DECLARATION in CASE of ELECTRONIC TRANSMISSION: You Must Read the Following Before Continuing

PROSPECTUS

DECLARATION IN CASE OF ELECTRONIC TRANSMISSION: You must read the following before continuing. The following statement relates to the attached Prospectus dated 14 November 2014 (“the Prospectus”), and therefore you are advised to read this carefully before reading, accessing or making any use of the attached Prospectus. By accessing the attached Prospectus, you agree to be bound by the following terms and conditions, including any relevant amendment to them, each time you receive any information from Hellenic Bank Public Company Limited (the “Bank”) as a result of such access.

NOTHING IN THE PROSPECTUS CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES DESCRIBED IN THE PROSPECTUS HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS.

THE PROSPECTUS MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. IF YOU HAVE GAINED ACCESS TO THE PROSPECTUS CONTRARY TO ANY OF THE FOREGOING RESTRICTIONS, YOU ARE NOT AUTHORIZED, AND WILL NOT BE ABLE, TO PURCHASE ANY OF THE SECURITIES DESCRIBED THEREIN.

Any securities referred to herein are not being offered or sold, directly or indirectly, in or into the United States (including its territories and possessions, any state of the United States and the District of Columbia), Canada, Australia, South Africa or Japan or any other jurisdiction where to do so would be illegal or violate applicable laws or regulations (together, the “Excluded Territories”), except as may be permitted by applicable law. No offer of securities is being made to any person in any of the Excluded Territories, except as may be permitted by applicable law.

The materials relating to the offering do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. Under no circumstances shall the Prospectus constitute an offer to sell or the solicitation of an offer to buy nor shall there be any offer or sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Confirmation of your Representations: If you have accessed the Prospectus from the internet, have gained such access from the following official site of the Bank at www.hellenicbank.com, and / or the official site of the Cyprus Stock Exchange (the “CSE”) and / or the Cyprus Securities and Exchange Commission (the “CySEC”). In the case that the Prospectus was sent to you electronically, you received it from the Bank or authorised persons of the Bank.

If you have gained access to the Prospectus and/or the Prospectus has been sent to you by the Bank or by an authorised person of the Bank, you will be deemed to have represented to the Bank that (i) you are not located in any of the Excluded Territories, (ii) you consent to the delivery by electronic transmission and (iii) in the case of delivery by email, the email address you have given to the Bank or to authorised persons of the Bank and to which this email has been delivered, is not located in any of the Excluded Territories.

This Prospectus has been made available to you in electronic format. We remind you that the contents of the Prospectus which has been sent and / or received electronically, can be altered or changed during the process of transmission and / or reception and therefore the Bank or any of its affiliated companies do not accept any responsibility whatsoever in respect to any difference between the attached Prospectus sent or received in electronic format and the printed version.

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HELLENIC BANK PUBLIC COMPANY LTD (The Company was incorporated in the Republic of Cyprus (“Cyprus”) under the Cyprus Companies Law, Cap.113) (Company registration number: 6771)

PROSPECTUS DATED 14 NOVEMBER 2014

(In accordance with the Provisions of Regulation No 809/2004 (as amended) of the Commission of the European Union, the Public Offer and Prospectus Law of 2005 (as amended) and the Cyprus Companies Law, Cap.113)

SHARE CAPITAL INCREASE THROUGH SUBSCRIPTION RIGHTS ISSUE, OF UP TO €221.433.706 AND LISTING ON THE CSE SUBSCRIPTION RIGHTS AND NEW SHARES TO RESULT FROM THE ISSUE The Subscription Rights will be issued and allotted to all existing shareholders at the ratio of one (1) Subscription Right to every one (1) Ordinary Share held on the Record Date. Every two (2) Subscription Rights to be exercised will be converted to three (3) new Ordinary Shares of the Bank of nominal value of €0,01 at an Exercise Price of €0,0375 per New Share. The Holders of Subscription Rights who will exercise all of their Subscription Rights in time may, concurrently with the exercise of their Subscription Rights, exercise their Presubscription Right to acquire any New Unsubscribed Shares, i.e. shares that correspond to the unexercised Subscription Rights, at a price equal to the Exercise Price, i.e. €0,0375 per New Share, provided that the exercise of such Holder’s Subscription Rights and Presubscription Right does not result in such investor holding equal or in excess of 30,0% of the issued share capital of the Bank after giving effect to the issue of shares pursuant to the Subscription Rights and the Presubscription Right. New Shares issued pursuant to Presubscription Rights will be allocated on a pro rata basis, up to 100% of the number of New Shares corresponding to the Subscription Rights exercised by such Holder. If the Presubscription Right is in excess of the aforementioned limit of 100%, then satisfying the excess percentage will be at the discretion of the Board. The Bank shall have the right, at any time within 30 working days from the Last Date of Exercise of Subscription Rights and the exercise of the Presubscription Right to issue all or part of the New Shares which correspond to the unexercised Subscription Rights that have not been covered during the exercise of the Presubscription Right, and the Board of Directors of the Bank will allot, at its discretion, such New Shares, in Cyprus and abroad, through a procedure it will determine, at a price at least equal to the Exercise Price, i.e., €0,0375 per New Share, provided that the allotment of such News Shares does not result in such investor holding equal or in excess of 30,0% of the issued share capital of the Bank upon completion of the Issue, but in such a way that the procedure of allotment of such New Shares will not constitute a public offer under the provisions of the applicable legislation of that state.

UNDERWRITER RESPONSIBLE FOR DRAWING UP THE PROSPECTUS

HELLENIC BANK (INVESTMENTS) LTD

THIS IS AN ENGLISH TRANSLATION OF THE PROSPECTUS ISSUED IN GREEK IN THE FORMAT THAT HAS BEEN APPROVED BY THE CYPRUS SECURITIES AND EXCHANGE COMMISSION (“CYSEC”) AS THE COMPETENT AUTHORITY. THE GREEK TEXT OF THE PROSPECTUS AS IT HAS BEEN APPROVED BY THE CYSEC IS BINDING. THE ENGLISH TRANSLATION IS FOR INFORMATION PURPOSES ONLY.

PROSPECTUS

PROSPECTUS (In accordance with the Provisions of Regulation No 809/2004 (as amended) of the Commission of the European Union, the Public Offer and Prospectus Law of 2005 (as amended) and the Cyprus Companies Law, Cap.113 (as amended)) This document is important and requires your immediate attention. If you require further explanations and/or clarifications about the contents of this Prospectus you can be informed by professional financial brokers or other investment advisors. Hellenic Bank Public Company Limited assumes full responsibility for the information included in this Prospectus and ascertains that, having taken all possible measures for this purpose, the information herein this Prospectus is, to its knowledge, in accordance with the facts and there are no omissions that could compromise its contents. The Directors of Hellenic Bank Public Company Limited are also responsible jointly and severally for the information included in this Prospectus and ascertain that, having taken all possible measures for its drafting, the information herein, is to the best of their knowledge, in accordance with the facts and there are no omissions that could compromise its contents. HELLENIC BANK PUBLIC COMPANY LIMITED (The Company was incorporated in Cyprus under the Cyprus Companies Law, Cap.113 (as amended))

AUTHORISED SHARE CAPITAL €516.000.000 divided into 51.600.000.000 Ordinary Shares of nominal value €0,01 each ISSUED SHARE CAPITAL €39.365.992,11 divided into 3.936.599.211 Ordinary Shares of nominal value €0,01 each The Prospectus has been approved by the CySEC solely for the purpose of meeting the information needs of investors as defined in the Public Offer and Prospectus Law of 2005 (as amended) of the Republic of Cyprus, which transposes into national law Directive 2003/71/EC (as amended) and Regulation 809/2004 (as amended) of the Commission of the European Union. Prospectus Date: 14 November 2014

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The approval of the Prospectus should not be considered as a recommendation to invest in the Issuer. Before any investment decision is obtained, investors should consult their investment advisor and/or any professional consultant, as they see fit.

Hellenic Bank (Investments) Ltd, which signs the Prospectus, is the Underwriter responsible for drawing up the Prospectus.

The Subscription Rights and the New Shares (together the “Securities”) are only being offered to the public in Cyprus, Greece and the United Kingdom, and the offer is only addressed to persons that can legally accept it. In EEA (the “European Economic Area”) member states other than Cyprus, Greece and the United Kingdom, the Securities are only being offered in circumstances that do not require the publication of a prospectus pursuant to Article 3 of Directive 2003/71/EC of the European Parliament and Council, as amended by the Directive 2010/73/EU, (the “Prospectus Directive”). This offer is not addressed in any way (in writing or otherwise), directly or indirectly, to persons in the Excluded Territories. For this reason, it is forbidden to mail, distribute, send or otherwise promote copies of this Prospectus and any other relevant documents or material relating to this Offer into or from any Excluded Territory, except in compliance with applicable law. In jurisdictions other than Cyprus, Greece, the United Kingdom and the Excluded Territories, the offer of the Securities may be restricted by legal or regulatory requirements of such jurisdictions.

Applications have been made by Hellenic Bank Public Company Limited for a certificate of approval under Article 18 of Directive 2003/71/EC of the European Parliament and Council, as implemented in Cyprus, to be issued by the CySEC to the competent authority in Greece and the United Kingdom, in which it will be certified that this Prospectus has been prepared in accordance with Directive 2003/71/EC of the European Parliament and Council.

This Prospectus includes forward-looking statements. These forward-looking statements are identified by the use of terms and phrases such as “believe”, “anticipate”, “will”, “should”, “may”, “could”, “plan” and other similar terms and phrases and the negative form of the above statements. By nature, these forward-looking statements involve risk and uncertainty and the factors described within the context of the forward-looking statements may cause the actual results and developments to be materially different from those expressed or implied in this Prospectus. The forward-looking statements are subject to risks, uncertainties and assumptions, including, amongst others, the changing conditions in businesses or the market. In view of the risks, uncertainties and assumptions, any projections contained herein may not be realised. Any references to trends or activities in the past should not be perceived as a guarantee that these trends or activities will continue in the future. Investors are warned not to place undue reliance on these forward-looking statements.

The decision for participation in the share capital increase of the Bank through the Prospectus should be based on consideration of all the information contained in this Prospectus as a whole. Such potential decision involves risks the most important of which are described in Part II of this Prospectus.

THIS IS AN ENGLISH TRANSLATION OF THE PROSPECTUS ISSUED IN GREEK IN THE FORMAT THAT HAS BEEN APPROVED BY THE CYSEC AS THE COMPETENT AUTHORITY. THE GREEK TEXT OF THE PROSPECTUS AS IT HAS BEEN APPROVED BY THE CYSEC IS BINDING. THE ENGLISH TRANSLATION IS FOR INFORMATION PURPOSES ONLY.

PROSPECTUS

TABLE OF CONTENTS

PART I. SUMMARY NOTE ...... 8

A. INTRODUCTION AND WARNINGS ...... 8 B. ISSUER ...... 8 C. SECURITIES ...... 20 D. RISKS ...... 23 E. OFFER ...... 26

PART II. RISK FACTORS ...... 33

1. RISKS RELATING TO THE ECONOMIC CRISIS IN CYPRUS ...... 33 2. RISKS RELATING TO THE GLOBAL FINANCIAL MARKETS ...... 37 3. RISKS RELATING TO THE GROUP’S BUSINESS ...... 39 4. RISKS RELATING TO LAW AND REGULATION ...... 55 5. RISKS RELATING TO THE MARKETS ...... 61 6. RISKS RELATING TO THE ISSUE ...... 62

PART III. DRAWING UP THE PROSPECTUS / PROFESSIONAL ADVISORS ...... 66

1. DRAWING UP THE PROSPECTUS ...... 66 2. PROFESSIONAL ADVISORS ...... 67

PART IV. SUBSCRIPTION RIGHTS – TERMS OF THE ISSUE ...... 68

1. SUBSCRIPTION RIGHTS – GENERAL TERMS OF ISSUE ...... 68 2. EXPECTED INDICATIVE TIMEFRAME ...... 72 3. ISSUE OF SUBSCRIPTION RIGHTS ...... 73 4. EXERCISE PRICE OF NEW SHARES ...... 74 5. TERMS OF PAYMENT ...... 74 6. TRADING ON THE CSE ...... 75 7. PROCEDURE FOR EXERCISING SUBSCRIPTION RIGHTS ...... 75 8. PRESUBSCRIPTION RIGHT FOR NEW UNSUBSCRIBED SHARES ...... 78 9. ALLOTMENT OF SHARES WHICH HAVE NOT BEEN SUBSCRIBED THROUGH THE EXERCISE OF SUBSCRIPTION RIGHTS AND THE EXERCISE OF THE PRESUBSCRIPTION RIGHT ...... 80 10. JOINT PLACEMENT AGENTS ...... 80 11. ANNOUNCEMENT OF RESULTS OF THE SUBSCRIPTION RIGHTS EXERCISE ...... 82 12. LETTERS OF ALLOTMENT OF NEW SHARES ...... 82 13. REASONING FOR THE OFFER AND USE OF PROCEEDS ...... 83 14. COST OF ISSUE ...... 84 15. INFORMATION RELATING TO THE SECURITIES OFFERED ...... 84 16. CHANGE IN SHARE DILUTION AFTER THE ISSUE ...... 85 17. WITHDRAWAL RIGHTS ...... 85 18. RANKING/DIVIDENDS ...... 85 19. INVESTOR REPRESENTATIONS AND WARRANTIES ...... 86

PART V. INFORMATION ABOUT THE ISSUER ...... 89

1. GENERAL INFORMATION ...... 89

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2. GROUP MILESTONES ...... 90 3. BANK OBJECTIVES ...... 93 4. ACTIVITIES ...... 93 4.1 ACTIVITIES IN CYPRUS ...... 94 4.2 OVERSEAS OPERATIONS ...... 100 4.3 SUBSIDIARY INSURANCE COMPANIES ...... 101 4.4 HEAD OFFICE SUPPORT SERVICES ...... 102 5. GROUP STRUCTURE ...... 105 6. PERSONNEL ...... 107 7. BOARD OF DIRECTORS AND KEY MANAGEMENT FIGURES ...... 108 7.1 BOARD OF DIRECTORS ...... 108 7.2 BOARD OF DIRECTORS COMMITTEES AND BOARD OF DIRECTORS TENURE ...... 113 7.3 KEY MANAGEMENT PERSONNEL ...... 116 7.4 STATEMENTS OF BOARD DIRECTORS AND KEY MANAGEMENT PERSONNEL ...... 122 7.5 PARTICIPATING INTERESTS OF THE BOARD OF DIRECTORS AND KEY MANAGEMENT PERSONNEL IN THE SHARE CAPITAL OF THE BANK ...... 123 7.6 PARTICIPATION OF BOARD DIRECTORS AND KEY MANAGEMENT PERSONNEL IN THE MANAGEMENT OF OTHER COMPANIES ...... 124 7.7 RELATED PARTIES TRANSACTIONS ...... 127 8. SHARE AND LOAN CAPITAL ...... 130 8.1 SHARE CAPITAL ...... 130 8.2 MAIN SHAREHOLDERS ...... 132 8.3 LOAN CAPITAL ...... 133 8.4 EQUITY AND LOAN CAPITAL ...... 144 8.5 SOURCES OF CAPITAL ...... 145 8.6 GROUP CAPITAL ADEQUACY ...... 147 8.7 STATEMENT FOR THE SUFFICIENCY OF WORKING CAPITAL ...... 148 9. DIVIDEND POLICY ...... 148 10. GROUP STRENGTHS ...... 149 11. GROUP STRATEGY ...... 150 12. OTHER INFORMATION ...... 152 12.1 CAPITAL ENHANCEMENT PROCESS ...... 152 12.2 PROSPECTS AND FINANCIAL POSITION ...... 153 13. DESCRIPTION OF SHARE CAPITAL, TRANSFER AND RIGHTS OF SHAREHOLDERS ...... 154 14. INFORMATION ON THE HISTORICAL PRICES OF THE SHARES ...... 156

PART VI. RISK MANAGEMENT ...... 157

1. RISK MANAGEMENT GOVERNANCE ...... 157 2. OVERALL RISK STRATEGY ...... 158 3. CREDIT RISK ...... 158 4. LIQUIDITY RISK ...... 160 5. MARKET RISKS ...... 162 6. OPERATIONAL RISK ...... 162 7. CAPITAL MANAGEMENT ...... 163

PART VII. FINANCIAL INFORMATION ...... 166

PROSPECTUS

1. FINANCIAL INFORMATION AS AND FOR THE PERIOD ENDED 30 SEPTEMBER 2014 AND AS OF AND FOR THE YEARS ENDED 2013, 2012, 2011 ...... 166 2. ANALYSIS OF THE GROUP’S FINANCIAL RESULTS ...... 178 2.1 OPERATING AND FINANCIAL REVIEW ...... 178 2.2 KEY FACTORS AFFECTING RESULTS OF OPERATIONS ...... 182 2.3 RESULTS OF OPERATIONS ...... 184 2.4 FINANCIAL CONDITION ...... 192 2.5 INVESTMENTS ...... 194 2.6 FIXED ASSETS ...... 196 2.7 SEGMENTAL ANALYSIS ...... 199 2.8 OFF BALANCE SHEET ARRANGEMENTS ...... 203 3. CAPITAL ADEQUACY ...... 203 3.1 GROUP REGULATORY CAPITAL IN ACCORDANCE WITH THE CENTRAL BANK OF CYPRUS DIRECTIVES REGARDING THE PRINCIPLES OF BASEL II ...... 204 3.2 RESTRUCTURING AND STRENGTHENING OF THE CAPITAL BASE PLAN 2013 ...... 206 3.3 CAPITAL RAISING PLAN OF 2012 ...... 208 4. LIQUIDITY AND FUNDING ...... 208 5. CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS ...... 208

PART VIII. SELECTED STATISTICAL INFORMATION ...... 212

1. COMPOSITION OF LOAN PORTFOLIO BY CURRENCY ...... 212 2. EXPOSURE TO CREDIT RISK ...... 212 3. CREDIT RISK CONCENTRATION ...... 213 4. CREDIT QUALITY OF LOANS AND ADVANCES TO CUSTOMERS ...... 214 5. PROVISION FOR IMPAIRMENT OF LOANS AND ADVANCES TO CUSTOMERS ...... 216 6. RESCHEDULED LOANS AND ADVANCES TO CUSTOMERS ...... 218 7. ANALYSIS OF LOAN PORTFOLIO FROM BANKING SERVICES ACCORDING TO TRANSACTION PERFORMANCE STATUS AS AT 30 SEPTEMBER 2014 ...... 219 8. ANALYSIS OF LOAN PORTFOLIO FROM BANKING SERVICES ACCORDING TO TRANSACTION PERFORMANCE STATUS AS AT 31 DECEMBER 2013 ...... 220 9. EXPOSURE IN COUNTRIES WITH HIGH CREDIT RISK ...... 222 10. INVESTMENTS IN DEBT SECURITIES ...... 226 11. FAIR VALUE OF FINANCIAL INSTRUMENTS ...... 226

PART IX. STATUTORY AND GENERAL INFORMATION ...... 229

1. RELEVANT ARTICLES FROM ARTICLES OF ASSOCIATION ...... 229 2. MATERIAL CONTRACTS ...... 233 3. OTHER STATUTORY INFORMATION ...... 234 4. EXCHANGE RATES ...... 235 5. TAX REGIME ...... 236 6. LEGAL AND REGULATORY FRAMEWORK ...... 239 7. TRADING SECURITIES IN CYPRUS ...... 243 8. DOCUMENTS AVAILABLE FOR INSPECTION ...... 246 9. INCORPORATION BY REFERENCE...... 247 10. CONSENTS ...... 247

SELECTED DEFINITIONS ...... 253

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PART I. SUMMARY NOTE

The Summary Note contains notification requirements, defined as “Items”. The Items are numbered in Sections A to E (Paragraphs A.1 to E.7).

This Summary Note contains all the Items that are required to be included in a summary about these kinds of securities and about the Issuer. Due to the existence of Items not required to be included, gaps may exist in the numbering sequence of the Items.

Although an Item may be required to be introduced in the Summary Note due to the kind of securities and the Issuer, it is possible that any information regarding this Item will not be provided. In such a case a summary description is included in the Summary Note with the reference “Not applicable”.

A. INTRODUCTION AND WARNINGS

A.1. Warning:

 This Summary Note should be considered as the introduction to the Prospectus.

 Investors should base their decision to invest in the securities in question after studying the Prospectus as a whole.

 When a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor will be charged with any costs of translating the Prospectus in relation to the legal proceedings.

 The persons who have tabled the Summary Note including any translation thereof, and requested its publication or notification, are not subject to civil liability solely on the basis of the summary and any translation thereof, except if the Summary Note is misleading, inaccurate or inconsistent in relation to the other parts of the Prospectus or does not provide, when read together with the other parts of the prospectus, key information to assist investors in their decision whether to invest in these securities.

A.2. Issuer’s consent to the use of the Prospectus

Not applicable. The Issuer has not consented to the use of the Prospectus for subsequent resale or final placement of securities by financial intermediaries.

B. ISSUER

B.1. Legal and Trading Name of the Issuer

The legal name of the Issuer is “Hellenic Bank Public Company Limited” and has the trading name “Hellenic Bank”.

B.2. Seat, legal form of the Issuer, legislation pursuant to which the Issuer is acting and country of incorporation

The Bank was incorporated in Cyprus, on 29 May 1974, as a public company with registration number 6771, in accordance with the provisions of the Cyprus Companies Law, Cap.113 as amended (the “Companies Law, Cap. 113”). The Bank has a licence to carry out banking operations in accordance with the Banking Laws of 1997-2013.

8 Part I

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The registered office and administrative headquarters of the Bank are located at 200 Limassol & Athalassas Avenue, 2025 Strovolos, P.O.Box 24747, 1394 Nicosia, Cyprus.

B.3. Services and main activities of the Bank

The Bank offers a wide range of services in the financial sector to individuals, companies, governments and semi-governmental organisations. The main activities of the Bank includes acceptance of deposits, lending as well as other banking services, such as overseas transfers related to imports and exports and issuance of guarantees. It also offers insurance and investment services as well as custodian and factoring services.

The Bank operates in Cyprus through a network of 57 retail branches and provides business services via two corporate centers and four commercial centres. Furthermore, it operates four international business centres and one shipping business centre.

The Bank also operates four representative offices, two in Russia (Moscow and St. Petersburg), one in Ukraine (Kiev) and one in South Africa (Johannesburg).

Issuer’s credit ratings

The credit risk of the Bank is assessed by international credit assessment agencies such as Moody’s Investors Services and Fitch Ratings, and ranked based on specific indicators adopted by each agency. For further details on the interpretation and methodology used by each agency you may refer, inter alia, to the websites of the above agencies.

The following table presents the most recent credit rating of the Bank according to Moody’s Investor Services Cyprus Ltd (“Moody’s”) and Fitch Ratings Espana S.A.U (“Fitch”).

Rating agencies and credit ratings Credit rating Moody’s (last assessment date 12 June 2014) Long-term Issuer Default Rating ...... Caa3 Outlook ...... Stable Foreign and Local Deposit ratings...... Caa3 Bank Financial Strength Rating/Standalone BFSR ...... E

Fitch (last assessment date 4 July 2014) Long-term Issuer Default Rating ...... CCC Outlook ...... Stable Short-term Issuer Default Rating ...... C Viability rating...... ccc

Source: Reports of the above international credit agencies. Information from third parties has been accurately reproduced and, as far as the Bank is aware and is able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading.

Moody’s is a company based in Cyprus and Fitch is a company based in Spain. Both companies have been registered in accordance with regulation 1060/2009 (as amended by the regulation (EU), no. 462/2013), according to the list that has been posted by the European Securities Market Authority.

The long term rating refers to the ability of a company to repay its long-term debt and is evaluated using ratings from Aaa to C. Moody’s Investor Services Inc. also uses a combination of indicators with numerical indexes (1, 2, 3), while Fitch Ratings Ltd combines the ratings with a positive or negative sign. Credit ratings assist investors in their assessment of the degree of the investment risk of a firm.

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Β.4a Important Recent Trends

The financial environment in Cyprus has changed dramatically during the past one year and a half. Some key events that led to the current adverse economic situation are summarised as follows:

 In March 2013, there was a bail-in of the two largest banks of Cyprus, Bank of Cyprus Public Company Ltd (“Bank of Cyprus”) and Cyprus Popular Bank Public Co Ltd (“Laiki Bank”). Uninsured deposits of the Bank of Cyprus were bailed-in, along with the loss of all uninsured deposits and the termination of the operations of Laiki Bank and the merging of its Cypriot operations with those of the Bank of Cyprus.

 In addition, to safeguard the financial stability of the Cypriot banking system, Cyprus adopted temporary restrictive measures on banking transactions. These restrictive measures would be removed gradually depending on the assessment of the situation. The measures included, among others, restrictions on the withdrawal of funds from bank accounts, the opening of accounts and the transferring of funds abroad.

 After the Memorandum of Understanding (Eurogroup, March 2013) was concluded (“MoU”), Cyprus entered into a long and difficult programme of fiscal consolidation, which constrains its ability to allocate resources to growth.

The above developments, in conjunction with the resulting lack of liquidity and the strict economic adjustment program adopted under the financial support of Cyprus and the already over-indebted households and businesses, has led to a significant restriction of broader economic activity, which steered the Cyprus economy into deep recession, with a fall in real gross domestic product (“GDP”), rising unemployment and an increase in non-performing loans.

The evaluation by the European Commission, the European Central Bank (“ECB”) and the International Monetary Fund (“IMF”) (collectively, the “Troika”) on the implementation of the MoU is an important indicator of the state of the Cypriot economy. At the date of publication of this Prospectus, all evaluations have been positive. In addition, the first exit of Cyprus to the international markets, the removal of restrictive measures in domestic banking transactions and the upgrade of the credit rating of the country by international rating agencies confirms that tangible progress has been achieved in relation to the stabilization of the Cypriot economy. The gradual lifting of the remaining restrictive measures in banking transactions is expected to be an important step for the return of confidence to the Cypriot banking system.

From a financial standpoint, market liquidity remains limited and is expected to recover, but at a relatively slow pace. The main reasons for this gradual recovery are the ongoing and prolonged downturn in the economy and the already very high leverage ratio of firms and households in the country.

Despite the challenges Cyprus faced, the financial services sector remains robust due to the specialised services offered and the favourable tax regime. Tourism has generally remained strong. Other formerly growing sectors such as construction are going through a period of restructuring. As far as the energy sector is concerned, long-term prospects for the exploitation of natural gas seem positive, while on a medium-term time horizon, energy related operations are expected to accelerate and boost economic activity.

In relation to the banking environment, the largest financial institutions in Cyprus recently had their capital adequacy evaluated by the ECB and European Banking Authority (the “EBA”). Specifically, the Bank participated in the Asset Quality Review (“AQR”) performed by the ECB, which was performed along with a stress testing process (in cooperation with the EBA) as part of the ECB’s Comprehensive Assessment (“CA”) prior to inception of the Single Supervisory Mechanism for

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Eurozone banks and other credit institutions (“SSM”). The ECB completed the CA on 26 October 2014 and released the results that same day.

For the AQR, the ECB reviewed the asset quality of the Bank at 31 December 2013, conducting a detailed loan review, asset and collateral valuation and adequacy and related loan loss provisions. A substantial sample of the Bank’s loan portfolio was examined (approximately 74%).

The overall results of the AQR, resulted in a €124,4 million adjustment on the provisions as at 31 December 2013, which is allocated to individual provisions amounting to €76,4 million and €48 million in general provisions, having a negative impact on CET1, for prudential supervisory purposes.

As per the report of the ECB titled “Aggregate Report on the Comprehensive Assessment” issued on 26 October 2014, the CA, including the AQR, was a prudential rather than an accounting exercise and the outcome of the assessment will not be necessarily reflected directly in the accounts of the Bank.

According to the same report, a number of findings of the AQR stem directly from adjustments which, under the previous practice of the banks involved, were completely inconsistent with accounting standards. The participating banks are expected to evaluate these issues and will readjust the incorrect accounting standards in their financial statements.

The Bank considers that the AQR adjustments that have been made in the CA do not indicate that the Bank failed to comply with IFRS. Furthermore, it should be noted that the Bank had no knowledge, not so ever, that such an issue, (i.e., that any possible accounting errors or practices inconsistent with IFRS) were identified during the AQR.

The stress test complemented the AQR, examining the balance sheet resilience of the Bank under stress scenarios over the next three years. An 8% minimum CET1 ratio was assumed in the baseline scenario, and a 5.5% minimum CET1 ratio was assumed in the adverse scenario.

The results of the CA were as follows:

Common Comprehensive Additional Equity Assessment Mitigating capital Tier 1 Results factors required Ratio (€ m) (€ m) (€ m) Baseline (threshold of 8.0%) ...... 6.17% -85 126 0 Adverse (threshold of 5.5%) ...... -0.49 % -277 172 105

The results of the baseline scenario of the stress test confirmed the business model of the Bank, while the adverse scenario quantified the capital that the Bank must raise in order to be sufficiently capitalised in the event of unexpected future losses. For the Bank, the €277 million result from the adverse scenario was reduced to €105 million by mitigating factors, which the Bank will attempt to cover through the present issue of Subscription Rights. The Bank will seek to raise more capital than the residual capital resulting from the CA in order to actively support the growth of its business.

B.5. Description of the Group and position of the Issuer

The Bank is the holding company of the Group. The following are the main subsidiary companies of the Bank: Hellenic Bank (Investments) Ltd, Pancyprian Insurance Ltd and Hellenic Alico Life Insurance Company Ltd. The Group’s main activity is the provision of a broad range of banking and financial services, including financial, investment and insurance services as well as custodian and factoring services.

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The Bank operates in Cyprus through a network of 57 branches providing services to the business community through two corporate and four business centres. The Bank also operates four international and one shipping business centre.

In addition, the Bank maintains four representative offices, two in Russia (Moscow and St. Petersburg), one in Ukraine (Kiev) and one in South Africa (Johannesburg).

B.6. Main Shareholders

At the date of publication of this Prospectus, the shareholders that, in accordance with the Shareholder Register, possess directly or indirectly more than 5% of the issued share capital are the following:

Indirect Percentage Shareholder Name Direct holding holding Total holding % Wargaming Public Company Ltd ...... 800.000.000 - 800.000.000 20,3

Third Point Hellenic Recovery Fund LP1 ...... 800.000.000 - 800.000.000 20,3

Demetra Investments Public Limited ...... 418.695.594 - 418.695.594 10,6

Holy Archbishopric of Cyprus and connected Persons 283.486.140 31.232.503 314.718.643 8,0 Subtotal ...... 2.302.181.734 31.232.503 2.333.414.237 59,2 Other shareholders ...... 1.603.184.974 40,8 Total ...... 3.936.599.211 100,0

1The registered name in the Shares Registry is CPB FBO Third Point Hellenic Recovery Fund, L.P.

All shareholders of the Bank have the same voting rights.

The shareholder base of the Bank at the issue date of this Prospectus consists of 26.661 shareholders.

The Bank is not owned or controlled either directly or indirectly by any person.

Third Point Hellenic Recovery Fund, L.P. (“Third Point”) and Wargaming Public Company Limited (“Wargaming”) (Wargaming together with Third Point, the “Major Shareholders”), each of which holds 20.3% of the Bank’s issued share capital prior to the Issue have undertaken pursuant to individual written undertaking (“Undertaking” and together “Undertakings”) to procure the exercise of the Subscription Rights corresponding to the respective number of Ordinary Shares each of them holds (the “Relevant Subscription Rights”) at the Exercise Price in accordance with the terms of the Issue.

Pursuant to these Undertakings, each of the Major Shareholders has agreed, inter alia, not to dispose of any Ordinary Shares or Relevant Subscription Rights (i) prior to issuance of the New Shares pursuant to the Issue or (ii) until the Issue terminates or (iii) is withdrawn. It is provided that all the obligations under the Undertakings will terminate if the Issue lapses or is withdrawn, or in the event of a material adverse change in the terms of the Issue or of the Bank.

It is noted that, at the issue date of this Prospectus, Demetra Investments Public Limited holds directly and indirectly 23.441 units of CCS 1 of nominal value €1,00 each, the Holy Archbishopric of Cyprus

PROSPECTUS and connected persons hold, directly or indirectly, 250.651 units of CCS 1 of nominal value €1,00 each and 16.397.695 units of CCS 2 of nominal value €1,00 each. Third Point holds, directly and indirectly, 7.692.305 units of CCS 2 of nominal value of €1,00 each. Under the issuance terms of the CCS 1 and CCS 2, the CCS 1 and CCS 2 may be converted into new Ordinary Shares of the Bank.

B.7. Selected historic financial information

The following financial information for the years 2011, 2012 and 2013 is based on the annual audited consolidated financial statements of the Group for the years 2011, 2012 and 2013, each of which are incorporated by reference into this Prospectus. The consolidated financial statements for the years 2011, 2012 and 2013 have been audited by the external auditors of the Group. The financial information for the nine month period ended 30 September 2014 incorporated by reference in this Prospectus, was reviewed by the Group’s external auditors in accordance with the International Standard on Review Engagements 2410 “Review of Interim Financial Information performed by the Independent Auditor of the Entity”.

The financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as adopted by the European Union. In addition, the financial statements have been prepared in accordance with the requirements of the Companies Law, Cap.113, the Cyprus Stock Exchange Laws and Regulations and the Transparency Requirements (Securities Admitted to Trading on a Regulated Market) Law.

It is noted that:

 The nine months results for the period ended 30 September 2013 refer to the comparative results of the Group for the nine months ended 30 September 2014 and have been restated to reflect the reclassification of operations of the Russian Subsidiary sold on 5 June 2014, from continuing operations to discontinued operations.

 The results for the year ended 31 December 2012 refer to the comparative figures of the annual results of the Group for the year ended 31 December 2013 and have been restated to reflect the reclassification of the operations of the BNG (on 26 of March 2013 (transfer date), the Bank, as a result of a transnational understanding of the governments of Greece and Cyprus, at the demand of Troika and according to the instructions of the Ministry of Finance and the Central Bank, consented to the sale of its BNG to Piraeus Bank SA with immediate effect) from continuing to discontinued operations.

 The results for the year ended 31 December 2011 have not been restated to reflect the reclassification of the BNG operations that was sold during 2013, from continuing to discontinued operations and therefore may not be comparable with the corresponding results for the years ended 31 December 2013 and 2012.

In accordance with the provisions of the IFRS, references made in this Prospectus to the nine months results for the period ended 30 September 2013 and the results for the year ended 31 December 2012, refer to the restated results for those periods that have been adjusted to reflect the reclassification of operations of the Limited Liability Company Commercial Bank “Hellenic Bank” (the “Russian Subsidiary”) and of the Branch Network in Greece (the “BNG”) during 2014 and 2013 respectively, from continuous operations to discontinued operations. Also, references made in this Prospectus for the results for the year ended 31 December 2011 have not been restated and therefore may not be comparable with years ended 2013 and 2012.

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Selected financial information from the consolidated income statement

For the nine month periods ended 30 September 2014 and 30 September 2013 and for the years ended 31 December 2013, 2012 and 2011.

Restated 1 January 1 January 2014-30 2013-30 September September Restated 2014 2013 2013 2012 2011 (reviewed) (reviewed) (audited) (audited) (audited) €’000 €’000 €’000 €’000 €’000 Net interest income ...... 156.338 133.510 188.905 191.328 214.544 Other net income ...... 69.069 66.451 92.141 110.850 9.640 Total net income ...... 225.407 199.961 281.046 302.178 224.184 Total expenses ...... (106.387) (114.511) (148.425) (142.757) (168.621) Profit from ordinary operations before provisions ...... 119.020 85.450 132.621 159.421 55.563 Loan Provisions (259.056) (166.456) (310.810) (103.970) (142.484) (Loss)/profit before taxation ...... (140.036) (81.006) (178.189) 55.451 (86.921) (Loss)/profit for the period/year from continuing operations ... (127.127) (76.215) (161.142) 50.432 (99.545) Profit/(Loss) from discontinued operations after taxation ...... 3.021 (10.215) (28.767) (72.364) -- (Loss)/profit for the period/year ...... (124.106) (86.430) (189.909) (21.932) (99.545) (Loss)/profit attributable to: Non-controlling interests ...... 716 814 991 1.508 1.113 Owners of the parent company (continuing operations) ...... (127.843) (77.029) (162.133) 48.924 (100.658) Owners of the parent company (discontinued operations) ...... 3.021 (10.215) (28.767) (72.364) --

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Selected financial information from the consolidated statement of financial position as at 30 September 2014 (reviewed) and 31 December 2013, 2012 and 2011

30 September 2014 2013 2012 2011 (reviewed) (audited) (audited) (audited) €’000 €’000 €’000 €’000 Loans and advances to customers Cyprus ...... 3.267.651 3.554.502 4.156.997 4.300.353 Greece ...... -- -- 576.335 684.678 Russia ...... -- 9.447 11.578 1.796 Total assets ...... 6.872.454 6.383.947 8.755.701 8.278.976 Customer deposits and other customer accounts Cyprus ...... 6.128.112 5.511.864 7.148.964 6.528.594 Greece ...... -- -- 614.592 575.172 Russia ...... -- 1.408 3.307 2.775 Total liabilities 6.298.817 5.680.497 7.965.940 7.524.900 Loan capital ...... 204.946 304.629 304.877 319.878 Share capital ...... 36.986 26.888 266.466 132.448 Reserves ...... 326.567 367.600 215.259 299.151 Total equity ...... 368.691 398.821 484.884 434.198

Significant changes in financial information

Note: References made in this Prospectus in respect to capital adequacy ratios of the Bank or the Group that relate to prior periods have been calculated according to the applicable guidance of the period/year under reference.

Nine month period ended 30 September 2014 (Reviewed)

1. The Group's profit from ordinary operations before provisions for the period ended 30 September 2014 amounts to €119,0 million, which experienced an increase of 39% compared to €85,5 million for the corresponding period in the prior year, mainly due to the increase in net income as well as due to the decrease of expenses.

2. The total expenses of the Group for the period ended 30 September 2014 recorded a decrease of 7% compared to the corresponding period of the prior year, and this is mainly due to the decrease by 18% of staff costs and an increase in administrative and other expenses by 11%, compared to the corresponding period in the prior year. The administrative and other expenses of the Group, included in the total expenses, for the corresponding period include an amount of €9,6 million in relation to the cost of voluntary early retirement scheme implemented in 2013 (the “VRS”). The increase in administrative and other expenses at 30 September 2014 is mainly due to the €10,5 million impairment of assets of as well as the cost of advisory services of €3,4 million.

3. Loans and advances to customers reached €3,3 billion decreasing by 8% compared to December 2013.The decrease is due to the increase of provisions for impairment of loans and advances to customers as a result of the negative economic environment, the increase of non-

PROSPECTUS

performing loans and the continued decrease in the value of property. Total gross loans and advances to customers recorded a marginal increase compared to December 2013 and reached €4,4 billion.

4. Customer deposits increased by 11% compared to December 2013, reaching the amount of €6,1 billion (December 2013: €5,5 billion).

5. The Capital Adequacy Ratio of the Group and the Bank as at 30 September 2014 was at 11,7%, the Tier 1 Ratio at 10,7% and 10,8% respectively and the Common Equity Tier 1 Ratio at 7,4% for the Group and 7,5% for the Bank (according to the new legislation and directive of the EU concerning the minimum requirements for credit institutions (Capital Requirement Regulation (“CRR”)/Capital Requirement Directive (“CRD IV”)) dated 26 June 2013, which came into effect at 1 January 2014, and according to the relevant circulars of the Central Bank of Cyprus (the “Central Bank”), under Pillar 1.

6. In applying the provisions of the prospectus dated 30 September 2013 on CCS 1 and CCS 2, and as a result of the Common Equity Tier 1 Ratio of the Group and the Bank being below the minimum required supervisory ratio of 8% as set by the Central Bank circular dated 29 May 2014, on 26 October 2014, CCS 1 of approximately €23,8 million were mandatorily and irrevocably converted to shares, so that the lower of the two, Common Equity Tier 1 Ratio of the Bank and the Group amounts to 8%. As a result, the Common Equity Tier 1 Ratio of the Group is formed at 8,0% (the Bank: 8,0%). The mandatory conversion applied pro rata to the outstanding balance of CCS 1 for each investor on the conversion date (transactions performed up to and including 24 October 2014, record date 29 October 2014). Additionally on 29 August 2014, CCS 1 of a total value of €15.106.520 were mandatorily and irrevocably converted to shares. The mandatory conversions were applied pro rata to each of the remaining balances of CCS 1 for each investor at the date of conversion (transactions performed up to 29 August 2014 included, record date 3 September 2014).

7. On 5 June 2014, the Bank disposed 100% of the share capital of its wholly owned Russian Subsidiary. The Bank sold its Russian Subsidiary as part of the Group’s continuous efforts for more effective management of available resources, capital planning, active risk management and risk-weighted assets and to focus on key markets. With the completion of the financial results’ review for the period from 1 April 2014 until 5 June 2014 (date of signature of the agreement) by an independent expert of joint consensus, the selling price of the Russian Subsidiary was adjusted to 1,154 million Rubles (€24,4 million approximately) and the profit from the sale was €3 million.

Year 2013

1. The loss after taxation attributable to the owners of the parent company for the year ended 31 December 2013 amounted to €190,9 million (€162,1 million loss from continuing operations and €28,8 million loss from discontinued operations), compared to a loss of €23,4 million (€48,9 million profit from continuing operations and €72,4 million loss from discontinued operations for the corresponding prior year period). This loss included increased provisions for the impairment of loans and advances, the loss resulting from discontinued operations following the sale of the BNG and the cost of the VRS.

2. Provisions for impairment of loans and advances in the Income Statement for the year ended 31 December 2013, amounted to €310,8 million and increased by €206,8 million from the corresponding 2012 amount, as a result of the negative economic environment, the increase of non-performing loans and the continued decrease of property values.

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3. Loans and advances to customers amounted to €3,6 billion decreasing by 25% compared to December 2012. The decrease is due to the increase of provisions for impairment of loans and advances to customers as a result of the negative economic environment, the increase of non- performing loans and the continued decrease in the value of property. Total gross loans and advances to customers recorded a decrease of 21% compared to December 2012 and reached €4,4 billion compared to €5,6 billion in December 2012.

4. Customer deposits declined by 29% compared to December 2012 and amounted to €5,5 billion compared to €7,8 billion in December of 2012.

5. In July 2013, the Board of Directors of the Bank decided to take measures to enhance the capital base of the Bank through a Restructuring and Capital Base Enhancement Plan (the “Capital Enhancement Plan”) which included the issue of new shares and convertible capital securities. Upon completion of the Capital Enhancement Plan, the Bank raised €358 million, exceeding by €64 million the capital shortfall of €294 million imposed as a result of the adverse scenario, of the due diligence test performed by the Pacific Investment Management Company LLC (“PIMCO”), following the instructions of the Central Bank. The shareholding structure of the Bank changed significantly with the existing shareholders maintaining around 23% of the share capital of the Bank, Wargaming and Third Point acquiring around 30% (each) and Demetra Investments Public Ltd acquiring about 15%.

6. Equity attributable to the owners of the Bank reached the amount of €394,5 million at 31 December 2013, compared to €481,7 million as at December 2012. The return on equity of the Group based on the results of the year ended 31 December 2013 was -43,6%, including the loss from the sale of BNG (December 2012: -5,1%).

7. Under Pillar 1 of the Central Bank Directive for the Calculation of Capital Requirements and Large Exposures, the Group’s Capital Adequacy Ratio at 31 December 2013 was 14,3% (December 2012: 13,6%) (Bank: 13,5%), the Tier 1 Ratio was 13,1% (December 2012: 10,9%) (Bank: 12,9%) and the Common Equity Tier 1 Ratio was 7,3% (December 2012: 8,2%) (Bank: 7,0%).

8. In applying the provisions of the prospectus dated 30 September 2013 on CCS 1 and CCS 2, and as a result of Common Equity Tier 1 ratio of the Group and the Bank being below 9%, CCS 1 of total value of €85,9 million were mandatorily and irrevocably converted on 28 February 2014, without any obligation to obtain the consent of the holders of the CCS 1, to shares so that, the lower of the two, Common Equity Tier 1 ratio of the Group and the Bank, reached 9%. As a result, the Common Equity Tier 1 ratio was adjusted to 9,3% (Bank: 9,0%). The mandatory conversion applies pro rata to the outstanding balance of CCS 1 for each investor on the conversion date (transactions performed up to and including 28 February 2014, record date 6 March 2014).

9. On 26 March 2013, the Bank, as a result of a transnational understanding of the governments of Greece and Cyprus, within the framework of the agreement for international funding with Troika and according to the instructions of the Ministry of Finance and the Central Bank, consented to the sale of BNG to Piraeus Bank SA with immediate effect.

According to the agreement, the Bank sold the total of cash, deposits, loans, software, plant and equipment of the BNG for a total amount of €28 million and covered in cash the negative difference between the net payable amount and the carrying amount of net liabilities transferred, which amounted to €119 million.

All assets and liabilities that were part of the above agreement were reviewed by a mutually accepted independent expert. In addition, the results of the BNG have been audited by external

PROSPECTUS

auditors and the resulting adjustments that occurred, were reflected in the 2013 year-end results.

The effect of this transaction on the Group’s results is presented as activities terminated in the Income Statement (Profit / (Loss) from discontinued operations after taxation).

Following the sale of the BNG, the Bank no longer performs banking operations in Greece, but continues to maintain a Greek tax status as it retains properties for sale under its name.

Year 2012

1. For the year ended 31 December 2012, the loss after taxation attributable to the owners of the parent company amounted to €23,4 million (€48,9 profit from continuing operations and €72,4 losses from discontinued operations) compared to a loss of €100,7 million from continuing operations in 2011. It is noted that in 2011 an impairment of Greek Government Bonds amounting to €77,0 million was recognised, that is included in the net losses on disposal and revaluation of foreign currencies and financial instruments. Excluding the impairment of the Greek Government Bonds, loss after taxation attributable to equity holders of the parent company has improved marginally.

2. Provisions for impairment of loans and advances in the Income Statement for the year ended 31 December 2012 (restated) amounted to €104,0 million and decreased by €38,5 million from the corresponding 2011 amount.

3. Loans and advances to customers reached the amount of €4,7 billion recording a decrease of 5% compared to 2011. The decrease is due to the increase in provisions for impairment of loans and advances as a result of the deteriorating economic environment mainly in Cyprus. Total gross loans and advances to customers reached €5,6 billion recording a marginal decrease of 1% compared to December 2011

4. Customer deposits increased by 9%, reaching €7,8 billion, compared to €7,1 billion in December 2011.

5. Equity attributable to the owners of the Bank reached the amount of €481,7 million as at 31 December 2012, compared to €431,6 million as at December 2011. The increase resulted from capital raised through the Capital Enhancement Plan.

6. Under Pillar 1 of Basel II, the Group’s Capital Adequacy Ratio as at 31 December 2012 was 13,6% (December 2011: 12,9%), the Tier 1 Ratio was 10,9% (December 2011: 10,1%) and the Common Equity Tier 1 Ratio was 8,2% (December 2011: 7,1%). Correspondingly, the minimum required supervisory ratios for the Bank, taking into account the increment, which is calculated based on the percentage of the bank’s assets over the GDP of Cyprus, enforced from 31 December 2012, were 11,7% (Capital Adequacy Ratio), 9,7% (Tier 1 Ratio) and 8,2% (Common Equity Tier 1 Ratio).

Year 2011

1. On 31 December 2011, following the finalisation of the terms of the agreement between Greece and its private creditors on 21 February 2012 concerning the repayment plan of the Greek debt, the Group proceeded with an impairment provision of €77,0 million of the Greek Government Bonds it held. The total amount of the impairment provision represented 70% of the nominal value of bonds held by the Group, amounting to €110 million and was classified as ‘Held to Maturity’. As a result, following the impairment cost of the Greek Government Bonds, the Group showed losses before taxation for the year ended 31 December 2011

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amounting to €86,9 million compared to profits of €15,3 million for the corresponding period of 2010. Excluding the cost of impairment of the Greek Government Bonds, the profit of the Group before provisions amounted to €132,6 million, recording an increase of 47% compared to the corresponding prior year period.

2. Total net income of the Group excluding the impairment cost of the Greek Government Bonds increased by 12% compared to 2010. At the same time, total expenses decreased by 6% reaching €168,6 million compared to €178,7 million for the year 2010.

3. Provisions for impairment of loans and advances in the Income Statement for the year ended 31 December 2011 amounted to €142,5 million and increased by €67,8 million from the corresponding 2010 amount.

4. Loans and advances to customers reached €5,0 billion increasing by 2% compared to December 2010.Total gross loans and advances to customers increased by 4% reaching €5,6 billion in December 2011 compared to €5,4 billion in December 2010.

5. Customer deposits increased by 4%, reaching €7,1 billion, compared to €6,9 billion in December 2010.

6. Equity attributable to the owners of the Bank reached the amount of €431,6 million as at 31 December 2011, compared to €531,9 million as at 31 December 2010.

7. The Group’s Capital Adequacy Ratio, based on the relevant Central Bank Directive for the calculation of the capital requirements and large exposures (Basel II), was 12,9% (December 2010: 15,0%) and Tier 1 Ratio was 10,1% (December 2010: 11,9%), exceeding the minimum required supervisory ratios of 11,5% and 9,5% respectively. The Common Equity Tier 1 Ratio was 7,1% (December 2010: 9,0%), lower than the Central Bank’s minimum threshold of 8%.

B.8. Selected pro forma financial information

Not applicable.

B.9. Projection or estimation of profits

No projections or estimation of profits are included in this Prospectus.

B.10. Qualifications in the auditors’ report for the historical financial information

The external auditors’ report of the Group for the years 2011, 2012 and 2013 is without any qualifications. The auditors’ report for the year ended 31 December 2012 includes an emphasis of matter as follows: “we draw your attention to Notes 2.1 (Basis of Preparation) and 41 (Economic Environment) of the financial statements which refer to the estimates and assumptions used for the preparation of the financial statements on the going concern basis, the current economic uncertainties prevailing in Cyprus and the restructuring of the banking system in Cyprus. These factors could adversely affect the financial results, capital requirements and liquidity of the Company and the Group. Our opinion is not qualified in respect of this issue”.

For the nine-month period ended 30 September 2014, the condensed consolidated financial statements, included as a significant matter the following: “We draw your attention to note 3 to the interim condensed consolidated financial statements which makes reference to the results of the European Central Bank's CA exercise and the forthcoming capital enhancement of the Bank. Our conclusion is not qualified in respect of this matter”.

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B.11. Working capital

The Bank states that, in its opinion its working capital is sufficient to finance the current activities of the Bank for the 12 months following the date of this Prospectus.

C. SECURITIES

C.1. Information regarding the securities

The securities offered are Subscription Rights to be offered to the current shareholders pro rata to the shares they hold on the Record Date, and which can be converted, according to their terms of issue, to New Shares of the Bank.

The Holders of Subscription Rights who will exercise all of their Subscription Rights in time may, concurrently with the exercise of their Subscription Rights, exercise their Presubscription Right to acquire any New Unsubscribed Shares, i.e. shares that correspond to the unexercised Subscription Rights, at a price equal to the Exercise Price, i.e. €0,0375 per New Share, provided that the exercise of such Holder’s Subscription Rights and Presubscription Right does not result in such investor holding equal or in excess of 30,0% of the issued share capital of the Bank after giving effect to the issue of shares pursuant to the Subscription Rights and the Presubscription Right. New Shares issued pursuant to a Presubscription Right will be allocated on a pro rata basis up to 100% of the number of New Shares corresponding to the Subscription Rights exercised by such Holder. If the Presubscription Right is in excess of the aforementioned limit of 100%, then satisfying the excess percentage will be at the discretion of the Board.

The Bank shall have the right, at any time within 30 working days from the Last Date of Exercise of Subscription Rights and the exercise of the Presubscription Right to issue all or part of the New Shares which correspond to the unexercised Subscription Rights that have not been covered during the exercise of the Presubscription Right, and the Board of Directors of the Bank will allot, at its discretion, such New Shares, in Cyprus and abroad, through a procedure it will determine, at a price at least equal to the Exercise Price, i.e., €0,0375 per New Share, provided that the allotment of such New Shares does not result in such investor holding equal or in excess of 30,0% of the issued share capital of the Bank upon completion of the Issue. The allotment and distribution of the New Shares will not constitute a public offer under the provisions of applicable securities legislation of any state, other than Cyprus, Greece and the United Kingdom. In EEA member states other than Cyprus, Greece and the United Kingdom, the Securities are only being offered in circumstances that do not require the publication of a prospectus pursuant to Article 3 of the Prospectus Directive. The offer is not addressed in any way (in writing or otherwise), directly or indirectly, to persons in the Excluded Territories. Accordingly, it is forbidden to send, distribute, post or otherwise forward copies of this Prospectus and any promotional material related to this public offering document or other material from any person to or from the Excluded Territories, except as it may be permitted by applicable law. In jurisdictions other than Cyprus, Greece, the United Kingdom and the Excluded Territories, the offer of the Securities may be restricted by legal or regulatory requirements of such jurisdictions.

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Basic information relating to the securities to be offered and listed is presented in the table below.

Subscription Rights New Shares Securities category Subscription Rights Ordinary Shares with the same rights as the existing issued Ordinary Shares of the Bank Law according to which According to Cyprus Company According to Cyprus Company the securities were Law Chapter 113. Law Chapter 113. issued / will be issued Type of securities Nominal and intangible Nominal and intangible Register Maintenance Central Depository/ Register of the Central Depository/ Register of the CSE CSE ISIN CY0125200119 CY0000300117

C.2. Currency of securities

Euro (€).

C.3. Number of shares issued at nominal value per share

The authorised share capital of the Bank at the date of the issue of this Prospectus was €516 million divided into 51.600.000.000 shares of nominal value €0,01 each. The issued and fully paid capital at the date of issue of the Prospectus was €39.365.992,11 divided into 3.936.599.211 Ordinary Shares of nominal value €0,01 each.

All issued Ordinary Shares are fully paid and have the same rights.

C.4. Rights of securities

The rights of the Subscription Rights and New Shares are shown at the following table:

Subscription Rights New Shares Dividend Right ...... No Yes Voting Right ...... No Yes Preferential right in allotment of securities of same category ...... Not Applicable Yes Rights in participation in issuers profits ...... No – see Dividend Right See Dividend Right Rights in any surplus in case of liquidation ...... No Yes

C.5. Restrictions in the free transfer of the securities

There are no restrictions on the free transfer of securities.

C.6. Trading of securities

Provided all necessary approvals are granted, the Subscription Rights for the acquisition of New Shares will be tradable and traded on the Main Market of the CSE for a limited period of time. Provided all necessary approvals are granted, the New Shares will be listed on the Main Market of the CSE and will

PROSPECTUS be traded together with the existing shares of the Bank. The Main Market is one of the regulated markets of the CSE.

C.7. Dividend Policy

The Ordinary Shares to result from this Issue will rank pari passu with the existing shares of the Bank.

The Board of Directors, taking into account the income of the Group, its financial position, expansion plans, capital requirements, capital adequacy ratios and the relevant regulatory framework of the Central Bank, tax factors, liquidity and profitability prospects, decides whether to pay any dividend or not and the amount of dividend to be paid in line with the existing approved dividend policy.

The distribution of dividends is subject to the availability of sufficient reserves for distribution, the issuance terms of the securities issued by the Bank as part of its capital raising efforts which refer to restrictions in dividend distributions and the relevant provisions of the Companies Law, Cap. 113 and the directives of the Central Bank as these may be amended from time to time or any other regulatory body, and the limitations of the dividend policy of the Bank.

The Board of Directors may aim to keep additional capital levels, based on internal capital buffers, that itself decides. In light of the above paragraph, if, among other things, the reporting internal capital buffers and / or regulatory requirements for capital adequacy are not met, the Board of Directors has the option not to take action for dividend payment.

Based on the provisions of the Companies Law, Cap. 113, except when there is a reduction of the issued capital, a public company cannot make a distribution to its shareholders, if at the end of the last financial year, the net assets as they already appear in the annual accounts, or as could arise as a result of such distribution, are below the issued capital and reserves.

In addition, according to the Companies Law, Cap. 113 the amount of a distribution to shareholders may not exceed the amount of the results of the last financial year, of which the annual accounts have been closed, increased by the profits brought forward at the end of the last financial year and sums drawn from reserves available for this purpose, reduced, however, by the amount of losses brought forward from previous financial years, and sums placed in reserves according to the law or the Articles of Association.

Furthermore, in accordance with the Companies Law, Cap. 113 a public company may pay interim dividends only if the following conditions are met:

a. interim accounts are prepared in which the funds available for distribution are shown to be sufficient; and

b. the amount to be distributed may not exceed the amount of profits made since the end of the last financial year for which the annual accounts have been finalised, increased by the profits carried forward from the last financial year and sums drawn from reserves available for this purpose and reduced by the losses of the previous financial years, and sums to be placed in reserve pursuant to the requirements of the law or the Articles of Association.

According to the Articles of Association of the Bank, in General Meetings proposals are made for the payment of dividends by the Board of Directors of the Bank and the Board of Directors, at times, decides on paying interim dividends to shareholders that are justified by the Bank’s profits and the availability of sufficient reserves for distribution.

Dividends may be paid in cash and / or shares (stock dividend) for better tax management purposes as well as for non-capital loss.

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Dividends are paid after withholding the income tax and/or defence contribution amounts stipulated by the tax legislation applicable at the time. Any cash dividend will be paid in Euros and therefore there is currency risk in relation to investors who do not have Euro as their base currency.

The Bank has not paid out any dividends for the years 2011-2013. Taking into account the foregoing, the Bank does not currently intend to pay dividends.

It is noted the provisions of the limitation law, as applied today, are not applicable to the shareholder’s right to dividend.

D. RISKS

D.1. RISKS RELATING TO THE BANK OR TO THE BANK’S AREA OF ACTIVITY

Risks Relating to the Economic Crisis in Cyprus

 The uncertain economic conditions in Cyprus have had, and are likely to continue to have, a material adverse effect on the Bank.

 The Group is significantly exposed to the financial performance and creditworthiness of companies and individuals in Cyprus.

 The implementation, conditions and requirements of the MoU entered into between Cyprus and the Troika, and any government actions aimed at alleviating the economic crisis, might not yield results and may create adverse results or have an adverse effect on the Bank.

 The Group is subject to systemic risk.

 The Group is particularly exposed to developments in the Cypriot construction and real estate sectors.

Risks Relating to the Global Financial Markets

 Political and economic developments in Cyprus and overseas could adversely affect the Group’s operations.

 The Group is vulnerable to the ongoing disruptions and volatility in the global financial markets.

 The Group’s operations may be adversely affected by recent economic and political events in Russia.

Risks Relating to the Group’s Business

 A failure by the Bank to meet the regulatory capital shortfall identified by the ECB’s CA through the proceeds raised in this Issue may result in a need to undertake further share capital increases, or state aid provisions may apply.

 The Group is subject to evolving Minimum Capital Requirements which may require it to raise additional capital or result in increased costs.

 Risk of high percentage of non-performing loans and further deterioration of the Group’s loan portfolio.

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 A material decrease in funds available from customer deposits could impact the Group’s funding and there can be no assurance that the lifting of capital controls in Cyprus will not result in an increase of deposit outflows from the Bank or the banking sector in Cyprus.

 The Bank is subject to reputational risk.

 The maturity profile of the Bank’s deposits is subject to fluctuation.

 The planned creation of a deposit guarantee system applicable throughout the European Union may result in additional costs to the Group.

 Government and Central Bank actions intended to support liquidity may be insufficient or discontinued such that the Group may be unable to obtain the required liquidity.

 A possible substantial increase in new provisions could adversely affect the Group’s financial condition and results of operations.

 The Group is vulnerable to decreases in the value of loan collateral and limitations on disposal and enforcement.

 Risk of fluctuation of prevailing share and other securities prices and significant holdings of Cyprus Government Bonds.

 The Bank is exposed, as a counterparty, to risks of other financial institutions.

 Pricing of restructured loans may not adequately reflect default risk.

 The Bank’s access to liquidity and wholesale funding markets may be adversely affected by downgrades of the credit ratings of Cyprus and the Bank.

 The Group may not be successful in managing its portfolio of liquid assets.

 Potential impairment of goodwill and intangible assets will have a negative impact on the results and net assets of the Group.

 The Bank faces significant competition.

 The Group may not achieve its targets, and its actual performance may differ materially from its targets.

 The Group may be unable to meet its strategic objectives.

 The Group may be unable to successfully manage employee and union relations or maintain optimal employee levels.

 The Group is exposed to operational risk.

 The Group is exposed to the risk of fraud or other illegal activity, including money laundering.

 The value of certain financial instruments recorded at fair value is determined using financial models incorporating assumptions, judgments and estimates that may change over time or may not be accurate.

PROSPECTUS

 Volatility in interest rates and interest rate risk may negatively affect the Group’s income and have other adverse consequences.

 The Group is exposed to foreign exchange risk.

 The Group’s hedging strategies may not prevent losses.

 Transactions in the Bank’s own portfolio involve risks.

 The Group is exposed to insurance and reinsurance risks through its insurance businesses.

 Business disruption, system failure and information security risks

 The Bank’s data are vulnerable and subject to incompleteness, improper recording and human error.

Risks Relating to Law and Regulation

 The Group is exposed to legal risk, including increasing legal claims.

 Regulatory action in the event of a bank failure can materially adversely affect the Group and the value of securities issued by the Bank.

 The Group’s business and operations are subject to substantial regulation and supervision and can be negatively affected by its non-compliance with certain existing regulatory requirements and any adverse regulatory and governmental developments.

 The Bank is subject to certain regulatory and legal constraints in originating new loans, managing existing loans and foreclosing on collateral.

 The Group is exposed to tax risk and failure to manage such risk may have an adverse impact on the Group.

 Additional taxes and levies may be imposed on the Bank and its subsidiaries.

D.3. RISKS RELATING TO SECURITIES

Risks Relating to the Markets

 The CSE is less liquid and more volatile than other stock exchanges.

 The share price of the Bank may be subject to significant fluctuation.

 Exchange rate fluctuations could have a significant impact on the value of the Bank’s shares for investors coming from countries that have not adopted the Euro as their currency.

Risks Relating to the Issue

 The size of the Issue may not be sufficient for the Bank’s capital requirements.

 Investors will suffer dilution if they do not exercise all their rights.

 Risk of dilution to existing shareholders due to possible CCS 1 and CCS 2 conversion to shares.

PROSPECTUS

 Non-distribution of dividends.

 Risk of non-allocation of New Shares.

 A trading market for the Subscription Rights may not adequately develop.

 A significant fall in the share price of the Bank could negatively impact the value of the Subscription Rights.

 Investors’ rights as shareholders are governed by Cypriot law, which may differ from the rights of shareholders under the laws of other countries.

 The exercise of the Subscription Rights may not be available to shareholders in certain jurisdictions, including U.S. holders of the Ordinary Shares.

 The market price of the Ordinary Shares may be lower than the Subscription Price.

 The existing capital control measures in Cyprus may restrict a shareholder’s ability to move out of Cyprus any cash proceeds from the sale of New Shares or any share dividends that could be distributed in the future.

 Holders of the Subscription Rights are exposed to certain additional risks.

E. OFFER

E.1. Total net proceeds and expenses related to the issuance and the CSE listing

Expenses related to the issuance of Subscription Rights and the issuance and CSE listing of New Shares, include the fees for professional services to auditors, legal advisors, underwriters, issue consultants, printing, marketing, and fees to the competent approving authorities for the issue and listing of the shares. These expenses are estimated to be approximately €2,7 million plus VAT, where applicable. The maximum fees and commissions payable to the Placing Agents will be approximately €4 million plus VAT, if applicable, plus out of pocket expenses of up to €150.000 plus VAT, if applicable. As such, the net proceeds from the issue, assuming all Subscription Rights are exercised is expected to rise to approximately €213 million.

No fees will be charged to the investor by the issuer.

