expectation for future increases only in January, 2009. 8 Circular Bacen No. 3405/2008. See https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108093173&method=detalharNormativo. 9 Circular Bacen No. 3408/2008. See https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108098141&method=detalharNormativo. 10 Circular Bacen No. 3412/2008. See https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108099445&method=detalharNormativo.

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11 Circular Bacen No. 3413/2008. See https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108099939&method=detalharNormativo. 12 Circular Bacen No. 3416/2008. See https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108104119&method=detalharNormativo. 13 Circular Bacen No. 3419/2008. See https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108110963&method=detalharNormativo. 14 Circular Bacen No. 3417/2008. See https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108105748&method=detalharNormativo. 15 Circular Bacen No. 3421/2008. See https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108114236&method=detalharNormativo. 16 For Resolução CMN No. 3639/2008, see https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108114725&method=detalharNormativo. 17 For Decree No. 6.691/08, see http://www.planalto.gov.br/ccivil_03/_Ato2007-2010/2008/Decreto/D6691.htm. 18 For FGC’s by-laws’ amendment see: https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108121811&method=detalharNormativo. 19 For Resolution 3,673 see: https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108124415&method=detalharNormativo. 20 For Law No. 11,887 see: http://www.planalto.gov.br/ccivil_03/_Ato2007-2010/2008/Lei/L11887.htm. 21 For Decree No. 6.696 see: http://www.planalto.gov.br/ccivil_03/_Ato2007-2010/2008/Decreto/D6696.htm. 22 For Decree No. 6,704 see: http://www.planalto.gov.br/ccivil_03/_Ato2007-2010/2008/Decreto/D6704.htm. 23 For Provisional Measure No. 451, see: https://www.planalto.gov.br/ccivil_03/_Ato2007-2010/2008/Mpv/451.htm – to be voted in the Senate. 24 For ”Solução de Divergência” No. 1/2009 see: http://www2.oabsp.org.br/asp/clipping_jur/ClippingJurDetalhe.asp?id_noticias=1982. 26 For Instruction No. 3675, see https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=109007562&method=detalharNormativo. 27 For Instruction No. 477/09, see http://www.cvm.gov.br/. 28 On March 3, 2009, the Provisional Measure No. 443 was converted into Federal Law No. 11.908. 29 For Resolution 3.689 see: https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=109016504&method=detalharNormativo. 30 For Provisional Measure No. 459 see: https://www.planalto.gov.br/ccivil_03/_Ato2007-2010/2009/Mpv/459.htm. 31 For Resolution 3692 see: https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=109023546&method=detalharNormativo. 32 For Resolution 3706 see: https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=109024049&method=detalharNormativo. 33 For Decree No. 6809 see: https://www.planalto.gov.br/ccivil_03/_Ato2007-2010/2009/Decreto/D6809.htm. 34 For Provisional Measure No. 460 see: https://www.planalto.gov.br/ccivil_03/_Ato2007-2010/2009/Mpv/460.htm.

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BULGARIA SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES By means of an amendment to As of December 1, 2008, the On November 4, 2008, the the guarantee of the Bank Central Bank decreased the Bulgarian Government1 decided Deposits Act, effective as of minimum amount of required to increase the capital of the November 17, 2008, the bank reserves to 10%. Bulgarian Development Bank (a

protection given to savings by State-controlled bank aimed at Starting January 1, 2009, the supporting the SME and local the Fund for guaranteeing Bank Deposits was increased from Central Bank will decrease the banks) by BGN 100,000,000. BGN 40,000 to BGN 100,000 minimum amount of required The capital is to be used mainly (approximately €50,000). bank reserves for funds for lending credits to the banks. attracted from abroad to 5%. A new Act on the State Fund for Starting January 1, 2009, the Guaranteeing the Stability of the Central bank will waive the State Pension System was obligation for required minimum enacted and entered into force bank reserves for funds as of November 17, 2008. The attracted from the Government Fund is aimed at achieving and or from municipalities. guaranteeing stability of the State pension system through accumulating, investing and transferring of additional financial means to the budget of the State pension system. The Minister of Finance as well as other members of the Government have been granted leading roles in the management of the new Fund. Representatives of the national employers’ and employees’ organizations will also participate in the management of the Fund.

1 The Bulgarian Prime Minister gave a brief oral presentation of the Anti-crisis Government Measures Programme. However, there is no official announcement, published structured document, or any consistent legislative changes initiated, other that those specified above. There have been some discussions on certain aspects of this programme, none of which have been promulgated as enforced statutes.

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CANADA SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES The Canadian Lenders The Canada Deposit Insurance In coordination with other major The 2009 Federal Budget On October 10, 2008, the On November 11, 2008, Assurance Facility announced Corporation (“CDIC”), a federal central banks, Canada’s central proposed a framework for the Ministry of Finance announced a changes were announced to the on October 23, 2008, that it will Crown corporation, insures bank, the Bank of Canada, Canadian Government to inject program to provide additional regulatory capital requirements insure certain categories of deposits at member institutions, lowered its key lending rate by capital directly into federally liquidity to Canadian financial for banks and other federally- senior unsecured wholesale which include most Canadian 0.5% on October 8, 2008, 0.25% regulated financial institutions. institutions through the purchase regulated, deposit-taking debt with a term to maturity of at chartered banks, as well as on October 21, 2008, 0.75% on Proposed amendments to the of up to $25 billion of mortgage- institutions. Debt covered by the least three months. Institutions various other deposit-taking December 9, 2008 and 0.5% on federal Financial Administration backed securities. On Canadian Lenders Assurance eligible to participate in the institutions. The CDIC protects January 20, 2009. This was Act authorize such capital November 12, 2008, the Ministry Facility and similar foreign facility include (i) deposit-taking funds in savings and checking followed by a further 0.5% rate injections. of Finance announced that the programs can now be assigned financial institutions accounts, and term deposits cut on March 3, 2009, leaving purchase program would be the same risk weighting for incorporated, amalgamated or with a term of less than five the rate at 0.5%. increased from C$25 billion to regulatory capital purposes as continued under the federal years, for as much as C$75 billion. The size of the the debt of the sovereign Bank Act or Trust and Loan C$100,000 (US$ 91,470). The Bank of Canada has program was further increased guarantor during the term of the Companies Act, (ii) associations increased the amount of liquidity to C$125 billion as part of the guarantee even if that term is and central cooperative The 2009 Federal Budget tabled it makes available to financial 2009 Federal Budget. less than the term to maturity of societies regulated under the on January 27, 2009 proposed institutions, has expanded the the debt. Also, an additional federal Cooperative Credit to provide the CDIC with greater scope of institutions eligible to Since the underlying mortgages 10% of Tier 1 capital may be Associations Act, and (iii) on the flexibility to enhance its ability to participate in its liquidity facilities already carry guarantees composed of qualifying approval of the Minister of safeguard financial stability in and has expanded the types of backed by the Canadian preferred shares (the former Finance, provincially regulated Canada including the following: collateral it accepts Government, there is no maximum of 30% has been central cooperative credit incremental risk to the federal increased to 40%). societies. This insurance will ▪ allowing the CDIC to establish Government in the purchase of cover principal and interest a bridge institution to preserve these securities. The Canadian Government payments on eligible debt critical functions and help partnered with the governments instruments for up to three years support financial stability in the The purchases are being of Ontario, Alberta and Quebec from the date of issue. event a CDIC member is no undertaken through a series of to provide a senior funding longer viable; competitive auctions. facility to support the January The facility will charge premiums Approximately C$50 billion of 21, 2009 closing of the C$32 that are intended to approximate ▪ increasing the CDIC’s mortgage-backed securities billion restructuring of non-bank commercial terms. The facility borrowing limit from C$6 billion have been purchased to date. sponsored asset-backed will charge a base annualized to C$15 billion to reflect the commercial paper. Media premium of 110 basis points (the growth of insured deposits; and reports indicate that the size of previously announced premium the senior funding facility was in of 135 basis points was reduced ▪ granting the Minister of the range of C$3.5 - C$4.5 in an effort to make the program Finance the power to direct the billion. more competitive with similar CDIC to take specific action to foreign programs), with prevent adverse effects on The 2009 Federal Budget surcharges depending on the financial stability. contained a number of other credit rating of the issuing measures designed to improve institution and an additional access to financing, strengthen surcharge for debt that is not Canada’s financial system and denominated in Canadian stimulate the economy including

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES dollars (on November 13, 2008, the following: the Canadian Government announced a temporary waiver ▪ committing C$13 billion in of the surcharge). The additional financing by Canadian Government has increasing the capacities of extended the period for issuing certain financial Crown guaranteed instruments from corporations including Export April 30, 2009 as originally Development Canada ("EDC") announced to December 31, and the Business Development 2009. There is a limit on the Bank of Canada; amount of insurance available to each institution, based on the ▪ creating the C$12 billion amount of wholesale debt of the Canadian Secured Credit institution maturing in the next Facility to support financing of six months, and on the amount equipment and vehicles by of deposits held by the businesses and consumers; institution. ▪ establishing the Canadian Life The Ministry of Finance has Insurers Assurance Facility to indicated that the facility was guarantee wholesale term introduced in order to ensure borrowings by life insurers by that Canadian institutions are way of a model similar to the not disadvantaged in global Canadian Lenders Assurance capital markets relative to banks Facility; in other jurisdictions that have access to a government ▪ providing approximately C$8 guarantee. billion to stimulate housing construction and C$12 billion in Dominion Bond Rating Services new infrastructure funding over has indicated that it will assign a a period of two years; and AAA long-term rating with a stable trend to eligible debt ▪ tax cuts totalling C$20 billion instruments to be issued by over the next six years. eligible deposit-taking financial With the passing of Bill C-10 on institutions covered by the March 12, 2009, the CLAF. Government of Canada has provided for a two-year expansion of EDC's mandate to help increase access to credit for Canadian companies.

This expansion is intended to allow EDC to support domestic trade by participating in

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES domestic financing and insurance with private sector financial institutions, private insurance providers and the surety industry.

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DENMARK SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Bank Aid Package I: Almost all Danish banks are The Danish Central Bank is Bank Aid Package I: The social pension fund (Den On December 6, 2008 the participating, including Danske, issuing up to DKK 60 billion in Sociale Pensionsfond) has been president of the Danish Central The Bank Aid Package I is Nordea, Jyske and Sydbank (the Danish treasury bonds with a The Danish Government will set given a mandate to purchase up Bank, Nils Bernstein, spoke at designed to guarantee creditors four largest banks by market 4.5% coupon aimed at a up a new liquidation company to DKK 22 billion one-year the annual meeting of the and depositors in distressed capitalisation in Denmark). balanced, low-risk investment that will benefit from a State property mortgage bonds at the Danish Bankers’ Association on banks. The package is regulated Foreign branches of Danish for Danish pension funds. guarantee which will take on December 2008 auction. the topic of economic initiatives through the Financial Stability banks may be covered if local defaulted obligations of a in the banking sector. Act which requires banks to be banks are subject to a similar Exchange rate participating bank. The rationale was that the state- members of the DPB in order to scheme. guaranteed mortgage bonds for In the short term, there are talks participate in the newly The Danish Central Bank has a The purpose of the liquidation social housing were expiring, about a new financial aid established guarantee scheme. Denmark has guaranteed all fixed exchange rate policy company is to ensure the and as the State bears the package to banks since even bank deposits of members of the (ERM2) with the ECB regarding covering of all claims by interest rate risk on social banks that are fundamentally Det Private Beredskab: DPB, so that all claims by the Euro. If the exchange rate “depositors and other ordinary housing, the Social Pension healthy are struggling to obtain “depositors and other ordinary varies more than +/- 2.25% of creditors” where the distressed Fund might as well take part in liquidity. Mr. Bernstein claimed DPB (Det Private Beredskab) is creditors” are covered. the central rate, the Danish bank is a member of the DPB. It the auction. that if such a package is not a private banking association Central Bank is empowered to will then found a subsidiary agreed upon, banks will be whose purpose is to help wind Some niche banks have chosen increase the benchmark lending whose task will be to wind down This had an immediate effect forced to reduce activities and down distressed banks, savings not to participate in the DPB and rate and/or to perform an the company by transferring its and the interest rate of the one- thereby reduce their balances in banks and co-operative banks, the guarantee scheme. These intervention of the Krone. assets and liabilities to a buyer. year property mortgage bond order to fulfil the solvency as an alternative to bankruptcy. are: If the DPB receives funds in the fell. Many private homeowners demand. The reason for this The association is non-profit. In the time of financial instability form of liquidation proceeds, etc. enjoyed a spin-off benefit from rationale, he explained, is that ▪ DnB Nord Bank A/S the ERM2 has had a significant when winding down a bank, it this measure. since 2007, Danish banks have According to Danish law, an influence on the benchmark must repay the DPB members increased their debt ratio from 7 association becomes a legal ▪ Dansk Autoriseret lending rate activity and on the proportionately to their Roskilde Bank: to 9. In order to bring the debt entity after the founding general Markedsplads A/S foreign currency reserve. respective contribution ratio back to 7, banks would assembly has been held. The commitment. When a bankruptcy of the have to reduce loans by 25%. ▪ Ekspresbank A/S legal relationship between its Benchmark lending rate Roskilde Bank was threatening, Many countries have carried out members is defined in the activity: Members of the DPB will the Danish Central Bank and the ▪ Lægernes Pensionsbank A/S such recapitalization measures articles of the association. contribute DKK 7.5 billion DPB decided to take over the and have increased the core On October 24, 2008, the (c.€1 billion) per annum, payable bank. Only the healthy parts of capital from 9% to 11%. The The top authority of the DPB is ▪ Leasing Fyn og Factoring Danish Central Bank monthly as a fee for the the bank’s activities were Danish Central Bank therefore the board of representatives Bankaktieselskab unexpectedly raised the guarantee. acquired, in order to be sold in believes that a temporary which decides if the DPB is to benchmark lending rate by half a pieces later on. provision of core capital to participate in the winding down In addition, some small savings percentage point to an eight- Additionally, DPB will initially Danish banks will be necessary. of a distressed bank. This is banks and many small co- year high of 5.50%, showing that Nordea Bank, Spar Nord Bank provide DKK 10 billion to the Mr. Bernstein recommends that normally done with a marginal operative banks have equally policymakers will defend the and Arbejdernes Landsbank, liquidation company and is also such a scheme be implemented majority. The board of chosen not to participate. Krone even as the economy respectively acquired nine, subject to a further over the next year, but with representatives is the same as risks entering a recession. seven and five branches. With the exception of Swedish DKK 10 billion to meet losses, careful reflection as to its terms that of the Danish Banker’s Handelsbanken and Icelandic providing for a maximum of and conditions. Association (Finansrådet). The On November 7, 2008, the The remaining part of the Straumur-Burdaras Investment DKK 35 billion loss to the DPB DPB is generally managed by Danish Central Bank followed original bank has been declared Bank, all other foreign banks over the two-year term. Mr. Bernstein also addressed the executive committee. The the ECB and cut the benchmark bankrupt. with branches in Denmark have the correlation between the general assembly is held lending rate by 50 basis points, Any losses in excess of the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES annually. opted not to participate. bring the rate down to 5.00%. funds provided by DPB will be Bank Trelleborg: already existing guarantee met by the State. scheme and the potential of a In order to be eligible for On December 5, 2008, the Sydbank took over Bank new financial aid package. Such participation in the guarantee Danish Central Bank followed Bank Aid Package II: Trelleborg. This takeover is an aid package would lower the scheme, banks must have a the ECB and cut the benchmark subject to a multi-party lawsuit risk of the State and the DPB banking license and be a lending rate by 75 basis points, The purpose of the package is launched by a group of and will limit the damage for member of the DPB. bringing the current rate down to to ensure that financial stockholders that demanded a which the State and the DPB are 4.25%. institutions have access to higher share price. liable. Members of the DPB are liable enough liquidity. Such measures for their contribution, which is On December 19, 2008 the are needed in order to cope with Ringkjoebing The suggestion has been the fixed by reference to each Danish Central Bank cut the the financial markets. The Bank/Bonusbanken: inspiration for new legislation, bank’s core capital. If existing benchmark lending rate by 50 package is regulated by the Act commonly known as Bank Aid members are to withdraw from basis points, bringing the rate of State Capital Injection to Vestjysk Bank took over Package II. Please see the the DPB, they are still liable until down to 3.75%. The rate cut Credit Institutions. Bonusbanken, which had lost all column “recapitalization the end of a five-year notice was made possible due to of its equity capital. The same measures” for more information. period. The liability can be strengthening of the Krone. The Danish act regarding day, Vestjysk Bank merged with collected by the executive financial institutions requires Ringkjoebing Bank, with the committee if the board of On January 15, 2009 the Danish compliance with the stated former being the continuing representatives has decided to Central Bank followed the ECB solvency demand, with which company. take over a distressed company. and cut the benchmark lending some financial institutions were Such liabilities are earmarked to rate by 50 basis points plus an having difficulties with Forstædernes Bank: help distressed banks. Members additional 25 basis points, complying. cannot be liable for more than bringing the rate down to 3.00%. Nykredit Realkredit took over their contribution commitment. This recent aid package gives Forstædernes Bank. On March 6, 2009, the Danish the Danish State authority to Up until October 13, 2008, Central Bank followed the ECB inject DKK 100 billion (c.€ 13 Spar Mors: current DPB members could and cut the benchmark lending billion) in troubled financial Morsø Bank took over the elect not to be part of the rate by 50 basis points plus an institutions; DKK 75 billion (c.€ Saving Bank, Spar Mors. scheme and other banks, additional 25 basis points, 10 billion) to the banking sector bringing the current rate down to and DKK 25 billion (c.€ 3 billion) including Danish branches of Lokalbanken: foreign banks, could join the 2.25%. The rate cut narrowed to the mortgage credit sector. DPB and thus the guarantee the interest rate differential Those figures are based upon Handelsbanken took over scheme. There is a five-year furthermore. the participation of all financial Lokalbanken. notice if an existing member institutions that are in need of wishes to withdraw from the Over a 5 month time period the capital. EBH Bank: DPB. Danish Central Bank has cut the benchmark lending rate by one The capital is provided as hybrid The DPB took over EBH Bank The guarantee will cover half from 5.50% to 2.25%, which core capital, which is defined as since it was no longer capable of creditors of the participating indicates a will to stimulate the a loan provided by the State. fulfilling the solvency demands banks including holders of growth and to follow the lead of The State requires an average set by the Danish FSA. Assets senior unsecured debt. the ECB. interest rate on return of 10%. and liabilities of the distressed Legislation, which has now been The individual interest rate is bank were transferred to the passed, has confirmed that both The strengthening of the Krone calculated individually with the DPB, who will wind down the subordinated debt (Tier 1 and gave the Danish Central Bank rating of the financial institution

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Tier 2) and covered bonds are room for this interest rate cut but as a factor. bank and its activities. excluded from the guarantee an interest rate differential of scheme. 0.75% continues to exist Financial institutions that apply Fionia Bank: between Denmark and the for capital injections must have a Banks participating in the EURO-countries, mainly due to core capital percentage of 12% Fionia Bank and the State have guarantee scheme may not for the Danish fixed exchange rate afterwards. This obligation is to entered into a framework the duration of scheme (until policy in order to protect the ensure a healthy financial agreement regarding the December 31, 2010 with a Krone. sturdiness in order to withstand transfer of the banking activities possibility of prolongation): losses in the years to come and in their present form to the SWAP agreements to maintain a reasonable loan company “Financial Stability a. pay dividends; portfolio. A/S”. This company will be On September 29, 2008, the founded and owned by Fionia b. set up new share buy-back Federal Reserve extended the The Danish FSA, on March 26, Bank but controlled by the State. programs; bilateral SWAP line from USD 5 2009, issued a statutory order The shareholders will remain in billion to USD 15 billion as well on application requirements etc. Fionia Bank. c. establish new share option as prolonging the time-frame to This has opened up a previously programs or extend or renew April 30, 2009. unknown option to convert the The Managing Director of Fionia existing share option programs; injected hybrid core capital to Bank explained that the or On October 27, 2008, the share capital at the request of operation is not part of Danish Central Bank and the the financial institution. The liquidation, but a strengthening d. give notice to wave the ECB established a bilateral following requirements need to of the bank’s activities. scheme. SWAP line of EUR 12 billion in be fulfilled for a financial order to improve the liquidity of institution to avail itself of this Fionia Bank realized that the Furthermore, participating banks the Euro in the market. The option: solvency requirement would be must sign a statement bilateral agreement is currently too great if the bank continued in authorising the scheme to sell in use and will continue to exist a) the financial institution must its original form. By transferring banking activities to a buyer as long as it is necessary. be in compliance with the the banking activities and designated by the scheme. solvency requirements set receiving a capital injection of On February 3, 2009, the out in the act and the DKK 1 billion (c.€ 130 million), For this reason, some Danish Danish Central Bank and the Danish FSA must not the new bank is able to continue branches of foreign banks have Federal Reserve prolonged the assess that there is an its operations. elected not to participate. existing temporary SWAP line of obvious risk that such USD 15 billion until October 30, compliance will not 2009. continue;

b) shares of the financial institution must be listed on a regulated market;

c) the total hybrid core capital of the financial institution must represents more than 35% of its core capital; and

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES d) voting rights and ownership restrictions must be cancelled.

If the requirements in a-d are met, the financial institution may convert upon its request. 20% of the injected hybrid core capital can be converted at a time. A conversion can be repeated if the abovementioned requirements are still met.

The largest bank in Denmark (Danske Bank) has applied for a DKK 26 billion (c.€ 3.4 billion) loan in state hybrid core capital. Danske Bank fully owns the mortgage credit institution, Realkredit Danmark, which has applied for a DKK 2 billion (c.€ 0.25 billion) loan.

Danske Bank has in its application exercised the option for the right to convert hybrid core capital to share capital upon its request. If the option is exercised the Danish state may end up as shareholder in the bank for a value of DKK 26 billion if the right to convert 20% at a time is exercised exhaustively.

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ESTONIA SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES The Government more than The Estonian Government has doubled its bank deposit agreed on a support package guarantee to €50,000 that involves almost doubling the (US$ 68,000) in line with other volume of state guarantees for European Union member states business loans, more than and introduced an investment doubling the volume of state pay-out guarantee up to 90% of export guarantees and various the investment to be paid out, options for state supported loan but not more than €20,000 per arrangements for exporting investor in one investment businesses as well as banks. company. The package is waiting for parliament approval.

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FINLAND SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES On December 12, 2008, the As of October 8, 2008, the The Government has set forth On October 20, 2008 financial Finnish Parliament approved the deposit guarantee limit was several amendments to the supervisors in Finland and Government’s proposal to increased from €25,000 to 2009 budget and has proposed Iceland endorsed an provide guarantees for credit €50,000. The higher limit shall that altogether €20 million will be arrangement to fund the instruments issued by banks or be valid at least until the end of allocated to equity-like financial deposits in the Finnish branch of bank holding companies. 2009. The Finnish Deposit instruments, in order to ensure Kaupthing Bank h.f. According to the proposal, Guarantee Fund protects that loans to Municipality guarantees can only be granted customers’ deposits in deposit Finance Plc (the only public Nordea Bank Finland plc, OP- to viable banks that meet all banks that have a license in sector owned credit institution in Pohjola Group and Sampo Bank solvency requirements. The Finland. Deposits in branch Finland) remain available for plc granted a fixed-term guarantees would be subject to offices of foreign banks acting in state-subsidized housing commitment to finance the market rates and may be drawn Finland are under the deposit production. deposits of all Finnish Kaupthing up to a total maximum of €50 guarantee of the home state of Bank depositors (about 10,000 billion. This temporary authority the relevant bank. On February 19, 2009, the customers) to the full extent to grant government guarantees Government submitted a including interest. This was a will remain in force until the end Branch offices of foreign banks proposal to Parliament for state market-based solution adopted of 2009. acting in Finland may apply for capital investment in deposit by the private sector, whereby an additional deposit guarantee taking banks. The state will offer the said banks will bear the The Government will assess by from the Finnish Deposit banks interest bearing commercial risk and credit risk April 30, 2009 whether a need Guarantee Fund in order to subordinated loans, which can involved in the settlement. The for further guarantees exists. cover a possible difference in be considered as banks' core decision did not alter the deposit the Finnish and foreign capital (Tier 1 capital). The protection principles in force in The guarantees and market- guarantee limit. However, in this subordinated loan will bear Finland. On October 24, 2008, based payments collected on case the maximum aggregate interest at a rate equalling the the Finnish Parliament granted a these instruments will be guarantee is the earlier limit interest-rate of the five-year state guarantee for the banks governed by the Act on State €25,000. Finnish Government bond plus 6 participating in the arrangement. Lending and State Guarantees percentage points. This guarantee covers claims for (449/1988). The guarantees will deposits to a maximum of be granted without financial Banks that take out a €115 million. collateral. subordinated loan commit themselves to paying interest The operations of Kaupthing The conditions for guarantees before distributing dividends. Bank hf., Finnish Branch, will include restrictions on banks' terminated with effect from top management pay systems. In addition, the conditions on January 30, 2009. The Branch subordinated loans include has repaid the above-mentioned restrictions applying to banks' loan. top management pay systems. Finland will contribute to a rescue package for Iceland together with Sweden, Denmark and Norway in aggregate $2.5 billion. The amount of the Finnish contribution is

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES approximately $ 450 million.

In Finland, Glitnir Bank Ltd is no longer part of the Icelandic Glitnir Bank h.f. group. The ownership of Glitnir plc transferred to the management of Glitnir Bank Ltd on October 14, 2008. Thereafter the bank decided on changing its name to FIM Bank Ltd and is now acting under a Finnish license.

The IMF Executive Board has approved a financial package for Latvia on December 23, 2008. The Nordic countries are prepared to lend €1.8 billion for Latvia, contingent on the successful implementation of the reform package. The amount of the Finnish contribution is approximately € 324 million.

On March 9, 2009, the Resolution Committee of the Icelandic Financial Supervisory Authority (FME) took control of the Icelandic securities company, Straumur-Burdaras Investment Bank hf, which owns the Finnish eQ Bank. According to the Finnish Financial Supervisory Authority, FME’s decision will not have an impact on the Finnish operations of eQ Bank or its subsidiaries nor their customers. On October 6, 2008, Finland’s Financial Supervision Authority issued a prohibition on any asset transfers out Finland by eQ Bank. This prohibition

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES remains in effect.

Various Financial Supporting Measures:

On November 18, 2008, the Government proposed a corporate finance supporting package, including various measures to improve financing options especially for small- and medium-sized enterprises (“SME”). The proposal will increase financial resources for export companies by introducing a new refinancing model, where Finnish Export Credit Ltd in cooperation with domestic or international banks would grant long-term credit to Finnish exporters. The arrangement will be temporary, valid until the end of 2010 and worth €1.2 billion. In addition, the maximum liability for export securities granted by the State will be raised from €7.9 billion to €10 billion and the maximum amount of interest equalization agreements and offers will be increased from €5 to €6 billion. The tasks of the State’s specialized financing company, Finnvera plc, will be increased by granting it a right to gather assets for export finance where the maximum amount of unpaid debts contracted by Finnvera would be increased from €1.2 billion to €3.1 billion. Finnvera’s powers to grant new loans and guarantees will be increased to 600 million as the amount of unpaid debts will be €3.2 billion. The amendments to

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES the acts regarding these safeguarding measures were passed on December 30, 2008.

In addition, the Government will boost the authority of the Finnish Funding Agency for Technology Innovation for the environmental and energy sectors by €15 million to help implement demonstration projects. To promote the commercial paper market, the Ministry of Finance has decided to grant the State Pension Fund the right to a limited use of the assets in its possession to acquire commercial papers of significant and financially solid Finnish companies.

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FRANCE SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES On October 16, 2008, a new law Article L. 312-4 of the French The Ministry of Finance will use Commercial Paper & CDs: As was enacted aiming at “restoring Financial and Monetary Code an ad hoc investment vehicle, of October 15, 2008, trading in confidence in the financial and regulation n° 99-05 of the the Société de prises de short-term commercial paper banking system and ensuring Banking Commission participations de l’Etat (the and certificates of deposit adequate financing of the (Commission Bancaire) provides “SPPE”) for recapitalization maturing in one year or less has French economy”. that deposits are guaranteed by purposes. been authorized on Euronext a “deposit guarantee fund” up to Paris. Banks whose commercial Under this new law, a new €70,000 per depositary, per The French State will guarantee paper is listed on a regulated government-backed entity financial institution. securities issued by the SPPE. market are thus eligible for (initially Société de The SPPE will then subscribe to short-term refinancing Refinancement des Activités des If necessary, the French securities issued by financial operations. Etablissements de Crédit and Government is willing to extend institutions to strengthen their renamed Société de the existing deposit guarantee capital ratios. Fair valuation financial Financement de l’Economie fund. instruments: On October 15, Française or “SFEF” on According to the French Ministry 2008, the National Accounting November 6, 2008) has been of Finance, €40 billion out of the Board (Conseil National de la created. The French State owns €360 billion made available as Comptabilité), the French 34% of its share capital, and the guarantees under the new law Financial Market Authority remaining 66% is owned by should benefit the SPPE. (Autorité des Marchés financial institutions. Financiers), the Banking On October 20, 2008, the Commission (Commission The SFEF will issue debt French Government announced Bancaire) and the Insurance and securities guaranteed by the that France’s six largest banks Mutual Funds Supervisory French State and then lend (BNP Paribas, Société Authority (Autorité de Contrôle funds to financial institutions. Générale, Crédit Agricole, Crédit des Assurances et des Any financial institution Mutuel, Caisses d’Epargne, and Mutuelles) issued a joint operating in France may borrow Banques Populaires) would get recommendation on the fair funds through the SFEF, a total of €10.5 billion from the valuation of certain financial provided it furnishes sufficient SPPE in exchange for issuing instruments due to financial and adequate collateral and deeply subordinated debt market turbulence. signs an agreement with the securities without voting rights. French State (regarding inter On December 8, 2008, the alia commitment to use the European Commission gave the Credit Mediation: In order to funds made available to finance green light for the French benefit from SFEF loans, the individuals, companies and local capitalization measures. On or participating banks have public entities and regarding around December 11, 2008, the committed themselves to good corporate governance subscription of the respecting an annual growth practices). abovementioned debt securities objective of their outstanding was launched. loans situated between 3 and This system does not provide a 4%, depending on the bank guarantee of inter-bank debts On January 29, 2009, the networks, until the end of per se but allows the SFEF to European Commission gave the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES inject liquidity into the inter-bank green light for a second tranche December 2009. debt market and financial of French capitalization institutions to refinance measures. This second tranche The French State will ensure themselves. will amount to €11 billion worth these undertakings are kept and of preference shares or hybrid will make public, on a monthly Moreover, on an exceptional securities. basis, the amount of outstanding basis and in particular in loans of the participating banks. emergency cases, the French Beyond the global follow-up of State may directly guarantee the commitment undertaken by securities issued by financial the banks, the French state shall institutions, provided that the oversee that the measures that French State is assured are adopted are then properly sufficient collateral. implemented in the field, in particular at the level of the The State guarantee will be corporations. made available at commercial rates for debt securities issued The French President has by the SFEF or, in emergency appointed a “credit mediator” cases, by financial institutions in with the minister of economy, distress, before December 31, industry and employment. 2009, and with maturities of up to five years. A corporation that is facing a financing or cash problem and All the guarantees made that cannot find a solution may available by the new law refer the matter to the mediator. (including the recapitalization The mediator has already measures and the Dexia Group received 1,200 corporation guarantee program) shall not requests, 600 of which are exceed €360 billion. According already under investigation with to the French Ministry of a possibility of mediation. Finance, €320 billion will benefit the SFEF and Dexia. Regional commissions for the financing of the economy On October 23, 2008 and on (commissions départementales October 30, 2008, the French de financement de l’économie) Government guaranteed the have been set up by the prefects debt securities issued or those (préfets) and ensure the follow- to be issued by the SFEF for a up of the financing of the maximum amount of €5 billion economy in the field, with the and €25 billion, respectively. local economic organizations.

On January 14, 2009, the Strategic Investment Fund French Government granted its guarantee in relation with US On November 20, 2008, the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES dollar-denominated debt French State created the securities to be issued by the Strategic Investment Fund or SFEF before April 30, 2009, in SIF (Fonds Stratégique an amount of US$ 10 billion. d’Investissement) which is a French public limited company On February 6, 2009, the (société anonyme) endowed French State issued a first with €20 billion. This figure demand guarantee to the SFEF includes existing stakes of the for the issuance of up to € 30 French State in French billion and US$ 20 billion worth companies. Currently, the SIF of debt securities. has approximately €1 billion to invest and this will eventually According to the AGEFI (April 2, rise to €6 billion (Source 2009), since its incorporation the L'Expansion, April 2, 2009). SFEF has raised € 33 billion and US$ 15.5 billion worth of debt securities, and carried out a The SIF invests in equities to private placement for € 2 billion. promote the development of selected companies, both small and medium-sized. It also participates in the stabilization of the share capital of some large French companies.

The SIF has invested in mid- sized companies (investment of €4.2 million, €20 million in Led to Lite (lights and light bulbs) and Farinia (subcontractor in the automotive industry), respectively) and large companies (investment of €19 million and € 80 million in Daher (subcontractor in the defense and nuclear sectors) and Valéo (subcontractor in the automotive industry), respectively). The SIF is considering investing in Technip (oil), Thomson (industry and defense) and Heuliez (car- body making).

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Corporate governance (Decree no. 2009-348 of March 30, 2009)

Companies that have received government bailout funds, including car-makers or banks that have issued shares, preference shares or subordinated securities subscribed for by the SPPE must enter into agreements (or amend existing agreements) to ban the allocation of stock options and shares to their chairmen and directors. Stock options and shares issued prior to the implementation of this decree are not caught. Any variable compensation must be approved by the Board for a maximum period of one year and is subject to pre-determined quantitative and qualitative performance criteria which are not linked to the share price. In addition, such companies shall not distribute variable compensation where have reduced their workforce by a considerable amount. This decree also forces the Board to publicly disclose its decisions on bonus payments.

State-controlled companies must apply “high ethical standards” to their governance, particularly with regard to compensation. Severance packages for executives of state-controlled companies are only permitted where the executives are forced to leave

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES the company and are limited to two years of salary. They are forbidden where the company is going through “serious economic difficulties” or if the departing executives have not met pre- established performance criteria. The SIF must take these principles into account when investing in listed companies.

This decree applies until December 31, 2010.

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GERMANY SPECIAL CENTRAL BANK RECAPITALIZATION ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES General: On October 5, 2008, the See “Other Measures”. Under the Stabilization Act, Aareal Bank: SoFFin may purchase selected German Government an amount of up to €70 billion assets from financial sector On October 18, 2008, the German announced that it will ensure the (which can be increased by SoFFin will strengthen the capital companies. Access to such Financial Market Stabilization Act repayment of bank deposits with another €10 billion) is basis of Aareal Bank AG with a silent measures is subject to certain (Finanzmarktstabilisierungsgesetz) German banks. Such available to recapitalize banks participation (Tier I instrument) in conditions to be fulfilled by the (the “Stabilization Act”) came into guarantee is understood to be a where necessary in the form Aareal Bank of €525 million. The financial sector company. So force. The Stabilization Act “political guarantee” in addition of equity, UT2 instruments or instrument has a coupon of 9% p.a. In far we understand that due to authorized a €500 billion financial to the statutory and industry silent participations (similar to addition, SoFFin will guarantee debt valuation issues and certain rescue package and created a deposit insurance schemes. preferred shares). In return instruments in a volume of up to €4 unclear legal aspects such public Financial Market There will be no additional for recapitalization, the billion. possibility has not been used in Stabilization Fund (Finanzmarkt- legislation to support such SoFFin will take an equity or practice. stabilisierungsfonds) (“SoFFin”)2, “political guarantee”. quasi-equity stake in the BayernLB: which is administrated by the relevant bank, and further There are ongoing discussions Financial Market Stabilization Proposed New Legislation: conditions may be imposed. On November 28, 2008, BayernLB about various “bad bank“ Agency (Finanzmarktstabilisie- announced its application for solutions to purchase toxic rungsanstalt; the “Agency”). On February 18, 2009, the The Stabilization Act also guarantees up to €15 billion from assets and to help banks and Federal Government agreed on revises various aspects of the SoFFin. Additionally, the owners of other financial sector In early April 2009, the draft legislation regarding corporate and takeover law to BayernLB (the Free State of Bavaria companies to clean up their Stabilization Act was amended by amendments to the German facilitate and accelerate the and the Association of Bavarian balance sheets from toxic the Supplementary Financial Deposit Protection and Investor recapitalization of financial Saving Banks) sought recapitalization assets. Markets Stabilization Act Compensation Act sector companies. measures in an aggregate amount of Nationalization of Financial (Finanzmarktstabilisierungs- (Einlagensicherungs- und €10 billion, which will be borne by the Sector Companies: ergänzungsgesetz).1 Anlegerentschädigungsgesetz). Access to the recapitalization owners (€7 billion) and the SoFFin measures is subject to certain (€3 billion). In addition, an ABS In April 2009, The Rescue Stabilization Measures: With the new legislation, among conditions to be fulfilled by investment portfolio will be covered Takeover Act others, the proposed the financial sector company with €6 billion, of which €4.8 billion will (Rettungsübernahmegesetz) Via SoFFin, three main types of amendments to the EU Directive applying for the be guaranteed by the Free State of was adopted as part of the measures may be granted on an on Deposit-guarantee Schemes recapitalization measures, Bavaria. On December 8, 2008, the Supplementary Financial application by a German financial (94/19/EC) shall be transposed including sound business European Commission approved the Markets Stabilization Act. sector company (including banks into German law. Under the new policies, undertakings with recapitalization measures. On January Under the Rescue Takeover and insurers): legislation, the existing statutory respect to the supply of loans 15, 2008, Bayern LB issued a Act the Federal Government minimum cover for deposits of to small- and medium-sized government-guaranteed bond with a has the right to expropriate ▪ recapitalization of companies in €20,000 shall successively be enterprises, adequate volume of €5 billion. The bond has a shareholders of financial sector the financial sector; increased. From June 30, 2009, compensation caps for the maturity of 3 years and a coupon of companies and owners of deposits shall be covered up to members of the management 2.75% p.a. regulatory capital instruments ▪ guarantees of debt instruments an amount of €50,000, and from board (an individual in such companies. Among and liabilities, each with a maturity December 31, 2010 up to an compensation of more than Commerzbank: others, the Government may of up to 36 months (in exceptional amount of €100,000. The €500,000 is deemed to be nationalize shares and own cases up to 60 months), to provide existing deductible of the inadequate), and restrictions funds instruments (Bestandteile companies in the financial sector depositor of 10% shall be on the payment of dividends. On November 3, 2008, Commerzbank der Eigenmittel) in financial access to liquidity and facilitate the repealed. announced that it had entered into an sector companies and its refinancing in the capital markets; The German recapitalization agreement with SoFFin according to subsidiaries, and receivables or

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SPECIAL CENTRAL BANK RECAPITALIZATION ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES and scheme was approved by the which SoFFin will provide financial instruments owned by European Commission on Commerzbank with capital in the form financial sector companies and ▪ the purchase by the SoFFin of October 27, 2008, as of silent participation instruments (Tier its subsidiaries. An selected assets.3 modified by a communication 1 eligible) of €8.2 billion (increasing expropriation shall only be from the Commission on Commerzbank’s core capital ratio (Tier permissible as ultima ratio December 5, 2008. With 1) to 11.2%) and guarantees for the measure to preserve the respect to the consideration, issuance of debt instruments of up to stability of financial markets Guarantees: the European Commission €15 billion. On December 13, 2008, and against payment of an established an indicative the European Commission confirmed adequate compensation as The SoFFin may guarantee debt corridor for interest rates of that the terms of the Commerzbank further defined in the Rescue instruments and liabilities, each 7% on preferred shares with recapitalization are in line with the Takeover Act. The right to with a maturity of up to 36 months, features similar to those of Commission’s requirements for an initiate expropriation measures issued by financial sector subordinated debt and an adequate compensation. shall expire on June 30, 2009. companies after October 17, 2008 average rate of return of 9.3% and before December 31, 2009. In on ordinary shares for the Economic Stimulus Package exceptional cases the maturity of recapitalization of Commerzbank has agreed to pay to II: the guaranteed liabilities may be fundamentally sound banks. SoFFin a coupon of 9% p.a. on the On February 20, 2009, a up to 60 months, provided that the silent participation, plus a step-up in number of various economic amount of guaranteed liabilities In April 2009, the years in which Commerzbank pays a stimulus measures known as with a maturity of more than 36 Supplementary Financial dividend. The silent participation is Economic Stimulus Package II months is limited to one third of all Markets Stabilization Act expected to qualify as Tier 1 capital. (Konjunkturpaket II) have been liabilities guaranteed by SoFFin. amended, among others, the For the guarantee Commerzbank has adopted by the German Stabilization Act, and further to pay a commitment fee of 0.1% p.a. Parliament. Part of such Guarantees shall expire no later modified German corporate on the undrawn facilities. A fee of package is a loan and than December 31, 2012. An and takeover law to facilitate 0.5% p.a. will be charged on guarantee program in an aggregate amount of €400 billion recapitalization measures. guaranteed interest-bearing debt aggregate volume of €100 is available for such guarantees. securities issued with a maturity of up billion mainly targeted to to 12 months. Maturities over one year companies outside of the Guarantees shall generally be will be subject to a fee of financial sector. The program issued in the form of guarantees approximately 0.95% p.a. supplements a prior program on first demand (Garantie auf known as Economic Stimulus erstes Anfordern) and shall Package I consisting of 15 generally only be granted if the On January 8, 2009, Commerzbank announced that SoFFin intends to different elements and a concerned financial sector volume of €32 billion. company is equipped with provide additional equity totaling €10 adequate funds (angemessene billion. By means of a capital increase, Eigenmittelausstattung). According Commerzbank will issue approx. 295 to SoFFin, a core capital ratio of million ordinary shares to SoFFin at a 8% is considered adequate. price of €6 per share . After closing of the transaction, SoFFin will hold 25% SoFFin shall receive adequate plus one share in Commerzbank. In consideration for the granting of addition, SoFFin will provide additional guarantees, which will generally capital to Commerzbank in the form of consist of a certain percentage of a second silent participation of €8.2

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SPECIAL CENTRAL BANK RECAPITALIZATION ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES the maximum guarantee amount billion. The terms of the silent reflecting the default risk plus a participation will be similar to those margin.4 offered in December 2008.