E.2a Purpose of the offer and use of proceeds

The Group intends to use the net proceeds of the Issue to meet the residual capital requirements of €105 million resulting from the “Adverse Scenario” of the CA of the ECB and the EBA, as well as to pursue business opportunities in the recovering Cypriot economy and utilise its competitive advantages to grow customer numbers and loan book and increase its market shares.

The ECB released the results of the CA on 26 October 2014. The CA consisted of the AQR, along with a stress test to examine the resilience of banks’ balance sheets to stress scenarios, performed in close cooperation with the EBA.

PROSPECTUS

The overall results of the AQR, resulted to a €124,4 million adjustment on the provisions as at 31 December 2013, which is allocated to individual provisions amounting to €76,4 million and €48 million in general provisions, having a negative impact on CET1, for prudential supervisory purposes.

According to the same report, a number of findings of the AQR stem directly from adjustments which, the previous practice of the banks involved, were completely inconsistent with accounting standards. The participating banks are expected to evaluate these issues and will readjust the incorrect accounting standards in their financial statements.

The Bank considers that the AQR adjustments that have been made in the CA do not indicate that the Bank failed to comply with IFRS. Furthermore, it should be noted that the Bank had no knowledge that such an issue, (i.e., that any possible accounting errors or practices inconsistent with IFRS) were identified during the AQR.

The results of the CA were as follows:

The results of the “Baseline Scenario” of the stress test confirmed the business model of the Bank, while the “Adverse Scenario” quantified the capital that the Bank must raise in order to be sufficiently capitalised in the event of unexpected future losses. For the Bank, the €277 million result from the ”Adverse Scenario” was reduced by mitigating factors to €105 million, which the Bank expects to cover through this issue of Subscription Rights. The Bank will seek to raise more capital than the residual capital resulting from the CA in order to pursue business opportunities in the recovering Cypriot environment and utilise its competitive advantages to grow customer numbers and loan book and increase its market shares.

E3. Terms and conditions of the offer

ISSUER Hellenic Bank Public Company Limited

PROCEEDS (BEFORE €221.433.706 (assuming all Subscription Rights are exercised) SUBTRACTING ISSUE COSTS)

ISSUE Subscription Rights to be issued and allotted to all existing shareholders who owned shares as at 19 November 2014 (the “Beneficiaries”) and which if exercised will be converted to new Ordinary Shares of the Bank.

PROSPECTUS

The current issue is not being offered to any shareholder in the Excluded Territories, except as may be permitted by applicable law.

Accordingly, it is forbidden (i) to send, distribute, post or otherwise forward copies of this Prospectus and any promotional material related to this public offering document or other material from any person to or from the Excluded Territories, and (ii) to participate in this issue of Subscription Rights by persons from Excluded Territories and/or persons located in Excluded Territories, except as may be permitted by applicable law.

The Securities have not been, and will not be, registered under the Securities Act or the securities laws of any state of the United States and the securities may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state or local securities laws.

RATIO OF ISSUE OF One (1) Subscription Right for every one (1) fully paid Ordinary SUBSCRIPTION RIGHTS Share held by the shareholder at the Record Date i.e. on 19 November 2014.

RATIO OF EXERCISE OF Every two (2) Subscription Rights exercised will provide a right of SUBSCRIPTION RIGHTS purchase three (3) fully paid newly issued, Ordinary Shares of €0,01 TO NEW ORDINARY nominal value at the Exercise Price. Fractions of New Shares SHARES resulting from the conversion of the Subscription Rights of each Holder to Shares will not be issued and any fractional balances will be discarded.

EXERCISE PRICE OF €0,0375 per New Share SUBSCRIPTION RIGHTS/PRICE OF NEW ORDINARY SHARES

NOMINAL SHARE VALUE €0,01

ISSUED SHARE CAPITAL €39.365.992,11 divided into 3.936.599.211 shares of nominal value PRIOR TO THE CURRENT €0,01 each. ISSUE

NUMBER OF 3.936.599.211 SUBSCRIPTION RIGHTS TO BE ISSUED

TOTAL ORDINARY SHARE Up to €59.048.988,16 divided into 5.904.898.816 Ordinary Shares CAPITAL TO BE LISTED of nominal value €0,01 each from the exercise of the Subscription WITH THE EXERCISE OF Rights. SUBSCRIPTION RIGHTS (IN CASE ALL If the increase in the issued capital is not fully subscribed for, the SUBSCRIPTION RIGHTS issued share capital will increase by the subscribed-for amount. ARE EXERCISED)

RANKING OF THE NEW All New Shares will rank pari passu with existing issued shares.

PROSPECTUS

ORDINARY SHARES

PRESUBSCRIPTION The Holders of Subscription Rights who will exercise all of their RIGHT Subscription Rights in time may, concurrently with the exercise of their Subscription Rights, exercise their Presubscription Right to acquire any New Unsubscribed Shares, i.e. shares that correspond to the unexercised Subscription Rights, at a price equal to the Exercise Price, i.e. €0,0375 per New Share, provided that the exercise of such Holder’s Subscription Rights and Presubscription Right does not result in such investor holding equal or in excess of 30,0% of the issued share capital of the Bank after giving effect to the issue of shares pursuant to the Subscription Rights and Presubscription Right. New Shares issued pursuant to a Presubscription Right will be allocated on a pro rata basis up to 100% of the number of New Shares corresponding to the Subscription Rights exercised by such Holder. If the Presubscription Right is in excess of the aforementioned limit of 100%, then satisfying the excess percentage over 100% will be at the discretion of the Board.

PRESUBSCRIPTION Anyone who filed an application for Presubscription Right will be RIGHT MECHANISM able to exercise that right as long as there will be New Unsubscribed Shares which correspond to the unexercised Subscription Rights, at a price equal to the Exercise Price, i.e. €0,0375 per New Share, provided that the exercise of such Holder’s Subscription Rights and Presubscription Right does not result in such investor holding equal or in excess of 30,0% of the issued share capital of the Bank after giving effect to the issue of shares pursuant to the Subscription Rights and Presubscription Right. New Shares issued pursuant to a Presubscription Right will be allocated on a pro rata basis up to 100% of the number of New Shares corresponding to the Subscription Rights exercised by such Holder, and in excess of the aforementioned limit of 100%, at the discretion of the Board.

ALLOTMENT OF NEW The Bank shall have the right, at any time within 30 working days SHARES WHICH REMAIN from the Last Date of Exercise of Subscription Rights and the UNSUBSCRIBED exercise of the Presubscription Right to issue all or part of the New Shares that correspond to the unexercised Subscription Rights that have not been covered during the exercise of the Presubscription Right. The Board of Directors of the Bank will allot, at its discretion, such New Shares, in Cyprus and abroad, through a procedure it will determine, at a price of at least equal to the Exercise Price, i.e., €0,0375 per New Share, provided that the allotment of such New Shares does not result in such investor holding equal or in excess of 30,0% of the issued share capital of the Bank upon completion of the Issue. The procedure of allotment and distribution of such New Shares will not constitute a public offer under the provisions of the applicable securities law of any state, other than Cyprus, Greece and the United Kingdom. In EEA member states other than Cyprus, Greece and the United Kingdom, the Securities are only being offered in circumstances that do not require the publication of a prospectus pursuant to Article 3 of the Prospectus Directive. The offer is not addressed in any way (in writing or otherwise), directly or indirectly, to persons in the Excluded Territories. Accordingly, it is forbidden to send, distribute,

PROSPECTUS

post or otherwise forward copies of this Prospectus and any promotional material related to this public offering document or other material from any person to or from the Excluded Territories, except as may be permitted by applicable law. In jurisdictions other than Cyprus, Greece, the United Kingdom and the Excluded Territories, the offer of the Securities may be restricted by legal or regulatory requirements of such jurisdictions.

JOINT PLACEMENT Each of Deutsche Bank AG, London Branch, 1 Great Winchester AGENTS Street, London EC2N 2DB, United Kingdom (“Deutsche Bank”) and Axia Ventures Group Limited, G. Kranidioti 10, Nice Day House, 6th Floor, P.C. 1065 Nicosia, Cyprus (together with Deutsche Bank, the “Joint Placement Agents”) has entered into a placement agreement dated 14 November 2014 under which the Joint Placement Agents have agreed on a several (but not joint and several) basis to use their reasonable endeavours to identify persons who wish to subscribe for New Shares corresponding to any unexercised Subscription Rights and that have not been allotted pursuant to the exercise of Presubscription Right, at a price at least equal to the Exercise Price, i.e. €0,0375 per New Share. The Joint Placement Agents are not obliged to purchase, subscribe for or underwrite any Subscription Rights or New Shares.

In relation to each member state of the European Economic Area that has implemented the Prospectus Directive, the offer of New Shares, which correspond to non-exercised Subscription Rights and which have not been allotted during the exercise of the Presubscription Right will only be made in that relevant member state:

• to any legal entity which is a qualified investor as defined in the Prospectus Directive; or

• in any other circumstances falling within Article 3.2 of the Prospectus Directive

provided that no such offer of shares shall require the Bank or any Joint Placement Agent to publish a prospectus pursuant to Article 3.2 of the Prospectus Directive.

The Securities (inclusive, without limitation, of New Shares which correspond to any unexercised Subscription Rights and that have not been allotted pursuant to the exercise of Presubscription Rights), have not been, and will not be, registered under the Securities Act or the securities laws of any state of the United States and the Securities may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state or local securities laws.

PROSPECTUS

“Adverse Scenario” of the Comprehensive Assessment of the ECB and the European Banking Authority, and to pursue business opportunities in the recovering Cypriot economy and utilise its competitive advantages to grow customer numbers and loan book and increase its market shares.

LOCK-UP The Bank has agreed with the Joint Placement Agents that until 180 days after the Settlement Date, without the prior written consent of Deutsche Bank, neither the Bank nor any of its Subsidiaries or Affiliates over which it exercises management or voting control, nor any person acting on its or their behalf, shall (i) issue or contract to issue, offer, or directly or indirectly sell or contract to sell, transfer, pledge, lien, charge, grant security or an option over, or enter into any other agreement or arrangement having a similar effect, or in any way, whether directly or indirectly, dispose of the legal title to or beneficial interest in any Ordinary Shares, including any New Shares; (ii) enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly, any of the economic consequences of the ownership of any Ordinary Shares, including any New Shares, whether any such swap or transaction described in (i) or (ii) is to be settled by the delivery of Ordinary Shares (including any New Shares), cash or otherwise; or (iii) carry out any capital increases by the Bank or issue any convertible bonds, exchangeable bonds or other securities which are convertible, exchangeable or exercisable into any Ordinary Shares (including any New Shares) or (iv) publicly disclose any intention to do any of (i), (ii) or (iii); provided that the foregoing limitations shall not apply to (a) the issuance of the New Shares in the Issue; (b) issuances of shares pursuant to the conversion or exchange of convertible or exchangeable securities, including the CCS1 and CCS2, or the exercise of warrants or options, in each case outstanding on the date of the Placement Agreement; (c) trading in the Ordinary Shares for the account of and/or on behalf of its clients which are not Affiliates of the Bank in the ordinary course of business of the Group; or (d) issuances of equity securities or other capital instruments mandated to occur by any competent regulatory body with supervisory authority over the Bank or any of its Affiliates. Deutsche Bank in its sole discretion may waive this limitation at any time without notice and, in the case of an acquisition, merger, corporate reorganisation or similar transaction, will not unreasonably withhold or delay its consent following receipt of a written request from the Bank.

LISTING AND TRADING The Subscription Rights will be listed and traded for six trading days on the Main Market of the CSE provided all necessary approvals from the competent authorities are granted. The New Shares arising from the exercise of the Subscription Rights, the exercise of the Presubscription Right and the allotment of New Shares which correspond to the unexercised Subscription Rights will be listed and traded on the Main Market of the CSE, provided all necessary approvals from the competent authorities are granted.

PROSPECTUS

E.4. Material interest affecting the issue/offer including conflicting interest

Not applicable.

E.5. Name of person or entity willing to sell the security

Not applicable.

E.6. Share dilution

The shareholdings of current shareholders that do not exercise any of their Subscription Rights will decrease up to 60%, assuming that all Subscription Rights are exercised in full (based on the 3.936.599.211 current issued shares of nominal value €0,01 each and the up to 5.904.898.816 New Shares of nominal value €0,01 each which may arise from the Issue).

As of the date of this Prospectus, the Bank has in issue 1.597.679 CCS 1 of nominal value €1 each and 128.070.047 CCS 2 of nominal value €1 each, which are convertible into shares. These Subscription Rights have not been offered to the holders of convertible capital securities and in accordance with their terms of issue, their conversion price is subject to adjustment. Therefore, the holding percentage of these shareholders will be further reduced if the CCS 1 and CCS 2 are converted to shares in accordance with their terms.

The final percentages in each case will depend on the final total percentage of Subscription Rights exercised and the exercise of the Presubscription Right, as well as the procedure for the allotment of any remaining unsubscribed New Shares to be determined at the discretion of the Board of Directors, which will determine the total number of shares of the Bank.

E.7. Estimated expenses charged from the issuer to the investor

Not applicable.

PROSPECTUS

PART II. RISK FACTORS

Investments in the Subscription Rights or New Shares are subject to a number of risks that should be taken into consideration by investors. You should carefully consider the risk factors set out below and all other information contained in this Prospectus, including the Group’s financial statements and the related notes, before making any investment decision regarding the Subscription Rights and/or New Shares. The risks and uncertainties described below are those currently known and specific to the Group or the banking industry that the Group believes are relevant to an investment in the Subscription Rights or New Shares. If any of these risks or uncertainties materialises, the Group’s financial condition or results of operations could suffer, share prices could decline and you could lose part or all of your investment. Moreover, the risks and uncertainties described below may not be the only ones faced by the Group. Additional risks not currently known to the Group or that the Group now deems immaterial may also adversely affect the Group and any investment in the Subscription Rights and/or New Shares.

1. RISKS RELATING TO THE ECONOMIC CRISIS IN CYPRUS

1.1 The uncertain economic conditions in Cyprus have had, and are likely to continue to have, a material adverse effect on the Bank.

The Cypriot economy has faced and continues to face substantial macroeconomic pressures. These pressures derive from the impact of an extremely deep recession, as well as the related pressure on private sector finances and the fiscal effort needed to achieve sustainable primary surpluses in the Cypriot government’s budget in the years to come.

The evolution of real gross domestic product (“GDP”) in Cyprus reversed from growth of 1,3% in 2010 to 0,4% in 2011 and a decline of 2,4% in 2012 according to the IMF. The contraction in real GDP increased to 5,4% in 2013, with a decline in all components of domestic demand. The IMF projects GDP growth slowing to a decline of -3,2% in 2014 to improve to 0,4% growth in 2015. In the labour market, unemployment remains high, with a total yearly average unemployment rate in Cyprus of 15,9% in 2013. These conditions have contributed to a significant reduction in levels of banking activity in Cyprus, and in particular to a significant retraction in loans extended to businesses and households.

Ongoing recessionary pressures in Cyprus could lead to: (i) lower levels of demand for loans and other services and (ii) further impairment of the Group’s assets as well as a decline in their fair value, resulting in a material adverse effect on the results, own funds and prospects of the Group. In particular, the Group faces, and will continue to face, various challenges associated with the deterioration of the economic environment in Cyprus, including, among others:

 The Group’s ability to evaluate its clients’ borrowing ability and non-performing loans.

 The deterioration in demand for loans by creditworthy customers.

 Increased levels and difficulty of estimating expected levels of non-performing loans.

 Decreased interest rates on loans and the need to pay higher rates on deposits.

 Decreased consumer confidence, which could lead to an increase in impairment and provisions on non-performing loans.

 The possibility of reduced trade and capital flows as a result of the protective measures being adopted in certain markets, and mainly in Cyprus, negatively affecting the Group’s activities.

33 Part II

PROSPECTUS

Government interventions aimed at alleviating economic conditions in Cyprus could lead to increased ownership and control of financial institutions by governments or other parties. In addition, if these measures fail, adverse market conditions will deteriorate further, with a negative impact on the business activities and financial results of the Group. Any prolonged continuation or further decline in economic conditions in Cyprus could have a material adverse effect on the Bank’s business, results of operations, financial condition and prospects (see also below “Part II, Paragraph 1.3 - The implementation, conditions and requirements of the MoU entered into between Cyprus and the Troika, and any government actions aimed at alleviating the economic crisis, might not yield results and may create adverse results or have an adverse effect on the Bank” and “Part II, Paragraph 1.2 - The Group is significantly exposed to the financial performance and creditworthiness of companies and individuals in Cyprus”).

1.2 The Group is significantly exposed to the financial performance and creditworthiness of companies and individuals in Cyprus.

Substantially all of the Bank’s total assets, amounting to 99,8% as at 30 September 2014 and 99.2% as at 31 December 2013, and 99,4% of the Group’s total net income for the nine months ended 30 September 2014 and 97,6% for the year ended 31 December 2013, were derived from its operations in Cyprus. Following the sale of its operations in Greece and Russia in 2013 and 2014, respectively, the Bank’s future financial performance significantly relies on the Cypriot economy and is strongly correlated with macroeconomic conditions and economic activity in Cyprus. As at 30 September 2014 and 31 December 2013, the Group accounted for 7,2% and 6,9%, respectively, of gross loans in the Cypriot banking system.

The Group’s non-performing loans, as a share of the Group's gross loans was 56,12% as at 30 September 2014. This percentage has increased significantly during recent periods. While the largest portion of the increase reflects the deterioration of the loan portfolio, it is also attributed to some extent to the change in the definition of non-performing loans effective from 1 July 2013. According to the new directive, loans that have arrears beyond 90 days are classified as non-performing, regardless of any tangible collateral in existence.

During 2013 and 2014, the number of new loans given to business and households has been substantially reduced. This reduction could also continue into the future.

For a discussion of the Bank’s non-performing loan portfolio, see “Part II, Paragraph 3.3 - Risk of high percentage of non-performing loans and further deterioration of the Group’s loan portfolio” and “Part II, Paragraph 1.5 - The Group is particularly exposed to developments in the Cypriot construction and real estate sectors” and Part VII and Part VIII. If the financial performance and creditworthiness of the Group’s borrowers in Cyprus worsen or do not improve, the quality of the Group’s domestic loan portfolio will continue to deteriorate and, consequently, this would have a material adverse impact on the Group’s financial condition and results of operations.

1.3 The implementation, conditions and requirements of the MoU entered into between Cyprus and the Troika, and any government actions aimed at alleviating the economic crisis, might not yield results and may create adverse results or have an adverse effect on the Bank.

In response to the Cypriot economic crisis, the Cypriot government agreed an Economic Adjustment Programme (“EAP”) with the Troika on 2 April 2013. The EAP covers the period from 2013 to 2016 and incorporates a financial assistance package for Cyprus of up to €10 billion. The MoU prepared by Troika and approved by the European Stability Mechanism (“ESM”) on 24 April 2013, specifies the conditions to be met for the first and subsequent disbursements of ESM financial assistance, which include measures related to revenue, public expenditure, as well as pension and health care reform. The MoU addresses short and medium term financial, fiscal and structural challenges facing Cyprus and seeks, among other things, to restructure and downsize financial institutions in Cyprus, correct the

PROSPECTUS governmental deficit by reducing expenditure and enhancing revenue collection, and implement structural reforms to support competitiveness and growth.

The MoU sets a number of targets for the Cypriot government, including limits on governmental expenditures and debt. Achieving these targets has required and will continue to require the government to implement a number of austerity measures. In addition, the MoU sets out an agenda for privatisation and reforms to the labour market, the pension and welfare systems and insolvency legislation which may prove unpopular and be difficult for the Cypriot government to implement.

Many of these austerity measures and reforms involve changes to Cypriot legislation which require parliamentary approval and, accordingly, may be subject to debate and intense lobbying by trade unions and other vested interests opposed to these changes.

In the short to medium term, these measures (as with austerity measures adopted in other countries) are expected to have an adverse impact on growth and public and private expenditure in Cyprus and the Cypriot government may engage in other measures aimed at alleviating the economic crisis in general. Unless and until the expected macroeconomic benefits from the MoU begin to appear, the Bank will continue to be adversely affected by many of the measures taken in implementing the requirements of the MoU and by any other measures taken by the Cypriot government aimed at alleviating the economic crisis in Cyprus.

These measures have contributed to a severe recession in Cyprus, with a substantial increase of provisions and non-performing loans in the banking sector, already affecting the Bank’s asset quality and net income. These developments also resulted in an outflow of deposits, particularly from the Bank’s international business, as foreign depositors have been increasingly concerned about the overall stability of the Cypriot banking system, and the safety of their deposits.

In addition, the implementation by the Cypriot government of the measures and reforms set out in the MoU has given rise, and will continue to give rise, to uncertainties as to the extent and impact of these measures and reforms, particularly with respect to tax legislation and the financial services sector in which the Group operates. To the extent that these reforms are more extensive and costly than anticipated by the market, this could have a material impact on the Group’s operations, business and financial condition.

If the requirements of the MoU are not implemented successfully or if additional austerity or other measures beyond those agreed to in the MoU are required to compensate for potential deviations from the MoU’s targets, economic activity in Cyprus may also register a weaker than expected performance in the future, which will result in a delayed recovery and further adverse effects on the Bank’s business, financial condition and results of operations.

If another credit event with respect to the Cypriot government’s debt occurs, this could result in a downgrade of Cyprus’ credit ratings, which could lead to a revision of the risk-weighting criteria for calculating the Bank’s risk-weighted assets and, consequently, have a negative impact on the Group’s capital ratios (also, see “Part II, Paragraph 3.14 - The Bank’s access to liquidity and wholesale funding markets may be adversely affected by downgrades of the credit ratings of Cyprus and the Bank”).

Further, the failure to implement certain structural reforms specified in the MoU, such as the reduction of the government deficit and enhancement of revenue collection, could result in Cyprus’ failure to restore its economy and credit ratings. There can be no assurances that financial assistance to the Cypriot government from the Troika will continue in the future as a result of increasing public discontent relating to the support of Cyprus and other Eurozone countries.

PROSPECTUS

1.4 The Group is subject to systemic risk.

Systemic risk is the risk of collapse of an entire financial system or entire market as a result of interlinkages and interdependencies in a system or market, where the failure of a single entity or cluster of entities can cause a widespread failure which could potentially bankrupt or bring down the entire system or market.

Following the bail-in events of March 2013, whereby uninsured deposits of the Bank of Cyprus were partially transferred into equity, along with termination of operations at Laiki Bank and the merging of its Cypriot operations with those of the Bank of Cyprus, the Cypriot banking system experienced significant deposit outflows, mainly by foreign large depositors, which contributed to the shrinking of the balance sheets of the major banks operating in Cyprus, including that of the Bank. As a result of these events, the banking system in Cyprus has since become much more vulnerable to rumours or hearsay about “haircuts” of deposits in other banks or financial institutions.

Concerns regarding potential default or the actual default of one financial institution could lead to significant liquidity problems, losses or defaults by other institutions because the commercial soundness of many institutions may be closely related, as a result of granting of credit, commercial transactions, clearing or other relationships between financial institutions. This risk might also adversely and materially affect financial intermediaries and clearing houses, banks, investment firms and stock exchanges with which the Group transacts on a daily basis.

Certain restrictive measures relating to the movement of capital abroad have been implemented. See "Part IX, Paragraph 6". If these remain in effect for an extended period of time or if additional restrictive measures on trade are imposed, customer confidence may be further weakened. In such an event, banks in the Cypriot banking system, including the Bank, may experience significant outflows of customer deposits, resulting in a material adverse effect on the operations, financial position and financial results of the Bank.

1.5 The Group is particularly exposed to developments in the Cypriot construction and real estate sectors.

As at 30 September 2014 and 31 December 2013, approximately 27% and 26%, respectively, of the Group’s loan portfolio was comprised of loans to corporate and SME customers in the construction and real estate sectors in Cyprus. Furthermore, the exposure to loans relating to the purchase or construction of real property, amounts to 50,0% of the total loans to individuals and 16,0% of total Group loans.

As a result, the Group is vulnerable to developments in these sectors arising out of ongoing recessionary pressures in Cyprus. The Group’s ability to recover on these loans remains limited, mainly as a result of ongoing recessionary pressures in Cyprus and the continuing depression in the Cypriot real estate market in terms of low demand and price. Any failure by the Group to successfully restructure and/or recover on its portfolio of non-performing loans can negatively impact its ability to increase its new lending business. See “Part II, Paragraph 3.3 - Risk of high percentage of non- performing loans and further deterioration of the Group’s loan portfolio” and “Part II, Paragraph 3.10 - The Group is vulnerable to decreases in the value of loan collateral and limitations on disposal and enforcement”.

PROSPECTUS

2. RISKS RELATING TO THE GLOBAL FINANCIAL MARKETS

2.1 Political and economic developments in Cyprus and overseas could adversely affect the Group’s operations.

External factors, such as political and economic developments in Cyprus and overseas, may negatively affect the Group’s operations, its strategy and prospects. The Group’s financial condition, its operating results as well as its strategy and prospects may be adversely affected by events outside its control, which include but are not limited to:

 Changes in government policy;

 Changes in the level of interest rates imposed by the ECB;

 Fluctuations in consumer confidence and the level of consumer spending and business spending;

 European Union regulations and directives relating to the banking and other sectors;

 Political instability or military conflict that impact Europe or other regions;

 Taxation and other political, economic or social developments affecting Cyprus, Russia, the European Union or Turkey and the Middle East; and

 Strikes in the banking and other sectors.

Terrorist acts, other acts of war or hostility, geopolitical, pandemic or other such events and responses to those acts/events may create economic and political uncertainties, which could have a negative impact on Cyprus and the international economic conditions generally, and more specifically on the business and results of the Group in ways that cannot necessarily be predicted.

There can be no assurance as to the realisation of any of these events or that a further weakening in the Cypriot economy will not have a material adverse effect on the Group’s business, financial condition, results of operations or prospects.

2.2 The Group is vulnerable to the ongoing disruptions and volatility in the global financial markets.

Since the second half of 2007, disruption in the global credit markets has created increasingly difficult conditions in the financial markets. These conditions have resulted in decreased liquidity and greater volatility in global financial markets, and continue to affect the functioning of financial markets and the global economy.

The debt crisis in Europe, and particularly in Greece, has had a material adverse effect impact on Cyprus. Despite measures taken by several governments, international and supranational organisations and monetary authorities to provide financial assistance to Eurozone countries in economic difficulty and to mitigate the possibility of default by such countries on their sovereign debt obligations, concerns persist regarding the debt or deficit burden of certain Eurozone countries, including Cyprus, and their ability to meet future financial obligations, given the diverse economic and political circumstances in individual member states of the Eurozone.

The debt crisis prevailing in the Eurozone has contributed to political, economic and social tension in several countries, including Cyprus. As a result, financial markets have exhibited significant volatility and increased yields. These disruptions have: contributed to the increasing volatility of the exchange

PROSPECTUS rate of the Euro against other key currencies and affected the ability of banks in the Eurozone to obtain liquidity; influenced the levels of stock market indices; and created uncertainty about the economic prospects of countries in the European Union. There has, from time to time been speculation that some Member States, including Cyprus, may exit the Eurozone (either voluntarily or compulsorily) or that the Euro may even be abolished as a currency, which could lead to the reintroduction of national currencies. The manifestation of such developments could result in a disruption in the markets, increasing counterparty risk and the risk of a negative impact on the market due to the need for adjustment of assets and liabilities to the new currencies. It remains difficult to predict the effect of these measures on the economy and on the financial system, how long the crisis will last and to what extent the Group’s business, results of operations and financial condition may be adversely affected.

2.3 The Group’s operations may be adversely affected by recent economic and political events in Russia.

Due to good and long-standing relations between Cyprus and Russia, as well as the favourable tax regime in Cyprus due to its tax system and the Convention for the Avoidance of Double Taxation between Cyprus and a large number of other countries, including Russia, there are significant economic ties between Russia and Cyprus, including the tourism industry and the provision of financial and associated services, such as legal and accounting services.

These activities and related services make a substantial contribution to the Cypriot economy, and a reduction in volumes or levels of activities could adversely affect economic conditions and levels of banking activity in Cyprus.

Russian customers and Russian companies comprise a significant source of deposits. As a result, a significant part of the deposits of the International Banking Division comes from customers in this category. According to the Bank’s results for the period ended 30 September 2014, these deposits accounted for 24% of the total deposits of the Bank. Furthermore, the Bank maintains several bank accounts in Russian Rubles with banks in Russia. The balances of these accounts vary daily depending on the needs of the Bank’s customers.

Political, historical and other differences between Russia and the United States and certain European Union Member States have, on occasion, given rise to tensions and, in certain cases, conflicts that can stunt or halt normal economic activity and disrupt the economies of neighbouring regions. Since March 2014, there has been a heightened level of tension between Russia and Ukraine, in particular relating to the Crimean peninsula. This has resulted in increased military activity on the border between Russia and Ukraine, the accession of Crimea to Russia, unrest and armed conflict elsewhere in Ukraine, along with allegations of Russian involvement in this domestic political unrest. These tensions also resulted in the imposition of sanctions, asset freezes, travel limitations and certain other measures by the United States, the European Union and a number of other countries against specified Ukrainian and Russian individuals and entities, including a number of Russian banks. The Russian government has in turn imposed certain limitations on the import of food and other products from the United States and European Union. Further conflicts or tensions between Russia and the United States, European Union Member States, Ukraine or other countries may cause further deterioration of economic conditions in Russia and adversely affect investments in Russian financial markets and the securities of Russian issuers. The imposition of trade and economic sanctions, including further sanctions by the United States, the European Union or other countries could also limit or prevent the Group from dealing with certain persons and entities in Russia and impose additional legal compliance costs on the Group.

In addition, the Russian government and Russian State Duma have announced various efforts to require repatriation of funds and assets of Russian companies held abroad, or to deter or limit the ability of business to establish holding and management structures outside of Russia. For example, the Russian Ministry of Finance has published a draft law which proposes to impose tax on the income of companies that are registered in offshore jurisdictions (such as Cyprus) and are owned by Russian

PROSPECTUS ultimate beneficiaries. If this law is passed, it could have a material adverse impact on the Bank’s deposits from Russian customers and/or the appeal of Cyprus as a jurisdiction for Russia-related business. Such developments could materially and adversely affect the ability or willingness of Russian customers to make deposits in the Bank.

3. RISKS RELATING TO THE GROUP’S BUSINESS

3.1 A failure by the Bank to meet the regulatory capital shortfall identified by the ECB’s CA through the proceeds raised in this Issue may result in a need to undertake further share capital increases, or state aid provisions may apply.

The Bank participated in the AQR performed by the ECB, which was performed along with a stress testing process (in cooperation with the EBA) as part of the ECB’s CA prior to inception of the Single Supervisory Mechanism for Eurozone banks and other credit institutions (“SSM”). The ECB completed the comprehensive on 26 October 2014 and released the results that same day.

The Bank considers that the AQR adjustments that have been made in the CA do not indicate that the Bank failed to comply with IFRS. Furthermore, it should be noted that the Bank had no knowledge that such an issue, (i.e., that any possible accounting errors or practices inconsistent with IFRS) were identified during the AQR.

The stress complemented the AQR, examining the balance sheet resilience of the Bank under stress scenarios over three year periods. An 8% minimum CET1 ratio was assumed in the baseline scenario, and a 5.5% minimum CET1 ratio was assumed in the adverse scenario.

The results of the CA were as follows:

PROSPECTUS capitalised in the event of unexpected future losses. For the Bank, the €277 million result from the adverse scenario was reduced by mitigating factors that took place during 2014 to €105 million, which the Bank expects to cover through this Issue. The Bank will seek to raise more capital than the residual capital resulting from the CA in order to actively support the growth of its business.

If the Bank is not able to strengthen its capital adequacy by raising funds from its shareholders or the capital markets, or by implementing other capital enhancement measures, it may need to seek additional funding by means of state aid, thereby increasing the likelihood that its shareholders will be subject to limitations on their rights, suffer significant dilution in their shareholding or incur significant losses in their investments. See “Part II, Paragraph 6 - Risks Relating to the Issue”.

Stress tests analysing the European banking sector have been, and the Bank anticipates that they will continue to be, published by national and supranational regulatory authorities. At present, it is not clear how the ECB’s stress tests will be aligned with the requirements of the EAP. Loss of confidence in the banking sector following the announcement of stress tests regarding the Bank or the Cypriot banking system as a whole, or a market perception that any such tests are not rigorous enough, could also have a negative effect on the Group’s cost of funding and may thus have a material adverse effect on its results of operations and financial condition. In addition, there is a risk that future developments will be worse than the assumptions made under the adverse stress test scenario, resulting in even greater than calculated estimates of capital needs. Accordingly, subsequent developments could possibly generate additional capital needs. In addition, any future stress tests may force the Bank to raise additional capital, which may cause a significant dilution of existing shareholders in the share capital of the Group or eliminate their interests.

3.2 The Group is subject to evolving Minimum Capital Requirements that may require it to raise additional capital or result in increased costs.

As from 1 January 2014, the European Parliament’s and Council’s Directive 2013/36/EU (CRD IV) and the Regulation (EU) No. 575/2013 (CRR) of 26 June 2013 became effective comprising the European regulatory package designed to transpose the new capital, liquidity and leverage standards of Basel III into the European Union’s legal framework. The Regulation 575/2013 (CRR) establishes the prudential requirements for capital, liquidity and leverage that entities need to abide by and is immediately binding on all European Union Member States. The Directive 2013/36/EU (CRD IV) governs access to deposit-taking activities, internal governance arrangements including remuneration, board composition and transparency. Unlike the Regulation 575/2013 (CRR), the Directive 2013/36/EU (CRD IV) must be transposed into national law and national regulators, such as the Central Bank, can impose additional capital buffer requirements. The Regulation 575/2013 (CRR) introduces significant changes in the prudential and regulatory regime applicable to banks including amended minimum capital ratios, changes to the definition of capital, the calculation of risk-weighted assets and the introduction of new measures relating to leverage, liquidity and funding. The CRR permits a transitional period for certain of the enhanced capital requirements and certain other measures, such as the leverage ratio, which are not expected to be fully implemented until 2018. As at 30 September 2014, the Group and the Bank’s Common Equity Tier 1 Ratio was 7,4% and 7,5%, respectively, as compared to a requirement of 8%, which led to the mandatory and irrecoverable conversion of about €23.804.161 CCS 1 into Ordinary Shares and as described in the prospectus dated 30 September 2013 relating to the issue of CCS 1 and CCS 2. The mandatory conversion applied pro rata to the outstanding balance of CCS 1 for each investor on the conversion date (transactions performed up to and including 24 October 2014, record date 29 October 2014).

The Central Bank has determined the extent of phasing-in of the transitional provisions relating to Common Equity Tier 1 deductions and, on 29 May 2014, set the minimum Common Equity Tier 1 capital ratio at 8%. The Central Bank will also impose additional capital requirements (Pillar 2 add- ons), for risks which are not covered by the above-mentioned capital requirements, taking also into account the provisions of CRD IV/CRR.

PROSPECTUS

The implementation of a more demanding and restrictive regulatory framework, with respect to, amongst other things, capital ratios, leverage, liquidity and disclosure requirements, notwithstanding the benefit to the financial system, will imply additional costs for banks. In particular, these regulatory requirements may result in a need for additional capital strengthening by the Bank in order to comply with the more demanding capital ratios and the lower profitability of such capital. There can be no assurance that the Bank will be able to raise the additional capital required by regulation or expected by the market and any failure to do so could have a material adverse effect on its reputation, financial condition and results of operation.

Compliance with new regulations might also restrict certain types of transactions, affect the Bank’s strategy and limit or imply the modification of the rates or fees charged by the Bank for certain loans and other products, where any of the foregoing might reduce the yield of its investments, assets or holdings. Accordingly, the Bank might face increased limitations on its capacity to pursue certain business opportunities, and, as a consequence, this could have a significant adverse effect on the business, financial condition and results of operations of the Bank.

3.3 Risk of high percentage of non-performing loans and further deterioration of the Group’s loan portfolio.

The Group has a very high proportion of non-performing loans. As calculated in accordance with the directive of the Central Bank, which has been in effect since 1 July 2013, gross non-performing loans were €2,0 billion as at 31 December 2013 and €2,5 billion as at 30 September 2014. The ratio of gross non-performing loans to total gross loans, including interest suspended and not recognized in the income statement, increased from 45,7% as at 31 December 2013 to 56,1% as at 30 September 2014.

The Bank’s non-performing loans have increased in the past due to classificatory changes promulgated by the Central Bank, and such changes may occur in the future. Prior to 30 June 2013, the Central Bank stated that only those loans which were not fully covered by tangible collateral and which were in arrears for over three months were classified as non-performing. With effect from 1 July 2013, the Central Bank set forth a directive redefining non-performing and forborne loans, stating that even if there is full tangible collateral to cover the loan, if the loan is in arrears for over 90 days, it would be classified as non-performing. In addition, the same directive states that a loan is considered non- performing when it has been restructured more than twice within a period of 18 months or, if on the date of restructuring, the loan had been past due or overdrawn for more than 60 days. As a result of these changes, the Bank’s levels of non-performing loans increased significantly. At the same time, the Bank has raised the level of provisions to cover non-performing loans. Particularly, as at 30 September 2014 the coverage ratio for the Group (total provisions assigned for non-performing loans/total non- performing loans) stood at 43,8% while this ratio was 38,4% for 31 December 2013.

In addition, the EBA has published its final reporting standards on forbearance and non-performing exposures, which are expected to be enacted into law before the end of this year. With the implementation of the new standards, the classificatory directives of the Central Bank described above will be abolished. Upon application of the new standards, which denote stricter criteria for the classification of loans as non-performing and/or restructured as well as longer time periods for which they must remain classified as such, the Bank's levels of non-performing and restructured credit facilities could further deteriorate.

The effectiveness of the restructurings done by the Bank after the enactment of the Directive on Arrears Management and the Code of Conduct for the handling of borrowers in financial difficulties, which is aimed at helping borrowers become viable, as well as the passage of the foreclosure law, is intended to manage the impact on the Bank of the high levels of non-performing loans. Nevertheless, the Bank has experienced, and is expected to continue to experience, high levels of non-performing loans. High levels of non-performing loans may cause the Bank to increase provisions. See “Part VII”.

PROSPECTUS

3.4 A material decrease in funds available from customer deposits could impact the Group’s funding and there can be no assurance that the lifting of capital controls in Cyprus will not result in an increase of deposit outflows from the Bank or the banking sector in Cyprus.

Essentially all of the Bank's funding comes from customer deposits, accounting for 97,3% of total liabilities as of 30 September 2014. As at 31 December 2013 and 30 September 2014, customer deposits amounted to €5,5 billion and €6,1 billion, respectively. In particular, the International Banking Division’s customer deposits constitute a significant part of the Group’s total deposits, approximately 42,4% as at 30 September 2014.

Since the Bank relies on customer deposits for the vast majority of its funding, if the Bank’s depositors withdraw their funds at a rate faster than the rate at which borrowers repay their loans, or if the Bank is unable to obtain the necessary liquidity by other means, the Bank may be unable to maintain its current levels of funding without incurring significantly higher funding costs or having to liquidate certain of its assets, or without seeking access to central bank funding. Further, access to central bank funding may not always be available and is subject to various funding provision rules.

The availability of customer deposits to fund the Group’s loan portfolio and other requirements of the Bank is subject to potential changes due to factors beyond the Bank's control. Such factors include, among others: general concerns of depositors regarding the overall economy, the financial sector or the Bank in particular; significant further deterioration of the economic conditions in Cyprus, which could reduce the availability of funds for deposits; and the availability and extent of deposit guarantees. Furthermore, the Bank remains vulnerable to further changes under the framework for the support of financial institutions through the involvement of shareholders, creditors and uninsured depositors (bail- in) and proposals to tax deposits can also contribute to a reduction in the availability of deposits. In addition, a loss of confidence by depositors in the management of internal issues relating to the Cyprus banking system affecting either the Bank or the Cypriot banking system generally may result in significant and unexpected deposit withdrawals from banking institutions in Cyprus, including the Bank. Any of these factors separately or in combination could lead to a sustained reduction in the Bank’s ability to access customer deposit funding on appropriate terms in the future, which would impact on the Bank’s ability to fund its operation, having an adverse effect on the Group’s results, financial condition and prospects. Unusually high levels of withdrawals could have the result that the Bank or another member of the Group may not be in a position to continue to operate without additional funding support, triggering the need for additional external funding or further capital, which it may be unable to secure.

In particular, in March 2013, the uncertainty concerning Cyprus’ ability to secure a financial assistance package from the ESM and IMF led to a significant loss of confidence in Cyprus and the banking sector of Cyprus. The subsequent bail-in of depositors of the Bank of Cyprus with deposits exceeding €100,000 (the maximum insured deposit level), resulted in losses suffered by depositors which further exacerbated this loss of confidence. In order to address the risk of significant deposit outflows from Cyprus in reaction to the uncertain state of Cyprus’ economy and the future of the banking sector in Cyprus, all banks in Cyprus were instructed by the Central Bank to remain closed from 19 to 27 March 2013. Upon the issue of a decree by the Ministry of Finance of Cyprus imposing capital controls on the withdrawal of funds on 27 March 2013, banks in Cyprus reopened on 28 March 2013. The issue of the decree imposed, amongst other things, a €300 daily withdrawal limit and a ban on cashing cheques as well as a prohibition on fund transfers within and outside Cyprus with a few specific exceptions. If capital controls had not been imposed by the Ministry of Finance of Cyprus, the loss of confidence by depositors of the Bank could have led to a rate of deposit outflows which was higher than that experienced by the Bank to date. Decrees imposing capital controls are renewed regularly and there has been a gradual relaxation of the restrictions imposed. In a recent decree issued by the Ministry of Finance of Cyprus on 30 May 2014, all domestic capital controls have been repealed but some restrictions remain on the transfer of funds outside of Cyprus. Specifically, bans and restrictions on cashless payments or money transfers out of Cyprus are still in effect, while restrictions and limitations

PROSPECTUS within Cyprus on, among others, cash withdraws, terminating fixed deposits prior to maturity, opening new accounts, transferring money among banks, using credit and debit cards and cashing cheques have all been lifted.

A significant portion of the Bank's deposits are from international customers, and deposit outflows from the Bank and the banking sector in Cyprus will increase if these customers lose further confidence in the Cypriot banking system and the restrictions on the transfer of funds outside of Cyprus are further relaxed or removed. Significant deposit outflows would have a material adverse effect on the Group’s business, financial condition and results of operations. See “Part II, Paragraph 2.3 - The Group’s operations may be adversely affected by recent economic and political events in Russia”. For more detail on the capital control measures imposed by the Ministry of Finance, see “Part IX”.

Any of these factors individually or in combination could lead to a reduction in the Group's ability to access funding from customer deposits with satisfactory terms in the future, which could affect the Group's ability to finance its operations and meet the minimum supervisory liquidity ratios, which may result in a material adverse effect on the financial results, financial position and prospects of the Group.

3.5 The Bank is subject to reputational risk.

Reputational risk is usually associated with conflicting interests, regulatory compliance, remuneration systems, professional behaviour of the human resources, corporate culture, leadership and corporate strategy and its implementation.

Examples of events that may result in reputational harm for the Bank may include any negative publicity on the financial soundness of the Bank, accusations of negligence in the provision of financial products or services, loss of important or confidential information from the Bank or its customers, external breach of systems, business interruption due to internal technical reasons (such as malfunction of computer systems), bankruptcy of a major customer or associate, a court conviction or publicity surrounding customer lawsuits and accusations of money laundering, among others. Moreover, negative public opinion against the financial sector for any reason may materially adversely affect the Bank. Such examples include negative publicity about the alleged intention of banks to implement mass foreclosures of mortgaged homes, negative interpretations of the intent of the banks to restructure obligations, or suspicions that the banks may be implementing excessive charges or rates for their products and services, among others. The Bank may also suffer from reputational harm if it receives negative supervisory reporting or an administrative fine against it or its executives, or if the public believes that bank officers or employees earn excessive wages.

Although the Group strives to protect its reputation, the risk still remains and could materially and adversely affect the Group's ability to retain or attract customers, particularly institutional and retail depositors, whose loss could adversely affect the Group's operations, financial condition and prospects. More specifically, reputational harm may result in the loss of market share and revenue, increased compliance costs and higher financing costs, reflecting the perceived increased risks.

3.6 The maturity profile of the Bank’s deposits is subject to fluctuation.

The structure of interest rates developed in 2013 following the Central Bank directive on the calculation of the capital requirements and large exposures of banks (special own funds for the coverage of risks arising from high deposit interest rates) has restricted the Bank’s ability to use interest rates as tools for the management of liquidity. In particular, this directive requires that banks maintain additional own funds under Pillar II in the cases where the deposit interest rates exceed by 3% certain reference rates (for example, Euribor for deposits in Euro), which resulted in a reduction of deposit interest rates in the Cypriot banking system

PROSPECTUS

This directive initially contributed towards deposits becoming progressively more short-term than in the past at the same time that the average repayment period of loans had increased, resulting in higher liquidity risk. This, in conjunction with the insecurity depositors felt during the same period, had led to the deterioration of the Bank's liquidity mismatch ratios in Euro.

Since removal by the Central Bank of measures restricting domestic withdrawals over the course of 2014, the average maturity of the Group’s deposits increased, contributing to the improvement of these indicators and their return within the supervisory limits in the recent past. Nonetheless, these indicators are subject to fluctuations that could have a material adverse effect on the Group's operations, financial position and financial results.

3.7 The planned creation of a deposit guarantee system applicable throughout the European Union may result in additional costs to the Group.

The harmonisation of the deposit guarantee systems will represent significant changes to the mechanisms of the deposit guarantee systems currently in force in individual countries. Harmonisation of the deposit guarantee systems contemplates increasing ex-ante funding to approximately 75% of total funds and increasing the target levels of the deposit guarantee systems to 2% of eligible deposits.

If the contributions of the European Commission for the deposit guarantee scheme are higher than the ones currently in place in Cyprus, this may result in the Bank increasing its contributions in this scheme, which in turn may adversely affect its operating results.

Although the harmonisation of the deposit guarantee systems is currently expected to maintain the level of coverage at €100,000, the pressure on the European Union authorities to simplify eligibility criteria and put swifter payment procedures in place may lead to additional adjustments in the level and scope of coverage, resulting in higher bank contributions to the deposit guarantee schemes.

3.8 Government and Central Bank actions intended to support liquidity may be insufficient or discontinued such that the Group may be unable to obtain the required liquidity.

The recent financial markets crisis, the increase of risk premiums and the higher capital levels sought by investors, have led to intervention and requirements for banking institutions to have increased levels of capitalisation and liquidity. In many countries, the requirement for additional liquidity was achieved through the provision of liquidity support by central banks. In order to permit such support, financial institutions were required to pledge securities deemed appropriate as collateral by their regulators and central banks.

The ECB has decided that it will continue conducting its main refinancing operations by means of fixed rate tenders with full allotment, for as long as necessary and at least until the end of December 2016. Furthermore the ECB decided to conduct the three-month longer-term refinancing operations (the “LTRO”) to be carried out before the end of the Eurosystem's reserve maintenance period ending in December 2016, at a rate equal to the average of the main refinancing operations during the life of the respective LTRO.

As of the date of this Prospectus, the Group has not received any funding from the ECB, does not receive liquidity from the Emergency Liquidity Assistance (the “ELA”) and does not depend on the interbank market for funding. In the event that the Group would require this liquidity or funding from European authorities, and is thus unable to obtain liquidity by pledging suitable collateral to central banks or if there is a significant reduction or elimination in the liquidity support provided to the system by governments and central banks, the Group may encounter increased difficulties in procuring liquidity in the market or higher costs for procurement of such liquidity, thereby adversely affecting its business, financial condition or results of operations.

PROSPECTUS

3.9 A possible substantial increase in new provisions could adversely affect the Group’s financial condition and results of operations.

In connection with its lending activities, the Group regularly establishes provisions for loan losses. As at 30 September 2014, the total provisions for impairment in the value of loans, including interest suspended and not recognised in the income statement, amounted to €1,139 million (while total provisions for the Group stood at €1,144 million). The percentage of provisions covering gross loans as at 30 September 2014 was 25,9% and the percentage covering non-performing loans as at the same date was 43,8%. As a result of deteriorating economic conditions or other factors adversely affecting the creditworthiness of borrowers the Group may have to increase its provisions for loan losses substantially in the future. For a discussion of the Group’s provisioning policies, see “Part VI, Paragraph 3”.

Any significant increase in provisions for loan losses or significant change in the Group’s estimate of the risk of loss inherent in its portfolio of non-impaired loans, as well as the occurrence of loan losses in excess of the related provisions, may have a material adverse effect on the Group’s business, financial condition and results of operations. Accordingly, a potential decrease in the value of such collateral, in conjunction with increasing non-performing loans, may create the need for additional provisions, something which may have a material adverse effect on the Group’s business, financial condition and results of operations.

The Central Bank issued in February 2014 the Directive on Loan Impairment and Provisioning Procedures of 2014 as published in the Cyprus Government Gazette on 21 February 2014. The provisions of the new Directive, which the Bank will have to adhere to for the preparation of the 2014 annual reports, may cause the level of provisions to differentiate.

3.10 The Group is vulnerable to decreases in the value of loan collateral and limitations on disposal and enforcement.

Approximately 68% of the Group's total gross loans and 60% of gross non-performing loans were secured by tangible collateral estimated at forced sale value as at 30 September 2014. Cypriot real estate assets secure a significant proportion of the Group’s outstanding loans (approximately 88% of the total collateral consists of mortgages).

Through 2009, population increase, economic growth, declines in unemployment rates and increases in levels of household disposable income, together with low interest rates within the European Union and increased foreign demand, led to an increase in the demand for mortgage loans in Cyprus. This increased demand and the widespread availability of mortgage loans affected housing prices, which rose significantly. After this buoyant period, Cyprus’ real estate market began to decline mainly as a result of the global financial crisis from 2009 onwards. As a result of the Cypriot economic crisis, Cyprus experienced a significant decline in real estate prices in 2013. According to the real estate price index published quarterly by the Central Bank, from the second quarter of 2006 until the third quarter of 2008 (when the index reached its highest level), residential property price levels rose by 44,5%. From its highest point the third quarter of 2008, the index had declined by 29% by the second quarter of 2014.

Due to the significant percentage of Group loans that are secured by mortgages, the Bank is exposed to the impact of further deterioration in the values of such collateral. In addition, the existence of tangible collaterals which fully cover the exposure leads to the accounting recognition of interest even in cases where the bank facility is classified as non-performing. A potential further reduction in the value of collateral of such loans, along with a possible inability of customers to provide additional collateral, might require the Group to make additional provisions to cover any credit risk and to increase its capital, as well as lead to a reduction in interest income.

PROSPECTUS

Furthermore, the Group has restructured certain of the loans it has made relating to real estate and the capacity of the borrowers to repay those restructured loans may be adversely affected by declining real estate prices. Moreover, the Group’s ability to sell real estate (in case of foreclosure) is limited by the continuing depression in the Cypriot real estate market both in terms of price and demand. The current state of the economy in Cyprus has caused a significant reduction in investor interest in real estate and has slowed down the ability to dispose of such properties, and even if disposal occurs, it would be at a lower price. In particular, the depression in real estate prices could be exacerbated if a significant proportion of the real estate for sale in Cyprus is comprised of foreclosed real estate. Moreover, any failure of the Group to foreclose on collateral can lead to losses that could have a negative impact on the Group's income and capital adequacy.

Foreclosing on collateral can also be time consuming and burdensome. See ("Part II, Paragraph 4.4 - The Bank is subject to certain regulatory and legal constraints in originating new loans, managing existing loans and foreclosing on collateral”).

If Cypriot real estate prices and demand fail to recover, the Group’s business may be materially adversely affected, which could materially and adversely affect its financial condition and results of operations.

3.11 Risk of fluctuation of prevailing share and other securities prices and significant holdings of Cyprus Government Bonds.

The risk of fluctuations in the market price of shares and other traded securities arises from adverse changes in the prices of securities (mainly equity and bond securities) held by the Group. Changes in the prices of equity securities that are classified as investments at fair value through profit and loss, affect the profit of the Group, whereas changes in the value of equity securities classified as “available for sale” affect the equity of the Group. Debt securities price risk is the risk of loss as a result of adverse changes in the prices of debt securities held by the Group. The Group invests part of its liquid assets in debt securities issued mostly by governments and supranational entities, and particularly in debt securities issued by the Cypriot government.

As at 30 September 2014, a substantial portion of the Group’s bond portfolio, approximately 41% was invested in Cyprus Government Bonds (amounting in total to €326 million as at 30 September 2014). The concentration in Cyprus Government Bonds, which is estimated at approximately 66% of the Group’s own funds, is considered high (using the Group’s own Funds as at 30 September 2014).

The following table shows the total exposure of the Group to Cyprus Government Bonds as at 30 September 2014:

Percentage Value relative Credit Rating Residual Book value to the Bank’s Issuer Name Moody's/S&P/Fitch Maturity (€ million) Own Funds <1 year 14 3% Republic of 1 to 5 years 169 34% Cyprus Caa3/B+/Β-* 5 to 10 years 143 29% Total 326 66% *Caa3: ‘In Poor Standing’, B/B– :‘Highly Speculative’

The credit risk of Cyprus is directly affected by the success of the implementation of the MoU, as potential delays in the implementation of structural reforms that are provided for by it may affect the disbursement of future tranches. Other factors, such as the level of non-performing loans in the banking sector and the results of the AQR and stress test, could negatively affect the credit risk of Cyprus. The

PROSPECTUS limited marketability of these bonds, and the fact that a large proportion of the Cyprus Government bonds are accounted for as securities classified as 'Loans and Receivables may have a material adverse effect on the Group’s financial condition and results of operations.

On 5 July 2013, the Board of Directors of the Bank unanimously decided to exchange existing Cyprus Government Bonds with nominal value €155,4 million, which were included as at 30 June 2013 in the duration of one to five years category, for new bonds in the duration of five to ten years category. The date of exchange was set as 1 July 2013, within the framework of the Cyprus debt restructuring and according to conditions set forth by the Central Bank. Other assets held by the Group have also been subject to similar restructuring in the past, such as its holdings of Greek Government Bonds in 2011- 2012. Future restructurings of the Cyprus Government Bonds or other bonds that are held by the Bank could result in, amongst others things, a reduction in their nominal value and/or a reduction in their interest rate. Any such occurrences could materially and adversely affect the Group’s financial condition and results of operations.

In addition, the Group’s insurance and investment businesses are subject to the risk of negative price adjustments in the value of shares and other securities held in their investment portfolios.

3.12 The Bank is exposed, as a counterparty, to risks of other financial institutions.

Credit risk is the risk of financial loss relating to the failure of a borrower to honor its contractual obligations against the Group. It arises in lending activities as well as in various other activities where the Group is exposed to the risk of counterparty default, such as the Bank’s trading, capital markets and settlement activities.

The Group is obliged to maintain high levels of liquid assets—specifically, money market instruments in foreign banks or investments in banks, sovereign bonds and other bonds—due to the high liquidity ratios imposed by supervisory authorities. As a result, the Bank routinely transacts with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks and other institutional clients. Sovereign credit pressures may weigh on Cypriot financial institutions, limiting their funding operations and weakening their capital adequacy by reducing the market value of their sovereign Cyprus Government debt and other fixed income holdings. These liquidity and capital concerns that the banking institutions of the country face have negatively impacted inter-institutional financial transactions in general. In particular, the Bank’s ability to enter into what would have been routine transactions with international counterparties has been negatively affected as a result of these counterparties’ concerns as to the credit risk they would be taking with respect to the Bank. As a result, a counterparty financial institution may reduce or withdraw the credit limits granted to the Bank, or foreign banks may close the Bank’s foreign accounts (“Nostro” accounts) with them, something which would significantly limit the Bank’s ability to serve its customers outside of Cyprus.

In addition, many of the transactions into which the Bank enters expose it to significant credit risk in the event of default by one of its significant counterparties. A default by a significant financial counterparty, or liquidity problems in the financial services industry in general, could have a material adverse effect on the Group’s business, financial condition and results of operations.

3.13 Pricing of restructured loans may not adequately reflect default risk.

Under the Central Bank’s Directive on Arrears Management, licensed financial institutions are required to apply a fair and sustainable pricing policy with respect to loan restructuring. This policy aims to minimise the cost, fees/commission and interest rates for debtors that are subject to restructuring of their loans. The above provisions, in conjunction with the Liberalization of Interest Rate and Related Matters (amended) Law of 2014, which has been in effect since 9 September 2014 and prohibits the exercise by credit institutions of any contractual right to unilaterally increase margins and limit the possibility of imposing a default interest in excess of 2%, could lead to under-pricing of default risk in

PROSPECTUS light of subsequent developments (credit risk) and consequently to a reduced net income for the Bank to the extent the credit risk materialises, something which can have a material adverse effect on the Group’s business, financial condition and results of operations.

3.14 The Bank’s access to liquidity and wholesale funding markets may be adversely affected by downgrades of the credit ratings of Cyprus and the Bank.

The Bank’s credit risk is assessed by international credit rating agencies such as Moody’s and Fitch and is classified based on certain indicators (such as profitability, liquidity, capital, profile risk) adopted by each agency. The current classification of the Bank with respect to its long-term credit rating is Caa3 (with stable outlook) by Moody’s and CCC (with stable outlook) by Fitch. These ratings reflect in part the sovereign ratings of Cyprus (which is classified at Caa3 by Moody’s, at B+ by Standard & Poor’s Financial Services LLP (“S&P”) and at B- by Fitch). The Bank’s sub-investment grade ratings make it more difficult for it to raise debt or equity and will increase its cost of wholesale funding, with a consequent adverse effect on its financial condition and results of operations.

The Bank’s credit rating may be further downgraded by the credit rating agencies, which would affect, amongst others, the ability of the Bank to raise capital and liquidity, lending costs, interbank transactions and the Bank’s reputation. In addition, a possible downgrade of the Bank could potentially affect its liabilities with other counterparties, since they could request additional collateral for the exposures they have with the Bank or even request immediate settlement of open positions. Further downgrades of the Bank’s credit rating (including as a result of downgrades of the sovereign rating of Cyprus) would exacerbate this and could potentially exclude the Bank from private sources of wholesale funding.

3.15 The Group may not be successful in managing its portfolio of liquid assets.

The Bank maintains a significant amount of liquid assets. As at 30 September 2014, €1.470 million of the Bank’s liquid assets were placed with the ECB (48% of the total liquid assets as at 30 September 2014). Following the recent decision by the ECB to reduce the overnight deposit facility rate from zero to negative levels (-0,10% initially and currently -0,20%), the placement of these liquid assets has resulted in costs to the Group. Accordingly, maintaining these deposits at the ECB has had and is likely to continue to adversely affect the profitability of the Bank.

In order to more effectively manage its portfolio of liquid assets, the Bank is undergoing changes in its investment policy. For example, the Bank has invested in certain high grade investments (rated Aaa to Aa1) in government securities and supranational organisations, and the Bank may consider placing part of its liquid assets into new loans, new investments in equities, bonds and commercial securities, among others. No assurance can be given that changes made in the Bank’s investment policy will be successful in managing the liquid asset portfolio. In addition, these investments may significantly alter the risk profile of the Bank with regards to credit risk (counterparty and country risk), liquidity risk (regulatory liquidity ratios), market risk (foreign exchange risk, interest rate risk and price risk) and concentration risk (counterparty and country concentrations).

3.16 Potential impairment of goodwill and intangible assets will have a negative impact on the results and net assets of the Group

Accounting goodwill represents the excess of the cost of an acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquired entities at the date of acquisition. If the excess is negative (negative goodwill), it is recognized immediately in profit or loss. Subsequent to initial recognition, goodwill is measured at cost less accumulated impairment losses. The carrying amount of goodwill is reviewed for impairment at least on an annual basis.

PROSPECTUS

The process of recognizing and testing for the impairment of goodwill and of the investments in subsidiaries is inherently uncertain since it requires significant management judgment in making a series of estimates, the results of which are highly sensitive to the assumptions used. The test for impairment represents management’s best estimate of the factors listed below. Firstly, significant management judgment is required in estimating the future cash flows of the entities acquired. The calculations are sensitive to the cash flows projected for the periods for which detailed forecasts have been projected, and to assumptions regarding the long-term pattern of sustainable cash flows thereafter. Cash flow forecasts are compared to actual performance and to reliable economic data in future years. However, the future cash flow forecasts necessarily and appropriately reflect management’s view of the future business prospects of the entities. Additionally, the cost of capital used to discount its future cash flows can have a significant effect on the entity’s valuation. Any impairment of goodwill of acquired entities affects the Group's results, while any impairment of investments in subsidiaries affects the Bank's results.

3.17 The Bank faces significant competition.

The Bank faces significant competition, both from Cypriot banks and foreign banks, some of which may have greater resources than the Bank. In Cyprus, competitors include other commercial banks, credit cooperatives and cooperative savings banks, as well as Greek and international banking units.

The accession of Cyprus to the European Union allowed banking institutions from across the European Union to operate in the country without obtaining a special licence from the Central Bank. This has intensified competition, especially since the introduction of the Euro in the country in 2008. Competition from foreign banks operating both within Cyprus and abroad has further increased following the bail-in of the Bank of Cyprus and Laiki Bank, which reduced customer trust in the Cypriot banking system in favor of foreign banks. The entrance of new banks in Cyprus and the increased competition faced from foreign banks has led to a more competitive landscape on deposit and lending interest rates, which has put pressure on the Bank's profit margin.

The continued volatility in financial markets may lead to mergers of financial institutions as well as increased government intervention. Any government intervention in the banking sector could affect the competitiveness of the local banks, both within a country and at an international level thus negatively affecting the competitiveness of the Group in relation to the local banks. Although last year's bail-in of the Bank of Cyprus and Laiki Bank has created an opportunity for the Bank to gain market share in certain product and service areas, the Bank may not be successful in increasing such market share. In addition, the merger of the Bank of Cyprus and Laiki Bank may result in a more competitive combined entity with the ability to take further market share away from the Bank.

Through any combination of the above factors, the Group may not be able to continue to compete successfully with domestic and international banks in the future. These competitive pressures on the Group may have a material adverse effect on the Bank’s business, financial condition and results of operations.

3.18 The Group may not achieve its targets, and its actual performance may differ materially its targets.

The Group’s management has set, and from time to time may set, performance targets in connection with achieving its strategic objectives. As set forth in this Prospectus, these relate to, amongst others, loan market share, net loan-to-deposit ratio, growth in net interest margin, cost-income ratio, CET 1 Ratio and return on equity. These targets constitute forward-looking information that is subject to considerable uncertainty. These targets are internal objectives against which the Group measures its operational performance, and they should not be regarded as forecasts or expected results or otherwise as a representation by the Group or any other person that these objectives will be achieved in any time period or by any particular date. The Group’s ability to achieve these targets is subject to a number of

PROSPECTUS assumptions and uncertainties, including the Group’s success in executing its strategy as described under “Part V, Paragraph 11” and other factors, including without limitation:

• macroeconomic conditions in Cyprus, the Eurozone, the European Union, and other jurisdictions;

• the Group’s ability to compete successfully;

• regulation affecting the banking sector;

• trends in the non-performing loans and regulatory capital; and

• the ability of the Bank to fund its operations through deposits and other sources.

The Group’s actual business, results of operations and financial condition, the development of the banking industry in Cyprus and the macroeconomic environment in which the Group operates are subject to significant uncertainty and may differ materially from the Group’s expectations. As a result, the Group’s ability to achieve its financial and strategic objectives is subject to such uncertainties and contingencies, many of which are beyond the Group’s control. As a result, the Group may not achieve these targets over a particular period of time or at all, or the Group may change or adopt new targets. As a result of any or all of these factors, the Group’s actual financial condition and results of operations may differ materially from the targets that the management has set and included in this Prospectus. See also information regarding forward-looking statements provided in this Prospectus (see page 4 regarding forward looking statements).

3.19 The Group may be unable to meet its strategic objectives.

The Group’s business strategy is based on a series of projections and estimates relating to the occurrence of future events, which may or may not take place, and includes operational and organisational initiatives and decisions that its management will undertake during the period covered by its business plan. For example, the Bank plans to grow customer numbers and its loan book and increase banking income through loan growth, margin expansion (at the extent permitted by the prevailing law) and recovery of fee income.

The Group’s ability to implement its strategy successfully is dependent upon a number of business, economic and competitive uncertainties and other factors that are outside of its control, and such strategy is based upon a number of assumptions that may prove to be inaccurate. The Group cannot provide assurance that the assumptions underlying the business strategy are correct, and any inaccurate assumption may result in variations of the strategy that may limit the ability of the Group to achieve the envisaged goals. In addition, the Group is unable to provide any assurance that: (a) its actions will generate the expected positive economic results; (b) the business strategy can be successfully implemented by Group management; and (c) the Group will be able to achieve the targets set out in its strategy within the expected time frame.

If the Group’s results differ significantly from those expected based on the strategies and business plan, or if the Group’s assumptions are incorrect or differ significantly from actual realized outcomes, this could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects. Accordingly, the successful implementation of the Group’s strategy is subject to numerous factors, many of which are beyond the control of the Group, such that the Group’s strategy should not be relied upon in any way by any investor in making an investment decision with respect to the Shares.

PROSPECTUS

3.20 The Group may be unable to successfully manage employee and union relations or maintain optimal employee levels.

Labor relations and employment benefits are determined by the negotiation of Collective Agreements, which are signed between the Cyprus Bankers Employers' Association (in which the Group is a member) and the Union of Cyprus Bank Employees (in which almost all of the Group's employees are members). In March 2014, a Collective Agreement between the two parties was signed for the period 2014-2016, with two issues relating to the adjustments of the staff loan interest rates and staff working hours still under negotiation. There can be no assurance that the renewal terms of this Collective Agreement will be favorable to the Group. Although there have been no material labor disputes in the Cypriot banking sector since the bail-in events of 2013, any prolonged labor unrest in the future could have a significant adverse impact on the Group's activities.

In addition, the Group’s Chief Executive Officer resigned in 2014 and the current Chief Executive Officer is serving on an interim basis. There may be difficulties in hiring a qualified permanent Chief Executive Officer, or there may be transition difficulties or other inefficiencies generally. In addition, the Group makes efforts to increase profitability through more efficient operations and reductions of expenses. For some categories of expenditure, including staff costs, the Group may also face constraints or difficulties arising from legislative issues, collective agreements and other limitations or as a result of consultations with trade unions.

The capabilities and experience of the staff of the Group, its managers and its experienced and skilled officers and employees significantly affects the Group's success. The Group’s competitive position depends, in part, on the ability of the Group to continue to attract, retain and motivate qualified and experienced banking and management personnel. Until now, the Group has been capable of this, but there can be no assurance that it will continue to do so in the future which could have a material adverse effect on the Bank’s business and results of operations.

3.21 The Group is exposed to operational risk.

Operational risks arise from a wide range of factors relating to internal procedures, personnel and technology and infrastructure as well as from external factors. External events include natural disasters such as floods, fires, earthquakes, riots or terrorist attacks and fraud by outsiders. Legal risks are also considered operational. For example, the Group is also subject to rules and regulations related to money laundering and terrorism financing. See “Part II, Paragraph 3.22 - The Group is exposed to the risk of fraud or other illegal activity, including money laundering” below.

Any significant failure or weakness of the internal control systems and the procedures of the Group, or the Group’s physical and technological infrastructure, could materially and adversely affect its activities, financial position, results and prospects.

3.22 The Group is exposed to the risk of fraud or other illegal activity, including money laundering.

As with all financial institutions, the Group is exposed to the risks of fraud and other illegal activities, which could have a material adverse effect on its business, financial condition, results of operations or prospects. The measures adopted by the Group for managing these risks, including the use of certain tracking technologies and enhanced due diligence, may not be able to protect it from all cases of fraud.

The Group is subject to certain rules and regulations relating to money laundering and terrorist financing. A significant portion of the Group’s deposits depend on the International Banking Division, which includes significant numbers of customers in Russia and, to a lesser extent, Ukraine. The Group has adopted policies and procedures against money laundering and terrorist financing to ensure compliance with applicable legislation and regulatory guidelines, and has trained staff in how to deal

PROSPECTUS with money laundering issues including the adoption of the “know your client” policies and procedures and the careful monitoring of transactions. These policies and procedures may not be effective or may not be sufficient to detect or prevent all instances of fraud or other illegal activity. Efforts to comply with applicable regulations and requirements also entail significant cost and effort for the Group and the Group may not be able to implement adequate anti-money laundering procedures in a timely or effective manner.

Failure to comply with applicable standards and regulations, or to implement effective procedures, may have a material adverse effect on the Group, including disrupting relations between the Bank and its correspondent and counterparty banks, especially in the United States, as well as damage to the Group’s reputation locally and globally. Such developments could materially and adversely impact the Group’s ability to effect payment and transact business in currencies other than the Euro, which could have a material adverse effect on its business and financial position.

The Central Bank recently commenced a series of on-site inspections at Cypriot banks to review their compliance with the provisions of the Directive on the Prevention of Money Laundering and Terrorist Financing, issued in December 2013. In addition, the MoU includes a plan of action against money laundering. The Central Bank recently commenced its scheduled review of the Bank, although results have not been released to the Bank as at the date of this Prospectus. As a result of this or any other review (including other supervisory authorities), there is a risk of imposition of financial or other sanctions or publication of the findings in relation to the Bank, which could have a material adverse effect on the Group’s reputation.

3.23 The value of certain financial instruments recorded at fair value is determined using financial models incorporating assumptions, judgments and estimates that may change over time or may not be accurate.

The Group measures the fair value of an instrument by using the values listed in an active market for that instrument, if such values are available. A market is considered to be active if values are readily available and represent real and regular transactions on a purely commercial basis. If the market for a financial instrument is not active, the Group determines the fair value by using a valuation technique.

Valuation techniques include the utilisation of recent transactions on a purely commercial basis between two counterparties, acting on their own will, and with a full understanding of market conditions, reference to the current fair value of an essentially similar instrument and the discounted cash flows method. The selected valuation technique uses market data to the full extent possible, incorporates factors that market participants would take into account for the derivation of a value, and follows generally accepted financial practices for the valuation of financial instruments. The data used in valuation techniques represent market expectations and the weights of the risk-return factors that are incorporated in the financial instrument.

However, valuation models are complex and the assumptions, judgments and estimations made by the Group often are subject to significant uncertainty, such as future cash flows. Such assumptions, judgments and estimations might need to be updated so as to incorporate changes in prevailing conditions and trends. The changes that may arise in the fair values of financial instruments may have a significant negative effect on the Group’s results and on its financial performance. In the future, the valuation techniques of financial instruments may change so as to reflect the prevailing market conditions, and this could have a material adverse effect on the Group’s business, financial condition and results of operations.

PROSPECTUS

3.24 Volatility in interest rates and interest rate risk may negatively affect the Group’s income and have other adverse consequences.

Interest rates are particularly sensitive to factors that are beyond the control of the Bank, including monetary policy and domestic and international financial and political events and circumstances. As a result, there is the risk of future events affecting the factors that determine interest rates. Interest rate risk is the Group’s risk of having a diminished fair value of future cash flows due to adverse changes in market interest rates. The risk arises from the mismatch of the adjustment of interest rates on assets and liabilities.

In recent years, a significant risk has been the “base” interest rate risk, with deposit interest rates being pushed upwards from time to time (due to the lack of liquidity in the economy), whilst two lending “base” interest rates (the interest rate of the ECB and Euribor) have been reduced through the intervention of the ECB due to the continuing Eurozone crisis. This has led to the contraction of interest rate margins and, consequently, has adversely impacted the net interest income of the Group.

An increase in interest rates might result in an increase in non-performing loans and provisions, a reduction in the demand for new loans or a reduction in the Group’s capacity to provide new loans. In addition, any rise in interest rates could lead to higher financing costs for the Bank, negatively affecting the Group’s net interest income. Any of these factors could have a material adverse effect on the Group's operations, financial position and financial results from operations.

Competitive and political pressures, and the existence of fixed interest rates on existing loans or receivables, might limit the Group’s ability to increase interest rates in case of an increase in deposit interest rates in the market, which would reduce the Group’s net interest margin and, accordingly, have a material adverse effect on the Group's operations, financial position and financial results from operations.

3.25 The Group is exposed to foreign exchange risk.

Foreign exchange risk relates to the risk that the value of financial instruments, assets and liabilities will fluctuate due to changes in foreign exchange rates. Foreign exchange risk arises from an open long or short position in a foreign currency, which creates an exposure to the fluctuations of the relevant exchange rates. This may be caused by obtaining assets in one currency which are being financed by liabilities in a different currency, or by agreements for the on demand or on notice delivery of foreign exchange, or even by derivatives in foreign currency, including forwards and options.

The Group seeks to maintain low open positions in foreign currencies. Nevertheless, an exit of Cyprus from the Eurozone could result in large foreign exchange rate positions, which would in turn have a material adverse effect on the Group’s profitability.

Additionally, any significant devaluation of the Euro against other currencies in which loans have been given to customers may lead to an increase of the loan portfolio of the Bank and increased risk weighted assets with a negative impact on capital ratios.

3.26 The Group’s hedging strategies may not prevent losses.

The Group’s risk hedging strategies might not be effective and as a result losses might not be prevented. It is possible that within the range of financial products and strategies used by the Group in order to hedge against the risk to which it is exposed, some of the products and strategies may prove to be ineffective and/or loss making. Hedging might either be just partial, or the strategies used might not be able to protect against all possible future risks, or they might not be fully effective in reducing the Bank’s exposures or in protecting against every risk that may arise in the future. Given the financial

PROSPECTUS risks faced by the Bank, ineffective hedging could adversely impact the Bank's financial position and results from operations.

3.27 Transactions in the Bank’s own portfolio involve risks.

The Bank carries out various proprietary activities, including the placement of deposits mostly denominated in currencies other than the Euro in the interbank market, as well as investments on government securities and other bonds in primary and secondary markets. Transacting for its own account carries risks, as results depend partly on market conditions. Moreover, the Bank relies on a range of reporting and internal management tools in order to be able to report its exposure to such transactions correctly and in due time. Future results arising from trading on account of its own portfolio will depend partly on market conditions, and the Bank may incur significant losses which could have a material adverse effect on the Bank’s business, financial condition, results of operations and prospects.

3.28 The Group is exposed to insurance and reinsurance risks through its insurance businesses.

The Group’s insurance business, as operated through its subsidiaries Pancyprian Insurance and Hellenic Alico Life, is subject to insurance risks.

For example, risks arise from the possibility that premiums and premium claim reserves are insufficient to meet future requirements due to factors such as greater than expected variability in frequency, severity and size of the risk. Depending on the insurance product, this risk is influenced by macroeconomic changes, changes in customer behaviour, changes in public health, pandemics and catastrophic events such as earthquakes, industrial disasters, fires, riots or terrorism. For Pancyprian Insurance, the main risk in relation to natural disasters is earthquakes. For Hellenic Alico Life, the insurance risk (for example, disease outbreak) is compounded by the limited geographical area of Cyprus and the lack of control over the north part of Cyprus, which is occupied by Turkey.

Hellenic Alico Life is also exposed to the risk that its clients consist exclusively of clients of the Bank. Hellenic Alico Life also depends on the minority shareholder MetLife Alico for actuarial matters, insurance claims processing and management of insurance electronic systems, and any failure to provide such support, or unanticipated termination of the Group’s relationship with MetLife Alico, could have a material adverse effect on the business and results of operations of Hellenic Alico Life.

The Group’s insurance operations are also required to comply with the requirements of Solvency II, which may entail additional costs.

3.29 Business disruption, system failure and information security risks

The Group’s operations depend to a significant extent on the secure processing, storage and transmission of confidential and other information as well as the management of a large number of complex transactions on a minute-by-minute basis. The Group maintains an extensive amount of client information and is required to maintain and provide accurate records of transactions. These activities have been, and will continue to be, subject to an increasing risk of cyber attacks.

The Group’s computer systems (including its software and networks) and internet banking platform are vulnerable (due to their nature) to unauthorized access, viruses or other malicious code, cyber attacks and other unexpected events that can disrupt their normal operations. Moreover, there is a risk of loss or destruction of data (including confidential client information) which is stored in information systems as well as account takeovers, resulting in their unauthorised operation. These threats may derive from human error, fraud or malice on the part of employees or third parties, or from a technological failure.

PROSPECTUS

In addition, third parties with which the Group does business may also be sources of cyber attacks or other technological risks. Although the Group adopts a range of measures that seek to reduce the exposure resulting from outsourcing, such as not allowing third-party access to the production systems and operating a highly controlled IT environment, unauthorized access, loss or destruction of data or other cyber incidents could occur. Any material security breaches of the information systems of the Group could have a material adverse effect on the Group’s business, financial condition and results of operations.

3.30 The Bank’s data are subject to incompleteness, improper recording and human error.

The quality of the Bank’s data is largely dependent on the quality and completeness of the data provided to the Bank by clients and others. Much of the verification, recording and maintenance is conducted through manual processes, resulting in the potential for human error. While in recent years the Group has sought to improve its procedures, including through improved controls and updated procedures, there can be no assurance that these measures will be sufficient to ensure the accuracy and completeness of data or to prevent error. In particular, the volume, nature, complexity, increasing reporting requirements and human fallibility create risks that may result in the slower than needed availability of some reports or inaccuracies that may adversely affect the Group.

4. RISKS RELATING TO LAW AND REGULATION

4.1 The Group is exposed to legal risk, including increasing legal claims.

The Group is exposed to various forms of legal risk due to the extent and complexity of its operations, the complexity and the wide range of its regulatory obligations. Although historically the Group has not experienced significant claim or litigation activity, the current business environment following the financial crisis has caused customers and associates to be move likely to pursue their interests in court. Courts and supervisory authorities may also impose fines or penalties in the Group if it is found to have failed to comply with applicable laws and regulations, which could have a material adverse effect on the operations, financial condition and results of the Bank.

Judicial and regulatory decisions that are unfavourable to other banks or related parties may also have implications for the Group, even in cases in which the Group is not a part of the proceedings. This could occur in cases where the contractual practices or clauses in question are also used by the Group and are interpreted against the relevant banking institution. For example, decisions that have an impact on formulations in general terms and conditions or schedules for repayment of loans could affect the whole sector. This could also be the case in a decision that depends on the special circumstances of an individual case, where its result is used by third parties against the Group. As a result, the Group may be required to change its practices or to pay compensation to limit damage to its reputation. Accordingly, these judicial and regulatory decisions may have a material adverse impact on the financial condition or operating results of the Group.

4.2 Regulatory action in the event of a bank failure could materially adversely affect the Group and the value of securities issued by the Bank.

The Consolidation of Credit and Other Institutions Law (Law 17 (I) / 2013, as amended), pursuant to the provisions of which the rules and methods of implementing reorganisation measures to financial institutions facing viability problems were established. This law sets out five resolution measures which can be adopted by the relevant resolution authority (the “Resolution Authority”), either in isolation or together when a bank becomes or may become non-viable. These measures include increasing the share capital from private sources, selling operations, transferring assets, rights or liabilities to a bridge bank, transferring assets and rights in an asset management company, and rescuing with its own resources (bail-in).

PROSPECTUS

In the implementation of the bail-in measure, the Resolution Authority, has, amongst others, the power to (a) write down or convert debt and obligations of the institution under resolution into shares or other title deeds of the institution; (b) reduce, including the reduction to zero, the value of or the outstanding amount due in respect of debts and obligations of the institution under resolution; (c) cancel securities issued by an institution under resolution; (d) demand the conversion of debt instruments or other instruments which contain a contractual conversion clause, notwithstanding the provisions based on which contractual conversion clauses may be activated; (e) demand from an institution under resolution to issue new shares, or other securities, including preference shares and contingent convertible instruments, which will be offered to affected by the implementation of bail-in measure parties, (f) amend or modify the maturity of debt instruments issued by the institution under resolution or to amend the amount of payable interest under such instruments, as well as the suspension of their payment for a temporary period of time.

In March 2013, both the Bank of Cyprus and Laiki Bank were placed under resolution by the Resolution Authority. Both banks’ shareholders and unsecured creditors suffered losses as a result of these resolution measures. Should the Resolution Authority determine that the Bank is required to be placed under resolution in the future, any such measures would have a material adverse impact on the Bank, including its shareholders and unsecured creditors.

4.3 The Group’s business and operations are subject to substantial regulation and supervision and can be negatively affected by its non-compliance with certain existing regulatory requirements and any adverse regulatory and governmental developments.

The Group conducts its businesses subject to ongoing regulation and associated regulatory risks, including the effects of changes in the laws, regulations, policies, voluntary codes of practice and interpretations. As a result of the economic crisis in Cyprus and the Eurozone more generally, regulatory requirements have changed and are subject to frequent amendment, particularly regulations governing financial institutions. As a result of the global economic crisis, national governments, as well as transnational groups such as the European Union, have begun to implement significant changes to the existing regulatory frameworks, including those relating to capital adequacy and liquidity. Future changes in regulation, fiscal or other policies are unpredictable and beyond the control of the Group and could materially adversely affect the Group’s business, financial condition and results of operations. In addition, the Cyprus government is conducting investigations into developments during 2013, which could result in additional requirements affecting the legal and regulatory environment for the banking industry in Cyprus.

4.3.1 Law and Regulation in Cyprus

In particular, the Central Bank has recently issued, at the end of 2013 and in 2014, a number of new requirements and processes in terms of its management of non-performing loans. See also “Part II, Paragraph 4.4 - The Bank is subject to certain regulatory and legal constraints in originating new loans, managing existing loans and foreclosing on collateral” below. One of these new directives is the consolidated Directives on Arrears Management of 2013 and 2014 (the “Arrears Management Directive”) and, as at the date of this Prospectus, the Bank is still in the process of implementing the requirements of the Arrears Management Directive. There can be no assurance that the Bank will implement effective procedures in compliance with these or other new regulations.

In addition, during the first quarter of 2013, a comprehensive review was commissioned by the Cypriot government and the Troika of the effectiveness of Cyprus’s anti-money laundering regime (the “AML Review”). Further, in accordance with the AML action plan on customer due diligence and entity transparency as set out in the MoU, the Central Bank has recently commenced its onsite inspections of banks in Cyprus to test for compliance with the provisions of its Directive on the Prevention of Money Laundering and Terrorism Financing issued in December 2013. There is a risk that financial or other penalties could be imposed on, or published in relation to, the Bank as a result of this audit or the AML

PROSPECTUS

Review. The Central Bank is also expected to issue a new governance code for Cypriot banks in the near future which may require the Bank to make additional changes to its existing governance structure and operations.

The Bank is subject to supervision by the Central Bank regarding, among other things, capital adequacy, liquidity and solvency. For example, the Central Bank has the discretion to determine the risk weights for the asset classes that are secured by real estate, which can significantly increase capital needs. Certain of the Group’s subsidiaries and operations are subject to the supervision of other local supervisory authorities. Increased regulatory intervention may lead to requests from regulators to carry out wide-ranging reviews of past sales or sales practices. The Group is unable to predict what regulatory changes may be imposed in the future as a result of regulatory initiatives in the European Union and elsewhere or by the Central Bank and other supervisory authorities. If the Group is required to make additional provisions or to increase its reserves as a result of potential regulatory changes, this could adversely affect the results of operations of the Group. In addition, failure by the Group to comply with regulatory requirements could result in significant penalties. For more detail on these regulatory liquidity requirements, see “Part VII”.

In addition, there is a risk of loss of earnings as a result of the enactment of the Liberalization Law, which has been in effect since 9 September 2014 and bars financial institutions from unilaterally changing the interest spread on loans. Furthermore, since the enactment of this law, the excess fee cannot exceed 2% on all credit facility contracts in force. This development may create a “base” rate risk. Insolvency laws applying to both natural and legal persons are expected to be voted on by end of 2014. However, there is still uncertainty about the exact provisions of the laws and therefore the real impact of the new framework cannot be calculated. If the current economic crisis persists or worsens, bankruptcies could intensify, or applicable bankruptcy protection laws and regulations may change to limit the impact of the recession on corporate and retail borrowers. Such changes may have an adverse effect on the Group’s business, results of operations and financial condition.

4.3.2 Law and Regulation in the European Union

The Group is also subject to European Union regulations with direct applicability and to European Union directives which are adopted by the European Economic Area Member States and implemented through local laws. More specifically, institutional changes that are stipulated at the European Union level with regards to the regulatory framework for banks, the application of provisions of existing directives, regulations, laws, special taxes on banking transactions, anti-money laundering legislation and the harmonisation of corporation tax, might affect the Group’s financial results, create needs to raise additional capital (especially Tier I capital), or lead to changes in the Bank’s dividend policy.

For example, on 16 August 2012, the European Market Infrastructure Regulation (Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012) (“EMIR”) came into force. EMIR introduces certain requirements in respect of derivative contracts, which will apply primarily to financial counterparties, such as investment firms, credit institutions and insurance companies. Broadly, EMIR’s requirements in respect of derivative contracts, as they apply to financial counterparties, are (i) mandatory clearing of over-the-counter (“OTC”) derivative contracts declared subject to the clearing obligation through an authorised or recognised central counterparty; (ii) risk mitigation techniques in respect of uncleared OTC derivative contracts; and (iii) reporting and record- keeping requirements in respect of all derivative contracts. Accordingly, the introduction of EMIR is likely to increase the costs of transacting OTC derivative contracts for the Group. In addition, a new European Union Directive replacing Directive 2004/39 on markets in financial instruments (as supplemented by Directive 2006/73 and Commission Regulation 1287/2006) (MiFID and, the replacing directive, MiFID II) and a new Regulation also replacing MiFID (MiFIR) could also require the implementation of additional compliance and other processes which could result in increased costs for the Group. MiFID II and MiFIR will also need to be supplemented by delegated acts and technical

PROSPECTUS standards and, therefore, the scope of the final regulations and their impact on the Group remains unclear.

The Recovery Resolution Directive ("RRD"), agreed between the Council of the European Union, the European Parliament and the European Commission was approved on 15 April 2014 (by the European Parliament) and 6 May 2014 (by the European Commission) and entered into force on the 12 June 2014. The aim of the RRD is to provide supervisory authorities, including the relevant Cypriot resolution authority, with common tools and powers to address banking crises pre-emptively.

Going forward, the RRD is also likely to have an impact on how large a capital buffer a bank will need, in addition to those set out in the CRR and CRD IV. To ensure that banks always have sufficient loss- absorbing capacity, the RRD provides for national resolution authorities to set minimum requirements for own funds and eligible liabilities for each institution, based on, amongst other criteria, its size, risk and business model. The national resolution authorities will also have powers to request changes in the structure and operations of financial institutions, if such changes are deemed necessary, in order to ensure these institutions are resolvable, in case they become non-viable. The powers granted to supervisory authorities under the RRD include (but are not limited to) the introduction of a statutory “write-down and conversion power” and a “bail-in” power, which, if implemented into Cypriot law as currently envisaged, should give the relevant Cypriot resolution authority the power to cancel all or a portion of the principal amount of, or interest on, certain unsecured liabilities of a failing financial institution or to convert certain debt claims into another security, including Ordinary Shares of the surviving entity, if any (see “Part IX, Paragraph 3”).

There can be no assurance that the application of changing laws and regulations will not negatively affect the ability of the Bank to pay dividends, or that it will not lead to the need of the issuance of additional capital, force the bank to sell assets, limit the Bank’s activities or result to further actions which may negatively influence the Bank’s activities, its financial standing and the results of its operations. Furthermore, an increase of the Bank’s capital requirements could adversely and materially affect its performance and other performance indicators.

4.4 The Bank is subject to certain regulatory and legal constraints in originating new loans, managing existing loans and foreclosing on collateral.

As part of its restructuring of the financial sector of Cyprus, the Central Bank recently issued, at the end of 2013 and in the first quarter of 2014:

 The Loan Origination and Review of Existing Loans Directive which, amongst other things, has significantly increased the amount of data required from both borrowers and guarantors in relation to their financial history regardless of the loan amount, leading to delays in the origination, review and restructuring of facilities.

 The Arrears Management Directive which, amongst other things, sets out a code of conduct (including an appeals process) for dealing with borrowers facing financial difficulties and sets the parameters for cooperation between banks in relation to borrowers who have borrowed from multiple banks.

For more detail on these directives, see “Part IX, Paragraph 3”.

These directives impose significant additional burdensome requirements on the loan origination processes of banks in Cyprus, which discourages both lenders and borrowers.

Where the Bank seeks to foreclose on collateral securing its loans, the legal system in Cyprus is less favourable to lenders with respect to foreclosure than in many other jurisdictions, making foreclosure more lengthy and costly.

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4.5 The Group is exposed to tax risk and failure to manage such risk may have an adverse impact on the Group.

Tax risk is the risk associated with changes in taxation rates or law, or misinterpretation of the law. This could result in an increase in tax charges or the creation of additional tax liabilities. Failure to manage the risks associated with changes in the taxation rates or law, or misinterpretation of the law, could materially and adversely affect the Group’s business, financial condition and results of operations.

In line with the MoU, the Cypriot government has amended Cyprus’ tax legislation in order to increase its tax revenues. These amendments include an increase of the corporate tax rate from 10% to 12,5%, the immovable property tax rates as at 1 January 2013 and the imposition of a special levy paid by credit institutions at 0,15% on deposits. Amendments to the MoU are negotiated and agreed between the Cypriot government and the Troika from time to time and, accordingly, there is a risk that further additional taxes could be imposed which may have a material adverse effect on the Group’s business, financial condition and results of operations.

In addition, the Group recognises deferred tax assets in respect of tax losses, calculated in accordance with the Cypriot income tax law, to the extent that it is probable that future taxable profits will be available against which the losses can be utilised. On 30 September 2014, the Group recognised €37,0 million in deferred tax assets from the total amount of €55,0 deferred tax assets the Group is entitled to. The estimation of the amount of the deferred tax asset depends on the timing and level of future taxable profits, along with future tax-planning strategies. These variables have been determined based on significant management estimations and assumptions and are subject to uncertainty. It is possible that actual future conditions will be different from the assumptions used, resulting in a material adjustment to the accounting value of deferred tax assets. If the levels of deferred tax assets are reduced in the future, the Group’s assets as well as its regulatory capital may decline, thereby creating further shortfalls of capital.

The Collection of Taxes Law Act 2014 (Law 80(Ι)/2014 as amended), passed on 20 June 2014, sets forth the basis on which amounts due in relation to income tax, special defence contribution, capital gains tax, immovable property tax, special contributions for employees, retirees and self-employed in the private sector or the public service and the wider public sector, as well as stamp duty, may potentially be set off against deposits and/or have priority over pledged deposits used as collateral for loans. This new law may reduce the level of collateral available to the Group necessitate the readjustment of collateral and result in an increase in provisions.

Moreover, changes in law to address tax compliance issues such as compliance with the U.S. Foreign Account Tax Compliance Act (“FATCA”) may increase the Group’s compliance costs.

4.6 Additional taxes and levies may be imposed on the Bank and its subsidiaries.

Additional taxes and levies may be imposed on the Bank and its subsidiaries as a result of the enactment of new or the revision of existing tax legislation. This may also result in increased taxation on income distributed by or received by the Bank and its subsidiaries in the form of dividends and interest.

No assurances may be given in respect of any new laws or revisions to the existing legislation that may be enacted after the date of this Prospectus. Additionally, no assurances may be given that any new laws or revisions to existing legislation that may be enacted may not negatively affect the ability of the Bank and of its subsidiaries to fulfil their obligations.

Current and proposed legislation that may result in the imposition of additional taxes and levies on the Bank and its subsidiaries includes The Income Tax Law, The Special Contribution on the Defence of

PROSPECTUS the Republic Law, The Special Levy on Credit Institutions Law, The Immovable Property Tax Law, The Capital Gains Tax Law, The Stamp Duty Law, The Assessment and Collection of Taxes Law, The Collection of Taxes Law.

The following factors should additionally be taken in to consideration:

 Deemed Dividend Distribution . A Cyprus Tax Resident Company (as defined under the Cyprus tax legislation) which does not distribute its after tax accounting profits within a period of two years from the year to which these profits refer is, at the end of the second year, deemed to distribute 70% of these profits. The company is obliged to remit to the tax authorities the defence contribution which relates to these profits at the rate provided by relevant provisions of the Special Contribution for the Defence of the Republic Law in force at the time (2014-17%), on account of its shareholders. This provision of the law applies only to the part of the profits relating to the Cyprus tax resident shareholders (individuals and corporations). However, even though it does not apply to the profits relating to the non-tax resident shareholders, in cases where the defence contribution on deemed distribution has been paid and at the time of distribution of these profits the percentage of non-tax resident shareholders increases, (compared to the corresponding percentage at the end of the second year following the year to which the profits refer), the dividend distributable to non-tax resident shareholders may be paid after withholding of defence contribution. The defence contribution withheld may be refunded following an application to the Cyprus Tax Commissioner.

 Establishment and Operation of a Deposits Protection Fund and Resolution of Credit and Other Institutions and Related Matters Law : In accordance with the provisions of this law, the administrative committee formed may impose on financial institutions exceptional contributions in excess of the those already provided by the Special Levy on Credit Institutions Law and of the amounts already paid under the Deposits Protection Scheme.

 Foreign Accounts Tax Compliance Act - FATCA (U.S): The Cyprus tax authorities have entered in to negotiations with the relevant U.S. authorities for the conclusion of a bilateral agreement between the two countries with a view to combatting tax evasion through the exchange of information. According to this agreement, when ratified and entered into force, financial institutions will be obliged to disclose to the U.S. tax authorities, through the Cyprus tax authorities, information on U.S. tax residents who maintain accounts or a financial relationship with these financial institutions.

 Council Directive on the Administrative Cooperation in the Field of Taxation 2011/16/EU. The Council of the European Union has proposed an amendment to the Directive. With this amendment a new provision will be introduced that will oblige each Member State to automatically exchange information in respect of tax periods commencing from 1 January 2014, with other Member States, concerning items which are paid, held or secured by a financial institution for the direct or indirect benefit of a beneficial owner who is a natural person resident in any of the other Member States. The items concerned are the following:: dividends; capital gains; any other income generated with respect to assets held in a financial account; any amount in respect of which the financial institution is the obligor or debtor, including any redemption payments; and account balances.

It is also proposed that, the European Commission and the European Council shall assess the further strengthening of the efficiency and functioning of the automatic exchange of information and the raising of the standard thereof, aiming at implementation of the following amendments by 2017:

o The competent authority of each Member State shall, by automatic exchange, communicate to the competent authority of any other Member State information

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regarding taxable periods as from 1 January 2017 concerning individuals resident in that other Member State, on all categories of income and capital listed in existing paragraph 1 of article 8 of the directive as they are to be understood under the national legislation of the Member State communicating the information;

o The lists of categories and items laid down in existing paragraph 1 and 3a of the directive, is to be extended to include other categories and items, including royalties.

Member States are required to amend their national legislation and regulations by 31 December 2014 so as to comply with the provisions of the directive, as amended, and apply those provisions from 1 January 2015 onwards.

The introduction of new taxes, contributions or levies may have an adverse effect on the business activities, financial position and the results of the Group.

5. RISKS RELATING TO THE MARKETS

5.1 The CSE is less liquid and more volatile than other stock exchanges.

The Ordinary Shares of the Bank are only traded on the CSE. The CSE is characterised by a low liquidity and marketability in relation to other major stock markets. Consequently, shareholders of the Bank may face difficulties in disposing their shares, especially in large blocks. In such a case, the market price of the Bank’s shares may be adversely and materially affected by sales of considerable amounts of its shares or by the perception that such sales might occur. The market prices of shares listed on the CSE have experienced substantial fluctuations in the past. This might affect the market price and the liquidity of the shares of companies listed on the CSE in the future, including those of the Bank.

On 31 December 2013, the market value of all equity securities listed on the CSE amounted to €2.241,8 million, while on 30 September 2014, it amounted to €2.457,2 million. The market value of the Ordinary Shares of the Bank listed on the CSE on 31 December 2013 and 30 September 2014 amounted to €228,5 million and €281,1 million, constituting 10,2% and 11,4% respectively of the total market capitalisation of all companies listed on the CSE. There can be no assurance regarding the future marketability of the securities of the Bank in the stock market.

5.2 The share price of the Bank may be subject to significant fluctuation.

The market price of the Bank’s shares may be subject to significant fluctuations as a result of various factors, many of which are beyond the control of the Bank. These factors include the following:

 Fluctuations in the financial results of the Group or the Group’s peers;

 Economic conditions in Cyprus;

 An anticipated or actual sale of large blocks of the Bank’s Ordinary Shares in the market;

 Changes in the estimates by financial analysts or a failure to meet the analysts’ expectations;

 Changes in the Bank’s credit ratings by the credit rating agencies;

 Allegations made or criminal proceedings against the current or former members of the Board of Directors or of the senior management of the Bank;

 Political instability or military conflict in Cyprus or abroad;

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 Financial and monetary developments in Cyprus, the European Union and internationally;

 The overall state of the securities markets in Cyprus and internationally; and

 The potential conversion (voluntary or mandatory) of CCS 1 and CCS 2 into shares.

Generally, investing in stocks is risky and may result in damage or lead to a reduction or loss of the capital invested.

5.3 Exchange rate fluctuations could have a significant impact on the value of the Bank’s shares for investors coming from countries that have not adopted the Euro as their currency.

The market price of the Bank’s shares traded on the CSE is denominated in Euro. Fluctuations in the exchange rate between the Euro and other currencies may affect the value of the Bank’s shares in the local currency of investors in other countries that have not adopted the Euro as their currency. Additionally, any cash dividends on the Bank’s Ordinary Shares are paid in Euro and, therefore, are subject to exchange rate fluctuations when converted to an investor’s local currency.

6. RISKS RELATING TO THE ISSUE

6.1 The size of the Issue may not be sufficient for the Bank’s capital requirements.

If less than all of the Subscription Rights issued in the rights issue are exercised to subscribe for New Shares, and if less than all of the New Shares that correspond to unexercised Subscription Rights are allotted to placees, the amount of proceeds raised by the Bank in the rights issue will be less than the maximum amount of proceeds that the Bank seeks to raise. In such a case, the Bank may not be successful in raising in the rights issue an amount sufficient to meet the Bank's capital requirements as prescribed by the results of the CA conducted by the ECB, and such shortfall could be material. Upon issuance of the New Shares to subscribers thereof, investors will not have any right to revoke or withdraw their subscriptions, even in the event that the proceeds from the rights issue are insufficient to meet the Bank's regulatory capital requirements.

Even if the Bank is successful in raising the amount of capital it seeks to raise as a result of the Issue, there can be no assurance that the amount raised will be sufficient for the Bank’s future capital requirements. Accordingly, the Bank may need to strengthen its capital position by raising funds from its shareholders or in the capital markets. If the Bank is unable to raise these funds, it may have to implement other capital enhancement measures such as further asset disposals and other deleveraging techniques or to issue additional equity.

If asset disposals or the employment of other actions are insufficient to result in the necessary improvement of its capital position, the Bank may need to seek funding in the form of state aid support, thereby increasing the likelihood that its shareholders will be subject to limitations on their rights, suffer significant dilution in their shareholding or incur significant losses in their investments.

If any of the above measures are taken, it is possible that the value of the shares held by shareholders to be reduced or have zero value and for such shares to become void or be transferred to third parties without any compensation. Additionally, there is the possibility of the sale of the business and the transfer of all or some of the assets, rights and liabilities of the Bank without the Bank's shareholders having any direct or indirect interest thereon.

6.2 Investors will suffer dilution if they do not exercise all their rights.

The Issue is designed to enable the Bank to raise capital in a manner that gives the opportunity to all shareholders to subscribe for New Shares, subject to applicable law. To the extent that an investor does

PROSPECTUS not exercise its rights, its proportionate ownership and voting interest in the Bank will, accordingly, be reduced.

6.3 Risk of dilution to existing shareholders due to possible CCS 1 and CCS 2 conversion to shares.

There is a substantial risk of dilution of the shareholders equity participation in the share capital of the Bank, due to the possibility of conversion (voluntary or mandatory) of CCS1 and CCS2 into shares. The CCS1 and CCS2 are mandatorily converted into shares according to the provisions of the prospectus dated 30 September 2013. The amount converted will be (i) the amount required for the reinstatement of the CET1 ratio of the Bank and / or the Group to 5.125% and / or 9% (for the latter, for as long as the Bank or the Group is obliged to maintain CET1 ratio equal or greater than 9%) and / or the prevailing ratio required by the Central Bank with a maximum CET1 ratio of 9% or (ii) the required amount for the Bank to be considered solvent by the Central Bank, for each case, up to the total amount of CCS1 and CCS2. The CCS1 are subject to mandatory conversion into shares pro rata before any mandatory conversion of the CCS2.

Furthermore the CCS1 and CCS2 can be converted into shares according to the provisions of the prospectus dated 30 September 2013, during the conversion periods, voluntarily at the discretion of the holders. As a result the shareholding of existing shareholders of the Bank will be significantly reduced.

Also in certain cases, the minimum conversion prices of the CCS1 and CCS2 into shares may be subject to adjustments which will result in further reduction of the shareholding (dilution).

6.4 Non-distribution of dividends.

Dividend distributions are subject to the existence of adequate reserves available for distribution, the terms of issue of the securities the Bank has issued to raise capital and restrictions on the payment of dividends taking into consideration the relevant provisions of the Companies Law, Cap. 113 and the instructions of the Central Bank. Dividend distributions are also subject to the provisions and limitations of the dividend policy of the Bank (see Part V, Paragraph 9). The Board of Directors may decide not to take action for dividend payment, for example, if reporting internal safety limits or regulatory requirements for capital adequacy have not been met.

The Bank did not pay dividends for the years 2011, 2012, 2013 and, under the prevailing circumstances, it does not currently intend to pay dividends.

6.5 Risk of non-allocation of New Shares.

By the end of the exercise period for the Subscription Rights and the exercise period for the Presubscription Right, unsubscribed New Shares could still be available.

If, despite the exercise of the Subscription Rights and the Presubscription Right stated above, such unsubscribed shares are still available, the Bank will have the right, at its discretion, to allot such unsubscribed New Shares in accordance with the procedures discussed elsewhere in this Prospectus. Nonetheless, not all available unsubscribed New Shares may be allotted and therefore not the entire capital of this issue is raised.

6.6 A trading market for the Subscription Rights may not adequately develop.

The Subscription Rights will be listed and traded on CSE. However, the Bank cannot assure investors that an active trading market for the Subscription Rights will develop or that the trading price of the Subscription Rights will not fluctuate.

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6.7 A significant fall in the share price of the Bank could negatively impact the value of the Subscription Rights.

Because the trading price of the Subscription Rights depends on the trading price of Bank’s Ordinary Shares any material fall in the Bank’s share price could negatively affect the value of the Subscription Rights.

6.8 Investors’ rights as shareholders are governed by Cypriot law, which may differ from the rights of shareholders under the laws of other countries.

The rights of the Bank’s shareholders are governed by the Bank’s Articles of Association and Companies Law, Cap. 113, regardless of the national law applicable to any shareholder. The ability of shareholders to bring claims against the Bank, its officers and directors under foreign laws and the ability of shareholders to enforce, in the Cypriot courts, judgments obtained in foreign jurisdictions which are neither members of the European Union nor party to any bilateral or multilateral conventions on the recognition and enforcement of foreign judgments to which Cyprus is a party are limited. In addition, whenever a pleading relating to the information contained in this Prospectus is submitted before a court, pursuant to the internal legislation of the relevant jurisdiction, investors may have to bear the costs of translating this Prospectus before the judicial proceedings are initiated. Under Cypriot law, shareholders may seek to invalidate resolutions of a company’s corporate bodies that breach the company’s articles of association or applicable law. Such actions could be taken, for example, in connection with resolutions adopted with respect to the payment of dividends, share capital increases or reductions and any other amendments to the articles of association or the spin-off or merger of the company.

6.9 The exercise of the Subscription Rights may not be available to shareholders in certain jurisdictions, including U.S. holders of the Ordinary Shares.

Under Companies Law, Cap. 113 and the Bank’s Articles of Association, prior to the issuance of any New Shares, holders of the Bank’s existing Ordinary Shares must be granted pre-emptive rights to subscribe and pay for a sufficient number of Ordinary Shares to maintain their existing ownership percentages. These pre-emptive rights are generally transferable during the rights trading period for the related offering and may be traded on the CSE.

Due to restrictions under the securities laws of certain countries, shareholders in those countries, including in the Excluded Territories, may not be able to exercise pre-emptive rights in any offering of New Shares by the Bank. In particular, U.S. holders of the Bank’s Ordinary Shares may not be able to trade or exercise pre-emptive rights for any such offering of New Shares. Furthermore, holders of Ordinary Shares may not be able to trade or exercise pre-emptive rights for any such offering of New Shares unless the Bank complies with various securities laws of the jurisdictions where the Ordinary Shares trade.

If holders of the Bank’s Ordinary Shares are not able to receive, trade or exercise pre-emptive rights granted in respect of their Ordinary Shares in any rights offering by the Bank then they might not receive the economic benefit of such rights. In addition, their proportional ownership interests in the Bank will be diluted.

6.10 The market price of the Ordinary Shares may be lower than the Subscription Price.

The Bank cannot assure investors that the public trading market price of the Ordinary Shares will remain equal to or higher than the Subscription Price. If a decline in the market price of the Bank’s Ordinary Shares occurs after investors irrevocably take up their rights to subscribe the New Shares, investors will suffer an immediate unrealised loss. Moreover, the Bank cannot assure investors that following the subscription of the New Shares, they will be able to sell shares at a price equal to or

PROSPECTUS greater than the Subscription Price. The market price of the Bank’s Ordinary Shares is volatile and may fluctuate for unpredictable reasons. Should the share price fall to a lower level than the Exercise Price of the of the Subscription Rights in New Shares, investors who exercised their Subscription Rights and acquired New Shares may suffer losses.

6.11 The existing capital control measures in Cyprus may restrict a shareholders’ ability to move out of Cyprus any cash proceeds from the sale of New Shares or any share dividends that could be distributed in the future.

The Ministry of Finance of Cyprus has imposed capital controls measures in Cyprus that currently restrict, amongst other things, the movement of funds outside of Cyprus (see “Part IX, Paragraph 6”). So long as these capital controls remain in place, shareholders of the Bank may be restricted in their ability to move cash proceeds from any sale of Ordinary Shares conducted in Cyprus (any movement of funds related to sales of Ordinary Shares which are conducted outside of Cyprus would not be restricted by these capital controls). In addition, although the Bank does not currently intend to distribute dividends, should the Bank be in a position to distribute dividends in the future, a shareholder of the Bank may be restricted in its ability to move them out of Cyprus if the capital control measures are still in place at that time.

6.12 Holders of the Subscription Rights are exposed to certain additional risks.

In addition to the risks faced by holders of Securities, there are certain risks that relate more directly to Subscription Rights.

First, the Subscription Rights will be traded for a short period of time on the CSE (a period of six trading sessions). As a result, there may be strong fluctuations in the trading price by the end of the trading period on the CSE or at any other time during the trading period. During this period, the trend of the international markets, the conditions prevailing on the CSE and developments or events concerning Cyprus, the economy or the Bank may directly affect the share trading price and the trading price of the Subscription Rights on the CSE.

There is also a risk of significant changes in the shareholding structure of the Bank due to the trading of the Subscription Rights on the CSE, the Presubscription Right procedure and the allotment of unsubscribed New Shares procedure. For example, during the trading of the Subscription Rights on the CSE, it is possible for an investor to buy large quantities of Subscription Rights and then exercise them, inclusive of a possible exercise of the Presubscription Right, thus obtaining a large number of New Shares of the Bank. Furthermore, there is the possibility of acquiring New Shares through the participation of investors in a procedure to be decided by the Board of Directors, at its discretion, for the allotment of New Shares which correspond to the unexercised Subscription Rights and which will not have been covered during the exercise of the Presubscription Right. In such a case, the existing shareholding structure of the Bank may vary significantly, enabling shareholders with a significant percentage of shareholding to even gain control of the Bank.

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PART III. DRAWING UP THE PROSPECTUS / PROFESSIONAL ADVISORS

1. DRAWING UP THE PROSPECTUS

This Prospectus has been drafted and distributed in accordance with the provisions of the applicable legislation. The content of this Prospectus has been approved by the Board of the CySEC only to the extent of informing investors, under the provisions of the Public Offer and Prospectus Law of 2005 of the Republic of Cyprus (as amended) and Regulation (EC) 809/2004 (as amended) of the Commission of the European Union.

This Prospectus contains all information which is required to be published by the Public Offer and Prospectus Law of 2005 of the Republic of Cyprus (as amended) and the Commission Regulation (EC) 809/2004 (as amended), and which relates to the Bank and the current issue of Subscription Rights.

Consequently, this Prospectus contains all the necessary information that will enable investors to make an evaluation of the assets, liabilities, financial position, results and prospects of the Group.

The Bank assumes full responsibility for the information included in this Prospectus and ascertains that, having taken all possible measures for this purpose, the information therein is to its best knowledge real and there are no omissions that could compromise its contents.

The Directors of the Bank are also responsible collectively and individually for the information included in this Prospectus and ascertain that, having taken all possible measures for its drafting, the information therein is to their best knowledge real and there are no omissions that could compromise its contents.

In accordance with the provisions of the Public Offer and Prospectus Law of 2005 (as amended) the Prospectus is signed by the following Directors:

Director’s Name Status Irena A. Georgiadou ...... Non-Executive Independent Chairwoman Marinos S. Yannopoulos ...... Executive Member / Chief Executive Officer David Whalen Bonanno ...... Non-Executive Independent Member Vassos Y. Komodromos ...... Non-Executive Independent Member / Senior Independent Director Ioannis A. Matsis ...... Non-Executive Independent Member Marianna Pantelidou Neophytou ...... Non-Executive Independent Member Dr. Evripides A. Polykarpou ...... Non-Executive Independent Member Georgios Fereos ...... Non-Executive Independent Member Ioannis Ch. Charilaou ...... Non-Executive Member Dr. Andreas G. Charitou ...... Non-Executive Independent Member Christodoulos A. Hadjistavris ...... Non-Executive Independent Member

Hellenic Bank (Investments) Ltd is the Underwriter responsible for drawing up the Prospectus, and also signs this Prospectus. Hellenic Bank (Investments) Ltd declares that, having taken all possible measures for this purpose, the information included in this Prospectus is to its best knowledge real and there are no omissions that could compromise its contents.

The Bank is the Underwriter responsible for the collection of the amounts due.

The consents and attestations of all the different persons/professionals who participated in the drafting of this Prospectus or are mentioned in it are set out in Part IX Paragraph 10 and include the consents

66 Part III

PROSPECTUS and attestations of Board Members, of the Underwriter responsible for drawing up the Prospectus, of the auditors of the Bank, KPMG Limited, a legal advisor of the Bank, Mr. Alecos Markides, and the Sole Global Coordinator and Joint Placement Agent Deutsche Bank A.G., London Branch and the Joint Placement Agent Axia Ventures Group Ltd.

Investors interested in additional information can contact, during working days and hours:

Shares and Bonds Service of the Bank at +357 22500649, +357 22500650 and +357 22500651;

Investor Relations Service of the Bank at +357 22500794;

The Underwriter responsible for drawing up the Prospectus at +357 22500100 and +357 22500140.

2. PROFESSIONAL ADVISORS

UNDERWRITER RESPONSIBLE FOR Hellenic Bank (Investments) Ltd DRAFTING THE PROSPECTUS 200 Corner of Limassol and Athalassas Ave. 2025 Strovolos P.O. Box 24747, 1394 Nicosia

AUDITORS KPMG Limited 14, Esperidon Street 1087 Nicosia (ICPAC registration number S069/028)

LEGAL ADVISORS Alecos Markides 1 & 1A Heroes Street, 1105 Nicosia

UNDERWRITER RESPONSIBLE FOR THE Ηellenic Bank Public Company Ltd COLLECTION OF THE AMOUNTS DUE 200 Corner of Limassol and Athalassas Ave. 2025 Strovolos P.O. Box 24747, 1394 Nicosia Tel: +357 22500000 SOLE GLOBAL COORDINATOR & Deutsche Bank A.G. JOINT PLACEMENT AGENT London Branch 1 Great Winchester Street, London, EC2N 2DB, United Kingdom JOINT PLACEMENT AGENT Axia Ventures Group Ltd G. Kranidiotis 10, Nice Day House, 6th Floor, 1065 Nicosia, Cyprus FINANCIAL ADVISOR N M Rothschild & Sons Limited New Court, St Swithin’s Lane, London EC4N 8AL United Kingdom

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PART IV. SUBSCRIPTION RIGHTS – TERMS OF THE ISSUE

1. SUBSCRIPTION RIGHTS – GENERAL TERMS OF ISSUE

ISSUER Hellenic Bank Public Company Limited

PROCEEDS (BEFORE €221.433.706 (assuming all Subscription Rights are exercised) SUBTRACTING ISSUE COSTS)

ISSUE Subscription Rights to be issued and allotted to all Beneficiaries on 19 November 2014 and which if exercised will be converted to new Ordinary Shares of the Bank.

The current issue is not being offered to any shareholder in the Excluded Territories, except as may be permitted by applicable law.

RATIO OF ISSUE OF One (1) Subscription Right for every one (1) fully paid Ordinary SUBSCRIPTION RIGHTS Share held by the shareholder at the Record Date i.e. on 19 November 2014.

EXERCISE PRICE OF €0,0375 per New Share SUBSCRIPTION RIGHTS/PRICE OF NEW ORDINARY SHARES

NOMINAL SHARE VALUE €0,01

ISSUED SHARE CAPITAL €39.365.992,11 divided into 3.936.599.211 shares of nominal value

68 Part IV

PROSPECTUS

PRIOR TO THE CURRENT €0,01 each. ISSUE

NUMBER OF 3.936.599.211 SUBSCRIPTION RIGHTS TO BE ISSUED

RANKING OF THE NEW All New Shares will rank pari passu with existing issued shares. ORDINARY SHARES

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Right. The Board of Directors of the Bank will allot, at its discretion, such New Shares, in Cyprus and abroad, through a procedure it will determine, at a price of at least equal to the Exercise Price, i.e., €0,0375 per New Share, provided that the allotment of such New Shares does not result in such investor holding equal or in excess of 30,0% of the issued share capital of the Bank upon completion of the Issue. The procedure of allotment and distribution of such New Shares will not constitute a public offer under the provisions of the applicable securities law of any state, other than Cyprus, Greece and the United Kingdom. In EEA member states other than Cyprus, Greece and the United Kingdom, the Securities are only being offered in circumstances that do not require the publication of a prospectus pursuant to Article 3 of the Prospectus Directive. The offer is not addressed in any way (in writing or otherwise), directly or indirectly, to persons in the Excluded Territories. Accordingly, it is forbidden to send, distribute, post or otherwise forward copies of this Prospectus and any promotional material related to this public offering document or other material from any person to or from the Excluded Territories, except as may be permitted by applicable law. In jurisdictions other than Cyprus, Greece, the United Kingdom and the Excluded Territories, the offer of the Securities may be restricted by legal or regulatory requirements of such jurisdictions.

• to any legal entity which is a qualified investor as defined in the Prospectus Directive; or

• in any other circumstances falling within Article 3.2 of the Prospectus Directive

provided that no such offer of shares shall require the Bank or any Joint Placement Agent to publish a prospectus pursuant to Article

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3.2 of the Prospectus Directive.

The Securities (inclusive, without limitation, of New Shares which correspond to any unexercised Subscription Rights and that have not been allotted pursuant to the exercise of Presubscription Right), have not been, and will not be, registered under the Securities Act or the securities laws of any state of the United States and the Securities may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state or local securities laws.

USE OF PROCEEDS The net proceeds of the Issue are expected to be approximately €213 million, assuming that all of the Subscription Rights are exercised. The Group intends to use the net proceeds of the Issue to meet the residual capital requirements of €105 million resulting from the “Adverse Scenario” of the Comprehensive Assessment of the ECB and the European Banking Authority, and to pursue business opportunities in the recovering Cypriot economy and utilise its competitive advantages to grow customer numbers and loan book and increase its market shares.

PROSPECTUS

limitation at any time without notice and, in the case of an acquisition, merger, corporate reorganisation or similar transaction, will not unreasonably withhold or delay its consent following receipt of a written request from the Bank.

2. EXPECTED INDICATIVE TIMEFRAME

The table below presents the indicative timeframe for the issuance and listing of the Subscription Rights on the CSE as well as for their exercise.

Event Date Date of approval for the publication of this Prospectus ...... 14 November 2014 Ex-Rights date ...... 18 November 2014 Record Date for the Subscription Rights Issue ...... 19 November...... 2014 Dispatch of allotment/Exercise of Subscription Rights letters to registered shareholders ...... 25 November 2014 Trading period for the Subscription Rights on the CSE ...... 28 November 2014 – 5 December 2014 Exercise period for the Subscription Rights by the Subscription Rights holders registered on the registry of the CSE ...... 2 December...... 2014 – 11 December 2014 Last Date of Exercise of Subscription Rights ...... 11 December...... 2014 Application period for the Presubscription Right for New Unsubscribed Shares ...... 2...... December 2014 – 11 December 2014 Last day to apply for the Presubscription Right for New Unsubscribed Shares ...... 11...... December 2014 Period of allotment of shares which have not been subscribed through the exercise of Subscription Rights Within 30 business days from 11 and the exercise of Presubscription Right ...... December...... 2014 Date of issue of New Shares ...... Within 10...... business days from: (i) The Last Date of Exercise of Subscription Rights and the Presubscription Right and, (ii) The date of issue and allotment by the Board of Directors of the Bank of the New Shares which correspond to the unexercised Subscription Rights, which have not been allotted during the exercise of the Presubscription Right. Date of dispatch of allotment of New Shares letter ...... Within 10.... business days from: (i) The Last Date of Exercise of Subscription Rights and the Presubscription Right and, (ii) The date of issue and allotment by the Board of

PROSPECTUS

Event Date Directors of the Bank of the New Shares which correspond to the unexercised Subscription Rights, which have not been allotted during the exercise of the Presubscription Right.

Immediately after (i) the Last Date of Exercise of Subscription Rights and the Presubscription Right and, (ii) the date of issue and allotment by the Board of Directors of the Bank of the New Shares which correspond to the unexercised Subscription Rights, which have not been allotted during the exercise of the Presubscription Right, the Bank will submit the necessary supporting documents to the CSE for the listing of the New Shares.

The date of commencement of the trading of the New Shares will commence if the CSE ensures the shareholders’ register of the Bank has been submitted in electronic form and meets all the conditions set by the CSE in accordance with Regulation 4 of the CSE (listing, trading and settlement of dematerialized securities) of Regulation 2001 for the listing of the securities to the central registry.

Note that the timeframe depends on unpredictable factors and may change at the discretion of the Board of Directors. In all cases, investors will be informed through an announcement at the CSE or through the issuance of a supplementary prospectus, if required.

3. ISSUE OF SUBSCRIPTION RIGHTS

At the Board of Directors meetings, dated 24 September 2014 and 31 October 2014, it was decided to increase the issued share capital of the Bank by issuing and offering Subscription Rights to the Beneficiaries in proportion to the number of Ordinary Shares held as at Record Date, which could be converted to new, Ordinary Shares (the New Shares) of the Bank to raise up to €221,4 million.

The Subscription Rights will be issued and allotted for free at the ratio of one Subscription Right for every one existing share. Every two (2) Subscription Rights which is exercised will be converted three (3) new Ordinary Shares of nominal value of €0,01 at an Exercise Price of €0,0375 each.

The issuance of Subscription Rights will not be extended to the holders of capital securities and bonds issued by the Bank in the past and still in existence (see Part V, Paragraphs 8.3.1.3, 8.3.1.4, 8.3.2.1, 8.3.2.2) and the conversion price of CCS 1 and CCS 2 could be readjusted according to the terms of their issuance as stated in the prospectus dated 30 September 2013. Fractions of New Shares resulting from the conversion of the Subscription Rights of each Holder to Shares will not be issued and any fractional balances regarding the exercise of Subscription Rights will be discarded.

PROSPECTUS which correspond to the unexercised Subscription Rights that have not been covered during the exercise of the Presubscription Right, and the Board of Directors of the Bank will allot, at its discretion, such New Shares, in Cyprus and abroad, through a procedure it will determine, at a price at least equal to the Exercise Price, i.e., €0,0375 per New Share, provided that the allotment of such New Shares does not result in such investor holding equal or in excess of 30,0% of the issued share capital of the Bank upon completion of the Issue. The allotment and distribution of the New Shares will not constitute a public offer under the provisions of applicable securities legislation of any state, other than Cyprus, Greece and the United Kingdom. In EEA member states other than Cyprus, Greece and the United Kingdom, the Securities are only being offered in circumstances that do not require the publication of a prospectus pursuant to Article 3 of the Prospectus Directive. The offer is not addressed in any way (in writing or otherwise), directly or indirectly, to persons in the Excluded Territories. Accordingly, it is forbidden to send, distribute, post or otherwise forward copies of this Prospectus and any promotional material related to this public offering document or other material from any person to or from the Excluded Territories, except as may be permitted by applicable law. In jurisdictions other than Cyprus, Greece, the United Kingdom and the Excluded Territories, the offer of the Securities may be restricted by legal or regulatory requirements of such jurisdictions.

Third Point and Wargaming, the Major Shareholders, each of which holds 20.3% of the Bank’s issued share capital prior to the Issue (in the aggregate, 1.600.000.000 shares or 40.6% of the Bank’s issued share capital), have undertaken pursuant to the Undertaking to procure the exercise of the Relevant Subscription Rights at the Exercise Price in accordance with the terms of the Issue.

The Bank has entered into an agreement with N. M. Rothschild & Sons Limited (“Rothschild”), dated 29 July 2014 (as amended), pursuant to which Rothschild provides the Bank with certain financial advisory services related to the Issue, and for which Rothschild receives customary fees.

N M Rothschild & Sons Limited, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting for the Bank and no one else in relation to the Issue and will not be responsible to anyone other than the Bank for providing the protections afforded to clients of N M Rothschild & Sons Limited nor for providing advice in relation to the Issue.

4. EXERCISE PRICE OF NEW SHARES

Every two (2) Subscription Rights exercised will be converted to three (3) new Ordinary Shares of nominal value of €0,01. The Exercise Price was set to €0,0375 per each fully paid New Share of nominal value of €0,01.

5. TERMS OF PAYMENT

The Subscription Rights can be converted to New Shares with the payment of the amount payable during the period 2 December 2014 until 11 December 2014, both dates inclusive. The repayment of the New Shares will be made by making a payment of €0,0375 for each New Share.

The payment for the New Shares should be conducted from 2 December 2014 until 11 December 2014, both dates inclusive, otherwise the offer will be deemed not to have been accepted by the Holder.

PROSPECTUS

The Holders of Subscription Rights who will exercise all of their Subscription Rights in time may, concurrently with the exercise of their Subscription Rights, exercise their Presubscription Right to acquire any New Unsubscribed Shares, i.e. shares that correspond to the unexercised Subscription Rights, at a price equal to the Exercise Price, i.e. €0,0375 per New Share, provided that the exercise of such Holder’s Subscription Rights and Presubscription Right does not result in such investor holding equal or in excess of 30,0% of the issued share capital of the Bank after giving effect to the issue of shares pursuant to the Subscription Rights and Presubscription Right. New Shares issued pursuant to a Presubscription Right will be allocated on a pro rata basis up to 100% of the number of New Shares corresponding to the Subscription Rights exercised by such Holder. If the Presubscription Right is in excess of the aforementioned limit of 100%, then satisfying the excess percentage will be at the discretion of the Board.

6. TRADING ON THE CSE

The Subscription Rights to obtain the New Shares will be tradable and will be traded on the Main Market of the CSE, upon receiving all necessary approvals.

The trading of the Subscription Rights on the CSE will start from 28 November 2014 until 5 December 2014, both dates inclusive. From the ex-rights date, i.e. 18 November 2014, the Bank’s shares will be trading on the CSE without the Subscription Right to the current capital increase.

Allotment letters for the purchase of New Shares will be mailed to the Subscription Rights Beneficiaries registered on the Central Depository/Registry of the CSE on 25 November 2014. Allotment letters will not be mailed to Excluded Territories. Each Subscription Right will be registered with the Central Depository/Registry of the CSE and can be fully or partially transferred, with the opening of a trading account with an operator/custodian and by making the securities accessible to any specific operator/custodian of the CSE. If the owner already maintains a trading account with a specific operator/custodian, it is not necessary to open a new account, as long as access is provided to that specific operator/custodian for a transfer of part or all of the Securities.

Each transfer will be posted to the Central Depository and the values will be registered on the name of the beneficiary on the same business day, from the execution of the transaction.

The New Shares arising from the exercise of the Subscription Rights, the exercise of the Presubscription Right and the allotment of New Shares which correspond to the unexercised Subscription Rights will be listed and traded on the CSE, provided all necessary approvals from the competent authorities are granted.

7. PROCEDURE FOR EXERCISING SUBSCRIPTION RIGHTS

The Subscription Period for the Subscription Rights for the Beneficiaries and the investors who will obtain Subscription Rights during their trading on the CSE is set from 2 December 2014 until 11 December 2014, both dates inclusive.

PROSPECTUS

The Underwriter responsible for the collection of the amounts due for the Subscription Rights is the Bank.

The exercise of Subscription Rights by investors in Excluded Territories is prohibited, except as may be permitted by applicable law. In case such investors exercise any Subscription Rights and the Bank realises it, the exercise will be cancelled and the amount paid will be refunded to the investor, interest free.

The Letter of Allotment / Exercise of Subscription Rights which will refer to, among others, the number of Subscription Rights, and the number of New Shares attributable to each Beneficiary will be mailed to the Beneficiaries on 25 November 2014. If the Beneficiaries do not receive or have lost the Letter of Allotment / Exercise sent to them, they will be able, during the Subscription Period, to obtain an Exercise Application from any branch of the Bank, through the official website of the Bank at www.hellenicbank.com linking to Investor Relations / Subscription Rights Issue 2014 or by contacting the Shares and Bond Registry of the Bank (tel. +357 22500649/650).

Investors who will get hold of Subscription Rights during their trading on the CSE will be able, during the Exercise Period, to obtain an Exercise Application from any branch of the Bank, through the official website of the Bank at www.hellenicbank.com linking to Investor Relations / Subscription Rights Issue 2014 or by contacting the Shares and Bond Registry of the Bank (tel. +357 22500649/650).

Holders who wish to exercise the Subscription Rights they hold, or part of them, have the following options:

a. To submit a completed and signed Letter of Allotment / Exercise or an Exercise Application and pay the required amount at any branch of the Bank in Cyprus in a specific account at the Bank which will be indicated in the Letter of Allotment / Exercise or in the Exercise Application, or in any other bank account as it may be designated by the Bank in due time, before the closing of the cashier window services on the Last Date of Exercise of the Subscription Rights, i.e. 11 December 2014 Banker’s Drafts or Personal Cheques of the Bank to be submitted by interested investors in Cyprus can be cashed by the Bank upon receipt. The completion and signing of the Letter of Allotment / Exercise or Exercise Application and the accompanying cheque will be considered as representation and warranty that the cheque will be paid when presented. If the cheque is returned unpaid, then the Board of Directors shall have the right in its absolute discretion to consider that the Holder concerned has not exercised the Subscription Rights.

b. To send to the Bank’s Shares and Bond Registry via facsimile (fax: 00357 22500065) or email (email: [email protected]) the completed and signed Letter of Allotment / Exercise or Exercise Application in due time, i.e. before the end of the Last Date of Exercise of Subscription Rights, i.e. 11 December 2014, and pay the required amount via electronic transfer (SEPA, SWIFT), with reference to the investor’s account, to a specific account referred to in the Letter of Allotment / Exercise or Exercise Application or to any other bank account referred to by the Bank or through Hellenic Net Banking, in due time before the end of the Last Date of Exercise of Subscription Rights, i.e. the value date of the electronic transfer should not be later than the Last Date of Exercise of Subscription Rights, i.e. 11 December 2014.