The scheme does not provide German banks with a blanket On January 9, 2008, Commerzbank guarantee, but rather permits placed the first government- SoFFin to issue guarantees on a guaranteed bond in Germany. The case-by-case basis. benchmark bond has a volume of €5 billion. The bond has a maturity of 3 As of March 2009, the total volume years and a coupon of 2.75% p.a. of guarantees committed by SoFFin for debt instruments of HSH Nordbank: individual banks amounted to approximately € 180 billion. On November 21, 2008, HSH Nordbank and SoFFin entered into an

agreement according to which SoFFin will provide HSH Nordbank with liquidity guarantees of up to €30 billion. On January 12, 2009, the bank placed a government-guaranteed bond with a volume of €3 billion. The bond has a maturity of 3 years and a coupon of 2.75% p.a.

According to press articles, the SoFFin rejected to provide HSH Nordbank with additional assistance measures. According to such press articles, HSH Nordbank has not fulfilled SoFFin's requirement for assistance measures including a core capital ratio of 7% and did not provide a satisfactory business plan for its future strategy.

The City of Hamburg and the Government of Schleswig-Holstein agreed to provide HSH Nordbank with €3 billion of fresh capital and guarantees amounting to up to €10 billion.

According to press articles in March

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SPECIAL CENTRAL BANK RECAPITALIZATION ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES 2009, HSH Nordbank has filed a new application with SoFFin for the issuance of guarantees in the amount of €10 billion.

Hypo Real Estate:

For information on the special emergency liquidity support package, see “Other Measures”.

On October 29, 2008, Hypo Real Estate announced that it plans to submit an application to SoFFin for additional comprehensive support, including potential recapitalization measures. Such announcement was repeated on December 9, 2008.

On November 21, 2008, SoFFin granted to Hypo Real Estate Group a framework guarantee in an amount of €20 billion to cover the issuance of debt securities maturing by January 15, 2009. On December 9, 2008, this guarantee framework was increased by €10 billion to an aggregate amount of up to €30 billion. On January 12, 2009, SoFFin extended its framework guarantee in the total amount of €30 billion until April 15, 2008. The pro- rata commitment fee remains unchanged, and the fee for guarantees drawn will be 0.5% p.a. On January 20, 2009, SoFFin extended its framework guarantee to Hypo Real Estate by an additional €12 billion to the aggregate guarantee amount of €42 billion. Hypo Real Estate can use the additional guarantees to cover the issuance of debt securities maturing by June 12, 2009. The Group will pay to SoFFin a pro-rata commitment fee of 0.1% of the undrawn portion of the

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SPECIAL CENTRAL BANK RECAPITALIZATION ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES framework guarantee. The fee for guarantees drawn will be 0.5% p.a.

On February 11, 2009, SoFFin extended its framework guarantee to Hypo Real Estate Group by an additional amount of €10 billion until June 12, 2008.

On March 17, 2009, the German Government extended its guarantee for notes issued by Hypo Real Estate Group until December 31, 2009.

On March 28, 2009, SoFFin announced its participation in a capital increase of Hypo Real Estate Holding AG under authorized capital. SoFFin will subscribe for 20 million new shares in an aggregate amount of €60 million (corresponding to 8.7% of the issued capital of Hypo Real Estate Holding AG).

In addition, SoFFin issued a declaration of intent to Hypo Real Estate Holding AG and Hypo Real Estate Bank AG, according to which SoFFin will implement measures to achieve a sufficient recapitalization of Hypo Real Estate Holding AG and will extend further guarantees.

IKB Deutsche Industriebank AG:

On December 22, 2008, SoFFin authorized guarantees to IKB in an amount of up to €5 billion to guarantee the repayment of bonds to be issued by IKB. On January 19, 2009, the bank placed a government-guaranteed bond with a volume of €2 billion. The bond has a maturity of 3 years and a

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SPECIAL CENTRAL BANK RECAPITALIZATION ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES coupon of 2.875% p.a.

LBBW:

LBBW is looking into a guarantee framework of between €15 20 billion to be provided by SoFFin or the owners as a funding reserve. In addition, the owners of LBBW are expected to participate in an envisaged capital increase of €5 billion.

Nord/LB:

On February 10, Nord/LB issued a bond in a volume of €2 billion and a term of five years, which is guaranteed by the federal state of Lower Saxony. The bond has a spread of 70 basis points above midswaps and is subject to a nominal interest rate of 3.50%.

Sicherungseinrichtungsgesellschaft deutscher Banken:

SoFFin guaranteed a bond in the volume of €6.7 billion issued by the Sicherungseinrichtungs-gesellschaft deutscher Banken mbH (protection company of German banks, “SdB“). The SdB was set-up by German private banks to provide the German deposit insurance and investors protection schemes with a loan to compensate customers of the German banking subsidiary of insolvent Lehman Brothers.

VW-Bank, GMAC-Bank:

According to press articles, VW Bank GmbH, the banking subsidiary of German car maker Volkswagen AG, will receive guarantees by SoFFin of

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SPECIAL CENTRAL BANK RECAPITALIZATION ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES up to €2 billion. VW Bank GmbH is the first banking subsidiary of car producers in Germany to receive SoFFin support.

According to press articles GMAC Bank, the banking subsidiary of General Motors, applied to SoFFin for the issuance of guarantees for bank debt. According to press articles, further banking subsidiaries of German car makers are investigating similar applications to SoFFin.

WestLB:

WestLB has applied for guarantees in an aggregate amount of between €10 billion and €20 billion to cover the issuance of debt instruments.

Other Institutions:

According to SoFFin, approximately 20 banks and one smaller insurer have applied to SoFFin for assistance measures. Several financial institutions have confirmed that they are investigating whether to apply for assistance measures from SoFFin.

1 On October 17, 2008, the Stabilization Act was published in the Federal Law Gazette (Bundesgesetzblatt) (BGBl. I, p. 1981). The main purpose of the Stabilization Act is to restore and sustain confidence and liquidity in the German financial market. The details and terms of conditions of such stabilization measures are set out in the Regulation regarding the Implementation of the Financial Markets Stabilization Fund Act (Finanzmarktstabilisierungsfonds-Verordnung; “Stabilization Fund Regulation”), which was released by the Federal Government under the Stabilization Act on October 20, 2008, and which came into force as of the same date. On March 20, 2009 the German Parliament (Bundestag) and on April 3, 2009 the Chamber of Federal States (Bundesrat) approved the Supplementary Financial Markets Stabilization Act (Finanzmarktstabilisierungsergänzungsgesetz). It amends, among others, the Stabilization Act and makes several adjustments, clarifications and simplifications to the current framework for assistance measures. The bill is expected to come into effect within the second week of April 2009, after its execution by the German Federal President and its publication in the Federal Law Gazette. This publication reflects already the law as applicable under the Supplementary Financial Markets Stabilization Act. 2 The SoFFin is set up as a special fund (Sondervermögen) of the German Federal State without its own legal personality (nicht rechtsfähig). The German Federal State is directly liable for the liabilities of the SoFFin. The Ministry of Finance will be given a broad spectrum of powers to determine the eligibility of institutions (who should be deemed to be integral to the financial system) to participate in the scheme. 3 In addition, there are ongoing discussions as to whether the German Government should set up a "Bad Bank" in order to purchase toxic assets from banks and other financial institutions.

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4 The German authorities have given a commitment to the European Commission that they will require a provision premium of 0.5%, plus, in all cases of debt instruments and other liabilities with a term of more than one year, a risk premium corresponding to the individual financial institution’s credit default swap spread, being not less than the median of the financial institution’s five-year credit default swap spread between January 1, 2007 and August 31, 2008 and which is not less than the amount specified in the recommendations of the European Central Bank of October 20, 2008, i.e. 0.5% plus the credit default swap spread.

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GREECE3 SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Issuance Guarantee: Law 3714/7.11.2008 “For the Securities Lending Facility: Preference Shares: Small and very Small protection of borrowers”, Business: The Enhancement Liquidity Law provides that the Greek The Enhancement Liquidity Law The Enhancement Liquidity Law (No 3723/2008) provides that, in Government will increase the provides that Greek State Bonds provides that the Greek Greek banks participate in the return for appropriate fees and protection given to savings from of up to €8 billion and three Government will underwrite up program proposed by the Credit collateral (as specified by the €20,000 to €100,000. years of maturity may be issued to €5 billion of preference Guarantee Fund for Small and central Bank of Greece and the until December 31, 2009 and shares, the specific terms of Very Small Enterprises (the 1 2 Ministry of Finance) , the Greek The extended guarantee is set lent to banks in return for which are determined by a “Fund”) for enhancing the Government will guarantee up to to expire on December 12, appropriate fees and collateral decision of the Ministry of liquidity of small enterprises, by a maximum of €15 billion for 2011. (to be specified by the central Finance.1 the issuance of loans for loans that are concluded until Bank of Greece and the Ministry working capital, 80% of which is December 31, 2009 (with a of Finance).1 Eligible banks are banks guaranteed by the Fund, with an maturity of three months to three licensed by the Bank of Greece, interest rate of Euribor+2,1, years). The banks must meet The banks must meet the capital including cooperative banks, subsidized by the Fund as well, the capital adequacy ratios set adequacy ratios set by the Bank regardless of whether they are under the following terms: by the Bank of Greece in order of Greece in order to benefit listed or not. (a) the loan should not exceed to benefit from this program. from this program. €350,000 and should have a The general assemblies of the three-year duration; The Greek Government will Pursuant to a relevant participating banks must resolve have the right to participate in agreement to be concluded (irrevocably) the share capital the board of directors of each of (b) the loans cannot exceed between the Greek State and increase by February 1, 2009, 30% of the average turnover of participating banks, through a each bank, the Bonds must be by the issuance of preference representative who may be the company for the last three returned to the Greek shares. The price of issuance of years; appointed as an additional Government upon their the shares (of each bank), must member to the Board. This expiration and cancelled. be the nominal value of the (c) the eligible companies must member shall have veto rights common shares of the last as regards decisions (either of have profits before amortizations The banks that participate in this issuance of each bank. The for the last three years; and the Board or the General scheme must use the funds from Greek Government will Assembly) for the distribution of the disposal of the Bonds to subscribe for the new shares by (d) the banks will not require any profits, the wages or the provide competitive housing and December 31, 2009. guarantees for the remaining granting of any kind of benefits SME loans. unsecured 20% of the capital. to members of the board, the The preference shares must be managing director or senior redeemed by the banks, at the The above program is also executives and their deputies, issuance price, within no later applicable to already issued either upon instruction of the than five years (but no sooner loans under the condition that Minister of Finance or in case he than July 1, 2009) following the the banks waive off all other considers that such decision approval of the Bank of Greece. securities given by the endangers the rights of companies. depositors or materially affects the solvency and the operation In case the banks cannot of the bank. redeem the preference shares, due to their inability to meet the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES In any case the aforementioned capital adequacy ratios set by benefits must not exceed the the Bank of Greece, the shares total of the wages of the may be converted to common or Governor of the Bank of Greece. other category of shares, by Additional benefits, such as virtue of a decision of the bonuses, are cancelled Ministry of Finance following the throughout the duration of the opinion of the Governor of the program and, for the same Bank of Greece. period, the distribution of dividends must not exceed 35% The preference shares are of the net profits of the bank, vested with a voting right to the which is the minimum set by general assembly of the holders law. of preferred shares cannot be transferred further by the Greek The above guarantees may also State to any third party and be used to finance enterprises cannot be listed in organized vital to the development of the markets. country. The preference shares carry a 10% fixed rate of interest on the subscription capital and have all characteristics as to be included in the equity of each bank.

The Greek Government, as a holder of preferred shares, will have the right to participate in the board of directors of each of the participating banks through a representative who may be appointed as an additional member to the Board. This member shall have veto rights as regards decisions (either of the Board or the General Assembly) for the distribution of profits, wages or the granting of any kind of benefits to members of the board, the managing director or senior executives and their deputies, either upon instruction of the Minister of Finance or in case he considers

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES that such decision endangers the rights of depositors or materially affects the solvency and the operation of the bank In any case, the aforementioned benefits must not exceed the total of the wages of the Governor of the Bank of Greece. Additional benefits such as bonuses are cancelled throughout the duration of the program, whereas for the same period, the distribution of dividends must not exceed 35% of the net profits of the bank, which is the minimum set by law.

Further, upon liquidation of a bank, the Greek State, as a holder of preference shares, has priority over the liquidation proceeds against all other shareholders.

1 The Ministry of Finance, taking into consideration (a) the provisions of the Enhancement Liquidity law, (b) the relevant reports of the Governor of the Bank of Greece, and (c) the European Commission’s communication paper No 2008/C 270/02 “The application of State aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis”, has issued the Ministerial Decision No 54201/B 2884 with the following provisions: A. Preference Shares: The €5 billion state aid by way of participation in capital increase and the subscription of preference shares shall be allocated to the eligible credit institutions after taking into consideration the following criteria: (i) the capital adequacy requirements for each credit institution (namely, Tier 1 must be between 8% and 10%) (such criterion weights 0,5 of the overall criteria); (ii) the market share of each credit institution and its role to the financial stability (such criterion weights 0,4 of the overall criteria); and (iii) the attribution of each credit institution to the housing and SME loans (such criterion weights 0,1 of the overall criteria). The value for the subscription of preferred shares shall be the nominal value of the common shares of the credit institution as at the most recent issuance of shares of such credit institution and shall be covered by Greek State Bonds and shall bear Euribor interest rate. Such shares may be repurchased at their initial issuance value either by exchange with Greek State Bonds or their cash equivalent. Where the State’s subscription is covered by Greek State Bonds a bilateral agreement will be executed between the credit institution and the Greek State. B. Issuance Guarantee: The guarantee of up to a maximum of €15 billion for bank credit will be given to credit institutions that will submit their petition until December 31, 2008 and each petition shall be restricted to the proportion of the guarantee to which each credit institution is entitled. The aforementioned guarantee does not cover interbank deposits. Such guarantee will be granted either with or without collateral as determined in the Ministerial Decision. Such collateral is blocked throughout the guarantee and is monitored for each credit institution separately by the Bank of Greece. The annual fees for the guarantee, pursuant to the standards set by the European Central Bank shall be of 50 base units (if no collateral is given) or 25 base units (if collateral is given). The €15 billion guarantee shall be allocated to the eligible credit institutions after taking into consideration the following criteria:

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(i) the liquidity status of the credit institution and in particular the risk that its capital adequacy may be compromised; (such criterion weights 0,5 of the overall criteria); (ii) the market share of each credit institution and its role to the financial stability (such criterion weights 0,3 of the overall criteria); (iii) the size and duration of the credit institution’s liabilities on December 31, 2009 (such criterion weights 0,1 of the overall criteria); and (iv) the attribution of each credit institution to the housing and SME loans (such criterion weights 0,1 of the overall criteria). C. Securities Lending Facility: the Bonds are of no interest rate, are listed in the Athens Exchange and are issued in lots of €1,000,000 each. They are issued at their nominal value and transferred in return for collateral to the credit institutions by virtue of a bilateral agreement executed between the credit institution and the Greek State. The credit institutions must pay the same fees as for the Issuance Guarantee Scheme. Apart from the provisions of the Enhancement Liquidity Law, the credit institutions must use the funds as collateral to refinancing or fixed facilities from the European Central Bank and/or as collateral for interbank financing for liquidity reasons. The Bonds shall be allocated between the financial institutions under the following criteria: (i) the liquidity status of the credit institution and in particular the risk that its capital adequacy may be compromised; (such criterion weights 0,5 of the overall criteria); (ii) the activity of the credit institution in money markets and its ability to reallocate stability (such criterion weights 0,3 of the overall criteria); (iii) the size and duration of the credit institution’s liabilities until December 31, 2009 (such criterion weights 0,1 of the overall criteria); and (iv) the attribution of each credit institution to the housing and SME loans (such criterion weights 0,1 of the overall criteria). The credit institutions that will participate in either of the above schemes shall report quarterly to the Bank of Greece on the use of the funds. In its turn, the Bank of Greece reports accordingly the Supervisory Board that is constituted with the same Enhancement Liquidity Law for the purpose of monitoring the overall use of the State aid by the credit institutions. The Issuance Guarantee funds and the Securities Lending Facility funds may be re-allocated pursuant to a relevant decision of the Ministry of Finance and following the recommendations of the Governor of the Bank of Greece, depending on the level of the needs and the absorbency of each program, but shall not in any case exceed the maximum of € 23 billion. D. Collateral provided by the participating Banks in the Issuance Guarantee Scheme and the Securities Lending Facility to the Bank of Greece: (i) all collateral accepted by the Central European Bank (as described in the Currency Policy Council Act 54/2004), as in force; (ii) foreign currency Greek State Bonds; (iii) up-to-date loans to companies, not operating in the financing sector, already assessed by the Bank of Greece eligible External Credit Assessment Institutions; (iv) up-to-date loans to companies guaranteed by the Greek State or by a legal entity that it is of acceptable credit standing pursuant to the provisions under (iii) above; (v) up-to-date loans to maritime companies that satisfy the criteria set in an Act of the Governor of the Bank of Greece (No. 2589/20.8.2007); and (vi) up-to-date housing loans to individuals granted with securities (A class mortgage or prenotation of mortgage) or B class mortgage or prenotation of mortgage provided that the A class prenotation is in favor of the same credit institution. 2 Credit Guarantee Fund for Small and Very Small Enterprises (TEMPME) is a société anonyme, licensed by the Bank of Greece as a financial institution and aims to support small and very small enterprises by providing guarantees and counter-guarantees and undertaking part of their financial and commercial risk. 3 According to recent press articles, the Greek State may implement a further State Aid package of around €15-20 billion to support the liquidity of Greek credit institutions’ subsidiaries operating in abroad and particularly in Southeast Europe. 4 The Ministry of Finance promotes measures for the protection of the enhancement liquidity scheme by virtue of an amendment to the Enhancement Liquidity Law to be submitted to the Greek Parliament. According to statements made to the press by the Minister of Finance, the credit institutions participating in the scheme will not be allowed to distribute dividends in cash for the financial year 2008. They will be able, if they so wish, to pay dividends in shares. Furthermore, they will not be allowed to acquire their own shares. 5 According to recent press releases the Ministry of Finance intends to re-examine the implementation criterion under (c) regarding the program for Small and Very Small Enterprises, due to the unwillingness of the credit institutions to grant loans to SMEs under the guarantee of the Fund.

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HONG KONG1 SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES On October 14, 2008, following Hong Kong joined the growing On October 14, 2008, the On September 30, 2008, the a run on the Bank of East Asia, number of countries easing their financial secretary pledged that HKMA announced five the first bank run in more than a monetary policy, when on HKMA would establish a temporary measures for decade, the Hong Kong October 9, October 30 and Contingent Bank Capital Facility providing liquidity assistance to Monetary Authority (“HKMA”) December 17, 2008, the HKMA for the purpose of making licensed banks in Hong Kong. announced it will use the cut its base rate (“Base Rate”), available additional capital to The measures were effective Exchange Fund2 to guarantee which now stands at 0.5%. locally incorporated licensed from October 2, 2008 until the the repayment of all customer banks, should this become end of March 2009. deposits held with all Authorized The HKMA has also announced necessary. This measure will Institutions3 in Hong Kong the adjustment to the remain in force until the end of The five temporary measures following the principles of the methodology for determination 2010. announced on 30 September existing Deposit Protection of the Base Rate. Prior to the 2008 were as follows: Scheme, but including adjustment, the Base Rate was Restricted-License Banks and set at either 150 basis points (1) the eligible securities, for Deposit-Taking Companies as above the prevailing US Federal access by individual licensed well as Licensed Banks.4 Funds Target Rate (FFTR) or banks to liquidity assistance the average of the five-day through the Discount Window,8 The guarantee applies to both moving averages of the will be expanded to include US Hong Kong-dollar and foreign- overnight and one-month dollar assets of credit quality currency deposits with HIBORs6, whichever was higher. acceptable to the HKMA. Authorized Institutions in Hong After the adjustment, the spread Kong, including those held with of 150 basis points above the (2) the duration of liquidity Hong Kong branches of prevailing FFTR was reduced to assistance provided to individual overseas institutions, until the 50 basis points. In addition, the licensed banks through the end of 2010. It will cover the other leg relating to the moving Discount Window will be amount of deposits in excess of averages of the relevant extended, at the request of that protected under the Deposit interbank interest rates (the individual licensed banks and on Protection Scheme.5 “HIBOR leg”) was removed from a case-by-case basis, from the formula with the effect from overnight money only to October 9, 2008 until the end of maturities of up to three months. March 2009. (3) the 50% threshold for the use of Exchange Fund paper as On March 26, 2009, the HKMA collateral for borrowing through announced that it has decided the Discount Window at the that the smaller spread of 50 Base Rate will be raised to basis points will be retained, and 100%. In other words, the 5% that the HIBOR leg will be premium over the Base Rate for reinstated after the end of March the use of Exchange Fund paper 2009. beyond the 50% threshold, as On December 8, 2008, the Hong collateral for borrowing through Kong Government announced the Discount Window, will be

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES that it would provide up to HK$ waived. 100 billion in loan guarantees for small and medium enterprises (4) the HKMA will, in response (“SMEs”). to requests from individual licensed banks and when it The maximum loan amount for considers necessary, conduct each enterprise will be HK$ foreign exchange swaps 6 million, with HK$ 3 million (between the US dollar and HK being revolving credit. The loan dollar) of various durations with can be used for a wide range of licensed banks. purposes7 and all firms, except listed companies, can apply for (5) the HKMA will, in response such guarantee. The loan to requests from individual guarantee period is up to a licensed banks and when it maximum of five years from the considers necessary, lend term first drawdown date of the loan. money of up to one month to individual licensed banks On March 26, 2009, the HKMA against collateral of credit quality announced that the Lender of acceptable to the HKMA. On Last Resort (LOLR) Policy November 6, 2008, the HKMA Statement has been amended to announced two refinements to expand the types of assets and the fifth of the five measures facilities eligible for obtaining introduced on September 30, Hong Kong dollar liquidity. In 2008. The two refinements are particular, foreign exchange as follows: swaps have been included among the basic instruments to (1) the maximum tenor of the be used by the HKMA to provide collateralized term lending will LOLR support, and the definition be extended from one month to of eligible securities for repos three months. has also been expanded to include securities in foreign (2) while the interest rate for the currencies with acceptable collateralized term lending ratings. continues to be determined with reference to market interest rates, the HKMA will take into account the fact that such lending is secured by collateral in determining the applicable interest rate.

Regarding the continued application of the measures after March 31, 2009 the HKMA

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES announced on March 26, 2009 that it will continue to conduct foreign-exchange swaps and term repos under its market operations to provide liquidity assistance to licensed banks if needed.

On the other hand, arrangements for obtaining liquidity at the Discount Window will return to the position that applied before the introduction of the five temporary measures. That is, using only Exchange Fund paper for overnight repos.

1 Hong Kong, according to the latest press release by HKMA on March 9, 2009, had approximately US$ 177.1 billion in foreign reserves as of the end of February 2009. 2 A fund established in 1935 by the Exchange Fund Ordinance (Cap 66) (originally enacted as the Currency Ordinance) as a reserve to back the issue of Hong Kong’s banknotes. 3 An institution authorized under the Banking Ordinance (Cap 155) to carry on the business of taking deposits. 4 The guarantee covers all protected deposits as defined in the Deposit Protection Scheme Ordinance (Cap 581), were the Ordinance to apply to all authorized institutions. 5 Previously, Hong Kong depositors had stood to receive compensation limited to HK$ 100,000 (US$ 12,800). 6 The rate of interest offered on a Hong Kong dollars loan by banks in the interbank market for a specific period ranging from overnight to one year. 7 The guarantee can be used by SMEs to secure loans for the purpose of acquiring business installations and equipment (e.g., machinery, tools, computer software and hardware, office equipment, transport facilities, furniture, fixtures, etc.) or to meet the working capital needs of general business uses, or a combination of both. 8 The facility through which banks can borrow Hong Kong dollar funds overnight from the HKMA through repurchase agreements using eligible securities as collateral.

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HUNGARY SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Bank Bailout Package: Deposit Guarantee: Interest Rate: Bank Bailout Package: IMF/World Bank/ECB Loan:

On December 15, 2008, the On October 15, 2008, a On October 22, 2008, the On December 15, 2008, the Hungary has obtained financial Hungarian Parliament approved legislative change was enacted Central Bank of Hungary Hungarian Parliament approved support from the IMF, the EU a 600 billion forint (€2 billion) to increase the limit of insured increased its base rate from a 600 billion forint (€2.2 billion) and the World Bank in the bank bailout package, which deposits by the National Deposit 8.5% to 11.5% to defend the bank bailout package, which amount of €20 billion after was promulgated on December Insurance Fund (OBA) from 6 to Hungarian forint against was promulgated on December Hungarian assets were 22, 2008, as Act CIV of 2008 on 13 million forints (€45,000) per speculation. The Central Bank 22, 2008, as Act CIV of 2008 on battered as foreign-currency the strengthening of the stability financial institution, and the 10% subsequently cut its growth and the strengthening of the stability borrowing by local companies of financial intermediaries. The own-risk component was inflation forecasts for 2009 and of financial intermediaries. The and consumers, along with bailout package enables the removed (statutory guarantee). 2010, and on November 24, bailout package enables the slower growth, a wider budget Government (i) to provide debt The funds constituting the OBA 2008, it decreased its base rate Government (i) to provide debt deficit and higher government guarantees to Hungarian banks are collected from the banks. from 11.5% to 11.0%. On guarantees to Hungarian banks debt than elsewhere in east up to the aggregate amount of December 8, 2008, the Central up to the aggregate amount of Europe, raised concern that the HUF 1,500 billion (€5 billion); In addition, on October 15, Bank further decreased its base HUF 1,500 billion (€5.4 billion), country may have difficulties in and (ii) to recapitalize troubled 2008, an unlimited governmental rate from 11.0% to 10.5%, on and (ii) to recapitalize troubled securing funding. banks – with or without their guarantee was declared in December 23, 2008, to 10.0%, banks – with or without their consent – up to a total of HUF respect of bank deposits in and on January 19, 2008, to consent – up to a total of HUF The IMF will provide a 600 billion (€2 billion). The excess of what is insured by the 9.5%. The base rate has 600 billion (€2 billion). The 17-month, SDR 10.5 billion bailout package is financed from OBA (governmental guarantee). remained unchanged since then, bailout package is financed from (€12.3 billion) Stand-By the IMF loan drawn, or to be as the value of the forint has the IMF loan drawn, or to be Arrangement under its drawn, between 2008 and 2010. been volatile. drawn, between 2008 and 2010. exceptional access policy, the EU will provide €6.5 billion to Debt Guarantee Scheme: Central Bank Measures: Recapitalization Scheme: facilitate fiscal consolidation, and the World Bank will provide The debt guarantee scheme is HUF liquidity measures: The Upon the request of an eligible €1 billion. available to banks licensed in Central Bank has introduced the bank, the Government may Hungary which meet prudent following HUF liquidity acquire non-voting dividend Hungary has also secured a capital requirements. It is measures: preference shares or voting €5 billion loan from the ECB. available to guarantee preference shares entitling it to obligations arising from loans or (i) public debt securities veto, among other things, EIB Loan: debt securities which are auctions: the Central Bank matters relating to dividend denominated in euros, Swiss agreed with primary dealers that distribution. In this voluntary In addition, on the basis of a francs, or forints, and only if market makers will provide recapitalization scheme the facility signed on January 26, repayment is to be made by the continuous quotes for certain bank and the Government must 2009, the European Investment bank in the currency in which public debt securities and enter into an agreement setting Bank (EIB) is lending €440 the obligation is denominated. increase their holdings of public out the value of the shares and million to part finance Banks that wish to have debt securities by an agreed the rights and obligations of the Hungary's national contribution recourse to the scheme must amount, and the Central Bank Government in respect of the to the implementation of priority issue preference shares entitling will conduct auctions for the bank’s operation. The bank will projects in the areas of the Government to veto purchase of these securities; have a call option to acquire the research and innovation decisions on dividend shares from the Government, identified under the Hungarian

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES distribution, and must undertake (ii) variable interest rate loan and the Government will have a National Strategic Reference limitations on management tenders: the Central Bank is put option to sell the shares to Framework for the period 2007- compensation. assisting primary dealers and the bank. 2013. banks in financing purchases of public debt securities by In case of a forced EBRD, EIB, World Bank introducing a six-month loan recapitalization, the Government Assistance: tender at variable interest rates; may acquire the right to exercise all shareholders’ rights in On February 27, 2009, the (iii) two-week loan tenders at respect of the general meeting EBRD announced that together fixed interest rates; of the bank, including decisions with the EIB and the World on recapitalization, if (i) the bank Bank they have pledged to (iv) Central Bank deposit rate needs access to the special provide up to €24.5 billion to cut: the Central Bank has liquidity loan of the Central Bank support the banking sectors in decreased the interest rate on of Hungary for more than 20 the region and to fund lending overnight Central Bank loans days in excess of a specific to businesses hit by the crisis. and deposits to + / - 50 basis amount, (ii) if the bank fails to The initiative will include equity points around the relevant satisfy prudent capital and debt financing, credit lines, asset’s interest rate; requirements, (iii) if the and political risk insurance. No Government is forced to make a concrete measures have been (v) the Central Bank has payment to the bank’s creditors implemented so far in respect widened the scope of under the debt guarantee of Hungary under the plan. acceptable collateral for Central scheme, or (iv) if the insolvency Bank financing (municipal bonds of the bank would seriously Fiscal Measures: and certain mortgage securities harm the system of financial have become acceptable intermediaries in Hungary. The Measures have been taken to security), and reduced the Government must declare the ensure a more prudent fiscal minimum rating criteria from A to satisfaction of these policy. The Government has BBB; circumstances in a government submitted to parliament a decree. Existing shareholders revised 2009 budget aiming at (vi) easing of reserve of the bank will have a right to a 2009 deficit of 2.6% of GDP, requirements of banks relating sell their shares to the and on November 17, 2008, to certain types of liabilities from Government within 120 days legislation was passed to limit 5% to 2%. after the entry into effect of the government spending in 2009 government decree, at a price to to 2008 levels, and permitting FX liquidity measures: The be determined on the basis of an increase in spending in Central Bank has introduced the the shareholder’s stake in the 2010 to 50% of GDP growth. following FX liquidity measures: bank and the value of the bank’s equity as per the interim balance To help achieve deficit targets (i) two-way overnight FX swap sheet of the bank to be prepared and stimulate growth, the tenders with the Central Bank as of the date preceding the Government has proposed new playing the role of intermediary entry into effect of the tax legislation which would by matching excess forint and government decree. become effective from the euro funds offered by the banks; middle of 2009. Most notably, FHB: On March 31, 2009, as the package includes an

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES (ii) an overnight FX swap facility part of the voluntary increase of VAT from 20% to for domestic banks, facilitated by recapitalization scheme, the 23% to increase Government an agreement between the Government and Land Credit revenues and a decrease of Central Bank and the ECB; and Mortgage Bank Ltd. (FHB), taxes levied on employee a large mortgage lender, signed compensation by approx. 6% to (iii) EUR/CHF swaps on the an agreement according to stimulate growth and facilitate basis of a cooperation which the Government will job retention. Pension agreement between the Central provide FHB with a capital payments to the elderly would Bank and the Swiss National injection worth 30 billion forints decrease (discontinuation of Bank, signed on January 28, (€100 million) in exchange for 13th month’s pension), and the 2009 (local banks need CHF to non-voting dividend preference terms of eligibility to several finance their large CHF loan shares and a special veto share. social payments would be portfolios); FHB agreed to maintain its revised. mortgage lending portfolio at (iv) six-month EUR/HUF FX previous levels. In addition to Stimulus Measures: swap: a euro liquidity FX swap the capital injection under the tender funded with €5 billion has bailout legislation, on March 25, The Government has been introduced for banks which 2009, the Government and FHB announced a 1,400 billion forint undertake to keep their lending agreed that FHB will be granted (€4.6 billion) two-year to corporates in 2009 at 2008 a 120 billion forint (€410 million) economic stimulus package to year-end levels and which agree credit line to boost lending to promote growth and provide not to withdraw funds from private individuals and SMEs. funding for small- and medium- Hungary; Both measures are financed sized businesses, as well as a from the €20 billion IMF/World HUF 1,800 billion (€6 billion) (v) three-month EUR/HUF FX Bank/ECB loan. investment stimulus package swap: commencing from March aimed primarily at the support 9, 2009, the Central Bank OTP: Besides FHB, according of the construction industry. introduced a euro liquidity FX to a loan agreement signed on swap tender funded with €2.2 March 25, 2009, OTP, HUF 1,400 billion (€4.6 billion, the unused amount Hungary’s largest bank, will also billion) economic stimulus remaining from the €5 billion receive a Government loan package: The HUF 1,400 allocated for the six-month worth 400 billion forints (€1.35 billion stimulus package will not EUR/HUF FX swap. billion). The loan is not part of involve new spending, instead the bailout scheme, although it will regroup existing funds in Verbal intervention: On OTP agreed to appoint a person the budget. The biggest part of February 23, 2009, the Central designated by the Government the package, 680 billion forints Bank, simultaneously with the in its supervisory board. OTP (€2.2 billion), will be spent on Czech, Polish and Romanian agreed to supplement the loan providing lending guarantees central banks, announced that with 200 billion forints (€0.7 primarily to SMEs, while they will undertake whatever billion) of its own funds to another 260 billion forints measures are required to provide financing to SMEs. The (€0.9 billion) will be used to prevent fluctuations in the value loan is financed, similarly to the provide liquidity for lending of their national currencies if FHB loan, from the €20 billion through commercial banks. fluctuations could lead to market The Government also plans to

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES disturbances. All four currencies IMF/World Bank/ECB credit line. provide 300 billion forints (€1 strengthened somewhat after billion) in interest rate subsidies the announcements, but more for corporate lending, and importantly the step indicates another 140 billion forints that the central banks have (€0.5 billion) for direct loans to recognized the need for micro firms and SMEs. coordinated action in the region to protect national currencies Concrete measures that have outside the eurozone. so far been introduced as part of the 1,400 billion forint stimulus package include:

(i) an increase of 450 billion forints in the amount of government guarantees offered by Garantiqa Hitelgarancia Zrt., a company jointly owned by the Government, commercial banks and business associations, to SMEs to facilitate their borrowing;

(ii) 50 billion forints from the funds of the EU and the Hungarian Development Bank will be made available to SMEs through commercial banks to facilitate the access of SMEs to these funds, and 140 billion forints will be made available in a similar fashion for the purpose of the current asset financing of SMEs.

In addition, in the case of EU tenders, the amount of automatic advance payments will be increased up to 40% of the total amount of the support, which will be transferred to applicants within 15 days after the signature of the financing contract. HUF 100 billion (€330 million) is expected to be

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES made available to applicants by March 2009.

HUF 1,800 billion (€6 billion) investment stimulus package: The HUF 1,800 billion investment stimulus package is aimed at providing the construction industry with orders in the coming 18 months. The money is being made available from EU development funds. The package contains 636 investments (schools, medical facilities, railroads, public roads, etc.) planned for completion, which are identified in a database run by the National Development Agency.

Workplace Retention Measures:

The Social and Labour Ministry has introduced several measures to facilitate workplace retention programs at troubled employers. These measures consist primarily of making funds available in the aggregate amount of HUF 107.4 billion (€358 million) to employers which announced mass redundancies or which otherwise are struggling to keep their employees. The funds can be used generally to supplement employee compensation where reduced working hours would bring about pay reductions, to support part-time working arrangements and training, and

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES to support the relocation of terminated employees. The availability of a portion of the funds (HUF 20 billion or €65 million) is still pending Government approval.

Regulatory Measures:

PSZAF circular: On February 25, 2009, PSZAF, the Hungarian financial regulator, issued a circular to banks in which it briefly set out its recommendations for handling the crisis. Among other things, PSZAF advised banks that they should not declare dividends, and that they should refrain from using innovative financial products such as structured securities, structured FX linked swaps, and speculative FX options. In addition, PSZAF warned that applications for exemptions from certain discretionary capital adequacy requirements would be turned down.

Regulatory commissioner: According to legislation promulgated on April 3, 2009, PSZAF will be authorized to appoint a regulatory commissioner to oversee the operation of banks whose capital adequacy ratio does not comply with applicable requirements and whose foreign parent institutions fail to provide the necessary funding to the Hungarian subsidiary.

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Debt Guarantee to Private Borrowers:

According to legislation promulgated on March 10, 2009, the Government will provide debt guarantees for private individual borrowers who are forced to take out a bridging loan from their bank to enable them to satisfy debt servicing requirements under their home loan mortgages. The bridging loans will have a grace period of 24 months. The debt guarantee will be available to any person who had taken a mortgage loan in the past but lost his job after September 10, 2008, for a reason beyond his control, is searching for a new job, lives with his family in the house which was mortgaged, and owns no second home.