Subscription Rights that will be obtained through trading on the CSE will be exercisable on the fourth business day following the date of acquisition.

PROSPECTUS

Upon the exercise of the Subscription Rights, prospective investors must state the following information: (a) their investor serial number in the CSE, (b) their securities account number, and (c) the authorised securities account Operator.

During the exercise period of the Subscription Rights, the amount payable will be limited to two decimal places and any extra decimal places arising will not be considered.

It should be noted that, in order for interested investors to be able to participate in the share capital increase, they should maintain an active Investor Securities Account in the CSE so that the newly acquired New Shares can be registered. The code number for the Investor Securities Account and the securities account number should be indicated on the Letter of Allotment / Exercise or Exercise Application. In addition, interested investors must indicate the Operator they would like to designate for the shares to be allotted to them, by filling in its code number.

In the event that the investor does not designate an Operator in the Letter of Allotment / Exercise or Exercise Application, then the shares to be allocated will be credited to a special account, whose Operator is the CSE.

Holders who exercise their Subscription Rights at any branch of the Bank in Cyprus will receive a deposit receipt which is not a security, does not constitute a provisional security and is not listed on the CSE.

Holders may, if they wish, exercise part of the Subscription Rights they hold. In such a case they must complete and sign the Letter of Allotment / Exercise or Exercise Application for the number of New Shares they wish to accept and pay the exercise price corresponding to the number of Subscription Rights they wish to exercise.

The exercise of the Subscription Rights by holders along with the deposit at any of the Bank’s branches in Cyprus or the sending via fax or email of the completed and signed Letter of Allotment / Exercise or Exercise Application and the payment of the corresponding value for the purchase of the New Shares is considered an irrevocable acceptance of the offer according to the terms of this Prospectus and the Articles of Association of the Bank.

Subscription Rights not exercised by the end of the Exercise Period of Subscription Rights become void.

It is noted the Bank has to comply with anti-money laundering legislation and regulations preventing terrorist financing. The Bank may require information regarding the identity of prospective investors. In the cases where identification is deemed necessary it will be required that investors provide satisfactory documentation regarding ultimate beneficial ownership and any other documents the Bank may require so as to comply with such legislation and regulations. The Bank reserves the right to refuse acceptance of payments or to issue shares on the name of the applicant if satisfactory verification documents are not provided or the Bank deems that acceptance of any payments may result in non- compliance with the above mentioned legislation and regulations.

It is clarified that if the price for exercising the Subscription Rights is not paid within the timeframe specified above, the offer shall be deemed not to have been accepted. This means that, for holders who will use any branch of the Bank in Cyprus, the price for exercising the Subscription Rights must be paid by the closing of the cashier window services on the Last Date of Exercise of Subscription Rights, i.e. 11 December 2014. If holders choose to pay for exercising the Subscription Rights via electronic transfer, that must be made by the Last Date of Exercise of Subscription Rights, i.e. the value date of the payment should not be made later than the last date of exercise, i.e. 11 December 2014.

PROSPECTUS

8. PRESUBSCRIPTION RIGHT FOR NEW UNSUBSCRIBED SHARES

The Holders of Subscription Rights who will exercise all of their Subscription Rights in time may, concurrently with the exercise of their Subscription Rights, exercise their Presubscription Right to acquire any New Unsubscribed Shares, i.e. shares that correspond to the unexercised Subscription Rights, at a price equal to the Exercise Price, i.e. €0,0375 per New Share, provided that the exercise of such Holder’s Subscription Rights and Presubscription Right does not result in such investor holding equal or in excess of 30,0% of the issued share capital of the Bank after giving effect to the issue of shares pursuant to the Subscription Rights and Presubscription Right. New Shares issued pursuant to a Presubscription Right will be allocated on a pro rata basis up to 100% of the number of New Shares corresponding to the Subscription Rights exercised by such Holder. If the Presubscription Right is in excess of the aforementioned limit of 100%, then satisfying the excess percentage will be at the discretion of the Board of Directors.

Anyone who filed a Presubscription Application will be able to exercise that right as long as there will be unsubscribed New Shares which correspond to the unexercised Subscription Rights, at a price equal to the Exercise Price, i.e. €0,0375 per New Share, provided that the exercise of such Holder’s Subscription Rights and Presubscription Right does not result in such investor holding equal or in excess of 30,0% of the issued share capital of the Bank after giving effect to the issue of shares pursuant to the Subscription Rights and Presubscription Right. New Shares issued pursuant to a Presubscription Right will be allocated on a pro rata basis up to 100% of the number of New Shares corresponding to the Subscription Rights exercised by such Holder. If the Presubscription Right is in excess of the aforementioned limit of 100%, then satisfying the excess percentage will be at the discretion of the Board of Directors.

The Presubscription Right to acquire New Shares will be exercised at the same time as the exercise of Subscription Rights throughout the period of exercise of Subscription Rights, namely from 2 December 2014 until 11 December 2014, both dates inclusive. The Presubscription Applications will be mailed to the Beneficiaries at the same time with the Letter of Allotment/Exercise, i.e. on 25 November 2014. During the Presubscription Period, Beneficiaries who did not receive or have lost the Presubscription Application sent to them could obtain the Presubscription Application from any branch of the Bank, through the official website of the Bank at http://www.hellenicbank.com linking to Investor Relations / Subscription Rights Issue 2014 or by contacting the Shares and Bond Registry of the Bank (tel. +357 22500649/650).

During the Presubscription Period, investors who will acquire Subscription Rights during their trading on the CSE may obtain a Presubscription Application from any branch of the Bank, through the official website of the Bank at http://www.hellenicbank.com linking to Investor Relations / Subscription Rights Issue 2014 or by contacting the Shares and Bond Registry of the Bank (tel. +357 22500649/650).

Holders of Subscription Rights who wish to acquire New Unsubscribed Shares have the following options:

a. To submit a completed and signed Presubscription Application and pay the required amount to acquire all of the New Unsubscribed Shares requested through the exercise of Presubscription Right at any branch of the Bank in Cyprus in a specific account at the Bank which will be indicated in the Presubscription Application, or in any other bank account as it may be indicated by the Bank in due time, before the closing of the cashier window services on the last date for the submission of a Presubscription Right for New Unsubscribed Shares, i.e. 11 December 2014.

Banker’s Drafts of local banks or Personal Cheques of the Bank to be submitted by interested investors in Cyprus can be cashed by the Bank upon receipt. The completion and signing of the relevant part of the Presubscription Application and the accompanying cheque will be

PROSPECTUS

considered representation and warranty that the cheque will be paid when presented. If the cheque is returned unpaid, then the Board of Directors shall have the right in its absolute discretion to consider the Presubscription Application void.

b. To send to the Bank’s Shares & Bond Registry via facsimile (fax: 00357 22500065) or email (email: [email protected]) a completed and signed Presubscription Application by the due date, i.e. before the end of the last date for the submission of the application for presubscription for New Unsubscribed Shares, i.e. 11 December 2014, and pay the required amount to acquire all of the New Unsubscribed Shares requested through the exercise of Presubscription Right via electronic transfer (SEPA, SWIFT) with reference to the investor’s account, to a specific account at the Bank indicated in the Presubscription Application or to any other bank account indicated by the Bank, or through Hellenic Net Banking, in due time before the end of the last date of application for Presubscription Right to acquire New Unsubscribed Shares, i.e. the value date of the electronic transfer may not be later than the last date for the exercise of the Presubscription Right, i.e. 11 December 2014.

Each applicant will be required to state on the Presubscription Application for the acquisition of New Unsubscribed Shares: (a) their investor serial number in the CSE, (b) their securities account number, and (c) the authorised securities account Operator so that the newly acquired New Shares can be registered.

Holders who will exercise their Presubscription Right at any branch of the Bank in Cyprus will receive a deposit receipt which is not a security, does not constitute a provisional security and is not listed on the CSE.

The exercise of the Presubscription Right for New Unsubscribed Shares by Holders along with the deposit at any of the Bank’s branches in Cyprus or the sending via fax or email of the completed and signed Presubscription Application and the payment of the corresponding value for the purchase of such New Unsubscribed Shares is considered an irrevocable acceptance of the offer according to the terms of this Prospectus and the Articles of Association of the Bank.

If Presubscription Applications for acquiring the New Unsubscribed Shares are not fulfilled or are partially fulfilled then the amount paid corresponding to the unfulfilled part will be refunded via cheque or will be deposited to an account indicated by the applicant, as per the instructions in the relevant Presubscription Application, interest free.

Investors residing in Excluded Territories are prohibited from exercising the Presubscription Right for New Unsubscribed Shares. In case such investors file a Presubscription Application and the Bank realises it, the Bank will cancel the Presubscription Application and will return the amounts paid to the investor, interest free.

PROSPECTUS

9. ALLOTMENT OF SHARES WHICH HAVE NOT BEEN SUBSCRIBED THROUGH THE EXERCISE OF SUBSCRIPTION RIGHTS AND THE EXERCISE OF THE PRESUBSCRIPTION RIGHT

The Bank shall have the right, at any time within 30 working days from the Last Date of Exercise of Subscription Rights and the exercise of the Presubscription Right to issue all or part of the New Shares which correspond to the unexercised Subscription Rights that have not been covered during the exercise of the Presubscription Right, and the Board of Directors of the Bank to allot, at its discretion, such New Shares, in Cyprus and abroad, through a procedure it will determine, at a price at least equal to the Exercise Price, i.e. €0,0375 per New Share, provided that the allotment of such New Shares does not result in such investor holding equal or in excess of 30,0% of the issued share capital of the Bank upon completion of the Issue, but in a way that the procedure of allotment of such New Shares will not constitute a public offer under the provisions of the applicable legislation of that state other than Cyprus, Greece and the United Kingdom. In EEA member states other than Cyprus, Greece and the United Kingdom, the Securities are only being offered in circumstances that do not require the publication of a prospectus pursuant to Article 3 of the Prospectus Directive. The offer is not addressed in any way (in writing or otherwise), directly or indirectly, to persons in the Excluded Territories. Accordingly, it is forbidden to send, distribute, post or otherwise forward copies of this Prospectus and any promotional material related to this public offering document or other material from any person to or from the Excluded Territories, except as may be permitted by applicable law. In jurisdictions other than Cyprus, Greece, the United Kingdom and the Excluded Territories, the offer of the Securities may be restricted by legal or regulatory requirements of such jurisdictions.

According to the procedure for allotment of New Shares which correspond to the unexercised Subscription Rights and which have not been allotted during the exercise of the Presubscription Right, the Bank has entered into an agreement with the Joint Placement Agents, according to which the Joint Placement Agents have agreed on a several (but not joint and several) basis to use their reasonable endeavors to identify persons who wish to subscribe for such New Shares. More information related to the Joint Placement Agents is presented in Part IV, Paragraph 10.

10. JOINT PLACEMENT AGENTS

Each of the Joint Placement Agents has entered into a placement agreement dated 14 November 2014 under which the Joint Placement Agents have agreed on a several (but not joint and several) basis to use their reasonable endeavours to identify persons who wish to subscribe for New Shares corresponding to any unexercised Subscription Rights and that have not been allotted pursuant to the exercise of Presubscription Rights, at a price at least equal to the Exercise Price, i.e. €0,0375 per New Share. The Joint Placement Agents are not obliged to purchase, subscribe for or underwrite any Subscription Rights or New Shares. The Joint Placement Agents are not obliged to purchase, subscribe for or underwrite any Subscription Rights or New Shares.

PROSPECTUS

• to any legal entity which is a qualified investor as defined in the Prospectus Directive; or

• in any other circumstances falling within Article 3.2 of the Prospectus Directive provided that no such offer of shares shall require the Bank or any Joint Placement Agent to publish a prospectus pursuant to Article 3.2 of the Prospectus Directive.

The Securities (inclusive, without limitation, of New Shares which correspond to any unexercised Subscription Rights and that have not been allotted pursuant to the exercise of Presubscription Right),have not been, and will not be, registered under the Securities Act or the securities laws of any state of the United States and the Securities may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state or local securities laws.

In the placement agreement, the Bank has given certain customary representations and warranties to the Joint Placement Agents, including in relation to the business of the Group, in relation to the Securities and in relation to the contents of this Prospectus. The Bank has given customary indemnities to the Joint Placement Agents in connection with the Issue.

As consideration for the services provided by the Joint Placement Agents, the Bank has agreed to pay the Joint Placement Agents fees up to a maximum of €4.0 million plus VAT, if applicable, and to reimburse the Joint Placement Agents for certain of their expenses. The Bank estimates that the aggregate fees and expenses of the Issue will be up to €150.000 plus VAT, if applicable.

The Bank has agreed in the Placement Agreement that until 180 days after the date of commencement of trading of the New Shares (the “Settlement Date”), without the prior written consent of Deutsche Bank, neither the Bank nor any of its subsidiaries or affiliates (“Affiliates”) over which it exercises management or voting control, nor any person acting on its or their behalf, shall (i) issue or contract to issue, offer, or directly or indirectly sell or contract to sell, transfer, pledge, lien, charge, grant security or an option over, or enter into any other agreement or arrangement having a similar effect, or in any way, whether directly or indirectly, dispose of the legal title to or beneficial interest in any Ordinary Shares, including any New Shares; (ii) enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly, any of the economic consequences of the ownership of any Ordinary Shares, including any New Shares, whether any such swap or transaction described in (i) or (ii) is to be settled by the delivery of Ordinary Shares (including any New Shares), cash or otherwise; or (iii) carry out any capital increases by the Bank or issue any convertible bonds, exchangeable bonds or other securities which are convertible, exchangeable or exercisable into any Ordinary Shares (including any New Shares) or (iv) publicly disclose any intention to do any of (i), (ii) or (iii); provided that the foregoing limitations shall not apply to (a) the issuance of the New Shares in the Issue; (b) issuances of shares pursuant to the conversion or exchange of convertible or exchangeable securities, including the CCS1 and CCS2, or the exercise of warrants or options, in each case outstanding on the date of the Placement Agreement; (c) trading in the Ordinary Shares for the account of and/or on behalf of its clients which are not Affiliates of the Bank in the ordinary course of business of the Group; or (d) issuances of equity securities or other capital instruments mandated to occur by any competent regulatory body with supervisory authority over the Bank or any of its Affiliates. Deutsche Bank in its sole discretion may waive this limitation at any time without notice and, in the case of an acquisition, merger, corporate reorganisation or similar transaction, will not unreasonably withhold or delay its consent following receipt of a written request from the Bank.

The Joint Placement Agents are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. The Joint Placement Agents and their respective affiliates have in the past performed commercial banking, investment banking and advisory services for the Group from time to time for which they have received customary

PROSPECTUS fees and reimbursement of expenses and may, from time to time, engage in transactions with and perform services for the Group in the ordinary course of their business for which they may receive customary fees and reimbursement of expenses. In the ordinary course of their various business activities, the Joint Placement Agents and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve the Bank’s securities and instruments.

11. ANNOUNCEMENT OF RESULTS OF THE SUBSCRIPTION RIGHTS EXERCISE

The Bank will announce the result of the exercise of the Subscription Rights and Presubscription Right as well as the procedure of allotment of News Shares which correspond to unexercised Subscription Rights, which have not been exercised during the exercise of the Presubscription Right, via a written announcement to the CSE in accordance with the applicable law.

12. LETTERS OF ALLOTMENT OF NEW SHARES

Immediately after (i) the Last Date of Exercise of Subscription Rights and the Presubscription Right and, (ii) the date of issue and allotment by the Board of Directors of the Bank of the New Shares which correspond to the unexercised Subscription Rights, which have not been allotted during the exercise of the Presubscription Right., the Bank will submit all the necessary supporting documents to the CSE for the listing of the New Shares.

Given the timetable set for the issue and allotment (all or part) of the New Shares corresponding to unexercised Subscription Rights and which have not been covered during the exercise of the Presubscription Right (i.e. within 30 business days from 11 December 2014) the Bank may make separate procedures for the issuing and listing of the New Shares arising (i) from the Subscription Rights and Presubscription Right and (ii) the allotment of New Shares corresponding to the unexercised Subscription Rights and which have not been covered during the exercise of the Presubscription Right.

After obtaining the approval for the listing of New Shares on the CSE, these shares will be credited to the applicants’ investor accounts they maintain with the CSE.

The credit of the New Shares is expected to be done on the working day preceding the listing of the New Shares on the CSE.

The letters of allotment of the New Shares will be sent to the shareholders within 10 business days from: (i) The Last Date of Exercise of Subscription Rights and the Presubscription Right and, (ii) the date of issue and allotment by the Board of Directors of the Bank of the New Shares which correspond to the unexercised Subscription Rights, which have not been allotted during the exercise of the Presubscription Right. The date of commencement of trading of the New Shares will commence if the CSE ensures the shareholders’ register of the Bank has been submitted in electronic form and meets all the conditions set by the CSE in accordance with Regulation 4 of the CSE (listing, trading and settlement of dematerialised securities) of Regulation 2001 for the listing of the securities to the central registry.

It is noted that the time schedule depends on unpredictable factors and may be changed at the discretion of the Board of Directors. In any case, investors will be updated with a relevant announcement by CSE or with the issue of a supplementary prospectus, if required.

PROSPECTUS

13. REASONING FOR THE OFFER AND USE OF PROCEEDS

The Group intends to use the net proceeds of the Issue to meet the residual capital requirements of €105 million resulting from the “Adverse Scenario” of the CA of the ECB and the EBA, as well as to pursue business opportunities in the recovering Cypriot economy and utilise its competitive advantages to grow its customer base and loan book and increase its market share.

Hellenic Bank considers that the AQR adjustments that have been made in the CA do not indicate that the Bank failed to meet with IFRS. Furthermore, it should be noted that the Bank has no knowledge, not so ever, that such an issue, i.e., that any possible accounting errors or practices inconsistent with IFRS were identified during the AQR.

The stress test complemented the AQR, examining the balance sheet resilience of the Bank under stress scenarios over three year periods. An 8% minimum CET1 ratio was assumed in the baseline scenario, and a 5.5% minimum CET1 ratio was assumed in the adverse scenario.

The results of the CA were as follows:

The results of the “Baseline Scenario” of the stress test confirmed the business model of the Bank, while the “Adverse Scenario” quantified the capital that the Bank must raise in order to be sufficiently capitalised in the event of unexpected future losses. For the Bank, the €277 million result from the “Adverse Scenario” was reduced by mitigating factors to €105 million, which the Bank expects to cover through the Issue. The Bank intends to raise more capital than the residual capital resulting from the CA in order to pursue business opportunities in the recovering Cypriot environment and utilise its competitive advantages to grow its customer base and loan book and increase its market share.

PROSPECTUS

14. COST OF ISSUE

The expenses related to the issuance of the Subscription Rights and to the issuance and listing of the New Shares that will arise from exercising the Subscription Rights, which include the fees for professional services from auditors, legal advisors, underwriters and issuance consultants, printing, marketing and fees to the competent approving authorities for the issue and listing of the shares are estimated to be approximately €2,7 million plus VAT, where applicable. The maximum fees and commissions payable to the Joint Placement Agents will be approximately €4 million plus VAT, if applicable, plus out of pocket expenses of up to €150.000 plus VAT, if applicable. As such, the net proceeds from the issue, assuming all Subscription Rights are exercised is expected to rise to approximately €213 million.

15. INFORMATION RELATING TO THE SECURITIES OFFERED

The Subscription Rights, having obtained all necessary approvals from the competent authorities, will be listed and traded on the CSE. After obtaining all necessary approvals from the competent authorities, the New Shares will be listed on the Main Market of the CSE and will be traded together with the existing shares of the Bank already listed on the aforementioned regulatory market.

The table below provides basic information about the Subscription Rights and the New Shares which will result from the Issue.

Subscription Rights New Shares Ordinary Shares with the same rights as the existing Securities category Subscription Rights Ordinary Shares of the Bank Law according to which the securities were issued / will According to Companies Law According to Companies Law be issued Chapter 113. Chapter 113. Type of securities Registered in book entry form Registered in book entry form Central Depository/ Registry of the Central Depository/ Registry Registry Maintenance CSE of the CSE Issue Currency Euro (€) Euro (€) Trading Currency Euro (€) Euro (€) ISIN CY125200119 CY0000300117 Trading CSE CSE Dividend Right No Yes Voting Right No Yes Subscription Right in allotment of securities of same category Not applicable Yes Right in participation in issuers profits No – see Dividend Right see Dividend Right Right in any surplus in case of liquidation No Yes Board of Directors decisions dated Board of Directors decisions Decisions in accordance to 24 September 2014 and 31 October dated 24 September 2014 and which securities are issued 2014 31 October 2014 Restriction in free transfer No No Redemption Clauses No N/A Conversion Clauses No N/A

PROSPECTUS

Note: The Subscription Rights under issue are freely transferable. However, Subscription Rights are not intended for investors in Excluded Territories who are prohibited to exercise them. The Subscription Rights to acquire the New Shares will be traded for six trading days on the CSE provided that all necessary approvals have been granted. Subscription Rights to be acquired during trading on the CSE can be exercised on the fourth business day from the date of their acquisition. Each Subscription Right will be registered with the Central Depository/Registry of the CSE and can be fully or partially transferred, with the opening of a trading account with an operator/custodian and by making the securities accessible to any specific operator/custodian of the CSE. If the owner already maintains a trading account with a specific operator/custodian, it is not necessary to open a new account, as long as access is provided to that specific operator/custodian for a transfer of part or all of the Securities.

16. CHANGE IN SHARE DILUTION AFTER THE ISSUE

Existing shareholders who will not exercise any of the Subscription Rights that will be offered to them, will see their holding percentage decrease by up to 60%, if all Subscription Rights are exercised (based on the existing issued shares of €3.936.599.211 of nominal value of €0,01 each and the up to 5.904.898.816 New Shares of nominal value of €0,01 each which may result from the Issue).

The Bank, as at the date of issue of the Prospectus, has issued 1.597.679 CCS 1 of nominal value €1 each and 128.070.047 CCS 2 of nominal value €1 each, convertible into Ordinary Shares. This issue of Subscription Rights has not been extended to the above holders of convertible capital securities; their conversion price will be subject to adjustment in accordance with their terms of issuance. Therefore, the holding percentage of the shareholders may be reduced further if the abovementioned securities (CCS 1 and CCS 2) are converted into Ordinary Shares in accordance with their terms of issuance.

The final percentages for each case will depend on the final total percentage of Subscription Rights exercised and the exercise of the Presubscription Right, as well as the procedure for the allotment of any remaining unsubscribed New Shares to be determined at the discretion of the Board of Directors, which will determine the total number of shares of the Bank.

17. WITHDRAWAL RIGHTS

In case of publication of a supplementary prospectus pursuant to the provisions of Articles 14(1) (6) and 14(1) (7) of the Public Offer and Prospectus Law of 2005 (as amended), investors who have agreed or were bound in any way prior to the publication of the supplementary prospectus to acquire or to obtain through subscription the securities to which the Prospectus refers to, based on the information provided thereon, shall be entitled to withdraw and be released without penalty from any obligation and commitment undertaken, given that the new information or significant mistake or inaccuracy referred to in Article 14 (1) (1) of the Public Offer and Prospectus Law of 2005 (as amended), arose before the final closing of the public offering and the delivery of the securities to them. The right of withdrawal and the declaration of release must be exercised within two working days from the publication of the supplementary Prospectus.

It is noted that, following an announcement by the Bank for the finalisation of this capital increase and the issuance of New Shares, no applications to acquire New Shares may be revoked or withdrawn for any reason, regardless of whether the shares have not yet been listed on the CSE.

18. RANKING/DIVIDENDS

The New Shares resulting from the exercise of the Subscription Rights will rank pari passu with the existing issued and fully paid Ordinary Shares of the Bank and will participate in any dividend payments with a record date after the date of issue of the New Shares. The New Shares will not be entitled to receive any dividends paid at a date prior to the Record Date. For information on the

PROSPECTUS taxation of dividends, refer to Part IX, Paragraph 5.3, while for information on the dividend policy of the Bank, refer to Part V, Paragraph 9.

The capital increase is not a tax event for corporate tax purposes. The capital increase expenses are not deductible in determining corporate tax. No stamp duty is levied on capital increases of companies whose shares are traded on the stock exchange. A fee of 0,6% for the increase in authorised capital is imposed by the Registrar of Companies. For additional information regarding taxes, refer to Part IX, Paragraph 5.

19. INVESTOR REPRESENTATIONS AND WARRANTIES

The Securities are only being offered to the public in Cyprus, Greece and the United Kingdom, and the offer is only addressed to persons that can legally accept it. In EEA member states other than Cyprus, Greece and the United Kingdom, the Securities are only being offered in circumstances that do not require the publication of a prospectus pursuant to Article 3 of the Prospectus Directive. This offer is not addressed in any way (in writing or otherwise), directly or indirectly, to persons in the Excluded Territories. For this reason, it is forbidden to mail, distribute, send or otherwise promote copies of this Prospectus and any other relevant documents or material relating to this Issue into or from any Excluded Territory, except in compliance with applicable law. In jurisdictions other than Cyprus, Greece, the United Kingdom and the Excluded Territories, the offer of the Securities may be restricted by legal or regulatory requirements of such jurisdictions.

By subscribing for New Shares, each investor (and any person acting on such investor’s behalf) acknowledges, undertakes, represents, warrants and agrees (as the case may be) to and with the Bank the following:

a. it has read this Prospectus and the terms of the Issue in their entirety and acknowledges and agrees that its participation in the Issue will be governed by the terms of the Issue and any other terms and conditions specified in Part IV. In particular, it has reviewed the terms of the Issue and of the Securities set forth in this Prospectus and it understands the nature and the terms of each of the Issue and the Subscription Rights and the New Shares;

b. it has conducted its own investigation with respect to the Bank, the Issue and the Subscription Rights and the New Shares and it has conducted such investigation as it deems necessary or appropriate in order to make an investment decision about the Securities it is not relying on any information or representation or warranty in relation to the Bank or any of its subsidiaries or any of the Subscription Rights and the New Shares other than as set forth in the Prospectus;

c. the Joint Placement Agents have no responsibility for the truth, accuracy, completeness or contents of this Prospectus or any other information provided to the investor relating to the Bank or the Issue and that the Joint Placement Agents have not made and do not make any representations, warranties or undertakings regarding the same, and furthermore the Joint Placement Agents are under no obligation to provide the investor with access to any additional information or to update, revise or supplement this Prospectus or any other information provided to the investor relating to the Bank or the Issue or to correct any inaccuracies which may become apparent except as may be required by law;

d. its obligations are irrevocable and legally binding and shall not be capable of rescission or termination by it in any circumstances except fraud or as required by applicable law;

e. it is entitled to subscribe for the New Shares under the laws of all relevant jurisdictions which apply to it and that it has fully observed such laws and obtained all governmental and other consents and authorisations which may be required thereunder or otherwise to enable it to give its commitment to subscribe for the New Shares and to perform its subscription obligations and

PROSPECTUS

complied with all necessary formalities and that it has not taken any action which will or may result in the Bank or any of its directors, officers, employees or agents acting in breach of any regulatory or legal requirements of any territory in connection with the issuance of the New Shares and that its commitment constitutes a valid and binding obligation on it; f. if it is outside of Cyprus, Greece and the United Kingdom, (i) it has been given access to the Bank and has been provided with an opportunity to ask questions about the Bank, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits, risks and suitability of the Issue, is able to bear the risk of an entire loss of its investment in the New Shares, has evaluated the merits and risks (including tax risks) of the Issue based exclusively on its own independent review and consultations with such investment, legal, tax, accounting and other advisers as it deemed necessary and acknowledges that neither the Bank nor any other person has made any representation to it with respect to the merits of an investment in the Subscription Rights and the New Shares, (ii) it has made its own assessment and has satisfied itself concerning the relevant tax, legal, currency and other economic considerations relevant to its investment in New Shares, (iii) if it located in a Member State of the European Economic Area, it is a Qualified Investor, as defined in the Prospectus Directive; g. it has not offered or sold and will not offer or sell any Subscription Rights or New Shares to persons in the European Economic Area except in circumstances which have not resulted in, and will not result in, an offer to the public within the meaning of the Prospectus Directive; h. it is not, and will not be subscribing on behalf of, a resident of an Excluded Territory, except as may be permitted by applicable law, and it acknowledges that the New Shares have not been and will not be registered under the securities legislation of any such jurisdiction and, subject to certain exceptions, may not be offered, sold, taken up, delivered or transferred, directly or indirectly, within those jurisdictions, and it has not and will not send this Prospectus to any person in an Excluded Territory; i. it understands and acknowledges that the New Shares have not been and will not be registered under the Securities Act or any U.S. state securities laws and none of the New Shares may be offered, sold, resold, pledged or otherwise transferred except in an “offshore transaction” as defined in, and in accordance with, Rule 903 or Rule 904 of Regulation S under the Securities Act, or pursuant to another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any applicable state or local securities laws; j. it is acquiring the New Shares in the Issue for its own account or, if it is acquiring the New Shares for one or more managed accounts, it is authorised in writing by each managed account (i) to subscribe for the New Shares for the managed account and (ii) to make on the managed account’s behalf the representations, warranties, acknowledgments and agreements set forth herein, and agrees that the provisions of this subsection 19 shall survive the resale of the Subscription Rights and the New Shares by or on behalf of the managed accounts; k. it is not acquiring the Subscription Rights or the New Shares with a view to distribution thereof or with any present intention of offering or selling any of the Subscription Rights or the New Shares except in compliance with the transfer restrictions set forth above; l. it will not offer, transfer or sell the Subscription Rights or the New Shares to or for the benefit of any persons (including individuals and legal entities) unless and only to the extent permitted under the laws of all relevant jurisdictions; m. it is aware of, has complied with and will continue to comply with any obligations it has under any anti-money laundering laws and regulations applicable to it and in respect of its subscription for the Subscription Rights and the New Shares, and it will provide the Bank on

PROSPECTUS

demand with any information it may require for the purposes of verification under the anti- money laundering laws and regulations applicable to the Bank and the Bank’s “know your customer” procedures; and n. it understands that the Bank and others will rely upon the truth and accuracy of the foregoing acknowledgements and representations and if any of such acknowledgements or representations deemed to have been made at the time of the delivery of the Subscription Rights or the New Shares is no longer accurate, such person will promptly notify the Bank.

PROSPECTUS

PART V. INFORMATION ABOUT THE ISSUER

1. GENERAL INFORMATION

Introduction

Hellenic Bank was established in Cyprus on 29 May 1974 as a public company under registration number 6771, according to the provisions of the Companies Law, Cap. 113. The Bank is licenced for carrying out banking activities as per the Banking Laws of 1997-2013 and operates based on the Companies Law, Cap. 113 of the Cyprus Securities and Stock Exchange Laws and Regulations and the Income Tax Laws. The legal and commercial name is: Hellenic Bank Public Company Limited. The registered office and head office of the Bank is located at 200 Limassol & Athalassas Avenue, 2025 Strovolos, PO Box 24747, 1394 Nicosia, Cyprus. The central contact number in the main head office of the Bank: +357 22500000.

The Bank is one of the largest financial institutions in Cyprus in terms of its market capitalisation on the CSE, holding a significant position in Cyprus’ retail banking sector, with more than 290.000 deposit accounts, more than 48.000 lending accounts, 57 branches and 69 automatic teller machines (“ATMs”) as at 30 September 2014. The Bank offers a wide range of services in the financial sector to individuals, companies, government and semi-governmental organisations. The main activities of the Group include acceptance of deposits, lending as well as other banking services, such as overseas transfers related to imports and exports and issuance of guarantees. It also offers insurance and investment services as well as custodian and factoring services.

The principal sources of income for the Bank historically have been interest earned on customer loans and income from fees and commissions. The Bank funds its lending activities principally through customer deposits in its branch network, which extends across Cyprus. As at 30 September 2014, the Bank’s net loans-to-deposits ratio was 53.3%.

Based on the monthly reports of the Central Bank at the end of September 2014 the Bank held a market share of 7,2% in loans (6,4% and 6,9% in December 2012 and December 2013, respectively) and 13,4% in deposits (10,2% and 11,8% in December 2012 and December 2013, respectively) (Source: Central Bank, Information from third parties has been accurately reproduced and, as far as the Bank is aware and is able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading).

Credit Rating

The following table presents the most recent credit rating of the Bank according to Moody’s Investors Services Cyprus Ltd and Fitch Ratings Espana S.A.U.

89 Part V

PROSPECTUS

Rating agencies and credit ratings Credit rating Fitch (last assessment date 4 July 2014) Long-term Issuer Default Rating ...... CCC Outlook ...... Stable Short-term Issuer Default Rating ...... C Viability rating...... ccc

Source: Reports of the above International Credit Agencies. Information from third parties has been accurately reproduced and, as far as the Bank is aware and is able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading.

Moody’s is a company based in Cyprus and Fitch is a company based in Spain. Both companies have been registered in accordance with Regulation (CySEC) No. 1060/2009 (as amended by Regulation (EU) No. 462/2013), according to the list that has been posted by the European Securities Market Authority.

The long-term rating refers to the ability of a company to repay its long-term debt and is evaluated using ratings from Aaa to C. Moody’s Investors Services Inc. also uses a combination of indicators with numerical indexes (1, 2, 3), while Fitch Ratings Ltd combines the ratings with a positive or negative sign. Credit ratings assist investors in their assessment of the degree of the investment risk of a firm.

2. GROUP MILESTONES

1976

When the Bank was founded, 20% of the capital was from the Hellenic Mining Company, 20% was from the Bank of America and the remaining 60% was from the public offering of shares.

On 2 January 1976, the Bank began operations with a branch in Nicosia and 33 employees.

1985

The subsidiary company, Hellenic Bank (Finance) Ltd, is founded, with the purpose of providing hire purchase loans.

The Bank becomes a member of the international system for transaction processing SWIFT.

1986

Bank of America sells its shareholding in the Bank to various Cypriot investors as part of its international strategy to sell investments abroad.

The subsidiary company Hellenic Bank (Investments) Ltd is founded, with the purpose of providing investment services.

The Card Services Department is established and the first Hellenicard Visa is launched.

1990

The Insurance Services Department is established, representing a number of insurance companies and offering a wide spectrum of insurance products as an agent.

The first international business centre is founded in Limassol.

PROSPECTUS

1994

The Bank Marketing Association of the USA, a subsidiary of the American Bankers Association, grants three awards to the Group.

Following the success of the international business centre in Limassol, a new centre in Nicosia commences its operations.

1996

As part of an important expansionary effort, the Group acquires the local operations of Barclays Bank PLC in Cyprus.

1997

The international business centre in Limassol obtains the international certificate of service quality “ISO 9002:1994”, becoming the first such centre in Cyprus to achieve this.

1998

The first branch of the Bank in the Kolonaki area of central Athens commences operations.

The Central Information System (RBS) is installed, operating successfully in all the Bank’s branches in Cyprus.

Representative offices are opened in Johannesburg, South Africa and in Moscow, Russia.

1999

The Ledra and Pancyprian insurance companies are acquired by the Group.

The subsidiary company Hellenic Bank (Factors) Ltd is established.

2000

A new insurance company is launched called Hellenic Alico Life Insurance Company Ltd for the provision of bancassurance products, following a joint venture between the Bank and the American Life Insurance Company (Alico AIG Life).

2001

Hellenic Bank (Investments) Ltd introduces the electronic brokerage service, namely HBI eTrade.

2002

Hellenic Net Banking is launched.

2003

The full integration of the Group’s subsidiary insurance companies ‘Pancyprian Insurance Ltd’ and ‘Ledra Insurance Ltd’ under Pancyprian Insurance Ltd was completed.

Hellenic Bank (Investments) Ltd obtains a licence from the CySEC to operate as a Cyprus Investment Firm.

PROSPECTUS

2004

The European Foundation for Quality Management (“EMEA/EFQM”) is adopted.

The Quality Evolution Programme is designed and introduced, aiming at the continuous improvement of the provision of services, high quality and personalised service.

2005

The Organisation and Methods and the Card Services Departments receive the honorary ‘Commitment to Excellence’ certification by the EMEA/EFQM.

The Bank receives the honorary BAM (Branch Assessment Model) distinction from the Institute of Financial Services in the competition Financial Innovation Awards 2005.

2006

The international journal ‘The Global Custodian’, which specialises in custodianship issues, places the Custodian Services Unit of the Bank in the first place among custodians in Cyprus.

2007

The Ukrainian Central Bank grants approval for the establishment of a representative office in Kiev.

A representative office is established in Saint Petersburg, Russia.

For the second consecutive year, the international journal ‘The Global Custodian’ ranks the Custodian Services Unit of the Bank in first place among custodians in Cyprus.

The Bank is now the first Cypriot bank to offer trilingual Electronic Banking services, following the addition of the Greek and Russian versions of Hellenic Net Banking.

2008

The esteemed international magazine ‘The Global Custodian’ awards the Bank’s Custodian Services Unit with the highest possible distinction of the ‘Top Rated’ Custodian for the third consecutive year.

The Bank is awarded by Deutsche Bank with the ‘Deutsche Bank’s 2008 EUR STP Excellence Award for the Exceptional Quality of Payment Messages’, for the quality of the payment messages sent by the Bank to Deutsche Bank.

The representative office in Kiev, Ukraine is established.

In the context of implementing the decision to carry out banking business in Russia, an application is submitted to the Central Bank of the Russian Federation for obtaining a licence to establish a subsidiary bank in Moscow.

2009

The Central Bank of Russia grants a banking licence to the Russian Subsidiary the fully owned subsidiary of the Group.

The Private Banking Unit is recognised by the Euromoney Magazine as the ‘Best Private Banking Unit’ in Cyprus.

PROSPECTUS

The green loan ‘Eco Autoloan’ is introduced for the purchase of hybrid / electric cars.

2010

The ‘Hellenic Net Banking for Business’ service is acclaimed as one of the best electronic banks for companies operating in Europe, in a contest of the international magazine Global Finance. It is further elected as the best electronic bank in Cyprus, in the category ‘Best Corporate / Institutional Internet Banks’.

2011

The Bank, through its bank subsidiary in Russia Limited Liability Company Commercial Bank “Hellenic Bank” operates its first company owned branch in the Russian capital, offering full banking operations as at 11 January 2011.

2013

On 26 March 2013, the Bank, as a result of a transnational understanding of the governments of Greece and Cyprus, within the framework of the agreement for international funding with Troika and according to the instructions of the Ministry of Finance and the Central Bank, consented to the sale of BNG to Piraeus Bank SA with immediate effect.

The Group secures its autonomous course and gives a new dynamic to the Cyprus economy. It successfully completes the enhancement of its capital base, drawing €358 million from private sources and overbalancing by €64 million the capital deficit of €294, which was imposed on the basis of the extreme scenario of PIMCO, ensuring consequently a Common Equity Tier 1 Ratio over 9%.

2014

The Bank becomes the first bank internationally that is certified with the environmental quality mark Green Key for its Head Office and Green Offices for 16 of its buildings.

The Bank proceeded with the sale of the Group’s Russian Subsidiary, at an arm’s length basis with Russian investors as counterparties, after having obtained the necessary approvals from the Central Bank. The Bank sold its subsidiary as part of the Group’s continuous efforts for more effective management of available resources, capital planning, active risk management and risk-weighted assets and to focus on key markets.

3. BANK OBJECTIVES

The principal objectives of the Bank, as set out in article 3 of its Articles of Association, are to carry out banking and financial operations, grant loans, find or withdraw or accept deposits and carry out all types of operations that relate to the entire spectrum of activities of commercial banks, financing organizations and assignees.

The objectives of the Bank are described in detail in its Articles of Association which is a public document that has been submitted to the governmental department of the Registrar of Companies and Official Receiver in Cyprus.

4. ACTIVITIES

The Group offers a wide spectrum of services in the financial sector to individuals, businesses, governmental and semi-governmental organisations. The main activities of the Group consist of the acceptance of deposits and lending, as well as other banking services, such as the processing of

PROSPECTUS overseas transactions which relate to exports and imports and the issuance of guarantees. The Group also offers bancassurance and investment services as well as custodian and factoring services.

The banking activities of the Group are operated through the Bank, while investment services are provided through its subsidiary company, Hellenic Bank (Investments) Ltd and other specialised service departments. The Group’s insurance business is operated through subsidiary Pancyprian Insurance Ltd, which provides non-life products and services, and Hellenic Alico Life Insurance Company Ltd, which provides life bancassurance products and services.

In Cyprus, the Bank operates through a network of 57 retail branches and provides business services via two corporate centres and four business centres. Furthermore, it operates four international and one shipping business centre.

The Group also operates four representative offices in total: two in Russia (Moscow and Saint Petersburg), one in Ukraine (Kiev) and one in South Africa (Johannesburg).

4.1 ACTIVITIES IN CYPRUS

4.1.1 Business Units

The Bank operates its banking business through the following divisions: Corporate Banking Division, Business Services Division, Retail Division (including Card Services) and International Banking Division. The International Banking Division is under the Global Markets & International Banking Division which also includes Financial Institutions, Treasury, Custodian Services, Private Banking and Hellenic Bank (Investments) Ltd. Each of these business units works together with the Group Arrears Management and Debt Recovery Unit.

4.1.1.1 Corporate Banking Division

The Corporate Banking Division’s primary and perennial goal is to continuously provide upgraded and ever-improving quality services to large businesses, public companies and semi-governmental organisations that operate in Cyprus. A basic element for achieving this goal is the professional, friendly and effective customer service, as well as the provision of consulting services to address customers’ current and future needs, which is especially important given the current economic recession. Particular emphasis is given on the study and analysis of the key factors which affect the operations and cash flow of companies, with the purpose of determining the necessary measures for dealing with the risks associated with each financing. Apart from the management and consolidation of the existing portfolio, the aim is to attract new customers with healthy economic profiles while developing the portfolio of existing clients.

All officers who staff Corporate Centres have the necessary academic background are properly qualified, experienced and properly trained and have as their primary aim the delivery of a prompt and effective customer service. The Corporate Banking Division is the main lending unit of the Group and is primarily funded by the deposits of the retail branch network of the Retail Division

The Corporate Banking Division, in cooperation with other units and departments of the Group, provides integrated solutions which include the full range of products and services offered by the Group and are in line with the continuously changing financial needs of customers as described below:

 Overdraft Accounts

 Long-term Loans

 Short-term Loans

PROSPECTUS

 Factoring

 Letters of Credit

 Trade Finance

 Letters of Guarantee

 Credit Cards (Company and personal)

 The facilities are aimed at all sectors of the economy and are marketed according to the strategy of the Bank at the time.

4.1.1.2 Business Services Division

The rapid expansion of the Bank’s operations created the need for a revamp of the structure of the Group to help maintain its customer-centric focus. In order to better serve the Small and Medium Enterprises (“SMEs”) sector which constitutes the backbone of the Cyprus economy, the Business Services Division was established.

The Business Services Division offers modern and continuously improved services and specialised products aimed at fully meeting the banking of SMEs and their directors and shareholders. Supporting business during this period has been a primary objective of the Business Services Division in combination with the development and maintenance of a sustainable professional and human relationship through a high-quality, friendly and prompt service.

The Business Services Division is staffed with qualified, experienced and skilled officers who offer professional and efficient service to SMEs. The same broad range of products and services of the Group (as described above) and the constantly upgraded technology systems form the foundation for building strong client relationships. Given ongoing recessionary pressures in Cyprus, the Business Services Division plays a key role in restarting the economy by providing financial solutions for the development of sustainable business and the utilisation of European funding programs.

In the midst of the economic downturn experienced by Cyprus, strengthening the infrastructure of the Business Services Division has been a strategic priority of the Group since the SME sector presents a potential for future growth. Both the Corporate and the Business Services Divisions contribute significantly to the credit expansion and the overall strategic targets of the Group.

4.1.1.3 Retail Division

The Retail Banking Division has played and continues to play a central role in the development and ongoing success of the Bank. Through the Retail Banking Division, the Bank offers a wide variety of retail products including, among others, current accounts, savings accounts, loans (such as housing loans, energy loans, student loans, car loans and personal loans), credit cards and debit cards. The Retail Banking Division offers these products and services through its 57 branches as well as the customer service line.

Providing customers with a highly personalised, customer-centric service is a significant part of the Retail Banking Division’s activities. For example, the Retail Banking Division offers flexible, bundled product and service packages to its customers based on their age and personal needs.

This division has also upgraded and redeployed branches to a new value added geographical distribution in order to better serve customers, under the current conditions. The development of the branch network in terms of both number and geographic dispersion, allowed the Group to take

PROSPECTUS advantage of the various opportunities presented through the changes of the banking environment, following the bail-in events of March 2013. Through the branch network and the use of the latest developments in net banking and mobile banking, the Retail Banking Division strives to meet the evolving needs of the market and their customers.

The upgraded retail branch network helped the Bank build deposits from a large pool of customers. The deposits surplus of the Retail Banking Division allowed the Bank to keep financing the other business units and avoid borrowing from the interbank market or the ECB following the events of March 2013.

Following the bail-in, the Retail Banking Division seeks to focus on maintaining relationships with existing customers and on attracting young customers through a new specialised account and new electronic products.

4.1.1.4 Global Markets & International Banking Division

The Global Markets & International Banking Division is comprised of six sub-divisions: International Banking, Financial Institutions, Treasury, Custodian Services, Private Banking and the services provided through the subsidiary Hellenic Bank (Investments) Ltd.

 International Banking

International Banking aims at providing quality services and support to international customers through a streamlined approach, focusing on customer service and regular employee training and development, drawing on the significant experience in the field of international banking. The International Banking Division focuses on the implementation of technological innovations and automations, and on the application of competitive pricing. Emphasis is also placed on enhancing the mutual trust between the Bank and each customer. The commitment to the high level of quality service provided was recently reaffirmed through the recertification of the three international business centers and the first time certification of the new international business centers in Nicosia, with the ISO Standard 9001:2008. The Group also operates four representative offices in total: two in Russia (Moscow and St. Petersburg), one in Ukraine (Kiev) and one in South Africa (Johannesburg).

International Banking has developed rapidly by exploiting the opportunities created by the introduction and promotion of Cyprus as an international business centers. The Bank was the first to identify the prospects of this sector, establishing the first of its kind offshore business service centre in Limassol, in 1990.

With the accession of Cyprus to the European Union and the loss of the benefits the island enjoyed as an offshore business centre, the Bank together with other companies supporting this sector have focused their attention on providing services to international clients (in particular for Russian-based clients and entities) who chose to have a presence in Cyprus utilising the favourable tax status and the quality of the services offered. Although the bail-in of the Bank of Cyprus and Laiki Bank in March 2013 was initially expected to adversely affect the operations of the International Banking Division, the Bank has not experienced any significant exit or move of accounts by its international clients. Consequently, International Banking remains a significant source of revenue not only for the country’s economy but also for the Bank through the provision of fee and commission income.

 Financial Institutions

The Financial Institutions department is responsible for maintaining and enhancing the business relationships of the Bank with other banks in Cyprus and abroad. In this context the Financial Institutions department is responsible for the maintenance and operation of an adequate number of Nostro accounts as well as for the smooth operations of accounts that other Banks hold with us

PROSPECTUS

(VOSTRO accounts) and the management of other banking relationships (Relationship Management Application – RMA).

The Financial Institutions department also ensures for the existence of various agreements with foreign banks which are necessary for the operation of other departments of the Bank such as the Trade Finance department and the Treasury department.

 Treasury Department

The Treasury department is responsible for managing the investment portfolio of the Bank as well as the market and liquidity risks of the Group, acting in accordance with the policy and limits set by the Assets and Liabilities Management Committee (“ALCO”). Investments include interbank placements in Euro (including placements with the ECB), interbank placements in foreign currency and investment in mainly sovereign and supranational bonds. The Treasury Department services various client transactions mainly for FX purposes.

The largest part of the investment portfolio is in Cyprus Government Bonds where relevant information provided at Part II, Paragraph 3.11.

 Custodian Services

The Custodian Services department of the Bank participates as official custodian and clearing member in the clearing and settlement systems of the CSE and the Athens Stock Exchange (the “ATHEX”). In addition, through a selective network of sub-custodians in most international markets, the Custodian Services department is able to serve the needs of all its customers, whether these are local or international, institutional or other categories of investor, at service quality standards comparable to those offered by top custodians abroad. Customers include clients of the Private Banking department, funds registered in Cyprus (licensed by the Central Bank), institutional investors (such as insurance companies and provident funds) and local financial companies (licensed by CySEC).

The services offered by the Custodian Services department cover not only the core custody services, such as safekeeping, transaction settlement, cash management, corporate actions, tax reclaims and reporting, but also specialised services aimed at global custodians and the managers of collective investment schemes, as well as escrow agency services and fiduciary deposits. The Bank also openly offers its expertise to fund managers and all other customers, assisting them in the safe management of their investments.

 Private Banking

The Private Banking department offers premium banking and investment services to high net-worth individuals in Cyprus and abroad. The unit's activities extend to international markets, implementing a consistent strategy that is based on the following three pillars: (1) proper evaluation and satisfaction of customers’ investment needs; (2) ongoing personnel training and development; and (3) access to a variety of international investment choices through a flexible policy and cooperation with prominent overseas financial institutions.

Among others, the unit offers mutual funds of leading overseas fund managers, structured products including capital-guaranteed products, investments in shares and bonds traded in major international markets, investments in precious metals including gold, deposit products including fiduciary deposits and loans against securities portfolios.

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 Hellenic Bank (Investments) Ltd

Hellenic Bank (Investments) Ltd was established in 1986 as a wholly owned subsidiary of the Group. It is a member of the CSE and since October 2006, a member of the Athens Stock Exchange (“ATHEX”). Hellenic Bank (Investments) Ltd holds a licence by the CySEC to operate as a Cypriot investment firm providing investment and ancillary services. Specifically, it provides the following investment services, among others:

 Brokerage transactions in the CSE and the ATHEX, as well as in major European and U.S. stock markets through the ΧΝΕΤ platform of the ATHEX

 Asset management, primarily to provident funds / pension funds, insurance companies and institutional investors

 Investment advice, mainly to provident funds / pension funds

 Investment banking, which, among other things, includes listing of securities on the stock exchange, issue of bonds on behalf of customers and advisory services on mergers and acquisitions.



Hellenic Bank (Investments) Ltd assigns great importance to the continuous upgrading of its technological infrastructure, aiming at improving performance and meeting the growing needs of its customers. Evidence of its continuous development is the upgrading of the online trading platform HBI eTrade, which enables all its customers to carry out transactions in the major stock markets of Europe and the U.S., under a single unified trading portfolio.

4.1.1.5 Card Services

The persistence in the improvement of the quality of customer service and the maximisation of card efficiency are the primary objectives of the Card Services department. These are achieved through continuous investment in advancing the technological infrastructure underlying the card management and control systems, the simplification of internal procedures, the renewal of incentive schemes, special offers to cardholders and the creation of innovative card products. In particular, the Bank issues debit and credit cards of MasterCard and VISA.

The successful combination of all the above is clearly reflected in the results of the department. Throughout the years, the Card Services department’s growth rates have been much higher than those of the market, something which is still reflected in today’s difficult economic conditions.

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4.1.2 Group Arrears Management and Debt Recovery

In 2013 and 2014, the Bank established a new directorate to streamline processes for the handling of clients who are in arrears and hence better manage the Bank’s non-performing loans portfolio. The new directorate seeks to: proactively increase collections from or initiate restructurings for clients who are in arrears.

The directorate is comprised of the below units:

4.1.2.1 Collections and Arrears Monitoring

The Collections and Arrears Monitoring Unit handles clients of the Retail Division who are in arrears in the payment of their credit facilities by making ongoing telephone calls to the relevant clients or guarantors aimed at debt recovery.

4.1.2.2 Arrears Management Unit (the “AMU”)

The AMU manages the credit facilities of clients from the Corporate, Business, International Banking and Retail divisions who are in arrears beyond 60 days, are undergoing the second restructuring of their credit facilities or have balances exceeding €10 million. The AMU has been restructured as an independent, centralised unit in accordance with the provisions of the 2014 Directive of the Central Bank on arrears management.

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4.1.2.3 Debt Recovery Unit

The Debt Recovery Unit handles unsustainable cases and/or uncooperative clients for which, in most cases, legal action needs to be taken in order to recover the debts. The Unit is composed of the preliminary and legal actions sections.

4.1.2.4 Loans and Asset Management

The Loans and Asset Management Unit manages, in cooperation with external consultants, the potential sale of loans and real estate held as security.

As of the date of this prospectus, the Bank has engaged external consultant Oliver Wyman to review the organisational structure of these units and assist with the recommendation and design of appropriate key performance indicators. In collaboration with FTI Consulting, the Bank has reviewed the recommendations and has put together a plan to be deployed.

4.2 OVERSEAS OPERATIONS

4.2.1 Representative offices

The Group operates four representative offices in total: two in Russia (Moscow and St. Petersburg), one in Ukraine (Kiev) and one in South Africa (Johannesburg). The Bank has obtained all relevant licences for the operation of all representative offices from the respective competent authorities in Cyprus and the countries in which they operate. The main activities of these offices consist of representing and promoting the Bank’s interests and monitoring international activity developments in these countries, as well as the wider regions in which they operate.

The Bank’s physical presence in these countries facilitates the direct monitoring of economic, political, legal and other developments, contributing towards the adoption of timely measures and actions with the purpose of protecting the interests of the Bank and its customers.

4.2.2 Sale of the BNG

With this transaction, the Group incurred a total loss of €43,6 million.

4.2.3 Sale of the Group's Russian Subsidiary

On 5 June 2014, the Bank disposed 100% of the share capital of its Russian Subsidiary.

The Bank sold its Russian Subsidiary as part of the Group’s continuous efforts for more effective management of available resources, capital planning, active risk management and risk-weighted assets and to focus on key markets.

With the completion of the financial results’ review for the period from 1 April 2014 until 5 June 2014 (date of signature) by an independent expert of joint consensus, the selling price of the Russian Subsidiary was adjusted to 1,154 million Rubles (€24,4 million approximately) and the profit from the sale was €3,0 million.

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4.3 SUBSIDIARY INSURANCE COMPANIES

4.3.1 Pancyprian Insurance Ltd

Pancyprian Insurance Company Ltd was established in 1963 offering insurance products to the sectors of Life and General Insurance. Pancyprian Insurance Ltd was established in 1992 and absorbed the portfolio of Pancyprian Insurance Company Ltd. Since 1994, Pancyprian Insurance Ltd is active in the sector of general insurance and, since 1999, is a member of the Group.

Pancyprian Insurance Ltd puts emphasis on a customer-centric approach, offering integrated insurance solutions to its customers with professionalism, always in line with healthy insurance principles. Pancyprian Insurance Ltd offers a wide range of non-life insurance products for private individuals, such as: motor third party and own damage, property damage, personal accident, employers' liability, travel insurance and transport of personal effects. The needs of commercial clients are covered through the offering of the following non-life insurance products: motor third party and own damage, property damage, travel insurance, liability, business interruption, engineering, marine cargo, electronic equipment, fidelity guarantee and personal accident.

The insurance products are promoted through the branch network of Pancyprian Insurance Ltd, in all the districts of Cyprus, through intermediaries and through the branch network of the Bank.

At the same time, Pancyprian Insurance Ltd places particular emphasis on the automation of procedures, the constant technological upgrading offering products which provide immediate coverage, with simple procedures, through Hellenic Bank’s branch network and Hellenic Net Banking.

4.3.2 Hellenic Alico Life Insurance Company Ltd

Hellenic Alico Life Insurance Company Ltd was established in Cyprus in 2000 and commenced operations in 2001, following an agreement between the Bank and American Life Insurance Group (ALICO AIG Life, today Metlife Alico) with the purpose of providing life insurance products exclusively to the customers of the Bank (bancassurance). The Bank retains a 72,5% interest, while Metlife Alico retains the remaining 27,5%. Hellenic Alico Life Insurance Company Ltd holds a licence to conduct business in life insurance, life insurance associated with investments, personal accidents and diseases.

Hellenic Alico Life Insurance Company Ltd’s philosophy is based on the provision of products characterised by their simplicity and the ease with which they can be promoted to customers by the Bank’s highly trained staff. It differs from others in the market by the innovative nature of its products in conjunction with the way they are promoted. The Hellenic Alico Life Insurance Company Ltd’s products are divided into three main categories:

 Credit Life: products connected with facilities, which are sold as collateral for loans granted by the Bank.

 Unit Linked: life insurance and investment products (such as future plus and student plus products).

 Other: standalone products offering cover only (such as accident prevention, dread disease, student medicard, protection plus and cover plus).

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4.4 HEAD OFFICE SUPPORT SERVICES

4.4.1 Risk Management of the Group

The Risk Management function monitors the various risks to which the Group may be exposed as a result of the services it offers across the spectrum of its operations and geographies, with the purpose of improving risk identification, measurement, monitoring and mitigation mechanisms and processes. The Group has the following specialised risk management departments, each of which has distinct responsibilities and covers specific risk areas:

 Credit Risk Management  Operational Risk Management  Market and Liquidity Risk Management

For more detail on the Group’s risk management governance and departments, see Part VI.

4.4.2 Group Compliance Unit

The Group Compliance Unit consists of a team of 15 staff members who are dedicated to monitoring, implementing and improving the Bank’s compliance processes, primarily on issues relating to anti- money laundering and terrorist financing.

The Bank currently maintains two anti-money laundering systems: sanctions filtering and transaction monitoring. The Group Compliance Unit receives suspicious activity reports as incidents arise and then determines whether escalation is necessary. Apart from anti-money laundering processes, the Group Compliance Unit handles general compliance matters, such as data protection, among others.

The Group Compliance Unit strives for continuous improvement against money laundering. Furthermore, the unit is continuously training its personnel as well as personnel of other business units in matters concerning money laundering and the improvement and upgrade of automated transaction monitoring systems processes, the constant communication with and oversight of business units and the submission of recommendations for improvement.

In addition to issues relating to money laundering, the unit deals with issues of general compliance in collaboration with the local officers and managers of services and business units of the Group, the Group Compliance Unit handles matters related to compliance with the Group’s Services and Products within the institutional and regulatory framework.

4.4.3 Legal Services

The Legal Services team provides legal advice and / or legal support to all units of the Group on an ongoing basis. The Legal Services team also engages with the preparation and / or evaluation of new legal terms and / or standard legal documents and contracts used by the Bank by monitoring and evaluating new legislation and amendments to the existing ones. The Legal Services team also handles all claims against the Bank in collaboration with external lawyers, cases against the Bank’s administrative bodies and / or issues arising in connection to those.

4.4.4 Electronic Service Platforms

The Bank, recognising the rapid evolution of technology in the field of electronic service platforms (automatic teller machines at the branches, online banking, customer service line), has integrated in planning the continuous upgrade of the infrastructure with the objective to continuously offer exemplary customer service.

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The Bank has a network of 69 ATMs serving its clients. The ATM network is currently being upgraded with engines which have the latest software, allowing the Bank to offer of a wider range of services and products to customers.

The primary goal of Hellenic Net Banking is the provision of safe and seamless, high-quality customer service around the clock, from wherever customers may be in the world.

The continuous upgrade of Hellenic Net Banking is a major strategic concern of the Group enabling it to respond to new customer demands. International customers can use the service in the Greek, English and Russian languages. The continued efforts to improve Hellenic Net Banking resulted in the award of the prestigious Global Finance magazine as the best Internet bank in Cyprus (2014), for both individuals and businesses.

The continuous system upgrades have brought a significant increase in the number of customers using the Net Banking service and a simultaneous increase in the number of transactions and other services processed through the Hellenic Net Banking system thus, reducing operational cost.

The customer service infrastructure starts with the branch network, the business and international centres, is supplemented by Hellenic Net Banking and is completed by the customer service line. The customer service line offers support and information to a large number of customers, mainly outside the Bank’s normal working hours, contributing to a more effective service.

The service is staffed by experienced officers who receive ongoing training and updating in order to be able to deal promptly and effectively to customers' requests. The customer service line is supported by the latest technology infrastructure which can utilise the introduction of new technology and capabilities at the various units of the Group.

4.4.5 Group Operations & Information Technology

The Group’s Operations Unit is responsible for the support services of Information Technology (IT), Organization, Methods & Re-engineering, Data Analysis, Management & Quality, Technical Services, Property Management, Payments Centre and Information Security / Business Continuity. It aims at automating processes and systems, re-engineering operations, reducing expenses, increasing productivity, supporting and providing services to the business units and other service units, managing data as well as improving business continuity.

The IT department in particular has the responsibility of supporting/ maintaining/ expanding IT systems, infrastructure and network of the Bank, as well as the assessing and introducing new systems, infrastructure and technology. IT has become the supplier of business solutions through technology, playing a key role in the reengineering of our operations. The main banking system has been internally developed, enabling flexibility in response to business needs and regulatory obligations as well as the quick development of new products. Payments Systems and Hellenic Net Banking, which have received international awards and global recognitions in recent years, have also been developed internally. The rest of business requirements are primarily accommodated via the parameterisation of specialised software packages (e.g. card systems, trade finance) or where this is not possible, via internal development or outsourcing the development. Further to Net Banking, there exist other e- Channels for the customers such as ATMs, SMS and Mobile Banking. The Bank has also a central data warehouse which is supplied with current and historical data from the primary systems, thus serving various data needs and reporting requirements.

4.4.6 Group Strategic Development

The Group Strategic Development Department’s responsibilities include, among other things, the preparation of the Group’s annual business plans, the three-year strategic plan and the monitoring of

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4.4.7 Competition

4.4.7.1 Cypriot banks

With the absorption of the Laiki Bank, Bank of Cyprus is now the largest bank in Cyprus. According to the 2014 6 months results of the Bank of Cyprus and the data from the Central Bank, as at 30 June 2014, the Bank of Cyprus owned nearly 39,57% of the local lending market. The Bank of Cyprus has recently completed a significant recapitalisation plan and is currently implementing a restructuring plan, aiming for a gradual recovery. The new Board of Directors of the Bank of Cyprus is expected to set a high priority on the problems relating to provisions and non-performing loans.

Co-operative Societies (“Coops”) are focused on Cypriot customers and do not offer international banking. They are mainly competitors in deposits and mortgages. Coops are now in state hands, after receiving state aid for their total recapitalisation needs. They are currently under consolidation and are expected to significantly change the way they operate, to be closer to that of commercial banks. The restructuring plan has progressed with the merge of 93 cooperatives down to 18.

4.4.7.2 Greek banks

Four Greek banks offer banking services in Cyprus. All of them belong to large groups which were recapitalised, mainly by the Greek state through the Financial Stability Fund.

Alpha Bank has the largest presence in the Cypriot market (about 30 branches) and offers all the banking and insurance services. In Greece, Alpha Bank recently acquired Emporiki Bank, thus significantly increasing its market share.

Piraeus Bank appears to be focused on increasing its market share in Cyprus, especially in the retail banking sector, offering a full range of banking services. It has about 15 branches located in all the cities of the country. In Greece, Piraeus Bank is now the largest bank, by more than doubling its portfolio of loans through a number of acquisitions (ATEbank, Millenium, Geniki and the three Cypriot banks which were operating in Greece until 2013).

Eurobank is very focused on large enterprises, high net worth individuals and international banking. It has seven banking centres located in all the cities of Cyprus. In Greece, Eurobank absorbed two smaller banks (the new TT Hellenic PostBank and the new Proton Bank).

National Bank of Greece has 16 branches in all cities around Cyprus and has a small share of the Cypriot market. In Greece, it is the only bank that did not make any acquisitions.

4.4.7.3 Other Banks

RCB Bank (former Russian Commercial Bank) is a member of the Russian group VTB. It offers a full range of banking services with an emphasis on international banking with a clientele mainly composed of Russian companies and foreign nationals. It has branches in Nicosia and Limassol. It is currently operating in the Cypriot market and is expected to follow Eurobank’s strategy of selectively targeting medium and large businesses for loans.

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5. GROUP STRUCTURE

The Bank is the principal entity of the Group. The Bank does not depend on any of its subsidiary companies for its ongoing viability.

The diagram below presents the structure of the Group as at the date of this Prospectus.

Hellenic Bank Public Company Ltd

Hellenic Bank Trust Hellenic Bank and Finance (Investments) Ltd Corporation Ltd (100%) (100%)

Hellenic Insurance Pancyprian Insurance Ltd Agency Ltd (Greece) (99,99%) (99,50%)

Hellenic Insurance Hellenic ALICO Life Agency Ltd (Cyprus) Insurance Company Ltd (100%) (72,50%)

Borenham Holdings Ltd (100%)

LLC Format Invest (100%)

Information with relation to the subsidiary companies of the Bank is presented in the following table:

Percentage of Country of share operation and capital/percentage registration of voting rights Hellenic Bank (Investments) Ltd ...... Cyprus 100,00% Hellenic Bank Trust and Finance Corporation Ltd ...... Cyprus 100,00% Pancyprian Insurance Ltd ...... Cyprus 99,99% Hellenic Alico Life Insurance Company Ltd ...... Cyprus 72,50% Hellenic Insurance Agency Ltd ...... Greece 99,50% Hellenic Insurance Agency Ltd ...... Cyprus 100,00% Borenham Holdings Limited ...... Cyprus 100,00%

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Under the Transfer Plan Agreements pursuant to Reorganization on 22 December 2011, the Bank absorbed the whole of the operations and all assets and liabilities of Athena High Technology Incubator Ltd, which was dissolved without liquidation.

Athena Real Estate Holdings Limited was a 100% subsidiary of the Bank, had 200.000 issued and unpaid (not called-up) shares of nominal value €1,71 and had been bought by Athena Cyprus Company Ltd for €1 in May 2010. During 2012 the Bank activated a voluntary liquidation process for the company, which was completed on 19 March 2013.

On 28 March 2011, the subsidiary company Limited Liability Company Commercial Bank “Hellenic Bank” entered into an agreement with the Bank for the issuance of a 10-year subordinated loan of 436 million Rubles.

On 23 September 2011, Hellenic Trade Services Limited ceased operations and on the same day entered into voluntary liquidation. The process of its liquidation was completed on 26 June 2012.

On 21 December 2012 the dissolution of Hellenic Trust Holdings S.A. was completed and the company was deleted from the Companies Register.

Borenham Holding Limited holds 100% of the share capital of the Russian Limited Liability Company ‘Format Invest’, owner of the premises of the Bank’s former Russian Subsidiary.

The subsidiary companies of Pancyprian Insurance Ltd were the following:

31 December 2013 31 December 2012 % % MIA (Insurance Agencies) Ltd ...... --- 100 Protection Insurance Agencies Brokers Ltd ...... --- 100

The absorption process, under the Transfer Plan Agreements pursuant to Reorganization, of Hellenic Pancyprian Insurance (Estate) Company Ltd and Hellenic Pancyprian Insurance Agencies Ltd by Pancyprian Insurance Ltd, was completed on 25 September 2012. Upon completion of this process, Pancyprian Insurance Ltd absorbed the whole of the operations and all assets and liabilities of these companies, which were dissolved without liquidation.

The company Protection Insurance Agencies Brokers Ltd, which was dormant, was dissolved by voluntary liquidation on 19 March 2013. The company Yiannis Charalambides Ltd, which was dormant, was dissolved without liquidation on 17 October 2012.

On 31 December 2012, the company MIA (Insurance Agencies) Ltd was dormant and in the process of voluntary liquidation. It was liquidated on 25 January 2013.

The Bank takes into account the impairment of the investments it holds in its subsidiaries based on future cash flows, which were discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the investment risks.

On 31 December 2013 the Bank proceeded to the impairment of its investment in its subsidiary Limited Liability Company Commercial Bank “Hellenic Bank” and Borenham Holdings Limited by €5.108 thousand and €7.389 thousand respectively, while on 31 December 2012 the Bank proceeded to the impairment of its investment in Pancyprian Insurance Ltd by €8.420 thousand.

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On 5 June 2014, the Bank completed the deliberations and the signing of all relevant agreements for the sale of 100% of the wholly owned subsidiary company of the Group in Russia Limited Liability Company Commercial Bank “Hellenic Bank”.

The sale was on an arm’s length basis with Russian investors as counterparties and after having received the necessary approvals from the Central Bank.

The Bank sold its former Russian Subsidiary in line with the Group’s continuous efforts for more effective management of the available resources, capital planning and active risk management and risk- weighted assets so as to focus on key markets.

The former Russian Subsidiary was founded by the Bank. In February 2009, it obtained a licence to conduct banking operations in Russia. On 11 January 2011, it completed the preparatory work and started providing banking services in Moscow. In view of the events of March 2013 and the uncertainty in the Russian Subsidiary, the Russian Subsidiary had developed limited activities in Russia with total assets of around €29 million.

On 30 June 2014, the Bank proceeded with further impairment of its investment in its subsidiary Borenham Holdings Limited by €2.191 thousand.

6. PERSONNEL

The geographical distribution of the Group’s personnel during the period 2011 – 2013, as at 30 September 2014 and as at the date of this Prospectus, was as follows:

Date of Prospectus 14/11/ 2014 30/9/2014 31/12/2013 31/12/2012 31/12/2011 Cyprus ...... 1.404 1.402 1.343 1.528 1.536 Oversees1 ...... 17 17 53 425 440 Total ...... 1.421 1.419 1.396 1.953 1.976

(1) Overseas personnel includes staff in the representative offices of the Bank in Russia (Moscow and St. Petersburg), Ukraine (Kiev) and South Africa (Johannesburg). Five members of our overseas personnel, including the managers of the representative offices in Moscow, St. Petersburg and Kiev, are Cypriot nationals.

Payroll reduction and overall cost containment have been key strategic areas of focus for the Bank in recent years, with the recent Eurogroup events placing an even greater importance on the application of prudent remuneration policies by Cypriot banks.

Labour relations and employment benefits are determined by the collective bargaining agreements signed between the Cyprus Bankers Employers’ Association (of which the Bank is a member) and the Cyprus Union of Bank Employees. In March 2014, a collective agreement was signed for the 2014- 2016 period which, through specific salary reductions and 50% reductions in other staff allowances and benefits, resulted in lowering the annual labour cost of the Bank by 12%. Based on the agreement of March 2014, the signing parties are currently in negotiation with the assistance of the Ministry of Labour and Social Insurance. The issues that remain under negotiation are the adjustments on staff loan interest rates and the hours of work.

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As part of the efforts of the Group to reduce staff costs and following the relevant decision of the Board of Directors, the Bank proceeded on 19 July 2013 with the VRS, an early voluntary retirement scheme which was addressed to all employees of the Group in Cyprus. The VRS was completed on 31 August 2013 and resulted in the voluntary departure of 163 staff members. In addition, in 2013 26 people left the Bank due to normal retirement or resignation. With the conclusion of the VRS, a reduction of 11% in the number of staff was achieved, with simultaneous saving in total employment costs of approximately 14%.

Following the VRS, the Bank has continued to streamline its operations to increase efficiency and reduce staffing requirements, for example by seeking to centralise various services, unify departments, rationalise the branch network and commercial/corporate business units and reallocate staff to priority areas. As a temporary and cost effective measure to address part of the staffing requirements following the VRS, the Bank participates in a Government introduced scheme for the placement of unemployed new graduates to businesses for the purpose of acquiring employment experience.

7. BOARD OF DIRECTORS AND KEY MANAGEMENT FIGURES

7.1 BOARD OF DIRECTORS

The Board of Directors of the Bank consists of the following 11 members:

Irena A. Georgiadou Non-executive Independent Chairwoman Born on 18 August 1976. Graduated from the English School in Nicosia and studied Economics and Politics (B.Sc.) at the University of Bristol in the United Kingdom. A Chartered Accountant (2001 A.C.A.) and a Corporate Financier (2006 C.F.) – Member of the Institute of Chartered Accountants in England and Wales.

Worked in the international audit firm / financial advisors Pricewaterhouse Coopers for six years and subsequently, in 2004, became Chief Financial Officer and Corporate Finance Manager of construction company Cybarco Plc. In 2008 she took over as Chief Financial Officer of betting company Megabet Ltd until 2011, when she assumed the management of the office of a Member of the House of Representatives of the Republic of Cyprus. In 2013, for one year, she served in the Ministry of Finance as Advisor to the Minister / Director of his Office. In March 2014 she was appointed by the President of the Republic as Commissioner for the Reform of the Civil Service, a position from which she resigned after her election to the Board of Directors of the Bank.

Elected Member of the Board of Directors of the Bank on 28 May 2014 and Chairwoman of the Board on 8 July 2014. Chairwoman of the Nominations / Internal Governance and Remuneration Committees of the Bank’s Board of Directors.

Marinos S. Executive Member Yannopoulos Born on 7 August 1953. Graduated from the Athens College and studied Economics (B.A.) at the American College of Greece (Deree College), Industrial Economics (M.A.) at the University of Sussex in the United Kingdom and Business Administration (M.B.A.) at the University of Manchester also in the United Kingdom.

Commenced his career in 1978, as internal auditor working for five years in Exxon in London and Rome. Afterwards, worked for ten years in Chase

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Manhattan, in the Treasury Department in New York and then in Milan and Frankfurt as Country Treasurer and Capital Markets Executive. Returned to Greece in 1991 to take over as General Manager of the Ionian Bank. Served as Chief Financial Officer, Member of the Board of Directors and the Executive Committee of Alpha Bank from 1994 until 2010. Subsequently became Deputy Managing Director (until February 2014) and Member of the Board of Directors of CHIPITA S.A. based in Athens. He served as Executive Vice President at Axia Ventures Group Limited from January – June 2014.

Elected Member of the Board of Directors of the Bank on 28 May 2014 and Vice Chairman of the Board on 17 July 2014, an office from which he resigned on 9 September 2014 upon his appointment as Chief Executive Officer of the Group until the appointment of a new Chief Executive Officer.

David Whalen Bonanno Non-Executive Independent Member Born on 14 December 1981 in Glen Cove, New York. Studied Psychology (B.A.) at Harvard University in the United States of America.

Commenced his career in 2004 in the financial advisory firm Rothschild Inc. as an analyst in the Restructuring Group and afterwards, as from 2006, worked in the private investment firm Cerberus Capital Management L.P. as an associate in the Private Equity and Distressed Investment Group. In 2008 he took over as Managing Director of the Investment Fund Third Point LLC. In charge of the long-term equity investments of Third Point in Greece and Cyprus.

Elected Member of the Board of Directors of the Bank on 28 May 2014. Member of the Nominations / Internal Governance and Remuneration Committees of the Bank’s Board of Directors.

Vassos Y. Komodromos Non-Executive Independent Member / Senior Independent Director Born on 2 May 1964. Graduated from the Pancyprian Lyceum in Larnaca. A Chartered Accountant, practicing in the profession since 1987. Started his career with Littlestone Martin Glenton in London where he trained to become a member of the Institute of Chartered Accountants in England and Wales and a member of the Chartered Association of Certified Accountants. In 1992 co-founded Komodromos & Co Ltd, offering auditing, accounting, tax and business consultancy services. He is the Senior Director, heading the Paphos office of the company. Specialises in the provision of business consultancy services and advises local and international clients on compliance and business finance issues.

Appointed Member of the Board of Directors of the Bank on 18 February 2014 and Senior Independent Director on 17 July 2014. Also Member of the Board of Directors of Pancyprian Insurance Limited. Member of the Nominations / Internal Governance and Remuneration Committees of the Bank’s Board of Directors.

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Ioannis A. Matsis Non-Executive Independent Member Born on 2 January 1969. Graduated from the English School in Nicosia and studied Chemical Engineering (B.A., M.Eng.) at the University of Cambridge in the United Kingdom. Worked in the investment banking sector of ING Barings, Chase Manhattan and Mizuho International in London. At ING Barings, was Head of Credit Derivatives Structuring and Trading and at Mizuho International, built and managed a Team responsible for structuring and trading credit, interest rate and foreign exchange derivative products. Returned to Cyprus in 2008 to work at Point Nine Ltd, a company he had co-founded, which offers middle and back office outsourcing and financial software services to financial institutions.

Appointed Member of the Board of Directors of the Bank on 24 December 2013. Member of the Audit and Risk Management Committees of the Bank’s Board of Directors.

Marianna Pantelidou Non-Executive Member Independent Member Neophytou Born on 5 January 1972. Graduated from the First Kykkos Lyceum in Nicosia and studied Economics at the University of Manchester in the United Kingdom. A Chartered Accountant – Member of the Institute of Chartered Accountants in England and Wales. Worked for the international audit firm / financial advisors Arthur Andersen in London and Boston, in the Financial Markets and Asset Management Divisions, respectively. Served as Vice President in the international credit rating agency Thomson Financial Bankwatch (Fitch Ratings) and was responsible for assessing banks and banking systems in Russia, South Africa, Greece and Cyprus. In 1999 she became Manager, Investor Relations and then Manager, Group Strategy in the Bank of Cyprus. Left in 2012 to work as a financial consultant in the private sector. She served as a Board Member of the National Economic Council from April 2013 until August 2014. Since November 2013 she has worked as Investment Portfolio Manager at Wargaming.

Appointed Member of the Board of Directors of the Bank on 24 December 2013 and also Chairman of the Board of Directors of Hellenic Alico Life Insurance Company Limited. Member of the Risk Management and Nominations / Internal Governance Committees of the Bank’s Board of Directors.

Dr. Evripides A. Non-Executive Member Independent Member Polykarpou Born on 18 January 1962. Graduated from the Technical School in Nicosia and studied Business Administration at the University of Colorado, Denver (B.Sc.) and at the National University, San Diego (M.B.A. in Financial Management) in the United States. Holds a Doctoral Degree (Ph.D.) in Educational Administration from the University of Middlesex in the United Kingdom.

From 1989 until today he is a lecturer at the School of Business Administration of the Cyprus College/European University. Was also Visiting Lecturer at the Cyprus Police Academy (1994-2013) and Member of the Board of Directors of various public companies. In 1997 he became Administrative Head of the Center of Applied Research, Cyprus College and in 2001 Chief Administrative Officer of the Cyprus College itself. In

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2007 he took over as Director of Administration and Human Resources of the European University. Has rendered his services amongst others to various programs financed by the European Union, the United Nations and local institutions. Served as a Member of the Cyprus Securities and Exchange Commission (2011-2013). Since September 2013 is Chief Operating Officer, Middle East and North Africa of Laureate International Universities.

Elected Member of the Board of Directors of the Bank on 28 May 2014. Member of the Nominations / Internal Governance and Remuneration Committees of the Bank’s Board of Directors.

Georgios Fereos Non-Executive Member Independent Member Born on 1 March 1977. Graduated from the A’ Ethnarch Makarios III Lyceum in Paphos and studied Accounting & Finance (B.Sc.) at the London School of Economics & Political Science and Finance (M.Phil.) at the University of Cambridge in the United Kingdom.

Commenced his career in 2000 in London, as investment banker for Credit Suisse First Boston and afterwards worked for Bank of America and Morgan Stanley in Leveraged Finance. After almost nine years as investment banker, he became an investment advisor and specialised in businesses experiencing financial difficulties that needed recapitalization, restructuring and reorganisation. In this area, worked for Gladwyne Investments LLP in London and Alden Global Capital Ltd in New York and Jersey. Since 2013 he has worked as a financial / investment advisor in the private sector.

Elected Member of the Board of Directors of the Bank on 28 May 2014. Member of the Audit and Risk Management Committees of the Bank’s Board of Directors.

Ioannis Ch. Charilaou Non-Executive Member Born on 3 April 1966. Graduated from the Acropolis Lyceum in Nicosia and in 1995, qualified as a Certified Accountant with the Association of Chartered Certified Accountants (2001 F.C.C.A.). In 1998, became a Member of the Association of International Accountants (2001 F.A.I.A.) and in 2001, a Member of the Association of Certified Fraud Examiners (U.S.A.). In 2003, received a postgraduate degree in Business Administration M.B.A. from the University of Leicester in the United Kingdom. In 1988 was employed by the Cyprus Telecommunications Authority in the Internal Audit Department. Since 1997, has been working in the Central Ecclesiastical Fund and the Audit Department of the Church of Cyprus as Head of Research and, since September 2003 as their Director. In June 2013, elected President of the Council of the Institute of Certified Public Accountants of Cyprus, of which he was in the past a member, Secretary and Vice President. Member of the Board of Directors of KEO Plc and of the Boards of various companies of the Hellenic Mining Company Group, of Logosnet Services Ltd and other private companies.

Elected Member of the Board of Directors of the Bank on 1 June 2005 and also Chairman of the Board of Directors of Pancyprian Insurance Limited.

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Chairman of the Risk Management Committee and Member of the Audit Committee of the Bank’s Board of Directors.

Dr. Andreas G. Non-Executive Member Independent Member Charitou Born on 22 November 1958. Studied Business Administration / Accounting at the Economic University of Athens (B.Sc.) and at the Pennsylvania State University in the United States (M.Sc., Ph.D.). Holder of the professional title of Certified Management Accountant (C.M.A., U.S.A.). Was also a member of the American Institute of Certified Public Accountants and holder of the Professional Ethics for CPAs Certificate. Taught at the Pennsylvania State University in the U.S.A. and at the University of Toronto in Canada. Currently a Professor of Finance & Accounting at the University of Cyprus and in charge of the Doctoral Programmes (Ph.D.) and the Postgraduate M.B.A. Programme. Served as Chairman of the Department of Business Administration and Vice Dean of the School of Economics and Management at the University of Cyprus.

He was a Member of the Cyprus Securities and Exchange Commission (2000-2001) and Member of the Board of Directors (2003-2005), the Audit Committee and the Corporate Governance Committee of the Cyprus Stock Exchange. From April 2009 to October 2013 he was an Independent Non- Executive Member of the Board of Directors of the Cooperative Central Bank and served as Chairman of the Risk Management Committee and Member of the Remuneration & Appointments Committee of the Bank. He was appointed by the Council of Ministers as an Expert of the Inquiry Committee on the Cyprus Economy. Member of the Disciplinary Committee of the Institute of Certified Public Accountants of Cyprus.

Appointed Member of the Board of Directors of the Bank on 24 December 2013. Chairman of the Audit Committee and Member of the Risk Management Committee of the Bank’s Board of Directors.

Christodoulos A. Non-Executive Member Independent Member Hadjistavris Born on 20 October 1981. Graduated from the First Kykkos Lyceum in Nicosia and studied Mathematical Science with Finance and Economics at the City University in London. A Chartered Accountant – Member of the Institute of Chartered Accountants in England and Wales.

Worked in the international audit firm / financial advisors Pricewaterhouse Coopers from 2004 to 2008 and afterwards in Group Strategy, Mergers & Acquisitions of the Bank of Cyprus. Since 2014 works at Wargaming as Investment Portfolio Deputy Manager.

Elected Member of the Board of Directors of the Bank on 28 May 2014 and also Member of the Board of Directors of Pancyprian Insurance Limited. Member of the Audit and Remuneration Committees of the Bank’s Board of Directors.

The correspondence address of the Members of the Board Directors is at 200 Limassol & Athalassas Avenue, 2025 Strovolos, Nicosia

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Changes in the composition of the Board of Directors

On 25 May 2011, Mr. Antonis I. Pierides retired from the Board of Directors. On 31 December 2011, Mr. Glafkos G. Mavros resigned from the Board of Directors and on 1 January 2012, Dr. Marios Clerides was appointed.

During 2013, the following resigned from the Board of Directors (a) Mr. Stavros Kremmos on 4 June 2013 (b) Mr. Iacovos G. Iacovou on 2 October 2013 (c) Mr. Sotiris Z. Kallis on 3 December 2013 (d) Mr. Andreas M. Mousiouttas on 4 December 2013, (e) Mr. Kyriacos I. Droushiotis on 5 December 2013 and (f) Dr. Marios Clerides on 20 December 2013.

On 24 December 2013, the following were appointed to the Board of Directors: (a) Mr. Kyriacos J. Koushios, (b) Ms. Marianna Pantelidou Neophytou (c) Dr. Andreas G. Charitou, (d) Mr. Ioannis A. Matsis and (e) Mr. Marios M. Michaelides.

On 14 January 2014 Mr. Charalambos P. Panayiotou resigned from the Board of Directors. On 3 February 2014 and 18 February 2014 Mr. Adonis E. Yiangou and Mr. Vassos Y. Komodromos were appointed, respectively. On 28 May 2014, at the Annual General Meeting, the following resigned from the Board of Directors: (a) Mr. Kyriacos J. Koushios, (b) Mr. Georgios K. Pavlou, (c) Mr. Kyriakos E. Georgiou (d) Mr. Adonis E. Yiangou and (e) Mr. Marios M. Michaelides. After the Annual General Meeting of 28 May 2014, Dr. Andreas P. Panayiotou resigned. On 28 May 2014 the General Meeting of the Shareholders elected the following Directors: (a) Ms. Irena A. Georgiadou, (b) Mr. Marinos S. Yannopoulos, (c) Mr. David Whalen Bonanno, (d) Dr. Evripides A. Polykarpou (e) Mr. Georgios Fereos and (f) Mr. Christodoulos A. Hadistavris. On 1 September 2014, Mr. Makis Keravnos resigned from the Board of Directors and from the position of Group Chief Executive Officer. On 1 September 2014, the Bank announced that the Board of Directors, in collaboration with international firm Heidrick & Struggles, initiated a recruitment process for the suitable candidate to fill the Chief Executive Officer’s position. Finally, on 9 September 2014 Mr. Marinos Yannopoulos resigned from the position of the Vice Chairman of the Board of Directors and was appointed Chief Executive Officer of the Group until the appointment of a new Chief Executive Officer. Mr. Yannopoulos remains as Executive Board Member.

On 7 November 2014, Hellenic Bank announced that Mr. Bert Pijls has been appointed as the Chief Executive Officer of Hellenic Bank Group, pending approval by the Central Bank.

A Dutch national, Mr. Pijls was most recently Managing Director of Customer Services and Commercial at British Gas/Centrica , where he had a strong focus on increasing the company’s use of digital channels. He was previously Managing Director at Citigroup EMEA in London, deputising to the CEO and with responsibility for re-engineering operations to improve expense-to-revenue ratios.

Earlier roles at Citigroup include CEO at Egg and Managing Director Consumer Banking in the UK , as well as Country Manager for Consumer and SME Banking in the Czech Republic.

Mr Pijls had previously held positions in the financial services sector in the USA, Germany and Belgium, primarily with Citigroup and American Express. He holds a Bachelor Degree in Business Administration from Nijenrode University, the Netherlands, and a Master of International Management from the American Graduate School of International Management (Thunderbird), Phoenix, Arizona.

7.2 BOARD OF DIRECTORS COMMITTEES AND BOARD OF DIRECTORS TENURE

7.2.1 The following Board of Directors Committees operate within the Bank, which have been established in accordance with the Corporate Governance Code of CSE and the Directives on the Framework of Principles of Operation and Criteria of Assessment of Banks’ Organisational

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Structure, Internal Governance and Internal Control Systems of 2006 to 2012 of the Central Bank

a. Audit Committee

Chairman: Dr. Andreas G. Charitou Members: Ioannis Ch. Charilaou Ioannis A. Matsis Georgios Fereos Christodoulos A. Hadjistavris

b. Remuneration Committee

Chairwoman: Irena A. Georgiadou Members: Vassos Y. Komodromos David Whalen Bonanno Dr. Evripides A. Polykarpou Christodoulos A. Hadjistavris

c. Nominations & Internal Governance Committee

Chairwoman: Irena A. Georgiadou Members: Marianna Pantelidou Neophytou Vassos Y. Komodromos David Whalen Bonanno Dr. Evripides A. Polykarpou

d. Risk Management Committee

Chairman: Ioannis Ch. Charilaou Members: Marianna Pantelidou Neophytou Ioannis A. Matsis Dr. Andreas G. Charitou Georgios Fereos

The Audit Committee meets in their respective sessions before the announcement of the results of each quarter to review the Financial Statements and in particular the issue of the extent and adequacy of provisions for doubtful debts and the adequacy of the internal Control System and makes the relevant recommendations to the Board of Directors. The Audit Committee also meets in private meetings (without the presence of members of the Executive Management) for consideration of any matters within its competence. In addition, it holds meetings with the Executive Management of the Bank and Internal Audit to examine issues raised and related to the financial statements, the various special reports and investigations and the annual report of the Internal Audit of the Bank and its subsidiary companies. The Committee makes recommendations or suggestions to the full Board of Directors on the issues it addresses. The Committee is assisted in its work by the respective Audit Committees operating in the three subsidiaries of the group – Hellenic Bank (Investments) Ltd, Pancyprian Insurance Ltd and Hellenic Alico Life Insurance Company Ltd. The Chairman of the Committee holds university degrees in Business Administration / Accounting (B.Sc., M.Sc. and Ph.D.) and is a Professor of Finance & Accounting. Two of its members are qualified accountants.

The Board of Directors appoints at least four to seven non-executive directors to be members of the Audit Committee. The majority of the members of the Committee are independent non-executive Directors, including the Chairman of the Committee. The Chairman of the Committee is a person with experience in accounting and / or finance and is appointed by the Board of Directors. The Chairman of

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PROSPECTUS the Group cannot be a member of the Audit Committee. The term in office of the members of the Committee shall be decided by the Board of Directors.

The Remuneration Committee meets whenever there is a need to determine or revise the remuneration / compensation of Executive and Non-Executive Members of the Board of Directors, the Chief Executive Officer and the Group General Managers and at least twice a year. After considering all relevant parameters and data, it makes relevant recommendations to the plenary session of the Board of Directors for a decision, always without the participation of the Executive Member of the Board involved or other Officers involved. The recommendations of the Committee and the Group’s Remuneration Policy take into account the associated responsibilities, workload, qualifications, know- how, academic background, experience, individual performance, remuneration of comparable positions in the market, especially in the areas where the Group operates, remuneration at various levels of the Group as well as non-financial criteria e.g. compliance with existing rules and procedures. The Committee’s aim is to attract and retain top executives at the administration and general management level in order to better serve the interests of the Group as well as those of the shareholders and other stakeholders.

The Remuneration Committee recommends to the Board of the Directors the Annual Remuneration Policy Report, which forms part of the Annual Report of the Company and is presented to the Annual General Meeting of the Shareholders for approval. The Committee also reviews and approves the Information disclosed on the Annual Remuneration of the Directors, which is prepared by Group Finance or inclusion in the notes of the annual accounts of the Company as well as in the Remuneration Policy Report.

The Board of Directors appoints at least three exclusively non-executive directors to be members of the Remuneration Committee. The majority of the members of the Committee are independent non- executive Directors, including the Chairman of the Committee. The Chairman of the Committee is appointed by the Board of Directors. The term in office of the members of the Committee shall be decided by the Board of Directors.

The Nominations / Internal Governance Committee addresses the issue of selection of competent and suitable persons for appointment as Members of the Board of Directors of the Bank or its subsidiaries, or the filling of an extraordinary vacancy or seat vacated after the retirement of a Member in accordance with the retirement policy due to age. It then submits the recommendation to the plenary of the Board of Directors of each company to decide on it. Such selection is valid for the period commencing on the date of appointment of a new Member to the Board until the next General Meeting of the shareholders. As long as the person is eligible, he/she can offer himself/herself for re-election. New members receive information from the Executive Officer responsible for ensuring Compliance with the Corporate Governance Code, and from other senior officials, on the provisions of the Code, the organisational structure and procedures, the strategic planning and group practices such as those relating to the Board and the Board’s Committees in particular. The Committee also has the overall responsibility for the implementation of the internal governance policies of the Group. The Nominations/Internal Governance Committee meets whenever issues within its competence arise and at least three times a year.

The Board of Directors appoints three to six (constituting a majority of) non-executive directors, involving at least one non-executive and independent director to be members of the Nominations/Internal Governance Committee. The Chairman of the Committee is a non-executive director. The term in office of the members of the Committee shall be decided by the Board of Directors.

The Risk Management Committee assists the Bank’s Board of Directors in fulfilling its responsibilities and obligations in relation to the identification, measurement, monitoring and effective management of all the Group’s risks (credit, interest rates, operational, market, liquidity, foreign exchange, capital,

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PROSPECTUS compliance and others). Among other duties, the Committee develops, recommends for approval to the Board of Directors and when implemented, assesses the principles, the framework and the policies of managing all types of risk as well as the use of funds in a manner that is in line with business objectives of the Bank, the Group and / or each subsidiary company separately.

It also recommends to the Board the assignment of approval authority to the Executive Management and other approving groups (concerning risk taking) as well as the adoption of new products or services that the Group intends to introduce. The Risk Management Committee meets whenever issues within its competence arise and at least once every three months.

The Board of Directors appoints three to seven non-executive directors with adequate knowledge and experience in Risk Management, to be members of the Risk Management Committee. At least one Member should be a non-executive, independent director. The Chairman of the Committee is appointed by the Board of Directors. The term in office of the members of the Committee shall be decided by the Board of Directors.

Following the adoption of the Directive of the Central Bank to Credit Institutions on the Governance and Management Arrangements (August 2014), the majority of the members of all Committees of the Board of Directors are now independent non-executive Board Directors and no Member participates in more than two Committees. Also, no executive Member participates in the Committees of the Board of Directors.

7.2.2 Corporate Governance Code

The Corporate Governance Code published by the CSE (4th Edition – April 2014) was fully adopted by the Board of Directors of the Bank.

7.2.3 Board of Directors’ Tenure

According to the Articles of Association of the Bank:

1. At each Annual General Meeting one-third of the active Directors retires from office, or if this number is not equal to three or a multiple of three, then the number nearest to one third, retires from office.

2. A retiring Director shall be eligible for re-election.

7.3 KEY MANAGEMENT PERSONNEL

Below the curriculum vitae of key management personnel are presented as these were determined by the Bank for the purpose of preparing the Prospectus.

Marinos S. Chief Executive Officer Yannopoulos See 7.1 Board of Directors Antonis Rouvas Group Chief Financial Officer, Group Finance Born on 22 August 1969. Mr. Rouvas is a graduate of Wake Forest University in the State of North Carolina, USA with a degree in Business and Mathematics, BSc (High Honours).

He holds the professional titles of FCA (Institute of Chartered Accountants in England and Wales) and AMCT (Association of Corporate Treasurers, UK).

He started his professional career at Price Waterhouse (now

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PricewaterhouseCoopers) in London. He subsequently worked for many years in the multinational bank Credit Suisse in various locations starting from Singapore, with his last appointment in London. Since the beginning of 2005, he was a Partner at KPMG (Audit and Advisory) in Nicosia.

In March of 2008, he was appointed as Group Chief Financial Officer of Hellenic Bank.

Doros Eliodorou Group General Manager, Group Insurance Services & Human Resources Born on 28 August 1959. He graduated with First Class Honours from the National and Kapodistrian University of Athens, Faculty of Economics. He holds the professional title ACIB (Associate Chartered Institute of Bankers).

He started his career in Hellenic Bank in 1984 in the Cash and Remittance Department and then went on to become Deputy Manager of the Trade and Finance Department and subsequently Operations Manager in Hellenic Bank in Greece. During 1994-97, he was Chairman / Member of the Board of Directors of the Cyprus Youth Organization. In 2002 he was appointed Manager, Group Human Resources and in 2009 he became Manager, Group Legal Services and Human Resources. On 1 June 2010 he was promoted to Group General Manager, Legal Services and Human Resources. On 1 July of the same year he temporarily assumed the position of Group General Manager, Operations for a period of 13 months. Since 1 August 2011 he holds the position of Group General Manager, Group Insurance Services & Human Resources and he is responsible for Group Insurance Division, Group Human Resources, Legal Services, Group Marketing Services, Public Relations & Cultural Activities, Shares & Bonds Registry and Health, Safety & Security.

He is Chairman of the Board of Directors of Hellenic Bank Trust and Finance Corporation Limited and Member of the Board of Directors of Hellenic Bank (Investments) Limited, Hellenic Alico Life Insurance Company Limited and Pancyprian Insurance Limited.

George Evripidou Group General Manager, Group Business Division Born on 26 March 1958. Graduated from the University of Essex, UK in 1981 with a B.A. Economics (Hons) degree and subsequently in 1982 from City University Business School (now Cass Business School), with an M.B.A. in Export Management and International Business. He also attended German Language lessons at the Technical University RWTH Aachen in Germany (Certificate Grundstucffe II and Oberstueffe).

He worked for a short period of time (1983) in Hellenic Bank and then from 1984 until January 1986 in Arab Bank Ltd as a Credit Officer. He returned to Hellenic Bank in February 1986 as Credit Officer and Head of Hellenic Bank (Finance) Ltd in Limassol. In February 1994 he was appointed as Sector Manager in Limassol and in August 1999 as Manager Corporate Centre Limassol. In November 2006 he was appointed Manager Business Services Division and in July 2011 Group General Manager, Group Business Division.

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George Karageorgis Group General Manager, Group Retail Division

Born on 15 September 1962 in Nicosia. He studied Economics (B.Sc.) at the State University of New York in Albany, USA and then Business Administration (M.B.A.) at UMIST University in the United Kingdom.

He was employed by the Bank in 1987 and worked in different sections and departments of the Bank. He served as Officer and Senior Credit Officer in Hellenic Bank (Finance) Ltd, Manager Stock Market Trading in Hellenic Bank (Investments) Ltd, Business Centre Manager and since June 2008 as Manager Retail Division. Since July 2011 he is the Group General Manager, Retail Division.

Petros Ioannides Group General Manager, Group Arrears Management and Debt Recovery Born on 18 July 1973. He is a graduate of the University of Manchester, England with a B.A. (Econ) (Hons) degree in Accounting and Finance. He holds the professional title of ACA (Associate of the Institute of Chartered Accountants in England and Wales) and is a member of the Institute of Certified Public Accountants of Cyprus. In February 2005 he was awarded with various Professional Certificates by the Ministry of Finance for the provision of investment advice and corporate finance issues.

Between 1995 and 1999 he worked for Ernst and Young in Cyprus and in 1999 he joined HSBC Bank plc in Cyprus as Head of Credit and was involved in major assignments in Cyprus and abroad.

In 2006, he joined Hellenic Bank and worked as Head of Group Credit Risk and Head of Group Corporate Banking. In July 2011 he was appointed as General Manager Overseas Operations, responsible for the Group’s operations in Greece and Russia. In July 2013, he took over the Debt Recovery Unit and, in December of the same year, the newly formed Arrears Management Unit. Since March 2014 he holds the position of Group General Manager, Group Arrears Management and Debt Recovery, consisting of the Arrears Management Unit, Debt Recovery Unit, Collections & Accounts Monitoring and the newly formed Loans & Assets Management Unit.

Between January 2012 and June 2014 he served as a non-executive Member of the Board of Directors of the Group’s Russian Subsidiary.

Ioannis Telonis Group General Manager, Group Strategic Development

Born on 20 January 1960. Studied Economics at the London School of Economics and Political Science (LSE). Attended the City University Business School (now Cass Business school) where he obtained his M.B.A. degree. Member of the Chartered Institute of Marketing of the U.K., holding the title of Chartered Marketer.

Returning to Cyprus at the end of 1987 he was employed by Hellenic Bank at the Planning and Research Department and then headed the Marketing Services Department. At the end of 1999, he took over as General Manager

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of Hellenic Bank (Investments) Ltd. In 2001, he was also appointed as a member of the Board of Directors of Athena Cyprus Investment Company Ltd.

In September 2002, Mr. Telonis was appointed as Head of the Group Strategic Development Division of the Bank, a position he held until June 2008.

In June 2008, Mr. Telonis was appointed as Project Manager of the group project to set up banking operations in Russia. With the incorporation of LLC CB “Hellenic Bank” as the Russian Banking subsidiary of the Group in February 2009, Mr. Telonis was appointed as its General Manager and permanently relocated to Moscow. At the end of 2013, he was repatriated to Cyprus and in March 2014, he assumed the position of Group General Manager, Group Strategic Development consisting of Group Strategy & Economic Studies, Product Development, Sales Support & Research, Service Line and Electronic Banking.

Marinos Group General Manager, Group Global Markets & International Athanassiades Banking Born on 2 February 1969. He studied Economics and Business Economics (B.Sc.) and Management Sciences (M.Sc.) at the University of Hull in the United Kingdom. He holds the professional titles of ACIB (Associate Member of the Chartered Institute of Bankers) and ACIF (Fellow Member of the ACI The Financial Markets Association).

He started his career with Hellenic Bank in 1993 as an F/X Dealer and subsequently he served in various positions, including Treasury Manager and Manager Group Global Markets. Currently, he holds the position of the Group General Manager, Group Global Markets & International Banking and he is responsible for the following Departments: Treasury, Dealing Room, Financial Institutions, Private Banking, Hellenic Bank (Investments) Limited, Trust & Custodian Services, International Banking Division and the Representative Offices in Moscow, St. Petersburg and Kiev.

He is a Member of the Board of Directors of Hellenic Bank (Investments) Ltd and a Member of the Board of Directors of Hellenic Bank Trust and Finance Corporation Ltd. He served as Chairman of the Board of Directors of ACI Cyprus and a Member of the Board of Directors of ACI The Financial Markets Association.

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Phivos Leontiou Group General Manager, Group Operations Born on 22 May 1964. Graduated the English School in Nicosia. He studied Economics / Accounting at the City University, London where he obtained the degree of B.Sc. (Hons) in Economics & Accounting. He followed up with postgraduate studies at the University of Reading in the United Kingdom obtaining an M.A. degree in “International Business & International Financial Management”.

In 1988 he was employed by Arab Bank Cyprus where he worked until 2008 in various positions, ending up in a senior management post in Operations and Customer Services.

In May 2008 he was employed by the Bank. Initially and until March 2011 he worked as Administration Manager for the Greek Branch Network. Upon his return to Cyprus he worked for a short period as Manager of the CEO’s Office.

As of 1 August 2011 he took over the duties of Group General Manager, Group Operations, responsible for a number of departments, namely, Information Technology, Organization & Methods and Re-engineering, Data Analysis, Management and Quality, Technical Services & Property Management, Administration Services, other central Processing Units and Information Security & Business Continuity. He participates in several Executive Committees of the Group and presides over the Committee of Tenders & Expenses and the IT Steering Committee .

Nicos Hadjimarkou Manager Group Risk Management Unit Born on 15 April 1960 and is a graduate of the Higher Technical Institute with a degree Diploma of Technician Engineer in Electrical Engineering, and the City University of London, with a degree in BSc (Honours) in Electronic Engineering. He holds an MBA from the Cyprus International Institute of Management, CIIM. Mr. Hadjimarkou joined Hellenic Bank in 1988 as a credit officer and served as Director for loan evaluations at Hellenic Bank (Finance) Ltd.

In 1998 he moved to Credit Administration where, among others, took over as Manager / Coordinator for various specialised projects. In 2002, he was appointed Manager of Market Risk and Liquidity for the Group, a position he held for approximately 10 years. During the period 2011 to 2014, he was appointed as Manager of the Chief Executive Officer’s office. Since 2014 he is Manager of the Group Risk Management Unit.

During his career at Hellenic Bank, he actively participated in various Committees, such as the Tender Committee of the Group, the Investment Committee and the Appeals Committee on Arrears Management issues. Currently he participates in the Committee responsible for allocating cases to external legal consultants and in the Executive Write-Off Committee.

Niki Nikolaidou Group Chief Internal Auditor Hadjixenophontos Born on 28 July 1969. She holds a B.Sc. in Financial Services from the University of Manchester (UMIST) in combination with the professional qualification of the Chartered Institute of Bankers (ACIB) and a Masters Degree in Business Administration (MBA) from the Cyprus International Institute of Management. Has also obtained the professional title FCCA

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(Fellow Member of the Institute of Chartered Certified Accountants) and she is a member of the Institute of Certified Public Accountants of Cyprus (ICPAC), where for a number of consecutive years she has served as the president and secretary of a number of ICPAC Committees. Has obtained the Advanced Level certification by CySEC (Public Register of Certified Persons of Cyprus Investment Firms). Has worked in the Accounts Department of Cyprus Airways for two years. Since 1989 she has been working for Hellenic Bank. In 2000 she assumed the position of Group Chief Accountant and since December 2007 she holds the position of the Group Chief Internal Auditor. Currently also the Chairman of the Audit Committee of JCC Payment Systems Ltd.

Andreas Lambrou Manager, Group Credit Administration Born on 26 March 1961 in Kyrenia. Graduated from the University of Athens in Business Administration. Holder of the professional title of FCCA (Fellow Member of Institute of Chartered Certified Accountants). From 1988 to 1991 worked in the auditing firm Moore Stephens in London and for a year after in Moore Stephens in Cyprus. Employed by the Bank in 1992 and worked as a Credit Officer, Manager of Group Credit Appraisal and since 2009 he holds the position of Manager Group Credit Administration.

Andreas Stavrou Manager, Group Compliance Unit Born on 1 May 1972. Graduated from the London School of Economics with a BSc (Hons) Economics degree. Qualified as a Chartered Accountant (ACA) with the Institute of Chartered Accountants in England and Wales. Commenced his professional career with Coopers and Lybrand (now PricewaterhouseCoopers) in London. Has worked for various organisations in London and in Athens. In October 2009 took on the role of Financial Services Manager of the Branch Network of Hellenic Bank in Greece. In December 2012 he has been appointed as Manager Group Compliance Unit of Hellenic Bank.

Andreas Manager, Group Strategy and Finance Research Papadopoulos Born on 15 August 1969. Holds a Bachelor’s and Master’s (First Class Honours) degrees in Chemical Engineering from the University of Cambridge in the U.K. and an MBA (Distinction) with specialisation in Finance from the Wharton Business School in the U.S.A. Upon completion of his studies, he worked for several years at Unilever in the United States and in Germany before returning to Cyprus. Since 2002 he has been working at Hellenic Bank and today serves as Group Strategy and Economic Studies Manager with the main responsibility of providing direction to and coordination of the business and supporting units of the Group. Andreas speaks English and German and is a member of various Boards of Directors, including those of Cyprus Airways, Junior Achievement Young Enterprise Cyprus, CYMEPA and University of Nicosia Research Foundation.

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Charalambos Company Secretary, Manager Legal Services, Shares and Bonds Mousoulides Registry

Born in Nicosia on 3 July 1968. In 1986 he graduated from Acropolis Lyceum in Nicosia and studied Law at the University of Leicester in the United Kingdom where he was awarded with the degrees of LLB Honours (1988-1991) and LLM in European and International Trade Law (1991- 1992). During 1993-1994, he worked for twelve months as a trainee Lawyer at the Law Office of the Republic of Cyprus (Attorney General’s Office), scored the highest marks of all the candidates at the Bar exams of the Cyprus Legal Council and qualified as an Advocate / Lawyer in Cyprus.

Has been working at the Bank since May 1994. Served as Assistant Company Secretary of Hellenic Bank since 1996 and Company Secretary or Assistant Company Secretary in a number of subsidiary companies of the Hellenic Bank Group. Appointed Company Secretary of Hellenic Bank Public Company Limited on 1 January 2010. Since July 2011 also holds the position of Manager Shares and Bonds Registry as well as the position of Group Manager Legal Services since August 2013.

7.4 STATEMENTS OF BOARD DIRECTORS AND KEY MANAGEMENT PERSONNEL

The members of the Board of Directors and Key Management Personnel of the Bank have made the following statements:

7.4.1 There is no family relationship of up to second degree between them.

7.4.2 They have not been convicted of any offences of fraud over the last five years (at a minimum).

7.4.3 They, or their connected persons, have not been involved in any bankruptcies, receiverships or liquidations in the last five years (at a minimum),

7.4.4 No official public incrimination and/or sanctions have been made against them by statutory or regulatory authorities or by designated professional bodies in which they participate, and they have not been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of any issuer or from managing or dealing with the affairs of any issuer, over the last five years (at a minimum).

7.4.5 There are no conflicts of interest between their position in the Bank and their private interests or any of their other obligations.

7.4.6 Their appointment to their position has not resulted from an arrangement or agreement with Bank shareholders or an agreement between the Bank and its customers, suppliers or other persons. It is noted that the non-executive Directors are nominated by the shareholders holding, directly or indirectly, more than 5% of the nominal value of the issued share capital of the Bank.

7.4.7 With the exception of any restrictions resulting from the current legislation, they do not have any contractual restriction on the disposal, within a certain period of time, of their holdings in the Bank’s securities.

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7.5 PARTICIPATING INTERESTS OF THE BOARD OF DIRECTORS AND KEY MANAGEMENT PERSONNEL IN THE SHARE CAPITAL OF THE BANK

7.5.1 Board of Directors’ Participating Interest

At the date of this Prospectus, the Board of Directors’ participating interest (direct and indirect) in the share capital of the Bank is as follows:

Direct Indirect Total Percentage participation participation participation % Irena A. Georgiadou ...... Marinos S. Yannopoulos ...... David Whalen Bonanno ...... Vassos Y. Komodromos ...... Ioannis A. Matsis ...... Marianna Pantelidou Neophytou .... 3.000 - 3.000 0,00008 Dr. Evripidis A. Polykarpou ...... Georgios Fereos ...... Ioannis Ch. Charilaou ...... 17.625 - 17.625 0,00045 Dr. Andreas G. Charitou ...... - Christodoulos A. Hadjistavris ...... - - - - Total ...... 20.625 20.625 0,00053

Note that, at the date of this Prospectus, no Director holds, directly and / or indirectly, CCS 1 or CCS 2 except for Ioannis Ch. Charilaou who holds 5 CCS 1 of nominal value €1 each.

7.5.2 Key Management Personnel Participation Interest

At the date of this Prospectus, the Key Management Personnel’s participating interest (direct and indirect), as these were determined by the Bank for the purposes of preparation of this Prospectus, in the share capital of the Bank is as follows:

Direct Indirect Total Percentage participation participation participation % Antonis Rouvas ...... - - - - Doros Eliodorou ...... 16.624 - 16.624 0,00042 George Karageorgis ...... 31.939 270.534 302.473 0,00768 Petros Ioannides...... 16.933 2.925 19.858 0,00050 Ioannis Telonis ...... 2 - 2 - George Evripidou ...... - 169.343 169.343 0,00430 Phivos Leontiou ...... 26.926 19.919 46.845 0,00119 Marinos Athanassiades ...... 21.206 - 21.206 0,00054 Nicos Hadjimarkou ...... 6 560 566 0,00001 Andreas Lambrou ...... - - - - Andreas Stavrou ...... - - - - Niki Nikolaidou Hadjixenophontos .. 130.516 5.855 136.371 0,00346 Andreas Papadopoulos ...... 2,305,099 2,305,099 0,05856 Charalambos Mousoulides ...... - 21.307 21.307 0,00054 Total ...... 2.549,251 490.443 3.039.694 0.07722

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PROSPECTUS

Direct Indirect Total participation participation participation Antonis Rouvas ...... - - - Doros Eliodorou ...... - - - George Karageorgis ...... 28 26 54 Petros Ioannides...... 13 - 13 Ioannis Telonis ...... - - - George Evripidou ...... - 688 688 Phivos Leontiou ...... 8 6 14 Marinos Athanassiades ...... 7 - 7 Nicos Hadjimarkou ...... - - - Andreas Lambrou ...... - - - Andreas Stavrou ...... - - - Niki Nikolaidou Hadjixenophontos ...... - - - Andreas Papadopoulos ...... 2.160 - 2.160 Charalambos Mousoulides ...... - - - Total ...... 2.216 720 2.936

At the date of this Prospectus, no Key Management Personnel, as these were determined by the Bank for the purposes of preparation of this Prospectus, has participating interest (direct and indirect), in CCS 2, except for George Evripidou who holds indirectly 44,000 CCS 2 of nominal value €1 each.

7.6 PARTICIPATION OF BOARD DIRECTORS AND KEY MANAGEMENT PERSONNEL IN THE MANAGEMENT OF OTHER COMPANIES

7.6.1 Participation of Board Members on the Boards of Directors of other companies

The following table presents the participation of the members of the Board of Directors on the boards of directors of other companies over the last five years (excluding Group subsidiaries):

Type of Current Board Member and Company Name Company Participation

Marinos S. Yiannopoulos CHIPITA SA ...... Private YES EMA Α.Ε ...... Private YES Alpha Asset Management Α.Ε.Δ.Α.Κ...... Private NO Alpha Residential Real Estate ...... Public NO Alpha Bank A.E...... Public NO Alpha Bank Cyprus Ltd ...... Private NO Alphalife Insurance Co. S.A...... Private NO Axia Ventures Group Ltd ...... Private NO Messana Holdings S.A ...... Private NO Standiko A.E...... Private NO Ioanian Hotel Enterprises S.A...... Public NO

David Whalen Bonanno

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PROSPECTUS

Type of Current Board Member and Company Name Company Participation Tollerton Investments Limited ...... Private YES Energean E&P Holdings Limited ...... Private YES

Vassos Y. Komodromos V. Komodromos & Co Limited ...... Private YES Selachian Limited ...... Private YES Tencester Holdings Limited ...... Private YES Ionisos Res Limited ...... Private YES Anheles Holdings Limited ...... Private YES Hyberia Estates Limited ...... Private YES Magine Consulting Ltd ...... Private YES Goldrein Limited ...... Private YES Corliss Enterprises Ltd ...... Private YES Moreiva Holdings Ltd ...... Private YES Ionisos Holdings Limited ...... Private NO V. Komodromos Trust Co Ltd ...... Private NO Ionisos Energy Ltd ...... Private NO Ionisos Solar Power Ltd ...... Private NO

Ioannis A. Matsis Point Nine Limited ...... Private YES Point Nine Financial Technologies Limited ...... Private YES Safespace Investments Limited ...... Private YES Centro Fund Services Limited ...... Private NO Eazyspeak Limited ...... Private NO Far Away Limited ...... Private NO Parinis Limited ...... Private NO Point Nine Group Limited ...... Private NO

Marianna Pantelidou Neophytou Elodie Holdings Ltd ...... Private YES Teamvision Consulting Ltd ...... Private YES OJSC Bank of Cyprus ...... Private NO

Dr. Evripides A. Polykarpou Center of the study of Childhood & Adolescence ...... Non-profit YES organisation E.U.C. Research Centre Ltd ...... Non-profit YES organisation ERMIS Research and Incubator Center Ltd ...... Private YES European University of Cyprus ...... Academic YES Institution Institute of Social and Political Research ...... Non-profit YES organisation LYM Investment Ltd ...... Private YES SPS Institute of Education Ltd ...... Private YES A. Panayides Contracting Public Company Ltd ...... Public NO Cyprus Security and Exchange Commission ...... Supervising NO Authority Karyes Investments Public Ltd ...... Public NO

Georgios Fereos ......

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PROSPECTUS

Type of Current Board Member and Company Name Company Participation Vertical Biomass Corporation ...... Private NO Limassol Co-Operative Savings Banks ...... Cooperative NO Institution HD Insurance Ltd ...... Private YES

Dr. Andreas G. Charitou Coop Central Bank ...... Financial No Institution

IOANNIS CH. CHARILAOU Ledra Pallas Hotels Ltd ...... Public YES KEO (UK) Ltd ...... Private YES Fifty Frith Street Ltd ...... Private NO KEO Plc ...... Public YES KEO Hellas S.A...... Private YES KEO Zithos S.A...... Private YES Hellenic Mining Public Co Ltd ...... Public YES Hellenic Tzilalis (Cyprus) Ltd ...... Private YES Hellenic Technical Enterprises Ltd ...... Private YES Gem Estates Investments Ltd ...... Private NO Logosnet Services Ltd ...... Private YES Gypsum & Plasterboard Public Co Ltd ...... Public YES United Gypsum Ltd ...... Private YES Saint Panteleimon (Ahera) Estate Ltd ...... Private YES Cyprus Textiles Public Co Ltd ...... Public YES Cyprus Hotels Ltd ...... Private NO Phoenicia Hotels Ltd ...... Private NO ABH Incentive Travel Ltd ...... Private NO The Cyprus Hotels (Paphos) Ltd ...... Private NO Kosmoplastic Enterprises Ltd ...... Private NO Falcoplast Ltd ...... Private NO K.C. Plastics Ltd ...... Private NO HTZ Minas Recycling Corporation Ltd ...... Private YES Cyprus Canning Company Ltd ...... Private YES Hellenic Aviation Fueling Services Ltd ...... Private YES Agrepavlis Kato Moni Ltd ...... Private NO

7.6.2 Participation of Key Management Personnel on the Boards of Directors of other companies

The following table presents the participation of Key Management Personnel, as established by the Bank for purposes of the preparation of this Prospectus, in the board of directors of other companies over the last five years (excluding Group subsidiaries):

Type of Current Key Management Personnel and Company Name Company Participation

Antonis Rouvas Friends Association of the Newborn Intensive Care Unit ...... Non-Profit YES Organisation Peaceplayers International Cyprus ...... Non-Profit YES

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PROSPECTUS

Type of Current Key Management Personnel and Company Name Company Participation Organisation

Petros Ioannides Petni Enterprises Ltd ...... Private YES

George Karageorgis JCC Payment Systems Ltd ...... Private YES

Andreas Papadopoulos Cyprus Airways Ltd ...... Public YES

Junior Achievement Young Enterprise Cyprus ...... Non-Profit YES Organisation ALPS Estates Ltd ...... Private YES

Cymepa (Cyprus Marine Environment Protection Association) ...... Non-Profit YES Organisation ALP Promotions Ltd ...... Private YES The ICE Club Ltd ...... Private YES University of Nicosia Research Foundation ...... Non-Profit YES Organisation

7.7 RELATED PARTIES TRANSACTIONS

7.7.1 As of the date of this Prospectus and as far as the members of the Board of Directors are aware, no Board Director has any interest, direct or indirect, in any asset which the Bank and its subsidiaries have acquired during the last two years or which the Bank and its Subsidiaries intend to buy or sell, other than what is mentioned below.

7.7.2 No member of the Board of Directors, Key Management Personnel or supervisory body has or has had any interest in transactions with the Bank or with any of its subsidiaries, which was not in the ordinary course of business, during the previous and the current financial year.

7.7.3 No member of the Board of Directors is an executive director on the basis of any special agreement or contract which calls for substantial compensation payments in the event of the termination of the director’s service, which is of material significance.

The contract of employment between the ex - Executive Director / Chief Executive Officer and the Bank was terminated by mutual consent on 1 September 2014. The two parties agreed to a consideration for the termination of the contract of employment, in cash and in kind, amounting in total to around €393 thousand. The Bank also paid to the Executive Director / Chief Executive Officer the total amount of his accrued rights.

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PROSPECTUS

7.7.4 The remuneration of the members of the Board of Directors and of Key Management Personnel who were not Board Directors is presented below:

30 31 31 31 September December December December Emoluments and fees of Members of the 2014 2013 2012 2011 Board of Directors: €’000 €’000 €’000 €’000 Emoluments and benefits in executive capacity ...... 297 486 486 477 Employer’s contributions for social insurance etc...... 26 30 33 22 Retirement benefits ...... 50 97 86 110 Amounts paid on termination……………… 393 ------Total emoluments for Executive Directors ...... 766 613 605 609 Fees ...... 207 285 301 328

30 31 31 31 September December December December Emoluments of Key Management 2014 2013 2012 2011 Personnel who were not Directors: €’000 €’000 €’000 €’000 Salaries and other short-term benefits ...... 1.100 1.459 1.411 849 Employer’s contributions for social insurance etc...... 134 158 136 52 Retirement benefits ...... 89 198 194 161 Total emoluments of Key Management Personnel who were not Directors ...... 1.323 1.815 1.741 1.062

Key Management Personnel are those persons who have the authority and the responsibility for the planning, management and control of the Bank’s operations, directly or indirectly. The Group, according to the provisions of IAS24, considers as Key Management Personnel the general managers of the Bank who were not Directors, the members of the ALCO, as well as management personnel who report directly to the Chief Executive Officer.

Part V Paragraph 7.3 of this Prospectus presents the Key Management Personnel of the Group as at the date of this Prospectus.

7.7.5 The auditors’ fees and lawyers’ expenses include the total fees for statutory auditors and other audit firms for audit and other professional services provided to the Group both in Cyprus and abroad and are analysed as follows:

The Group The Bank 2013 2012 2011 2013 2012 2011 €’000 €’000 €’000 €’000 €’000 €’000 Audit of annual accounts ...... 341 376 366 168 198 190 Assurance Services ...... 32 15 15 10 13 12 Tax advisory services ...... 104 52 31 99 50 30 Other non-audit services ...... 292 345 48 128 163 38 769 788 460 405 424 270

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PROSPECTUS

7.7.6 The following table presents, as at 30 September 2014 and 31 December 2013, 2012 and 2011, the loans and advances, the tangible securities and deposits concerning the members of the Board of Directors, their spouse and minor children and any companies in which Directors hold, directly or indirectly, at least 20% of the voting rights at a general meeting:

30 31 31 31 September December December December 2014 2013 2012 2011 €’000 €’000 €’000 €’000 Loans and other advances to members of the Board of Directors and their connected persons ...... 2 842 21.139 21.969 Tangible securities ...... 5 1.326 28.184 33.187 Deposits ...... 2.686 449 2.341 9.330

7.7.7 The following table presents, as at 30 September 2014 and 31 December 2013, 2012 and 2011, the loans and advances, the tangible securities and deposits concerning Key Management Personnel that were not on the Board of Directors, their spouse and minor children and any companies in which the key management personnel who were not Directors hold, directly or indirectly, at least 20% of the voting rights at a general meeting:

30 September 31 December 2014 2013 2012 2011 (€’000) Loans and other advances to Key Management Personnel who were not Directors and their connected persons ...... 640 523 1.441 1.216 Tangible securities ...... 158 158 948 1.173 Deposits ...... 5.968 6.210 3.788 1.387

7.7.8 Additionally on 30 September 2014, there were contingent liabilities and commitments in relation to members of the Board of Directors and their connected persons in the form of documentary credits, guarantees and unused limits amounting to €13.000, and which did not exceed 1% of the Bank’s net assets (December 2013: €114.000, December 2012: €14.826.000 and December 2011: €16.969.000). In addition, on 30 September 2014, there were contingent liabilities and commitments to Key Management Personnel who were not Directors, and to their connected persons amounting to €406.000 (December 2013: €386.000, December 2012: €347.000 and December 2011: €155.000).

There was no interest income in relation to members of the Board of Directors and their connected persons for the period ended 30 September 2014 (December 2013: €45.000, December 2012: €1.112.000, December 2011: €1.077.000), while interest expense in respect of members of the Board of Directors and their connected persons amounted to €6.000 (December 2013: €6.000, December 2012: €129.000 and December 2011: €163.000).

Interest income in relation to Key Management Personnel and their connected persons for the period ended 30 September 2014 amounted to €10 .000 (December 2013: €22.000, December 2012: €50.000 and December 2011: €54.000), while interest expense in relation to key management personnel who were not on the Board of Directors amounted to €135.000 (December 2013: €141.000, December 2012: €151.000 and December 2011: €56.000).

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PROSPECTUS

The sales of insurance policies by the Group’s subsidiary, Pancyprian Insurance Ltd, to members of the Board of Directors amounted to €2.000 while the sales of insurance policies by the Group’s subsidiary, Hellenic Alico Life Insurance Company, amounted to €3.000 for the period ended 30 September 2014.

The sales of insurance policies by the Group’s subsidiary, Pancyprian Insurance Ltd, to Key Management Personnel amounted to €6.000 while the sales of insurance policies by the Group’s subsidiary, Hellenic Alico Life Insurance Company amounted to €22.000 thousand for the period ended 30 September 2014.

7.7.9 On 23 March 2012, contracts were signed for the acquisition of land from the Holy Archbishopric of Cyprus, in the area of Amathus, Ayios Tychonas in Limassol, at the price of €15.500.000.

On 13 July 2007 a sale contract was signed between the company Iacovou Brothers (Constructions) Ltd and the Bank for the acquisition of a plot in Larnaca. Mr. Iacovos G. Iacovou, who resigned from the Board of Directors on 2 October 2013, holds an indirect interest in the company Iacovou Brothers (Constructions) Ltd. The ownership of the plot was transferred to the Bank on 19 December 2007 and on 11 January 2008 the amount of €769.000 was paid to Iacovou Brothers (Constructions) Ltd with respect to the acquisition of the relevant plot. On the same date an agreement was signed with the same company for the construction of a five-floor building on the above-mentioned plot. The building includes a ground floor, a mezzanine and two underground parking spaces and is used for the operations of the Bank in Larnaca. The transaction was based on market values and the total amount in accordance with the agreement for the construction of the building and the agreement for the additional work was €5.986.000 including VAT and the cost of the plot. The construction of the building has been completed. During the period January – September 2013 €237.000 (including VAT) was paid, being the amount of the settlement between the Bank and the company Iacovou Brothers (Constructions) Ltd.

As at 30 September 2014 and up to the date of this Prospectus, no significant changes have taken place on the transactions with the connected parties listed above.

8. SHARE AND LOAN CAPITAL

8.1 SHARE CAPITAL

8.1.1 Authorised Share Capital

The authorised share capital of the Bank, at the date of this Prospectus, amounts to €516 million divided into 51,6 billion Ordinary Shares of nominal value €0,01 each.

There were no changes in the authorised share capital during the period January 2011 to September 2014, except for:

a. The increase of the authorised share capital of the Bank from €258.000.000 divided into 600.000.000 Ordinary Shares of nominal value €0,43 each, to €516.000.000 divided into 1.200.000.000 Ordinary Shares of nominal value €0,43 each, through the issue of 600.000.000 new Ordinary Shares of nominal value €0,43 each, following a decision taken at the Extraordinary General Meeting of the shareholders of the Bank held on 24 April 2012.

b. The reduction of the authorised share capital of the Bank to €12.000.000 divided into 1.200.000.000 Ordinary Shares of nominal value €0,01 each and right after, the increase of the authorised share capital to an amount of €516.000.000, divided into 51.600.000.000 Ordinary

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PROSPECTUS

Shares of nominal value €0,01 each, following a decision taken at the Extraordinary General Meeting of the shareholders of the Bank held on 14 August 2013.

8.1.2 Issued Share Capital

The issued and fully paid share capital as at 31 December 2013 was €26.887.536,91 divided into 2.688.753.691 Ordinary Shares of nominal value €0,01 each, while at the date of this Prospectus it was €39.365.992,11 divided into 3.936.599.211 Ordinary Shares of nominal value €0,01 each.

During the period 1 January 2011 to 30 September 2014, the following changes were made to the issued share capital of the Bank:

30 September 31 December 2014 2013 2012 2011 (€’000) Fully paid shares 1 January 26.888 266.466 132.448 132.442 Reinvestment of dividend - - - - Transfer to the reduction of share capital reserve -- (260.269) -- -- Issue of shares 10.098 20.691 134.018 6 Total issued share capital 36.986 26.888 266.466 132.448

The Bank’s share capital from 1 January 2011 and up to the date of this Prospectus evolved as follows:

 During 2011, 15.358 shares were issued and were granted for free to members of the personnel.

 During 2012, 311.669.585 shares were issued as follows:

i. 271.894.576 shares resulted from the exercise of the subscription rights issue in accordance with the prospectus dated 16 May 2012.

ii. 23.984.712 shares resulted from the sale of the unexercised subscription rights, based on the prospectus dated 16 May 2012.

iii. 15.790.297 shares resulted from the conversion of 15.000.782 non-cumulative perpetual capital securities (“NCPCS”).

 During their Extraordinary General Meeting held on 14 August 2013, the shareholders of the Bank approved the reduction of the issued share capital from €266.466.364,60 divided into 619.689.220 Ordinary Shares of nominal value €0,43 each to €6.196.892,20 divided into 619.689.220 Ordinary Shares of nominal value €0,01 each, and the transfer of the difference that will emerge from this reduction to a reserve called “reserve from capital reduction”.