New Government:

On March 23, 2009, Ferenc Gyurcsany, the prime minister of Hungary, resigned. Hungary’s ruling party and their former coalition partner have agreed on a candidate to lead a new government: the economy minister, Gordon Bajnai. If approved by Parliament, the new government can be formed in April.

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ICELAND10 SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES The Government of Iceland has On October 10, 2008, the Board Glitnir: On October 14, 2008, On October 24, 2008, the repeatedly (in press releases of Governors of the Central the FSA decided to transfer a Icelandic Government reached and Ministerial statements) Bank of Iceland decided on part of Glitnir’s operations to a an agreement ad referendum declared that all bank deposits temporary modifications in new bank that has been formed with a mission from the IMF on in domestic commercial banks, currency outflow.5 and is fully owned by the an economic stabilization savings banks and their Icelandic State, the New Glitnir. program that could be supported branches in Iceland are fully On October 15, 2008, the Board The decision means, inter alia, by a stand-by arrangement with guaranteed. The statement, of Governors of the Central that the New Glitnir takes over the fund. It is stated that the which does not have the force of Bank of Iceland decided to lower all of Glitnir’s deposits in economic program will be law, only extends to domestic the policy interest rate by 3.5% Iceland, and also the bulk of the supported by an SDR 1.4 billion deposits and not to deposits with to 12%. bank’s assets that relate to its (US$ 2 billion) loan under a two- Icelandic banks held overseas.1 Icelandic operations, such as year Stand-By-Arrangement. On October 28, 2008, as a loans and other claims. An Iceland would be able to draw On October 6, 2008, the Act on condition of the loan from the independent evaluation of the SDR 560 million Authority for Treasury IMF, Iceland’s central bank value of assets and liabilities, (US$ 830 million) immediately Disbursements due to Unusual raised interest rates by a together with a final settlement, after the Board approval. It is Financial Market Circumstances, massive 6% to 18%. will be made within 90 days of also expected that an etc. was passed with immediate the transfer date. The new agreement with the IMF will force by the Icelandic Iceland’s central bank also said bank’s equity will, according to encourage lending from other Parliament. According to the it had applied to the United information on the FSA’s sources. Act, all deposits shall take States Federal Reserve and the webpage, be ISK 110 billion, priority over all general and ECB for extra funding. Iceland and the size of the balance A Letter of Intent was sent to the unprioritized claims against the has already said it needs sheet will be around ISK IMF on November 3, 2008, financial undertaking. another $4 billion in loans on top 1,200 billion. signed by the Minister of of the $2 billion it is seeking from Finance and the Chairman of The Icelandic Financial the IMF, which it is securing Landsbanki: On October 9, the Board of Governors of the Supervisory Authority (the from some Nordic and other 2008, the FSA decided to Central Bank.6 “FSA”) has decided to transfer a central banks. transfer a part of Landsbanki’s part of Landsbanki, Glitnir and operations to a new bank that On November 19, 2008, the Kaupthing operations to new On November 28, 2008, the has been formed and is fully Executive Board of the IMF banks that have been formed Central Bank of Iceland owned by the Icelandic State, approved Iceland’s request for a and are fully owned by the guidelines, issued in early the New Landsbanki. The two-year stand-by arrangement. Icelandic State. The decision October 2008 on temporary decision means, inter alia, that Iceland will receive means, inter alia, that the new modifications in currency the New Landsbanki takes over US$ 2.1 billion from the IMF. entities take over all of the “old” outflow, were revoked. The all of Landsbanki’s deposits in Additional loans of up to entities’ deposits in Iceland. revocation of these guidelines Iceland, and also the bulk of the US$ 3 billion have been secured Furthermore, the decision states means that there are no longer bank’s assets that relate to its from Denmark, Finland, Norway, that the new entities will take restrictions on current account Icelandic operations, such as Sweden, Russia and Poland. over the obligations of the related transactions. loans and other claims. An The Faroe Islands have branches of the “old” entities in independent evaluation of the announced that they would lend Iceland due to deposits from However, the economy value of assets and liabilities, Iceland US$ 50 million. The financial undertakings, the programme of the Stand-By together with a final settlement, funds made available through

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Icelandic Central Bank and other Arrangement from the Executive will be made within 30 days from the IMF will be used to support customers. Board of the International the transfer date. The new the currency, the Icelandic Monetary Fund entails bank’s equity will, according to króna, which will be floated as Icesave2: It was reported on continuing restrictions on the information on the FSA’s soon as possible. It is to be October 22, 2008 that the UK movement of capital between webpage, be ISK 200 billion, expected that the currency and Iceland are hoping to agree Iceland and other countries and and the size of the balance market will stabilize soon and on a loan of up to £3 billion to the subsequent lifting of those sheet will be around ISK that international money cover British depositors in restrictions as soon as a 2,300 billion. transfers will subsequently Icesave, the online banking unit sufficient stability has returned return to normal.7 of Landsbanki, the collapsed to the foreign exchange market. Kaupthing: On October 21, Icelandic bank.3 2008, the FSA decided to The Act on Financial The Parliament has passed a transfer a part of Kaupthing’s Undertakings No. 161/2002 was It was reported on October 11, legislative bill from the Minister operations to a new bank that amended on November 14, 2008 that the Dutch and to adopt rules restricting the has been formed and is fully 2008. Icelandic Governments have cross-border movement of owned by the Icelandic State, agreed on a solution regarding capital. This authorization has the New Kaupthing. The According to Act No. 129/2008 the Dutch depositors of been utilized by the Central decision means, inter alia, that amending Act on Financial Landsbanki Icesave savings Bank.8 the New Kaupthing takes over Undertakings, No. 161/2002 with accounts. all of Kaupthing’s deposits in subsequent amendments, a The aim of the Rules is to Iceland, and also the bulk of the lawyer or an authorized public The agreement states that the maintain restrictions on capital bank’s assets that relate to its auditor who has been engaged Icelandic Government will outflows that could have a Icelandic operations, such as by a financial undertaking to act compensate each Dutch negative impact on the loans and other claims. An as an assistant in reorganizing depositor up to a maximum of reconstruction of the foreign independent evaluation of the its financial affairs will not be €20,887. The Dutch exchange market. The Rules value of assets and liabilities, liable for compensation Government will provide a loan stipulate that those who acquire together with a final settlement, damages as a result of to Iceland to enable this foreign currency must submit it will be made within the next decisions or actions taken in his restitution and the Dutch Central to a domestic financial 90 days from the transfer date. capacity as assistant, unless Bank is to settle the depositors’ institution; however, such The new bank’s equity will, such decisions or actions claims. foreign currency may be according to information on the represent violations committed deposited to a foreign currency FSA’s webpage, be by intent or gross negligence. On November 16, 2008, the account in such an institution. ISK 75 billion, and the size of Government of Iceland agreed Restrictions are placed on the the balance sheet will be around Another amendment was made to cover deposits of insured movement of capital by parties ISK 700 billion. on Article 98 stipulating that depositors in the so-called intending to exchange Icelandic judicial proceedings will not be Icesave accounts in accordance krónur for foreign currency. Kaupthing’s U.K. subsidiary, filed against a financial with EEA law. They also entail Kaupthing, Singer & Friedlander undertaking while it is in a that the EU, under the French Furthermore, the Rules prohibit Ltd., has been placed in moratorium, unless such Presidency, will continue to trading between domestic and administration. proceedings are specifically participate in finding foreign parties in domestic Certain other subsidiaries of the authorized by law or if it is a arrangements that will allow securities and other króna- Icelandic banks have either criminal procedure and Iceland to restore its financial denominated financial been sold or placed in sanctions that can be levied on system and economy. instruments. Foreign parties are administration by local a financial undertaking are Furthermore, it was agreed to prohibited from purchasing petitioned. However, this

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES facilitate financial assistance to króna-denominated securities authorities. provision is disputed. Iceland, including agreeing on a through the intermediation of Kaupthing Bank hf. and Glitnir The Parliament has passed a stabilization package from the domestic parties, unless they Bank hf. were placed into legislative bill from the Minister IMF.4 already own króna-denominated moratorium proceedings as of to adopt rules restricting the assets that can be used for this November 24, 2008. cross-border movement of purpose. Furthermore, foreign capital. This authorization has parties are prohibited from Landsbanki Íslands hf. was been utilized by the Central issuing securities in Iceland. placed into moratorium Bank. Domestic parties are also proceedings as of December 5, prohibited from investing in 2008. The Government of Iceland has foreign securities. Foreign decided to examine any and all borrowings, provision of possibilities of Iceland seeking guarantees to foreign parties, redress before the European and derivatives transactions Court of Human Rights for the unrelated to trading of goods application by UK authorities of and services are restricted or the Anti-Terrorism, Crime and prohibited, as are loans granted Security Act 2001 against by domestic parties to foreign Landsbanki last year. parties. Furthermore, the Government The restrictions now adopted on has declared a strong support the basis of the newly-passed for legal proceedings by legislation include foreign Kaupthing Bank’s Resolution exchange transactions related to Committee against actions taken the movement of capital by the UK Financial Services between Iceland and other Authority (FSA) on October 8, countries. These restrictions are 2008, on which date the FSA a necessary part of the took control of the operations of measures intended to restore Singer & Friedlander, resulting stability in the foreign exchange in the insolvency of the parent market. They will be lifted as company. The Resolution soon as circumstances allow. Committee has decided to bring a suit, on the Bank’s behalf, Amended Rules on Foreign against the UK authorities and Exchange: enjoys the full support of the Government of Iceland. This The Central Bank of Iceland has support is provided in issued new Rules on Foreign accordance with an Act of the Exchange with the approval of Icelandic Parliament Althingi, the Minister of Business Affairs. adopted on December 20, The primary changes from the 20089, authorizing the Minister previous Rules pertain to of Commerce to provide exemptions granted to specified financial support for such groups because of critical

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES interests at stake It is also litigation. considered unlikely that these groups’ transactions will cause The Government of Iceland will serious and significant volatility also support possible legal in exchange rate and monetary action taken by the Resolution affairs. The State and the Committee of Landsbanki municipalities are granted against UK authorities; such exemptions, as are companies action, however, is not entirely in which the State and the subject to the same time municipalities own a majority constraints as is the suit to be holding and which operate in brought by the Resolution accordance with special Committee of Kaupthing Bank. legislation. Companies that are parties to investment agreements with the Icelandic Government and those that have been granted permits to search for oil by the Minister of Industry are exempt. Furthermore, resolution committees appointed on the basis of the Act on Financial Undertakings are exempt.

Companies that have over 80% of their revenues and expenses abroad may apply to the Central Bank for an exemption from specified articles of the Rules pertaining to securities trading abroad, borrowing and lending, guarantees and derivatives trading, and the obligation to submit foreign currency. The Central Bank will publish a list of the companies granted such exemptions on its website.

In addition, commercial banks, savings banks, and credit institutions have been granted extended authorisation to engage in foreign exchange

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES transactions.

Other minor changes involve the clarification of the lack of limits on direct investment; however, it is emphasised that the movement of capital from Iceland in connection with the sale of direct investments is prohibited.

The Rules are to be reviewed no later than March 1, 2009. It should be noted that the legislation on which the Rules are based is temporary and will expire at the end of November 2010.

1 It should be noted that a significant volume of banking business by Iceland’s banks is conducted overseas. 2 Icesave, the online British arm of Landsbanki, announced that its customers can no longer withdraw or deposit money. More than 300,000 British customers had around £4 billion deposited in Icesave accounts and now face the prospect of making a claim under the U.K. Government deposit guarantee scheme. Depositors with more than £50,000 and non-retail depositors are not protected by this scheme. 3 The decisions of the Icelandic Financial Supervisory Authority, due to unusual circumstances, are posted on the following website (in English translation): http://www.fme.is/?PageID=867. 4 A press release from the Prime Minister’s Office of the Agreed Guidelines Reached on Deposit Guarantees is posted on the following website (in English translation): http://eng.forsaetisraduneyti.is/news-and-articles/nr/3229. 5 The temporary modifications in currency outflow can be found on the following website: http://sedlabanki.is/lisalib/getfile.aspx?itemid=6493. 6 The Letter of Intent in English is posted on the following website: http://www.forsaetisraduneyti.is/media/Skyrslur/LOI.pdf. 7 A press release from the Prime Minister’s Office is posted on the following website (in English translation): http://eng.forsaetisraduneyti.is/news-and-articles/nr/3272. 8 Rules on foreign exchange, No. 1082, November 28, 2008, are posted on the following website (in English translation): http://sedlabanki.is/lisalib/getfile.aspx?itemid=6631. 9 http://www.iceland.org/info/news/features/nr/6450. 10 This section is up to date as of February 27, 2009.

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INDIA SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Deposits in Indian banks are The Reserve Bank of India Cash Reserve Ratio (“CRR”): already insured up to a (“RBI”) has come up with maximum of Rs.100,000 per various assistance measures in CRR is the minimum average depositor. order to infuse liquidity into the daily balance that a bank is system, some of which are: required to maintain with the RBI. In October 2008, the CRR Banks: of 9% was reduced by 250 basis points to 6.5%. On November 1, (i) On November 1, 2008, it was 2008, it was again reduced to decided to provide refinance 6% retrospectively with effect facilities to all banks from RBI up from October 25, 2008 and to to 1% of each bank’s net 5.5% with effect from November demand and time liabilities as on 8, 2008. October 24, 2008 at the repo rate up to a maximum period of On January 2, 2009, there was a 90 days. However, as per a further reduction in the CRR clarification issued by the from 5.5% to 5% with effect from Reserve Bank of India, on January 17, 2009. December 1, 2008, this facility can be rolled over and will Repo Rate: continue up to June 30, 2009. Repo rate is the rate at which the banks borrow money from (ii) Further, banks have also the RBI. On October 20, 2008, been allowed to borrow up to the repo rate was reduced by 1.5% in cash from the RBI to on- 100 basis points from 9% to 8%. lend it to Non-Banking Financial On November 1, 2008, it was Companies and Mutual Funds to decided to reduce the repo rate meet their funding requirements. further by 50 basis points to Consequently, on November 3, 7.5% effective November 3, 2008, a 14-day window of 2008. In order to further reduce Rs. 600 billion has been opened the marginal cost of funds to the to enable such funding by banks, this repo rate has been banks. further reduced by 100 basis points, from 7.5% to 6.5%, with Whilst this was initially effect from December 8, 2008. envisaged as an ad-hoc facility, On January 2, 2009, the repo on November 15, 2008, this rate was reduced by 100 basis special term repo facility was points from 6.5% to 5.5% with extended till end-March 2009. immediate effect. On March 4, Banks have been permitted to 2009, the repo rate was further avail of this facility either on reduced by 50 basis points from incremental or on rollover basis

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES within their entitlement of up to 5.5% to 5% with immediate 1.5% of each bank’s net effect. demand and time liabilities. Reverse Repo Rate: Under the extended arrangement, the RBI has also The reverse repo is the rate at commenced a special fixed rate which RBI borrows money from term repo for at 7.5% per annum banks. With effect from against eligible securities, on a December 8, 2008, the reverse periodic basis. repo rate has been reduced by 100 basis points, from 6% to Foreign Institutional Investors 5%. On January 2, 2009, the (“FIIs”): reverse repo rate was reduced by 100 basis points from 5% to (i) On October 6, 2008, 4% with immediate effect. On restrictions on the issue of March 4, 2009, the reverse repo Offshore Derivative Instruments rate was further reduced by 50 by FIIs were removed. basis points from 4% to 3.5% with immediate effect. (ii) On October 16, 2008, limits for FII investments in corporate Statutory Liquidity Ratio bonds were enhanced (“SLR”): substantially to a cumulative level of US$ 6 billion. Through a SLR is the amount of liquid Press Release dated January 2, assets in the form of cash, gold 2009, the Government of India or approved securities that a (“GOI”) has increased the FII bank is required to maintain in investment limit in rupee its reserves. On November 1, denominated corporate bonds 2008, the RBI reduced the SLR from US$ 6 billion to US$15 rates by 100 basis points to 24% billion. with effect from November 8, 2008. As a result, the banks (iii) On October 23, 2008, have an option of selling restrictions requiring FIIs to Rs. 400 billion of government purchase shares of stock securities which until now exchanges and security market formed part of their statutory infrastructure companies only investments. from the secondary market have been lifted, and FIIs are now External Commercial allowed to buy them even before Borrowings (“ECBs”): they are listed. (i) ECBs permitted up to Non Banking Financial US$ 500 million per borrower Companies (“NBFCs”): per financial year for rupee expenditure and/or foreign

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES The Government of India has currency expenditure for opened up various fund raising permissible end-uses under the options for NBFCs. automatic route.

(i) On October 29, 2008, (ii) Indian corporates were systematically important non- subject to certain restrictions on deposit taking NBFCs (i.e., non- rate of interest, other fees and deposit taking Non-Banking expenses in foreign currency Financial Companies having an (referred to as “all-in-cost”). Prior asset size of Rs.1 billion or to January 2, 2009, the all-in- more) were allowed to augment cost ceilings (over six months their capital funds by issue of LIBOR) for ECBs both under the Perpetual Debt Instruments automatic and the approval (“PDI”) in the form of bonds and route) were as follows: (i) for debentures with a minimum loans with an average maturity investment of Rs. 500,000 per period of 3-5 years- 300 basis issue by an investor. points and (ii) for loans with an average maturity period of 5 (ii) On November 1, 2008, years or more- 500 basis points. systematically important non- This requirement of all-in-cost deposit taking NBFCs were ceilings on ECBs has now been further allowed to raise short- dispensed with until June 30, term foreign currency 2009. Consequently, borrowers borrowings under the approval are now allowed to approach the route up to 50% of the net RBI under the approval route for owned funds or US$ 10 million, permission to avail ECBs where whichever is higher. the all-in-costs ceilings are in excess of those provided in this (iii) On February 18, 2009, the paragraph .This relaxation of all- Government of India approved a in-cost ceiling will be reviewed in scheme for providing liquidity June 2009. support to eligible non-deposit taking systemically important (iii) The requirement of minimum NBFCs through a special average maturity period of purpose vehicle for meeting seven years for ECBs in excess temporary liquidity mismatches of US$ 100 million for rupee in the operations. Such NBFCs expenditure for borrowers in are required to meet certain infrastructure sector has been specific criteria to be eligible for dispensed with. such liquidity support. This includes: (i) having a capital to (iv) Borrowers have been risk asset ratio of 12% by March permitted to park their ECB 31, 2009; (ii) a net profit in the proceeds with Indian Banks preceding two years; and (iii) the pending their utilization for

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES net non-performing assets as on permissible end-uses under the the last balance sheet date automatic route. should not be more than 5%. (v) Corporates engaged in the Financial Institutions: ‘development of integrated townships’ which were not The RBI provided an advance of permitted to take advantage of Rs. 25,000 crore to financial ECBs, have now been permitted institutions under the Agricultural to do so under the approval Debt Waiver and Debt Relief route. Therefore, the Scheme pending release of development of “integrated money by the Government. townships” is a permitted end- use for ECBs under the approval Housing Finance Companies route. This policy will be (“HFCs”): reviewed in June 2009. The phrase ‘integrated township’ has (i) On November 15, 2008, the same meaning as accorded HFCs complying with capital to it in Press Note 3 (2002 adequacy norms and other series) dated January 4, 2002 prudential norms laid down by (i.e. it includes housing, the National Housing Bank commercial premises, hotels, (“NHB”) have been allowed to resorts, city and regional level raise short-term foreign currency urban infrastructure facilities borrowings under the approval such as roads and bridges, route from multilateral or mass rapid transit systems and bilateral financial institutions, manufacture of building reputed regional financial materials). The development of institutions and foreign equity land and providing allied holders with minimum direct infrastructure will form an equity holdings of 25%. integrated part of developing townships. The resources should be used only for the sole purpose of (vi) Prior to January 2, 2009, refinancing the short-term NBFCs were permitted to take liabilities for a maximum maturity advantage of ECBs for a not exceeding three years and minimum average maturity the maximum amount not period of five years to finance exceeding 50% of the net owned import of infrastructure fund of the HFC or equipments for leasing to US$ 10 million, whichever is infrastructure projects in India. higher. NBFCs exclusively involved in financing of the infrastructure The all-in-cost ceiling should not sector, are now allowed to use exceed six months Libor + 200 ECBs from multilateral/regional

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES bps (for the respective currency financial institutions and of borrowing or applicable Government owned benchmark), and the borrowings development financial should be fully swapped into institutions for on-lending to the rupees for the entire maturity. borrowers in the infrastructure sector under the approval route. (ii) In order to boost lending to At the time of considering the housing sector, from applications made in relation to December 8, 2008 onwards, the above, the RBI will take into loans granted by banks to HFCs account the aggregate for on-lending to individuals for commitment of the lenders purchase/construction of directly to infrastructure projects dwelling units will be classified in India. Further, the direct under priority sector, provided lending portfolio of the above that the housing loans granted lenders vis-à-vis their total ECB by HFCs are not in excess of lending to NBFCs, must be Rs. 20 lakh per dwelling unit per maintained at a minimum of 3:1 family. This facility will apply to at any point in time and all such loans granted by banks certification indicating the same to HFCs up to March 31, 2010. must be obtained by the However, the eligibility under authorized dealers from the this measure will be restricted to eligible lenders. This facility will 5% of the individual bank’s total be reviewed in June 2009. priority sector lending. (vii) Earlier, entities operating in (iii) In order to provide further the services sector namely liquidity support to the housing hotels, hospitals and software sector, particularly to the HFCs, industries were allowed to use on December 11, 2008 the ECBs up to US$100 million per Reserve Bank of India decided financial year for import of to provide a refinance facility of capital goods under the approval Rs. 4,000 crore to the NHB until route. As per a Press Release of March 31, 2010 against NHB’s GOI dated January 2, 2009, the loans and advances to HFCs. aforementioned entities have This facility will be available at now been permitted to avail of the current repo rate of 6.5% for ECBs up to US$100 million per 90 days, during which the year for both foreign currency amount can be flexibly drawn and/or rupee capital expenditure and repaid and, at the end of for permissible end use, other which, the amount can also be than for land acquisition, under rolled over. the automatic route.

Export-Import Bank of India Foreign Currency Convertible

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES (“EXIM Bank”): Bonds (“FCCBs”):

On December 11, 2008, the On November 15, 2008, Indian Reserve Bank of India, decided companies were permitted to to provide a refinance facility of prematurely buyback their Rs. 5,000 crore to the EXIM FCCBs subject to prior approval Bank until March 31, 2010, as a from the RBI. Such buy back is result of which EXIM Bank will required to be financed by the be in a position to disburse company’s foreign currency foreign currency lines of credit to resources held in India or exporters. This facility will be abroad and/or out of fresh ECB available at the current repo rate raised in conformity with the of 6.5% for 90 days, during current norms for ECBs. which the amount can be flexibly drawn and repaid and, at the From December 8, 2008 end of which, the drawal can onwards, the Authorised Dealer also be rolled over. Category-I banks are permitted to consider applications for Micro and Small Scale premature buyback of FCCBs by Enterprises (“MSE”): Indian companies in situations where: (i) the buyback value of On December 6, 2008, the the FCCB is at a minimum Reserve Bank of India decided discount of 15% on the book to provide refinancing of an value; (ii) the source of funds for amount of Rs. 7,000 crore to the the buyback is out of existing Small Industries Development foreign currency funds held in Bank of India (“SIDBI”) so that India or abroad and/or (iii) fresh credit delivery to the ECB raised in conformity with employment-intensive MSE the current norms for ECBs; and sector could be enhanced. This (iv) where the fresh ECB is co- refinancing will be available terminus with the outstanding against: (i) the SIDBI’s maturity of the original FCCB incremental direct lending to and is for less than three years. MSE; and (ii) the SIDBI’s loans to banks, NBFCs and State Financial Corporations against The RBI is permitted to consider the latter’s incremental loans applications for buyback of and advances to MSEs. FCCBs by Indian companies In addition, this facility will be under the approval route, available until March 31, 2010 at subject to the following: (i) the the current repo rate of 6.5% for buyback value of the FCCB is at 90 days, during which the a minimum discount of 25% on amount can be drawn and the book value; (ii) the amount of the buyback is limited to US$

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES repaid and, at the end of which, 50 million of the redemption the amount can also be rolled value per company; and (iii) the over. resources for buyback are drawn out of internal accruals of Extension of Exceptional the company as certified by the Concessional Treatment: statutory auditor and designated bank’s certificate. Vide RBI As per the Reserve Bank of notification dated March 13, India’s decision on December 6, 2009, the time frame for 2008, the exceptional regulatory completing the entire procedure treatment of retaining the asset of buy back of FCCBs has been classification of the restructured extended from March 31, 2009 standard accounts in standard to December 31, 2009. category will apply to

commercial real estate sector FCNR(B) Accounts: exposures that are restructured Foreign Currency Non-Resident up to June 30, 2009. Such (Bank) accounts are accounts exceptional regulatory treatment opened by non-resident Indians will also apply to second with an authorized dealer in restructuring by banks of India. exposures up to June 30, 2009. However, second restructuring The rate of interest for FCNR(B) by banks of exposures to accounts have been increased commercial real estate, capital with effect from November 15, market exposures and personal/ 2008. The interest has to be consumer loans will not be paid within the ceiling rate of eligible for the above mentioned LIBOR / SWAP rates plus 100 exceptional regulatory basis points for the respective treatment. However, vide its currency / corresponding notification dated January 2, maturities (as against LIBOR / 2009, RBI had allowed banks to SWAP rates plus 25 basis points apply the special regulatory effective from the close of treatment for accounts which business on October 15, 2008). were standard on September 1, 2008 and taken up for On floating rate deposits, restructuring up to January 31, interest has to be paid within the 2009, even if these had turned ceiling of SWAP rates for the non-performing during this respective currency / maturities period, provided the plus 100 basis points. restructuring package was put in place within a period of 120 For floating rate deposits, the days from the date of taking up interest reset period is six the restructuring package. months.

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Given that the banks have not NRE Accounts been able to adhere to the January 31, 2009 time schedule Non-Resident External accounts due to increased workload, this are accounts opened by Non- time schedule for taking up resident Indians and Overseas restructuring has been extended Corporate Bodies with until March 31, 2009 vide RBI authorized dealers and banks press release dated February 5, authorized by the RBI to 2009. maintain such accounts.

Vide its notification dated The interest rates for NRE February 26, 2009, RBI has deposits maintained by banks extended the above mentioned have been increased with effect provisions related to exceptional from November 15, 2008. regulatory treatment of retaining the asset classification of the Presently, the interest rates on restructured standard accounts fresh NRE Term Deposits for in standard category to select all one to three years maturity as India financial institutions. well as above three years maturity, should not exceed the Prudential Guidelines on LIBOR / SWAP rates plus 175 restructuring of advances by basis points, as on the last Urban Cooperative Banks working day of the previous (“UCBs”) month, for US dollars of corresponding maturities (as Urban cooperative banks are against LIBOR / SWAP rates entities that undertake banking plus 100 basis points effective business as a cooperative from the close of business on society registered either under October 15, 2008). the Cooperative Societies Act of a state.Giiven the spillover These interest rates will also effects of the global recession apply to NRE deposits renewed on the Indian economy, RBI vide after their present maturity its notification dated March 6, period. 2009 introduced revised guidelines on the restructuring of Market Stabilization Scheme advances by UCBs. A brief over (MSS) view of these guidelines is as follows:- In pursuance of an agreement between the RBI and the (i) UCBs may restructure the Government of India, the RBI accounts classified under issues instruments in the nature 'standard', 'sub-standard' and of treasury bills and dated 'doubtful' categories such that securities, by way of auction, on

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES no account will be taken up for behalf of the Government of restructuring unless the financial India. The money so raised is viability is established and there impounded in a separate is a reasonable certainty of account with the RBI and is repayment from the borrower, as appropriated only for the per the terms of restructuring purpose of redemption and/or package. buy-back of the treasury bills and/or dated securities issued (ii) The accounts classified as under the MSS. 'standard assets' should be immediately re-classified as As a measure of infusing 'sub-standard assets' upon liquidity into the system, the RBI restructuring. Similarly, the non has put in a mechanism to buy performing assets, upon back dated securities issued restructuring, would slip into under the MSS. The securities further lower asset classification proposed to be bought back and category. the timing and modalities of these operations are notified (iii) Subject to certain from time to time. conditions, interest income in respect of restructured accounts Fiscal Stimulus Package: classified as ‘standard assets’ will be recognized on accrual To contain the impact of the basis and that in respect of the global financial meltdown on the account classified as ‘non Indian economy, the performing assets’ will be Government of India unveiled recognized on cash basis. fiscal stimulus packages on December 7, 2008, January 2, (iv) A special regulatory 2009 and February 24, 2009. treatment for asset classification, i.e. retention of the Highlights of the fiscal stimulus asset classification of the package announced on restructured account in the pre December 7, 2008 include the restructuring asset classification following: category, will be available to the borrowers engaged in important (i) In order to provide a stimulus business activities. Availability of via planned expenditure, the such treatment is however Government will seek subject to certain conditions. authorization for additional planned expenditure of up to Rs. Extension of period of credit 20,000 crore in the current year for rupee export credit interest rates: (ii) An across- the-board cut of 4% in the ad valorem central

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES In order to alleviate the value added tax for the difficulties faced by exporters remaining part of the ongoing due to weakening of external financial year on all products, demand, the Reserve Bank of except petroleum. Therefore, the India has decided that, from three major rate slabs of central November 28, 2008 onwards, excise duty of 14%, 12% and the interest rate on Post- 8% have been reduced to 10%, Shipment Rupee Export Credit 8% and 4%, respectively. up to 180 days will not exceed BPLR minus 2.5 percentage (iii) Interest subvention of 2% up points. to March 2009 has been implemented for pre- and post- On December 6, 2008, it was shipment export credit for further decided that the above labour-intensive exports like mentioned interest rate of BPLR textiles, leather, marine products minus 2.5 percentage points and SME. The concession is may also be extended to subject to a minimum rate of overdue bills up to 180 days interest of 7% per annum. from the date of advance. (iv) An additional Rs. 1,100 On December 16, 2008, it was crore for full refund of terminal further decided that banks may excise duty/CST and another Rs charge interest rates not 350 crore for export incentive exceeding BPLR minus 4.5% on schemes and a back-up pre-shipment credit up to 270 guarantee of Rs. 350 crore to days and post-shipment credit Export Credit Guarantee up to 180 days on the Corporation (“ECGC”) for outstanding amount for the providing guarantee for exports period from December 1, 2008 to difficult markets and products to March 31, 2009 to the will be provided. exporters in the sectors of textiles (including handloom), (v) Exporters will be given a handicrafts, carpets, leather, refund of service tax on foreign gems and jewellery, marine agent commissions up to 10% of products, and small and medium FOB value of exports. They will enterprises. However, the total also be given a refund of service subvention will be subject to the tax on output services while condition that the interest rate, availing of benefits under Duty after subvention, will not fall Drawback Scheme. below 7%, which is the rate applicable to the agriculture (vi) The lock-in period for loans sector under priority sector to small firms under the existing lending. Interest Subvention of credit guarantee scheme will be 2% with effect from December 1, reduced from 24 to 18 months to

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES 2008 until March 31, 2009 on encourage banks to cover more pre- and post-shipment rupee loans under the guarantee export credit has also been scheme. extended to the above mentioned exporters. As per the (vii) The Government will issue interim budget released on an advisory to Central Public February 16, 2009, it has been Sector Enterprises and request proposed to extend the above State Public Sector Enterprises mentioned facility beyond March to ensure prompt payment of 31, 2009 until September 30, bills of medium, small and micro 2009 as this is expected to enterprises (“MSMEs”). Easing involve an additional financial of credit conditions is expected outgo of Rs. 500 crore during to help PSUs to make such financial year 2009-10. This payments on schedule. proposal has been implemented by RBI vide its notification dated (viii) India Infrastructure Finance March 25, 2009. Co. is allowed to raise Rs.10,000 crores through tax- Reduction of Interest Rates: free bonds by March 31, 2009 as part of the exercise to In order to boost the housing support the Rs. 100,000-crore sector by making home loans highways development available at cheaper rates, programme. public sector banks from December 16, 2008, onwards (ix) Public Sector Banks will have decided to charge a soon announce a package for concessional rate of 9.25% for borrowers of home loans in two loans below Rs. 20 lakh and categories: (1) up to Rs. 5 lakhs 8.5% for loans less than Rs. 5 and (2) Rs. 5 lakh to Rs. 20 lakh. Furthermore, the interest lakh. rates for micro industries and small and micro enterprises (x) Government departments will have also been reduced by 100 be allowed to replace and 50 basis points, government vehicles within the respectively. allowed budget, in relaxation of extant economy instructions. Extension of time line for forex swap facility: (xi) The export duty on iron ore fines has been eliminated and Vide its press release dated on lumps for steel industry, has November 7, 2008, RBI had been reduced from 15% to 5%, extended a forex swap facility respectively. for tenors up to three months to public and private sector banks Highlights of the fiscal stimulus

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES having overseas operations in package announced on January order to provide them flexibility 2, 2009 are as follows: in managing their short term funding requirements at their (i) An SPV will be designated to overseas offices. This facility provide liquidity support against was available until June 30, investment grade paper to 2009. In view of the continuing NBFCs fulfilling certain uncertain credit conditions conditions. The scale of liquidity globally, the availability of this potentially available through this facility has now been extended mechanism will be Rs.25,000 until March 31, 2010 vide RBI crores. press release dated February 5, 2009. (ii) An arrangement will be worked out with leading public Increase in interest rate sector banks to provide a line of ceiling on export credit in credit to NBFCs specifically for foreign currency: the purchase of commercial vehicles. Due to increase in the banks' costs of raising funds abroad, (iii) Credit targets of public they were finding it difficult to sector banks are being revised extend credit within ceiling on upward to reflect the needs of export credit in foreign currency, the economy. The Government i.e. LIBOR + 100 basis points. will closely monitor, on a Therefore, RBI vide its press fortnightly basis, the provision of release dated February 5, 2009, sectoral credit by public sector increased the ceiling on export banks. credit in foreign currency from LIBOR + 100 basis points to (iv) Special monthly meetings of LIBOR + 350 basis points with State Level Bankers’ immediate effect. This increase Committees will be held to is, however, subject to the oversee the resolution of credit condition that the banks will not issues of MSME by banks. The levy any other charges, i.e., Department of MSME and the service charge, management Department of Financial charge, etc. except for recovery Services will jointly set up a Cell towards out-of-pocket expenses to monitor progress on this front. incurred. Similarly, the ceiling Matters of MSMEs remaining interest rate on the lines of credit unresolved with the Banks- SME with overseas banks has also Helpline for more than a been increased on February 5, fortnight may be brought to the 2009 from six months LIBOR/ notice of this Cell. EURO LIBOR/ EURIBOR + 75 basis points to six months (v) In the fiscal stimulus package

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES LIBOR/ EURO LIBOR/ announced on December 7, EURIBOR + 150 basis points, 2008, the guarantee cover under with immediate effect. the Credit Guarantee Scheme for micro and small enterprises on loans was extended from Rs.50 lakh to Rs.1 crore with a guarantee cover of 50%. In order to enhance the flow of credit to micro enterprises, it was decided on January 2, 2009 to increase the guarantee cover extended by the Credit Guarantee Fund Trust to 85% for credit facility up to Rs.5 lakh. This will benefit about 84 % of the total number of accounts accorded guarantee cover.

(vi) To help maintain the momentum of expenditure at the state government level, in the current financial year states will be allowed to raise additional market borrowings of 0.5% of their Gross State Domestic Product (“GSDP”), amounting to about Rs 30,000 crore for capital expenditures.

(vii) To ensure that infrastructure projects are not starved of funds, India Infrastructure Finance Company (“IIFCL”) has been authorized to raise an additional Rs.30,000 crores by way of tax free bonds so as to enable it to fund additional projects of about Rs.75,000 crore at competitive rates over the next 18 months. However, these funds can be raised only once the funds raised in the current year are effectively utilized since IIFCL has already

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES been authorized to raise Rs.10,000 crores through tax free bonds by March 31, 2009 for refinancing bank lending of longer maturity to eligible infrastructure bid based Public Private Partnership (“PPP”) projects.

(viii) Given that the rupee has appreciated nearly 4 % against the dollar since November 2008, it has been decided to restore Duty Entitlement Passbook Scheme (“DEPB”) rates to those prevailing prior to November 2008. The objective of DEPB is to neutralize the incidence of Customs duty on the import content of the export product. The neutralization will be provided by way of grant of duty credit against the export product. In addition, in order to provide predictability and stability of regime in the short term for future contracts, the DEPB Scheme will be extended till December 31,2009.

(ix) Duty drawback benefits on certain items including knitted fabrics, bicycles, agricultural hand tools and specified categories of yarn are being enhanced. These changes will take effect retrospectively from September 1, 2008.

(x) Accelerated depreciation of 50% will be provided for commercial vehicles to be purchased on or after January 1,

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES 2009 until March 31, 2009.

(xi) GOI will work with State governments to encourage them to release land for low income and middle income housing schemes.

(xii) States, as a one time measure until June 30, 2009, will be provided with assistance under the Jawaharlal Nehru National Urban Renewal Mission (“JNNURM”) for the purchase of buses for their urban transport systems. A scheme towards this end will be announced shortly.

(xiii) The Government is closely monitoring its spending to expedite the pace of expenditure for all schemes and programmes. Government will set up a fast track monitoring committee to ensure expeditious approval and implementation of central projects.

(xiv) EXIM Bank has obtained from RBI a line of credit of Rs. 5000 crore and will provide pre- shipment and post-shipment credit, in rupees or dollars, to Indian exporters at competitive rates.

Highlights of the fiscal stimulus package announced on February 24, 2009 are as follows:

(i) The general reduction in excise duty rates by 4% points which was made by virtue of the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES first fiscal stimulus package, i.e. with effect from December 7, 2008 has been extended beyond March 31, 2009.

(ii) The general rate of central excise duty will be reduced from 10% to 8%.

(iii) The rate of central excise duty on goods currently attracting ad valorem rates of 8% and 4% respectively will be retained.

(iv) The rate of central excise duty on bulk cement will be reduced from 10% or Rs. 90 Per Metric Ton (“PMT”), whichever is higher to 8% or Rs.30 PMT, whichever is higher.

(v) The rate of service tax on taxable services will be reduced from 12% to 10%.

(vi) Section 10AA of the Income Tax Act provides for exemption in respect of export profits of a unit located in a Special Economic Zone (“SEZ”). The export profits are required to be computed with reference to the total turn over of the assessee. Given that this has resulted in discriminatory treatment of assessees having units located both in SEZ and the Domestic Tariff Area (“DTA”) vis-à-vis assessees having units located only within the SEZs, it has been decided to remove this anomaly through necessary changes in

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES the Income Tax Act.

(vii) In order to spur the development of infrastructure and employment generation, the ceiling of fiscal deficit which the states could incur in 2008-09, i.e. 3.5% of the Gross Domestic Product (“GDP”), has been extended to 2009-10 with the possibility of further review, if required, in the coming months.

Custom duty exemption for newsprint:

In view of the current economic slowdown, the Government of India on February 11, 2009 completely exempted customs duty on ‘newsprint’, ‘uncoated paper used for printing of newspapers’ as well as on ‘light weight coated paper used for printing magazines’.

Foreign Investment:

In order to streamline the methodology of calculation of indirect foreign investment across sectors, the Government of India vide its press release dated February 11, 2009, adopted guidelines for calculation of total foreign investment i.e. direct and indirect foreign investment in Indian companies.