 During 2013, 2.069.064.471 shares were issued as follows:

i. 66.578.740 new shares of nominal value €0,01 each at the price of €0,05 each to the existing shareholders and the holders of NCPCS who have submitted an application.

ii. 2.002.485.731 new shares of nominal value €0,01 each at the price of €0,05 each to other investors.

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PROSPECTUS

 On 28 February 2014, 858.738.710 Ordinary Shares were issued which resulted from the conversion of CCS 1 of total value €85.873.871, after applying the provisions of the prospectus of CCS 1 and CCS 2 dated 30 September 2013. The mandatory conversion applied pro rata to the outstanding balance of CCS 1 for each investor on the conversion date (transactions performed up to and including 24 October 2014, record date 29 October 2014).

 On 29 August 2014, 151.065.200 Ordinary Shares were issued which resulted from the conversion of CCS 1 of total value €15.106.520, after applying the provisions of the prospectus of CCS 1 and CCS 2 dated 30 September 2013. The mandatory conversion applied pro rata to the outstanding balance of CCS 1 for each investor on the conversion date (transactions performed up to and including 29 August 2014, record date 03 September 2014).

 On 26 October 2014, 238.041.610 Ordinary Shares were issued which resulted from the conversion of CCS 1 of total value €23.804.161, after applying provision of the prospectus of CCS 1 and CCS 2 dated 30 September 2013. The mandatory conversion applied pro rata to the outstanding balance of CCS 1 for each investor on the conversion date (transactions performed up to and including 24 October 2014, record date 29 October 2014).

As of the date of this Prospectus, the subsidiary of the Bank Pancyprian Insurance Ltd held 16.036.630 shares of the Bank of nominal value €0,01 each and 20.533 CCS 1 of nominal value €1,00 each.

8.2 MAIN SHAREHOLDERS

The Bank is a public company listed in the CSE. The shareholders base at the date of publication of this Prospectus consisted of 26.698 shareholders.

Furthermore, at the date of publication of this Prospectus, the shareholders who, according to the Shareholders Registry, held directly or indirectly more than 5% of the Bank’s issued share capital, are the following:

Indirect Percentage Shareholder Name Direct holding holding Total holding (%) Wargaming ...... 800.000.000 - 800.000.000 20,3 Third Point1 ...... 800.000.000 - 800.000.000 20,3 Demetra Investments Public Limited ...... 418.695.594 - 418.695.594 10,6 Holy Archbishopric of Cyprus and connected persons ...... 283.486.140 31.232.503 314.718.643 8,0 Subtotal 2.302.181.734 31.232.503 2.333.414.237 59,2

Other shareholders ...... 1.603.184.974 40,8 Total ...... 3.936.599.211 100,0

1The registered name in the Shares Registry is CPB FBO Third Point Hellenic Recovery Fund, L.P.

All shareholders of the Bank have the same voting rights.

The Bank is not owned or controlled either directly or indirectly by any person.

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PROSPECTUS

It is noted that, at the issue date of this Prospectus, Demetra Investments Public Limited holds directly and indirectly 23.441 units of CCS 1 of nominal value €1 each, the Holy Archbishopric of Cyprus and connected persons hold, directly or indirectly 250.651 units of CCS 1 of nominal value €1 each and 16.397.695 units of CCS 2 of nominal value €1 each.

Third Point holds, directly and indirectly, 7.692.305 units of CCS 2 of nominal value of €1 each. Under the issuance terms of the CCS 1 and CCS 2, the CCS 1 and CCS 2 may be converted into Ordinary Shares of the issuer.

8.3 LOAN CAPITAL

The loan capital of the Group as at 30 September 2014 and 31 December 2013, 2012 and 2011 was as follows:

Group 30 September 31 December 2014 2013 2012 201 €’000 €’000 €’000 €’000 LOAN CAPITAL

Tier 1 Capital Capital Securities ...... -- -- 17.436 17.436 NCPCS ...... -- -- 124.758 139.759 CCS 1 ...... 25.075 124.758 -- -- CCS 2 ...... 128.070 128.070 -- -- 153.145 252.828 142.194 157.195 Tier 2 Capital Non Convertible Bonds 2016 ...... 41.801 41.801 62.683 62.683 Non Convertible Bonds 2018 ...... 10.000 10.000 10.000 10.000 Non Convertible Bonds 2019 ...... -- -- 90.000 90.000 51.801 51.801 162.683 162.683 Total Loan Capital ...... 204.946 304.629 304.877 319.878

Full details/conditions for the issuance of bonds and securities of the Bank are included in the prospectuses and supplementary prospectuses of each issue located on the official website of the Bank (www.hellenicbank.com).

In applying the provisions of the prospectus dated 30 September 2013 of the CCS 1, and as a result of the Common Equity Tier 1 Ratio of the Group and the Bank being below the minimum required supervisory ratio of 8%, as set by the Central Bank circular dated 29 May 2014, CCS 1 of total value of €23,8 million were mandatorily and irrevocably converted to shares.

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PROSPECTUS

The Mandatory Conversion Price of the CCS 1 to shares was set at €0,10. All CCS 1 which have been converted into shares were automatically cancelled and any right or obligation under their prospectus expires. A total of 238.041.610 Ordinary Shares of the Bank resulted from the conversion, while the number of listed CCS 1 decreased to 1.597.679 with a nominal value of €1,00 each.

8.3.1 Tier 1 Capital

8.3.1.1 Capital Securities

Certain of the Group’s capital securities (the “Capital Securities”) were perpetual with no maturity date and for the purposes of calculating the capital base were considered as Tier 1 capital. Under the terms of the issue (Prospectus dated 7 November 2003), the securities could, at the option of the Bank, be redeemed as a whole at their nominal value together with any accrued interest on 18 April 2008 or on any subsequent interest payment date. In addition, the Bank maintained the right to purchase Capital Securities, subject to the prior consent of the Central Bank.

The Capital Securities bore a floating interest rate which was reviewed at the beginning of each interest payment period and applied to that specific period. The interest rate was equal to the base rate of the Bank at the beginning of each interest payment period plus 1,20%. For the period from 1 January 2013 until 18 April 2013 the interest rate was 6,95% per annum. For the period between 18 April 2013 and 1 November 2013 the interest rate was 6,70% per annum. In the case where, prior to any interest payment date, the Bank found, at its discretion, that the minimum capital adequacy requirements as defined by the Central Bank were not met, or that the payment of interest would bring the Bank below these minimum capital adequacy requirements as defined by the Central Bank, then the Bank had the option to postpone the said interest payments. In such a case the interest payment would be made only on the date when the Capital Securities would be redeemed. No interest would be paid on deferred interest payments.

The Capital Securities constituted direct, unsecured and subordinated liabilities of the Bank. The Capital Securities were listed on the CSE.

8.3.1.2 NCPCS

For the purposes of calculating the capital base, NCPCS were considered as Tier 1 capital until 1 November 2013.

The NCPCS had an indeterminate duration with no maturity date. Under the terms of their issue (prospectus dated 17 September 2010 and supplementary prospectus dated 8 December 2010), the Bank had the right upon notice to the holders to redeem at par, together with any amounts payable, all but not part of the NCPCS on 31 December 2015 or on any interest payment date following that day. The Bank also had the right, upon approval by the Central Bank, to temporarily reduce the nominal value of the securities in case the Minimum Capital Requirements, as defined by the Central Bank, were not met. The nominal value of these securities could be reset back to their original amount when the Bank would be able to meet the minimum capital adequacy ratios and following the approval of the Central Bank.

Furthermore, in accordance with the terms of issue, if prior to any interest payment date, the Bank, at its discretion, found that it fails to meet the capital adequacy, as this is defined by the Central Bank and/or based on its creditworthiness and/or its financial position, or that the interest payment would lead to a failure of the Bank to meet the required capital adequacy, as defined by the Central Bank and/or would adversely affect its creditworthiness and/or its financial position in the foreseeable future, then the Bank would have the option to cancel the payment of such interest. In this case, the Bank would give notice to the trustee and the holders not less than 10 working days prior to the said date. Cancellation of any interest payment could be made for an indefinite period of time and on a non-

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PROSPECTUS cumulative basis. Cancellation of any interest payment could also be made upon instructions from the Central Bank, if the Central Bank believed that the Bank did not have sufficient capital adequacy and/or such payment would affect the creditworthiness and/or the financial position of the Bank. Any cancellation of interest payments would be final and would no longer be payable.

The NCPCS bore a fixed annual interest rate of 6,25% for their whole period of issue and were listed on the CSE.

Based on their terms of issue, the holders of these securities could exercise their rights to convert into Ordinary Shares in the periods between 15 and 31 March, 15 and 30 June, 15 and 30 September and 15 and 31 December of each year, with the first conversion period being the period between 15 and 31 December 2012 and the last conversion period being the period from 15 to 31 December 2020. In addition, according to the terms contained in the prospectus dated 17 September 2010, if the holder decided to convert the NCPCS to Ordinary Shares, then the conversion price would be determined based on the average closing price of the shares of the Bank at the CSE at the closing of the last five (5) trading days prior to the share conversion period, minus 20%, with a minimum conversion price of €0,95. It is noted that the minimum conversion price had been adjusted in accordance with the provisions of A (7) (c) and (d) of the relevant prospectus.

By 31 December 2012, the Bank collected applications for the conversion into Ordinary Shares of 15.000.782 NCPCS of nominal value €1,00 each. These shares were included in the issued share capital of the Bank and were listed for trading on 15 January 2013.

Pursuant to the prospectus dated 30 September 2013 and the results upon the completion of the Capital Enhancement Plan it was decided amongst others to issue:

 CCS 1 at a total value of €126.382.231 for optional exchange to the holders of the NCPCS (ISIN CY0141470118) issued by the Bank pursuant to the issue terms included in the prospectus dated 17 September 2010, based on the provisions of Article 5B.

 CCS 2 at a total value of €128.070.047 for optional exchange to the holders of the bonds due in 2016 (ISIN CY0140040110) issued by the Bank pursuant to the issue terms included in the prospectus dated 11 May 2006, the bonds due in 2018 issued on 1 September 2008, the bonds due in 2019 (ISIN CY0140940111) issued on 11 March 2009 pursuant to the issue terms included in the Prospectus dated 18 May 2009, and the Capital Securities (ISIN CY0048940114) issued on 18 April 2003 under the issue terms included in the prospectus dated 7 November 2003 as well as to new investors for cash.

Both issues of CCS 1 and CCS 2 were held alongside the voluntary proposal under the provisions of article 5B of Law 105(I)/2013 which amended the Restructuring of Financial Organizations Law (N.200(I)/2011).

On the 2 November 2013, all NCPCS that were converted into CCS 1 at a total value €126.382.231 and the Capital Securities (2003) that were converted into CCS 2 at a total value €17.187.512 were automatically cancelled and the Bank ceased to have any obligations in respect to these.

8.3.1.3 CCS 1

For the purposes of calculating the capital base, the CCS 1 are considered to be Tier 1 capital.

The CCS 1 are perpetual securities with no maturity date. Under the terms of their issue, they bear an annual fixed interest rate of 11% which is payable on a quarterly basis at the end of each interest payment period. Interest payment dates are set to be the 31 March, 30 June, 30 September and 31 December.

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PROSPECTUS

The Bank may, at its sole discretion, partially or fully cancel the interest payments on a non-cumulative basis at any time if considered necessary or desirable and for any reason, for an unlimited time period and without any restriction on the Bank.

The interest payment will be paid by the available distributable items of the Bank.

Without this affecting the right of the Bank to cancel the interest payments at its sole discretion, as mentioned above, the mandatory cancellation of the interest payments will apply in cases where:

i. the Bank does not possess the necessary available distributable items for such an interest payments on CCS 1; or

ii. the Bank or the Group is in breach of applicable laws, regulations, requirements, guidelines and policies regarding the Bank’s or the Group’s capital requirements; or

iii. there is a requirement by the Central Bank at its sole discretion, as the supervisory authority, to cancel all or part of an interest payment.

Interest cancellation will not constitute an event of default, will not impose any restrictions on the Bank and will not grant the right to CCS 1 holders to apply for liquidation or resolution of the Bank. The Bank may use any cancelled interest payment without restriction to fulfil its obligations, as they fall due.

The CCS 1 are unsecured and subordinated obligations of the Bank and at their issuance are classified as Tier 1 capital securities in accordance with the Directive of Capital Requirements and Large Exposures (as amended, revised or replaced) and any relevant European Union Directives and Regulations as applied in Cyprus or any other requirements that may apply.

The rights and claims of CCS 1 holders:

i. are subordinated to the claims of the Bank’s creditors, which are:

 depositors or other creditors whose claims are not subordinated to claims of the depositors;

 creditors whose claims are subordinated, except those whose claims rank pari passu with the claims of CCS 1 holders;

 Bank bondholders that are classified as Tier 2 capital, whose claims are subordinated;

 holders of securities that are issued or guaranteed by the Bank and ranked at a higher priority than the CCS 1;

ii. rank pari passu with the claims of other existing capital securities issues of the Bank and any other future capital and other securities issues of the Bank that are classified as Tier 1 Capital, excluding Ordinary Shares; and

iii. they have priority only in respect of the Bank’s shareholders.

Under the provisions of the prospectus dated 30 September 2013 the Bank may, at its sole discretion, redeem, at par including accrued interest and excluding any cancelled interest, the total or part of the CCS 1, on 31 October 2018 or on any interest payment date after that date, provided that the financial situation and/or the solvency of the Bank and/or the Group are not adversely affected by such a

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The CCS 1 are also redeemable at the sole discretion of the Bank, during or after their issue (after approval of the Central Bank or other competent supervisory authority and given that events or conditions referred to in (i) or/and (ii) below, as applicable, could not reasonably be anticipated by the Bank at the time of the issue of CCS 1 and deemed by the Central Bank that such changes in (i) below are considered almost certain), in whole and not part, at par including accrued interest not cancelled:

i. where as a result of any change or proposed change in the laws or regulations of Cyprus, the relevant directives, regulations or laws in relation to the credit institutions or a change or proposed change in the application or official interpretation, the CCS 1 cease to be considered as:

(a) Tier 1 Capital; and/or

(b) appropriate funds for inclusion in the calculation of capital requirements as defined by Troika (as long as the Bank or the Group is required to maintain Common Equity Tier 1 ratio equal to or greater than 9%). (Note: 9% is the prevailing index during the reporting period);

ii. if the Bank shall not be entitled to claim any deduction in the calculation of tax liabilities in Cyprus with respect to any interest payments on the next interest payment date or if the amount of any deduction for the Bank would be greatly reduced.

All CCS 1 redeemed by the Bank will be cancelled and will not be reissued or resold. The Bank shall cease to have any obligations in regards to any CCS 1 that may be cancelled.

On 9 December 2013, in accordance with the above provisions, and at its sole discretion, the Bank announced the mandatory cancellation of the interest payments as a result of the absence of the required available distributable items for such interest payments. The mandatory cancellation of interest payments will be valid until the Bank informs the holders of the CCS 1 otherwise.

Any redemption of CCS 1 will be subject to prior approval from the Central Bank as the supervisory authority and/or any other competent authority.

CCS 1 will mandatorily and irrevocably be converted into Ordinary Shares, if any of the following occurs:

(a) The Common Equity Tier 1 Ratio of the Bank or the Group after 31 October 2013 or if this date is amended by the Central Bank or other competent authority, after this new date, decreases, or remains below 9% (as long as the Bank or the Group is required, by the Central Bank or other competent authority, to maintain its Common Equity Tier 1 Ratio equal to or greater than 9%).

(b) The Common Equity Tier 1 Ratio of the Bank or the Group at any time decreases or remains below the applicable percentage required, by the Central Bank or other competent authority, to be maintained by the Bank or the Group with a maximum Common Equity Tier 1 Ratio of 9%.

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(d) If any non-viability event occurs for the Bank or the Bank is subject to state aid measures.

The conversion amount will be, as applicable: (i) the amount required to restore the Common Equity Tier 1 Ratio of the Bank and/or the Group to 5,125% and/or to 9% (for the latter, as long as the Bank or the Group is required to maintain the Common Equity Tier 1 Ratio equal to or greater than 9%) and/or the applicable ratio that is required, at any time, from the Central Bank or other competent authority with a maximum ratio of Common Equity Tier 1 capital of 9% or (ii) the amount required so that the Bank is considered viable by the Central Bank or other competent authority, in each case up to the entire nominal amount of CCS 1. Any conversion will apply pro rata to the outstanding balance of CCS 1.

The CCS 1 will be converted into Ordinary Shares of the Bank at the “Mandatory Conversion Price”, which will be equal to the higher of:

(i) the Mandatory Reported Market Price, i.e. the average closing price of the last five days of trading of the shares of the Bank on the CSE prior to conversion with 20% discount;

(ii) the minimum conversion price of €0,10 (subject to adjustment as set forth in the provisions of the relevant prospectus); and

(iii) the nominal value of the Bank’s Ordinary Shares.

The CCS 1 holders may voluntarily convert them into Ordinary Shares of the Bank, at predetermined periods each year at the “Voluntary Conversion Price”, which will be equal to the higher of:

(i) the Voluntary Reported Market Price, i.e. the average closing price of the last five days of trading of the shares of the Bank on the CSE prior to conversion with 20% discount;

(ii) the minimum conversion price of €0,15 (subject to adjustment as set forth in the provisions of the relevant prospectus); and;

(iii) the nominal value of the Bank’s Ordinary Shares.

The CCS 1 are listed on the CSE.

In applying the provisions of the prospectus on CCS 1 and CCS 2 dated 30 September 2013, and as a result of the Common Equity Tier 1 ratio of the Group and the Bank being below 9%, on 28 February 2014, CCS 1 of a total value of €85.873.871 were mandatorily and irrevocably converted. A total of 858.738.710 Ordinary Shares of the Bank resulted from the conversion.

In addition, on 29 August 2014, in applying the provisions of the prospectus on CCS 1 and CCS 2 dated 30 September 2013, and as a result of the Common Equity Tier 1 ratio of the Group and the Bank being below 8%, as set by the Central Bank circular on 29 May 2014, CCS 1 of a total value of €15.106.520 were mandatorily and irrevocably converted. A total of 151.065.200 Ordinary Shares of the Bank resulted from the conversion.

Finally, on 30 September 2014, in applying the provisions of the prospectus on CCS 1 dated 30 September 2013, and as a result of the Common Equity Tier 1 Ratio of the Group and the Bank being below 8%, as set by the Central Bank of Cyprus circular dated 26 October 2014, CCS 1 of total value of €23.804.158 were mandatorily and irrevocably converted to shares. A total of 238.041.610 Ordinary Shares of the Bank resulted from the conversion.

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The mandatory conversions applied pro rata to the outstanding balance of CCS 1 for each investor on the conversion date and the mandatory conversion price of the CCS 1 to shares was set at €0,10. All CCS 1 which have been converted into shares were automatically cancelled and any right or obligation under their prospectus expires, while the number of listed CCS 1 decreased to 1.597.679 with a nominal value of €1,00 each.

As of the date of this Prospectus, Pancyprian Insurance Ltd, a subsidiary of the Bank, holds 20.533 CCS 1 of nominal value €1,00 each.

8.3.1.4 CCS 2

For the purposes of calculating the capital base, the CCS 2 are considered as Tier 1 capital

The CCS 2 are perpetual securities with no maturity date. Under the terms of their issue, they bear an annual fixed interest rate of 10% which is payable on a quarterly basis at the end of each interest payment period. Interest payment dates are set to be the 31 March, 30 June, 30 September and 31 December.

The Bank may, at its sole discretion, partially or fully cancel the interest payment on a non-cumulative basis at any time under considered necessary or desirable and for any reason, for an indefinite time period and without any restriction to the Bank.

The interest payment will be paid by the available distributable items of the Bank.

Without this affecting the right of the Bank on cancelling the interest payment at its sole discretion, as mentioned above, the mandatory cancellation of the interest payment will apply in cases where:

(i) the Bank does not possess the necessary available distributable items for such an interest payment on CCS 2; or

(ii) the Bank or the Group is in breach of applicable laws, regulations, requirements, guidelines and policies regarding the Bank’s or the Group’s capital requirements; or

(iii) there is a requirement by the Central Bank at its sole discretion, as the supervisory authority, to cancel all or part of an interest payment.

Interest cancellation will not constitute an event of default, will not impose any restrictions on the Bank and will not grant the right to CCS 2 holders to apply for liquidation or resolution of the Bank. The Bank may use any cancelled interest payment without restrictions in order to fulfil its obligations, as they fall due.

CCS 2 were offered (the “CCS 2 Voluntary Conversion Proposal”) to the holders of the following securities:

 Bonds due 2016 (ISIN CY0140040110), issued under the issuance terms of the prospectus dated 11 May 2006;

 Bonds due 2018 issued on 1 September 2008;

 Bonds due 2019 (ISIN CY0140940111) issued on 11 March 2009 under the issuance terms included in the prospectus dated 18 May 2009; and

 Capital Securities (ISIN CY0048940114) issued on 18 April 2003 under the issuance terms of the prospectus dated 7 November 2003.

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The CCS 2 are unsecured and subordinated obligations of the Bank and at their issuance were classified as Tier 1 Capital Securities in accordance with the Directive of Capital Requirements and Large Exposures (as amended, revised or replaced) and any relevant European Union Directives and Regulations as applied in Cyprus or any other requirements that may apply.

The rights and claims of CCS 2 holders:

(i) Are subordinated to the claims of the Bank’s creditors, which are:

 depositors or other creditors whose claims are not subordinated to claims of the depositors;

 creditors whose claims are subordinated, except those whose claims rank pari passu with the claims of CCS 2 holders;

 Bank bondholders that are classified as Capital Tier 2 (Tier 2), whose claims are subordinated; and

 holders of securities that are issued or guaranteed by the Bank and their rank is higher of the rank of CCS 2.

(ii) Rank pari passu with the claims of other existing capital securities issues of the Bank and any other future capital and other securities issues of the Bank that are classified as Tier 1 Capital, with the exception of the Ordinary Shares.

(iii) They have priority only in respect of the Bank’s shareholders.

Under the provisions of the prospectus dated 30 September 2013 the Bank may, at its sole discretion, redeem, at par including accrued interest, excluding any cancelled interest, the total or part of the CCS 2, on 31 October 2018 or on any interest payment date after that date, provided that the financial situation and/or the solvency of the Bank and/or the Group are not adversely affected by such a redemption and after approval by the Central Bank or other competent supervisory authority. In case of redemption of part of the CCS 2, the redemption will apply for all holders of CCS 2 in proportion to the CCS 2 they hold.

The CCS 2 are also redeemable at the sole discretion of the Bank, during or after their issue (after approval of the Central Bank or other competent supervisory authority and given that events or conditions referred to in (i) or/and (ii) below, as applicable, could not reasonably be anticipated by the Bank at the time of the issue of CCS 2 and deemed by the Central Bank that such changes in (i) below are considered almost certain), in whole and not part of, at par including accrued interest not cancelled:

(i) where as a result of any change or proposed change in laws or regulations of Cyprus, the relevant directives, regulations or laws in relation to the credit institutions or change or proposed change in the application or official interpretation, the CCS 2 cease to be considered:

(a) Tier 1 Capital; and/or

(b) appropriate funds for inclusion in the calculation of capital requirements as defined by the Troika (as long as the Bank or the Group is required to maintain Common Equity Tier 1 Ratio equal to or greater than 9%) (Note: 9% is the prevailing index during the reporting period); and

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(ii) if the Bank shall not be entitled to claim any deduction in the calculation of tax liabilities in Cyprus with respect to any interest payment on the next interest payment date or the amount of any deduction for the Bank would be greatly reduced.

All CCS 2 redeemed by the Bank will be cancelled and will not be reissued or resold. The Bank shall cease to have any obligations in regards to any CCS 2 that may be cancelled.

On 9 December 2013, in accordance with the above provisions, and at its sole discretion, the Bank announced the mandatory cancellation of the interest payment as a result of the inexistence of the required available distributable items for such interest payment. The mandatory cancellation of interest payment will be valid unless the Bank informs the holders of the CCS 2 otherwise.

Any redemption of CCS 2 will be subject to prior approval from the Central Bank, as the supervisory authority and/or any other competent authority.

The CCS 2 will mandatorily and irrevocably be converted into Ordinary Shares, if any of the following applies:

(a) The Common Equity Tier 1 Ratio of the Bank or the Group after 31 October 2013 or if this date is amended by the Central Bank, after this new date, decreases, or remains below 9% (as long as the Bank or the Group is required, by the Central Bank, to maintain its Common Equity Tier 1 Ratio equal to or greater than 9%).

(b) The Common Equity Tier 1 Ratio of the Bank or the Group at any time decreases or remains below the applicable percentage required, by the Central Bank, to be maintained by the Bank or the Group with maximum Common Equity Tier 1 Ratio of 9%.

(d) If any Non-Viability Event occurs for the Bank, the Group or the Bank may be subject to state aid measures.

The conversion amount will be, as applicable: (i) the amount required to restore the Common Equity Tier 1 Ratio of the Bank and/or the Group to 5,125% and/or to 9% (for the latter, as long as the Bank or the Group is required to maintain the Common Equity Tier 1 Ratio equal to or greater than 9%) and/or the applicable ratio that is required, at any time, from the Central Bank or other competent authority with a maximum ratio of Common Equity Tier 1 capital of 9% or (ii) the amount required so that the Bank is considered viable by the Central Bank or other competent authority, in each case up to the entire nominal amount of CCS 2. Any conversion will apply pro rata to the outstanding balance of CCS 2.

The CCS 2 will be converted into Ordinary Shares of the Bank at the “Mandatory Conversion Price”, which will be equal to the higher of:

(i) the Mandatory Reported Market Price, i.e. the average closing price of the last five days of trading of the shares of the Bank on the CSE prior to conversion with 20% discount;

(ii) the minimum conversion price of €0,05 (subject to adjustment as set forth in the provisions of the relevant prospectus); and

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(iii) the nominal value of the Bank’s Ordinary Shares.

The CCS 2 holders may voluntarily convert them into Ordinary Shares of the Bank, at predetermined periods each year at the “Voluntary Conversion Price”, which will be equal to the higher of:

(i) the Voluntary Reported Market Price, i.e. the average closing price of the last five days of trading of the shares of the Bank on the CSE prior to conversion with 20% discount;

(ii) the minimum conversion price of €0,15 (subject to adjustment as set forth in the provisions of the relevant prospectus); and

(iii) the nominal value of the Bank’s Ordinary Shares.

The CCS 2 are listed on the CSE.

8.3.2 Tier 2 Capital

For the purposes of calculating the Bank’s capital base, the following bonds are considered as Tier 2 capital:

8.3.2.1 Non-Convertible Bonds 2016 (the “2016 Bonds”)

The 2016 Bonds were issued in three different series and will mature on the 1 July 2016, irrespective of their date of issue. Under their terms of issue (prospectus dated 11 May 2006, supplementary prospectus dated 7 June 2006, second supplementary prospectus dated 1 November 2006, third supplementary prospectus dated 12 December 2006 and fourth supplementary prospectus dated 5 April 2007), the Bank has the right to redeem the 2016 Bonds on any interest payment date, after 1 July 2011. The bonds that resulted from all issue series are listed on the CSE.

The 2016 Bonds are unsecured and in the event of the Bank’s resolution, their repayment follows in order of priority, the claims of depositors and other Bank creditors. The 2016 Bonds have, however, priority over shareholders and the holders of Capital Securities.

The 2016 Bonds bear a floating interest rate, which is reviewed at the start of each interest payment period and applies to that specific period. According to their terms of issue, the applicable interest rate was the 3-month Euribor plus 0,80% up to 1 July 2011 and the 3-month Euribor plus 1,50% after 1 July 2011, if the 2016 Bonds are not redeemed by the Bank. Interest is payable quarterly in cash at the end of each interest period. For the period from the 1 January 2013 to 31 March 2013 the interest rate was set at 1,69% per annum, for the period from 1 April 2013 to 30 June 2013 the interest rate was set at 1,71% per annum, for the period from 1 July 2013 to 30 September 2013 the interest rate was set at 1,72% per annum, while for the period from 1 October 2013 to 31 December 2013 the interest rate was set at 1,724% per annum. For the period from 1 January 2014 to 31 March 2014 the interest rate was set at 1,788%, for the period from 1 April 2014 to 30 June 2014 it was set at 1,81% per annum, for the period from 1 July 2014 to 30 September 2014 it was set at 1,707% per annum, while for the period from 1 October 2014 to 31 December 2014 it was set at 1,583% per annum.

With the absorption of the operations of Athena Cyprus Company Ltd on 28 June 2010, an amount of €854.288 relating to an investment of Athena Cyprus Public Company Ltd in the 2016 Bonds, was taken up by the Bank and subsequently eliminated in consolidation.

Pursuant to the prospectus, dated 30 September 2013 and upon completion of the Capital Enhancement Plan, among others, CCS 2 of a total value of €20.881.785 were issued to exchange the 2016 Bonds (ISIN CY0140040110), to the holders who had accepted the CCS 2 Voluntary Conversion Proposal.

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On the 2 November 2013, all 2016 Bonds that were converted into CCS 2 were automatically cancelled and the Bank ceased to have any obligations in respect of these.

8.3.2.2 Non-Convertible Bonds 2018 (the “2018 Bonds”)

On 1 September 2008 the Bank proceeded with the issue of the 2018 Bonds amounting to €10.000.000. The bonds have a maturity date of 31 August 2018 and form part of the Bank’s Tier 2 capital.

Interest on the 2018 Bonds is payable in cash every three months, at the end of each interest period. The 2018 Bonds bear interest at a floating rate equal to the 3-month Euribor rate applicable at the beginning of each interest period, plus 1,75%. Under the terms of issuance of the bond if the bonds were not redeemed by the Bank after 1 September 2013, they would bear an additional interest of 1%. Consequently the interest rate applicable subsequent to 1 September 2013 is equal to the 3-month Euribor plus 2,75%.

The 2018 Bonds are not secured and in the event of the Bank’s resolution their repayment follows in order of priority, the claims of depositors and other Bank creditors. They have, however, priority over shareholders and Capital Securities holders. The 2018 Bonds are not listed on the Cyprus Stock Exchange.

8.3.2.3 Non-Convertible Bonds 2019 (the “2019 Bonds”)

On 11 March 2009, the Bank proceeded with the issue of the 2019 Bonds amounting to €90.000.000 with a 10-year duration and a nominal value of €100 each. The issue was placed to investors with a minimum amount of investment of €50.000, in accordance with the relevant provisions of the legislation, regulations and directives of the competent authorities. Under the terms of issue, (prospectus dated 18 May 2009), the 2019 Bonds bore interest equal to the 3-month Euribor rate plus 4,60% until 11 March 2014. Subsequent to 11 March 2014, had the 2019 Bonds not been redeemed by the Bank, they would bear an additional interest rate of 2%. Consequently, the interest rate applicable subsequent to 11 March 2014 and in the event of non-redemption of the 2019 Bonds by the Bank, would equal to the applicable 3-month Euribor plus 6,60%.

The Bank, following approval by the Central Bank and after giving notice to the Commissioner and the holders of the 2019 Bonds of no less than 30 and no more than 60 days, could redeem the 2019 Bonds on the first interest payment date subsequent to the 11 March 2014, and on any other subsequent interest payment date.

The 2019 Bonds were listed on the CSE.

The interest on the 2019 Bonds was payable quarterly in cash at the end of each period. The 2019 Bonds bore interest at the fixed rate of 7,50% for the first year and a floating rate for the remaining periods until the end of the fifth year, equal to the 3-month Euribor, was applicable at the beginning of each interest period, plus 4,60%. For the period from 1 January 2013 to 31 March 2013 the interest rate was set at 4,79% per annum, for the period from 1 April 2013 to 30 June 2013 it was set at 4,81% per annum, while for the period from 1 July 2013 to 31 December 2013 the interest rate was set at 4,82% per annum.

Pursuant to the prospectus dated 30 September 2013 and upon completion of the Capital Plan, among others, CCS 2 were issued with a total value of €90.000.000 to exchange all of the 2019 Bonds (ISIN CY0140940111) under the provisions of Article 5B.

On 2 November 2013, all 2019 Bonds that were converted into CCS 2 were automatically cancelled and the Bank ceased to have any obligations in respect of these.

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All the titles that have resulted from the Capital Enhancement Plan are listed and traded on the CSE.

8.4 EQUITY AND LOAN CAPITAL

Group 30 September 31 December 2014 2013 2012 2011

LOAN CAPITAL (€’000) (€’000) (€’000) (€’000) Tier 1 Capital Capital Securities ...... -- -- 17.436 17.436 NCPCS ...... -- -- 124.758 139.759 CCS 1 ...... 25.075 124.758 -- -- CCS 2 ...... 128.070 128.070 -- -- 153.145 252.828 142.194 157.195 Tier 2 Capital 2016 Bonds ...... 41.801 41.801 62.683 62.683 2018 Bonds ...... 10.000 10.000 10.000 10.000 2019 Bonds ...... -- -- 90.000 90.000 51.801 51.801 162.683 162.683 Total Loan Capital ...... 204.946 304.629 304.877 319.879 EQUITY Share capital ...... 36.986 26.888 266.466 132.448 Reserves ...... 326.567 367.600 215.259 299.151 363.553 394.488 481.725 431.599 Non-controlling interest ...... 5.138 4.333 3.159 2.599 Total equity ...... 368.691 398.821 484.884 434.198 Total loan capital and equity 573.637 703.450 789.761 754.076

Net financial assets

The following table presents the net financial assets of the Group as at 30 September 2014 and 31 December 2013 and 2012:

30 31 31 September December December 2014 2013 2012 €’000 €’000 €’000 Α. Cash and non-compulsory placements with central banks ...... 1.503.827 965.030 1.009.283 Β. Placements with other banks ...... 895.191 850.711 1.624.991 Cash and cash equivalents ...... 2.399.018 1.815.741 2.634.274 C1. Investments in listed equities held for trading ...... 464 527 557 C2. Investment in bonds with maturity within one year .. 265.481 166.990 321.707 D. Total liquidity (D) = (Α)+(Β)+(C) ...... 2.664.963 1.983.258 2.956.538 Ε. Other current financial assets ...... 113.456 70.666 69.980 F. Amount due to other banks – short term ...... 43.217 47.358 46.706 G. Loan capital – short term ...... 41.801 41.801 62.683

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30 31 31 September December December 2014 2013 2012 €’000 €’000 €’000 H. Total current financial liabilities (H) = (F)+(G) ..... 85.018 89.159 109.389 I. Net current financial assets (Ι)=(D)+(Ε)–(H) ...... 2.693.401 1.964.765 2.917.129 Κ. Amounts due to central banks and deposits by banks – long term ...... -- 4 -- L. Loan capital – long term ...... 163.145 262.828 242.194 Μ. Total non-current financial liabilities (Μ)=(Κ) + (L) ...... 163.145 262.832 242.194 Ν. Net financial assets (Ν)=(Ι) – (Μ) ...... 2.530.256 1.701.933 2.674.935

There was no significant change in the net assets of the Group from the date of preparation of the condensed financial statements for the period ended 30 September 2014 until the date of this Prospectus.

For the contingent liabilities and commitments of the Group see Part VII, Paragraph 2.8.

8.5 SOURCES OF CAPITAL

The main sources for the Bank’s capital are the cash flows from its operations and from its investment and financing activities.

During the period ended 30 September 2014, the Group had net cash inflows for operations of €701 million, while for the year 2013 the Group had net cash outflows from operations of €1.132 million.

During 2012 the Group had net cash inflows in operations of €747 million, while for 2011 its net cash outflows in operating activities amounted to €72 million.

Net cash outflows from investment activities for the period ended 30 September 2014 amounted to €118 million, while during 2013 the Group’s net cash inflows from such activities were €226 million.

Net cash inflows from investment activities during 2012 amounted to €208 million, while during 2011 they were €534 million.

On 2 November 2012 the Capital Enhancement Plan that was announced in March 2012 was completed and the Group raised €51 million of additional funds with the corresponding enhancement of the Group’s total core capital.

On 31 December 2012 the holders of 15.000.782 NCPCS of nominal value €1,00, exercised their right to convert NCPCS into Ordinary Shares of the Bank. As a result 15.790.297 new shares were issued with the corresponding enhancement of the Bank’s original own funds.

On 1 November 2013 the Bank’s Board of Directors completed the evaluation of the applications received within the framework of the Capital Enhancement Plan, pursuant to the prospectus dated 30 September 2013 and the implementation of the provisions of Article 5B of the Restructuring of Financial Organizations Law (N.200(I)/2011, as amended), securing capital of €358 million.

Details of the Restructuring and Capital Enhancement Plan and the results after its completion are described below.

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2013 Restructuring and Capital Enhancement Plan of the Bank

Following the completion of the due diligence test of loan portfolios of financial institutions operating in Cyprus, including the Bank, performed by PIMCO, following the instructions of the Central Bank, the Central Bank has defined the capital needs of the financial institutions involved in the test and which, according to the Central Bank, should have been raised either from private sources or state aid with funds from Troika’s Financial Sector Reform Program that have already been committed.

According to the Central Bank and on the basis of the extreme scenario of PIMCO’s due diligence and after the sale of the BNG the capital requirement the Bank needed to meet by 31 October 2013 was €294 million.

The Board of Directors of the Bank, at its meetings on 11 July 2013 and 18 July 2013, decided to enhance the capital base of the bank via a capital enhancement plan with an aim of raising private funds to meet the amounts and structure set by the Capital Enhancement Plan to satisfy its capital needs.

The actions planned, based on the 2013 plan, included the increase of the authorised share capital of the Bank, the reduction of the nominal value of the issued share capital, the transfer of the difference that emerged from the reduction to a special reserve account from the reduction of capital pursuant to the provisions of article 64(1)(e) of the Companies’ Law, the issue of new Ordinary Shares to the existing shareholders to the holders of NCPCS and to new investors, the issue of CCS 1 which were offered for optional exchange to the holders of the NCPCS and the issue of CCS 2 which was offered for optional exchange to the holders of Capital Securities and to the bondholders of the Bank and to new investors.

For this purpose, at an Extraordinary General Meeting of the shareholders of the Bank held on Wednesday, 14 August 2013 which was attended, either by proxy or in person, by shareholders holding 51,77% of the then issued share capital of the Bank, a series of resolutions was approved unanimously. These have been posted on the official website of the Bank (www.hellenicbank.com).

On 1 November 2013 the Bank’s Board of Directors completed the evaluation of the applications received within the framework of the Capital Enhancement Plan, pursuant to the Prospectus dated 30 September 2013 and the implementation of the provisions of Article 5B of the Restructuring of Financial Organizations Law (N.200(I)/2011, as amended), securing capital of €358 million.

The capital raised by the Bank, despite the unfavourable conditions of the market and the prevailing uncertainty, exceeded by €64 million the imposed, by the extreme scenario of PIMCO, capital deficit of €294 million and formed a Core Tier 1 Ratio of more than 9%.

Specifically, the Board of Directors, pursuant to the prospectus dated 30 September 2013 and the results deriving from the completion of the Capital Enhancement Plan, decided to issue the following titles:

1. 66.578.740 new shares of nominal value €0,01 each at the price of €0,05 per share to the existing shareholders and the holders of the NCPCS, who have submitted an application.

2. 2.002.485.731 new shares of nominal value €0,01 each at the price of €0,05 per share to other investors.

3. CCS 1 of a total value of €126.382.231 in exchange for all NCPCS (ISIN CY0141470118) issued by the Bank pursuant to the issue terms included in the prospectus dated 17 September 2010, based on the provisions of Article 5B.

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4. CCS 2 of a total value of €90.000.000 in exchange for all 2019 Bonds (ISIN CY0140940111) issued on 11 March 2009 and the terms of issue of which are included in the prospectus dated 18 May 2009 based on the provisions of Article 5B.

5. CCS 2 of total value of €17.187.512 in exchange for all Capital Securities (ISIN CY0048940114) issued on 18 April 2003 and the terms of issue of which are included in the prospectus dated 7 November 2003 based on the provisions of Article 5B.

6. CCS 2 of total value of €20.881.785 in exchange for 2016 Bonds (ISIN CY0140040110) issued pursuant to the terms of issue of the prospectus dated 11 May 2006 based on the CCS 2 Voluntary Exchange Proposal.

7. CCS 2 of total value of €750 to other investors.

On 2 November 2013, all NCPCS were converted into CCS 1. The 2019 Bonds, the Capital Securities and the 2016 Bonds whose holders participated in the voluntary conversion of CCS 2, were converted into CCS 2. After the publication in two national newspapers they were automatically cancelled and the Bank ceased to have any obligations in respect of these.

All titles that have arisen from the Capital Enhancement Plan are listed and traded on the CSE.

During 2014 and until the date of this Prospectus, 1.247.845.520 Ordinary Shares have been issued as a result of the conversion of CCS 1 of total value of €124.784.552, in applying the provisions of the prospectus on CCS 1 and CCS 2.

The Group’s cash flow analysis is presented in Part VII, Paragraph 1 “Consolidated Statement of Cash Flows”.

8.6 GROUP CAPITAL ADEQUACY

The references made in this Prospectus to capital adequacy ratios of the Bank or the Group for previous periods have been calculated in accordance with the applicable directive on the reporting period in question.

The table below presents the regulatory capital of the Group:

30 September 31 December 2014(1) 2013 €’000 €’000 Common Equity Tier 1 Capital 314.850 322.705 Original own funds ...... 453.152 577.157 Supplementary own funds ...... 41.226 51.095 Total own funds ...... 494.378 628.252 Risk weighted assets ...... 4.229.353 4.399.138 Core Tier 1 Ratio ...... 7,4% 7,3% Tier 1 Ratio ...... 10,7% 13,1% Tier 2 Ratio ...... 1,0% 1,2% Capital Adequacy Ratio ...... 11,7% 14,3% (1) CRD IV (Basel III) is effective from 1 January 2014

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8.7 STATEMENT FOR THE SUFFICIENCY OF WORKING CAPITAL

The Bank states that, in its opinion, its working capital is sufficient to finance the current activities of the Bank for the 12 months following the date of this Prospectus.

9. DIVIDEND POLICY

The Ordinary Shares to result from this Issue will rank pari passu with the existing shares of the Bank.

The Board of Directors may aim to keep additional capital levels, based on internal capital buffers that it decides. In light of the above paragraph, if, among other things, the reporting internal capital buffers and/or regulatory requirements for capital adequacy are not met, the Board of Directors has the option not to take action for a dividend payment.

Based on the provisions of the Companies Law, Cap. 113, except when there is a reduction of the issued capital, a public company cannot make a distribution to its shareholders if, at the end of the last financial year, the net assets as they already appear in the annual accounts, or as could arise as a result of such distribution, are below the issued capital and reserves, the distribution of which the Liberalization Law or the Articles of Association do not allow.

In addition, according to the Companies Law, Cap. 113, the amount of a distribution to shareholders may not exceed the amount of the profits of the last financial year, for which the annual accounts have been closed, increased by the profits brought forward at the end of the last financial year and sums drawn from reserves available for this purpose, reduced however by the amount of losses brought forward from previous financial years, and sums placed in reserves according to the Liberalization Law or the Articles of Association.

Furthermore, in accordance with the Companies Law, Cap. 113, a public company may pay interim dividends only if the following conditions are met:

a. interim accounts are prepared in which the funds available for distribution are shown to be sufficient, and

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Dividends may be paid in cash and/or shares (stock dividend) for better tax management purposes as well as for non-capital loss.

For more information on the taxation of dividends, go to Part IX, Paragraph 5.

Dividends are paid after withholding the income tax and/or defence contribution amounts stipulated by the tax legislation applicable at the time. Any cash dividend will be paid in Euros and therefore there is a currency risk in relation to investors who do not have the Euro as their base currency.

The Bank has not paid out any dividends for the years 2011-2013.

Taking into account the above, the Bank does not currently intend to pay dividends.

It is noted the provisions of the limitation law, as applied today, are not applicable to the shareholder’s right to dividend.

10. GROUP STRENGTHS

The Group believes that its business is based on a number of key strengths, as set forth below.

New shareholder and board structure focused on value creation. Following the investment by new major shareholders in November 2013, a number of new members have joined the Board of Directors over the course of 2014. The Board in its new composition has mandated the management team to pursue decisive arrears management as well as growth opportunities in the Cypriot market.

The recovering Cypriot economy provides opportunity to grow the business. The Group is well- positioned to capitalise on the recovery of the Cypriot economy. Recent macroeconomic data points to an improvement in the Cypriot economy. In October 2014 the IMF indicated forecasts for GDP growth in Cyprus of 0.4% for 2015 and 1.6% for 2016. Notwithstanding recent financial difficulties, Cyprus has maintained its status as an attractive tourist destination and business centre, and these are key pillars of the economy. Moreover, increases in real estate prices as economic conditions improve will enhance the value of the collateral associated with lending by banks. Furthermore, the discovery of significant hydrocarbon reserves in the country’s Exclusive Economic Zone provides long term growth potential for the economy, which has not been taken into account in the Bank’s or IMF’s forecasts.

Strong funding and liquidity position and reputation for stability provide competitive advantage to grow customer base and the Bank’s loan book significantly above market. The Bank is well-positioned to grow its loan market share as lending growth in Cyprus recovers, building on its strong funding position (based on EUR6.2bn of deposits against EUR3.3bn of net loans). The Bank enjoys a strong reputation for stability, evidenced by recent awards such as Safest Bank in Cyprus, Best Consumer Internet Bank 2014, Best Cooperate/ Institutional Internet Bank 2014, and has not been subject to any depositor bail-in or government bail-out or European Union restructuring plan during the Cypriot financial crisis, and does not currently have any exposure to ECB/ ELA funding or the interbank market. Reflecting these factors, the Bank has been able to grow its deposit market share over recent years from 9.4% as of 31 December 2011 to 13.4% as of 30 September 2014, and significantly increased its number of customers from 320,724 as of February 2013 to 370,366 as of September 2014.

Significant potential to improve banking income through loan growth, margin expansion and fee income recovery. The Group has significant potential to improve banking income by replacing its liquid assets with new lending at attractive margins. The Group achieved a net interest margin of 3.35% during the nine month ended 30 September 2014. In comparison, the Bank’s liquid asset portfolio of €3.4 billion is invested on average at a low yield of 0,4%, comprising cash and balances with Central Bank of €1.6 billion as of September 2014 invested at -0,2%. The Group’s fee income has recovered from €13.3 million in the first quarter of 2014 to €14.7 million in the third quarter of 2014

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Efficient and scalable operational platform provides additional leverage to increase profitability. The Group’s cost-income ratio has improved year on year from 52,4% for the nine months ended 30 September 2013 to 41,0% for the nine months ended 30 September 2014, when excluding one-off items. The Group’s cost position was further improved during 2013 and the first nine months of 2014 through a VRS as well as other wage and workforce optimisation programs. The Bank's number of employees has come down from 1.968 (including 372 employees in the Greek network and 34 employees in Russia) as of September 2012, to 1.419 as of 30 September 2014. Staff costs per employee (excluding one-off costs) have also decreased significantly over the course of the last year. The Bank offers a complete range of banking products through a wide network of branches and business centres.

Well provisioned with additional upside from recoveries on the back of legislation change and macroeconomic improvement. The Group believes that it exhibits prudent risk management, with 46.3% of its non-performing loans being covered by provisions. This level is in line with the European average of 46% and significantly above the Cypriot market average of 34%, according to the IMF. The provisions coverage ratio of the bank increases to 106.4% of non-performing loans when collateral at force sale value is included. In addition, the Bank has changed its organisational structure and set up a fully operational non-performing loan management unit to maximise the value from its non-performing loan portfolio, with over 100 personnel involved in managing the non-performing loan portfolio. In addition to the above, further upside on recoveries and new lending quality can be expected from an improvement of the macroeconomic environment as well as legislation changes in the Cypriot market to decisively improve foreclosure processes, loan origination, and the central information collected in the credit registry.

11. GROUP STRATEGY

The Bank sought to establish a reputation for stability, enabling it to attract new customers and grow its market share across the entire spectrum of banking business while maintaining sufficient liquidity to enable it to capture market opportunities and at the same time focus on organic growth. The Bank offers a full range of universal banking products, and believes that it has substantial opportunities to expand its business by leveraging network infrastructure, technology and systems.

The above characteristics of the Group have already yielded results in the period following the decisions of Eurogroup in March 2013. There has been a significant increase in the Bank’s customer base and operations of the Bank as clearly demonstrated by the market share in loans and deposits (Refer to Part V, Paragraph 1). The very healthy Euro liquidity ratio at 39% (September 2014) should also be emphasised, as well as the total net loans to deposits ratio at 53% (September 2014).

The strategic goals of the Group focus on three major pillars:

 The effective management of credit risk arising from the challenges of the loan portfolio and especially the portfolio of non-performing loans.

 The use of the Bank’s significant liquidity to achieve better returns and the diversion of some of that liquidity to achieve high-quality growth in the loan portfolio.

 Capitalising on the opportunities presented to achieve a careful and well thought -out growth in the Bank’s volume of business through the careful and prudent management of its assets.

The Bank anticipates that over the next 12 months the Cypriot economy is likely to continue to face challenges, maintaining pressure on the loan portfolio. The Bank is working diligently on the implementation of the management framework, as set out by the Central Bank, taking concrete steps such as strengthening the Debt Recovery Unit, establishing an Arrears Management Unit, and engaging

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In terms of liquidity, despite the outflow of deposits during the first months following the Eurogroup meeting on 25 March 2013, the rate of outflow was reversed in October 2013. Since then, there has been a steady upward trend in deposit balances. This steady upward trend has created a very good liquidity, thus enabling the Bank to maintain a liquid assets ratio beyond the regulatory minimum of 20% in Euros and 70% in foreign currencies. Consequently, the Bank does not hold any funding from either the ELA or the ECB, but instead, and as at the date of this Prospectus, it retains significant amounts of deposits at the ECB. The Bank’s objective is to optimise the performance of its assets, taking into account the potential risks and keeping in mind its first priority to protect depositors.

The management of the Bank believes the absorption of Laiki’s Bank portfolio by the Bank of Cyprus created a gap in the banking sector which could provide the opportunity for a dynamic bank to attract credit-worthy households and businesses from the market through provision of high-quality banking services. The Bank’s lending market share of approximately 7% leaves upside potential to gain further market share and implies good prospects for growth. This assessment is based on the experience of the past 18 months (since the Eurogroup’s decision of March 2013) during which the number of new customers of the Bank has significantly increased.

The Bank has the ability to finance creditworthy businesses and households, helping in the restoration of the country’s economy. The Bank’s objective is to build long-term relationships with customers, with a specific focus on SMEs, which form the backbone of the Cypriot economy. The Bank believes there is potential in some sectors of the economy. The focus of new loans will be on companies that increase the competitiveness and productivity of the country, such as commercial activities, essentials, tourism, agriculture, European programs and specific projects on energy and shipping. Loans to the retail sector are expected to be focussed on mortgages, small loans to new customers and supporting other current clients who are deemed viable. The Group’s insurance business gave further breadth in the range of services offered by the Group. It is the Bank’s intention to further promote these products, especially those not associated with credit facilities.

In terms of the Bank’s income sources from international companies, management believes that the activities of the International Business Division will continue to be supported by the stabilisation of the economy, the return to growth and the gradual lifting of restrictive measures, making a significant contribution to the Bank’s income.

As part of achieving its strategy, Group management has set the following medium-term objectives:

 Grow loan market share to more than 10%;

 Maintain a strong funding position based on a net loan-deposit ratio over 70%

 Increase net interest margin to in excess of 3.5%;

 Maintain a cost to income ratio of approximately 40%;

 Achieving a cost of risk of approximately 1.5%;

 Following completion of the capital increase, maintaining a CET 1 ratio (Basel III phase-in) above 10%, so as to ensure an adequate risk buffer over the minimum ratio of 8%; and

 Achieve a return on equity of more than 15%.

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These objectives are not a forecast of future financial or other performance, and there can be no assurance that the Group will achieve these or other objectives in any time period or at all. See “[Risk Factors – Risks Relating to the Group’s Business – The Bank’s actual performance may differ materially from the targets included in this Prospectus].”

12. OTHER INFORMATION

12.1 CAPITAL ENHANCEMENT PROCESS

The Bank considers that the AQR adjustments that have been made in the CA do not indicate that the Bank failed to comply with IFRS. Furthermore, it should be noted that the Bank had no knowledge that such an issue (i.e., that any possible accounting errors or practices inconsistent with IFRS) were identified during the AQR.

The results of the CA were as follows:

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PROSPECTUS through the Issue. The Bank is seeking in the Issue to raise more capital than the residual capital resulting from the CA in order to actively support the growth of its business.

12.2 PROSPECTS AND FINANCIAL POSITION

Since the date of the latest published audited consolidated financial statements (31 December 2013) up until the date of this Prospectus, the Group’s prospects have been negatively affected mainly because of the restrictive measures on capital movement abroad which are still in effect.

The prospects of the Group could be further affected by the CA conducted by the ECB on 130 European banks before assuming full responsibility for the banking supervision under the SSM in November 2014. The results of the “Baseline Scenario” of the stress test part of the CA confirmed the business model of the Bank while the “Adverse Scenario” quantified the capital the Bank must raise in order to be sufficiently capitalised in the event of unexpected future losses.

For the Bank, the €277 million result from the “Adverse Scenario” was reduced by mitigating factors to €105 million, which are anticipated to be covered through this issue of Subscription Rights (see Part II, Paragraph 3.1).

If the Group does not manage to secure the necessary funds for full recapitalisation from private sources, it will be subject, under preconditions, to state aid measures and/or consolidation measures. In such cases, the relevant laws in force and other provisions will apply. These now include, inter alia, the Management of Financial Crisis Law (Law. 200 (I)/2011, as amended), the Resolution of Credit and other Institutions Law (Law 17 (I)/2013, as amended), the Banking Laws, 1997-2013, the Directive 2014/59/EC of the European Parliament and of the Council of 15 May 2014 establishing the framework for recovery and resolution of credit institutions and investment firms as well as the provisions of the announcement from the European Commission on the application of state aid rules to support measures in favour of banks in the context of the financial crisis (from 1 August 2013).

Furthermore, the prospects of the Group have been affected mainly by the following:

 The slow recovery of the Cyprus economy which continues to have an adverse impact on the Group’s activities, financial position and operating results.

 The risk of further deterioration in the quality of the loan portfolio and the increase in non- performing loans which will have a negative impact on the future results and business activities of the Bank.

 The delay in enacting laws stipulated in the MoU, which will help banks to manage problematic loans and the existence of relative uncertainty due to political disputes between the government and the House of Representatives in relation to legislation pertaining to foreclosures (the President’s decision to refer to the Supreme Court four legislative proposals, and refer back another two to the House of Representatives and the threat by the main opposition party to suspend the Law 142 (I)/2014).

In particular, on 31 October 2014, the Supreme Court of Cyprus declared unconstitutional the four bills passed by Parliament to limit the scope of new foreclosure legislation, which means that these bills will not be put into force and cannot affect the procedures set forth in the new foreclosure legislation.

From the date of the last published audited consolidated financial statements (31 December 2013) and up until the date of this Prospectus, the commercial position, the activities and the financial position of the Group have been negatively affected by the events described above.

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The impact of the abovementioned events on the financial position of the Group up to the period ending 30 September 2014 is reflected in the reviewed financial results of the respective period, which have been announced and are included in this Prospectus by referral.

In the context of applying the provisions of the Prospectus on CCS 1 and CCS 2 dated 30 September 2013, as a result of the Common Equity Tier 1 Ratio of the Group and the Bank being below the required minimum supervisory ratio of 9%, based on the preliminary results dated 28 February 2014 and related to the year ending 31 December 2013, CCS 1 of total value of €85.873.871 were mandatorily and irrevocably converted, without any obligation to obtain the consent of the holders of the CCS 1, to shares.

Furthermore as a result of the Common Equity Tier 1 Ratio of the Bank and the Group being below the required minimum supervisory ratio of 8%, as set by the Central Bank circular on 29 May 2014, based on the results dated 29 August 2014 and related to the six months' results ended as at 30 June 2014, CCS 1 of total value €15.106.520 were mandatorily and irrevocably converted, without any obligation to obtain the consent of the holders of the CCS 1, to shares so the lower of the Common Equity Tier 1 Ratio of the bank and the Group rose to 8%.

Based on the results dated 26 October 2014 and related to the nine months’ results ended as at 30 September 2014, CCS 1 of total value €23,8 million were mandatorily and irrevocably converted, without any obligation to obtain the consent of the holders of the CCS 1, to shares so the lower of the Common Equity Tier 1 Ratio of the Bank and the Group amounted to 8%.

The mandatory conversions were applied pro rata to each of the remaining balances of CCS 1 for each investor at the date of conversion and the mandatory conversion price of CCS 1 to shares for all of the above three cases was €0,10.

All CCS 1 which have been converted into shares were automatically cancelled and any right or obligation under their Prospectus ceased to be valid. A total of 1.247.846 thousand Ordinary Shares of the Bank resulted from the conversion, while the number of listed CCS 1 decreased to 1.597.679 with a value of €1,00 each.

Furthermore, and according to the provisions of the Prospectus dated 30 September 2013, the rest of the CCS 1 and CCS 2 can be converted into Ordinary Shares of the Bank in case the Common Equity Tier 1 Ratio of the Bank and/or the Group is lower than the prevailing required minimum supervisory ratio.

As a result of the above and the general uncertainty, the Board of Directors and management of the Group are not in a position to foresee all the developments which could have an impact on the Cypriot economy and consequently on the future financial performance, cash flows and financial position of the Group.

The Group shapes its strategy taking into consideration the above developments so as to actively manage the various issues described above and utilize its strong points as described in Part V, Paragraph 10. In Part V, Paragraph 11 of the Prospectus there is reference on the strategic target of the Group, under certain conditions and circumstances.

13. DESCRIPTION OF SHARE CAPITAL, TRANSFER AND RIGHTS OF SHAREHOLDERS

On 31 December 2013, the issued and fully paid-up capital was €26.887.536,91 divided into 2,688,753,691 Ordinary Shares of nominal value €0,01 each, while at the date of this Prospectus, it was €39.365.992,11 divided into 3.936.599.211 Ordinary Shares of nominal value €0,01 each.

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The following table shows the relative shareholding structure of the Bank based on Ordinary Shares, in accordance with its share register, on 30 September 2014.

Number of Percentage Shareholders Ordinary Shares (%) Legal person – interior ...... 1.725.313.589 43,83 Legal & natural person – abroad ...... 1.390.025.532 35,31 Natural persons – interior ...... 412.578.366 10,48 Church institutions – interior ...... 366.165.085 9,30 Provident funds – interior ...... 42.567.427 1,08 Total ...... 3.936.599.211 100,00

For information regarding the Major Shareholders of the Bank, see Part V, Paragraph 8.2.

13.1 Format and Transfer of Shares

Securities in Cyprus are dematerialised. They are registered with the Central Registry and the Central Securities Depository maintained by the CSE. The CSE is located at 71-73 Lordou Vironos Avenue, 1096, Nicosia, P.O. Box 25427, 1309 Nicosia Cyprus

Instead of the registries being maintained by publicly-listed companies, as happened before the operation of the Central Securities Registry, CSE has undertaken the maintenance of the Central Securities Registry containing all the details of holders of securities in listed companies. With the operation of the Central Securities Registry, CSE took over the responsibility of maintaining and recording any changes in the registries, regardless of whether the transaction took place within the CSE (through the trading system) or off the CSE.

At the same time, CSE has carried through the procedures required for the clearance and settlement of stock exchange transactions by updating the registries and transmitting the monetary transaction fee to the stockbrokers of the sellers.

For any new listed security on the CSE, the CSE has the responsibility of maintaining its registry from its date of listing.

13.2 Rights of Shareholders

The shareholders of the Bank have the rights and obligations as set by Cypriot law and the Bank’s Articles of Association. The Articles of Association does not have additional restrictions regarding the rights of shareholders, beyond those set in accordance with the relevant provisions of Cypriot law.

According to the Articles of Association of the Bank (Regulations 3 and 4), as it stands today:

Regulation 3: “Notwithstanding any provisions to the contrary that may be contained in a special resolution passed at the General Meeting, all new shares issued, as well as any other securities conferring the right to purchase shares or which are convertible into shares of the Company, before their issue will be offered to the shareholders in proportion (pro-rata) to the participation of each shareholder in the Company, at a specific date to be determined by the Board. Any such offer will be made by written notice to the shareholders and will determine the number of shares and / or other securities conferring the right to purchase shares or convertible into shares of the Company the shareholder is entitled to acquire, and the period after which the offer, if not accepted, will be deemed as rejected. If at the expiry of that period, no written notice is received from the person to whom the offer is made or to whom the rights have been assigned, that he accepts all or part of the shares or other

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PROSPECTUS securities conferring the right to purchase shares of the Company or are convertible into shares of the Company, the Board may dispose them in such manner as it deems most beneficial to the Company”.

Regulation 4: “If at any time the Share Capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of shares of that class) may, whether or not the Company is being wound up, be varied with the consent in writing of the holders of three fourths of the issued shares of that class or with the sanction of an Extraordinary Resolution passed at a separate General Meeting of the holders of the shares of the class.”

To every such separate General Meeting, the provisions of these Regulations relating to General Meetings shall apply, but so that the necessary quorum shall be three at least persons holding or representing by proxy 51% of the issued shares of the class.

14. INFORMATION ON THE HISTORICAL PRICES OF THE SHARES

The Ordinary Shares of the Bank are listed on the CSE. The table below lists the maximum and minimum closing prices for the periods indicated.

Ordinary Shares Price € Maximum Minimum Period of six most recent months November (untill 12 November 2014) ...... 0,066 0,050 October 2014 ...... 0,082 0,072 September 2014 ...... 0,084 0,073 August 2014 ...... 0,087 0,078 July 2014 ...... 0,091 0,082 June 2014 ...... 0,092 0,078 May 2014 ...... 0,085 0,072 Year 2014 (until 12 November 2014) ...... 0,145 0,050 2013 ...... 0,178 0,047 2012 ...... 0,38 0,161 2011 ...... 0,95 0,307 2010 ...... 1,27 0,84 Quarter 2014 First Quarter ...... 0,145 0,078 Second Quarter ...... 0,092 0,072 Third Quarter ...... 0,091 0,073 Quarter 2013 First Quarter ...... 0,178 0,155 Second Quarter ...... 0,174 0,098 Third Quarter ...... 0,107 0,051 Fourth Quarter ...... 0,138 0,047 Quarter 2012 First Quarter ...... 0,380 0,283 Second Quarter ...... 0,271 0,161 Third Quarter ...... 0,222 0,169 Fourth Quarter ...... 0,213 0,161 Quarter 2011 First Quarter ...... 0,950 0,780 Second Quarter ...... 0,900 0,590 Third Quarter ...... 0,640 0,380 Fourth Quarter ...... 0,430 0,307

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PART VI. RISK MANAGEMENT

1. RISK MANAGEMENT GOVERNANCE

Financial risk management is intertwined with the Group’s business activity. The aim of risk management for the Group is to monitor the various risks to which the Group may be exposed as a result of the services it offers across the spectrum of its operations, with the purpose of improving risk identification, measurement, monitoring and mitigation mechanisms and processes.

The Bank’s Board of Directors is responsible for ensuring the identification, measurement, monitoring and management of the Group’s risks (including credit, interest rate, operational, market, liquidity, foreign exchange, capital and compliance). The Board re-examines the adequacy and effectiveness of the Group’s risk management framework at least annually. The following internal units assist the Board of Directors with this function:

Risk Management Committee. The Risk Management Committee (“RMC”), is responsible for assisting the Board of Directors in fulfilling its responsibilities and obligations in relation to the Group’s risks and ensuring that the risk policies adopted by the Board of Directors are duly carried out by the Group. In addition, the RMC develops, recommends for approval to the Board of Directors and when implemented, assesses the principles, the framework and the policies of managing all types of risks as well as for the use of funds in a manner that is in line with business objectives of the Group, the Bank, or each subsidiary company separately. The RMC also recommends to the Board the assignment of approval authority to the Senior Executive General Management and other groups (concerning risk taking) as well as the adoption of new products or services that the Group intends to introduce. The RMC holds meetings at least once every three months and reports to the Board of Directors on its work. It held 9 meetings in 2013, all of which were with the Group Risk Management Unit (“GRMU”) in attendance. Furthermore the RMC also held 5 joint meetings with the Audit Committee of the Board of Directors.

Assets and Liabilities Management Committee (“ALCO”). The ALCO, a committee responsible for implementing the policy set and approved by the Board of Directors with regards to market and liquidity risks at the Group level and their effect on profitability, arising from balance sheet items. The ALCO holds meetings at least once every two months and reports to the Board of Directors on its work.

Group Risk Management Unit. The Group has established a centralised and independent GRMU which is responsible for managing and monitoring all Group risks. The GRMU has a direct reporting line to the Group Chief Executive Officer (“GCEO”) and the RMC and updates the GCEO and RMC regularly. Once a quarter, a meeting is held for the discussion of the Risk Quarterly Report and ad hoc meetings are also held when deemed necessary.

The GRMU is composed of the following specialised risk management departments, each of which has distinct responsibilities and covers specific risk areas:

 Credit Risk Management. The Group’s Credit Risk Management department closely monitors the effective management (identification, measurement, monitoring and control) of credit risk, both in its banking book and in its trading book. At the same time, efforts are made to establish all necessary policies and procedures and to review them on a regular basis, making sure they always reflect the Group’s risk and overall strategy as well as the developments in the local and global economy.

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 Market and Liquidity Risk Management. The Group’s Market & Liquidity Risk Management department is responsible for the monitoring and management of market and liquidity risks at the Group level, in accordance with the relevant policy and limits approved by the ALCO.

 Operational Risk Management. The Group’s Operational Risk Management assists the line managers, the Chief Executive Officer and the Board of Directors in updating and implementing the Group Strategic Plan on Operational Risk Management (Basic Principles of Operational Risk Management) and related procedures, policies, operations and systems for its implementation (in collaboration with the management of the Group). The level of risk taken is determined by the risk tolerance of the Group, which is determined by the Board of Directors. The Operation Risk Management of the Group acts on the identification, assessment, monitoring, control, mitigation and reporting of operational risks in collaboration with the management of the Group and the units affected. It assesses operational risks and provides guidelines for the prevention and limiting of potential consequences.

The departments cover the major risk aspects across the Group’s operations and are intensively working towards the Bank fully conforming to the provisions of Basel III as well as the directives of the Regulatory Authorities. The core aim of management is the adoption of advanced methods and systems for the evaluation and management of risks undertaken by the Group.

2. OVERALL RISK STRATEGY

The Group’s overall risk strategy is considered to be conservative. In particular:

 Credit risk. The Group’s credit risk strategy is defined by the Board of Directors in line with the Bank’s risk appetite. The Bank follows a conservative strategy regarding the profile of its borrowers, the industries to which it lends, the types of facilities it offers, and the markets it targets. Furthermore, the Bank seeks to maintain a conservative approach to management of cash balances, by assigning counterparty and country limits based on both quantitative and qualitative criteria. Additionally, the Bank’s trading book is limited in size. The Bank places emphasis on the quality of its portfolio and has policies to address risks relating to such, which it reviews periodically to evaluate their effectiveness;

 Liquidity and market risk. The Group’s approach towards market and liquidity risk management is to concentrate these risks for all Group business units under the Group Treasury Department. The Group Treasury Department manages risks using a framework of activities and limits approved by ALCO. The Group Risk Management Unit is responsible for developing policies and procedures for managing risks and monitoring the implementation of such policies and procedures on a daily basis; and

 Operational risk. The Group has implemented a “zero-tolerance” policy towards internal fraud and non-compliance with regulatory requirements. The Group manages other operational risks according to certain pre-established parameters.

3. CREDIT RISK

Credit risk is the risk of financial loss to the Group if a customer and/or other counterparty to a financial instrument fail to meet their contractual obligations. This risk principally arises from lending, trade finance activities and treasury operations. The management of credit risk is one of the most important chapters in the Group’s operation and is essential for its long term soundness. As part of its restructuring of the financial sector of Cyprus, the Central Bank issued, towards the end of 2013 and in 2014, a number of new directives which significantly impacted the Bank’s credit risk policy and the management of its credit risk. As a result of implementing new and stricter credit risk management

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PROSPECTUS policies and processes, the Bank is in compliance, or is in the process of complying, with the requirements of these new directives. For more detail on these new directives, see “Part IX.

3.1 Credit Risk Management

To ensure the effective management of credit risk, the Group regularly assesses credit policies and monitors compliance of the relevant Business Divisions or AMU with these. The Group’s Credit Risk Management department issues directions to the various Business Divisions and AMU based on the Group’s risk appetite for specific market segments’ operations, as well as directions on specific banking products and, whenever considered necessary, restrictions or limits are set regarding the undertaking of additional credit risk. During 2013, the Credit Risk Management department actively participated in the crisis management after the events in March 2013 impacting the Cypriot banks, actively participating and coordinating the implementation and application of the new directions of the supervisory authority under the provisions of the MoU between the Cyprus and the Troika. This implementation and application is ongoing given the continuing changes and updates to the supervisory directives and the enactment of new legislation.

The Credit Risk Management department is principally responsible for the establishment of the Group’s credit risk and lending policies and approval limits for credit applications, write-offs and charges. These policies and approval limits are reviewed and updated by the Credit Risk Management department on a regular basis to reflect any changes in the Group’s strategy for its lending businesses, economic conditions and the applicable laws and Central Bank directives. The Credit Risk Management department also provides support to the business divisions in relation to any issues concerning the credit risk and lending policies of the Group.

3.1.1 Credit Criteria and Lending

In order to protect the interests of the Group, significant or sudden changes in the parameters that shape credit risks, such as world market developments, diversification of economic aggregates, credit rating changes, reclassifications of countries, are identified and necessary measures or implementation of actions within the framework of credit risk management are taken. Stress tests are conducted at regular time intervals, both in relation to the possible deterioration in asset quality as well as the possible impairment in the value of specific collaterals.

The Bank’s primary lending criterion is the borrower’s repayment ability. The Bank’s lending policy includes thorough guidelines of the procedures to be followed for granting new lending and the review of existing facilities, which guidelines are also based on the Directive introduced by the Central Bank in December 2013. A new restructuring policy, which was revised at the beginning of 2014, was also introduced by the Bank in 2013 to set the guidelines for the restructuring of accounts presenting arrears or excesses in an effort to effectively manage and cure problematic loans. In addition, in the retail, commercial and corporate divisions and in the treasury department the Group employs systems to evaluate existing or potential borrowers’ creditworthiness and to measure credit risk based on quantitative and qualitative criteria:

 For the retail banking division, a credit risk assessment system is applied for the evaluation of the creditworthiness of customers and the measurement of credit risk (Credit Scoring). This system covers credit cards and other retail lending products.

 For the commercial and corporate divisions, a credit rating system (Credit Rating) is applied which classifies companies into credit rating bands, thus assisting both in the assessment of the credit worthiness of a company and in the rationalisation of pricing requirements according to the risk undertaken, while taking into account each company’s financial position and various qualitative criteria relating to the company as well as the market in which it operates.

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 For the treasury department, there is a centralised management of exposures to countries, financial institutions and other counterparties. Limits are defined based on the credit limits model, which is primarily based on the credit standing of the country and counterparty as determined by international credit assessment institutions while also taking into account their international classification regarding the assets and the country risk in which they are resident.

3.1.2 Credit Approval Limits

Credit approval limits are determined by reference to the Group’s regulatory own funds. The Board of Directors approves the maximum limits which are subsequently allocated to the Executive Loan Committee for the approval of credit facilities. Credit facilities in excess of these limits are referred to the Board of Directors for approval. The Executive Loan Committee may delegate up to 20% of its approved limits to the Credit Administration department which subsequently may delegate (with the consent of the GRMU) up to 20% of its approved limits to the Business Divisions. The Board of Directors delegated to the AMU specific approval limits for restructurings but no such approval has been granted for new facilities. The Board of Directors also delegated small write-off limits to the General Manager of the Retail Division, the General Manager of the Business Division as well as to the Manager of Credit Administration. Write-off applications in excess of the limits delegated to the General Managers of the Retail and Business Division and the Manager of Credit Administration are assessed by the Executive Write-Off Group Committee.

3.1.3 Exposure to Credit Risk

To achieve continuous monitoring, detection, management and mitigation of credit risk, the Credit Risk Management department is responsible for assessing the composition, quality and performance of the credit portfolio of each business unit of the Group, in order to identify timely the problematic accounts and accounts that are possible to be problematic and to reduce the risk of potential losses. For high risk accounts, the Credit Risk Management department provides suggestions for the provisioning for bad debts.

 Concentration of credit risk. The Group monitors concentration of credit risk by sector. The concentration by geographic location for investments and deposits with other banks is based on the geographical location of the risk country of the issuer of the security and counterparty respectively.

 Group exposure in countries with high credit risk. The Group closely monitors developments in the international markets so that any measures needed to reduce credit risk are promptly taken. The monitoring of exposure in countries of high risk is centralized through systems that fully and on an ongoing basis cover all material exposures to these high-risk countries such as interbank placements, debt securities, and their investments. Also, maximum acceptable levels are specified according to the rankings of the countries, taking into account their credit ratings, political, economic and other factors. The credit ratings of the countries and the bond implied ratings (which incorporate information about credit spreads of government bonds as well as other available financial data of the countries) are primarily considered when determining whether to classify a country as a “high risk” country.

4. LIQUIDITY RISK

Liquidity risk is the risk of decrease in profits or capital, arising from a weakness of the Group to meet its immediate obligations, without incurring additional costs. The Group’s approach in managing liquidity risk is to ensure, to the extent possible (considering that the main role of the Bank as an intermediary is to accept short term deposits and grant long term loans), that there is adequate liquidity in order to satisfy its obligations, when they arise, under “normal” circumstances as well as under stress

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Following the negotiation between the Government and the Troika in relation to the provision of financial assistance to Cyprus, various restrictions on transactions and capital controls were put into place that restricted the free movement of funds within and outside of Cyprus. For a description of these capital controls, see “Part IX, Paragraph 6”. With the relaxation of the restrictive measures on transactions in the domestic market but with restrictions relating to the movement of capital abroad still prevailing in light of the continuing economic crisis in Cyprus, the Group has increased its monitoring of cash flows and highly liquid assets both in terms of depth and frequency.

Following the disposal of its Greek and Russian operations, the Group has operations principally in Cyprus. The management of the liquidity of the Group’s banking units (including compliance with regulatory limits), is undertaken by the Group Treasury Department and is locally effected depending on the conditions prevailing in the various markets.

The Group places emphasis on the maintenance of stable customer deposits, as they represent one of its basic funding sources. This is mainly achieved through the maintenance of good and long standing relationships of trust with customers and through competitive and transparent pricing strategies. Regular stress testing scenarios are performed to simulate extreme conditions and the appropriate measures are taken whenever necessary.

The liquidity risk of banking units is monitored daily by Group’s Market and Liquidity Risk Management department. At the Group level, the liquidity of the euro is being monitored separately, as well as the liquidity of all foreign currencies, lumped together. In managing liquidity risk for the Euro, the Group calculates and monitors, among other ratios, the liquid assets ratio required by the Central Bank directive on prudential liquidity in euro. According to the directive, the liquid assets ratio of the Bank should always be equal to or greater than 20%. Liquid assets consist of cash, interbank deposits and bonds.

At the Group level, the liquidity of all foreign currencies is monitored on an aggregate basis. According to the relevant directive of the Central Bank on prudential liquidity in foreign currencies, the Bank needs to maintain 70% of its total foreign currency deposits and highly liquid assets.

4.1 Funding and liquidity sources

Over the past several years, the Group’s main sources of funding and liquidity are its customer deposits. For a discussion of the change in the Group’s funding profile, see “Financial Information— Analysis of the Group’s Financial Results—Operating and Financial Review—Liquidity and Funding”.

4.2 Liquidity reserves

Liquidity reserves include available cash and cash equivalents, unencumbered highly liquid securities and other unencumbered securities that can be sold in the market or used for secured funding purposes. The Group’s liquidity reserves are managed by Group’s Treasury Department. Liquid asset investments take place within limits and parameters specified in the liquid assets investment policy approved by the Board of Directors. As of 30 September 2014, the Group had liquidity reserves of €3.057 million (€2.245 million as at 31 December 2013), of which €2.103 million (€1.450 million as at 31 December 2013) are eligible for the purposes of calculating the Bank’s Liquidity Coverage Ratio (“LCR”) under Basel III requirements. The Group mostly holds LCR Level 1 eligible assets which include high quality debt securities issued by a government or central bank, multilateral agency bonds, cash and reserves at central banks. The Group holds only one sovereign LCR Level 2 asset, totalling €6.0 million in market value.

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5. MARKET RISKS

Market risks are derived from the change in the value of the Group’s assets and liabilities and the uncertainty in the stream of future earnings, resulting from changes in market conditions (volatility in foreign exchange, interest rates and financial instrument prices). These risks are managed mainly through the implementation of open position and stop loss limits.

The Group has defined its strategy and methods of continuous monitoring for the control of market risk undertaking and the prudential management of these market risks as follows:

5.1 Foreign exchange risk

Foreign exchange risk arises from the undertaking of an open position in one or more foreign currencies. The Group’s Market and Liquidity Risk Management monitors foreign currency positions on an ongoing basis within the risk management framework and limits set by the ALCO and the regulatory authority. Within this framework, there are nominal limits (by currency, in total, during the day, end of day), stop/loss limits and Value at Risk (“VaR”) limits. The regulatory limits for open positions during working hours exceed the limits for open positions during non-working hours.

VaR methodology is an important tool for the monitoring of foreign exchange risk. With this methodology, the Group calculates the maximum possible loss that may be incurred as a result of changes in market conditions, with a confidence level of 99% and over a one day period, based on the historical data of foreign exchange rates over a period of one year. The limitations of the VaR methodology are derived from the fact that the historical data used in the calculation may not be indicative of future events.

5.2 Interest rate risk

Interest rate risk arises as a result of timing mismatches on the interest rate repricing of assets and liabilities. Interest rate risk is initially managed through the monitoring of the interest rate gaps by currency, by time interval and in total (gap analysis).

The Group’s Market and Liquidity Risk Management department monitors interest rate positions on an ongoing basis, within the risk management framework and limits set by the ALCO.

In addition to monitoring interest rate gaps, interest rate risk management is carried out mainly by monitoring the sensitivity of the Group’s economic value (assets and liabilities) and net interest income under various interest rate change scenarios. The ALCO Committee is regularly informed about the magnitude of interest rate risk and makes decisions for the management of the risk based on this information. Scenarios for interest rate changes consider both parallel and non-parallel shifts of the yield curve. Additionally, analyses based on stress testing scenarios are also performed.

5.3 Financial instrument price risk

Financial instrument price risk is derived from the undertaking of an open position in equities, bonds or derivatives. The Group manages this risk through policies and procedures of setting and monitoring open position limits, stop loss limits on trading positions, as well as concentration limits by issuer.

6. OPERATIONAL RISK

Operational risk is the risk of direct or indirect loss arising from a wide range of factors associated with procedures, staff, technology and infrastructure as well as external factors, such as those arising from legal requirements and compliance with laws and regulations. The Group has adopted the principles

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The Group has developed a strong framework for the management of operational risks, taking into account the risk appetite and tolerance for operational risk. In addition, the Group has relevant insurance coverage, which is considered to be an effective tool for mitigating the impact of operational risks. The Group’s Operational Risk Management Unit, together with the business units, are responsible for the identification, detection, measurement, assessment, monitoring, control and mitigation of assumed risks, aiming for its effective management. The Operational Risk Management department, on regular interval and ad hoc, reports to the management and the Risk Management Committee of the Board of Directors information relevant to the operational risks the Group faces.

Under the ‘Risk Control Self Assessment’ project, which is currently in progress, departments/business lines, with the cooperation of the Operational Risk Management department, identify and assess potential operational risks. Internal integrated controls and measures for monitoring risks are also assessed. Following the assessment, the collection of key basic risk indicators for the monitoring of the identified risks, is agreed.

An internal electronic system for the recording of operational risk events is in operation. Operational risks, events and near misses are recorded.

In general, operational risk management is performed by the various Group business units in their day to day activities. Other means used include workshops, checklists, labs, internal and external audit reports, basic risk indicators and the operational risk register. Meetings and discussions are held with officers in various departments internal controls that are embedded in the daily operations of the Group are also applied.

Great importance is also given on management of procedures, staff training, limit setting limits, design of business continuity and disaster recovery plans contingency as well as the general promotion of an operational risk management culture in the whole Group.

7. CAPITAL MANAGEMENT

The lead regulator that sets and monitors capital requirements for the Group and the Bank is the Central Bank. From November 2014, Hellenic Bank will be included among the significant European banks that will be supervised directly by the European Central Bank.

In July 2011, the Central Bank amended its Directive for the Calculation of the Capital Requirements and Large Exposures, introducing a new ratio for Common Equity Tier 1 capital. The minimum level of the new ratio was set at 8% for the period until 30 December 2012. After that date, the minimum level of the ratio increased gradually based on the percentage of Group assets over the GDP of the Republic of Cyprus. The Central Bank directive also set the minimum level of Tier 1 capital as the minimum level of Core Tier 1 ratio plus 1.5%. In addition, it set the minimum total capital ratio as the Tier 1 ratio plus 2.0%. On 31 December 2013, the Central Bank increased the minimum Common Equity Tier 1 capital ratio from 8% to 9% and the minimum requirements for Tier 1 and total capital ratios have been abolished.

From 1 January 2014, CRR/CRD IV comprise the European regulatory package designed to transpose the new capital, liquidity and leverage standards of Basel III into the European Union’s legal framework. Unlike the CRR, CRD IV is required to be transposed into national law. CRR introduces significant changes in the prudential regulatory regime applicable to banks, including amended minimum capital ratios, changes to the definition of capital and the calculation of risk-weighted assets and the introduction of capital buffers and new measures relating to leverage, liquidity and funding.

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Full implementation began on 1 January 2014, with particular elements being phased in over a period of time. Although the CRR is directly applicable in each Member State, it leaves a number of important interpretational issues to be resolved through technical standards, and leaves certain other matters to the discretion of the National Competent Authorities in each Member State.

The Central Bank has determined the extent of phasing-in of the transitional provisions relating to Common Equity Tier 1 deductions. In addition, the Central Bank may also impose additional capital requirements for risks which are not covered by the above-mentioned capital requirements (Pillar II add-ons).

On 29 May 2014, the Central Bank set the minimum Common Equity Tier 1 capital ratio at 8%. The Central Bank may also impose additional capital requirements for risks which are not covered by the above-mentioned capital requirements (Pillar II add-ons), taking also into account the provisions of CRR/CRD IV.

CRR/CRD IV consists of three Pillars:

 Pillar 1 – Minimum capital requirements

 Pillar 2 – Supervisory review process

 Pillar 3 – Market discipline

Pillar 1 – Minimum Capital Requirements. Pillar 1 sets forth the guidelines for calculating the Minimum Capital Requirements to cover the credit risk, the market risk, the operational risk and the credit value adjustment risk.

The Group has adopted the Standardised Approach for the calculation of the minimum capital against credit risk. Under this approach, exposures are classified in specified classes and are weighed using specific weights, depending on the class the exposures belong to and their credit rating. Also, Basel III suggests two methods for the recognition of collateral, the Simple Approach and the Comprehensive Approach. The Group has applied the Comprehensive Approach, as this enables the fairer recognition and more accurate estimation of the Group’s collateral.

The Group has adopted the Standardised Approach for market risk, according to which the minimum capital requirement is calculated as the total of position risk and foreign exchange risk. Position risk derives from derivatives, debt instruments and equity instruments. For debt instruments, the own funds requirement consists of specific risk and general risk. General risk is calculated using the maturity- based method. The own funds requirement for market risk is calculated using predefined factors set by the relevant regulation.

The Group has adopted the Standardised method for calculating the credit valuation adjustment risk.

The Group uses the Basic Indicator Approach for the calculation of the capital requirements for operational risk. According to the Basic Indicator Approach, the operational risk capital requirement is estimated using a specific percentage on the average sum of gross income on a three year basis.

Pillar 2 – Supervisory review process. Pillar 2 includes rules to ensure that adequate capital is in place to support any risk exposures of the Group and requires appropriate risk management, reporting and governance policies. Under Pillar 2, the Bank conducts stress tests, presenting different balance sheet positions to negative changes scenarios, in order to identify weaknesses that may, under the circumstances, expose the Bank at risk. The intensity and breadth of scenarios depends on idiosyncratic factors relevant to the mixture and the concentration of the assets of the Bank. Banks are assessing

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PROSPECTUS internally their capital needs relative to their risks within the framework of Internal Capital Adequacy Assessment Process (ICAAP). This process is supervised and evaluated by the Central Bank.

Pillar 3 – Market discipline. Pillar 3 sets out required disclosures to allow market participants, having a full picture of the risk profile of the Group, to assess key pieces of information relevant to the capital structure, risk exposures, risk assessment processes and the capital adequacy of the Group. Based on the CRR, , disclosures by banks include information relating to their objectives and risk management policies and strategies, the remuneration policy and practices for staff whose professional activities have a material impact on the risk profile of the Bank, the composition of own funds including Common Equity Tier 1, Additional Tier 1 and Tier 2 items, filters and deductions, capital buffers and leverage ratio-related information,, their compliance with minimum capital requirements and the internal capital adequacy assessment process.

The Group’s policy is to maintain a strong capital base, in order to maintain investor, creditor and market confidence and support the future development of the Group’s operations.

The Capital Adequacy Ratio of the Group and the Bank as at 30 September 2014 was formed at 11,7%, the Tier 1 Ratio at 10,7% and 10,8% respectively and the Common Equity Tier 1 Ratio at 7,4% for the Group and 7,5% for the Bank, according to the New Legislation and Directive of the European Central Bank concerning the minimum requirements for credit institutions (Capital Requirement Regulation (CRR)/Capital Requirement Directive (CRD IV)) dated 26 June 2013, set in effect as of 1st January 2014 and according to the relevant circulars of the Central Bank, under Pillar 1.

In applying the provisions of the Prospectus dated 30 September 2013 of the CCS 1 and CCS 2, and as a result of the formation of the Common Equity Tier 1 Ratio of the Group and the Bank below the minimum required supervisory ratio of 8%, as set by the Central Bank circular dated 29 May 2014, CCS 1 of total value of €23,8 million were mandatorily and irrevocably converted to shares, so that the lower of the two, Common Equity Tier 1 Ratio of the Bank and the Group amounts to 8%. As a result, the Common Equity Tier 1 Ratio of the Group was formed at 8,0% (Bank: 8,0%).

The mandatory conversion applied pro rata to the outstanding balance of CCS 1 for each investor on the conversion date (transactions performed up to and including 24 October 2014, record date 29 October 2014). CCS 1 that were converted into shares were automatically cancelled and any right or obligation under their prospectus ceases to apply. All shares resulting from the mandatory conversion are listed for trading on the Cyprus Stock Exchange, upon receipt of all necessary approvals.

As at 30 September 2014, the Group’s risk weighed assets amounted to €4.229 million.

On 26 October 2014, the ECB and the EBA published the results of the AQR and the Stress Tests (together the “Comprehensive Assessment”) for 130 banks across the Eurozone, including Hellenic Bank.

From November 2014, Hellenic Bank will be included among the significant European banks that will be supervised directly by the ECB.

For information related to the analysis of the Group’s financial results see “Part VII, Paragraph 2”.

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PART VII. FINANCIAL INFORMATION

1. FINANCIAL INFORMATION AS AND FOR THE PERIOD ENDED 30 SEPTEMBER 2014 AND AS OF AND FOR THE YEARS ENDED 2013, 2012, 2011

The Group consolidated financial statements were prepared in accordance with IFRS as adopted by the European Union. In addition, the financial statements were prepared in accordance with the requirements of the Companies Law, Cap. 113, the CSE laws and regulations and the Transparency Requirements (Securities Admitted to Trading on a Regulated Market) Law, as these are amended, revised and/or replaced. For the years 2013, 2012 and 2011 the financial statements were audited by the Group’s auditors, KPMG Limited.

The financial information for the nine month period ended 30 September 2014 incorporated by reference in this Prospectus, was reviewed by the Group’s external auditors in accordance with the International Standard on Review Engagements 2410 “Review of Interim Financial Information performed by the Independent Auditor of the Entity”.

The consolidated financial statements of the Group for the specific periods 2013, 2012 and 2011 and the reviewed financial statements for the nine months period ending 30 September 2014 are incorporated in this Prospectus by reference, in accordance with the requirements of Article 28 of Regulation 809/2004 of the European Union Commission.

Presented below are the condensed financial statements and other financial information as at and for the nine-month period ended 30 September 2014 and for the years ended 31 December 2013, 31 December 2012 and 31 December 2011, which are based on the condensed financial statements and the annual audited consolidated financial statements of the Group respectively.

The condensed financial information presented below should be read in conjunction with the reviewed condensed consolidated financial statements for the nine-month period ended 30 September 2014 and with the full annual audited financial statements and auditors’ reports for the years ended 31 December 2013, 31 December 2012 and 31 December 2011. The auditors of the Group have not expressed a qualified opinion or disclaimer of opinion in their report for the years 2011, 2012 and 2013. The auditors’ report for the year ended 31 December 2012 includes an emphasis of matter as follows: “we draw your attention to Notes 2.1 (Basis of Preparation) and 41 (Economic Environment) of the financial statements which refer to the estimates and assumptions used for the preparation of the financial statements on the going concern basis, the current economic uncertainties prevailing in Cyprus and the restructuring of the banking system in Cyprus. These factors could adversely affect the financial results, capital requirements and liquidity of the Company and the Group. Our opinion is not qualified in respect of this issue”.

For the nine-month period ended 30 September 2014, the condensed consolidated financial statements, included as a significant matter the following: “We draw your attention to Note 3 to the interim condensed consolidated financial statements which makes reference to the results of the European Central Bank's CA exercise and the forthcoming capital enhancement of the Bank. Our conclusion is not qualified in respect of this matter”.

It is noted that:

 the nine month results for the period ended 30 September 2013 refer to the comparative figures of the nine month results of the Group for the period ended 30 September 2014 and have been restated to reflect the reclassification of the operations of the Russian Subsidiary, which was sold on 5 June 2014, from continuous operations to discontinued operations.

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 the results for the year ended 31 December 2012 refer to the comparative figures of the annual results of the Group for the year ended 31 December 2013 and have been restated to reflect the reclassification of the operations of the BNG from continuing to discontinued operations (on 26 of March 2013 (transfer date), the Bank, as a result of a transnational understanding of the governments of Greece and Cyprus, at the demand of Troika and according to the instructions of the Ministry of Finance and the Central Bank, consented to the sale of its BNG to Piraeus Bank SA with immediate effect).

 the results for the year ended 31 December 2011 have not been restated to reflect the reclassification of operations of BNG and therefore they may not be comparable with the corresponding amounts of the results for the years ended 2013 and 2012.

AUDITORS

The financial statements of the Bank and its subsidiaries are audited by external auditors. The audit of the consolidated financial statements of the Bank and all of its subsidiaries for the years 2011-2013 was performed by KPMG Limited in Cyprus, Registration No. ICPAC S069/028, except for the audit of the company Hellenic Alico Life Insurance Co Ltd, whose audit was conducted by PricewaterhouseCoopers Cyprus, Registration No. ICPAC E002/008; for the audit of Athena High Technology Incubator Ltd, whose audit was conducted by Deloitte Cyprus Registration No. ICPAC E047/042, until 21 December 2011, when it was absorbed by the Bank, and of the companies based in Greece whose audit was conducted by KPMG Greece. The audit of the financial statements of the subsidiaries in Russia was conducted for Format Invest Ltd by KPMG Russia for the years 2011-2013 and for LLC CB Hellenic Bank by KPMG Russia. Format Invest Ltd was acquired by the Bank (100%) in August 2008 and the auditor at the time was Juris Audit. For the purposes of more efficient coordination of the Group’s audit, from the year ended 31 December 2010 onwards the auditors of the Group (KPMG Limited) were appointed as auditors of the company.

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Condensed consolidated income statement (reviewed) for the nine-month period ended 30 September 2014

Nine month period ended 30 September (reviewed) 2014 2013 €’000 €’000 Continuing operations Turnover ...... 291.502 310.878 Net interest income ...... 156.338 133.510 Net income from fees, commissions, net gains on disposal and revaluation of foreign currencies and financial instruments and other income ...... 69.069 66.451 Total net income ...... 225.407 199.961 Total expenses ...... (106.387) (114.511) Profit from ordinary operations before provisions ...... 119.020 85.450 Provisions for impairment of loans and advances ...... (259.056) (166.456) Loss before taxation ...... (140.036) (81.006) Taxation ...... 12.909 4.791 Loss for the period from continuing operations ...... (127.127) (76.215) Discontinued Operations ...... Profit/(loss) from discontinued operations after taxation ...... 3.021 (10.215) Loss for the period ...... (124.106) (86.430) (Loss)/profit attributable to: ...... Owners of the parent company from continuing operations ...... (127.843) (77.029) Owners of the parent company from discontinued operations ...... 3.021 (10.215) Non-controlling interest ...... 716 814 Loss for the period ...... (124.106) (86.430) Basic loss per share (cent) ...... (3,7) (13,7) Basic loss per share (cent) from continuing operations ...... (3,8) (12,1)

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Consolidated income statement

For the years ended 31 December 2013, 2012, 2011

Restated 2013 2012 2011 (audited) (audited) (audited) €’000 €’000 €’000 Continuing Operations Interest income ...... 318.966 352.478 380.415 Interest expense ...... (130.061) (161.150) (165.871) Net interest income ...... 188.905 191.328 214.544 Fee and commission income ...... 61.758 73.298 72.242 Fee and commission expense ...... (5.109) (7.012) (7.812) Net fee and commission income ...... 56.649 66.286 64.430 Net gains/(loss) on disposal and revaluation of foreign currencies and financial instruments ...... 16.923 21.043 (75.220) Other income ...... 18.569 23.521 20.430 Total net income ...... 281.046 302.178 224.184 Staff costs ...... (91.018) (94.060) (122.360) Depreciation and amortisation ...... (5.916) (5.616) (6.321) Administrative and other expenses ...... (51.491) (43.081) (39.940) Total expenses ...... (148.425) (142.757) (168.621) Profit from ordinary operations before provisions ..... 132.621 159.421 55.563 Provisions for impairment of loans and advances ...... (310.810) (103.970) (142.484) (Loss)/gain before taxation ...... (178.189) 55.451 (86.921) Taxation ...... 17.047 (5.019) (12.624) (Loss)/gain for the year from continuing operations ... (161.142) 50.432 (99.545) Discontinued Operations ...... Loss from discontinued operations after tax ...... (28.767) (72.364) -- Loss for the year ...... (189.909) (21.932) (99.545) (Loss)/profit attributable to: Owners of the parent company from continuing operations ...... (162.133) 48.924 (100.658) Owners of the parent company from discontinued operations ...... (28.767) (72.364) -- Non-controlling interest ...... 991 1.508 1.113 Loss for the year ...... (189.909) (21.932) (99.545) Basic loss per share (cent) ...... (10,9) (5,3) (32,0) Basic (loss)/earnings per share (cent) from continuing operations ...... (9,2) 11,0 (32,0)

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Condensed statement of financial position

30 September 31 December 2014 31 December 2012 31 December (reviewed) 2013 (audited) (audited) 2011 (audited) €’000 €’000 €’000 €’000 Assets Cash and balances with Central Banks ...... 1.553.640 1.003.020 1.094.620 219.890 Placements with other banks ...... 1.018.788 921.719 1.698.571 1.645.333 Loans and advances to customers ...... 3.267.651 3.563.949 4.744.910 4.986.827 Debt securities ...... 789.305 645.465 939.732 1.146.660 Equity securities ...... 9.127 8.343 10.312 13.381 Property, plant and equipment .... 96.329 123.662 146.478 112.509 Intangible assets ...... 18.596 18.865 19.003 20.593 Tax receivable ...... 39 75 40 4.154 Deferred tax asset ...... 37.144 24.697 17.230 22.751 Assets belonging to subsidiary held for sale ...... 7.380 ------Other assets ...... 74.455 74.152 84.805 106.878 Total assets ...... 6.872.454 6.383.947 8.755.701 8.278.976 Liabilities Deposits by banks ...... 43.217 47.362 46.706 74.302 Customer deposits and other customer accounts ...... 6.128.112 5.513.272 7.766.863 7.106.541 Tax payable ...... 5.244 5.265 6.495 7.952 Deferred tax liability ...... 1.188 4.406 28.905 33.359 Liabilities belonging to subsidiary held for sale ...... 1.493 ------Other liabilities ...... 119.563 110.192 116.971 302.746 6.298.817 5.680.497 7.965.940 7.524.900 Loan capital ...... 204.946 304.629 304.877 319.878 Equity Share capital ...... 36.986 26.888 266.466 132.448 Reserves ...... 326.567 367.600 215.259 299.151 Equity attributable to owners of the parent company ...... 363.553 394.488 481.725 431.599 Non-controlling interest ...... 5.138 4.333 3.159 2.599 Total equity ...... 368.691 398.821 484.884 434.198 Total liabilities and equity ...... 6.872.454 6.383.947 8.755.701 8.278.976 Contingent liabilities and commitments ...... 745.807 806.094 1.056.010 1.192.092

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Condensed consolidated statement of changes in equity for the nine-month period ended 30 September 2014

Attributable to owners of the parent company Reduction of Share Share Own Non- Share capital premium Revenue Translation Revaluatio shares controllin Capital Reserve reserve reserve reserve n reserve reserve Total g interest Total €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 Balance 1 January 2014...... 26.888 260.269 245.073 (179.719) 39 41.938 -- 394.488 4.333 398.821 Total comprehensive (expenses)/income for the period net of taxation...... (Loss)/profit for the period ------(124.822) ------(124.822) 716 (124.106) Other comprehensive (expenses) / income ...... ------(5.795) -- (5.795) 89 (5.706) Transfer from property revaluation reserve on disposal of property ...... ------201 -- (201) ------Transfer of excess depreciation on revaluation surplus ...... ------260 -- (260) ------Transactions with shareholders recognized in equity ...... Shares held by Subsidiary company of the Group ...... ------(1.298) (1.298) -- (1.298) Issue of shares from conversion of CCS 1 ...... 10.098 -- 90.882 ------100.980 -- 100.980 30 September 2014 ...... 36.986 260.269 335.955 (304.080) 39 35.682 (1.298) 363.553 5.138 368.691

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Consolidated statement of changes in equity

For the year ended 31 December 2013

Attributable to owners of the parent company Reduction of Share Share Non- Share capital premium Revenue Translation Revaluatio controlling Capital Reserve reserve reserve reserve n reserve Total interest Total €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 Balance 1 January 2013...... 266.466 -- 167.171 10.835 39 37.214 481.725 3.159 484.884 Total comprehensive (expenses)/income for the year net of taxation ...... (Loss)/profit for the year .. ------(190.900) -- -- (190.900) 991 (189.909) Other comprehensive income ...... ------5.070 5.070 183 5.253 Transfer of excess depreciation on revaluation surplus...... ------346 -- (346) ------Transactions with shareholders recognized in equity ...... Expenses from increase in authorized capital and issue of shares and loan capital ...... -- -- (4.861) ------(4.861) -- (4.861) Reduction in Nominal Value of Share Capital...... (260.269) 260.269 ------Issue of shares ...... 20.691 -- 82.763 ------103.454 -- 103.454 31 December 2013 ...... 26.888 260.269 245.073 (179.719) 39 41.938 394.488 4.333 398.821

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Consolidated statement of changes in equity

For the year ended 31 December 2012

Attributable to owners of the parent company Share Non- Share premium Revenue Translation Revaluation controlling Capital reserve reserve reserve reserve Total interest Total €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 Balance 1 January 2012 132.448 237.174 35.331 39 26.607 431.599 2.599 434.198 Total comprehensive income for the year net of taxation ...... (Loss)/profit for the year ...... -- -- (23.440) -- -- (23.440) 1.508 (21.932) Other comprehensive income ...... ------10.700 10.700 79 10.779 Transfer of excess depreciation on revaluation surplus...... -- -- 93 -- (93) ------Transactions with shareholders recognized in equity ...... Dividend paid ...... ------(1.027) (1.027) Expenses from increase of authorized share capital and issue of shares ...... -- (1.877) ------(1.877) -- (1.877) Issue of shares from exercise of Rights ...... 127.228 (76.337) ------50.891 -- 50.891 Issue of shares from conversion of loan capital ...... 6.790 8.211 ------15.001 -- 15.001 Special defence contribution on deemed dividend distribution ...... -- -- (1.149) -- -- (1.149) -- (1.149) 31 December 2012 ...... 266.466 167.171 10.835 39 37.214 481.725 3.159 484.884

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Consolidated statement of changes in equity

For the year ended 31 December 2011

Attributable to owners of the parent company Share Non- Share premium Revenue Translation Revaluation controlling Capital reserve reserve reserve reserve Total interest Total €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 Balance 1 January 2011...... 132.442 237.174 137.382 39 24.911 531.948 2.316 534.264 Total comprehensive income for the year net of taxation ...... (Loss)/profit for the year ...... -- -- (100.658) -- -- (100.658) 1.113 (99.545) Other comprehensive income ...... ------2.145 2.145 (261) 1.884 Transfer of excess depreciation on revaluation surplus...... -- -- 449 -- (449) ------Absorption of operations of subsidiary company ...... -- -- (163) -- -- (163) -- (163) Transactions with shareholders recognized in equity ...... Dividend paid ...... ------(569) (569) Issue of shares ...... 6 ------6 -- 6 Special defence contribution on deemed dividend distribution ...... -- -- (1.679) -- -- (1.679) -- (1.679) 31 December 2011 ...... 132.448 237.174 35.331 39 26.607 431.599 2.599 434.198

At 31 December 2011 the absorption of the operations of subsidiary company refers to Athena High Technology Incubator Ltd.

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Condensed consolidated statement of cash flows (reviewed) for the nine-month period ended 30 September 2014

Nine-month period ended 30 September (reviewed) 2014 2013 €’000 €’000 Cash flow from operating activities Loss for the period ...... (124.106) (86.430) Adjustments to profit for the period ...... 244.464 177.077 Operating profit before working capital changes ...... 120.358 90.647 Working capital changes ...... 580.818 (1.346.087) Cash flow from/(used in) operations ...... 701.176 (1.255.440) Tax paid ...... (253) (5.885) Net cash flow from/(used in) operating activities...... 700.923 (1.261.325) Cash flow from investing activities Disposal of discontinued operations, net of cash disposed of ...... 5.247 (90.256) Income from investments in debt and equity securities ...... 13.816 15.713 Net (additions)/disposals/maturity of investment in debt and equity securities ...... (133.733) 247.483 Additions less proceeds from disposal of property, plant and equipment and intangible assets ...... (3.103) 13.822 Net cash flow (used in) / from investing activities ...... (117.773) 186.762 Cash flow from financing activities Interest paid on loan capital ...... (766) (10.927) Net cash flow used in financing activities ...... (766) (10.927) Net increase/(decrease) in cash and cash equivalents ...... 582.384 (1.085.490) Effect of exchange rate fluctuations on cash and cash equivalents ..... 893 1.012 Cash and cash equivalents at the beginning of the period ...... 1.815.741 2.634.274 Cash and cash equivalents at the end of the period ...... 2.399.018 1.549.796

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Consolidated statement of cash flows

For the years ended 31 December 2013, 2012, 2011

2013 2012 2011 (audited) (audited) (audited) Cash flow from operating activities €'000 €'000 €'000 Group loss for the year ...... (189.909) (21.932) (99.545) Depreciation of property, plant and equipment and amortization of intangible assets ...... 5.916 5.616 6.321 Loss/(profit) from the sale of property, plant and equipment 23 (506) (189) Loss from disposal and revaluation of investment in debt and equity securities ...... 1.046 829 8.390 Impairment of investment in debt and equity securities ... 111 2.132 85.074 Impairment of property ...... 5.882 954 -- Impairment of goodwill ...... -- 953 -- Income from investment in debt and equity securities ..... (19.842) (30.881) (45.393) Interest expense on loan capital ...... 12.358 16.465 17.770 Provisions for impairment of loans and advances ...... 310.810 103.970 142.484 Issue of shares...... -- -- 6 Loss from discontinued operations ...... 28.767 72.364 -- Cash flows from discontinued operations1 ...... -- (6.228) -- Special levy tax prior year ...... -- 1.646 -- Taxation ...... (17.047) 5.019 12.624 Operating profit before working capital changes ...... 138.115 150.401 127.542 Decrease/(Increase) in loans and advances to customers and in other assets ...... 320.389 97.477 (269.245) (Decrease)/Increase in customer deposits and other customer accounts and in other liabilities ...... (1.628.950) 474.549 252.169 Decrease/(Increase) in placements with other banks ...... 2.572 (34.213) (10.184) Decrease/(Increase) in deposits to central banks ...... 47.347 92.404 (75.575) Decrease in deposits by banks ...... (4.113) (27.596) (84.459) Net cash (used in)/from operating activities before taxation (1.124.640) 753.022 (59.752) Tax paid ...... (7.405) (6.054) (12.299) Net cash flow (used in)/from operating activities...... (1.132.045) 746.968 (72.051) Cash flow from investing activities Disposal of discontinued operations, net of cash disposed of (90.542) -- -- Income from investment in debt and equity securities ..... 19.842 30.881 45.393 Net disposals/maturity of investment in debt and equity securities ...... 300.440 221.548 495.190 Acquisitions of property, plant and equipment...... (2.710) (43.640) (5.739) Acquisitions of intangible assets ...... (1.222) (645) (898) Proceeds from the sale of property, plant and equipment 77 1 345 Net cash flow from investing activities ...... 225.885 208.145 534.291 Cash flow from financing activities Expenses from increase in authorized capital and issue of shares and loan capital ...... (4.861) (1.877) -- Proceeds from issue of share capital ...... 103.454 50.891 -- Proceeds from issue of loan capital ...... 1 -- -- Repayment of loan capital ...... -- -- (33.857)

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2013 2012 2011 (audited) (audited) (audited) Cash flow from operating activities €'000 €'000 €'000 Dividend paid ...... -- (1.027) (570) Interest paid on loan capital ...... (12.358) (16.465) (17.770) Net cash flow from/(used in) financing activities...... 86.236 31.522 (52.197) Net (decrease)/increase in cash and cash equivalents (819.924) 986.635 410.043 Effect of exchange rate fluctuations on cash and cash equivalents ...... 1.391 (475) 672 Cash and cash equivalents at the beginning of the year 2.634.274 1.648.114 1.237.399 Cash and cash equivalents at the end of the year ...... 1.815.741 2.634.274 1.648.114

1Cash flows from discontinued operations for the year 2013 of €59.839 are included in the category net cash from operating activities. Specifically, inflow of €571.830 relates to decrease in loans and advances to customers and in other assets and outflow of (€631,669) relates to decrease in customer deposits and other customer accounts and in other liabilities. The effect of the discontinued operations is presented in Part VII, Paragraph 2.1 - Operating and Financial Review.

Group regulatory capital in accordance with the relevant Central Bank Directive for the calculation of capital requirements

30 September 31 December 31 December 31 December 2014(1) 2013 2012 2011 €'000 €'000 €'000 €'000 Own funds Common Equity Tier 1 capital ...... 314.850 340.599 435.267 384.690 Less: Participation in insurance companies and securitization exposures -- (17.894) -- -- 314.850 322.705 435.267 384.690 Original own funds ...... 453.152 577.157 578.837 543.261 Supplementary own funds 41.226 68.989 180.277 196.081 Less: Participation in insurance companies and securitization exposures -- (17.894) -- -- 41.226 51.095 180.277 196.081 Total original and supplementary own funds 494.378 628.252 759.114 739.342 Less: Participation in insurance companies and other regulatory adjustments ...... -- -- (34.131) (43.133) Total own funds ...... 494.378 628.252 724.983 696.209 Risk weighted assets Credit risk ...... 3.677.765 3.849.575 4.728.563 4.830.650

Market risk ...... 13.275 11.250 29.725 40.113 Operational risk ...... 538.313 538.313 556.200 529.900 4.229.353 4.399.138 5.314.488 5.400.663 Common Equity Tier 1 ratio...... 7,4% 7,3% 8,2% 7,1% Tier 1 ratio ...... 10,7% 13,1% 10,9% 10,1% Tier 2 ratio ...... 1,0% 1,2% 3,4% 3,6% Capital adequacy ratio ...... 11,7% 14,3% 13,6% 12,9%

(1) CRD IV (Basel III) is effective from 1 January 2014

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2. ANALYSIS OF THE GROUP’S FINANCIAL RESULTS

2.1 OPERATING AND FINANCIAL REVIEW

The following discussion should be read in conjunction with the condensed consolidated financial statements as at and for the nine month period ended 30 September 2014, which the Group’s external auditors have conducted a review in accordance with the International Standard on Review Engagements 2014 “Review of Interim Financial Information performed by the Independent Auditor of the Entity”, and the audited consolidated financial statements as at and for the years ended 31 December 2013, 2012 and 2011 incorporated by reference in this Prospectus.

OVERVIEW

Based on the monthly reports of the Central Bank, at the end of September 2014 the Bank held a market share of 7,2% in loans (6,4% and 6,9% in December 2012 and December 2013, respectively) and 13,4% in deposits (10,2% and 11,8% in December 2012 and December 2013, respectively) (Source: Central Bank. Information from third parties has been accurately reproduced and, as far as the Bank is aware and is able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading.)

PRESENTATION OF FINANCIAL INFORMATION

The nine months results for the period ended 30 September 2013 refer to the comparative results of the Group for the nine months ended 30 September 2014 and have been restated to reflect the reclassification of operations of the Russian Subsidiary sold on 5 June 2014, from continuing operations to discontinued operations.

The results for the year ended 31 December 2012 refer to the comparative figures of the annual results of the Group for the year ended 31 December 2013 and have been restated to reflect the reclassification of the operations of the BNG from continuing to discontinued operations (on 26 of March 2013 (transfer date), the Bank, as a result of a transnational understanding of the governments of Greece and Cyprus, at the demand of Troika and according to the instructions of the Ministry of Finance and the Central Bank, consented to the sale of its BNG to Piraeus Bank SA with immediate effect).

The references made in this Prospectus to the results of the year ended 31 December 2011 have not been restated and therefore are not considered comparable with the years ended 2013 and 2012.

In accordance with the provisions of IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations" all assets and liabilities of Borenham Holdings Limited as at 30 September 2014 have been reclassified and are presented in the consolidated statement of financial position in the category Assets/Liabilities belonging to subsidiary held for sale.

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In this Prospectus, references made in respect to capital adequacy ratios of the Bank or the Group that relate to prior periods have been calculated according to the applicable guidance of the period/year under reference.

For the nine month period ended 30 September 2014, the effect of the discontinued operations on the Group’s results (the sale of Russian Subsidiary and BNG) is presented as follows:

Nine-month period ended 30 September 2014 2013 €’000 €’000 Discontinued operations Turnover ...... 1.286 11.592

Net interest income ...... 992 4.968 Net income from fees, commissions, net gains on disposal and revaluation of foreign currencies and financial instruments and other income ...... 117 843 Total net income ...... 1.109 5.811 Total expenses ...... (1.119) (5.566) (Loss)/profit from ordinary operations before provisions...... (10) 245 Provisions for impairment of loans and advances ...... -- 6.309 (Loss)/profit before taxation ...... (10) 6.554 Taxation ...... 76 25.850 Profit after taxation ...... 66 32.404 Loss on disposal of the BNG ...... -- (42.619) Profit from disposal of subsidiary ...... 2.955 -- Profit/(loss) for the period ...... 3.021 (10.215)

Basic profit/(loss) per share (cent) ...... 0,1 (1,6)

The effect of terminated activities on the Condensed Consolidated Statement of Cash Flows was as follows

Nine month period ended 30 September 2014 2013 €’000 €’000 Cash Flow from /(to) terminated activities Net Cash Flow from /(to) operations ...... 10.424 (59.136) Net Cash Flow from /(to) investments ...... 5.247 (90.256) Net Cash Flow to financing activities ...... -- -- Net Cash Flow for the period ...... 15.671 (149.392)

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Year ended 31 December 2013 2012 €’000 €’000 Cash Flow to terminated activities Net Cash Flow to operations ...... (59.839) (6.228) Net Cash Flow to investments ...... (90.542) -- Net Cash Flow to financing activities ...... -- -- Net Cash Flow for the period ...... (150.381) (6.228)

Disposal of the Russian Subsidiary

On 5 June 2014, the Bank disposed 100% of the share capital of the Russian Subsidiary.

Pursuant to the provisions of IFRS, the presentation of the Income Statement for the nine months ended 30 September 2013 adjusted to reflect the reclassification activities of the Russian Subsidiary, which was sold during 2014, from continuous to discontinued operations.

The sale was on an arm’s length basis with Russian investors, after obtaining the necessary approvals from the Central Bank.

Following the completion of the review of the results for the period from 1 April 2014 to 5 June 2014 (date of signing of agreement) by independent expert of common acceptance, the sale price of the Russian Subsidiary was adjusted to 1.154 million Rubles (€24,4 million approximately). The profit from the disposal of the Russian Subsidiary, amounted approximately to €3,0 million.

Nine-month period ended 30 September 2014 2013 €’000 €’000 Turnover ...... 1.286 2.033

Net interest income ...... 992 1.862 Net income from fees, commissions, net gains on disposal and revaluation of foreign currencies and financial instruments and other income ...... 117 161 Total net income ...... 1.109 2.023 Total expenses ...... (1.119) (2.195) Loss before tax ...... (10) (172) Taxation ...... 76 242 Profit after taxation ...... 66 70 Profit from disposal of subsidiary ...... 2.955 -- Profit for the period ...... 3.021 70

The profit on disposal of the Russian Subsidiary was after the completion of the review of the results for the period from 1 April 2014 to 5 June 2014 (date of signing of agreement) by independent expert of common acceptance.

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Sale of the BNG

On 26 March 2013 (transfer date), the Bank, following the transnational understanding between Cyprus and Greece and within the framework of the agreement for international funding with Troika, consented to the sale of its BNG to Piraeus Bank SA, in accordance with the instructions of the Ministry of Finance and the Central Bank, with immediate effect.

Following the sale of the BNG, the Bank no longer performs banking operations in Greece, but continues to maintain a tax status, as it retains properties for sale under its name.

On 31 December 2013 the loss on the disposal of the BNG, following the final review by an independent expert, amounted to €43.571.000 while the profit after tax of the BNG amounted to €14.804.000. The loss on the sale of the BNG arose from the sale of the BNG’s assets and liabilities to Piraeus Bank SA under the agreement signed on 26 March 2013. The loss constituted the difference between the net payable amount and the carrying amount of net liabilities transferred.

Nine month period ended 30 September 2014 2013 €’000 €’000 Turnover ...... -- 9.559 Net interest income ...... -- 3.106 Net income from fees, commissions , net gains on disposal and revaluation of foreign currencies and financial instruments and other income ...... -- 682 Total net income ...... -- 3.788 Total expenses ...... -- (3.371) Profit from ordinary operations before provisions……………… -- 417 Provisions for impairment of loans and advances……………………………………………………………………… -- 6.309 Profit before taxations ...... -- 6.726 Taxation ...... -- 25.608 Profit after taxation ...... -- 32.334 Loss on disposal of the BNG ...... -- (42.619) Loss for the period ...... -- (10.285)

Reclassification of the Bank’s subsidiary Borenham Holdings Limited as held for sale

The Bank’s subsidiary Borenham Holdings Limited owns 100% of the share capital of the Russian company Limited Liability Company “Format Invest”, owner of the premises of the Russian Subsidiary. Based on the above developments the Bank has the intention to dispose the subsidiary company Borenham Holdings Limited.

In accordance with the provisions of IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations" all assets and liabilities of the subsidiaries, for the nine month period ended 30 September 2014, have been reclassified and are presented in the consolidated statement of financial position in the category Assets/Liabilities belonging to subsidiary held for sale.

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2.2 KEY FACTORS AFFECTING RESULTS OF OPERATIONS

The Group’s financial condition, results of operations and prospects depend significantly upon the macroeconomic conditions prevailing in Cyprus as well as other factors. The impact of these and other potential factors may vary significantly in the future and many of these factors are outside the control of the Group.

The Cypriot Economy

The Group generates substantially all of its net interest income in Cyprus, and as a result its results of operations are substantially dependent on economic conditions in Cyprus. The sale of the Bank’s operations in Greece in 2013, as well as the sale of its Russian Subsidiary in 2014, further concentrates the Group’s income from its operations in Cyprus (local and international), which accounted for 99.8% of its total net income for the nine months ended 30 September 2014.

A number of key factors have led to significant deterioration of the Cypriot economy in the last few years, including: accumulating structural problems and distortions in the Cypriot economy; the growing public deficit; the global economic crisis and the sovereign debt crisis in Europe (which resulted in the rollover of problems from Greece to Cyprus); the excess liquidity held by the Cypriot banks (which led to excessive borrowing by households and the private sector); the gradual increase in unemployment and employee salary cuts and the resulting significant increase in non-performing loans (and accompanying capital shortfalls to the Cypriot financial sector). These developments have been accompanied by downgrades of both Cyprus’ sovereign rating and the Bank’s rating by international credit rating agencies, limiting the ability of the state and the banks to access international financial markets.

In April 2013, Cyprus signed a MoU with the Troika. The economic adjustment program called for financial, fiscal and structural changes in Cyprus. Its objectives were to restore financial sector stability, to strengthen sustainability of public finances, and to adopt structural reforms so as to support a sustainable and balanced growth of the economy.

During this period there were significant concerns about the stability of the Cypriot banking system, and it was deemed necessary to apply temporary restrictive measures on banking transactions, including, among others, restrictions on the withdrawal of funds from bank accounts, the opening of accounts and the transferring of funds abroad, contributing to a significant reduction in deposits from international customers in particular. Although most of the restrictive measures that were adopted during the period after 15 March 2013 relating to transactions in Cyprus have been gradually lifted, most restrictive measures remain in force with regard to movements of capital abroad.

During the past year and half, the Cypriot economy entered into a severe recession, with a substantial increase of provisions and non-performing loans in the banking sector, which affected the Bank’s asset quality and net income.

These developments also resulted in an outflow of deposits from the Bank’s International Business Centres, as foreign depositors faced increasing concerns about the overall stability of the Cypriot banking system.

However, the latest macroeconomic data indicates a faster than expected economic recovery in Cyprus. The IMF expects the economy to grow again in 2015 and 2016 by 0,4% and 1,6%, respectively (Source: Country Report No. 14/313 as of Oct-14. Information from third parties has been accurately reproduced and, as far as the Bank is aware and is able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading.)

Provisions for impairment of loans and advances

The Group’s financial results can be significantly affected by the amount of provisions for impairment of loans and advances.

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A significant proportion of the Group’s loan portfolio is comprised of non-performing loans. As calculated in accordance with the new directive of the Central Bank which has been in effect since July 1, 2013, gross non-performing loans have increased from €2.007 million as at 31 December 2013 to €2.154 million as at 31 March 2014 and €2.332 million as at 30 June 2014, and €2.473 million as at 30 September 2014 and the ratio of gross non-performing loans to total loans, including interest suspended and not recognized in the income statement, increased from 45,7% as at December 2013, to 48,9% as at 31 March 2014, 53,0% as at 30 June 2014 and 56,1% as at 30 September 2014.

Accumulated provisions for impairment of loans and advances, which also included suspended interest that was not recognized in the income statement, amounted to €1.144,3 million as at 30 September 2014 (December 2013: €830,2 million) and represented 25,9% of total gross loans and advances (December 2013: 18,9%). As at 30 September 2014, 46,3% (December 2013: 41,4%) of gross non-performing loans and advances was covered by provisions for impairment for loans and advances.

The increased levels of non-performing loans have resulted in large part from the ongoing economic recession in Cyprus, leading to higher unemployment rates and lower disposable household incomes and business profitability, consequently affecting individuals’ ability to service the loans they have taken out. In addition, there has been a change to the relevant directive of the Central Bank which determines the definition of non-performing loans as at 1 July 2013. According to the new directive, loans that have arrears beyond 90 days are classified as non-performing, regardless of any physical collateral in existence. Previously loans that were fully collateralised were not classified as non-performing loans, even if payments were overdue by 90 days or more. The new directive resulted in a significant increase in the Bank's levels of non-performing loans.

The construction and real estate management sectors have been particularly affected by recent economic conditions in Cyprus, and as at 30 September 2014 non-performing loans in the construction and real estate management sectors account for 35% of the total number of non-performing loans of the Group with the Construction and Property Management sectors amounting to approximately 27% of the Group’s loan portfolio as at 30 September 2014.

Interest Rate Environment

One of the primary factors influencing the Group’s profitability is the level of interest rates in Cyprus, which in turn influence the return on its securities portfolio and its loan and deposit rates. Interest rates are particularly sensitive to factors that are beyond the control of the Bank, including monetary policy and domestic and international financial and political events and circumstances.

Fluctuations in interest rates impact the Group’s net interest income based on the re-pricing profile of the Group’s interest-earning assets and interest-bearing liabilities. The interest paid for the Group’s interest- bearing liabilities (principally deposits) is mostly driven by competition in the market. On the other hand, the assets are comprised mostly of loans, most of which have floating interest rates. Around half of the Bank’s live loans re-price based on interest rate bases that are not controlled by the Bank. In general, the short term interest income of the Bank is negatively affected when interest rates for both assets and liabilities decrease since liabilities generally have longer re-pricing than loans. This effect is partly offset by the fact that another part of the assets, comprised of fixed rate bonds, the value of which will increase following a decrease in the level of interest rates.

In recent years, deposit interest rates have been pushed upwards from time to time (due to the lack of liquidity in the economy), whilst two lending “base” interest rates (the interest rate of the ECB and the Euribor) have been reduced through the intervention of the ECB due to the continuing Eurozone crisis. This has led to the contraction of interest rate margins and, consequently, of the net interest income of the Group.

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PROSPECTUS

An increase in interest rates might also lead to an increase of non-performing loans and provisions and a reduction in the demand for new loans. In addition, any rise in interest rates could lead to higher financing costs for the Bank, negatively affecting the Group’s net interest margin.

Changes in Banking Regulation

Institutional changes that are stipulated at the European Union level or the Central Bank with regards to the regulatory framework for banks, the application of provisions of existing directives, regulations, laws, special taxes on banking transactions, anti-money laundering legislation and the harmonization of corporation tax, can affect the Group’s financial results, create needs to raise additional capital (especially Tier I capital), or lead to changes in the Bank’s dividend policy. Changes in consumer protection laws in Cyprus and other jurisdictions where the Group operates could limit the fees that banks may charge for certain products and services such as mortgages, unsecured loans and credit cards. If introduced, such laws could reduce the Group’s profit for the period, though the amount of any such reduction cannot be estimated at this time.

There is a risk of loss of earnings as a result of the enactment of the Liberalisation of the Interest Rate and Related Matters (Amending) Law of 2014, which has been in effect since 9 September 2014 and bars financial institutions from unilaterally changing the interest spread. Furthermore, since the enactment of this law, the excess fee may not exceed 2% on all credit facility contracts in force. The increase in the margin of an average rate for the Bank was used to offset the increased credit risk. An additional risk derives from legislation passed on 20 June 2014, the Tax Collection Law (Amendment) Act 2014 (Law 80(Ι)/2014), on the basis of which amounts due by virtue of (a) the Income Tax Law, (b) the Special Contribution for the Defence of the Republic Law, (c) the Capital Gains Tax Law, (d) the Immovable Property Tax Law, (e) the Special Contributions for Employees, Retirees of the State Agency and the Public Sector Law and (f) the Stamp Duty Law, may have priority against the pledged deposits used as collateral for loans and on the basis of a specific procedures could be seized. This development may reduce the level of collateral available to the Group and impose the readjustment of collaterals and as a result increase the Group’s provisions.

2.3 RESULTS OF OPERATIONS

Condensed consolidated income statement (reviewed) for the nine-month period ended 30 September 2014

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Nine month period ended 30 September (reviewed) 2014 2013 €’000 €’000

Total net income ...... 225.407 199.961 Total expenses ...... (106.387) (114.511) Profit from ordinary operations before provisions ...... 119.020 85.450 Provisions for impairment of loans and advances ...... (259.056) (166.456) Loss before taxation...... (140.036) (81.006) Taxation ...... 12.909 4.791 Loss for the period from continuing operations ...... (127.127) (76.215)

Discontinued Operations ...... Profit/(loss) from discontinued operations after taxation ...... 3.021 (10.215) Loss for the period ...... (124.106) (86.430)

(Loss)/profit attributable to: Owners of the parent company from continuing operations ...... (127.843) (77.029) Owners of the parent company from discontinued operations ...... 3.021 (10.215) Non-controlling interest ...... 716 814 Loss for the period ...... (124.106) (86.430)

Basic loss per share (cent) ...... (3,7) (13,7) Basic loss per share (cent) from continuing operations ...... (3,8) (12,1)

Analysis of financial results for the nine months ended 30 September 2014

Net Interest Income

The net interest income of the Group for the nine month period ended 30 September 2014 amounted to €156,3 million compared to €133,5 million for the restated nine months period ended 30 September 2013, increasing by 17%, due to the significant decrease in the interest expense of 42%, despite the decrease of 9% in interest income. The Group’s net interest rate margin for the nine month period ended 30 September 2014 was 3,35%, compared to 2,75% for the year ended 31 December 2013.

Specifically, the decrease in interest income was primarily the result of the increase in the suspension of interest income. The decrease in interest expense was mainly the result of the decrease in the interest rates on deposit products, as well as the reduction of the interest payable on loan capital pursuant to the decision of the Board of Directors for the cancellation of the payment of interest on 9 December 2013.

Non-Interest Income

Total non-interest income (net income from fees, commissions, net gains on disposal and revaluation of foreign currencies and financial instruments and other income) increased by 4%, reaching an amount of €69,1 million in the nine month ended 30 September 2014 compared to €66,5 million in the nine months ended 30 September 2013 (restated).

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The increase in non-interest income was due to the increase in net fee and commission income by 7% and to the increase in net gain on disposal and revaluation of foreign currencies and financial instruments by 5%, despite the decrease by 6% of other income.

Expenses

Staff costs represented 53,2% of the Group’s total expenses in the nine months ended 30 September 2014, compared to 60,5% for the same period in 2013, and decreased by 18% (€12,7 million) compared to the corresponding prior year period as a result of the VRS and the salary reductions of the personnel, based on an agreement made before the Department of Labor Relations between the Cyprus Bankers Employers’ Association and the Cyprus Union of Bank Employees, which relates to the three-year period 2014-2016 and which was signed on 17 March 2014, with effect from 1 March 2014. Administrative and other expenses of the Group for the nine-month period ended 30 September 2014 increased by 11% compared to the corresponding prior year restated period which included an amount of €9,6 million in relation to the cost of the 2013 VRS. The increase was mainly due to the impairment of assets amounting to €10,5 million as well as to the cost of advisory services of €3,4 million.

The Group’s cost to income ratio for the nine months ended 30 September 2014 was 47,2% compared to a cost to income ratio 52,4% for the corresponding period of 2013, excluding the cost of the 2013 VRS of €9,6 million.

Provisions for impairment of loans and advances

The charge for provisions for impairment of loans and advances for the nine-month period ended 30 September 2014 amounted to €259,1 million and increased by €92,6 million from the corresponding amount in the restated nine months ended 30 September 2013, as a result of the negative economic environment, the increase of non-performing loans and the continued decrease in the value of property.

Accumulated provisions for impairment of loans and advances, which also included suspended interest that was not recognised in the Income Statement, amounted to €1.144,3 million as at 30 September 2014, compared to €830,2 million as at 31 December 2013, and represented 25,9% of total gross loans and advances, compared to 18,9% as at 31 December 2013. At 30 September 2014, 46,3% (compared to 41,4% as at 31 December 2013) of gross non-performing loans and advances was covered by provisions for impairment for loans and advances.