The salient features of these guidelines are:

(i) All investment directly by a non-resident entity into the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Indian company would be counted towards foreign investment.

(ii) The foreign investment through the investing Indian company would not be considered for calculation of the indirect foreign investment in case of Indian companies which are ‘owned and controlled’ by resident Indian citizens and Indian companies which are ‘owned and controlled’ ultimately by resident Indian citizens.

(iii) For cases where this condition is not satisfied or if the investing company is owned or controlled by ‘non resident entities’, the entire investment by the investing company into the subject Indian company would be considered as indirect foreign investment.

(iv) As an exception, the indirect foreign investment in only the 100% owned subsidiaries of operating-cum- investing/investing companies, will be limited to the foreign investment in the operating- cum-investing/investing company. For the purposes of explanation, it is clarified that this exception is being made since the downstream investment of a 100% owned subsidiary of the holding company is akin to investment made by the holding company and the downstream investment should be a mirror image of the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES holding company.

In furtherance of the above mentioned guidelines, the Government of India vide its press release dated February 27, 2009 and press note 4 of 2009 has issued clarifications with respect to downstream investment by Indian companies. Salient features of these clarifications are:-

(i) Foreign investment into operating companies and operating cum investing companies would be subject to compliance with conditions applicable to the relevant sector. The same would apply to downstream investments made by operating cum investing companies as well.

(ii) Prior FIPB approval would be required for foreign investment in investing companies, regardless of the amount or extent of foreign investment. Downstream investments by such a company would require compliance with conditions applicable to the relevant sector.

(iii) Prior FIPB approval would be required for foreign investment into companies not having any operations or downstream investments, regardless of the amount or extent of foreign investment.

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IRELAND SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES On October 20, 2008, the The protection limit for Ireland’s The Minister for Finance On January 15, 2009, the Irish The Credit Institutions (Financial Minister for Finance made the existing deposit protection announced details of a Government announced its Support) Act 2008 (the “Act”) Credit Institutions (Financial scheme was extended on recapitalization program for the decision to nationalize the third provides the Minister for Finance Support) Scheme 2008 (the September 20, 2008 to Bank of Ireland and Allied Irish biggest bank in the State, Anglo with broad powers to provide “Scheme”). €100,000 per depositor per Banks on February 11, 2009. Irish Bank Corporation plc financial support in respect of institution, from its previous limit Earlier plans had provided for (“Anglo Irish Bank”). The the borrowings, liabilities and The Scheme gives effect to the of €20,000. the recapitalization of each of decision was taken after obligations of any credit State bank guarantee the three largest banks in the consultation with the Central institution or subsidiary specified announced by the Irish Note also that the Scheme State: Bank of Ireland, Allied Bank and the Financial by order. The Act also amends Government on September 30, described in the first column Irish Banks and Anglo Irish Regulator, which confirmed that Irish merger control rules. 2008. Under the Scheme, the covers all retail, corporate and Bank. However, following the Anglo Irish Bank remained Minister for Finance has inter-bank deposits (to the nationalization of Anglo Irish solvent. The nationalization Financial support under the Act guaranteed certain “covered extent not covered by the Bank (see opposite), its planned became effective on cannot be provided for any liabilities” of “covered existing depositor protection recapitalization will no longer Wednesday, January 21, 2009. period beyond September 29, institutions” from September 30, scheme). proceed. 2010. 2008 to September 29, 2010 In announcing the inclusive. The EU Commission In summary, under the nationalization plan, the Minister Financial support is defined as has approved the Scheme as recapitalization program, the for Finance explained that the including loans, guarantees, being compatible with EC Treaty Irish Government will invest €3.5 funding position of the bank had exchange of assets and any State aid rules. billion of Core Tier 1 capital in weakened and that recent other kind of financial each of the Bank of Ireland and unacceptable practices had accommodation or support. The The Scheme is only open to Allied Irish Banks. Bank of caused serious reputational Minister for Finance has power systemically important credit Ireland was recapitalized on 31 damage to the bank at a time to provide support on “such institutions and certain named March 2009 and it is expected when overall market sentiment commercial or other terms and subsidiaries of such credit that Allied Irish Banks will be towards it was negative. The conditions as the Minister thinks institutions. Institutions covered recapitalized in May 2009. The plans announced on December fit”. by the Scheme are listed on the investment will be funded from 21, 2008 to recapitalize Anglo website of the Department of the National Pension Reserve Irish Bank have been The Scheme described in the Finance. Fund. In return for the abandoned in favor of first column was made pursuant investment, the Government will nationalization. The Minister to the Minister for Finance’s Liabilities covered by the receive preference shares in has confirmed that Anglo Irish powers under the Act. Scheme are known as “covered each of Bank of Ireland and Bank will continue to trade liabilities”. They comprise all Allied Irish Banks. These normally as a going concern, retail and corporate deposits (to shares will have a fixed annual with appropriate government the extent not covered by dividend of 8%, payable in cash support as necessary. existing deposit protection or ordinary shares in lieu of a schemes in Ireland or any other dividend, and will confer 25% of Anglo Irish Bank’s shares have jurisdiction); inter-bank deposits; the voting rights in respect of been suspended from listing on senior unsecured debt; covered appointments of directors and the Irish Stock Exchange and bonds (including asset covered change of control. Warrants the London Stock Exchange. securities) and dated attached to the preference Under the nationalization plan, subordinated debt (Lower Tier 2) shares will give an option to the all shares in Anglo Irish Bank

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES (subject to certain restrictions), Government to purchase up to pass to the Minster. An but excluding any intra-group 25% of the ordinary share Assessor will be appointed by borrowing and any debt due to capital of each bank existing on the Minister to determine the the ECB arising from the date of issue of the compensation, if any, payable to Eurosystem monetary preference shares, calculated on Anglo Irish Bank shareholders. operations. a post dilution basis. Bank of Ireland and Allied Irish Banks On April 7, 2009, the Irish Under the Scheme, the Irish will be able to redeem the Government announced its Financial Regulator, in preference shares within five decision to create the National consultation with the Minister for years at the issue price, or after Asset Management Agency Finance, will impose conditions five years at 125% of the issue (“NAMA”). NAMA will be a that regulate the commercial price. commercial, semi state entity conduct and competitive under the government, direction behavior of covered institutions. In February 2009, the Financial and management of the National The conditions are described in Regulator published statutory Treasury Management Agency. detail in the Scheme. codes of practice on (a) business lending to small and While specific details of the In conducting its six month medium enterprises; and (b) operation of NAMA are to be review of the Scheme, the mortgage arrears for principal confirmed, the Government has Government has announced primary residences. Bank of indicated that potentially € 80 that it will examine how the Ireland and Allied Irish Banks billion to € 90 billion in assets Scheme can be revised in ways have also agreed not to (based on current book value, that include supporting longer commence legal action for but to be transferred at an term bond issuances by the repossession of a principal appropriate discount) will be covered institutions. This is in private residence until after 12 transferred from participating line with EU trends, where the months of arrears appearing, credit institutions to NAMA. average term of state cover for where the customer continues to These assets will include loans bond issues extends beyond co-operate reasonably and in respect of the purchase of 2010. Amendments to the honestly. land for development, Scheme will be subject to EU associated work in progress state aid approval. In an arrangements and certain emergency budget statement on property investment loans. April 7, 2009, the Minister for Finance confirmed the The assets will be acquired by Government’s intention to put in NAMA at an appropriate place a state guarantee for the discount depending on the value future issuance by Irish credit of the assets and an institutions of debt securities assessment of the risk being with a maturity of up to five transferred to the State. Assets years. Further details of this acquired by NAMA will be paid new guarantee are expected in for either in Government bonds due course and the proposal is or in Government guaranteed subject to EU state aid approval. bonds issued by NAMA.

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES The finalizing of the design of the NAMA initiative will take full account of the European Commission’s communication on the treatment of impaired assets and is subject to EU state aid approval. Further details are expected in due course.

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ITALY1 SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES On December 4, 2008, the Law No. 190/2008 authorizes Law No. 190/2008 provides that, Law No. 190/2008 authorizes Law No. 190/2008 authorizes Italian Parliament approved Law the Ministry of the Economy to in the event of severe liquidity the Ministry of the Economy, to the Ministry of the Economy to No. 190, which, inter alia, guarantee Italian banks’ crises, the Ministry of the subscribe for or guarantee guarantee, on market terms, incorporates the measures depositors for a 36-month Economy is authorized to capital increases of Italian banks newly issued bank liabilities adopted by the Government on period. guarantee loans granted by the (including the parent company of having a maturity of up to five an urgent basis1 for the Bank of Italy to Italian banks or an Italian banking group) that years. stabilization of the credit system This guarantee is in addition to the Italian branches of foreign the Bank of Italy determines to and the improvement of capital the existing deposit guarantee banks. be inadequately capitalized. Law No. 190/2008 empowers adequacy of Italian banks (“Law introduced by Legislative Decree These transactions must be the Ministry of the Economy to No. 190/2008”). Following No. 659 of December 4, 1996, On October 13, 2008, the Bank effected giving consideration to effect temporary exchanges publication in the Official which provides for a guarantee of Italy, through a press release, market conditions. In order to between government securities Gazette, Law No. 190/2008 equal to a maximum of announced: (i) the reduction, benefit from these measures, and assets held by banks or came into effect on December 7, €103,291.38 per depositor. with immediate effect, of the (i) the recapitalization must not liabilities of Italian banks having 2008.2 minimum threshold for loans to have been completed prior to a maturity of up to five years and Law No. 190/2008 does not be issued for refinancing issued after October 13, 2008 specify the maximum amount of October 9, 2008 and (ii) the Law No. 190/2008 authorizes transactions, from €1,000,000 to (see also the temporary the guarantee. bank must adopt or have the Ministry of the Economy and €500,000; and (ii) the adopted a more comprehensive exchange program implemented Finance (the “Ministry of the implementation of a temporary stabilization and financial by the Bank of Italy and Economy”) to guarantee, on exchange program between strengthening plan covering at discussed under “Special market terms, transactions government securities held by least the subsequent 36 months. Central Bank Assistance carried out by Italian banks to the Bank of Italy and assets held Measures”). obtain securities eligible for use by Italian banks. The Bank of Italy is required to Law No. 190/2008 provides that in refinancing transactions within evaluate the existence of the The temporary exchange the Bank of Italy may grant the Eurosystem. above-mentioned conditions, the program is capped at €40 billion. adequacy of the plans and loans secured by pledge or policy on dividends approved by assignment of receivables to the applicant bank. Italian banks to satisfy their liquidity requirements. The These shares, for so long as pledges or assignments of they are held by the Ministry of receivables issued in the Economy, are (i) without accordance with such provision voting rights; (ii) preferred in the are enforceable vis-à-vis any distribution of dividends to all debtor and third parties and they other classes of shares and become effective on the date of (iii) redeemable by the issuer, execution of the security provided that the transaction will agreement. The secured loans not affect the financial condition granted by the Bank of Italy and solvency of the bank or the under this provision are not group to which the bank subject to clawback under Italian belongs. insolvency rules. In addition to the Law No. On January 28, 2009, the Italian 190/2008, a press release Parliament adopted Law No. 2

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES issued on October 30, 2008, (“Law No. 2/2009”), approving anticipated that the Government Law Decree No. 185 of is expected to establish a November 28, 2008, which, special fund (with €15-20 billion among other measures to available) to subscribe for sustain the economy, authorizes subordinated convertible the Ministry of the Economy, to securities issued by Italian subscribe for financial banks. Such securities would instruments issued by Italian have the benefit of being listed banks (or by the parent included for the purposes of company of Italian listed banking capital adequacy requirements groups), upon their request. as Tier 1 capital, without This program is set to expire entailing an immediate direct and cease every effect after 10 State participation in the share years from the approval of Law capital. The press article also No. 2/2009. On February 25, indicated that conversion rights 2009, the Ministry of Economy would be granted only to the adopted the required ministerial issuing bank. As of the date of decree which sets forth the this client publication, no specific terms and conditions for concrete action has been taken the subscription of the financial in this respect. instruments (the “Mnisterial Decree”). The instruments issuable pursuant to Law No. 2/2009 must be without voting rights and otherwise qualify as regulatory capital instruments. These instruments are not transferable without the consent of the issuer and may be convertible into ordinary shares at the option of the issuer. Early repayment or redemption at the option of the issuer may also be provided for, provided that the Bank of Italy attests that the proposed early repayment or redemption will not adversely affect the financial condition of the issuer or its solvency. Their yield may be subject, in whole or in part, to the availability of distributable

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES profits. The subscription by the Ministry of the Economy is conditioned upon the following conditions: a) the transaction as a whole must be (i) economically sound (“economica”) according to the criteria set forth hereinafter, (ii) effected after due consideration is given to market terms, and (iii) aimed at ensuring an improved flow of financing to the real economy and appropriate capital adequacy levels in the banking system. b) the issuer must undertake to ensure adequate levels and conditions of financing to small and medium businesses and families and adequate liquidity levels for creditors of public administrations; c) the issuer must undertake to adopt dividend policies consistent with the need to maintain appropriate levels of capital; and d) the issuer must adopt a code of conduct regulating, inter alia, executive compensation policies (including “golden parachutes”) and traders compensation. The transaction is economically sound (“economica”) if the financial instruments bear an interest equal to the greater of: (a) (i) 7.5% with respect to year 2009, to be increased by 0.25% for each of the subsequent four fiscal years, and further

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES increased by 0.5% for each subsequent two-year period until reaching 15% for 2039 and subsequent years; or alternatively (ii) 8.5% with respect to years 2009 through 2012, to be increased by 0.5% for each of the subsequent four fiscal years, and further increased by 0.50% for each subsequent two-year period until reaching 15% for 2039 and subsequent years; and (b) a percentage of the dividend of the ordinary share, as indicated in the borrower’s financial statements, equal to (i) 105% for year 2009, (ii) 110% for 2010; (iii) 115% for years from 2011 to 2017, and (iii) 125% for 2018 and subsequent years; and (c) a percentage of the nominal value of the financial instruments equal to the average yield on the 30-year Treasury Bonds (Buoni del Tesoro Poliennali or BTP), as calculated in the first querter of each year in which interest is being paid, increased by 300 basis points for years 2011 and 2012 and by 350 basis points for 2013 and subsequent years. Furthermore, the transaction may also be considered economically sound (“economica”) if the financial instruments are subscribed for by private persons for at least 30% of the aggregate size of the issuance (of which at least 20%

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES is subscribed for by persons other than shareholders holding more than 2% of the share capital of the issuer); The amount available for each bank cannot exceed 2% of the total assets of the relevant banking group weighted by the risk and it must be limited to the minimum amount necessary to reach the purposes of Law 2/09. The Ministerial Decree also provides that the banks that participate in this program must carry out their activities in a way that does not represent an abuse of the assistance received and without pursuing aggressive expansion strategies. Furthermore, the Ministerial Decree indicates that the subscription by the Ministry of Economy is made upon request of a bank. The application must be filed with the Bank of Italy and the Ministry of Economy at least 30 days prior to the expected subscription date.

1 On October 9, 2008, the Italian Government had issued Law Decree No. 155 and on October 13, 2008, Law Decree No. 157. 2 Law No. 190/2008 requires further ministerial decrees to be implemented. The law provides for a 60-day term for the issuance of the ministerial decrees running from October 9, 2008; in the absence of the ministerial decrees, no concrete action can be taken under the program. Thus far, the only measure that has been used is the Bank of Italy’s temporary exchange program between government securities held by the Bank of Italy and assets held by Italian banks. 2 Law Decree No. 185/2008 is currently in force pending its approval by the Italian Parliament which must take place by no later than January 28, 2009. In addition, Law Decree No. 185/2008 requires a further ministerial decree before it can be implemented, which was supposed to be adopted before December 29, 2008. No such decree has been approved to date. In the absence of the relevant ministerial decree no concrete action can be undertaken by the Ministry of the Economy under this law decree.

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JAPAN SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES On October 21, 2008, the On October 13, 2008, the The Bank of Japan (the “BoJ”) Japan, China, South Korea and The BoJ has announced a Japanese Government Japanese Government said that will seek to improve corporate other Asian countries are series of measures to increase announced that it was ready to it would consider guaranteeing financing by increasing the working to form an $80 billion liquidity to the market, including support major banks with public all bank deposits if necessary. frequency and size of reserve-pool scheme from mid- lowering the target for the funds, so that small- and In Japan, currently the Commercial Paper repo 2009 to boost liquidity in the overnight call rate by 20 basis medium-sized companies would government-backed Deposit operations. region. points on October 31, 2008, and not struggle to access credit. Insurance Corporation encouraging it to remain around The Government has also guarantees up to 10 million yen The BoJ will accept, until 0.3%. On November 21, 2008, relaxed regulations on (US$ 100,000) for each deposit April 2009, asset-backed the BoJ decided to continue to companies buying up their own in Japanese banks. commercial paper which is encourage the uncollateralized shares. guaranteed by a BoJ financial overnight call rate to remain at counterparty as collateral, 0.3%. On December 2, 2008, unless the BoJ deems it the BoJ decided to continue to necessary to review the encourage the uncollateralized creditworthiness of specific overnight call rate to remain at assets or encounters other 0.3%. On December 19, 2008, issues that would endanger the the BoJ decided to lower the soundness of its assets. target for the uncollateralized overnight call rate by 20 basis On November 21, 2008, the BoJ points from 0.3% to 0.1% decided to continue to (effective immediately). encourage the uncollateralized overnight call rate to remain at On October 31, 2008, the BoJ 0.3%. The BoJ will carry out lowered the basic loan rate purchases of commercial paper applicable under the under repurchase agreements complementary lending facility more flexibly to facilitate by 25 basis points to 0.5% and corporate financing. introduced the Complementary Deposit Facility, a temporary On December 2, 2008, the BoJ measure to pay interest on decided to continue to excess reserve balances in encourage the uncollateralized order to further facilitate the overnight call rate to remain at provisioning of sufficient liquidity 0.3%. toward the year-end. The Complementary Deposit Facility On December 19, 2008, the BoJ will be effective from the decided to introduce outright November 2008 reserve purchases of commercial paper maintenance period to the issued by companies to raise March 2009 reserve short-term funds. maintenance period, and the interest rate applied will be 0.1%. On December 19, 2008,

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES the BoJ decided to lower the basic loan rate applicable under the complementary lending facility by 20 basis points to 0.3% (effective immediately). On December 19, 2008, the BoJ decided to set the interest rate to be applied to the complementary depositary facility at 0.1% (effective immediately).

Other measures include the widening of repo eligible assets to floating rate Japanese government bonds (“JGBs”), inflation-indexed JGBs and 30-year government bonds, the lowering of the minimum secured lending facility fee to 0.5% from 1% and the extension of the period of relaxation in conditions for conducting the secured lending facility. These measures are temporary in nature until January 16, 2009.

In addition, the BoJ will introduce U.S. dollar funds- supplying operations whereby unlimited funds are provided at a fixed rate set for each operation against eligible pooled collateral.

The BoJ will also start providing “sufficient” funds over the year- end earlier than usual.

On December 2, 2008, the BoJ announced that December 9, 2008 through to April 30, 2009, it will ease the criteria on credit ratings of corporate debt as BoJ’s eligible collateral from A-

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES rated or higher to BBB-rated or higher.

On December 12, 2008, the BoJ reached an agreement with the Bank of Korea to increase the maximum amount of the bilateral yen-won swap arrangement from US$ 3 billion to US$ 20 billion. The increase will remain in effect until the end of April 2009.

Also on December 12, 2008, the Japanese Government announced an economic stimulus package valued at 23 trillion yen, which includes 10 trillion yen in Government spending and 13 trillion yen to stabilize the financial system (including 10 billion yen to recapitalize banks and 2 trillion yen to purchase commercial paper through the Development Bank of Japan). This brings the Japanese Government’s total economic stimulus package announced to date to around 44 trillion yen.

On December 19, 2008, the BoJ decided to increase its outright purchase of JGBs from 14.4 trillion yen per year to 16.8 trillion yen per year, effective immediately. The BoJ also decided to expand the range of JGBs accepted in outright purchase and to introduce purchases from specific maturity segments. On March 18, 2009, the BoJ announced that it would increase the amount of outright

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES purchases of Japanese government bonds from 16.8 trillion yen per year to 21.6 trillion yen per year.

On December 19, 2008, the BoJ also decided the terms and conditions of the new operation utilizing corporate debt, of which introduction had been decided at the Monetary Policy Meeting held on December 2, 2008.

On December 19, 2008, the BoJ decided to include the Development Bank of Japan Inc. as a counterparty in operations such as commercial paper repo operations.

On January 22, 2009, the BoJ decided to purchase up to 3 trillion yen of commercial paper and asset-backed commercial paper rated a-1 or higher and with the residual maturity up to 3 months, with certain restrictions.

Beginning on February 26, 2009, the BoJ will provide funds against collateral for a period of three months for a fixed rate, currently at 0.1%, which is the same as the current uncollateralized overnight call rate.

On February 3, 2009, the BoJ announced that it will resume the purchase of stocks held by financial institutions so that the financial institutions may offload some of their stocks and reduce market risks. The total purchase

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES amount is for 1 trillion yen.

The BoJ has also decided to purchase up to 1 trillion yen of corporate bonds rated single A or higher and have a remaining term of one year or less from the last date of the month in which the Bank of Japan will make such a purchase. The limit per issuer of the corporate bonds is 50 billion yen.

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LUXEMBOURG SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Following the recapitalization of As of January 1, 2009, the level Fortis: the Luxembourg In a statement made to the the Dexia group (see the of the protection of the deposit Government has announced, on Luxembourg Parliament on the Recapitalization Measures guarantee in Luxembourg has the basis of an agreement of financial crisis on October 15, column), a Grand-Ducal been increased from €20,000 to September 28, 2008 with the 2008, Prime Minister Jean- Regulation was enacted on €100,0003. Dutch and Belgian Claude Juncker declared that October 10, 2008, authorizing Governments, that as a first step “… the Luxembourg the Luxembourg Government to it would invest €2.5 billion in Government and the grant a financial guarantee to Fortis Banque Luxembourg S.A. Luxembourg Central Bank will the Dexia group (the (“Fortis”) in the form of a take all necessary steps to “Regulation”). convertible loan.4 The secure the liquidity of money Luxembourg Government would market funds established under This Regulation further aims at thus take 49% in the capital of Luxembourg law.” implementing an Fortis. intergovernmental agreement between the Luxembourg, On October 6, 2008, the Belgian and French Luxembourg Government Governments that, pursuant to announced that it had sold 16% the common press release of of Fortis to the BNP Paribas these Governments1, aims to group. Under the agreement, assure depositors that the Dexia BNP Paribas will hold 67% in group will have sufficient Fortis,5 while the Luxembourg liquidity. State will hold 33% in Fortis and will acquire 1.1% of the share Pursuant to the Regulation, the capital of BNP Paribas. Government is authorized to guarantee, for the account of the Dexia: the Luxembourg, Luxembourg State, funding Belgian and French obtained by the Dexia group2 Governments and the with credit institutions and shareholders of Dexia agreed to institutional depositories as well recapitalize the Dexia group on as bonds and debt instruments September 30, 2008. Pursuant issued by the Dexia group to to this agreement, the institutional investors (the Luxembourg Government abovementioned credit announced that it would institutions, institutional subscribe to the issuance by depositories and institutional Dexia B.I.L. S.A. of convertible investors being referred to as bonds/loan of €376 million,6 the “Creditors”). In order to be which if converted would eligible for the guarantee, this represent roughly 20% in Dexia funding and the bonds and debt B.I.L. S.A. instruments must have been

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES issued between October 9, 2008 and October 31, 2009, and must mature before October 31, 2011.

In accordance with the state aid rules of the EC Treaty, on November 19, 2008 the European Commission has, approved this state financial guarantee for the Dexia group7.

Further to the European Commission’s approval and in accordance with the Regulation, a first demand guarantee has been granted in favour of the Dexia group (and its Creditors) on December 9, 2008 by Luxembourg, Belgium and France.8

The guarantee of the Luxembourg State cannot exceed €4.5 billion. It is granted jointly but not severally with Belgium and France.

1 Communiqué (Public release), Communication conjointe des gouvernements français, belge et luxembourgeois relative à Dexia, October 9, 2008, available at www.gouvernement.lu. 2 i.e., Dexia S.A. and Dexia Banque Belgique S.A., Dexia Banque Internationale à Luxembourg S.A., Dexia Credit Local de France S.A. as well as their issuing vehicles. 3 Loi du 19 décembre 2008 concernant le budget des recetteset des dépenses de l’Etat pour l’exercice 2009. 4 Article d’actualité (News), Les gouvernements belge, luxembourgeois et néerlandais investissent 11,2 milliards d’euros dans Fortis, September 29, 2008, available at www.gouvernement.lu. 5 Article d’actualité (News), Fortis Banque Luxembourg devient BGL-BNP Paribas, 06-10-2008, available at www.gouvernement.lu. 6 Article d’actualité (News), Les gouvernements belges, français et luxembourgeois ainsi que les actionnaires investissent 6,4 milliards d’euros dans Dexia, September 30, 2008, available at www.gouvernement.lu 7 See Press release at http://europa.eu/rapid/pressReleasesAction.do?reference=IP/08/1745&format=HTML&aged=0&language=FR&guiLanguage=fr. 8 Communiqué de presse conjoint des États belge, français et luxembourgeois relatif à Dexia: signature d’une convention, December 10, 2008, available at www.gouvernement.lu.

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THE NETHERLANDS SPECIAL CENTRAL BANK RECAPITALIZATION ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES As of October 23, 2008, a Credit On March 10, 2009, the Minister DNB will grant special credit to The Dutch State announced on ING Groep N.V.: Reference is made in other Guarantee scheme (“the of Finance announced that the individual financial institutions October 9, 2008, a €20 billion columns. scheme”) set up by the Dutch increase of the guaranteed against adequate collateral, if fund to recapitalize financial Issuance of Tier 1 securities State of €200 billion is amount under the deposit and for as long as necessary. institutions, with €13 billion ING Groep N.V.(“ING”) operational for non-complex guarantee scheme from €40,000 The short-term financing of already committed to individual announced on October 19, 2008 senior unsecured loans to to €100,000 per person per bank these institutions against institutions (see Assistance to that it had reached an financial institutions made by (regardless of the number of collateral will hence be secured. Individual Institutions). agreement with the Dutch other financial institutions and accounts) will apply indefinitely. Government to strengthen its institutional investors. These This increase was first Funds will be directly available capital position. guarantees are available until announced on October 7, 2008 to fundamentally sound and December 31, 2009 to financial to apply for one year. All EU viable financial institutions that ING has issued non-voting core institutions with their principal member states are obliged to may run into liquidity or capital Tier 1 securities for a total place of business in the guarantee a minimum amount of problems. €20 billion is consideration of €10 billion to Netherlands and to subsidiaries €100,000 from January 1, 2010. available until January 20, 2009 the Dutch State. established in the Netherlands to financial institutions and The Government has obtained of foreign banks with substantial Where two people have a joint insurance companies through the right to nominate two business in the Netherlands.1 account, either accountholder participation, preference shares Supervisory Board members can claim payment under the or by any other means. (and has exercised this right on Instruments eligible to be deposit guarantee scheme. The October 22, 2008), who will guaranteed are limited to maximum joint deposit covered have the right to veto securities denominated in is therefore €200,000. fundamental decisions. EURO, US$ and GBP with maturities from three months to All Dutch banks that operate All members of ING’s Executive five years and extend only to under a licence from the Dutch Board have relinquished their non-complex senior unsecured Central Bank (De bonuses over 2008, both in cash loans; “plain vanilla” commercial Nederlandsche Bank (DNB)) are payments and in options or paper, certificates of deposit and covered by the Dutch deposit shares. Resignation premiums medium-term notes. guarantee scheme. have been restricted to one year’s fixed annual pay. Fees to be paid by participating DNB has activated the deposit Illiquid Assets Bank-up Facility financial institutions will depend guarantee scheme for on their creditworthiness and will accountholders of On January 26, 2009, ING and be based on historical credit Icesave/Landsbanki Ísland hf. the Dutch State have reached default swap spreads (or an on October 13, 2008, and for the an agreement on an Illiquid approximation if necessary), accountholders of N.V. De Assets Back-up Facility covering with an addition of 50 basis Indonesische Overzeese Bank 80% of ING's Alt-A mortgage points. Maturities of less than a (Indover) on November 11, securities. Based on a press year will have a fixed fee of 50 2008. release issued by ING, basis points. important features of the Back- up Facility include the following. Participating institutions will also be required to meet certain Under the terms of the Back-up

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SPECIAL CENTRAL BANK RECAPITALIZATION ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES additional requirements on Facility, a full risk transfer to the corporate governance with Dutch State will be realized on respect to bonuses and 80% of ING's €27.7 billion resignation premiums. portfolio of Alt-A RMBS at ING Direct USA and ING Insurance Up to the date of this overview, Americas. The Dutch State the following financial therefore will participate in 80% companies have issued debt of any results of the portfolio. instruments under the guarantee This risk transfer will take place scheme: LeasePlan, NIBC at a discount of 10% of par Bank, SNS Bank and ING Bank. value. ING will remain the legal Actual information on debt owner of 100% of the securities issues under the guarantee and will remain exposed to 20% scheme may be obtained on the of any results on the portfolio. website of the Dutch State Treasury Agency (see The effects of the transaction on www.dsta.nl). ING's capital and balance sheet will include a reduction of equity volatility, a positive impact on shareholders' equity of €5 billion through a reduction of the negative revaluation reserve. Risk-weighted assets will be reduced by approximately €15 billion, raising ING Bank's Tier 1 ratio by approximately 40 basis points to 9.5% and the core Tier 1 by 32 basis points to 7.4%, both on a pro forma basis. For the duration of the Back-up Facility, ING will maintain the corporate governance measures agreed upon issuing core Tier 1 securities to the State in November 2008 (see above). In addition, the government- nominated members of the ING Supervisory Board will have approval rights on certain executive appointments. The Executive Board of ING has agreed to forego all bonuses until a reviewed remuneration policy will be completed. This

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SPECIAL CENTRAL BANK RECAPITALIZATION ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES policy will include criteria on sustainability for the Executive Board and is expected to be proposed to the annual General Meeting of Shareholders in 2010. The transaction is expected to close in the first quarter of 2009, subject to further and regulatory approval. AEGON: On October 28, 2008, the Dutch State reinforced the capital position of AEGON Group by €3 billion. The Government will obtain €3 billion in securities, which have largely the same features as shares. The capital reinforcement is made available to AEGON via the Association AEGON, which is AEGON’s largest shareholder. All members of the Executive Board will relinquish their bonuses over 2008, both in cash payments and in options or shares. AEGON will develop a sustainable remuneration policy. Resignation premiums will be restricted to one year’s fixed annual pay. SNS REAAL N.V.: On November 12, 2008, the Dutch State has reinforced the capital position of SNS REAAL N.V. (hereafter: SNS) by €750 million. The Government has obtained €750 million in securities, which have largely

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SPECIAL CENTRAL BANK RECAPITALIZATION ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES the same features as shares. The Government has obtained the right to nominate two Supervisory Board members, who will have the right to veto fundamental decisions. All members of SNS’s Executive Board have relinquished their bonuses over 2008, both in cash payments and in options or shares. Resignation premiums have been restricted to one year’s fixed annual pay.

1 The Dutch Government issued specific rules on its Credit Guarantee scheme on October 21, 2008, which is administered by the Dutch State Treasury Agency (see ). In order to be eligible to apply for the guarantee, the bank must inter alia be authorized to perform banking activities, be domiciled and conduct substantial business in the Netherlands, in addition to satisfying certain solvency ratios. The rules were amended and restated on February 18, 2009.

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NEW ZEALAND GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED (WHOLESALE FACILITY) (RETAIL SCHEME) ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES A Wholesale Funding Guarantee The New Zealand Government On October 23, 2008, spurred Additional liquidity facilities have Facility (the “Wholesale Facility”) has guaranteed all deposits in by fears of a recession, New been provided by the Reserve has been established to facilitate institutions that ‘opt-in’ to the Zealand’s central bank cut its Bank of New Zealand to access to global financial Retail Scheme to a limit of benchmark interest rate by a registered banks. markets by registered banks. NZ$1 million per depositor per record full percentage point to guaranteed institution. 6.5%, warning that financial The Wholesale Facility is market turmoil will further available to financial institutions Institutions with total deposits at constrain the economy. that have a rating of BBB- or more than NZ$5 billion will be better and have substantial New charged a 10 bps p.a. fee for Cuts of 150 basis points were Zealand borrowing and lending guaranteed deposits in excess made on December 4, 2008 and operations. It is not available to of NZ$5 billion. A further fee will January 29, 2009 meaning that institutions that are primarily be charged on the growth of the official cash rate at 3.5% financing a parent or related deposits held by guaranteed was at its lowest level since company, non-financial issuers institutions that have a total being introduced as the key (e.g., corporate or local authority deposit value of less than official interest rate in 1999. issuers) or collective investment NZ$5 billion.1 schemes. A further cut of 50 basis points The Retail Scheme extends was made on 12 March 2009 All newly issued senior beyond registered banks to non- bringing the official cash rate to unsecured negotiable or bank deposit takers (finance further record lows of 3.0%. transferable debt securities by companies, building societies eligible financial institutions in all and credit unions) and to major currencies are eligible for collective investment schemes coverage. The Wholesale (such as unit trusts).2 Facility covers any paper issued until the earlier of its maturity or The opt-in scheme takes the for up to five years. form of a bilateral contractual agreement between the Eligible institutions are required Government and the individual to “opt-in” to the Wholesale institutions which take up the Facility and must then apply for guarantee. The Treasury has an eligible instrument to be discretion to decline applications covered. A fee of between 70 to participate in the Retail bps p.a. and 200 bps p.a. will be Scheme.3 charged on each issue differentiated upon the Participating institutions in the “riskiness” of the issue and the Retail Deposit Guarantee term of the security. As part of Scheme are exempted from the “opt-in” process institutions certain provisions of the will enter into a guarantee facility Securities Act 1978 and the with the Crown and then the Securities Regulations 1983,

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GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED (WHOLESALE FACILITY) (RETAIL SCHEME) ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Crown will issue the actual subject to certain conditions. guarantee as a separate The exemptions relate to document. Accompanying the required information about guarantee will be an opinion as guarantors in registered to enforceability issued by a prospectuses and solicitor of the Treasury in their advertisements. capacity as a legal advisor to the Crown. Guarantees for banks and non- bank deposit takers are currently The Treasury has reduced the being approved. Approvals of fees that apply to the Wholesale guarantees for collective Facility in order to take into investment schemes will follow. account the changing market There have been no approved environment. guarantees for collective investment schemes as at Once an institution has been January 23, 2009. approved, application may be made for an individual instrument to be covered by the guarantee. The guarantee itself does not provide for the guarantee of any individual instrument – this must be done separately. If approval is given by the Crown an eligibility certificate will be granted.

Deposit-taking institutions that wish to participate will be expected to have opted-in to the Retail Scheme. Any institution which joins the Wholesale Facility will be required to agree that the securities eligible for a wholesale guarantee (whether actually guaranteed or not) are not covered by the Retail Scheme.

The Wholesale Scheme will require institutions to enter into a deed of guarantee which gives them access to the guarantee but does not in and of itself

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GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED (WHOLESALE FACILITY) (RETAIL SCHEME) ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES guarantee any debt. In order for a debt instrument to be guaranteed an institution will need to apply for an guarantee eligibility certificate. As at February 25, 2009 only two institutions have entered into a deed of guarantee with the Crown and no eligibility certificates have been issued.

Participating institutions will be required to have: additional capital buffers; prudential supervision; and undertaken that the foreign exchange risk associated with foreign currency borrowing will be hedged and managed.

Two major New Zealand banks have had guarantees issued in their favor and the first successful issue of government guaranteed debt took place on March 27, 2009.

1 The fee charged on institutions with less than $5 billion in deposits will only apply to the increase in total deposits since the scheme was announced (above the 10% allowed growth per annum). A further fee will be imposed upon non- bank deposit takers that are non-rated or rated BB (or below) of 300 bps p.a. New non-bank deposit takers wishing to join the scheme will need to be rated BBB- or better in order to be eligible. 2 Non-bank deposit takers and collective investment schemes will be subject to stringent requirements under the Retail Scheme. In order to be eligible, non-bank deposit takers will be subject to increased reporting requirements, limitations on entering transactions with related companies and personal undertakings from directors. Collective investment schemes will access the Retail Scheme by way of a Deed of Nomination which allows those schemes to benefit from the Guarantees already in place without being subject to the $1 million cap. Each scheme will only be guaranteed if it: invests only in New Zealand Government securities or debt securities issued by institutions participating in the Retail Scheme; and does not increase investments in participating institutions (other than registered banks) beyond the levels that existed as at October 12, 2008. The Wholesale Scheme and the Retail Scheme will be administered by the New Zealand Treasury. Further information can be found on its website: www.treasury.govt.nz. 3 Participating institutions in the Retail Deposit Guarantee Scheme are exempted from certain provisions of the Securities Act 1978 and the Securities Regulations 1983, subject to certain conditions. The exemptions relate to required information about guarantors in registered prospectuses and advertisements.

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NORWAY1 SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES NOK2 million per person. Norges Bank has since On October 24, 2008, the In May 2008, Norges Bank and October 1, 2008 made the Norwegian Government Sedlabanki Islands agreed on a following measures: presented a NOK350 billion swap facility, entitling Government bond swap facility Sedlabanki Islands to borrow ▪ Offered two-year fixed-rate to be administered by Norges €500 million if and when the loans particularly designed to Bank on behalf of the Ministry of need arises. On November 3, secure funding for small Finance. 2008, Norges Bank announced banks. The loans are offered that the agreement would be by auction on market terms to Under the swap arrangement, extended to December 31, 2009 banks operating in Norway government securities are subject to certain conditions. At and are provided against exchanged in return for the same time, Norges Bank collateral in the form of Norwegian covered bonds. The expressed its willingness to offer securities. arrangement is governed by Sedlabanki Islands a medium- The maximum bid for a two- guidelines issued on term loan (five years) of year loan is NOK1 billion. November 3, 2008. The €500 million. Such loan will guidelines set out the require a state guarantee. ▪ Offered banks new three- requirements for the securities months fixed-rate loans of and their valuation. In a joint statement made on maximum NOK10 million and November 20, 2008, the six-months fixed-rate loans of A number of securities and Ministers of Finance in up to NOK1 billion. funds are pre-approved and Denmark, Finland, Norway and ▪ Entered into an agreement listed at the website of Norges Sweden stated that these Nordic with the US Federal Reserve Bank (www.norges-bank.no), countries have decided to under which Norges Bank but other types of collateral may provide medium-term financing may borrow up to be approved upon application. to Iceland within the framework US$ 15 billion against of the IMF-supported program. collateral in NOK. The Bonds and short-term paper agreement expires in from Norwegian and foreign On January 26, 2009, the April 2009. issuers are accepted as Norwegian Government will collateral. Norwegian bond and announce additional measures ▪ Offered banks NOK for € or money market funds may be to strengthen the economy. The US$ in auction based used as collateral on certain details of such financial package FX-swaps to banks active in conditions. are currently unknown. the Norwegian money market. Securities issued by foreign On February 4, 2009, the key entities must have a S&P or policy rate was reduced to Moody’s credit rating. Securities 2.5%. issued by foreign private entities The next scheduled interest rate are required to be listed on the meeting is March 25, 2009. stock exchange.

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES It is required that securities in foreign currency issued by private entities have a minimum volume outstanding equivalent to at least €100 million.

The bonds will be made available to the banks for periods of up to three years against collateral. Banks may surrender covered bonds, including bonds issued by a mortgage association within the bank group. The facility will be made available against a market-based premium. There will, however, be a floor price on the premium. The facility will be administered by Norges Bank on behalf of the Ministry of Finance. Bi-weekly auctions are planned as long as there is a demand for such government bonds.

A bank may only pledge up to 20% of the outstanding volume of its loans and up to 35% of its total collateral in the form of securities issued by Norwegian banks.

Banks’ claims on mortgage companies issuing covered bonds will be eligible as collateral for loans. A bank’s issued bonds or short-term paper are not accepted as collateral.

The value of a security will, as a main rule, be based on the security’s market value adjusted according to set rates available on the website of Norges Bank.

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1 This section is up to date as of February 27, 2009.

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PEOPLE’S REPUBLIC OF CHINA1 SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES On October 9, 2008, the Since September 2008, Central On November 9, 2008, the Chinese central bank, the Huijin Investment Co., Ltd. Chinese Government People’s Bank of China (“Huijin”), an investment arm of announced an economic (“PBOC”), lowered the one-year the Chinese Government, has stimulus plan aimed at benchmark deposit and lending increased its shareholdings in bolstering its weakening rates by 0.27%, respectively. each of the Bank of China, economy, a sweeping move that The interest rates of loans and China Construction Bank, and could also help fight the effects deposits with other maturities the Industrial and Commercial of the global slowdown. The were adjusted accordingly. On Bank of China through share Government would spend an October 15, 2008, the PBOC purchases on the secondary estimated US$ 586 billion over lowered the deposit reserve ratio market. The total value of such the next two years in ten areas, by 0.5%. On October 30, 2008, share purchases is estimated to including low-income housing, the PBOC further lowered the be over RMB 1.3 billion railway, highway and airport benchmark deposit and lending (approximately US$ 190 million). construction, electricity, water, rates by 0.27%, respectively. Huijin may continue to increase rural infrastructure and projects its shareholdings in the three aimed at environmental The PBOC also announced on banks on the secondary market. protection and technological November 3, 2008, that it will innovation. The package is the loosen its strict control over On March 4, 2009, the deputy largest economic stimulus effort credit plans of PRC commercial general manager of China ever undertaken by the Chinese banks to boost economic Investment Corporation (“CIC”) Government. growth. said Huijin will continually increase its shareholdings in On December 5, 2008, Chinese On November 27, 2008, the Bank of China, Industrial and Vice Premier Wang Qishan and PBOC further lowered the one- Commercial Bank of China and US Treasury Secretary Henry M. year benchmark deposit and China Construction Bank where Paulson announced a new lending rates by 1.08%, deemed appropriate given the cooperative plan for increasing respectively. The interest rates state of the market. trade-related finance to on loans and deposits with other emerging markets. According to maturities were adjusted On March 30, 2009, the State the plan, China, through the accordingly. On December 5, Council approved the takeover Export-Import Bank of China, is 2008, the PBOC further lowered by Huijin of the shareholdings in providing US$ 8 billion in short-, the deposit reserve ratio by 1% Xinhua Life Insurance Co., Ltd. medium-, and long-term trade for large banks and 2% for (“Xinhua Life”) from China finance facilities for export of medium- and small-sized banks. Insurance Protection Fund Chinese goods and services to The prevailing one-year deposit Limited. The parties will begin emerging markets. (The US, and lending rates are 2.52% and negotiations on the transaction through the US Export-Import 5.58%, respectively. price following the publication of Bank, intends to provide Xinhua Life’s 2008 audit report. US$ 4 billion in new short-term On December 23, 2008, the Xinhua Life is the fourth largest trade finance facilities and PBOC further lowered the life insurance company in China. US$ 8 billion in new medium- benchmark deposit and lending After this transaction, Xinhua and long-term trade finance

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES rates by 0.27%, respectively. Life will become a state- facilities for export of US goods The interest rates of loans and controlled life insurance and services to emerging deposits with other maturities company. markets.) were adjusted accordingly. On December 25, 2008, the PBOC On March 6, 2009, Mr. Zhou lowered the deposit reserve ratio Xiaochuan, the governor of the by 0.5%. PBOC, stated that the pilot programs of renminbi On February 24, 2009, the international trade settlement PBOC issued buyback notes to are to commence imminently. the public market in the value of These programmes will reduce RMB 80 billion (approximately “institutional obstacles for cross- US$ 11.7 billion). border trade settlement in renminbi”. On March 10, 2009, The PBOC will create a new Hong Kong was selected as the department to manage first pilot region to be allowed to exchange rate policies and use renminbi to settle monitor cross-border short-term international trade. China's capital flows. According to an State Council announced last unidentified PBOC official, it is December to settle international likely that the new department trade in renminbi between will be modeled on the Guangdong, the Yangtze River Exchange Rate Policy Division Delta and Hong Kong and of the Monetary Policy Macao, and between Guangxi, Department. Wang Yu, deputy Yunnan and members of the director of the Monetary Policy Association of Southeast Asian Department, was named as a Nations on a trial basis. likely head of the new department by the same official, On March 6, the National who added that the details were Development and Reform not yet ready to be made public. Commission (“NDRC”) published on its website the Mr. Zhou Xiaochuan, governor breakdown of China's RMB 4 of the PBOC, published an trillion stimulus plan, which will article on the central bank's cover construction for the official website on March 23 and purposes of livelihood; rural 24. Mr. Zhou pointed out that it areas in need, agriculture, and is clear that the Chinese farmers; infrastructure government intends to lower construction; health, culture and interest rates on deposits to education; ecological and expand domestic demands. environmental protection; as well as proprietary innovation and restructuring.

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES On March 23, 2009, the PBOC The Administration over the and China Banking Regulatory Transfer of State-owned Assets Commission (the “CBRC”) jointly in Financial Enterprises was promulgated the Guiding promulgated by the Ministry of Opinions on Further Finance on March 17, 2009. Strengthening Credit According to the new rules, Restructuring to Promote the China moved to prevent the sale Steady and Rapid Development of state-owned stakes in of China’s National Economy financial companies at below- (the “Opinions”), in which it is market prices. There were emphasized that while complaints that domestic state- maintaining a reasonable owned banks sold stakes to increase in the total quantity of foreign investors and employees the monetary credit facilities, at below-market prices. The something must be done to new rules will be effective May further strengthen credit 1, 2009. restructuring so as to promote the steady and rapid In recent months, the PBOC has development of China’s national signed bilateral three-year economy. The Opinions currency swap agreements with expressly encourage banking the central banks or monetary financial institutions to offer authorities of Republic of Korea, more loans and highly Hong Kong, Malaysia, the diversified financial support to Republic of Belarus, Indonesia small and medium enterprises and Argentina totaling RMB 650 which are basically well billion. The purpose of these operated and have good credit, currency swap arrangements is competitive power, market share to promote bilateral trade and and purchase orders but are investment so as to boost currently experiencing business economic development and or financial difficulties. The heighten confidence in the Opinions also encourage money market. commercial banks and vehicle financing companies to jointly On March 25, 2009, the State support eligible vehicle financing Council gave the green light to companies to issue bonds, speed up the process of turning expand the scale of vehicle loan Shanghai into a major securitization and open more international financial and channels for financing vehicle shipping center by 2020. The financing companies. State Council urged Shanghai to develop into a multi-functional financial center by 2020 to keep up with "China's economic influence and the renminbi’s

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES international position".

The State Council has approved the issue of RMB 200 billion local government bonds through the Ministry of Finance. The bonds will be used to fund key central government projects, improve people's livelihoods and improve local government debt management. On March 30, 2009, the Xinjiang Uyghur autonomous region launched bonds worth RMB 3 billion (US$ 441 million) in the first batch of RMB 200 billion local government bonds. On April 2, 2009, the Anhui Provincial Government launched bonds worth RMB 4 billion (US$ 585 million) on the market.

On April 2, 2009, the Ministry of Finance said it will issue RMB 27.31 billion (US$ 4 billion) of book-entry treasury bonds – the fourth batch this year. The bonds, with a maturity of five years, have an annual interest rate of 2.29%. China has increased its issues of treasury bonds to finance its RMB 4 trillion stimulus package for the next two years, with the central government to spend RMB 1.18 trillion.

1 China, according the website of the State Administration of Foreign Exchange, has about US$ 1.946 trillion in foreign reserves as of December 31, 2008.

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PORTUGAL SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES State Guarantee: The Government has increased Accounting of Bond Porfolios: Recapitalization Program: Banco Português de Increase of Core Tier 1 Capital the coverage of the deposit Negócios: Requirements: The Government of Portugal guarantee scheme from €25,000 The Bank of Portugal published The Government has approved passed legislation fully effective to €100,000. Regulation nr. 6/2008 on a recapitalization program of up The Government announced on The Governor of the Bank of from October 24, 2008 pursuant October 14, 2008 aimed at to €4,000 million to be used to November 2, 2008 that it will Portugal announced on to which it will guarantee at its Although the Portuguese allowing credit institutions to recapitalize banks, to help them submit, for parliamentary November 2, 2008, that discretion the funding of credit Minister of Finance has disregard the potential gains and reach an 8% Core Tier 1 ratio (a approval, the nationalization of Portuguese banks will be institutions of up to €20 billion. represented in the media that losses of their bond portfolios for ratio that will become BPN. In the mean time, the required to hold a minimum of the Portuguese State would the calculation of their own mandatory). The program has Bank of Portugal appointed two 8% of Core Tier 1 capital The maturities of the covered cover all the deposits held with funds, to the extent that such entered into force on government administrators who (against the 4% previously credits may range between Portuguese credit institutions, gains and losses are not related November 25, 2008. are also directors of the state- required by the Bank of Portugal three months and five years. the fact is that until now only the to impairment. owned bank CGD. Its shares and the Portuguese market However, inter-bank deposit increase from €25,000 to The stated purpose of this will be valued by two practice that sets it currently at operations in the money market, €100,000 per depositor has This measure is of significant program was said to be to independent entities to 7%). subordinated debt operations, been implemented. importance in the current protect national banking determine the amount that operations already covered by financial crisis scenario since institutions against hostile shareholders will receive as Legislation protecting any other type of guarantee or due to the low liquidity of bonds takeovers, and to create a level compensation for the consumers: security and financing the banks are not able to sell playing field for the Portuguese nationalization. operations in jurisdictions not them out of their trading banking sector, since other On November 3, 2008, a complying with internationally portfolio, and until now have jurisdictions have already This measure was aimed at legislation was enacted requiring accepted transparency been obligated to account for implemented similar measures ensuring the safety of deposits prior approval of the Bank of standards are excluded from this them as potential gains or aimed at helping the financial and at preventing systemic risks. Portugal for advertising complex scheme. losses in the calculation of own sector. The reaction from credit The nationalization comes after financial products, establishing a funds. institutions to this measure was rescue plans directed at its duty to provide a prospectus to Qualifying institutions must favorable. recapitalization and asset sales clients before subscription of demonstrate that the guarantee Eligible Collateral in have failed, which included a such products and in general is required for the normal Eurosystem Operations: The bill makes provision for two proposal to the State for the broadening the duty of functioning of the institution. distinct regimes: acquisition of preferential shares information and assistance to Further to the European Central amounting to €600 million. banking institution customers, The guarantee is available to Bank measure of broadening the (i) An increase in the equity According to public statements primarily at the consumer credit Portuguese credit institutions types of assets eligible as levels of credit institutions which by the Governor of the Bank of pre-contractual stage. which inter alia demonstrate that collateral in Eurosystem under the applicable legislation Portugal, the financial disruption the same is necessary in order operations, the Bank of Portugal possess the necessary liquidity was the result of alleged The Bank of Portugal has also to obtain funding. has issued an instruction, and soundness conditions; and doubtful operations by the bank submitted to public consultation effective between December 1, that, until recently, had not been a new regulation imposing new A fee will be paid by credit 2008 and December 31, 2009, (ii) Direct state intervention in revealed on BPN accounts, rules applicable to players upon institutions amounting to confirming that the following the recovery and remedial reports and investigations opening of current and deposit (i) 50 bps where the guarantee’s may be elected: processes for credit institutions aggravated by the current accounts. duration is one year or less or which have or are at risk of market situation and causing it (ii) the institutions’ median five (i) debt instruments having an equity, solvency or severe losses and a serious years CDS spread plus 50 bps denominated in US dollars, yen liquidity level of less than the liquidity shortfall. In the where the guarantee’s duration and pounds sterling, which are beginning of February, the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES is more than one year. issued, held and liquidated in legal minimum. current management of BPN The Bank of Portugal has If the Portuguese State decides the Eurozone and whose issuer announced that the Bank has recently submitted to public to honor a payment claim is established in the European These measures will only apply estimated imparities amounting consultation two regulations, the presented under the guarantee, Economic Area; to the capitalization operations to € 1.8 billion. main innovation of which are the it may (i) subscribe for capital of Portuguese-based credit prohibition on banks to sell issued by the credit institution; (ii) syndicated loans fulfilling the institutions carried out before Banco Privado Português: financial products named as (ii) decide on various corporate requirements laid down in recent December 31, 2009. “banking deposits” when the matters of the credit institution, decisions and regulations of the On November 19, Banco customers are not able to totally such as distribution of dividends ECB; (Re)capitalisation can be carried Privado Português requested a recover the amounts deposited. or remuneration of managers; or out through distinct transactions, €750,000,000 guarantee for a In addition, the prospectus for (iii) impose compulsory (iii) certain types of debt including (i) acquisition of the period of 3 years from the structured banking deposits administration. instruments issued by credit credit institution’s own shares or government. On November 24, shall follow a standard model, institutions and marketed in non- (ii) increase in the share capital the Governor of the Bank of and be subject to prior approval The legislation authorizes the regulated markets as listed by of the credit institution through Portugal advised the from the Bank of Portugal. scheme to continue until ECB; ordinary shares, preference Government not to issue such a December 31, 2009. Until now, shares which do not carry voting guarantee, in view of the small New rules on disclosure of Banco Privado Português has (iv) certain assets rated as rights and shares which confer dimension of the Bank, and of information: already requested an “BBB-”; special rights; (iii) other capital the fact that only a fraction of its €750,000,000 Portuguese state securities which are admissible business is directed to the On November 3, 2008, a guarantee, and Banco (v) subordinated assets that are by law or the articles of the granting of credit to customers legislation was passed to Português de Investimento, covered by guarantees provided company; (iv) joint venture (the main business of this bank increase the information to be Banco Comercial Português, by guarantors with a solid agreement or other contracts is private banking). Nonetheless, provided to the Bank of Portugal Banco Espírito Santo, financial situation; and which have similar effects. the State has agreed to provide by the credit institutions, Santander Totta and Caixa a guarantee covering the particularly in relation to (i) the Geral de Depósitos have (vi) fixed term deposits created The issue of the above financial repayment obligations under an risks incurred, including the confirmed that they intend to by the credit institutions before instruments may also be €450,000,000 loan recently exposure level of different types apply for it. In addition, the Bank of Portugal, in destined for credit institution granted by a syndicate of of financial instruments; (ii) the according to information publicly accordance with an instruction shareholders, the public or both, Portuguese banks to BPP. The risk management and control available, Banco Espírito Santo issued by the regulator. with a full or partial underwriting guarantee was issued under the practices to which they are or and Caixa Geral de Depósitos or placement guarantee by the general regime, as the may be subject; and (iii) the were already granted a Softening of the impact of state. Government has understood methods used in valuing their guarantee by the State under pension funds actuarial that the exceptional state assets, in particular those which the guarantees scheme covering losses: At the duly-grounded proposal of guarantee scheme recently are not traded in high liquidity an issuance of bonds. Banco the Bank of Portugal, a approved was not applicable to and transparent markets. Espírito Santo has already The Bank of Portugal has capitalisation operation may the BPP case. The guarantee is closed a debt issue amounting approved a regulation until 2012 take on the nature of a debt covered by security over certain Possible waiver / increase of to €1.5 billion on January 8, allowing banking institutions to issue (convertible to or BPP’s assets granted in favor of requirements applicable to 2009. gradually soften the negative exchangeable for ordinary or the State. investment funds: impact of the actuarial losses of preference shares) without their pension funds in 2008 in breaching the limits set out in On December 1, 2008, the Bank The above-mentioned legislation the calculation of their own the Portuguese Companies of Portugal decided to also provides for the temporary funds. Code. reorganize BPP and has waiver of compliance with compulsorily appointed three certain matters related to Analysts expect that this The financial institutions that people to serve on BPP’s board investment fund management,

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES measure will have a relevant benefit from this aid will have of directors. The regulator also at the request of the interested impact in the calculation of certain obligations imposed on decided on the same date that parties; (i) the portfolio solvency ratios of certain them, such as financing the BPP will be discharged for a composition regime, its limits, Portuguese banking institutions. economy, including families and period of 3 months from techniques and instruments for SMEs, the implementation of obligations arising from its investment fund management; good corporate governance portfolios management activity. (ii) the terms and conditions for practices and a pay and financing investment funds; dividends policy as well as (iii) carrying out operations with increased contributions to the related funds and entities; Deposit Guarantee Fund (iv) the vagaries which (conditions to be set by order of investment funds are liable to, the Ministry of Finance). particularly with regard to mergers, splits, transformation, The reaction from credit liquidation and division of funds. institutions to this measure was favourable. Conversely, the same legislation imposes additional duties on Decrease of the nominal value investment funds and their of shares without reduction respective managers, of share capital: depositaries or marketing entities in exceptional situations The Government has passed including turmoil in the financial legislation, entering into force on instruments market. March 21 2009, allowing companies to reduce the Review of the financial sector nominal value of their shares. penalty regime:

This legislation serves the A legislative bill has been purpose of facilitating presented to Parliament by the recapitalization operations in the Government with a view to current financial and market enhancing the penalty regime scenario and will only be for the financial sector in applicable until December 31, criminal and administrative 2009. offence matters, modernising - and bringing into line - the According to the Act, punitive framework and the companies listed in regulated amounts of the fines to the size markets may reduce the nominal and characteristics of the current value of their shares without financial sector. reducing their share capital whenever:

(a) The nominal value of the shares before reduction is equal

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES or inferior to their balance sheet accounting value, as established in a financial statement certified by the company’s auditor; and

(b) A resolution for the raising of capital is simultaneously or priorly passed.

The amount of reduction must be set in accordance with the corporate interest and current market conditions, and the reduction will only take place following an approval from the Portuguese securities regulator.

Additionally, the portion of share capital corresponding to the amount of the reduction of nominal value shall only be used for the following purposes: (i) raising the shares’ nominal value; (ii) issuing new shares to be allotted to existing shareholders, which will be entitled to ordinary preemption rights in the event of a share issue, with a view of fostering the egalitarian treatment of shareholders.

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REPUBLIC OF KOREA SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES On October 19, 2008, the On November 6, 2008, the Foreign currency liquidity Recapitalization of State-run Purchase of Troubled Project Bond Market Stabilization Korean Government announced Korean Government published provision: Banks: Financing Loans of Savings Fund: that it will guarantee the foreign- its proposal regarding Bank: currency debt of local banks amendments to the enforcement On October 6, 2008, the Korean On November 3, 2008, the On November 13, 2008, the borrowed up to June 30, 2009. decree for the Depositor Government provided US dollar Korean Government announced On December 3, 2008, the Korean Government announced Protection Act so that foreign- liquidity in the amount of plans to inject funds into Korean Government announced plans to set up a KRW 10 trillion On October 30, 2008, the currency deposits would be US$ 15 billion by utilizing the state-run banks and other plans to arrange for the Korea bond market stabilization fund National Assembly approved the covered by deposit insurance. foreign equalization fund. financial institutions to strength Asset Management Corporation that will mainly invest in bonds Korean Government’s bank debt This proposal was confirmed their credit extension capacity. (KAMCO) to purchase KRW 1.3 issued by corporations and guarantee program up to a limit and promulgated on On October 19, 2008, the trillion worth of troubled project financial companies. of US$ 100 billion. Each bank November 26, 2008. Korean Government announced The actual amounts of such fund financing loans from mutual participating in this program will plans to provide loans of injections in respect of the savings banks. On November 24, 2008, the be subject to a 1% per annum US$ 20 billion to local banks by relevant financial institutions Bank of Korea announced its guarantee fee. utilizing the foreign equalization reflected in the annual In accordance with such plan, plans to provide liquidity up to fund and the Bank of Korea government budget for 2009 that on December 30, 2009, KAMCO KRW 5.0 trillion to banks and On November 14, 2008, 18 local announced plans to provide were approved by the National made its first purchase of KRW other financial companies banks executed a memorandum US$ 10 billion to local banks Assembly on December 15, 500 billion of troubled project through the purchase of of understanding pertaining to through swap transactions. 2008 and executed accordingly financing loans from 30 mutual government bonds and other the Korean Government’s bank by the Korean Government in savings banks. In addition, on low-risk securities held by such debt guarantee program and the On November 13, 2008, the January 2009 are as follows: March 18, 2009, KAMCO made banks and financial companies, banks’ plans for efficient Bank of Korea announced plans its second purchase of KRW 1.2 the proceeds of which will be management with the Financial to provide US$ 10 billion to local - The Korea Development Bank: trillion of troubled project used to finance their investment Supervisory Service. banks for export financing of KRW 900 billion financing loans from 51 mutual in the BMSF. small and medium businesses. savings banks. On February 18, 2009, the - Industrial Bank of Korea: On December 9, 2008, the Korean Government lowered the Since December 2, 2008, the KRW 500 billion Restructuring Fund under BMSF task force1 formed the guarantee fee rate of the bank Bank of Korea has provided KAMCO: BMSF as a non-redeemable debt guarantee program from US$ 16.5 billion to local banks, - The Export-Import Bank of private equity fund with a term of 1% to 0.70% per annum. utilizing its US$ 30 billion Korea: KRW 300 billion On February 19, 2009, the three years. The BMSF will be currency swap line with the Korean Government announced set up as a fund of funds, with As of April 4, 2009, Hana Bank Federal Reserve of the United - Credit Guarantee Fund and its plan to establish the each underlying fund focusing is in discussions with the Korean States. Kibo Technology Fund: Corporate Restructuring Fund its investment on a particular Government to issue foreign KRW 1.1 trillion under KAMCO to purchase type of bond (e.g., bank bond, currency bonds based on the KRW liquidity provision: troubled assets from financial corporate bond, etc.). bank debt guarantee program. - Korea Housing Finance institutions. This Fund will be On September 18, 2008, the Corporation: KRW 200 billion financed by the issuance of On December 17, 2008, the first Bank of Korea provided government-guaranteed bonds. BMSF (KRW 5 trillion) was set - Korea Asset Management KRW 6.5 trillion to the financial up and commenced operations. market through repo Corporation: KRW 400 billion On March 13, 2009, the Korean transactions, etc. Government announced detailed On December 15, 2008, the plans relating to the Korean Government announced On October 23, 2008, the Bank management of the of Korea increased the credit that it had made investments-in-

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES line for support of small and kind of KRW 1.65 trillion in the Restructuring Fund. medium businesses from aggregate to the following three KRW 6.5 trillion to state-run banks: - The funds required for the KRW 9 trillion. Restructuring Fund will be - The Korea Development Bank: appropriated by issuing On October 24, 2008, the Bank KRW 500 billion government-guaranteed bonds, of Korea provided KRW 2 trillion with a maximum amount of to non-bank financial institutions - Industrial Bank of Korea: KRW KRW 40 trillion. indirectly through repo 500 billion transactions with Korea - Use of proceeds will include Securities Finance Corp. - The Export-Import Bank of the purchase of troubled assets Korea: KRW 650 billion of financial institutions and On October 27, 2008, the Bank assets being disposed by debtor of Korea included bank bonds On March 23, 2009, the Korean companies in restructuring as securities eligible for repo Government announced that an proceedings. transactions and announced that aggregate amount of KRW 2.3 it would purchase KRW 5 trillion trillion was reflected in the - The Restructuring Fund will be to 10 trillion of bank bonds revised supplementary budget operated for a limited period of through repo transactions to for the purpose of investments in time, maturing in 2014. provide liquidity to the banking five state-run financial sector. institutions to bolster their In April 2009 the Korean support of small-and-medium- Government intends to submit a On January 13, 2009, the Bank sized enterprises (SMEs) and bill amending the relevant law to of Korea provided KRW 1.5 the disposal of troubled assets. enable the launch of the trillion of liquidity to the financial Restructuring Fund. market through repo Recapitalization of transactions. commercial banks: On December 18, 2008, the Korean Government announced plans to set up a KRW 20 trillion of Bank Capital Expansion Fund to support banks to strengthen their financial stability.

On February 25, 2009, the Korean Government announced detailed plans relating to the fund-raising for, and management of, the BRF.

- The KRW 20 trillion required for the BRF will be comprised of: (a) a KRW 10 trillion loan from the Bank of Korea, (b) a KRW 2

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES trillion loan from The Korea Development Bank and (c) KRW 8 trillion from institutional and general investors.

- Use of proceeds will be limited to lending activities for SMEs and companies under restructuring.

On March 31, 2009, the Korean Government announced the completion of the first round of purchases by the BRF of hybrid bonds and subordinated bonds issued by eight banks in the amount of approximately KRW 4 trillion.

Financial Market Stabilization Fund:

On March 13, 2009, the Korean Government announced its plan to launch the Financial Market Stabilization Fund (FMSF) with the Korea Policy Finance Corporation (fka Korea Development Fund) for the purpose of enhancing the soundness of financial institutions and reinforcing the support functions for real economic sectors.

- The funds required for the FMSF will be appropriated by issuing government-guaranteed bonds.

- Use of proceeds will include equity investments, loans and loan guarantees for financial institutions.

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES In April 2009 the Korean Government intends to submit a bill amending the Act on Structural Improvement of Financial Industry to enable the launch of the FMSF.

1 The BMSF task force is constituted of seven civilian members representing banks and other financial companies investing in the BMSF.

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RUSSIA SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES On March 31, 2009, the Russian With effect from October 17, With effect from September 18, As of November 19, 2008, the There have been reports that On November 20, 2008, the Government announced that it 2008, the Central Bank of 2008, the CBR, aiming to Russian Government had Russia will acquire up to US$ 20 Russian Government will provide government Russia (the “CBR”) increased stabilise the situation in the allocated approximately RUB billion of equity in various announced its proposed guarantees on bonds issued by the maximum amount, which in Russian financial markets and to 5.7 trillion (approximately US$ Russian companies in order to measures aimed to support strategically important accordance with the support liquidity in the Russian 211 billion) to stabilise the support the stock market. A Russia’s real economy sector, companies (including banks and requirements and procedures banking sector, decreased situation in the Russian markets. number of transactions were which provide, amongst other, Russian military industrial established by Russian interest rates on loans from the Of this, the Russian Government announced in October- for certain tax advantages for enterprises) in the amount of legislation, is payable by the CBR secured by the pledge of spent RUB 175 billion (US$ 6.5 November 2008 relating to the businesses. In particular, with RUB 300 billion. CBR to an individual depositor promissory notes, receivables or billion) on highly-rated and liquid purchase by entities allocated effect from January 1, 2009, having a claim against an suretyships provided by credit Russian shares and bonds to with the Russian Government of profit tax will be decreased from On December 12, 2008, RIA insolvent Russian bank, from organisations as follows: from support liquidity in the Russian shares in various Russian 24% to 20%, which will leave Novosti reported that the state- RUB 400,000 to RUB 700,000. 8% to 7.5% per annum for stock market. RUB 450 billion companies and banks. For RUB 400 billion with Russian owned Agency for Housing rouble loans with a term of up to (US$ 16.6 billion) was example, on November 1, 2008, companies. Tax for small Mortgage Lending (AHML) On December 2, 2008, 90 calendar days; and from 9% earmarked to provide long-term RIA Novosti reported that the business is expected to be announced that it is ready to Kommersant released a to 8.5% per annum for rouble subordinated loans to Russian Russian Federal Agency for decreased in Russia’s regions offer Russian banks RUB 500 statement by the Deposit loans with a term of 91 to 180 banks on favourable terms, RUB Management of Federal from 15% to 5%. As to January billion worth of guarantees for Insurance Agency ("DIA") calendar days. 200 billion (US$ 7.4 billion) was Property purchased 3.3% of the 13, 2009, only six regions of mortgage bonds, which would stating that it may raise the allocated to VTB to provide shares in a large diamond- Russia decided to support involve repackaging senior guarantee limit to RUB 1 million. At the same time, the CBR loans to Russian enterprises to mining company “ALROSA” and Russian companies and RMBS with guarantees that will As of April 7, 2009, however, the raised the adjustment coefficient support the real economy sector is now holding a controlling decreased the tax to 5%. then make them eligible guarantee limit remained to calculate the value of security and RUB 25 billion (US$ 925 stake in the company (50.9%). According to the estimates of collateral for repo lending from unchanged at RUB 700,000. on the loans provided by the million) was provided to A controlling stake in Svyaz- the Russian Ministry of Finance, the CBR. Only financial CBR, which is calculated based Rosselkhozbank (a government- Bank was bought by made on November 20, 2008, institutions with mortgage pools on potential fluctuations or owned bank active in the Vnesheconombank (the the announced package of tax of at least RUB 3 billion could be changes in price of securities, agricultural sector) to support its transaction was announced on measures will cost RUB 556.6 eligible for the scheme. and which is intended to lending program. In addition, September 23, 2008). In billion. However, on March 23, 2009, decrease the CBR’s risks the Russian Government addition, on October 27, 2008, AHML announced that in 2009 it related to the potential contributed RUB 60 billion (US$ Vnesheconombank’s board of On December 4, 2008, Russian will help troubled borrowers of depreciation of the security. 2.2 billion) to the charter capital directors approved the purchase prime minister Putin suggested mortgage loans, but will not help of Agency for Housing Mortgage of 99% of the shares in Globex that the DIA provide Russian Russian banks as had With effect from September 18, Lending thereby significantly Bank for the purposes of further banks with government previously been promised. The 2008, the CBR decreased the increasing its capacity to stabilization of the Russian guarantees in respect of decision not to support Russian interest rate on collateral loans refinance the mortgage banking sector. A controlling mortgages of individuals who banks was taken in light of the with a term of one day from 9% portfolios of Russian banks. stake in KIT-Finance was lose their employment as a fact that RUB 200 billion (US$ to 8%. According to the Russian news bought by Russian Railways result of the financial crisis. 7.2 billion) will no longer be agency Interfax, as of April 1, (the transaction was announced Consequently, the Russian provided to AHML under the In order to further improve 2009, the Russian Government on October 8, 2008); Sobinbank Government approved a 2009 budget. market liquidity, in October spent approximately RUB 400 was bought by programme of government 2008, the CBR took the billion (US$ 14.9 billion) to Gazenergoprombank (the support for mortgage borrowers. following measures: support the Russian financial transaction was announced on As part of the programme, in system in the seven months October 15, 2008); Yarsotsbank December 2008 the DIA (i) with effect from October 15, since September 2008. On April was bought by Promsvyazbank approved "Rules for

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES 2008, the CBR reduced its 6, 2009, Russian Prime-Minister (in October 2008); Russian Restructuring of Mortgage reserve requirements as follows: Putin announced that in 2009 Capital Bank was bought by the Residential Loans for Certain on liabilities to individuals (in the Russian Government will National Reserve Bank (the Categories of Borrowers in roubles) from 1.5% to 0.5%; on spend another RUB 3 trillion transaction was announced on 2009" and published "Standards credit institutions’ liabilities to (US$ 108 billion) to combat the October 23, 2008); VEB’s board for Restructuring of Mortgage non-resident banks (in roubles consequences of the crisis and of directors approved the Loans for Certain Categories of and foreign currency) from 4.5% to redevelop the economy. purchase of 99% of the shares Borrowers" which provide for the to 0.5%; and on credit in Globex Bank on October 27, following restructuring schemes: institutions’ other liabilities (in On October 13, 2008, Russia 2008. roubles and foreign currency) adopted the Federal Law (i) the mortgage lender and the from 2.0% to 0.5%. This new No.173-FZ “On Additional According to official DIA will provide funds to the legislation brings the CBR Measures Regarding Support of announcements, these mortgage borrower; or reserve ratios to unprecedented the Russian Financial System”, transactions were made to low levels. These new reserve pursuant to which the CBR support the banks which had (ii) the DIA will provide a requirements are valid until April provided Vnesheconombank become technically insolvent "stabilization loan" to the 30, 2009. (VEB) with US$ 50 billion (from and could no longer perform mortgage borrower. the CBR’s gold and currency their obligations to the On May 1, 2009, the CBR reserves). VEB was given a depositors and creditors. According to the DIA, option (i) expects to raise the reserve mandate to refinance Russian above is likely to be the main requirements on all credit major companies’ debt to foreign On November 28, 2008, VTB scenario for the time being. institutions’ obligations to 1.5%, banks, which arose before Group announced that it will then again on June 1, 2009, to September 25, 2008. VEB’s lend Alrosa US$ 1.6 billion to There have been significant 2.5%; public criteria are to extend help the state-owned diamond changes to the Russian loans of between US$ 100 mining monopoly refinance its insolvency framework with the (ii) the interest rate on loans million and US$ 2.5 billion for debt. introduction of two new laws on from the CBR secured by the one year at a minimum of 500 December 30, 2009, namely pledge of promissory notes, basis points above LIBOR. As In December 2008, the Russian dealing with insolvency and receivables or suretyships of October 29, 2008, VEB had Government announced its pledge enforcement. provided by credit organisations approved loans in the amount of intention to support liquidity and was decreased by 0.25% to approximately US$ 10 billion mortgage lending and to provide The pledge enforcement law 8.25% per annum for rouble (out of applications for loans for these purposes up to RUB provides for new methods of loans having terms of between exceeding US$ 100 billion, 200 billion (US$ 7.2 billion) to enforcing pledges over assets 91 and 180 calendar days; approximately US$ 70 billion AHML to buy out mortgages (in addition to enforcement from Russian banks and from Russian private banks in through auction which was the (iii) the term for secured loans approximately US$ 30 billion order to reduce banks' risk only option until the introduction was raised from 30 to 90 from Russian corporates). exposure (under the current of this new law). calendar days; and threat of wide-scale mortgage On December 1, 2008, VEB defaults). However, as of April 7, The Russian Government has (iv) the CBR was granted the announced that, of the loans 2009, AHML has not received raised custom duties on right to provide rouble loans to approved for banks and any of these funds and it imported cars from 25% to 30- Russian banks with no collateral corporates, $7.5 billion had announced in March 2009 that 35% with effect from January for a term of up to six months. already been transferred. in the absence of the promised 12, 2009 until October 2009. support it will have to harden its The aim of this measure is to On October 3, 2008, the CBR Under this programme VEB support the Russian car industry

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES expanded the list of the assets, announced further tranches of mortgage lending standards. during the economic crisis. which can be provided as subordinated loans on security on the loans granted by November 11, 2008 - of RUB On December 17, 2008, it was On January 16, 2009, the the CBR. In addition to the 200 billion - and on December announced that Ukraine's Russian State Duma assets accepted by the CBR 10, 2008 - of RUB 17.1 billion (of Prominvestbank, which has (parliament) approved previously as security (such as which RUB 10.2 billion was been in receivership since amendments to the Fiscal Code promissory notes or allocated to Alfa Bank, RUB 4.9 October, had signed a that allow the Russian receivables), the CBR allowed billion to Nomos Bank and RUB memorandum with Russia's VEB Government to directly provide issues of bonds to be provided 2 billion to Khanty-Mansiysk to help restore its financial subsidies to Russian regions in as security on its loans as well, Bank. position. It was reported that the order to support them during the provided that such bonds meet sum needed to recapitalize the economic crisis. The amount the following criteria established According to the Russian bank would be announced soon and specific purpose of the by the CBR: Minister of Finance Alexey and submitted to the Russian subsidies is to be determined by Kudrin, as of April 7, 2009, VEB Government for consideration. the Russian Government without (i) the relevant issue of bonds is had already lent US$ 11 billion the prior approval of the Duma. included into a list of issues of to companies and banks to According to the recapitalization It is likely that primarily RUB bonds (published in “Vestnik of refinance foreign debt. plan, Prominvestbank received 43.7 million will go towards the the CBR”), which can be the first tranche in the amount of stabilization of the employment accepted by the CBR as security In September 2008, the Russian US$ 390 million on February 10, market, according to the in accordance with the decision Government set aside US$ 50 2009, the second tranche in the Russian Ministry of Finance. of the CBR’s board of directors; billion to refinance foreign amount of US$ 325 million on corporate debt through VEB, but February 20, 2009, and the third On March 2, 2009, the Russian (ii) the bonds are registered on in March 2009 the program was tranche in the amount of US$ Government will discuss the the securities (depo) account shut down by the Russian 285 million on March 20, 2009. establishment of a new non- opened with a depository; Government. profit government body, the On February 12, 2009, the Russian Finance Agency (iii) the bonds are owned by the The CBR provided government- Moscow Times reported that the ("RFA"). It is proposed that the borrowing bank, these are not owned Sberbank, which suffered Russian Government had RFA will oversee the National charged by any other obligations an unprecedented withdrawal of refused to consider taking toxic Reserve Fund that is currently of the bank and there are no retail deposits in October 2008 assets off banks' balance under the control of the CBR, as disputes and/or submitted (approximately RUR 80 billion sheets. well as other financial activities claims in respect of the bonds; (US$ 2.9 billion), representing as seen fit by the Russian 2.5% of its retail deposits base, On March 6, 2009, Troika Government. These could be (iv) the bonds have to be repaid with a RUB 300 billion (US$ Dialog, a major Russian the reserve fund (RUB 4 billion), not earlier than six days after the 11.1 billion) subordinated loan in investment company, pension savings (RUB 350 repayment date under the CBR addition to the RUB 150 million announced its intention to million) as well as the national loan; and (US$ 5.5 billion) subordinated acquire "troubled" Russian and foreign debt of the Russian loan. As of mid-March 2009, the assets together with Standard Federation. The RFA will be run (v) the borrowing bank is not the situation with retail deposits in Bank Group. No further details by a supervisory board. It is issuer of the bonds to be Sberbank has reportedly have been announced as of expected that initially, the RFA provided as security. improved. According to the April 7, 2009. will not control the money itself, CBR, as of March 15, 2009, in but will appoint Russian and On October 23, 2008, the Sberbank retail deposits foreign experts to provide advice Federal Law “On Additional constituted RUB 3.116 trillion,

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Measures Aimed to Strengthen an increase in the amount of prior to investing the funds. Stability of the Banking System RUB 40 billion (US$ 1.45 billion) for the Period until December compared with mid-February. 31, 2011” was adopted, with effect from October 28, 2008, In September 2008, the Russian giving VEB 1.3 trillion roubles Ministry of Finance, with the (US$ 50 billion) to pay off or CBR’s approval, relaxed the service Russian legal entities’ requirements for Russian banks foreign loans obtained before to participate in state auctions September 25, 2008. It came with a view to placing budgetary after President Dmitry funds with banks more Medvedev announced RUB 950 efficiently, which allowed billion (US$ 36.4 billion) of long- Russian banks to attract more term help for banks at an funds from the Russian Ministry emergency Kremlin meeting on of Finance. In particular, 25 October 7, 2008. more banks (in addition to Sberbank, VTB and Further, this legislation provides Gazprombank) were allowed to that in order to strengthen participate in state auctions. stability of the Russian banking The following requirements were system and to protect creditors’ applied to such banks: general interests, if a Russian bank banking licence issued by the shows any signs of financial CBR; own funds of not less than instability threatening the legal 5 billion roubles; no budgetary interests of its depositors and funds-related indebtedness; creditors, the CBR and the DIA, obligatory participation in the are allowed to take measures to deposit insurance system; and prevent such bank’s insolvency. long-term solvency rating not In particular, the DIA and the less than “BB-” by Fitch and CBR can, amongst other things, Standard & Poor’s and “Ba3” by provide loans; acquire shares or Moody’s. In October 2008, the participatory interests in such Russian Ministry of Finance bank’s charter capital in such further relaxed these amounts as to allow them to requirements to allow make decisions within the participation in state auctions by competence of the bank’s banks having long-term shareholders or participants; solvency rate “BBB-” and “BB+”. perform functions of temporary administration on the basis of In addition, on September 15, the relevant CBR decision; and 2008, the Russian Ministry of arrange auctions for the bank’s Finance increased the amount assets representing collateral in of temporarily available respect of the bank’s budgetary funds from RUB 668 billion (US$ 24.7 billion) to RUB

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES obligations. 1.232 trillion (US$ 45.7 billion) to support the liquidity of the For the purposes of the above- Russian banking sector. mentioned law, on November 1, 2008, the CBR approved the On December 11, 2008, the DIA model form of the agreement has started to apply the RUB between the CBR and credit 200 billion (US$ 7.4 billion) organizations, which provides provided to it by the Russian for compensation by the CBR of Government to prevent the part of the losses or expenses insolvency of Russian banks. incurred by the credit The DIA has the authority to organization as a result of its prevent the insolvency of transaction(s) made with other Russian banks, by taking credit organizations (if their measures, that include providing banking licences have been financial assistance to the revoked) on or after October 14, persons that acquire shares 2008 until December 31, 2008 (participation interest), assets or (inclusive). As of November 20, liabilities (or their part) of a bank; 2008, the CBR concluded such providing financial assistance to agreements with MDM Bank, the bank (provided that the DIA Raiffeisenbank and Sberbank. or investors will be purchasing The CBR also offered the same shares (participation interest) of possibilities to other major the bank in the amount, that Russian banks. These would allow them to make measures are aimed at decisions within the competence stabilizing the situation in the of the bank’s shareholders (or Russian interbank market. As of participants). For example, on January 22, 2009, the CBR had November 14, 2008, the DIA concluded such agreements entered into an agreement for with 13 Russian banks. Probusinessbank to acquire Gazenergobank. Under the On January 20, 2009, Prime- agreement, Probusinessbank as Tass reported that the CBR investor will acquire withdrew 33 banking licenses in Gazenergobank’s shares and 2008. Between November 14, will elaborate a plan for the 2008 and March 18, 2009, the financial rehabilitation of CBR withdrew the licenses of 12 Gazenergobank with the aim of banks, including Sotscreditbank settling Gazenergobank’s (March 18, 2009), NPK-Bank creditors’ claims by March 1, and Federal Investment Bank 2009. The DIA, in turn, (March 30, 2009). undertakes to provide financial assistance to Probusinessbank On November 27, 2008, the to assist it to fulfil its obligations. CBR announced that a third of Under the agreement, on

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES all Russian banks posted a loss January 22, 2009, last month, amid the country's Probusinessbank increased its worst financial crisis in a shareholding in Gazenergobank decade. from 19.79% to 99.99203%.

On February 25, 2009, the CBR On March 17, 2009, the DIA reported that a total of 171 announced that it spent RUB banks were unprofitable in 132.8 billion (US$ 3.8 billion) January 2009, with combined from November 2008 to losses of RUB 16.99 billion (US$ February 2009 to support 620.5 million). troubled banks.

On November 27, 2008, the On October 14, 2008, to support CBR urged banks not to the liquidity of the Russian increase their foreign currency banking system, the CBR longs in December 2008. The increased fixed interest rates on CBR advised organizations with operations with deposits, with a net short position in foreign effect from October 15, 2008, currency not to build longs in the which is aimed at encouraging final month of 2008, stating that companies and individuals to the monthly average net long make deposits. balance positions in each currency should not be higher To decrease the outflow of than for the October 25, 2008 to capital from Russia and to November 25, 2008 period. In restrain inflation, with effect from December 2008, the CBR November 12, 2008, the CBR extended the application of increased the refinancing rate these recommendations to the (i.e., an interest rate applied by first quarter of the year 2009. the CBR to credit organisations and depositary institutions that On December 1, 2008, the CBR borrow funds from the CBR, that announced reduced rating influences interbank market requirements for banks eligible rates and deposit interest rates) to be compensated for their by 1% to 12%. This measure is inter-bank lending losses to BB- intended to increase the return /Ba3. on borrowed assets. With effect from December 1, 2008, the Of the RUB 60 billion provided CBR increased the refinancing to AHML in 2008, RUB 8.4 rate by 1% to 13%. On March billion has been disbursed as to 19, 2009, the head of the April 7, 2009. Ministry of Economic Development and Trade, Mrs. On December 5, 2008, the Nabiullina announced that the Russian Government outflow of capital from Russia is

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES announced that it would provide expected to be approximately RUB 200 billion (US$ 7.2 billion) US$ 80 billion in 2009. to support the mortgage market. This would be distributed among The specific mechanisms of banks that issue mortgages, government support have not while any mortgage-backed been disclosed and there are bonds issued by banks would be reports that the situation in guaranteed by AHML and Russia may be exacerbated by refinanced by the CBR. geo-political tensions. However, on March 23, 2009, AHML announced that in 2009 it The CBR has been carrying out will not support banks on the regular loan auctions, with mortgage market, because RUB varying terms and interest rates, 200 billion (US$ 7.2 billion) for to 136 eligible banks since the support of mortgage lending October 2008. The CBR programme was not included in announced on November 21, the 2009 budget as had been 2008, that it would reduce hoped. requirements for banks to take part in collateral-free money On December 16, 2008, the auctions, to include banks rated CBR announced that it would by Russian rating agencies (less increase the term of unsecured than 12% of Russia's banks are loans to banks to one year. rated by international agencies). Prime Minister Putin said legislation regulating the CBR On November 28, 2008, the must be amended to extend the Russian Government term. The CBR has also cut announced that it intends to limits on collateral-free loans for provide RUB 10 billion (US$ 365 34 out of the 136 banks eligible million) in subsidies for grain to take part in CBR money exports. The subsidies and auctions. This measure comes accelerated refunds of value- after repeated warnings from the added tax would allow 10 million CBR and the Russian tons of grain to be exported Government that banks that use without providing a timeframe. state aid to buy foreign currency will be punished. On December 12, 2008, Prime Minister Vladmir Putin announced that the Russian The CBR holds regular repo Government had reserved auctions, lending to commercial around RUB 9 trillion (US$ 323 banks at low rates. On January billion) to support Russia's 12, 2009, the CBR held an banking system. As of unsecured loan auction on the December 12, 2008, of this Russian Trading System (RTS, approximately RUB 4 trillion

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES one of Russia's two major stock (US$ 144 billion) has already exchanges) providing been spent. participating banks with unsecured loans amounting to On February 5, 2009, Russian RUB 64.6 billion at 13.25% p.a. Prime Minister Vladimir Putin Another auction was held on announced that the Russian January 19, 2009, with Government will offer RUB 500 unsecured loans amounting to billion (US$ 14 billion) to banks RUB 22.7 billion at the annual in the next few months. This rate of 13.41% being provided followed an announcement the by the CBR. previous day that the Russian Government had earmarked On January 27, 2009, the CBR another US$ 40 billion for issued RUB 77.43 billion in five- domestic banks. week collateral-free loans, out of VTB will receive RUB 200 billion RUB 80 billion on offer. The average rate was 16.77%, while in Tier 1 capital, while VEB will receive RUB 100 billion in Tier 1 the cut-off rate stood at 15.55%. capital, and possibly another RUB 100 billion in Tier 2 capital On February 10, 2009, the CBR or subordinated loans. injected RUB 94.47 billion (US$ 2.62 billion) of seven-day funds The scheme will allocate an into the banking system at a rate additional RUB 100 billion to be of 11.63%. A maximum of RUB given in subordinated loans to 100 billion had been on offer. private banks. This will, The week before the CBR however, come with the injected RUB 82.5 billion of condition that shareholders of seven-day funds at 10.51%. those banks match the state support on an equal rouble On February 16, 2009, the CBR basis. auctioned RUB 19.31 billion in three-month collateral-free loans The funds were aimed at to commercial banks, out of increasing lending in the RUB 25 billion on offer. The cut- banking sector, and the Russian off rate at the auction was Government instructed 17.54%. recipients of the funds to increase the amount they lend On February 19, 2009, Alexei by 2% per month. Ulyukaev, the CBR's First Deputy Chairman, announced According to RIA Novosti, on that the CBR has been cutting February 3, 2009, Prime limits on collateral-free loans. Minister Vladimir Putin warned Russian banks against using

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES On March 16, 2009, the CBR state funds for currency auctioned RUB 1.625 billion in speculation, reminding bankers three-month collateral-free loans that state assistance to the to Russian banks. The cut-off financial system was not charity: rate at the auction was 18.83%. "Funds are given to banks on the basis they will be returned, On March 31, 2009, the CBR and they should be spent not on auctioned RUB 6.910 billion in financial speculations but go to five-week collateral-free loans to the real sector in the form of Russian banks. The cut-off rate loans to enterprises". at the auction was 16.73%. While Sberbank announced on On April 6, 2009, the CBR February 18, 2009, that it did not auctioned RUB 26.617 billion in require additional financing, it is five-week collateral-free loans to rumoured that Sberbank was Russian banks. The cut-off rate offered a RUB 500 billion at the auction was 16.62%. subordinated loan. According to Reuters, the CBR has promised The CBR will introduce half- it a capital injection if its yearly and annual repurchase exposure to bad loans operations next month, First increases. Deputy Chairman Alexei Ulyukayev said on March, 30, VEB deputy chairman Mikhail 2009, RIA Novosti reported. The Kopeikin said on March 16, interest rate on the planned 2009, that the Russian operations will not be higher Government would recapitalize than 13%, Ulyukayev said. The the state development bank by CBR holds overnight and weekly just RUB 130 billion (US$ 3.7 repo auctions and conducted its billion), dropping a plan to first three-month operation this provide VEB with an additional month. RUB 100 billion as a subordinated loan.

President Dmitry Medvedev announced on March 16, 2009, that the Russian Government would stop handing out easy bailouts to companies unless they can present concrete restructuring plans. The 295 companies from a list of economically vital businesses published by the Russian Government late last year have

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES reportedly asked for RUB 350 billion (US$ 10 billion) in aid and RUB 213 billion (US$ 6.1 billion) in state guarantees. According to the Russian Government, a company's presence on the list does not automatically mean that it will receive aid, and Russian companies need to work with domestic banks to solve their foreign debt problems and not rely on Russian Government bailouts. The Russian Government will only offer direct aid in "extreme cases".

The revised Russian budget contains RUB 300 billion to recapitalize banks and RUB 255 billion for subordinated loans to banks.

The Russian Finance Ministry announced on March 25, 2009, that it will sell RUB 529 billion (US$ 15.7 billion) of treasury bonds in 2009 and issue 50% to 100% more bonds in 2011 and 2012, as the Russian Government looks for ways to finance a growing budget deficit in 2009 in the amount of 8% of gross domestic product and increase liquidity in its financial system. The Russian Government may also further amend some of its key rules in efforts to recapitalize the banking sector, while shying away from the U.S. model of a "toxic assets" fund.

On March 26, 2009, the Russian

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Minister of Finance Alexey Kudrin announced that Russia plans to swap sovereign rouble bonds for shares in banks to boost their capital without spending budgetary funds, although Mr. Kudrin said that it is too early to talk about the size of the program or which banks will be involved. It is also unclear when the initiative will start. Participants are expected to be required to buy back their shares within three years. The Russian Government has also budgeted RUB 555 billion (US$ 20 billion) in new funding for banks this year and RUB 300 billion (US$ 10.8 billion) of that sum is earmarked for recapitalization.

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SLOVAKIA SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES The Government announced the The Slovak legislative body has The Government of the Slovak In order to facilitate accessibility intention to introduce new decided to implement the Republic announced that it of SME’s to working capital from measures including state Economic and Financial Affairs intends to adopt measures to commercial banks through guarantees for debts of Council of the Council of the increase the equity capital in loans, the Ministry of Finance of individuals who were unable to European Union (“ECOFIN”) state bank institutions being the Slovak Republic, commercial pay for mortgage loans due to recommendation on the Eximbank (focusing on support banks and state banks losing their jobs. These increase of deposit guarantees of export/import) and Guarantee Eximbank and Guarantee and measures were expected to be through the adoption of the and Development Bank Development Bank concluded submitted to the Parliament in amendment of the Act (dedicated mainly to support the Memorandum for March, but so far no such No. 118/1996 Coll. on Protection business activities of SMEs and cooperation, concerning legislative initiative has been of Deposits, as amended. This their accessibility to capital), provision of so called introduced. legal instrument is effective as of allowing them to increase their accelerated guarantees. November 1, 2008, and liquidity and thus the ability to increases the guarantee of compensate for the expected According to presently available deposits in the commercial worsening conditions for loan public information, selected

banks provided by the Fund on availability provided by loans of up to €340,000 (in commercial banks to business each individual case) to be Protection of Deposits to a 100% of the value of depositions enterprises. drawn by SME’s from commercial banks will be able to without a limit of a maximum amount of the guarantee (from The increase of registered utilize guarantees provided by capital will be effectuated in the the state banks up to the level of the previous level of 90% compensation and maximum beginning of 2009 and will 55% of the loan. This will allow guarantee amount of €20,000). present approximately SME’s to draw the bank loans €30 million (Slovak Guarantee even under currently more strict and Development Bank) and policy of banks regarding €11 million (Eximbank) provision of securities. respectively, with the According to representatives of Government’s planned commercial banks, this project assessment for any potential will be employed mainly to further increases in loan finance working capital (not capacities of the mentioned investments). On the basis of banks by €45-55 million (through the Memorandum, separate a loan from the European agreements stipulating details of Investment Bank and subsidy state guarantees will be signed from the state to the insurance with respective commercial funds of Eximbank). banks participating on the project in a short period of time. The Government also announced the intention to The project of the Ministry of introduce new measures Finance of the Slovak Republic including financial aid to the is a response by the State in State Housing Development relation to published information

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Fund. These measures were on lower availability of loan expected to be submitted in capital from commercial banks March, but so far no such in the recent period due to the initiative has been introduced. global capital crises.

Investment Measures

The Government also declared its intention to support significant public investments in PPP projects - EUR 1,33 billion is expected to be spent in 2009.

The amendment to the Investment Aid Act No. 561/2007 Coll., as amended, will be introduced for the period from April 1, 2009 to December 31, 2010. The minimum investment amount for the provision of long- time tangible and intangible property required to obtain the grant is decreased by half for the projects in industrial production. For projects in tourism, the minimum investment amount is lowered to EUR 9.960.000 for tangible property and EUR 4.980.000 for intangible property, respectively. The provision of new production and technological devices for production purposes is lowered to 40% of the overall value of the provided long-time tangible and intangible property in the industrial production, and 20% in tourism.

Tax and Employment Measures

From March 1, 2009, the non- taxable part of the tax base of

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES individuals' income tax will be increased from 19,2-multiple of the life minimum (EUR 3.435,26) to 22,5-multiple of the life minimum (EUR 4.017,80). This measure is aimed at decreasing the tax burden of individuals with low and medium income.

The minimum input price for assets depreciation for the purpose of income taxation will change from EUR 996 to EUR 1,700 for tangible property, and from EUR 1.660 to EUR 2.400 for intangible property, respectively. This measure should increase tax depreciation, which should improve cash-flow and stimulate purchase of property. Furthermore, several sorts of tangible property will be transferred into lower depreciation groups. Separate depreciation of detachable parts of tangible property is introduced.

Individual – entrepreneurs who do not have any employees and whose income does not exceed EUR 170.000 per year will be exempted from the duty of book- keeping.

Administrative burden for SMEs in respect of notification duties and sale licences for alcohol in consumer packages is lowered. Analogous measures were adopted in respect of the mineral oils excise tax.

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES The Act No. 5/2004 Coll. on Employment Services is amended from March 1, 2009, providing state assistance measures to the employment market in order to preserve the employment rate and create new job opportunities using active measures on employment market. Conditions for establishment of so-called social enterprises employing at least 30% of handicapped employees are simplified, mostly for municipalities and self-governing regions.

A new employment-sustaining grant has been introduced for employers which sustain work positions even in case of serious operational reasons (pursuant to Section 142 (4) of the Labour Code), provided that they preserve existing work positions and provide employees salary compensation of 60% of agreed salary. The grant is aimed at covering salary and levies expenses and is granted for a maximum period of 60 days during one year.

A grant for the creation of new work positions will be granted to employers performing their activities for at least 12 months, in the amount of 15% of overall labour value in Bratislava region, 30% in other regions, at most 50% of overall labour value of new employee. The grant will be provided for a maximum period

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES of 12 months.

Levies Measures:

The amendment to the Social Insurance Act changed the system of calculation of levies, such as sick pay, for individual/self-employed undertakings. Previously, the calculation basis was so-called minimum salary. Since April 1, 2009, levies for self-employed individuals have been calculated based on 44.2 % of average salary in Slovakia for the two years preceding the year in question.

Aggregate payable levies are reduced by lowering the amount of levies to the reserve solidarity fund. From April 1, 2009 to December 31, 2010, self- employed individuals shall pay 2% of their average salary and the rest of contributions shall be covered by the state.

The amendment to the Health Insurance Act changed the system of calculation of levies for health insurance for self- employed individuals. Since April 1, 2009, the calculation basis has been (instead of minimum salary) 44.2% of average salary in Slovakia for the two years preceding the year in question.

Scrapping Subsidy:

The Ministry of Economy

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES introduced the so called “scrapping subsidy” - a subsidy for purchasing a new motor vehicle. From December 31, 2008, any natural or legal person that owned a motor vehicle manufactured before January 1, 1999, which was registered in the register of motor vehicles in Slovakia before December 31, 2008, who provided this motor vehicle to the authorised old vehicles processor for scrapping after March 9, 2009, was entitled to a grant for the purchase of a new motor vehicle.

Provision of this subsidy was terminated from March 26, 2009, after the total aggregate amount of the subsidy of EUR 33.19 million was spent. From April 6, 2009, the Ministry of Economy extended/renewed provision of this subsidy up to the spending of the additional aggregate amount of EUR 22.1 million. However, the amount provided to individuals has changed – the Ministry will now provide EUR 1,000 provided that the automobile seller reduces the price by another EUR 1,000.

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SLOVENIA SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES As of November 20, 2008, Slovenia has implemented the The amendment of the Public The amendment of the Public Granting loans: Slovenia may guarantee loans amendment of the Banking Act Finance Act (OG of the RS Finance Act provides the granted to credit institutions with (OG of the RS no. 131/06 as no. 79/99 as amended) provides Government with power to The amendment of the Public a registered seat in Slovenia up amended) pursuant to which the the Government with the power purchase troubled financial Finance Act provides the to maximum nominal amount of amount of the guaranteed to recapitalize credit institutions, assets of credit institutions with Government with power to grant € 12 billion. Only loans with deposit is not limited anymore.3 insurance companies, a registered seat in Slovenia. loans to credit institutions, maturities from three months to The measure is valid from reinsurance companies and insurance companies, five years are eligible. The November 20, 2008 to pensions companies with a Credit institutions may also be reinsurance companies and guarantee does not extend to December 31, 2010. registered seat in Slovenia. required to meet certain pensions companies with a structured financial instruments, Detailed provisions have not requirements on corporate registered seat in Slovenia. subordinated debt and loans to been adopted yet. governance. related entities. The maturity of the loans is 1 to Participating institutions may five years. The interest rate is Participating institutions may also be required to meet certain determined in each specific case also be required to meet certain additional requirements on by the Government. The interest additional requirements on corporate governance with rate is calculated by adding (i) corporate governance with respect to bonuses, dividend the cost of a loan (including respect to bonuses, dividends payments and other interests) with similar maturity payments and other requirements. which is secured with the state requirements. guarantee and (ii) a credit risk margin. The credit risk margin is The Government Regulation determined by taking into valid from December 6, 20081 account the beneficiary’s rating, sets the amount of state as follows: guarantee fees. The annual fee is generally dependent from the AAA rating: 25 bps + 50 bps beneficiaries’ rating and loan maturity. The fees for AA (all) rating: 40 bps + 50 bps guarantees with maturities over one year are as follows: A (all) rating: 45 bps + 50 bps

AAA rating: 25 bps + 50 bps BBB (all) rating: 50 bps + 50 bps AA (all) rating: 40 bps + 50 bps BB (all), lower rating, no rating: A (all) rating: 45 bps + 50 bps 55 bps + 50 bps. 4

BBB (all) rating: 50 bps + If granted a loan, the beneficiary 50 bps must undertake to provide Slovenia with the right to BB (all), lower rating, no rating: subscribe the beneficiary’s 55 bps + 50 bps. shares by way of contribution in kind (the object of which is

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES For state guarantees up to one Slovenia’s claim towards the year, the fee is 50 basis points beneficiary – debt-to-equity (bps) irrespective of the rating. swap). The beneficiaries may also be required to meet certain Liquidity Guarantee Program: requirements on corporate governance. The Liquidity Guarantee Program (the “Program”) Fiscal Measures: provides € 1.2 billion of state guarantees for the banks with Wage Related Subsidies: intention to finance the real sector economy. The Program Employers who reduce the will be effective until December number of hours of work from 40 31, 2010. to 36 (weekly) are entitled to monthly € 60 subsidies for each The Slovenian Government will employee. If employers reduce guarantee a maximum of 80% of the number of hours of work to each loan granted to a company 32 (weekly), they are entitled to under the Program. Program monthly € 120 subsidies for conditions are: by granting a each employee. The employees loan, each bank undertakes a are in such cases considered as minimum of 20% of the credit full time employees in all risk; loan maturity ranges from respects. 5 one to five years; loan is properly secured; only new Income tax: loans are eligible, a debtor has A, B or C ranking according to Income tax general rate of the rules of the Central Bank of taxation will gradually Slovenia. decreased. The general rate of taxation will be 20 % of the tax The annual fees range from base for year 2008, 19 % of the 0.55% up to 2% (dependent tax base for year 2009 and 18 % from debtor’s ranking) of the for year 2010 and the principal amount of a loan subsequent years. granted. The fees are reduced for the first two years by 25% for The amount of the prepayment SMEs and by 15% for large of the income tax has been companies. An additional fee of reduced by one percent, and is 0.1% of the principal amount of therefore fixed at 21% for the a loan granted is due quarterly.2 year 2009. 6

State guarantee to SID banka The amount of the tax relief for d.d. investments has been increased to 30 % of the invested amount (but cannot exceed the amount

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES State guarantee to SID banka of the tax base). The tax relief d.d. is planned to be granted in can be exercised in the year of an amount of € 500 million, of the investment.7 which € 300 million is envisaged to be financed by the EIB. Personal Income Tax:

State guarantee to NLB banka The amount of the tax relief for d.d. investments (for sole proprietors, farmers, etc.) has NLB has been granted a state increased to 30 % of the guarantee in an amount of € 2.5 invested amount (but cannot billion. exceed the amount of the tax base) and the limitation in absolute amount of €10.00 has been abolished.8

Special tax relief has been granted to sole proprietors for the years 2008, 2009 and 2010; they are entitled to lower tax base for the amount of the investments in cargo vehicles (EURO V) and buses (Euro IV).9

Loans to the industrial sector:

The Government shall prepare new de minimis program which will include granting loans and subsidies to the industrial sector in total amount of € 20 million. The Program shall be in force until December 2010.10

The Government shall prepare a program for strategic projects in clean technology and technological advanced industry sector which will include granting long-term loans in total amount of € 100 million.

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1 The Regulation on the Measures and Conditions for Guarantee Issue Pursuant to the Article 86.a of the Public Finance Act (OG of the RS no. 115/08). 2 The Liquidity Guarantee Program has been adopted by the Government on 19 February 2009. The Program has to be adopted by the parliament in a form of an act. 3 Before the respective amendment, the amount of the guaranteed deposit was limited to €22,000. 4 The Regulation on the Measures and Conditions for Granting Loans Pursuant to the Article 81.a of the Public Finance Act (OG of the RS no. 119/08). 5 The Act on Subsidies for Full Time Employment (OG of the RS, no. 5/09). 6 The Amendment of the Tax Procedure Act (OG of the RS, no. 125/2008). 7 The Amendment of the Income Tax Act (OG of the RS, no. 5/09). 8 The Amendment of the Personal Income Tax (OG of the RS, no. 125/2008). 9 The Amendment of the Personal Income Tax (OG of the RS, no. 20/09). 10 The decision on such Program has been adopted by the Government on 19 February 2009 and has to be approved by the European Commission.

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SPAIN SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES The Spanish Minister of The Spanish Government has On March 29, 2009, the Spanish The Government has also In a move to drive liquidity, the On November 28, 2008, the Economy and Finance has been implemented the Economic and government approved by Royal authorized the Minister of Financial Assets Acquisition Spanish Government approved authorized by Royal Decree to Financial Affairs Council of the Decree 4/2009 the intervention Economy and Finance until Fund (the “FAAF”) has been by a Royal Decree containing guarantee new funding Council of the European Union of Caja Castilla La Mancha December 31, 2009, to acquire, established (on a temporary certain economic, tax, operations of Spanish credit (“ECOFIN”) agreement on (CCM), the first Spanish upon request of the relevant basis) to invest in the financial employment, and access to entities. raising depositor guarantee financial institution that is on the entity, securities, preferred assets of credit entities or housing measures. In particular, levels by increasing the brink of collapse since the shares or other similar capital securitization funds backed by these measures are aimed at: In 2008, €100 billion were maximum amount guaranteed beginning of the credit crunch. instruments issued by Spanish loans granted to individuals, available for the Spanish by the Deposit Guarantee Fund credit entities. companies and non-financial - promoting the recruitment of Government to guarantee and the Investment Guarantee Savings bank CCM had liquidity entities. Assets backed by new certain unemployed people and issuances of debt instruments Fund from €20,000 to €100,000 problems that forced the The securities that the credit transactions originated on facilitating self-employment; traded on official Spanish per account holder and entity. intervention by the Bank of Government acquire will not be or after October 7, 2008, will secondary markets, of which Spain. subject to the limitations have priority for the purpose of - establishing a new bonus in €90 billion had been allocated to This measure is applicable to established by the legislation for its acquisition by the FAAF. the employer’s Social Security 53 eligible entities upon their deposits of cash or securities in The measures adopted so far regulatory capital purposes. contributions for those request by December 31, 2008. credit entities and investment involve: The FAAF will be financed employers who hire unemployed In 2009, a further €100 billion services firms authorized to Purchase agreements will be through the issuance of workers for an indefinite period will be available for this matter. operate in Spain, including those (i) The substitution of the finalized following the issuance Government bonds. €30 billion that have one or more The guarantees are available that are subsidiaries of foreign savings bank Board of of a report by the Bank of Spain. is available and may be dependent children. This bonus until December 31, 2009. The credit entities or foreign Directors by the three increased to €50 billion if will be €125 per month and per expiry date of the guaranteed investment services firms, as administrators appointed by To date, no entity has requested required. employee for two years; transaction must not exceed five well as the branches of such the Bank of Spain that will the Minister of Economy and years. entities that are adhered to manage the instituion going Finance to subscribe for its Unlike the U.S. TARP, the FAAF these funds. forward. equity securities. targets high quality assets of the - increasing the amount of the On November 21, 2008, through financial institutions rather than unemployment benefit payable a Ministerial Order, the Spanish (ii) Making available to CCM troubled assets. by way of a one-off upfront Minister of Economy and facilities up to 9,000 million payment to unemployed workers Finance has established: euro from the Bank of On October 31, 2008, the who set up a new business, in Spain. Indebtedness arising Minister of Economy and order to facilitate that these (i) The main features of the from the amounts drawn Finance issued the workers become self-employed; guarantees include among down under these facilities corresponding developing them, the irrevocable and will be guaranteed by the regulations governing its - enabling the unemployed unconditional nature of the Kingdom of Spain. operation, and the General (jobless workers and guarantees and the waiver of Directorate of the Treasury and pensioners) and the self- the benefit of prior exhaustion of Financial Policy, as secretary of employed who have seen their the guaranteed entity’s assets. the Governing Council of the income reduced significantly as FAAF, published the a result of the crisis to have (ii) The entities eligible to adhere composition of the Executive access to a temporary and to the guarantee scheme: Committee (the body that partial mortgage moratorium. Spanish credit entities and manages the FAAF) and the Under this measure, such consolidated groups of Spanish criteria for the selection of persons will be allowed to delay

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES credit entities provided that (a) assets eligible for purchase. half their mortgage payments they have a share of at least (maximum € 500/month) for up 0.1% of the aggregate The selection of assets to be to three years4 (beginning March outstanding amount of loans and purchased by the FAAF is made 1, 2009 to February 28, 2011) credits to Spanish residents, and by auctions, where the bids provided they meet certain (b) have issued in the previous submitted may be competitive or requirements, including: (i) that five years securities of like not-competitive. The assets in mortgage loan is made prior to nature to those for which the which the FAAF may invest by September 1, 2008 (maximum State guarantee is sought. way of firm and definitive eligible mortgage is €170,000); purchases include mortgage- (ii) that there is a prior (iii) The financing transactions backed bonds and asset-backed agreement between the that may be guaranteed, which securitization bonds, and by way appellant and the lending credit; comprise issuances of of sale and repurchase (repo) and (iii) that the debtor is not in unsecured and unsubordinated transactions the FAAF may arrears in its payment commercial paper, bonds and invest in mortgage-backed obligations; and notes in Spain with a maturity of bonds, asset-backed between three months and three securitization bonds and - extending, on an extraordinary years (securities with a longer mortgage-backed securitization and temporary basis, the tax maturity, up to five years, are bonds (backed by loans granted benefits enjoyed by owners of eligible for guarantee subject to to individuals, companies and housing savings accounts and a report by the Bank of Spain) non-financial entities) provided owners of houses who are and which meet other they meet certain requirements bearing mortgages or who have conditions, including the regarding: (i) the date of purchased a new house and requirement of a minimum issuance, (ii) admission to have not yet been able to issuance amount of €10 million.2 trading on a regulated market, dispose of its primary residence. (iii) credit rating, and (iv) (iv) The basis for calculation of maturity date or estimated In addition, tax legislation has the fees to be charged by the average maturity. been amended in order to permit State for the granting of the monthly VAT reimbursement guarantee. The results of the auctions are upon taxpayers’ request. published on the website of the (v) The maximum amount of FAAF within a maximum period guarantees to be granted to of three business days, including each individual entity and the the following details: (i) the procedures to be followed for aggregate amount of the bids the granting of the guarantees. received, (ii) the amount effectively allocated to the bids, The State will guarantee only (iii) the total number of bids, (iv) the principal of the loan and the the number of allocated bids, (v) ordinary interests. In the event the marginal rate of the auction, that the issuances are and (vi) the weighted average denominated in foreign rate of the auction. currencies, the guarantee will The first auction was held on

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES also cover the exchange risk.3 November 20, 2008, and the acquisitions of assets were Moreover, in the event of made by way of sale and enforcement of the guarantee, repurchase (repo) transactions. the State will pay interest at The FAAF acquired assets market rates from the maturity worth €2,115 million of the date of the secured and €5,000 million available. The defaulted obligations until the remainder €2,885 million payment date, provided certain increased the €5,000 million set requirements are met. aside for the following auction, which was held on December In consideration the issuer must 11, 2008, where the FAAF provide collateral in the form of acquired €7,224 million by way Spanish debt securities to the of firm and definitive purchases General Directorate of the of assets. Treasury and Financial Policy. The amount of collateral will be In the third auction, which was reassessed monthly. The held on January 20, 2009, the General Directorate of the FAAF acquired assets worth Treasury and Financial Policy €4,000 million, by way of repo will be entitled to enforce such transactions. collateral on the date of the enforcement of the guarantee to Lastly, in the fourth auction, held recover the damages resulting on January 30, 2009, the FAAF from exchange rate fluctuations, acquired, by way of firm and if any. definitive purchases, assets worth €6,002 million. Finally, in the event of enforcement of the guarantee, the Government shall notify the Bank of Spain so that it can analyze if the requirements for intervention of the guaranteed entity are met.

So far medium terms notes in the amount of €16,000 million with the guarantee of the Kingdom of Spain and with maturity on 2012 have been issued by ten different entities.

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1 The Spanish Minister of Economy and Finance has finally decided not to guarantee inter-bank debt. 2 The form to apply for the state guarantees on the issuance of debt securities by banks was published on November 25, 2008. 3 On December 23, 2008, through a new Ministerial Order, the Spanish Minister of Economy and Finance amended some of the requirements provided in the previous Ministerial Order which, given the critical situation of the market, could be an obstacle to the effectiveness of the guarantees. 4 On February 6, 2009, the Minister of Economy and Finance delayed the period of computation of the payments subject to the moratorium, deferred the repayment (from January 1, 2011 to March 1, 2012) and extended the maximum repayment term (from 10 to 15 years).

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SWEDEN1 SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES A guarantee scheme was Effective as of October 6, 2008, The Swedish Government will Kaupthing Bank hf.: On October 30, 2008, the Act introduced the last days of Sweden has amended the Act provide a fund to recapitalize (2008:814) on State Support to October 2008 in order to secure (1995:1571) on Deposit banks if required as well as Riksbank will loan as much as Credit Institutions came into the medium term financing Guarantees such that the providing banks with liquidity (a SEK5 billion (US$ 700 million) to force. needs of Swedish banks. The government guarantee for capital injection will likely be in the Swedish unit of Kaupthing total amount which may be deposits was increased from the form of preference shares). Bank hf., after the subsidiary Pursuant to the provisions of the guaranteed under the program SEK250,000 up to a maximum failed to meet payment Act, state support in the form of is SEK 1,500 billion; hereof amount of SEK500,000. The Swedish Financial obligations and was put up for guarantees, capital contributions 500 billion may be allocated to Supervisory Authority has, as of sale. or otherwise may be provided to covered bonds with terms of December 12, 2008, amended Swedish banks and credit Swedbank: three to five years. This its Regulations (FFFS 2008:27) institutions (credit market pertaining to Capital Adequacy companies) if deemed possibility is now being On November 4, 2008, to the effect that Tier 1 capital necessary to prevent serious broadened to include debt Swedbank (the country’s largest contributions may now represent disruption to the Swedish securities without special savings bank) became the first a maximum of 30% a firm’s financial system. If the support collateral. No more than a third Swedish bank to seek state help original own funds, whereas takes the form of a capital of the total limit, or SEK 500 to lower its funding costs by previously the limit was 15%. contribution to the affected billion, may concern guarantees signing up for the Government’s The purpose of this change is to institution this will be against for debt securities with SEK 1,500 billion guarantee increase the Swedish banks’ preference shares with higher maturities of between three and program. Swedish banks had lending capacity. On December voting rights than existing five years. The program was suffered little direct impact to the 18, 2008, the responsible shares. The State can also initially open until April 30, 2009 credit crisis because they had Minister stated that the Swedish provide support by underwriting and has been extended and little subprime exposure, but are state may make Tier 1 capital (and guaranteeing) a new share made available until 31 October now suffering from short-term contributions to Swedish banks issue. 2009. It may be extended until liquidity pressures and longer- in order to help increase their December 31, 2009. term concerns over the lending capacity. On February The Act provides that any state slowdown in the Nordic and Eligible under the guarantee 3, 2009 the Government support must be commercially Baltic economies. scheme are Swedish banks, announced that the National sound and not distort savings banks and credit market Debt Office may provide capital Carnegie Investment Bank: competition. Moreover, the companies that have a to solvent banks, either within terms and conditions of any considerable share of their the context of new share issues On October 26, 2008, the state support must be drafted lending secured by real estate or by making Tier 1 capital Swedish Riksbank granted a such that the existing pledges. Moreover, it is contributions. The National Debt credit of SEK1 billion to shareholders of the institution required that an applying bank Office has been authorised to Carnegie Investment Bank in bear any losses incurred by the or credit market company provide capital as aforesaid up order to avoid a possible default institution. satisfies certain requirements to a total amount of SEK 50 situation for the bank. On regarding capital adequacy, i.e., billion (SFS 2009:46). One October 28, 2008, the credit was The Act also gives the State the in respect of the Tier 1 capital condition for Tier 1 capital increased to a maximum of right to redeem the shares of a ratio and the capital base, and if contributions is that the SEK5 billion. As security for the credit institution under certain considered sufficiently receiving bank accepts credit, the parent holding circumstances – i.e., if the capitalized it will be eligible. restrictions as to compensation company D Carnegie & Co AB, institution or its shareholders schemes for the top five pledged i.e. all of its shares in have refused to accept the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Guarantee undertakings which executives. Carnegie Investment Bank and terms for state support; provided are issued to an individual bank Max Matthiesen (insurance that the Settlement Board (for may not from time to time (See other columns.) brokers and pension settlement of disputes exceed the higher of (i) the consultants). The credit was concerning support provided aggregate of maturing debt subsequently assigned to the under the Act) has declared the instruments issued by the bank Debt Office. On November 10, terms of the proposed support and (ii) 20% of bank’s deposits 2008, the Swedish FSA not to be unreasonable. on account from the public as at withdrew Carnegie’s banking September 1, 2008. licence (for violations of banking The Act provides for the regulations, i.e. the large establishment of a stabilization exposures provisions). fund. The fund will be financed The National Debt Office (the Following the withdrawal of the through fees collected from the “Debt Office”) will request banking licence, the Debt Office, banks and credit institutions. It applying banks to enter into a under the pledge agreement, is expected that the fund will Guarantee Agreement with the took over the title to the shares reach SEK150 billion within a Debt Office. Under the terms of in the banking company and the period of 15 years. The fund will the Guarantee Agreement, the insurance brokers. As a result be administered by the National banks have to restrict of the takeover, the FSA Debt Office. reconsidered its decision and in compensation levels to the top Iceland: five executives, such that their view of the new ownership, salaries must not be increased revoked its withdrawal decision On November 5, 2008, officials and bonuses or stock options and instead issued a warning to from the central banks and not granted as long as the the bank. finance ministries of Norway, Guarantee Agreement is in Sweden, Finland and Denmark force. There is also a held a meeting in Stockholm to commitment not to increase the discuss their contributions to a remuneration to Board directors. $6 billion rescue package for Moreover, the terms of the Iceland. The four Nordic nations Guarantee Agreement further have said that they are willing to provide that the relevant bank support Iceland, but only after it may not refer to the government agreed to design and implement guarantee when marketing an economic stabilisation plan in credit and the bank will also association with the IMF. The have to undertake not to loans would also require significantly expand its activities, approval from the respective if the expansion would not have countries’ parliaments. taken place in the absence of Home Owner Protection: the government guarantee. BKN, the National Housing The government guarantee may Credit Guarantee Board, a be issued in respect of bonds national government agency and other instruments subject to under the Ministry of Finance, trading on the capital market. administers Government credit

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES The relevant bank’s debt guarantee programs for housing instrument must have a term of development. Government credit more than 90 days but less than guarantees can be provided for 3 years, except for covered loans advanced by financial bonds which may have a term of institutions operating in Sweden. up to 5 years. On December 16, 2008, the responsible Minister instructed A guarantee issued by the BKN to draft a program, the Swedish State (the Kingdom of purpose of which was to protect Sweden) through the Debt house owners against significant Office, will be irrevocable and falls in value of their housing unconditional (subject to the properties, causing a lending terms of the guarantee). There bank to call its loan, because the is no requirement to exhaust any value of the bank’s security has remedies against the bank depreciated. As this program is issuer prior to making a demand presently understood, the under the guarantee. Government would guarantee the loans vis-a-vis the bank. It Banks availing themselves of has been emphasized by the the state guarantee will have to Minister that only house owners pay a fee, based on the capable of servicing their debts Recommendations on on an on-going basis will be Government Guarantees on eligible under the program. bank debt issued by the European Central Bank October 20, 2008. The fee payable is based on market benchmarks and will take into account institution-specific risk (median spread for credit default swaps or credit rating) plus a mark-up of typically 50 basis points.

The Swedish Government guarantee scheme has been notified and approved by the European Commission (State Aid No. 533/2008).

At this point in time only one major Swedish commercial bank and an automotive financing company has joined the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES scheme, whereas the three other major Swedish banks have indicated a reluctance to join. It is believed that the banks have issues with: (i) the fee and (ii) the restriction imposed on any expansion by the banks. In view hereof, the National Debt office has waived the restriction on expansion and has lowered the fees slightly in order to make the scheme more attractive to the banks.

1 In summary, the Swedish stabilization measures include the implementation of a general framework for giving state support to ailing credit institutions, the creation of a stabilization fund and a temporary guarantee program. The guarantee program is governed by the Ordinance (2008:819) on State Guarantees for Banks and the National Debt Office Regulation (2008:1) concerning State Guarantees for Banks.

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SWITZERLAND SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES2 MEASURES FINANCIAL ASSETS OTHER MEASURES The Government did not take Under a temporary act of the The Swiss National Bank Credit Suisse Group AG: See recapitalization measures. Assistance to Other Financial any ad hoc measures to Swiss Federal Assembly, the (“SNB”) and the Swiss Central Institutions: guarantee inter-bank debt. maximum amount under the Bank, took several special On October 16, 2008, Credit In October 2008, UBS AG However, in connection with the deposit guarantee scheme was measures to overcome the Swiss raised CHF 10 billion announced that it would transfer The Federal Council, the Swiss bill seeking the approval of the raised to CHF 100,000 (or financial crisis using open Tier 1 capital through a up to US$ 60 billion in illiquid executive, has announced in UBS AG recapitalization roughly €66,666). The system market transactions: combination of a sale of treasury securities of its balance sheet to connection with the bill seeking measure, it expressly mentioned will continue to be based on shares, the issuance of a SNB StabFund, a fund set up by the approval of the UBS AG that it would act should the both a preferential treatment in USD Auctions: mandatory convertible bond and the Swiss National Bank. 90% recapitalization that it would prevailing conditions require insolvency proceeding and an the issuance of a non-dilutive of this sale is financed by a loan provide on a case-by-case basis such action. insurance system but with an Since December 2007, in hybrid instrument through a from the Swiss National Bank at similar assistance to other banks increase capped at CHF 6 billion conjunction with the Federal private placement with a group LIBOR plus 250 basis points, of systemic relevance. (approx. €4 billion). In addition to Reserve, the Bank of England, of investors, including a wholly which shall not exceed US$ 54 the Bank of Japan and the owned subsidiary of the Qatar billion. Since then, the size of Stabilization Measures: this insurance system, however, 3 institutions with guaranteed European Central Bank (ECB), it Investment Authority. the portfolio of illiquid assets deposits exceeding CHF 6 repeatedly injected liquidity was reduced and the transaction The Federal Council announced UBS AG: billion will have to cover these through several US$ auctions. closed with assets amounting to on November 12, 2008, that it deposits by holding approved In December 2007, UBS AG a total of US$ 38.7 billion. The would take various measures to securities in an amount equal to CHF Liquidity Facilities: raised CHF 15 billion in Tier 1 Swiss National Bank controls stabilize the economic situation:8 125% of the guaranteed capital through the sale of the SPV and is entitled to an deposits, subject to a possible In October 2008, acting with the treasury shares and the private equity kicker of CHF 1 billion First, it anticipated certain exemption from FINMA, the ECB to improve the liquidity of placement of a CHF 13 billion plus 50% of any remaining expenditures that were already Swiss Financial Market the Swiss Franc, the SNB mandatory convertible note with equity after repayment of the approved by Parliament. These Authority. entered into a EUR/CHF swap, the Government of Singapore loan in principal and interest. expenditures relate mainly to allowing the ECB to auction Investment Corporation Pte. specific projects of various Whereas until now, individual Swiss Francs to Eurosystem Ltd., the sovereign state fund of departments which were retirement accounts (so-called Institutions. This measure the Government of Singapore approved by Parliament but not 3a accounts) were added to an sought to offer Swiss Francs to and a private investor.4 yet implemented pending individual’s ordinary savings for financial institutions that do not budgetary approvals. It also the purposes of the deposit have access to the normal open In June 2008, UBS AG carried accelerated various projects, guarantee system. Under the market operations of the Swiss out a CHF 15.97 billion rights mainly in the construction sector revised act they will be treated National Bank. offering.5 (e.g. protection against natural as separate claimants. Thus, a threats, measures to promote given person may receive up to To neutralize the monetary On October 16, 2008, the energy efficiency, CHF 200,000 (or €133,333) in effect of this added liquidity, it Federal Council and the Swiss encouragement for public guaranteed deposits: half of issued CHF-denominated SNB National Bank announced a interest housing, and them through its individual Bills with a seven-day term. concerted effort to recapitalize government buildings savings and the other half UBS AG. construction projects). Through through the investment In November 2008, the Swiss these measures, the executive retirement account. However, National Bank entered into a The measure is divided into two will be allowed to spend an the individual retirement similar arrangement with the legs: aggregate amount of ca. CHF accounts will not be covered Narodowy Bank Polski (“NBP”), 340 million (or roughly €212.5 under the deposit insurance the Polish central bank, allowing First, the Federal Council, acting million) in addition to the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES2 MEASURES FINANCIAL ASSETS OTHER MEASURES scheme. 7 the NBP to offer banks in its on the basis of its emergency ordinary expenditure covered by jurisdiction Swiss Francs against powers, will subscribe a the budget. The Federal Council Certain financial institutions, e.g. Polish Zlotys. CHF 6 billion mandatory expressly mentioned that it some cantonal banks and Post convertible note with would examine and, if Finance, benefit from a statutory In February 2009, the Swiss two-and-half-year term and necessary, present further guarantee from their canton or, National Bank entered into a paying 12.5% p.a. measures in 2009. in the case of Post Finance, the similar agreement with Magyar Federal Government. Nemzeti Bank ("MNB"), allowing Second, UBS AG agreed to Second, it accelerated its MNB to provide Swiss Francs to transfer up to US$ 60 billion in decision to allow firms to use banks in its jurisdiction through illiquid securities and other their crisis reserves, an foreign exchange swaps. assets of its balance sheet to a institution which provided tax special purpose vehicle SNB incentives to firms to set aside a Promoting Interbank Liquidity StabFund. On December 19, share of their profits for a crisis. 2008, SNB StabFund acquired This mechanism was due to be To overcome difficulties in the the first tranche of assets from abolished by 2012. In December domestic interbank lending UBS AG in an amount 2008, the Federal Council market, which normally operates equivalent to USD 16.4 billion.10 decided to accelerate this through unsecured money Another US$ 22.2 billion was decision to January 1, 2009.9 market operations, the Swiss transferred in the course of the This will allow the 650 firms that National Bank intermediated a first quarter of 2009 so that the put aside CHF 500 million to use work around involving the big transaction closed with a total these funds at their discretion as banks (Credit Suisse and UBS size of US$ 38.7 billion. of the beginning of next year. AG) pledging top-rated Swiss mortgage bonds to the UBS AG will finance 10% of the Other Conjuncture Measures: Pfandbriefbank der transaction in equity up to a schweizerischen maximum of US$ 6 billion.The On February 11, 2009 the Hypothekarinstitute (Pfandbrief remainder is funded by a non- Federal Council launched a institution acting for all other recourse from the Swiss second step to its conjunctural Swiss mortgage lenders) in National Bank, up to a maximum programme including an return for liquidity in the form of of US$ 54 billion. The term of investment of CHF 700 million in a Pfandbrief loan. The the loan will be from eight to 12 various projects, ranging from Pfandbrief institution then years and it will bear interest investments in rail and road refinances itself by issuing equal to LIBOR plus 250 basis infrastructure, increased Pfandbriefe, which were bought points. subsidies for applied sciences, by banks with surplus liquidity. encouragement for The entity is controlled by the environmental protection and Swiss National Bank, which sustainable energy, renovation upon repayment of the loan in of buildings of the ETH and principal and interest, is entitled armasuisse, and the marketing to an equity kicker amounting to of tourism. It also reduced the US$ 1 billion and 50% of any financing fees for the export remaining equity.6 guarantee scheme, extended benefits for the renovation of The Swiss Federal Assembly subsidised housing, and

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES2 MEASURES FINANCIAL ASSETS OTHER MEASURES (the Swiss parliament) has reviewed the unemployment approved the principle of the benefit scheme by both CHF 6 billion mandatory extending from 12 to 18 months convertible bond subscribed by the duration of these benefits the Swiss Government. and reducing the cool off periods before employers can meet their Glarner Kantonalbank: pay-roll obligations with More anecdotally, on unemployment benefits under October 29, 2008, the reduced working hours Parliament of the Canton of schemes. Parliament extended Glarus announced that it would this programme by adding an provide an additional CHF additional CHF 10 million for 20 million capital to the Glarner investments in photovoltaic Kantonalbank, a bank controlled energy. by the canton. In any case, deposits with the Glarner In addition to the conjuctural Kantonalbank are subject to an programme the Government unlimited guarantee by the also announced for 2010 a CHF Canton of Glarus. 600 million tax cut for families with children, hoping to boost consumption through this mechanism. Finally, the Government plans to review its budgetary and task programme to adjust to the conjuctural uncertainty.

1 See http://www.credit-suisse.com/news/en/media_release.jsp?ns=40924. 2 See generally http://www.snb.ch/en/ifor/media/id/media_releases. 3 See http://www.credit-suisse.com/news/en/media_release.jsp?ns=40924. 4 See http://www.ubs.com/1/e/about/news/archive/archive10?newsId=133686. 5 See http://www.ubs.com/1/e/about/news/archive/archive10?newsId=143689. 6 See http://www.snb.ch/en/mmr/reference/pre_20081016_1/source/pre_20081016_1.en.pdf; See also http://www.efd.admin.ch/aktuell/medieninformation/00462/index.html?lang=en&msg-id=22019. See also http://www.ubs.com/1/e/about/news.html?newsId=154213; and See also http://www.ebk.admin.ch/e/publik/medienmit/20081016/mm-massnahmenpaket-20081016-e.pdf. 7 http://www.efd.admin.ch/00468/index.html?lang=fr&msg-id=22499.

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8 http://www.seco.admin.ch/aktuell/00277/01164/01980/index.html?lang=fr&msg-id=22775. 9 http://www.evd.admin.ch/aktuell/00120/index.html?lang=fr&msg-id=24000. 10 Swiss National Bank, Accountability report for the Federal Assembly 2008, http://www.snb.ch/en/mmr/reference/annrep_2008_rechenschaft/source, p. 77 et seq.; http://www.snb.ch/en/mmr/reference/pre_20090403/source/pre_20090403.en.pdf.

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UKRAINE SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Law no.639-VI dated Since October 31, 2008, The National Bank of Ukraine Law no.639-VI introduces Law no.639-VI allows the The IMF announced on October 31, 2008, on immediate deposits are guaranteed for adopted a special regulation on special procedures to accelerate Ministry of Finance to purchase October 26, 2008, that it has measures to prevent negative UHR 150,000 (approx. October 11, 2008 (No. 319), banks’ capitalization. shares of Ukrainian banks. reached a tentative agreement consequences of the financial US$ 26,000). which has been amended with Ukraine for a crisis and amending certain laws several times already. The The Government adopted The Government of Ukraine US$ 16.5 billion loan. of Ukraine, allows the Ukrainian At least UHR 1 billion will be regulation boosts bank liquidity special procedures for state twice increased the capital of Government to issue state transferred annually to the maintenance on the basis of participation in the bank two state owned banks, Saving The loan is contingent on the guarantees of an amount up to Guarantee Fund of Physical financial recuperation programs, capitalization on November 4, Bank and Ukreximbank, by Ukrainian Government passing UHR 10 billion in 2008. Persons Deposits. requires banks to make currency 2008 (No. 960). regulation enacted on November specific legislation to address exchange at the official rate 26, 2008 (No. 1031). financial sector liquidity and fixed by the National Bank of solvency. Ukraine, and restricts free The Government of Ukraine remittance of currency abroad. increased the capital of The National Security Council Ukreximbank to UHR 6,763 proposed limiting imports under To maintain banks’1 liquidity, the million (twice the previous Article 12 of GATT on National Bank of Ukraine is increase) on December 17, October 20, 2008. ready to render to such banks 2008 (No. 1116). credits at 15% per annum for 1 The President of Ukraine (under year within 90% of given The Government of Ukraine Decree N 1046/2008 dated collateral. increased the capital of Saving November 17, 2008) will transfer Bank to UHR 13,892 million UHR 50 billion (approx. In case of a decrease of termed (seven times the previous US$ 8 billion) to the Stabilization deposits for 2% within 5 banking increase) on December 29, Fund in 2009, including days, a bank may apply to the 2008 (No. 1119). UHR 10 billion in the first quarter National Bank of Ukraine for a of 2009. credit amounted up to 60% of its statutory capital for liquidity The Stabilization Fund may be maintenance under above used among others to cover, stated conditions. Collateral refinance a service of credits bank shares to be submitted obtained before September 15, should equal 51%. 2008 by Ukrainian banks and companies. On November 25, 2008, the National Bank of Ukraine Special laws as to building adopted a special procedure for industry support were enacted the regulation of bank liquidity on January 14, 2009. These and correspondence of laws stipulate privileged refinanced credits to given financing of the contactors, final securities (No. 395). customers and banks creding building industry. Due to the critical situation of the Ukrainian currency exchange A law increasing import duties market,2 the National Bank of on food, textiles, vehicles and

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Ukraine decreased obligatory many other goods was enacted reservation limits on November on January 15, 2009. 25, 2008 (No. 396). Such new limits take effect from December The President has vetoed the 5, 2008. Law as it contradicted WTO norms and principals. Instead, a The National Bank of Ukraine new law introducing a special has cancelled limitations as to extra charge to import duty in banks’ fee on currency the amount of 13% for six exchange operations provided months has been adopted. The by its regulation No. 319 on law takes effect on March 6, December 1, 2008 (No. 408). 2009.

The National Bank of Ukraine Finally, a law increasing the has cancelled its regulation No. excise-duty on alcohol, tobacco 319 on December 4, 2008 and and fuel was adopted on issued a new regulation No. 413 December 25, 2008. which concerns bank liquidity maintenance as well. The law amending existing laws on social security was adopted Due to the foreign currency on December 25, 2008 to deficit on the internal market, the miminize the negative influence National Bank of Ukraine of the financial crisis on mandated that local banks with employment. credits in foreign currency must put special reserves in the same To decrease the deficit currency in the National Bank of amendments to the State budget Ukraine (December 22, 2008, have been introduced on No. 442; December 29, 2008, December 26, 2008 and No. 473). February 3, 2009.

The National Bank has The Law On Concessions on approved special procedure to construction and operation of render credit to local banks that highways, adopted in new need liquidity support version on January 31, 2009, is (December 25, 2008, No. 459). aimed at stimulating investments in the sector and developing the On January 14, 2009 the economy. Government together with the National Bank of Ukraine Amendements to the law made adopted a procedure for the on March 5, 2009 exempt refinancing of commercial cultural, educational, sporting, banks. This procedure had and other entities financed by been cancelled by the state budget from payment for

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Government on March 17, 2003. land. As such, refinancings are now effected according to decisions made by the National Bank of Ukraine.

The National Bank of Ukraine has introduced an additional requirement for commercial banks refinancing dated February 9, 2009, No. 57.

The National Bank of Ukraine has issued some regulations directed to stabilization of the credit market in Ukraine (No. 442 dated December 22, 2008; No. 33 dated January 30, 2009).

The National Bank of Ukraine has adopted new limits of minimum regulatory capital for commercial banks (Regulation No. 116 dated March 4, 2009) in addition to establishing new limits for open currency positions taken by banks (Regulation No. 107 which takes effect on April 23, 2009).

1 The National Bank of Ukraine will maintain only banks organized as open joint stock companies with paid statutory fund of UHR 500 million (approximately US$ 81 million). 2 In September 2008, US$1 cost UHR 5. In today’s market, US$1 costs from UHR 10 to UHR 13, depending on the Ukrainian city. In January 2009 the currency rate has been stabilizing at the level of UHR 7.7 per US$1.00.

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UNITED ARAB EMIRATES (“UAE”) SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES The Government has stated that The Government has declared On September 22, 2008, the No publicly announced Amlak Finance PJSC and The UAE Central Bank is it would guarantee inter-bank that it would guarantee deposits UAE Central Bank launched an measures at this stage. Tamweel PJSC, two leading discussing plans to launch new lending in local institutions. and interbank lending in local emergency funding facility for its UAE real estate finance facilities to support property institutions and on Monday, banks, pumping as much as providers in Dubai, were merged lending in the UAE. On October 14, 2008, the Prime October 13, 2008, the UAE AED 50 billion (€9.3 billion, with the Real Estate Bank, an Minister ordered the transfer of extended its three-year £7.4 billion, $13.6 billion) into entity wholly-owned by the The Dubai Government has AED 70 billion to the UAE guarantee on deposits to foreign the banking sector in order to Federal UAE Ministry of Finance (through the Investment Ministry of Finance and Industry banks with substantial help the local interbank market. and Industry. The Real Estate Corporation of Dubai) deposited to inject further liquidity to operations in the UAE after Bank itself merged with the US$1.3 billion with certain Dubai banks. concerns grew that the previous The UAE Ministry of Finance Emirates Industrial Bank under state-owned banks for the day’s decision to guarantee and Industry offered a further the name Emirates purposes of those banks The UAE has previously injected such monies in local institutions AED 70 billion ($19 billion) Development Bank. refinancing existing loans of AED 50 billion of liquidity to could trigger runs on the 28 liquidity injection to domestic Borse Dubai. banks to encourage inter-bank foreign banks operating in the banks, on top of the lending. UAE. The legislative framework AED 50 billion ($13.6 billion) on The Dubai Government has for these guarantees has yet to offer by the UAE Central Bank. issued bonds to the value of be finalized. US$ 20 billion, of which US$ 10 On October 8, 2008, the UAE billion were subscribed for by Central Bank cut its base rate by the UAE Central Bank. The 0.5% in a move timed to proceeds are expected to be coincide with other central used to support a number of banks. It again cut its base rate Dubai owned companies. by a further 0.5% to 1% on January 18, 2009.

Under Central Bank notice 4312/2008, the UAE Central Bank agreed to allow banks to obtain funding from the UAE Central Bank through:

(i) the use of the Central Bank CD balances; and

(ii) liquidity support facility at 300bps over the prevailing UAE Central Bank rate (provided no new lending to foreign borrowers).

On December 24, 2008, the UAE Central Bank introduced

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES UAE Dirham/US Dollar swap facilities with tenors between 1 week and 12 months to all banks operating within the UAE

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UNITED KINGDOM SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Credit Guarantee Scheme: The U.K. Government has Operational Standing Bank Recapitalization Northern Rock: Guarantee Scheme for Asset- increased the protection given to Facilities: Scheme: backed Securities: On October 8, 2008, the U.K. savings from £35,000 to Northern Rock was nationalized Government announced that in £50,000. The Bank of England (“BoE”) The U.K. Government on February 21, 2008. The bank On January 19, 2009, the return for an appropriate fee the has set up these new facilities to announced that it is establishing had approached the BoE for Government announced its U.K. Government will guarantee However, Chancellor Alistair replace the existing standing a new facility of £25 billion which emergency funding in decision to set up a new newly issued (initially up to April Darling announced that the U.K. facilities. The rate charged on will make Tier 1 capital in the September 2007. As the guarantee scheme for asset- 9, 2009 but now extended to would guarantee all the the Operational Standing form of equity (underwritten by Government subsequently failed backed securities (“ABS”). The December 31, 2009) short- and U.K. retail deposits of Icesave Lending Facility is 25 basis the Government) as well as to attract private buyers to take Government will, in consultation medium-term unsecured debt and Heritable (both branches of points above Bank Rate, and the preference shares (placed with over the bank, it decided to with issuers and investors, (including certificates of deposit, Icelandic Bank, Landsbanki, rate paid on the Operational the Government) available at the nationalize it. provide full or partial guarantees commercial paper and senior which has been nationalized by Standing Deposit Facility is request of eligible institutions. to be attached to eligible triple-A unsecured bonds and notes) of the Icelandic Government). 25 basis points below Bank Bradford & Bingley: rated ABS, including those participating institutions with Rate. Eligible institutions are backed by mortgages and corporate and consumer debt. maturities of up to three years in The eligible collateral for the U.K.-incorporated banks which Bradford & Bingley was GBP, EUR, and US$, and to be have a substantial business in nationalized on September 29, UK banks and building societies Operational Standing Lending eligible to participate in the used for refinancing maturing Facility will comprise high-quality the U.K. and building societies. 2008. The Company’s obligations. The aggregate Applications to be included as mortgage book was assumed by Credit Guarantee Scheme (see debt securities. Transactions will column on far left of this page) notional amount of the debt to be for overnight maturity. BoE an eligible institution will be the U.K. Government and the be guaranteed by HM Treasury reviewed. Company’s retail deposit book will be able to access the new will cease to publish a list of Scheme subject to fulfilling the is estimated to reach £250 banks and building societies was transferred to Abbey billion. A further £25 billion will be National plc. Scheme’s conditions. The signed up for access to the Scheme will commence in April Operational Standing Facilities available as assistance for On December 15, 2008, HM eligible institutions for ordinary Dunfermline Building Society: 2009, subject to state aid and the reserves-averaging approval. Treasury announced changes to scheme. equity fund-raising. The the Scheme. The Government U.K. Government would not be It was announced on March 30, Asset Protection Scheme: now proposes to extend the Asset Purchase Facility subject to bank supervision if it 2009 that about £3.4 billion of guarantee in the future to (“APF”): acquired control of a bank deposits, mortgages and other The Government has now quality assets would be published details of the Asset instruments in a wider range of Private Sector Assets through stock ownership. currencies: Yen, Australian However, in the past the purchased from the failing Protection Scheme, including a dollars, Canadian dollars and On January 19, 2009, the U.S. Federal Reserve has Dunfermline Building Society by Term Sheet setting out the Swiss francs. The term of the Government authorized the BoE frowned on allowing institutions Nationwide Building Society, terms and conditions on which instruments guaranteed will to purchase high quality private with capital from the with the Government paying an institutions can participate in the remain no longer than three sector assets, including Government to make additional £1.6 billion to the Scheme. The basic features of years. commercial paper, corporate expansionary acquisitions in the acquiror to make up the the Scheme are: difference between assets and bonds, paper issued under the United States. It is not clear (i) In return for a fee, HM liabilities. About £500 million of On January 19, 2009, the Credit Guarantee Scheme whether the U.S. Federal Treasury will provide to each other healthy assets would be Government extended the (“CGS”), syndicated loans and Reserve might make an participating institution transferred to a "bridge bank" drawdown window of the asset-backed securities created exception in the current protection against credit losses wholly owned by the BoE. The Scheme from April 9, 2009, to in viable securitization circumstances. incurred on one or more remainder of the business December 31, 2009, subject to structures. portfolios of defined assets to In a release on October 13, (riskier assets worth more than state aid approval. During the the extent that credit losses

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES drawdown window, eligible Under the Commercial Paper 2008, the HM Treasury stated £900 million) were to be placed exceed a “first loss” amount to institutions can issue new Facility (which began on that institutions requesting under the management of be borne by the institution. The guaranteed debt. After the February 6, 2009), the BoE can government recapitalization will, administrators. These steps Treasury protection will cover closure of the drawdown purchase investment grade inter alia, need to: (i) limit were taken using powers – for 90% of the credit losses which window, those institutions can sterling commercial paper remuneration of senior the first time – under the exceed this “first loss” amount, continue rolling over any issued by UK corporates, both at executives both for 2008 (no Banking Act 2009 (see "Other with each participating institution outstanding guaranteed debt (all issuance and in the secondary cash bonus for board), and, for Measures"). retaining a further residual of it until April 13, 2012, and up market, subject to a minimum remuneration policy going exposure of 10% of any credit to one-third of the total until April spread. Purchases are made forward, limit bonuses to reduce losses exceeding this amount. 9, 2014). during a defined period each “moral hazard” activities; (ii) day. Eligible issuers are agree to modify dividend (ii) Eligible Institutions are: UK The fee for the guarantee will be companies, including their policies; and (iii) maintain, over incorporated authorised deposit- based on 100% of the finance subsidiaries, that make the next three years, the takers (including UK subsidiaries institution’s median five-year a material contribution to availability and active marketing of foreign institutions) with more CDS spread during July 2007 to economic activity in the UK. UK of competitive credit to than £25 billion of eligible July 2008, as determined by HM incorporated companies, homeowners and small assets. HM Treasury will Treasury, plus 50 basis points. including those with foreign- businesses at 2007 levels. consider extending the Scheme Prior to December 15, 2008, the incorporated parents, of to other authorised deposit fee was based on the median sufficient size to sustain a RBS: takers in the future. Eligible five-year CDS spread for the commercial paper program and institutions may request to preceding 12 months to October with a genuine business in the On October 13, 2008, RBS participate in the Scheme until 7, 2008. It is expected that this UK, are normally regarded as announced the U.K. Treasury March 31, 2009. change will result in a lower fee meeting this requirement. Paper would underwrite £15 billion of (iii) Participants will be required being payable by institutions for issued by non-bank financial ordinary shares (common stock) to enter into legally binding the guarantee. companies is in principle and purchase £5 billion of commitments to increase eligible, subject to the BoE being preference shares (preferred lending to creditworthy As the changes announced on satisfied that the issuer makes a stock). The U.K. Government borrowers, comply with December 15, 2008 and significant contribution to would have representatives on remuneration policy consistent January 19, 2009, vary the corporate financing in the UK. the bank’s board. The bank has with the FSA’s Code of Practice Scheme, the Government is Paper issued by leveraged announced that it has agreed to on remuneration policy (see seeking the approval of the investment vehicles is ineligible. maintain the availability of SME below) and meet the highest European Commission to the Only sterling-denominated and mortgage lending at 2007 international standards of public revised Scheme (the commercial paper is eligible. levels. disclosure in relation to their Commission had approved the There are many other assets. previous version of the Scheme requirements (relating to On January 19, 2009, the on October 13, 2008). maturity and credit rating) that Government decided to convert (iv) Eligible Assets are: apply in determining whether its preference shares in RBS • Corporate and leveraged loans The scheme is open to paper is eligible. The names of into ordinary shares. It also U.K.-incorporated banks issuers and securities that are agreed a number of lending • Commercial and residential (including U.K. subsidiaries of purchased or eligible are not commitments with RBS, property loans foreign institutions) that have a disclosed publicly. including a new commitment to substantial business in the U.K. increase lending by £6 billion in • Structured credit assets, and U.K. building societies. Any Under the Corporate Bond the next 12 months. including RMBS, CMBS, CLOs other U.K.-incorporated bank Secondary Market Scheme and CDOS

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES (including U.K. subsidiaries of (which began on March 25, RBS announced on February • Participations in respect of the foreign institutions) can apply for 2009), the BoE gives market 26, 2009, that it will seek £13 above, inclusion. Within a banking participants a back-stop offer to billion of additional capital from group, only a single entity can purchase modest amounts of a the Government in the form of in each case, held by the participate in the scheme (and wide range of investment-grade non-voting ‘B’ Shares, together participating institution or an this entity will normally be the sterling UK corporate bonds with with a further Treasury affiliate as at December 31, primary U.K. deposit-taker). the aim of improving secondary commitment to subscribe to an 2008. The Treasury will assess market liquidity, initially by additional £6 billion of B Shares each asset category for The Financial Services Authority facilitating market-making by at RBS’ option. inclusion in the Scheme on a has deemed that, under the banks and dealers. The BoE case-by-case basis. Standardized Approach for purchases bonds issued by HBOS & Lloyds TSB: Assets included in the Scheme calculating capital requirements, companies, including their will continue to be managed by securities guaranteed under the finance subsidiaries, that make Similarly, the U.K. Government the institution and will remain on scheme will qualify for zero risk a material contribution to will underwrite £8.5 billion of its balance sheet but will be weighting. economic activity in the UK. UK- HBOS ordinary shares and required to be “ring-fenced” by incorporated companies, purchase £3 billion of preference the institution so that actions in Furthermore, guaranteed including those with foreign- shares. The U.K. Government relation to them, including instruments are eligible as incorporated parents, capable of will underwrite £4.5 billion of enforcement and disposal, will collateral in the BoE’s extended- issuing a bond into the capital Lloyds TSB ordinary shares and be subject to appropriate collateral open market markets and with a genuine purchase £1 billion of preference Treasury controls. The Scheme operations. business in the UK, are shares. The two banks are also provides for the Treasury to normally regarded as meeting currently in the process of take over ownership and/or The description of the guarantee this requirement. Bonds issued merging. management of the assets in and the guarantor in any offering by non-bank financial certain defined circumstances. document (including listing companies are in principle Management of the particulars, information eligible, subject to satisfying the Government’s investments: RBS announced on February memorandum or offering BoE that the issuer makes a 26, 2009 that it would seek circular) or in any other material contribution to The Government’s investments protection under the Scheme for document or announcement corporate financing in the UK. will be managed on a £325 billion par value of assets. issued by or on behalf of the Paper issued by leveraged commercial basis by a new The fee for the Government’s issuer must be substantially in a investment vehicles is not be “arm’s-length” company called protection under the Scheme will form set out in the Rules of the eligible. Only listed sterling- UK Financial Investments be £6.5 billion, funded through Credit Guarantee Scheme. denominated bonds are eligible. Limited (“UKFI”), wholly owned the issuance of non-voting B Subject to this, no institution that There are many other by the U.K. Government. UKFI shares. will manage the investments obtains a guarantee is permitted requirements (relating to The Lloyds Banking Group arising from the Government’s explicitly to promote itself on the maturity and credit rating) that announced on 7 March, 2009 recapitalization of RBS, Lloyds basis of the guarantee. apply in determining whether a that it would, similarly, seek TSB and HBOS, and, in due bond is eligible. Convertible or protection under the Scheme for course, those arising from the exchangeable bonds are not up to £260 billion par value of nationalization of Northern Rock eligible. assets, with a participation fee of and Bradford & Bingley. The BoE has also announced £15.6 billion being paid to the Government, funded through the that it is ready to implement a UKFI will work to ensure that issuance of non-voting B shares. CGS Bond Secondary Market management incentives for

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Scheme (to purchase CGS- Government assisted or As part of the deal, £4 billion of backed paper) on terms broadly acquired banks are based on Government-held preference similar to those above, should “maximizing long-term value and shares will be converted into market conditions deteriorate. restricting the potential for ordinary shares, to be offered to rewarding failure”. However, the existing shareholders on a pre- The BoE is currently consulting assisted or acquired companies emptive basis and fully with market participants on the will continue to have their own underwritten by the details of any purchases of independent boards and Government. syndicated loans and asset- management teams, backed securities to be made determining their own In conjunction with the under the APF. The BoE may commercial strategies. Government’s announcement of also decide to extend the APF to the details of the Asset non-sterling denominated Protection Scheme, the FSA has instruments. issued two new statements related to this Scheme, one on Government Assets remuneration policy and the The range of assets that could other on capital treatment of be purchased under the APF assets protected by the was expanded on March 3, Scheme: 2009, to include UK Government (i) A new Code of Practice for debt. remuneration policy. The Funding of Purchases principles in this Code are relevant to all FSA-regulated Under the APF, assets are firms. The aim of the Code is to purchased by a wholly owned ensure that firms have subsidiary of the BoE, called remuneration policies which are “Bank of England Asset consistent with sound risk Purchase Facility Fund Limited”. management, and which do not The purchases were originally expose them to excessive risk. It financed by the issuance of is not concerned with levels or Treasury Bills by the UK quantum of remuneration. The Government, and about £984 principles embodied in the Code million in assets were purchased include: this way. • The bonus pool calculation However, the issuance of should include an Treasury Bills was suspended adjustment for current and after 5 March, 2009 in favour of future risk, and take into using newly-created reserves account the cost of capital (i.e., quantitative easing). The employed and liquidity BoE is authorized to create up to required. £150 billion in new reserves, and plans to spend around £75 • Firms should not assess billion of that in the first three performance solely on the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES months. Since quantitative results of the current easing began, almost £19 billion financial year. (out of £100 billion authorized) has been spent on Government • Non-financial performance debt and just over £2 billion (out metrics, including adherence of £50 billion authorized) on to effective risk management corporate bonds and and compliance with commercial paper. regulations, should form a significant part of the Discount Window Facility performance assessment (“DWF”): process. The DWF is intended to provide • The measurement of liquidity insurance, not to tide performance for long term over firms facing fundamental incentive plans, including solvency problems. Under the those based on the DWF, BoE will swap the performance of shares, Government securities on its should also be risk-adjusted. balance sheet for high quality eligible collateral from banks • The major part of any and building societies. In bonus which is a significant exceptional circumstances, BoE proportion of the fixed may lend cash, rather than gilts, component should be against eligible collateral under deferred, with a minimum the DWF. The transactions will vesting period. normally be for 30-day (ii) A statement of capital maturities. Gilts borrowed may treatment of assets insured not be used as collateral for under the Asset Protection Operational Standing Lending Scheme. The FSA expects the Facility borrowings but may be Scheme to protect against credit used as collateral in open losses experienced in respect of market operations. On January assets in the Banking Book, 19, 2009, the BoE announced although participants can that it would permit drawings request HM Treasury to provide from the DWF with a term of 364 cover for assets in the Trading days, in addition to the standard Book. The Scheme will be option to draw for 30 days. considered the equivalent of There would be an additional 25 eligible unfunded credit basis points fee for any protection under the Prudential drawings with initial maturity Sourcebook for Banks, Building beyond 30 days. The BoE has Societies and Investment Firms now published a Market Notice (BIPRU). The “first loss amount” on the DWF. This sets out of an asset will not qualify for details of how the facility will any special capital treatment. operate, securities eligible for

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES exchange, institutions eligible to The FSA expects firms to deduct join the facility and the fees the First Loss tranche from charged. Instruments eligible as capital resources (although collateral will be classified into impairments already taken at the four levels, each attracting commencement of the Scheme different fees upon exchange: will reduce the extent of deduction). The Senior Tranche (i) Level A: high-quality debt (i.e. where losses are securities that are routinely reimbursed by the Treasury) is eligible as collateral in the BoE’s subject to the risk weight of the short-term repo open market protection provided, which would operations; typically be 0% and would (ii) Level B: third party debt therefore attract no capital securities trading in liquid charge.. markets; Capital Regulation: (iii) Level C: other third party On January 19, 2009, the FSA debt securities including those issued a statement clarifying its that are not trading in liquid approach to regulatory capital, markets; following the recapitalization of (iv) Level D: own-name the UK banking sector securitizations and own-name announced on October 8, 2008. covered bonds. The FSA stated that the purpose of the recapitalization scheme Instruments may be deemed was to ensure that bank capital ineligible for the DWF if the BoE ratios were sufficiently high to judges that they were created provide a buffer to allow the for the express purpose of banks both to withstand the obtaining funding from the BoE. challenging economic conditions Term Auctions: and to continue lending on normal commercial criteria. It In September 2007, BoE was not intended to create new announced that it would conduct statutory capital requirements. four auctions to provide funds at three months maturity against a The FSA also endorsed the view wider range of collateral expressed by the Basel (including U.K. residential Committee in a statement of mortgages) than that used in its January 16, 2009, that the weekly open market operations. capital regime should Banks and building societies incorporate counter-cyclical with reserve accounts with BoE measures which ensure that or with access to the BoE’s banks build up capital buffers in standing facilities were eligible good years which they can draw to participate. On October 8, down during economic

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES 2008, the U.K. government downturns. announced that the BoE would continue to conduct auctions The FSA confirmed that each of against extended collateral, the participating banks are reviewing the size and expected to have a minimum frequency of the operations as core tier 1 of 4%. At the time of necessary. the recapitalization in October 2008, the FSA used a tier 1 ratio Special Liquidity Scheme: of 8%. The FSA estimates 6 – 7% to be a comparable post- The Scheme, launched in April stress tier 1 number to the core 2008, enabled banks and tier 1 number of 4%. This building societies with access to approach is intended to be a the BoE’s standing facilities to supervisory framework, and not temporarily exchange their high a new set of rules. quality mortgage-backed and other securities for U.K. The FSA also intends to ensure Government securities. The that the application of the Basel drawdown period of the Scheme Accord (implemented through was initially six months, due to the Capital Requirements end on October 21, 2008. This Directive) does not create any period was then been extended unnecessary or unintended pro- to January 30, 2009. On cyclical effects. In particular, the January 19, 2009, the FSA is amending the variable Government announced that the scalar method of converting window for swapping illiquid internal credit risk models from assets for Treasury Bills in the point in time to through the Special Liquidity Scheme would cycle. These changes will close on January 30, 2009. The significantly reduce the scheme will continue to provide requirement for additional capital liquidity support for a further resulting from the procyclical three years from that point. effect. Extension of Eligible Banking Act 2009: Collateral: The Banking Act was passed on On October 3, 2008, the BoE February 12, 2009. The Act is extended the collateral eligible designed to strengthen the for use in its weekly sterling existing U.K. framework for three-month repo operations to financial stability and depositor include AAA rated asset-backed protection. Most of the securities based on some provisions of the Act came into corporate and consumer loans, force on February 21, 2009. and approved highly-rated, asset-backed commercial paper Part 1 of the Act introduces a permanent special resolution

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES programs, where the underlying regime (“SRR”) for dealing with assets would be eligible if banks that get into financial securitized. The collateral is difficulties. HM Treasury, the subject to haircuts as set out in Financial Services Authority and the market notice of October 13, the Bank of England (the “BoE”) 2008. all play a role. The BoE will have the power to transfer a failing On November 14, 2008, the BoE bank’s business or its shares to announced that it would a “bridge bank” (i.e., a company continue to hold extended- wholly owned by the BoE), with collateral three-month repo open a view to restructuring it for market operations twice-monthly onward sale to the private up to and including the sector. It can also carry out a scheduled long-term repo direct transfer to a private sector operation on January 20, 2009. purchaser. The U.K. Treasury is given the power to nationalize a failing bank. The BoE has the power to make partial transfers, i.e., to transfer healthy assets out of a failing bank and into a bridge bank. This may result in prejudice to those creditors whose claims are not transferred to the bridge bank. One of the objectives of the special resolution regime is to “protect depositors”. Part 2 establishes a new bank insolvency procedure (“BIP”), based largely on existing liquidation provisions of the Insolvency Act 1986 as amended by the Enterprise Act 2002. The BIP provides for the orderly winding up of a failed bank, including prompt payments from the Financial Services Compensation Scheme (“FSCS”) to eligible depositors. There are powers to extend the BIP to building societies and credit unions.

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Part 3 establishes a new bank administration procedure, based largely on existing administration provisions of the Insolvency Act 1986, as amended by the Enterprise Act 2002. This procedure is to be used where there has been a transfer of part of a failing bank’s business, assets or liabilities to a bridge bank or a private sector purchaser under the SRR, leaving an insolvent residual entity. It is designed to ensure that essential services and facilities that cannot be immediately transferred to the bridge bank or private purchaser continue to be provided for a period of time. The Government has also enacted regulations that provide safeguards in the event of a “partial property transfer”. These include safeguards for set-off and netting arrangements where partial transfers are made so that contracts covered by set-off or netting agreements are protected from disruption in a partial transfer subject to express carve-outs. Furthermore, security-holders will also be given explicit protection (including holders of floating charges). There are also third-party compensation safeguards to ensure creditors remaining in the residual bank may not be left worse off than they would have been had the bank been subjected to ordinary insolvency procedures.

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES EC Competition Laws: The U.K. Government has advised the European Commission of its planned support of the U.K. financial sector in relation to the Government scheme for consideration under EC competition laws.

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UNITED STATES OF AMERICA OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS Temporary Liquidity FDIC Insurance Program: Financial Stability Plan On October 14, 2008, the U.S. Mortgage-Backed Securities U.S. Government Loan to the Guarantee Program (“TLGP”): Congress announced the Purchase Program: Auto Industry: The FDIC will expand deposit On February 10, 2009, the Troubled Assets Relief Program On October 14, 2008 the FDIC insurance for non-interest- Treasury, Federal Reserve, (“TARP”) Capital Purchase The U.S. Treasury Department In late September 2008, the announced its temporary bearing transaction accounts. FDIC, Comptroller of the will be authorized to purchase U.S. Congress approved a more 1 Program providing for direct Liquidity Guarantee Program The maximum coverage under Currency (“OCC”), and Office of equity investments in certain up to US$ 700 billion of than US$ 630 billion spending issuing guarantees of newly the FDIC deposit insurance Thrift Supervision (“OTS”) financial institutions under the distressed mortgage-backed bill, which included a measure issued senior unsecured debt of program will temporarily be announced a new Capital Economic Emergency securities and other assets and for US$ 25 billion in loans to the certain banks, thrifts and holding increased from US$ 100,000 to Assistance Program to help Stabilization Act (“EESA”). then resell the mortgages to auto industry. These low- companies. The FDIC revised US$ 250,000.3 ensure that U.S. banking investors under the Economic interest loans are intended to aid the regulations on November 21, institutions have sufficient capital The EESA authorized the U.S. Emergency Stabilization Act the industry in its push to build 16 2008. Under the new program, the to withstand any new challenges, Treasury to use US$ 250 billion (“EESA”). more fuel-efficient, FDIC will provide full insurance paired with a supervisory without further action. Another environmentally-friendly The FDIC will fully guarantee all coverage for non-interest- process to produce a more US$ 100 billion can be obtained On November 12, 2008 vehicles. U.S. auto giants senior unsecured debt issued by bearing accounts until the end of consistent and forward-looking upon the President notifying Treasury Secretary, Henry General Motors, Ford and FDIC-insured institutions, next year. Banks will pay a new assessment of the risks on Congress. Finally, the Paulson, stated “Over these Chrysler will be the primary subject to the limitations premium to cover the expense banks' balance sheets and their remaining US$ 350 billion of the past weeks we have continued beneficiaries. 27 discussed below, and their of the program. potential capital needs. total US$ 700 billion can be to examine the relative benefits parent companies up to October obtained by giving notice to of purchasing illiquid mortgage- Automotive Industry 31, 2009, with any guarantee For non-interest-bearing They announced the following: Congress, who then have related assets. Our assessment Financing Program (AIFP): ceasing on June 30, 2012. transaction deposit accounts 30 days to deny funding if they at this time is that this is not the AIFP is to prevent a significant (including accounts swept from • A new Treasury and wish. most effective way to use TARP Assessment rates under the a non-interest bearing Federal Reserve initiative to funds, but we will continue to disruption of the American Debt Guarantee Program are as transaction account into an non- dramatically expand – up to The EESA has two definitions of examine whether targeted forms automotive industry, which follows: interest bearing savings deposit US$1 trillion – the Term Asset- “troubled assets”, one being of asset purchase can play a would pose a systemic risk to account), a 10 basis point Backed Securities Lending mortgage-related assets and the useful role, relative to other financial market stability and for debt with a maturity of annual rate surcharge will be Facility (“TALF”) in order to other being assets on which the potential uses of TARP have a negative effect on the 180 days or less (excluding applied to non-interest-bearing reduce credit spreads and Treasury believes it should resources, in helping to economy of the United States. overnight debt), 50 basis points; transaction deposit amounts restart the securitized credit spend money. It is the second strengthen our financial system The program requires over US$ 250,000. markets that in recent years definition that Treasury is using and support lending. But other participating institutions to for debt of 181-364 days, strategies I will outline will help implement plans that will 75 basis points; and supported a substantial portion to buy stock in banks, and it has of lending to households, chosen to spend US$ 250 billion to alleviate the pressure of achieve long-term viability. Every institution, regardless of 17 students, small businesses, and on bank securities; the first illiquid assets.” for debt of 365 days or greater, risk category, will be charged its Participating institutions must others. US$ 125 billion of which went to 100 basis points. normal quarterly risk-based also adhere to rigorous nine banks.14 deposit insurance assessment. executive compensation The rates set forth above will be That assessment will equal its • An extension of the FDIC's standards and other measures increased by 10 basis points for As of April 2, 2009, over 500 assessment rate times its Temporary Liquidity Guarantee to protect the taxpayer’s senior unsecured debt issued by banks have received funds for a assessment base (which is Program to October 31, 2009. interests, including limits on the a holding company or another total of US$ 198,416,687,000.15 almost equal to total domestic institution’s expenditures and non-insured depository other corporate governance institution affiliate that becomes • A new framework of Financial institutions had until

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS an eligible and participating deposits). governance and oversight to mid-November to elect into this requirements.23 entity, where, as of help ensure that banks receiving Government recapitalization September 30, 2008, or as of In addition to this assessment, funds are held responsible for scheme which will be in the form JPMorgan Chase & Co.: the date of eligibility, the assets appropriate use of those funds of non-voting preferred shares an institution that has not opted The Federal Reserve Bank of of the holding company’s through stronger conditions on which are redeemable by the out of the deposit guarantee New York provided a combined insured depository lending, dividends and executive issuing bank after three years. portion of the TLGP will pay US$ 29 billion credit line to institution subsidiaries constitute compensation along with The preferred shares will pay an 10 basis points on non-interest JPMorgan Chase & Co. for its less than 50% of consolidated enhanced reporting to the annual dividend of 5% during bearing transaction account purchase of Bear Stearns for holding company assets. public. the first five years and will step- balances in excess of US$ 236 million or US$ 2 per up to 9%. Under the Final Rule, an eligible US$ 250,000. share, subsequently raised to • A limit on senior executive entity that chooses to opt out of Warrants were issued to the US$ 10 per share, to ensure the Several banks have opted out of compensation to those the TLGP by December 5, 2008, Government based on 15% of sale could move forward. the general guarantee program institutions that take under the will not be assessed a fee for its the face value of preferred JPMorgan agreed to guarantee and the transaction-account TARP to US$500,000 in total participation in the program. shares on issue with this halved Bear Stearns’s trading program.22 compensation plus restricted However, if an eligible entity if the preference shares are obligations. stock payable. chooses to remain in the redeemed prior to the December American International Group program after December 5, 31, 2009. 2008, the entity will be subject to Capital Assistance Program (“AIG”): assessments retroactive to (“CAP”): On February 27, 2009, the The Federal Reserve Bank of November 13, 2008 on all senior American Recovery and New York intervened after AIG secured debt, other than Banking supervisory agencies Reinvestment Act (“ARRA”) was unable to secure a private- overnight debt instruments, will “stress test” each major U.S. was signed into law. Under the sector loan, and granted a issued on or after October 14, banking institution to determine ARRA, banks with CPP money two-year revolving credit facility 2008 and on or before whether the institution could are now permitted to buy the of US$ 85 billion in return for an December 5, 2008, that is still withstand economic conditions preferred shares and warrants option to acquire an 80% stake 31 outstanding on December 5, even more adverse than those back with retained. in the insurance giant. 2008. anticipated. If additional capital To date, several banks have is needed, the Treasury will On October 8, the Federal Beginning on December 6, repaid the CPP funds from make available a new capital Reserve Board authorized the 2008, assessments accrue on retained earnings received from facility. The expectation is that Federal Reserve Bank of New all senior unsecured debt with a the U.S. government. The the capital will be in the form of York to lend up to maturity of greater than 30 days banks have returned a total of convertible preferred shares, US$ 37.8 billion by purchasing issued by it on or after US$338,000,000.32 2 with a dividend rate to be investment-grade, fixed-income December 6, 2008. securities from certain regulated specified and a conversion price On March 23, 2009, the Federal U.S. insurance subsidiaries of In the final rule, the FDIC Board set at a modest discount from Reserve announced the delay of AIG. voted to include NOW accounts the institution's stock price up to the March 31, 2009, with interest rates of 0.5% or February. 9, 2009. This security implementation date for On March 2, 2009, the Treasury less and IOLTAs (lawyer trust would serve as a source of amendments to the Federal and the Federal Reserve accounts) in the transaction “contingent” common equity, Reserve's capital adequacy announced a new AIG account program. convertible solely at the option guidelines for bank holding restructuring plan.30 The plan of the issuer for an extended companies on trust preferred period of time. In addition, with

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS On January 16, 2009, the FDIC supervisory approval, banks will securities and the definition of includes: board announced that it will be allowed to exchange existing capital published by the Federal soon propose rule changes to its Capital Purchase Program Reserve in the Federal Register Preferred Equity TLGP to extend the maturity of preferred stock (that of the first on March 10, 2005.33 Due to the the guarantee from three to up TARP tranche) for the new CAP continuing stressed conditions in The Treasury will exchange its to 10 years where the debt is instrument. Participation in the the financial markets and in existing $40 billion cumulative supported by collateral and the stress test is mandatory for U.S. order to promote stability in the perpetual preferred shares for issuance supports new banking institutions with over financial markets and the new preferred shares with consumer lending. US$ 100 billion of assets on a banking industry as a whole, the revised terms that more closely consolidated basis, but banks Federal Reserve has decided to resemble common equity and On March 4, 2009, the FDIC not meeting that threshold may delay until March 31, 2011, the thus improve the quality of AIG's issued an interim rule to make a also apply for CAP capital. implementation date of new equity and its financial leverage. minor modification to the TLGP Stress testing reportedly began requirements that: The new terms will provide for to include certain issuances of at some banks on February 25. non-cumulative dividends and mandatory convertible debt (1) limit the aggregate amount of limit AIG's ability to redeem the cumulative perpetual preferred (MCD) under the TLGP debt Public-Private Investment preferred stock except with the 34 stock, trust preferred securities, guarantee program. Program (“PPIP”): proceeds from the issuance of and minority interests in the equity capital. On March 17, 2009, the equity accounts of most extended the Temporary On Monday, March 23, 2009, consolidated subsidiaries Equity Capital Commitment Liquidity Guarantee Program to the Treasury announced a two- included in the tier 1 capital of all include all insured depository pronged program that is bank holding companies; The Treasury will create a new institutions and those additional intended to deal with troubled equity capital facility, which participants, such as holding assets on financial institution (2) require bank holding allows AIG to draw down up to companies, that have actively balance sheets. Treasury, in companies to deduct goodwill, $30 billion as needed over time participated in the debt conjunction with the FDIC and less any associated deferred tax in exchange for non-cumulative guarantee portion of the TLGP the Federal Reserve, has liability, from the sum of core preferred stock to the Treasury. (by issuing guaranteed debt established the PPIP, the capital elements in calculating This facility will further before April 1, 2009) may purpose of which is to purchase the amount of restricted core strengthen AIG's capital levels continue to issue guaranteed the troubled assets owned by capital elements that may be and improve its leverage. debt through October 31, 2009, financial institutions through a included in tier 1 capital; and without application. The combination of private and Federal Reserve Revolving guarantee on debt issued before public capital, utilizing private- (3) impose further limits on the Credit Facility April 1, 2009, will expire no later sector expertise and the amount of restricted core capital than June 30, 2012. The resources of the U.S. elements that internationally The Federal Reserve will take guarantee on debt issued on or Government.28 active bank holding companies several actions relating to the after April 1, 2009, will expire no may include in tier 1 capital. $60 billion Revolving Credit later than December 31, 2012. The PPIP has two parts, Facility for AIG established by addressing both the legacy the FRBNY in September 2008. Participants that are not insured loans (“Legacy Loans Program”) depository institutions and that and legacy securities (“Legacy Fannie Mae and Freddie Mac: have not issued FDIC- Securities Proram”) clogging the The U.S. government seized guaranteed debt before April 1,

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS 2009 must apply by June 30, balance sheets of financial firms. control of Fannie Mae and 2009, if they wish to issue Freddie Mac and made a guaranteed debt after that date. The Legacy Securities Program commitment to provide up to consists of two related parts: (1) US$ 100 billion to each The FDIC also voted to impose debt financing from the Federal company to ensure they would surcharges on guaranteed debt Reserve under the TALF and (2) not fall into bankruptcy. that has a maturity of one year matching private capital raised Together, the two companies or more and is issued on or after for dedicated funds targeting own or guarantee nearly half the April 1, 2009. For guaranteed legacy securities. It is intended US$ 12 trillion mortgage market, debt that is issued by June 30, to facilitate the creation of and by July 2008 operated at 2009, and matures by June 30, Public-Private Investment Funds leverage ratios of approximately 2012, the surcharge will be 10 (“PPIFs”), which are investment 50 to 1. basis points (on an annualized funds that will invest in legacy basis) for an insured depository securities. They will be managed The seizure involved both institution and 20 basis points by qualifying private sector asset companies being placed in a (on an annualized basis) for all managers (“Fund Managers”), government conservatorship others. For all other guaranteed which will raise equity capital (analogous to a bankruptcy debt that utilizes the extension from private investors and reorganization) and also (either through a maturity after receive matching equity funds replaced senior management. June 30, 2012, or through from the Treasury. Dividends were eliminated and issuance after June 30, 2009), the U.S. Government took an the surcharge will be 25 basis option to acquire 80% of each points (annualized) for an The Legacy Loans Program is company’s common stock. insured depository institution intended to facilitate the creation However, the U.S. Government and 50 basis points (annualized) of PPIFs that will purchase pools did not guarantee the for all others. of legacy loans. Unlike Legacy subordinated debt or preferred Securities PPIFs, Legacy Loan stock issued by these Surcharges will be will be in PPIFs will be formed at the time companies, which is held on the addition to current fees for that a selling institution balance sheets of many banks. guaranteed debt and deposited successfully sells a pool of loans The U.S. Federal Reserve will into the deposit insurance fund to bidders, which thereby also begin purchasing short- instead of being set aside to become investors. There are no term debt obligations issued by cover potential TLGP losses. established Fund Managers for Fannie Mae, Freddie Mac and Loan PPIFs; rather, the selling the Federal Home Loan Banks On March 30, 2009, the Federal bank and FDIC are effectively in the secondary market.18 Reserve announced that, the managers of each Loan effective April 27, 2009, it will PPIF. The term sheet states that Fannie Mae, Freddie Mac and increase the lendable values for the Legacy Loan Program is Ginnie Mae: group deposited loans pledged intended to facilitate buy-and- to the Federal Reserve Banks hold strategies. Treasury intends On November 24, 2008, the for discount window or PSR to provide approximately 50% of Federal Reserve Board collateral purposes, to reflect the equity capital in each loan announced that it will initiate a recent trends in the values of PPIF, with the other 50% program to purchase the direct

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS some types of loans. The coming from private investors. obligations of Fannie Mae, Federal Reserve also announce Private investors will manage Freddie Mac, and the Federal the acceptance of senior the pools of assets, with Home Loan Banks—and unsecured debt issued under oversight from the FDIC. The mortgage-backed securities the FDIC's TLGP. The new loan PPIF will be financed (MBS) backed by Fannie Mae, collateral margins for TLGP through the issuance of second Freddie Mac, and Ginnie have been added to the discount non-recourse debt guaranteed Mae.19 window and PSR collateral by the FDIC and collateralized margins table.35 by the assets purchased by the Purchases of up to PPIF. US$ 100 billion in GSE direct obligations under the program Commercial Paper Funding will be conducted with the Facility (“CPFF”): Federal Reserve’s primary dealers through a series of The CPFF (announced competitive auctions and will October 7, 2008) will purchase begin next week. Purchases of through a Special Purpose up to US$ 500 billion in MBS will Vehicle three-month unsecured be conducted by asset and asset-backed commercial managers selected via a paper (“ABCP”) from eligible competitive process with a goal issuers.4 of beginning these purchases before year-end. Purchases of All U.S. issuers of commercial both direct obligations and MBS paper are eligible. The are expected to take place over maximum amount of a single several quarters. issuer’s commercial paper covered at any time will be the greatest amount of U.S. dollar- denominated commercial paper Government Sponsored the issuer had outstanding on Enterprise Credit Facility any day between January 1 and (“GSECF”): August 31, 2008. The lender of last resort for On January 26, 2009, the NY GSEs (Fannie Mae, Freddie Federal Reserve announced a Mac and FHLB) will ensure change in eligibility continued access to funding and requirements. The CPFF will ensure market stability.20 not purchase ABCP from issuers that were inactive prior to the Citigroup: creation of the CPFF. An issuer will be considered inactive if it On November 23, 2008, the did not issue ABCP to U.S. Treasury Department and institutions other than the the Federal Deposit Insurance

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS sponsoring institution for any Corporation announced that it consecutive period of three will provide protection against months or longer between the possibility of unusually large January 1 and August 31, 2008. losses on an asset pool of approximately US$ 306 billion of Liquidity Fund: loans and securities backed by The Liquidity Fund, which began residential and commercial real on September 19, 2008 and estate and other such assets, ends on October 30, 2009, will which will remain on Citigroup’s lend funds to depository balance sheet. As a fee for this institutions and bank holding arrangement, Citigroup will issue companies in order for them to preferred shares to the Treasury purchase eligible ABCPs from and FDIC. Treasury will invest money market mutual funds US$ 20 billion in Citigroup from (“MMMF”) under certain the Troubled Asset Relief conditions.5 Program in exchange for preferred stock with an 8% Money Market Investor dividend to the Treasury.21 Funding Facility (“MMIFF”): Targeted Investment Program A special purpose vehicles (TIP): established by the private sector (“PSPV”) will cease purchasing TIP is designed to prevent a loss assets and will enter the wind- of confidence in financial down process on October 30, institutions that could result in 2009, unless the Board extends significant market disruptions, the MMIFF.6 Eligible assets threatening the financial strength include U.S. dollar-denominated of similarly situated financial certificates of deposit, bank institutions, impairing broader notes and commercial paper financial markets, and issued by highly rated financial undermining the overall institutions and having economy. Institutions will be remaining maturities of 90 days considered for this program on a or less. case-by-case basis.24

On January 7, 2009, the Federal On December 31, 2008, Reserve expanded the set of Citigroup received US$20 billion institutions eligible to participate under this program. in the MMIFF from U.S. money market mutual funds to also Bank of America: include a number of other money market investors. The On January 16, 2009, the U.S. newly eligible participants Treasury Department and the

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS include U.S.-based securities- Federal Deposit Insurance lending cash-collateral Corporation announced that reinvestment funds, portfolios, they will provide protection and accounts (securities against the possibility of lenders); and U.S.-based unusually large losses on an investment funds that operate in asset pool of approximately US$ a manner similar to money 118 billion of loans, securities market mutual funds, such as backed by residential and certain local government commercial real estate loans, investment pools, common trust and other such assets, all of funds, and collective investment which have been marked to funds. current market value. The large majority of these assets were The Federal Reserve Board also assumed by Bank of America as authorized the adjustment of a result of its acquisition of several of the economic Merrill Lynch. The assets will parameters of the MMIFF, remain on Bank of America's including the minimum yield on balance sheet. In addition and if assets eligible to be sold to the necessary, the Federal Reserve MMIFF, to enable the program stands ready to backstop to remain a viable source of residual risk in the asset pool backup liquidity for money through a non-recourse loan. market investors even at very low levels of money market The U.S. Treasury will invest interest rates. US$ 20 billion in Bank of America from the Troubled Money Market Funds Assets Relief Program in Guarantee Program exchange for preferred stock (“MMFGP”) with an 8 percent dividend to the Treasury. Bank of America will On March 31, 2009, the comply with enhanced executive Treasury announced an compensation restrictions and extension of its temporary implement a mortgage loan Money Market Funds Guarantee modification program.25 Program through September 18, 2009. The MMFGP was scheduled to end on April 30, 2009.

As a result of the extension, the MMFGP will continue to provide coverage to shareholders up to the amount held in participating

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS money market funds as of the close of business on September 19, 2009. All money market funds that currently participate in the MMFGP and meet the extension requirements under the guarantee agreements are eligible to continue to participate in the MMFGP. Funds that are not currently participating in the MMFGP are not eligible to participate.

While the MMFGP protects the accounts of investors, each money market fund makes the decision to participate in the program. Investors cannot sign- up for the MMFGP individually. The MMFGP currently covers over $3 trillion of combined fund assets.37

Primary Dealer Credit Facility (“PDCF”): The PDCF, effective September 15, 2008, is an overnight loan facility that will provide funding to primary dealers, who will participate through their clearing banks, in exchange for tri-party eligible collateral. It is scheduled to expire October 30, 2009.7

Term Securities Lending Facility (“TSLF”): The TSLF is a 28-day facility that offers general Treasury collateral, such as Treasury bills, notes, bonds and inflation- indexed securities, to primary

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS dealers of the New York Federal Reserve Bank in exchange for other eligible collateral. It is scheduled to expire October 30, 2009.8

Term Auction Facility (“TAF”): The TAF, established in December 2007, is a temporary credit facility that allows a depositary institution to place a bid for an advance from its local Federal Reserve Bank at an interest rate determined as a result of the auction. The first auction took place on December 17, 2007.9 Federal Reserve intends to conduct bi-weekly TAF auctions as long as necessary. Only depository institutions are eligible.

Foreign Exchange Swap Lines: On October 13, 2008, the U.S. Federal Reserve announced the expansion of swap lines with, among others, the BoE, the ECB10 and the Swiss National Bank. These three European central banks will conduct tenders of U.S. dollar funding at 7-day, 28-day and 84-day maturities.11 Swap lines with the U.S. Federal Reserve will be increased to accommodate whatever quantity of U.S. dollar funding is demanded.

Temporary 23A Exemption:

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS The U.S. Federal Reserve temporarily exempt certain bank-to-affiliate financings from limits under section 23A of the Federal Reserve Act and the Fed’s regulation W.12

Term Asset-Backed Securities Loan Facility (“TALF”):

Under the TALF announced on November 25, 2008 the Federal Reserve Bank of New York (“FRBNY”) will lend up to US$ 200 billion on a non- recourse basis to holders of certain AAA-rated Asset-Backed Securities (“ABS”) backed by newly and recently originated consumer and small business loans. The FRBNY will lend an amount equal to the market value of the ABS less a haircut and will be secured at all times by the ABS. The U.S. Treasury Department—under the Troubled Assets Relief Program (“TARP”) of the Emergency Economic Stabilization Act of 2008—will provide US$ 20 billion of credit protection to the FRBNY in connection with the TALF.13

On February 10, 2009, the Federal Reserve announced that it is prepared to undertake a substantial expansion of the TALF. The expansion could increase the size of the TALF to as much as $1 trillion and could broaden the eligible collateral to encompass other types of newly

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS issued AAA-rated asset-backed securities, such as commercial mortgage-backed securities, private-label residential mortgage-backed securities, and other asset-backed securities. An expansion of the TALF would be supported by the provision by the Treasury of additional funds from the Troubled Asset Relief Program.26

Under the TALF, any entity controlled by a foreign government or managed by an investment manager controlled by a foreign government may not be an eligible borrower. A foreign government is considered to control a company if, among other things, it owns, controls, or holds with power to vote 25% or more of a class of voting securities of the company.

On March 3, 2009, Treasury and Federal Reserve announced the details of TALF. The FRBNY will lend up to $200 billion to eligible owners of certain AAA-rated ABS backed by newly and recently originated auto loans, credit card loans, student loans, and SBA-guaranteed small business loans. Issuers and investors in the private sector are expected to begin arranging and marketing new securitizations of recently generated loans, and subscriptions for funding in March will be accepted on

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS March 17, 2009. On March 25, 2009, the new securitizations will be funded by the program, creating new lending capacity for additional future loans. The program will hold monthly fundings through December 2009 or longer if the Federal Reserve chooses to extend the facility.29

On March 19, 2009, the FRBNY announced that investors applied to borrow US$ 4.7 billion from TALF on the first TALF subscription date.36

On April 8, 2009, the FRBNY announced that investors applied to borrow US$ 1.7 billion from TALF on the second TALF subscription date.38

1 Invoked through the systemic risk exception provisions of the FDIC Improvement Act of 1991. See the FAQ’s at http://www.fdic.gov/regulations/resources/TLGP/faq.html. 2 The FDIC’s TLGP final rules were issued on November 21, 2008. See http://www.fdic.gov/news/board/08BODtlgp.pdf. 3 The FDIC Insurance Program is effective from October 3, 2008 until December 31, 2009. See http://www.treas.gov/initiatives/eesa/. 4 Expires October 30, 2009. See http://www.newyorkfed.org/markets/cpff_terms_conditions.html. 5 Expires October 30, 2009. See http://www.frbdiscountwindow.org/mmmf.cfm?hdrID=14. 6 Expires October 30, 2009. See http://www.newyorkfed.org/markets/mmiff_terms.html. 7 Expires October 30, 2009. See http://www.newyorkfed.org/markets/pdcf.html. 8 Expires October 30, 2009. See http://www.newyorkfed.org/markets/tslf.html. 9 In September 2008 the U.S. Federal Reserve announced (1) an increase in the size of the 84-day maturity TAF auctions from US$ 25 billion to US$ 75 billion per auction beginning on October 6, 2008; (2) two forward TAF auctions amounting to US$ 150 billion and (3) an increase in swap authorization limits with foreign central banks. See http://www.federalreserve.gov/monetarypolicy/taffaq.htm. 10 The swap line amount with the ECB was increased from US$ 120 billion to US$ 240 billion. Other foreign country swap lines include: Australia, Canada, Denmark, England, Japan, New Zealand, Norway, Sweden, and Switzerland. See http://www.federalreserve.gov/newsevents/press/monetary/20081013a.htm, http://www.federalreserve.gov/newsevents/press/monetary/20080924a.htm, http://www.federalreserve.gov/newsevents/press/monetary/20081028a.htm, and http://www.federalreserve.gov/newsevents/press/monetary/20080918a.htm. 11 In August 2008 the ECB, in conjunction with the U.S. Federal Reserve, began operating 84-day operations in addition to its operations with a 28-day maturity.

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12 The exemption is available from September 14, 2008 until January 30, 2009. See http://edocket.access.gpo.gov/2008/pdf/E8-22701.pdf. 13 Expires December 31, 2009. See http://www.federalreserve.gov/newsevents/press/monetary/monetary20081125a1.pdf. 14 The rescue package involves a plan to buy stakes of circa: US$ 25 billion each in Citigroup, JPMorgan and Wells Fargo; US$ 25 billion between Bank of America and Merrill, which agreed last month to be acquired by Bank of America; US$ 10 billion each in Goldman Sachs and Morgan Stanley; US$ 3 billion for Bank of New York Mellon; and US$ 2 billion for State Street. 15 The Treasury Department has listed all completed transactions on its website. See http://www.ustreas.gov/initiatives/eesa/docs/001-06-09-CPP-Report.pdf. 16 Expires December 31, 2009. See http://www.ustreas.gov/press/releases/reports/mbs_factsheet_090708hp1128.pdf. 17 Secretary Paulson’s full statement can be viewed at http://www.ustreas.gov/press/releases/hp1265.htm. 18 Expires December 31, 2009. See http://fpc.state.gov/documents/organization/110096.pdf. 19 The Federal Reserve’s full press release can be viewed at http://www.federalreserve.gov/newsevents/press/monetary/20081125b.htm. 20 The Treasury Department’s full statement on the program can be viewed at http://www.ustreas.gov/press/releases/reports/gsecf_factsheet_090708.pdf. 21 The joint press release among the Treasury Department, FDIC, and Federal Reserve on Citigroup can be viewed at http://www.federalreserve.gov/newsevents/press/bcreg/20081123a.htm. 22 The lists of the banks are available at http://www.fdic.gov/regulations/resources/TLGP/optout.html. 23 Guidelines for the AIFP are published on Treasury’s website. See http://www.treasury.gov/initiatives/eesa/program-descriptions/aifp.shtml. 24 Program guidelines for the TIP were published on Treasury’s web site on January 2, 2009 as required by section 101(d) of the EESA. See http://www.treasury.gov/press/releases/hp1338.htm. 25 The term sheet for this deal can be viewed at http://www.fdic.gov/news/news/press/2009/pr09004a.pdf. 26 The Federal Reserve’s full press release can be viewed at http://www.federalreserve.gov/newsevents/press/monetary/20090210b.htm. 27 The Federal Reserve’s full press release can be viewed at http://www.ustreas.gov/press/releases/tg21.htm. See also http://financialstability.gov/. 26 The Federal Reserve’s full press release can be viewed at http://www.federalreserve.gov/newsevents/press/monetary/20090210b.htm. 27 The Federal Reserve’s full press release can be viewed at http://www.ustreas.gov/press/releases/tg21.htm. See also http://financialstability.gov/. 28 The Federal Reserve’s full press release can be viewed at http://www.treas.gov/press/releases/tg65.htm. 29 The Federal Reserve’s full press release can be viewed at http://ustreas.gov/press/releases/tg45.htm. 30 The Federal Reserve’s full press release can be viewed at http://federalreserve.gov/newsevents/press/other/20090302a.htm. 31 The full ARRA is available at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h1enr.pdf. 32 The full article is available a t http://www.washingtonpost.com/wp-dyn/content/article/2009/03/31/AR2009033102187.html. 33 The Federal Reserve’s full press release can be viewed at http://www.federalreserve.gov/newsevents/press/bcreg/20090317a.htm. 34 The FDIC interim rule can be viewed at http://edocket.access.gpo.gov/2009/pdf/E9-4586.pdf. 35 The Federal Reserve’s full press release can be viewed at http://www.frbdiscountwindow.org/announcement090330.cfm?hdrID=21. 36 The FRBNY’s full press release can be viewed at http://www.newyorkfed.org/newsevents/news/markets/2009/ma090319.html. 37 The Treasury’s full press release can be viewed at http://www.ustreas.gov/press/releases/tg76.htm. 38 The FRBNY’s full announcement can be viewed at http://www.newyorkfed.org/markets/TALF_operations.html.

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This publication is intended only as a general discussion of the issues covered in it. It should not be regarded as legal advice. The description of state action given is not intended to be a comprehensive summary or discussion of states’ activities and may be subject to further changes.

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Shearman & Sterling LLP – LONDON Shearman & Sterling LLP – NEW YORK Broadgate West 599 Lexington Avenue 9 Appold Street New York, New York 10022 London, EC2A 2AP United States of America United Kingdom T: +1 212 848 4000 T: +44 20 7655 5000 F: +1 212 848 7179 F: +44 20 7655 5500 Azam H. Aziz Barney Reynolds Partner Partner T: +1 212 848 8154 T: +44 20 7655 5528 [email protected] [email protected]

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The following law firms contributed the sections dealing with their respective countries:

ARGENTINA AUSTRALIA

Bruchou, Fernández Madero & Lombardi Mallesons Stephen Jaques Ing Enrique Butty 275 Level 61, Governor Phillip Tower Psio 12 C1001AFA 1 Farrer Place Buenos Aires, Argentina Sydney, Australia T: +5411 5288 2300 T: +61 2 9296 2000 www.bfmyl.com http://www.mallesons.com/

Hugo Nicolas Bruzone, Partner Martin James, Partner [email protected] T: + 61 2 9296 2198 [email protected]

Philip Harvey, Senior Associate T: +61 2 9296 2484 [email protected]

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AUSTRIA BELGIUM

BINDER GRÖSSWANG Rechtsanwälte OG CMS DeBacker A-1010 Wien, Sterngasse 13 Avocats – Advocaten Austria Ch. de La Hulpe 178 T: +43 1 534 80 B-1170 Brussels, Belgium www.bindergroesswang.at T: +32 (0) 2 743 69 00 www.cms-db.com Dr. Florian Khol, Partner [email protected] Carl Dotremont, Partner T: +32 2 647 85 24 Mag. Emanuel Welten, Partner [email protected] [email protected] Razvan Emanoil, Senior Associate T: +32 2 674 85 23 [email protected]

BELGIUM BRAZIL

Lydian Veirano Advogados Av. Das Nações Unidas, 12.995 - 18o andar Tour & Taxis Brooklin Havenlaan - Avenue du Port 86c b113 São Paulo - S.P, Brasil 1000 Brussels T: 04578-000 Belgium http://www.veirano.com T: +32 2 787 90 00 www.lydian.be Roberto Rudzit, Partner [email protected] Peter De Ryck, Partner T : +32 2 787 90 20 Guilherme Peres Potenza, Associate [email protected] [email protected]

Tom Geudens, Counsel T : +32 2 787 90 08 [email protected]

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BULGARIA CANADA

DRP Legal Stikeman Elliott LLP 15 Shipka Street, Floor 2 5300 Commerce Court West 1504 Sofia, Bulgaria 199 Bay Street T: +359 2 943 4350 Toronto, ON M5L 1B9 T: + 1 416 869 5500 Anelia Dinova, Partner www.stikeman.com [email protected] Peter Hamilton, Partner T: + 1 416 869 5564 [email protected]

Lewis Smith, Partner T: + 1 416 869 5210 [email protected]

DENMARK ESTONIA

Accura Advokataktieselskab Raidla Lejins & Norcous Tuborg Boulevard 1 Roosikrantsi 2 DK-2900 Hellerup 10119 Tallinn Copenhagen, Denmark Estonia T: +45 3945 2800 T: +372 640 7170 www.accura.dk http://www.rln.ee

Claus Bennetsen, Partner Sven Papp, Partner T: +45 3945 2828 [email protected] [email protected]

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FINLAND GREECE

Krogerus Attorneys Ltd PotamitisVekris P.O. Box 533 (Jaakonkatu 3 A) 11th km National Rd Athens-Lamia FI-00101 Helsinki, Finland GR 144 51 Metamorphosi, Greece T: +358 29 000 6200 T: +30210 2886549-550 http://www.krogerus.com http://www.pipartners.info/

Mikko Mali, Partner George Bersis, Partner T: +358 29 000 6219 [email protected] [email protected]

Päivi Toivari, Specialist Counsel T: +358 29 000 6237 [email protected]

HONG KONG HUNGARY

Richards Butler in association with Reed Smith LLP Szabó Kelemen & Partners Attorneys 20F Alexandra House Váci út 20 16-20 Chater Road 1132 Budapest, Hungary Central, Hong Kong T: + 36 1 288 8200 T:+ 852 2810 8008 http://www.sz-k-t.hu http://www.reedsmith.com/ Domonkos Kiss, Partner C.J. Williams, Partner [email protected] T: +852 2507 9738 [email protected] Tamás Kárpáthegyi, Associate [email protected]

ICELAND INDIA

Logos Legal Services Amarchand & Mangaldas & Suresh A. Shroff & Co. Efstaleiti 5 Peninsula Chambers 103 Reykjavík, Iceland Peninsula Corporate Park T: 00 354 5 400 300 Ganpatrao Kadam Marg, Lower Parel (W) http://www.logos.is/ Mumbai – 400 013 T: +91(0)11 2692 0500 Gunnar Sturluson, Partner [email protected] Vandana Shroff, Partner T: +91 22 2496 4455/ 6660 4455 [email protected]

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IRELAND KOREA

Arthur Cox Kim & Chang Earlsfort Centre 5th Floor, Seyang Bldg. Earlsfort Terrace 223 Naeja-dong, Jongno-gu Dublin 2, Ireland Seoul 110-720, Korea T: 00 353 1 618 0000 T: 822 3703 1114 www.arthurcox.com http://www.kimchang.com/

Robert Cain, Senior Associate Sang-Hwan Lee T: + 353 1 618 1146 T: (822)-3703-1074 [email protected] [email protected]

Sang-Jin Ahn T: (822) 3703-1180 [email protected]

LUXEMBOURG THE NETHERLANDS

Arendt & Medernach NautaDutilh N.V. 14, rue Erasme P.O. Box 7113 B.P. 39 1007 JC L-2010 Luxembourg Amsterdam, The Netherlands T: (352) 40 78 78 1 T: +31 20 717 1000 http://www.arendt-medernach.com http://www.nautadutilh.com

Philippe Dupont, Partner Pim Rank, Partner T: +352 40 78 78 205 T: +31 20 71 71 864 [email protected] [email protected]

NEW ZEALAND NORWAY

Bell Gully Advokatfirmaet Haavind Vislie AS Vero Centre Bygdøy Allé 2 48 Shortland Street P.B. 359 Sentrum Auckland, New Zealand NO-0101 Oslo T: +64 9 916 8800 T: +47 22 43 30 00 http://www.bellgully.com/ www.haavind.no

Murray King, Partner Peter L. Brechan, Partner T: +64 9 916 8971 [email protected] [email protected]

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PORTUGAL RUSSIA

PLMJ - A. M. Pereira, Sáragga Leal, Lovells CIS Oliveira Martins, Júdice e Associados 5th Floor Usadba Centre Av. da Liberdade, 224 22 Voznesensky Pereulok Edifício Eurolex 125009 Moscow, Russia 1250-148 Lisbon, Portugal T: +7 495933 3000 T: + 351 21 319 73 00 http://www.lovells.com http://www.plmj.pt/en/index.php Michael Pugh, Partner Maria Castelos [email protected] T: +351213197409 [email protected]

Sónia Teixeira da Mota T: +351213197564 [email protected]

SLOVAKIA SLOVENIA

Čechová & Partners Jadek & Pensa Bratislava Head Office Tavčarjeva 6 Štúrova 4 1000 Ljubljana 811 02 Bratislava, Slovakia Slovenija T: +421-2 54 41 44 41 T: +386 1 234 25 20 http://www.cechova.sk http://www.jadek-pensa.si

Tomas Maretta Pavle Pensa [email protected] [email protected]

Tina Zvanut Mioc [email protected]

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SPAIN SWEDEN

Uría Menéndez Advokatfirman Lindahl Príncipe de Vergara, 187 P.O. Box 1766 28002 Madrid, Spain SE-111 87 Stockholm, Sweden T: +34 915 860 400 T: +46 8 463 39 00 http://www.uria.com/eng/index.asp www.rydincarlsten.se or www.lindahl.se

Luis de Carlos, Partner Erik Lind, Partner T: +34 91 586 0374 T: +46 8 463 39 08 [email protected] [email protected]

Javier Redonet, Partner T: +34 91 586 0154 [email protected]

SWITZERLAND UKRAINE

Bäer & Karrer AG Jurvneshservice Law Firm Brandschenkestrasse 90 57/3 Krasnoarmeyskaya Str., Suite 229, CH-8027 Zurich, Switzerland Kyiv 03150, Ukraine T: +41 58 261 50 00 T: +380 44 239 23 90 http://www.baerkarrer.ch www.jvs.com.ua

Eric Stupp, Managing Partner Dr. Anna Tsirat, Partner [email protected] [email protected]

UNITED ARAB EMIRATES UNITED ARAB EMIRATES

Trowers & Hamlins LLP Afridi & Angell BurJuman Business Tower Emirates Towers - Level 35 Sheikh Khalifa bin Zayed Road Sheikh Zayed Road (Trade Centre Road) Dubai, United Arab Emirates PO Box 23092 T: +971 4 330 3900 Dubai, United Arab Emirates http://www.afridi-angell.com T: +971 (0)4 3519201 F: +971 (0)4 3519205 Charles Laubach, Partner www.trowers.com [email protected]

Jennifer Bibbings, Partner [email protected]

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