Profit (loss) from continuing operations after taxation

On 5 June 2014, the Bank disposed 100% of the share capital of the Russian Subsidiary. The Bank sold its Russian Subsidiary as part of the Group’s continuous efforts for more effective management of available resources, capital planning, active risk management and risk-weighted assets and to focus on key markets. With the completion of the financial results’ review for the period from 1 April 2014 until 5 June 2014 (date of signature of the agreement) by an independent expert of joint consensus, the selling price of the Russian Subsidiary was adjusted to 1,154 million Rubles (€24,4 million, approximately). The profit from the disposal of the subsidiary amounts to €3,0 million.

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Consolidated income statement

For the years ended 31 December 2013, 2012, 2011

Restated 2013 2012 2011 (audited) (audited) (audited) €'000 €'000 €'000 Continuing Operations ...... Interest income ...... 318.966 352.478 380.415 Interest expense ...... (130.061) (161.150) (165.871) Net interest income ...... 188.905 191.328 214.544 Fee and commission income ...... 61.758 73.298 72.242 Fee and commission expense ...... (5.109) (7.012) (7.812) Net fee and commission income1 ...... 56.649 66.286 64.430 Net gains/losses on disposal and revaluation of foreign currencies and financial instruments1 ...... 16.923 21.043 (75.220) Other income1 ...... 18.569 23.521 20.430 Total net income ...... 281.046 302.178 224.184 Staff costs ...... (91.018) (94.060) (122.360) Depreciation and amortisation ...... (5.916) (5.616) (6.321) Administrative and other expenses ...... (51.491) (43.081) (39.940) Total expenses ...... (148.425) (142.757) (168.621) Profit from ordinary operations before provisions 132.621 159.421 55.563 Provisions for impairment of loans and advances ..... (310.810) (103.970) (142.484) (Loss)/gain before taxation ...... (178.189) 55.451 (86.921) Taxation ...... 17.047 (5.019) (12.624) (Loss)/gain for the year from continuing operations ...... (161.142) 50.432 (99.545) Discontinued Operations ...... Loss from discontinued operations after taxation ...... (28.767) (72.364) -- Loss for the year ...... (189.909) (21.932) (99.545) (Loss)/profit attributable to: Owners of the parent company from continuing operations ...... (162.133) 48.924 (100.658) Owners of the parent company from discontinued operations ...... (28.767) (72.364) -- Non-controlling interest ...... 991 1.508 1.113 Loss for the year ...... (189.909) (21.932) (99.545) Basic loss per share (cent) ...... (10,9) (5,3) (32,0) Basic (loss)/earnings per share (cent) from continuing operations ...... (9,2) 11,0 (32,0)

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1 The total non-interest income is analysed as follows:

Restated 2013 2012 2011 (audited) (audited) (audited) €’000 €’000 €’000

Net fee and commission income ...... 56.649 66.286 64.430 Net gains/(losses) on disposal and revaluation of foreign currencies and financial instruments ...... 16.923 21.043 (75.220) Other income ...... 18.569 23.521 20.430 Total non-interest income ...... 92.141 110.850 9.640

Analysis of financial results for the year ended 31 December 2013

Net Interest Income

The decrease in net interest income for the year ended 31 December 2013 by 1% compared with the same period last year is primarily the result of the increase in the suspension of interest income and the decrease in interest income from investment in Bonds. The Group’s net interest rate margin for the year ended 31 December 2013 was 2,75% compared to 2,47% (including the BNG) for the year ended 31 December 2012.

Non-Interest Income

Total non-interest income decreased by 17%, reaching an amount of €92,1 million, compared to €110,9 million in December 2012 (restated).

The decrease in non-interest income was primarily due to reduced profits from the disposal and revaluation of bonds and currency compared to the respective prior year period as well as due to the decrease in net fee and commission income from banking activities, which was negatively affected by the decisions of Eurogroup in March 2013.

Expenses

Staff costs represented 61,3% of the Group’s total expenses (December 2012 (restated): 65,9%) and decreased by 3% (€3,0 million) for the year ended 31 December 2012 (restated). On 31 December 2013 the number of persons employed by the Group was 1.396 compared to 1.953 persons (of which 371 were employed in Greece) in December 2012.

Following the Board of Directors' decision, the Group offered a VRS to all its permanent personnel. With the completion of the Scheme on 2 August 2013, an 11% decrease in the number of employees was achieved. The total compensation amount paid to the Group staff members that had voluntarily enrolled in the VRS was €9,6 million.

Administrative and other expenses of the Group (excluding the €9,6 million compensation offered as part of the VRS) for the year ended 31 December 2013 reduced by 3% compared to the year ended 31 December 2012 (restated). This decrease reflected the targeted efforts of the Group to restrain expenses.

The cost to income ratio, excluding the cost of the 2013 VRS compensation of €9,6 million and despite the decrease in total income, was 49,4%, compared to 47,2% for the year ended 31 December 2012 (restated).

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Profit before Provisions

The profit of the Group before provisions for the year ended 31 December 2013 decreased by 17% and amounted to €132,6 million, compared to €159,4 million for 2012 (restated), mainly due to reduced income from banking operations.

Provisions for impairment of loans and advances

Provisions for impairment of loans and advances in the income statement for the year ended 31 December 2013 amounted to €310,8 million, increased by €206,8 million from the comparable amount of 2012 (restated), as a result of the negative economic environment, the increase of non-performing loans and the continued decrease in the value of property. Accumulated provisions for impairment of loans and advances, which also included suspended interest that is not recognized in the income statement, amounted to €830,2 million as at 31 December 2013 and represented 18,9% of total gross loans and advances.

The ratio of annual provisions to gross loans was 7,1% based on the period’s results (December 2012 (restated): 2,2% excluding the BNG portfolio).

Loss for the period

For the year ended 31 December 2013 the loss after taxation attributable to the owners of the parent company amounted to €190,9 million (€162,1 million loss from continuing operations and €28,8 million loss from discontinued operations), compared to a loss of €23,4 million (€48,9 million profit from continuing operations and €72,4 million loss from discontinued operations) for the corresponding prior year period (restated). This loss included increased provisions for impairment of loans and advances, the loss resulting from discontinued operations following the sale of the BNG and the cost of the 2013 VRS.

Analysis of financial results for the year ended 31 December 2012

Net Interest Income

The Group’s interest rate margin for the year ended 31 December 2012 was 2,47% (December 2011: 2,65%). The decrease in the Group’s interest margin is primarily the result of increase in the cost of deposits. The net interest income in Cyprus, which constitutes 98% of the total net interest income of the Group (December 2011: 94%), reached the level of €200,3 million, maintaining the same levels as preceding year’s corresponding figure. The interest rate margin for the year ended 31 December 2012 was 2,66% in Cyprus and 0,37% in Greece.

Non-Interest Income

Total non-interest income increased by 1.050%, from €9,6 million in 2011 to €110,9 million in 2012 (restated). The non-interest income of 2011 included an impairment of Greek Government Bonds amounting to €77,0 million. Excluding the cost of impairment of the Greek Government Bonds, the non-interest income of the Group showed an increase of 28% compared to the corresponding figure in 2011.

The significant increase in non-interest income was primarily due to improved earnings from the revaluation of financial assets and the positive contribution of the banking business of the Group. It is noted that the total non-interest income for 2012 was reduced by €4,1 million as a result of the reclassification of the operations of the BNG to discontinued operations.

Expenses

The total expenses decreased by 15,3%, from €168,6 million in 2011 to €142,8 million in 2012 (restated). It is noted that the total expenses for 2012 was reduced by €26,5 million as a result of the reclassification of the operations of the BNG to discontinued operations.

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Staff costs represented 66% of the Group’s total expenses in the year ended 31 December 2012 (restated), compared to 73% for the year ended 31 December 2011. In Cyprus, staff costs decreased by 12%, from €105,2 million in 2011 to €92,2 million in 2012, and constituted the greater part of the Group's staff expenses. The decrease was mainly due to the change in the calculation methodology of employees’ retirement benefits.

The Group’s cost to income ratio, excluding the impairment cost of the Greek Government Bonds, was 47,2% for the year ended 31 December 2012 (restated) compared to 56,0% for the year ended 31 December 2011.

The number of staff employed by the Group decreased from 1.976 as at 31 December 2011 to 1.953 as at 31 December 2012.

Profit before Provisions

The Group’s profit before provisions for the year ended 31 December 2012 (restated) noted an increase of 187%, reaching €159,4 million, compared to profits of €55,6 million for the corresponding prior year period, which included an impairment of Greek Government Bonds amounting to €77,0 million. Excluding the amount corresponding to the impairment of the Greek Government Bonds from the prior year results, the increase in the Group’s profit before provisions amounted to 20%. The Group’s profit before provisions for the year 2012 exclude the loss of €10,3 million as a result of the reclassification of the operations of the BNG to discontinued operations.

Provisions for impairment of loans and advances

Provisions for impairment of loans and advances in the income statement for the year ended 31 December 2012 (restated) amounted to €104,0 million and decreased by €38,5 million from the corresponding 2011 amount. The decrease is mainly due to the fact that the provisions for impairment of loans and advances for the year 2012 exclude provisions of €58,4 million due to the reclassification of the operations of the BNG to discontinued operations. Accumulated provisions for impairment of loans and advances including suspended interest not recognized in the income statement amounted to €811,9 million as at 31 December 2012 (December 2011: €644,9 million) and represented 14,6% (December 2011: 11,5%) of the total gross loans and advances. The ratio of the annual cost of provisions over gross loans, excluding the loans of the BNG amounting to €0,9 billion, based on the results of the year was 2,2% (December 2011: 2,5%).

Loss for the period

For the year ended 31 December 2012, the loss after taxation attributable to the owners of the parent company amounted to €23,4 million (profit from continuing operations €48,9 million and loss from discontinued operations €72,4 million) compared to a loss from continuing operations of €100,7 million in 2011. Excluding the impairment of the Greek Government Bonds, the loss after taxation attributable to the owners of the parent company marginally improved.

Analysis of financial results for the year ended 31 December 2011

Income Statement for the year ended 31 December as shown above has not been restated to reflect the reclassification of operations of the BNG, which was disposed during 2013 respectively, from continuous operations to discontinued operations.

Net Interest Income

The Group’s net interest rate margin for the year ended 31 December 2011 was 2,65% compared to 2,44% for the year ended 31 December 2010. The net interest income in Cyprus, which constitutes 94% of the total net interest income of the Group (Year 2010: 92%), reached €201 million for the year ended 31 December

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2011, an increase of 12,9% compared to 2010’s corresponding figure. The interest rate margin for the year ended 31 December 2011 was 2,74% in Cyprus and 1,76% in Greece.

Non-Interest Income

Total non-interest income decreased by 87%, from €76,1 million during 2010 to €9,6 million during 2011. Excluding the cost of impairment of the Greek Government Bonds, the non-interest income of the Group amounted to €86,6 million, recording an increase of 14% compared to €76,1 million during the year 2010, mostly due to the improved results from the disposal and revaluation of foreign currencies and financial instruments, as well as to the Group’s insurance operations, which had a positive contribution to non-interest income.

Expenses

Total expenses of the Group decreased by 6% compared to the corresponding amount for 2010, as a result of the Group’s coordinated efforts to save funds, especially concerning the BNG. As a result, the cost to income ratio, excluding the impairment cost, was 56,0% – and it was lower than the ratio of 66,5% for the corresponding prior year period.

Staff costs, which included the cost of staff retirement benefits, represented 73% of the Group’s total expenses (December 2010: 70%). The number of staff employed by the Group as at 31 December 2011 amounted to 1.976 employees (December 2010: 1.997 employees).

According to the new collective agreement between the Cyprus Bankers Employers' Association and the Cyprus Union of Bank Employees, signed on 12 January 2012 with effect from 1 January 2012, the staff defined benefit retirement plan with lump sum payments was terminated on 31 December 2011, and all the employees joined the provident fund. Under this scheme the employer will make monthly contributions to the provident fund at a rate of 14% of the employees’ salary and each employee will make monthly contributions at a rate of 3%-10% of their salary.

Profit before Provisions

On 31 December 2011, following the finalization of the terms of the agreement between Greece and its private creditors concerning the repayment plan of the Greek debt, the Group proceeded with an impairment provision of €77,0 million for the Greek Government Bonds it held. The total amount of the impairment provision represented 70% of the nominal value of bonds held by the Bank, amounting to €110 million and classified as ‘Held to Maturity’. As a result, following the impairment cost of the Greek Government Bonds, the Group showed losses before taxation for the year ended 31 December 2011 amounting to €86,9 million compared to profits of €15,3 million for the year ended 31 December 2010. Excluding the cost of impairment of the Greek Government Bonds, the profit of the Group before provisions amounted to €132,6 million, recording an increase of 47% compared to the corresponding prior year period.

Provisions for impairment of loans and advances

Provisions for impairment of loans and advances in the income statement for the year ended 31 December 2011 amounted to €142,5 million, which represented an increase of €67,8 million from the corresponding 2010 amount. The ratio of the annual cost of provisions over gross loans, based on the results for the year, was 2,5% (December 2010: 1,4%).

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2.4 FINANCIAL CONDITION

CONDENSED STATEMENT OF FINANCIAL POSITION

30 September 31 December 31 December 31 December 2014 2013 2012 2011 (reviewed) (audited) (audited) (audited) €'000 €'000 €'000 €'000 Assets Cash and balances with Central Banks ...... 1.553.640 1.003.020 1.094.620 219.890 Placements with other banks ..... 1.018.788 921.719 1.698.571 1.645.333 Loans and advances to customers1 ...... 3.267.651 3.563.949 4.744.910 4.986.827 Investments in debt securities .... 789.305 645.465 939.732 1.146.660 Investments in equity securities . 9.127 8.343 10.312 13.381 Property, plant and equipment ... 96.329 123.662 146.478 112.509 Intangible assets ...... 18.596 18.865 19.003 20.593 Tax receivable ...... 39 75 40 4.154 Deferred tax asset ...... 37.144 24.697 17.230 22.751 Assets belonging to subsidiary held for sale ...... 7.380 ------Other assets ...... 74.455 74.152 84.805 106.878 Total assets ...... 6.872.454 6.383.947 8.755.701 8.278.976 Liabilities ...... Deposits by banks ...... 43.217 47.362 46.706 74.302 Customer deposits and other customer accounts ...... 6.128.112 5.513.272 7.766.863 7.106.541 Tax payable ...... 5.244 5.265 6.495 7.952 Deferred tax liability ...... 1.188 4.406 28.905 33.359 Liabilities belonging to subsidiary held for sale ...... 1.493 ------Other liabilities ...... 119.563 110.192 116.971 302.746 6.298.817 5.680.497 7.965.940 7.524.900 Loan capital ...... 204.946 304.629 304.877 319.878 Equity ...... Share capital ...... 36.986 26.888 266.466 132.448 Reserves ...... 326.567 367.600 215.259 299.151 Equity attributable to owners of the parent company ...... 363.553 394.488 481.725 431.599 Non-controlling interest ...... 5.138 4.333 3.159 2.599 Total equity ...... 368.691 398.821 484.884 434.198 Total liabilities and equity ...... 6.872.454 6.383.947 8.755.701 8.278.976 Contingent liabilities and commitments ...... 745.807 806.094 1.056.010 1.192.092

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1 Customers loans and advances analyzed below:

30 31 31 31 September December December December 2014 2013 2012 2011 (reviewed) (audited) (audited) (audited) €'000 €'000 €'000 €'000 Gross loans and advances to customers ...... 4.411.991 4.394.166 5.556.811 5.631.726 Provisions for impairment ...... (1.144.340) (830.217) (811.901) (644.899) Loans and advances to customers ...... 3.267.651 3.563.949 4.744.910 4.986.827

Loans and advances/Deposits

Total gross loans and advances to customers of the Group, which amounted to €4,4 billion at 30 September 2014, showed a marginal increase compared to the 31 December 2013 amount, while the Group’s customer deposits increased by 11%, reaching an amount of €6,1 billion as at 30 September 2014, compared to €5,5 billion as at 31 December 2013.

As of 30 September 2014, the ratio of gross loans to deposits was 72,0% while the ratio of net loans to deposits was 53,3%. On 31 December 2013, the corresponding ratios were 79,7% and 64,6% respectively.

On 31 December 2013, total gross loans and advances to customers reduced by 21% compared to December 2012 including €0,9 billion gross loans of the BNG, which was sold during 2013. Customer deposits including €0,6 billion deposits of the BNG decreased by 29%, from €7,8 billion as at 31 December 2012 to €5,5 billion as at 31 December 2013.

On 31 December 2012, total gross loans and advances to customers marginally declined by 1% in comparison to 2011, reaching €5,6 billion. Customer deposits rose by 9%, from €7,1 billion in December 2011 to €7,8 billion, in December 2012.

Loans and Advances Past Due but not Impaired

The comparative figures for the year ended 31 December 2012 include the results of the BNG.

30 September 31 December 31 December 31 December 2014 2013 2012 2011 (reviewed) (audited) (audited) (audited) €'000 €'000 €'000 €'000 Past Due 0-30 days ...... 74.978 127.391 168.791 204.662 30-60 days ...... 42.709 116.026 132.871 95.649 60-90 days ...... 57.197 95.307 119.509 88.182 90 days+ ...... 303.033 304.448 660.010 548.132 Carrying Amount ...... 477.917 643.172 1.081.181 936.625 Of which term loans that were renegotiated ...... 152.160 247.259 414.267 687.442

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Overview of Net Customer Loans & Advances by Geography

The geographical analysis of the Group’s total net loans and advances to customers is as follows:

30 September 31 December 31 December 31 December 2014 2013 2012 2011 (reviewed) (audited) (audited) (audited) €'000 €'000 €'000 €'000 Cyprus ...... 3.267.651 3.554.502 4.156.997 4.300.353 Greece ...... - - 576.335 684.678 Russia ...... - 9.447 11.578 1.796 3.267.651 3.563.949 4.744.910 4.986.827

Overview of Customer Deposits by Maturity

31 December 31 December 31 December 2013 2012 2011 (audited) (audited) (audited) €'000 €'000 €'000 On demand...... 2.560.536 3.365.913 3.043.043 Within three months ...... 1.886.402 2.672.865 2.742.658 Between three months and one year 1.032.831 1.551.447 1.293.962 Between one year and five years 33.503 176.638 26.878 5.513.272 7.766.863 7.106.541

Overview of Customer Deposits by Geography

The geographical analysis of the Group’s total customer deposits and other customer accounts is as follows:

30 September 31 December 31 December 31 December 2014 2013 2012 2011 (reviewed) (audited) (audited) (audited) €'000 €'000 €'000 €'000 Cyprus ...... 6.128.112 5.511.864 7.148.964 6.528.594 Greece ...... - - 614.592 575.172 Russia ...... - 1.408 3.307 2.775 6.128.112 5.513.272 7.766.863 7.106.541

2.5 INVESTMENTS

Investments in debt securities

Group 30 September 2014 2013 2012 2011 €'000 €’000 €'000 €'000

Securities held for trading ...... 1.934 1.962 1.912 4.399 Securities held to maturity ...... 73.874 121.561 189.109 626.971

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Group 30 September 2014 2013 2012 2011 €'000 €’000 €'000 €'000 Securities classified as loans and receivables ...... 323.154 328.165 331.825 445.954 Securities available for sale ...... 391.398 195.054 419.221 153.389 790.360 646.742 942.067 1.230.713 Provisions for impairment ...... (1.055) (1.277) (2.335) (85.053) 789.305 645.465 939.732 1.146.660 Listed securities ...... 779.355 636.605 930.491 1.139.117 Non-listed securities ...... 9.950 8.860 9.241 7.543 789.305 645.465 939.732 1.146.660 Within three months ...... 33.587 92.433 187.632 367.507 Between three months and 231.894 74.557 134.075 208.005 one year ...... Between one and five years ...... 380.471 300.868 605.699 385.375 Over five years ...... 143.353 177.607 12.326 185.773 789.305 645.465 939.732 1.146.660

On 30 September 2014, on 31 December 2013, on 31 December 2012 and on 31 December 2011, within the normal practices of treasury management, there were no investments in bonds pledged as collateral to third parties.

On 27 June 2013, the Board of Directors of the Bank unanimously decided to accept the exchange of the existing Cyprus Government Bonds amounting to €155,4 million classified in the category “Between 1 and 5 years” with new bonds with expiry “5 to 10 years”, with the exchange date being set as 1 July 2013, in the context of the restructuring of the Cyprus government debt. On 30 September 2014, the Bank held bonds of the Republic of Cyprus with a book value €326 million.

On 30 September 2014 the Group did not have in its possession bonds of issuers of high credit risk countries as Spain, Hungary, Portugal, Ukraine, Slovenia or Egypt.

Greek Government Bonds

At 31 December 2011, the Bank had in its possession Greek Government Bonds with nominal value €110 million, classified as “Held to maturity”.

During 2011, the Bank proceeded to the impairment of €23,1 million and €31,9 million which was included in the condensed consolidated income statement for the period ended 30 June 2011 and 30 September 2011 respectively, according to the plan issued on 21 July 2011 and in accordance with the decisions of the leaders of the Eurozone at the summit on 27 October 2011. The said plan proposed to the holders of eligible Greek Government Bonds to exchange their existing bonds with new ones. With the finalization of the terms of the plan on 21 February 2012, the Bank proceeded to additional impairment of a total amount of €77 million at 31 December 2011, which represented 70% of the nominal value of bonds.

These bonds were eligible for the voluntary participation of private plan (the “PSI +”) to restructure the Greek debt, issued on 21 July 2011 and finalized on 21 February 2012. As a result, and under the terms of the plan, on 12 March 2012 creditors, including the Bank, received new Greek Government Bonds for 31,5% of the original value of the eligible Greek Government Bonds held, short-term securities issued by the European Financial Stability Fund (the “EFSF”) for 15% of the original value of Greek Government Bonds held as well as securities of the GDP of the Greek Republic. Any accrued interest on the original Greek Government Bonds were paid with six-month securities issued by the EFSF.

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PROSPECTUS

During 2012, based on the difference between the carrying value of the eligible securities and the present value of the new securities arising during the exchange of Greek Government Bonds on 12 March 2012, the Bank proceeded with additional impairment of €7,3 million. The total amount for impairment of the eligible securities before the exchange accounted for 77,3% of their nominal value.

In October 2012 all Greek Government Bonds held by the Bank and which had resulted from the participation in the PSI + were sold.

Investments in equity securities

Group 30 September 2014 2013 2012 2011 €'000 €’000 €'000 €'000 Securities held for trading Listed securities ...... 464 527 557 1.118 Securities available for sale Listed securities ...... 8.898 8.271 17.154 17.911 Non-listed securities ...... 11.910 11.612 11.526 12.144 Provision for impairments ...... (12.145) (12.067) (18.925) (17.792) 8.663 7.816 9.755 12.263 9.127 8.343 10.312 13.381

Non-listed securities available for sale as at 30 September 2014 include the Group’s and the Bank’s investment in JCC Payment Systems Ltd of €4.314.000 (2013: €4.314.000, 2012: €3.964.000).

In determining the fair value of the Bank’s investment in the unlisted company JCC Payment Systems Ltd, a valuation method based on the company’s equity was used.

The investments as presented on the tables above do not differ significantly from 30 September 2014 until the date of the current Prospectus.

2.6 FIXED ASSETS

The fixed assets of the Group, consists of land and buildings and plant and equipment. The Group does not own any property under finance leasing. The book value of the Group’s property is shown below:

30 September 2014 €'000 2013 2012 2011 €’000 €’000 €’000

Land and buildings 85.999 112.259 109.485 89.706 Plant and equipment 10.330 11.403 36.993 22.803 Total 96.329 123.662 146.478 112.509

Land and buildings were revalued at 30 September 2014, by independent qualified valuers on a market value basis for their existing use.

The cost and net book value on a historic cost basis of the freehold land and buildings stated at valuation at 30 September 2014 amounted to €70.880 thousand (2013: €70.879 thousand, 2012: €64.870 thousand) and €64.430 thousand (2013: €65.152 thousand, 2012: €59.963 thousand) respectively for the Group and to

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€66.923 thousand (2013: €66.923 thousand, 2012: €60.926 thousand) and €60.515 thousand (2013: €61.238 thousand, 2012: €56.061 thousand) respectively for the Bank.

The cost of branches under renovation and the cost of buildings under construction, included under plant and equipment at 30 September 2014 amounted to €1.856 thousand (2013: €1.616 thousand, 2012: €24.133 thousand) for the Group and the Bank.

At 30 September 2014 the value of the revalued freehold land not subject to depreciation amounted to €29.926 thousand (2013: €37.150 thousand, 2012: €45.539 thousand) for the Group and €28.524 thousand (2013: €35.749 thousand, 2012: €44.137 thousand) for the Bank.

Purchase of fixed assets

On 23 March 2012 the Bank acquired a property at the area of Amathous, Ayios tychonas in Limassol from the Holy Archbishopric of Cyprus. In September 2013 the book value of the land at the area of Amathus, Ayios Tychonas in Limassol which the Board of Directors of the Bank has decided to sell was transferred to financial assets held for sale.

On 8 August 2012 the Bank announced the signing of an agreement for the acquisition of a property (building) at Amfipoleos Street in Strovolos at the price of €21.000.000 from Clin Company Ltd. The transaction was made at an arm’s length basis. This building is used for the housing needs of the Hellenic Bank Group Services.

There are no material encumbrances on the fixed assets of the Group.

There are no other significant changes in the Group's property from 30 September 2014 until the date of this Prospectus.

Assets held for sale

On 30 September 2014 group debtors and other receivables include assets held for sale amounting to €22.121 thousand (2013: €23.834 thousand, 2012: €12.457 thousand) for the Group and €20.602 thousand (2013: €22.858 thousand, 2012: €11.432 thousand) for the Bank. Assets held for sale consist of assets from customers’ debt settlement amounting to €8.922 thousand (2013: €11.021 thousand, 2012: €11.405 thousand) for the Group and €7.403 thousand (2013: €10.045 thousand, 2012: €10.380 thousand) for the Bank, and properties which are no longer used by the Group and the Bank for their operations and which they intend to sell, amounting to €13.199 thousand (2013: €12.813 thousand, 2012: €1.052 thousand).

Assets/liabilities belonging to subsidiary company held for sale

Subsidiary company Borenham Holdings Limited holds 100% of the share capital of the Russian company Limited Liability Company “Format Invest”, owner of the premises of the Group’s former Russian Subsidiary. In continuation to the sale of the Russian Subsidiary, the Bank has the intention to dispose the subsidiary company Borenham Holdings Limited.

In accordance with the provisions of IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations" all assets and liabilities of the subsidiary have been reclassified and are presented in the consolidated statement of financial position in the category Assets/Liabilities belonging to subsidiary held for sale.

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On 30 September 2014 the assets and liabilities of the subsidiary company Borenham Holdings Limited included in the consolidated statement of financial position are as follows:

€'000

Assets

Placements with other banks 103

Property, plant and equipment 7.121

Tax receivable 32

Other assets 124

Total assets 7.380

Liabilities

Deferred tax liability 1.411

Other liabilities 82

Total liabilities 1.493

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2.7 SEGMENTAL ANALYSIS

Greece Russia (discontinued (discontinued Inter-segment operations during operations during transactions/balance Cyprus 2013) 2014) s Total Banking & financial services Insurance services Nine-month period Nine-month period Nine-month period Nine-month period Nine-month period Nine-month period ended 30 September ended 30 ended 30 ended 30 ended 30 September ended 30 September September September September 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 Turnover ...... 280.852 299.057 14.770 16.405 16 10.001 1.618 2.291 (4.468) (5.284) 292.788 322.470

Net interest income ...... 156.478 133.478 579 1.165 1 326 272 728 - 2.781 157.330 138.478 Net income from fees, commissions, net gains on disposal and revaluation of foreign currencies and financial instruments and other income ...... 59.573 55.701 10.854 11.088 15 1.131 264 69 (1.520) (695) 69.186 67.294 Total net income ...... 216.051 189.179 11.433 12.253 16 1.457 536 797 (1.520) 2.086 226.516 205.772 Total expenses ...... (99.055) (107.254) (5.279) (6.865) (73) (3.400) (3.161) (2.696) 62 138 (107.506) (120.077) Profit /(loss) from ordinary operations before provisions ...... 116.996 81.925 6.154 5.388 (57) (1.943) (2.625) (1.899) (1.458) 2.224 119.010 85.695 Provisions for impairment of loans and advances ... (258.156) (153.613) (900) (725) - (5.809) - - - - (259.056) (160.147)

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Greece Russia (discontinued (discontinued Inter-segment operations during operations during transactions/balance Cyprus 2013) 2014) s Total Banking & financial services Insurance services Nine-month period Nine-month period Nine-month period Nine-month period Nine-month period Nine-month period ended 30 September ended 30 ended 30 ended 30 ended 30 September ended 30 September September September September 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 (Loss)/profit before taxation ...... (141.160) (71.688) 5.254 4.663 (57) (7.752) (2.625) (1.899) (1.458) 2.224 (140.046) (74.452) Total assets ...... 7.189.278 6.670.684 90.144 86.976 5.734 8.360 7.380 43.677 (420.082) (425.750) 6.872.454 6.383.947

Inter-segment transactions/balanc Cyprus Greece Russia es Total Banking and Insurance

financial services services 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 Turnover ...... 397.985 453.685 21.209 22.687 10.266 48.463 2.879 5.356 (6.012) (16.737) 426.327 513.454

Net interest income ..... 186.363 198.095 1.620 2.237 3.163 2.465 922 641 -- -- 192.068 203.438 Net fees and commission income/(expense) ...... 58.547 67.574 (2.126) (2.687) 693 3.943 86 1.012 (12) (5) 57.188 69.837 Net gains/(losses) on disposal and revaluation of foreign currencies and 17.182 11.249 (278) (336) (137) 297 19 1.710 -- 8.420 16.786 21.340

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Inter-segment transactions/balanc Cyprus Greece Russia es Total Banking and Insurance

financial services services 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 financial instruments..... Other income ...... 1.857 5.751 16.972 18.067 754 1.704 (98) (87) (164) (1.649) 19.321 23.786 Staff costs ...... (83.473) (86.045) (5.947) (6.179) (2.084) (14.886) (1.598) (1.836) -- -- (93.102) (108.946) Depreciation of property, plant & equipment and amortization of intangibles ...... (5.229) (4.819) (154) (160) (113) (665) (534) (637) -- -- (6.030) (6.281) Administrative and other expenses ...... (46.860) (38.985) (2.540) (2.726) (2.290) (11.102) (2.021) (2.883) 139 1.656 (53.572) (54.040) Profit/(loss) from ordinary operations before provisions ...... 128.387 152.820 7.547 8.216 (14) (18.244) (3.224) (2.080) (37) 8.422 132.659 149.134 Provisions for impairment of loans and advances ... (309.711) (102.435) (1.099) (1.139) 6.260 (58.782) ------(304.550) (162.356) (Loss)/profit before taxation ...... (181.324) 50.385 6.448 7.077 6.246 (77.026) (3.224) (2.080) (37) 8.422 (171.891) (13.222) Total assets ...... 6.670.684 8.381.475 86.976 91.141 8.360 661.865 43.677 54.553 (425.750) (433.333) 6.383.947 8.755.701 Total liabilities ...... 5.952.127 7.646.045 52.728 62.665 388.410 973.107 18.393 22.387 (426.532) (433.387) 5.985.126 8.270.817 Capital expenditure on property, plant & equipment and intangibles ...... 6.047 43.797 52 62 -- 178 73 248 -- -- 6.172 44.285

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Inter-segment transactions/ Cyprus Greece Russia balances Total Banking & Finance Insurance services services 2011 2011 2011 2011 2011 2011 €’000 €’000 €’000 €’000 €’000 €’000 Turnover ...... 343.500 21.717 55.889 1.262 (24.501) 397.867 Net interest income ...... 198.641 1.982 14.112 (191) -- 214.544 Net fees and commission income/(expense) ...... 62.516 (2.777) 4.571 129 (9) 64.430 Net gains/(losses) on disposal and revaluation of foreign currencies and financial instruments (76.059) (5) 697 147 -- (75.220) Other income ...... 6.398 16.876 1.630 (113) (4.361) 20.430 Staff costs ...... (98.227) (6.988) (15.335) (1.810) -- (122.360) Depreciation of property, plant & equipment and amortization of intangibles ...... (4.975) (155) (951) (240) -- (6.321) Administrative and other expenses ...... (29.862) (2.127) (8.310) (1.189) 1.548 (39.940) Profit/(loss) from ordinary operations before provisions ...... 58.432 6.806 (3.586) (3.267) (2.822) 55.563 Provisions for impairment of loans and advances ...... (45.812) (206) (96.466) -- -- (142.484) (Loss)/profit before taxation ...... 12.620 6.600 (100.052) (3.267) (2.822) (86.921) Total assets ...... 7.877.848 85.748 779.693 54.037 (518.350) 8.278.976 Total liabilities ...... 7.273.800 59.211 1.009.965 21.042 (519.240) 7.844.778 Capital expenditure on property, plant & equipment and intangibles ...... 5.859 183 368 227 -- 6.637

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Segmental reporting for Greece includes the results of the BNG until 25th March 2013, the date of termination of the banking activities, as well as the results of the subsidiary company of the Group in Greece, Hellenic Insurance Agency Ltd.

Segmental reporting for Russia includes the results of the Bank’s Russian Subsidiary, which was disposed of on 5th June 2014, and subsidiary company Borenham Holdings Limited, which is held for sale.

2.8 OFF BALANCE SHEET ARRANGEMENTS

Contingent Liabilities and Commitments

Group

30 September 31 December 31 December 31 December 2014 2013 2012 2011 €'000 €'000 €'000 €'000 Contingent Liabilities Acceptances and endorsements ...... 807 771 531 914 Guarantees ...... 211.031 229.974 302.278 414.341 211.838 230.745 302.809 415.255 Commitments

Undrawn formal standby facilities 484.006 502.870 623.430 755.756 Undisbursed loan amounts ...... 41.176 63.622 111.840 - Other commitments ...... 8.787 8.857 17.931 21.081 533.969 575.349 753.201 776.837 745.807 806.094 1.056.010 1.192.092

Capital Commitments

At, 30 September 2014, the Group’s commitments for capital expenditure amounted to €8.226.000 compared to €5.103.000 at 31 December 2013, €6.586.000 at 31 December 2012 and €6.738.000 at 31 December 2011.

3. CAPITAL ADEQUACY

References made in this Prospectus in respect to capital adequacy ratios of the Bank or the Group that relate to prior periods have been calculated according to the applicable guidance of the period/year under reference.

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3.1 GROUP REGULATORY CAPITAL IN ACCORDANCE WITH THE CENTRAL BANK OF CYPRUS DIRECTIVES REGARDING THE PRINCIPLES OF BASEL II

30 September 31 December 31 December 31 December 2014(1) 2013 2012 2011 €'000 €'000 €'000 €'000 Own funds Common Equity Tier 1 capital .. 314.850 340.599 435.267 384.690 Less: Participation in insurance companies and securitisation exposures ...... -- (17.894) -- -- 314.850 322.705 435.267 384.690

Original own funds ...... 453.152 577.157 578.837 543.261 Supplementary own funds ...... 41.226 68.989 180.277 196.081 Less: Participation in insurance companies and securitisation exposures ...... -- (17.894) -- -- 41.226 51.095 180.277 196.081 Total original and supplementary own funds ...... 494.378 628.252 759.114 739.342 Less: Participation in insurance companies and other regulatory adjustments ...... -- -- (34.131) (43.133) Total own funds ...... 494.378 628.252 724.983 696.209

Risk weighted assets ...... Credit risk ...... 3.677.765 3.849.575 4.728.563 4.830.650 Market risk...... 13.275 11.250 29.725 40.113 Operational risk ...... 538.313 538.313 556.200 529.900 4.229.353 4.399.138 5.314.488 5.400.663 Common Equity Tier 1 ratio .. 7,4% 7,3% 8,2% 7,1% Tier 1 ratio...... 10,7% 13,1% 10,9% 10,1% Tier 2 ratio...... 1,0% 1,2% 3,4% 3,6% Capital adequacy ratio ...... 11,7% 14,3% 13,6% 12,9%

(1) CRD IV (Basel III) is effective from 1 January 2014

The following table presents the Group’s Capital Adequacy Ratio as at 30 September 2014, and as adjusted cumulatively for (i) the conversion of EUR23,8 million of CCS 1 in 26 October 2014; (ii) CRR fully phased-in; and (iii) the gross proceeds of the Issue, but not for any other changes subsequent to 30 September 2014.

As at 30 September 2014

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CRR fully Adjustments As adjusted Adjustments phased-in as for CCS for CCS 1 for CRR Adjustments adjusted for conversion in conversion in fully CRR Fully for the the Issue(1), Actual October 2014 October 14 phased-in(1) phased-in(1) Issue(2) (2) €'000 Own funds Common Equity Tier 1 Capital ...... 314.850 23.498 338.348 -36.735 301.613 221.434 523.047 Additional Tier 1 capital ..... 138.302 -23.498 114.804 14.844 129.648 129.648 Tier 1 capital ...... 453.152 0 453.152 -21.891 431.261 652.695 Tier 2 capital ...... 41.226 41.226 -18.746 22.480 22.480

Total own funds ...... 494.378 494.378 -40.637 453.741 675.175

Risk weighted assets Credit risk and CVA risks .. 3.677.765 3.677.765 3,677.765 3.677.765 Market risk ...... 13.275 13.275 13.275 13.275 Operational risk ...... 538.313 538.313 538.313 538.313

Total risk weighted assets 4.229.353 4.229.353 4.229.353 4.229.353

Common Equity Tier 1 Ratio ...... 7,4% 0,6% 8,0% -0,9% 7,1% 5,2% 12,4% Tier 1 ratio ...... 10,7% 10,7% -0,5% 10,2% 15,4% Tier 2 ratio ...... 1,0% 1,0% -0,4% 0,5% 0,5%

Total capital ratio ...... 11,7% 11,7% -1,0% 10,7% 16,0%

(1) Assuming full application of CRR without any transitional provisions. (2) Assumes gross proceeds of the Issue of approximately €220 million and that all New Shares in the Issue are issued at the Subscription Price.

The Capital Adequacy Ratio of the Group and the Bank as at 30 September 2014 was formed at 11,7%, the Tier 1 Ratio at 10,7% and 10,8% respectively and the Common Equity Tier 1 Ratio at 7,4% for the Group and 7,5% for the Bank, according to the CRR/CRD IV dated 26 June 2013, which came into effect on 1 January 2014 and according to relevant circulars of the Central Bank, under Pillar 1.

In applying the provisions of the prospectus dated 30 September 2013 on CCS 1 and CCS 2, and as a result of the formation of the Common Equity Tier 1 Ratio of the Group and the Bank being below the minimum required supervisory ratio of 8%, as set by Central Bank circular dated 29 May 2014, on 26 October 2014 CCS 1 of total value of €23.8 million has mandatorily and irrevocably converted to shares, so that the lower of the two, Common Equity Tier 1 Ratio of the Bank and the Group amounts to 8% as at 30 September 2014. As a result, the Common Equity Tier 1 Ratio of the Group is formed at 8,0% (Bank: 8,0%) as at 30 September 2014. The mandatory conversion applied pro rata to the outstanding balance of CCS 1 for each investor on the conversion date (transactions performed up to and including 24 October 2014, record date 29 October 2014).

In addition, on 29 August 2014, and as a result of the Common Equity Tier 1 ratio of the Group and the Bank being below 8% on the 30 June 2014, as set by the Central Bank circular on 29 May 2014, CCS 1 of a total value of €15,1 million were mandatorily and irrevocably converted in to shares. The mandatory conversion applied pro rata to the outstanding balance of CCS 1 for each investor on the conversion date (transactions performed up to 29 August 2014 included, record date 03 September 2014).

The Capital Adequacy Ratio of the Group, in accordance with the Central Bank Directive for the Calculation of Capital Requirements and Large Exposures (Basel II), stood at 14,3% as at 31 December 2013 (December 2012: 13,6%) (Bank: 13,5%), the Tier 1 Ratio at 13,1% (December 2012: 10,9%) (Bank: 12,9%) and the Core Tier 1 Ratio at 7,3% (December 2012: 8,2%) (Bank: 7,0%).

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In applying the provisions of the prospectus on CCS 1 and CCS 2 dated 30 September 2013 and, as a result of the formation of the Common Equity Tier 1 Ratio of the Group and the Bank to below 9%, on 28 February 2014 CCS 1 of a total value of €85,9 million was subject to mandatory and irrevocable conversion, without any obligation to obtain the consent of the holders of the CCS 1, to shares so that the lower of the two, Common Equity Tier 1 Ratio of the Group and the Bank, was increased to 9%. As a result, the Core Tier 1 Ratio was adjusted to 9,3% (Bank: 9,0%). The mandatory conversion applied pro rata to the outstanding balance of CCS 1 for each investor on the conversion date (transactions performed up to 28 February 2014 included, record date 06 March 2014).

The Group’s Capital Adequacy Ratio in accordance with the Central Bank Directive for the Calculation of Capital Requirements and Large Exposures (Basel II) as at 31 December 2012 was 13,6% (December 2011: 12,9%), the Tier 1 Ratio was 10,9% (December 2011: 10,1%) and the Core Tier 1 Ratio was 8,2% (December 2011: 7,1%) as at 31 December 2012. Correspondingly, the minimum required supervisory ratios for the Bank, taking into account the increment, which is calculated based on the percentage of the bank’s assets over the GDP of Cyprus which came into force on 31 December 2012, were 11,7% (Capital Adequacy Ratio), 9,7% (Tier 1 Ratio) and 8,2% (Core Tier 1 Ratio).

As at 31 December 2011, under Pillar 1 of Basel II the Group’s Capital Adequacy Ratio in accordance with the Central Bank Directive for the Calculation of Capital Requirements and Large Exposures (Basel II) was 12,9% (December 2010: 15%) and Tier 1 Ratio was 10,1% (December 2010: 11,9%), exceeding the required minimum limits of 11,5% and 9,5% respectively, set by the Central Bank. The Group’s Core Tier 1 Ratio was 7,1% (December 2010: 9,0%) and this was marginally lower than the minimum 8% required ratio set by the Central Bank. Within the framework of its continuous actions to enhance and strengthen the Group position and taking into account the effective management of the prevailing macroeconomic environment, the Board of Directors of the Group, at its meeting held on 30 March 2012, decided to further strengthen the Group’s capital position through a Capital Strengthening Program. Upon successful completion of the Program, the Group strengthened further its capital adequacy ratio and the Group’s Capital Adequacy Ratio increased to 14,1%, the Tier 1 Ratio at 11,3% and Core Tier 1 Ratio at 8,4%, which had as a result the Group exceeding all the required minimum supervisory capital adequacy ratios.

3.2 RESTRUCTURING AND STRENGTHENING OF THE CAPITAL BASE PLAN 2013

Following the completion of the due diligence test of loan portfolios of financial institutions operating in Cyprus, including the Bank, performed by the company Pacific Investment Management Company LLC (PIMCO), following the instructions of the Central Bank, the Central Bank has defined the capital needs of the financial institutions involved in the test and which, according to the Central Bank, should have been raised either from private sources or state aid with funds from Troika’s Financial Sector Reform Program that have already been committed.

According to the Central Bank and on the basis of the extreme scenario of PIMCO’s due diligence and after the sale of the BNG, the capital need that the Bank was required to meet by 31 October 2013 was €294 million.

The Board of Directors of the Bank, at its meetings on 11 July 2013 and 18 July 2013, decided to enhance the capital base of the bank via a Restructuring and Capital Base Enhancement Plan with the aim of raising private funds to meet the amounts and structure set by the Capital Enhancement Plan to satisfy its capital needs.

The actions planned based on the Restructuring and Capital Enhancement Plan included increasing the authorized share capital of the Bank, reducing the nominal value of the issued share capital, the transfer of

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PROSPECTUS the difference that emerged from the reduction to a special reserve account from the reduction of capital pursuant to the provisions of Article 64(1)(e) of the Companies Law, Cap. 113, issue of new Ordinary Shares to the existing shareholders, to the holders of NCPCS and to new investors, issue of CCS 1 to be offered for optional exchange to the holders of the NCPCS and issue of CCS 2 to be offered for optional exchange to the holders of Capital Securities, to the bondholders of the Bank and to new investors.

For this purpose, at an Extraordinary General Meeting of the Shareholders of the Bank held on Wednesday, 14 August 2013 which was attended, either by proxy or in person, by shareholders holding 51,77% of the issued share capital of the Bank, a series of resolutions was approved unanimously. These have been posted on the official website of the Bank (www.hellenicbank.com).

On 1 November 2013 the Bank’s Board of Directors completed the evaluation of the applications received within the framework of the Restructuring and Capital Enhancement Plan, pursuant to the prospectus dated 30 September 2013 and the implementation of the provisions of Article 5B of the Restructuring of Financial Organizations Law (N.200(I)/2011, as amended), securing capital of €358 million.

The capital raised by the Bank, despite the unfavourable conditions of the market and the prevailing uncertainty, exceeded by €64 million that imposed by the extreme scenario of PIMCO, a capital deficit of €294 million, and formed a Core Tier 1 Ratio of more than 9%, giving at the same time a new, dynamic boost for the Group, securing its autonomous course.

Specifically, the Board of Directors, pursuant to the prospectus dated 30 September 2013, decided to issue the following securities:

 Issue of 66.578.740 new shares of nominal value €0,01 each at a price of €0,05 per share to the existing shareholders and the holders of the NCPCS, who had submitted an application.

 Issue of 2.002.485.731 new shares of nominal value €0,01 each at a price of €0,05 per share to other investors.

 Issue of CCS 1 for a total value of €126.382.231 to exchange all NCPCS (ISIN CY0141470118) issued by the Bank pursuant to the issue terms included in the Prospectus dated 17 September 2010, based on the provisions of Article 5B.

 Issue of CCS 2 for a total value of €90.000.000 to exchange all 2019 Bonds (ISIN CY0140940111) issued on 11 March 2009, the terms of issue of which are included in the prospectus dated 18 May 2009 based on the provisions of Article 5B.

 Issue of CCS 2 of total value of €17.187.512 to exchange all Capital Securities (ISIN CY0048940114) issued on 18 April 2003, the terms of issue of which are included in the prospectus dated 7 November 2003 based on the provisions of Article 5B.

 Issue of CCS 2 of total value of €20.881.785 to exchange 2016 Bonds (ISIN CY0140040110) issued pursuant to the terms of issue of the prospectus dated 11 May 2006, based on the CCS 2 Voluntary Exchange Proposal.

 Issue of CCS 2 for a total value of €750 to other investors.

On 2 November 2013, all NCPCS were converted into CCS 1, the 2019 Bonds, the Capital Securities and the 2016 Bonds whose holders participated in the voluntary conversion of CCS 2 were converted into CCS

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2 and after publication in two national newspapers they were automatically cancelled and the Bank ceased to have any obligations in respect of these.

All titles that have arisen from the Capital Enhancement Plan are listed and traded on the CSE.

3.3 CAPITAL RAISING PLAN OF 2012

During 2012, under the Capital Enhancement Plan of the Group, 295.879.288 new shares were issued through the exercise of rights and fulfilment of subscription applications and through the disposal of the rights that were not exercised.

On 2 November 2012, with the completion of the Group’s Capital Enhancement Plan, the Group raised a total of €51 million of additional funds, enhancing the total original own funds of the Group.

On 31 December 2012, holders of 15.000.782 Non-Cumulative Perpetual Capital Securities of nominal value €1,00 exercised the conversion right of the Non-Cumulative Perpetual Capital Securities into Ordinary Shares of the Bank and as a result 15.790.297 New Shares were issued, with the corresponding enhancement of the Bank’s original own funds.

4. LIQUIDITY AND FUNDING

The total of the Group’s cash and placements with banks amounted to €2,6 billion at 30 September 2014 (December 2013: €1,9 billion).

These amounts, along with zero funding from the ECB, the zero raised liquidity from the ELA and non- dependence on the interbank market, are all indicative of the sufficient liquidity of the Group.

In September 2014 the ratio of gross loans to deposits was 72,0% while the ratio of net loans to deposits was 53,3%. The corresponding ratios at 31 December 2013 were 79,7% and 64,6% respectively.

On 31 December 2013, the ratio of gross loans to deposits was 79,7% while the ratio of net loans to deposits was 64,6%. The ratios for the year ended 31 December 2012, excluding loans and deposits of the BNG, were adjusted to 64,9% and 58,3% respectively. On 31 December 2011 the ratio of gross loans to deposits was 79,2% (December 2010: 79,1%), while the ratio of net loans to deposits was 70,2% (December 2010: 71,3%).

5. CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS

The preparation of financial statements requires management to make use of judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and underlying assumptions are based on historical experience and various other factors that are believed to be reasonable in the circumstances and the results of which form the basis of making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

The accounting policies that are deemed critical to the Group’s results and financial position and which involve significant estimates and judgements are set out below:

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Provision for impairment of loans and advances to customers

The Group reviews its loans and advances to customers to assess whether a provision for impairment should be recorded in the consolidated income statement and reflected in an allowance account against loans and advances.

The Group considers evidence of impairment in its loan portfolio at both a specific and collective level. The portfolio of loans and advances to customers examined at a specific level includes all non performing accounts in accordance with the definition of the 2013 Directive on “Non Performing and Restructured Credit Facilities” as well as the performing accounts which the Group classifies as high risk.

Indicatively, the following events may be considered by the Group as an indication of impairment. However, one fact alone may not constitute an indication of impairment while the absence of a specific event does not preclude the existence of impairment.

1. Credit facilities classified as non-performing

2. Restructured credit facilities included in performing loans and advances

3. Significant and sustained reduction of total income/future cash flows of the borrower

4. Apparent worsening debt servicing capacity of the borrower

5. Significant reduction in the value of collateral

6. Credit facilities which are partly provided

7. Credit facilities with internal credit rating that represents high credit risk

8. Credit facilities which are pending renewal, violating the relevant credit policy of the Bank

9. Macroeconomic indications that may affect the expected future cash flows of borrowers such as increase in unemployment and decline in real estate prices

Impairment loss on loans and advances to customers which are examined at a specific level, is measured as the difference between the carrying amount of the asset and the forced sale value of collateral, which is assumed to approximate the present value of estimated future cash flows discounted at the loan’s original effective interest rate. Therefore the value of collateral is an important factor in the calculation of the impairment loss. Future cash flows related with the sale of collateral are based on assumptions about a number of factors and therefore actual impairment losses may differ. Any decreases in the fair value of collaterals will translate to further increases of the required provisions for impairment of loans and advances.

All loans and advances individually examined and found not to be impaired are then collectively assessed for any impairment by grouping together loans with similar risk characteristics. In assessing collective impairment the Group uses historical trends of the probability of default demonstrated by the relevant groups with similar risk characteristics. In addition, the use of historical information is supplemented with management judgement to assess whether current economic and credit conditions are such that the actual level of incurred losses is likely to be greater or less than that suggested by historical experience. Loans and advances with terms that were renegotiated are classified in a separate group with a higher credit risk.

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PROSPECTUS

The total amount of the Group’s provision for impairment of loans and advances is inherently uncertain because it is highly sensitive to changes in economic and credit conditions across a number of geographical areas. Economic and credit conditions within geographical areas are influenced by many factors with a high degree of interdependency so that there is no one single factor to which the Group’s loan impairment provisions as a whole are particularly sensitive. It is possible that the actual results within the next financial year could be different from the assumptions made, resulting in a material adjustment to the carrying amount of loans and advances.

Impairment of goodwill and investments in subsidiaries

The process of identifying and evaluating impairment of goodwill and investments in subsidiaries is inherently uncertain because it requires significant management judgement in making a series of estimates, the results of which are highly sensitive to the assumptions used. The review of goodwill and investments in subsidiaries impairment represents management’s best estimate of the factors below.

Firstly, significant management judgement is required in estimating the future cash flows of the entities acquired. These values are sensitive to the cash flows projected for the periods for which detailed forecasts are available, and to assumptions regarding the long-term pattern of sustainable cash flows thereafter. Forecasts are compared with actual performance and verifiable economic data in future years. However, the cash flow forecasts necessarily and appropriately reflect management’s view of future business prospects. Additionally, the cost of capital used to discount its future cash flows, can have a significant effect on the entity’s valuation.

Any impairment of goodwill of acquired entities affects the Group's results while any impairment of investments in subsidiaries affects the Bank's results.

Fair value of investments

The best evidence of fair value of investments is a quoted price in an actively traded market. If the market for a financial instrument is not active, a valuation technique is used. The majority of valuation techniques employed by the Group use only observable market data and thus the reliability of the fair value measurement is high. The Group only uses models with unobservable inputs for the valuation of non listed investments. In these cases, the Group takes into account, amongst others, the net positions of the entities in which the investment has been made as well as estimates of the Group’s management to reflect uncertainties in fair values resulting from the lack of data and significant adverse changes in technology, market and the economic or legal environment in which the entity operates.

Impairment of available for sale investments

Available for sale investments in equity securities are impaired when there has been a significant or prolonged decline in their fair value below cost. In such a case, the total loss previously recognised in equity is recognised in the consolidated income statement. The determination of what is significant or prolonged requires judgement by management. Factors taken into account in these estimates include the percentage reduction in the cost or impaired cost, as well as the net positions of the entities.

Available for sale investments in debt securities are impaired when there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the investment and the loss event (or events) has an impact on the estimated future cash flows of the investment. The identification of impairment requires judgment by management. An individual assessment for impairment

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PROSPECTUS is performed on bonds whose fair value at the balance sheet date has significantly decreased as well as the issuer has been downgraded.

Fair value of properties and impairment of investment in properties

Volatility in the global financial system is reflected in the real estate markets with a significant reduction in the volume of property transactions. Under these circumstances, the degree of uncertainty which exists is greater than in a more active market for determining the market values of property.

The properties held by the Group for own use, are measured at fair value less accumulated depreciation and impairment losses. Fair value is determined from valuations undertaken by professionally qualified valuers based on market signals for their existing use and is carried out at regular intervals so that the carrying amount does not differ materially from fair value.

Properties held for sale by the Group, which are not presented at fair value, are measured at cost which includes transaction costs, less any provision for impairment. The calculation of the provision for impairment is determined by estimations of professional valuers based on market signals.

Taxation

The Group is subject to corporation tax in the countries it operates. Estimates are required in determining the provision for corporation taxes at the balance sheet date. The Group recognises corporation tax liabilities for transactions and assessments whose tax treatment is uncertain. Where the final tax is different from the amounts initially recognised in the income statement, such differences will impact the tax expense, the tax liabilities and deferred tax assets or liabilities of the period in which the final tax is agreed with the relevant tax authorities.

Deferred tax assets are recognised by the Group in respect of tax losses to the extent that it is probable that future taxable profits will be available against which the losses can be utilised. Judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits, together with future strategies. These variables have been established on the basis of significant management judgement and are subject to uncertainty. It is possible that the actual future events could be different from the assumptions made, resulting in a material adjustment to the carrying amount of deferred tax assets.

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PART VIII. SELECTED STATISTICAL INFORMATION

Information included in this section, except where otherwise stated, relates to the Group. The statistical data presented below has been derived from data included in the Group’s audited annual financial statements for the years ended 31 December 2013, 31 December 2012 and 31 December 2011 and reviewed quarterly financial statements for the nine months ended 30 September 2014 incorporated by reference into this Prospectus. Such data is compiled in the normal operation of the Group’s financial reporting and management information systems.

1. COMPOSITION OF LOAN PORTFOLIO BY CURRENCY

The following table sets out an analysis by currency of the Group’s loans and advances to customers as at the dates indicated:

As of 30 September As of 31 December 2014 2013 2012 2011

€’000 % €’000 % €’000 % €’000 % Euro ...... 2.982 91% 3.217 90% 4.169 88% 4.232 85% U.S. Dollar ...... 95 3% 126 4% 215 4% 279 6% Other ...... 190 6% 221 6% 361 8% 476 9% Total ...... 3.268 100% 3.564 100% 4.745 100% 4.987 100%

2. EXPOSURE TO CREDIT RISK

The below table shows the Group’s exposure to credit risk for the periods indicated. The comparative figures for the year ended 31 December 2012 include the results of the BNG.

Loans and advances Placements with other banks Debt securities 2013 2012 2011 2013 2012 2011 2013 2012 2011 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 Carrying amount 3.563.949 4.744.910 4.986.827 921.719 1.698.571 1.645.333 645.465 939.732 1.146.660 Individually impaired: Grade 2 (medium risk) ...... ------10.291 50.491 Grade 3 (high risk) ...... 1.591.171 1.219.417 875.187 ------9.881 -- 77.000 Provisions for impairment .. (763.829) (723.210) (554.487) ------(1.277) (2.335) (84.053) Carrying amount ...... 827.342 496.207 320.700 ------8.604 7.956 43.438 Of which term loans that were renegotiated ...... 398.539 150.006 83.951 ------Past due but not impaired: Grade 1 (low risk) ...... 192.503 593.427 436.379 ------Grade 2 (medium risk) ...... 409.130 556.146 449.300 ------Grade 3 (high risk) ...... 41.539 58.189 50.946 ------Carrying amount ...... 643.172 1.207.762 936.625 ------Past due comprises: 0-30 days ...... 127.391 201.437 204.662 ------30-60 days ...... 116.026 157.123 95.649 ------60-90 days ...... 95.307 135.114 88.182 ------90 days+ ...... 304.448 714.088 548.132 ------Carrying amount ...... 643.172 1.207.762 936.625 ------Of which term loans that were renegotiated ...... 247.259 437.396 687.442 ------Neither past due nor impaired:

212 Part VIII

PROSPECTUS

Loans and advances Placements with other banks Debt securities 2013 2012 2011 2013 2012 2011 2013 2012 2011 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 Grade 1 (low risk) ...... 1.490.404 2.400.243 2.950.433 921.719 1.698.571 1.645.333 636.861 931.776 1.103.222 Grade 2 (medium risk) ...... 647.666 701.240 814.287 ------Grade 3 (high risk) ...... 21.753 28.149 55.194 ------Carrying amount ...... 2.159.823 3.129.632 3.819.914 921.719 1.698.571 1.645.333 636.861 931.776 1.103.222 Of which term loans that were renegotiated ...... 717.023 748.666 254.495 ------Balances after individual impairment...... 3.630.337 4.833.601 5.077.239 921.719 1.698.571 1.645.333 645.465 939.732 1.146.660 Collective impairment ...... (66.388) (88.691) (90.412) ------Total carrying amount ...... 3.563.949 4.744.910 4.986.827 921.719 1.698.571 1.645.333 645.465 939.732 1.146.660

3. CREDIT RISK CONCENTRATION

The Group monitors concentration of credit risk by sector and by geographic location. The concentration by geographic location for loans and advances to customers is measured according to the geographical position of the debtor. The concentration by geographic location for investments and deposits with other banks is based on the geographical location of the risk country of the issuer of the security and counterparty respectively.

The table below presents a breakdown of concentration of credit risk by sector as at the dates shown:

Advances to customers Deposits with other banks Investments in bonds Concentration by 2013 2012 2011 2013 2012 2011 2013 2012 2011 sector: €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000

Book value 3.563.949 4.744.910 4.986.827 921.719 1.698.571 1.645.333 645.465 939.732 1.146.660 Businesses ...... 3.078.881 3.928.177 3.978.110 ------Individuals ...... 1.315.285 1.628.634 1.653.616 ------Banks ...... ------921.719 1.698.571 1.645.333 216.166 293.578 602.003 Government ...... ------394.649 584.715 572.021 Other ...... ------35.927 63.774 56.689 4.394.166 5.556.811 5.631.726 921.719 1.698.571 1.645.333 646.742 942.067 1.230.713 Provisions for impairment...... (830.217) (811.901) (644.899) ------(1.277) (2.335) (84.053) 3.563.949 4.744.910 4.986.827 921.719 1.698.571 1.645.333 645.465 939.732 1.146.660

The table below presents a breakdown of concentration of credit risk by geographical area as at the dates shown:

Advances to customers Deposits with other banks Investments in bonds Concentration by 2013 2012 2011 2013 2012 2011 2013 2012 2011 geographical area: €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000

Book value 3.563.949 4.744.910 4.986.827 921.719 1.698.571 1.645.333 645.465 939.732 1.146.660 Eurozone ...... 4.213.241 5.281.779 5.307.643 280.558 511.335 625.152 476.332 543.783 899.937 Other European Countries ...... 170.002 259.480 299.604 558.641 1.011.867 872.154 82.248 157.763 205.722 America ...... 701 1.185 1.112 76.154 79.660 53.094 82.881 234.942 91.872 Oceania ...... -- 1 1 622 844 877 -- -- 19.731 Asia ...... 331 722 655 4.337 93.734 93.834 ------Middle East...... 3.762 3.959 5.087 1.387 1.125 194 5.281 5.579 13.451 Africa ...... 6.129 9.685 17.624 20 6 28 ------4.394.166 5.556.811 5.631.726 921.719 1.698.571 1.645.333 646.742 942.067 1.230.713 Provisions for Impairment ...... (830.217) (811.901) (644.899) ------(1.277) (2.335) (84.053) 3.563.949 4.744.910 4.986.827 921.719 1.698.571 1.645.333 645.465 939.732 1.146.660

213

PROSPECTUS

The Group’s exposure to customer groups who have credit facilities amounting to more than 10% of the Group’s capital base was €0,4 billion at 31 December 2013. Total exposure to the Group’s largest customer groups was 8,8% of the Group’s gross loans and advances to customers at 31 December 2013.

There are restrictions on loan concentrations which are imposed under the Banking Law of Cyprus of 1997 (the “Banking Law”) and by the directive issued under the Banking Law by the Central Bank. According to these restrictions, banks should not lend more than 25% of their capital to any individual borrower and their connected persons. In addition, total lending to individual borrowers and their connected persons whose borrowings exceed 10% of a bank’s capital base should not in aggregate exceed eight times its capital base. The Bank is in compliance with both of these regulations. In addition to the above, the Group’s overseas operations have to comply with large exposure guidelines set by the authorities of the countries in which they are based.

The geographical analysis of the Group's total gross loans and advances to customers is as follows:

30 September 31 December 31 December 31 December 2014 2013 2012 2011 The Group €'000 €'000 €'000 €'000 Cyprus ...... 3.267.651 3.554.502 4.156.997 4.300.353 Russia ...... -- 9.447 11.578 1.796 Greece ...... -- -- 576.335 684.678 3.267.651 3.563.949 4.744.910 4.986.827

The table below presents a breakdown of the Group’s loans and advances to customers by industry as at the dates shown:

30 September 31 December 31 December 31 December 2014 2013 2012 2011 €'000 €'000 €'000 €'000 Trade ...... 734.300 725.391 1.030.169 969.628 Construction and Real Estate ...... 1.198.733 1.131.140 1.316.978 1.311.215 Manufacturing ...... 257.314 255.152 412.525 417.104 Tourism ...... 240.568 241.167 251.445 246.805 Other Sectors ...... 681.659 726.031 917.060 1.033.358 Retail ...... 1.299.417 1.315.285 1.628.634 1.653.616 4.411.991 4.394.166 5.556.811 5.631.726 Provisions for impairment ...... (1.144.340) (830.217) (811.901) (644.899) 3.267.651 3.563.949 4.744.910 4.986.827

4. CREDIT QUALITY OF LOANS AND ADVANCES TO CUSTOMERS

Impaired loans

These represent loans for which the Group determines that it is probable it will be unable to collect all principal and interest due, according to the contractual terms of the loan or relevant agreement. These loans are classified under Grade 3 (high risk).

214

PROSPECTUS

As at 30 September 2014, the impaired loans of the Group amounted to €2.114 million (31 December 2013: €1.591 million (excluding the BNG)).

Non-impaired loans

All individually significant loans assessed and found not to be specifically impaired are presented in risk categories based on the credit risk assessment system of the Group. The risk categories are as follows:

Grade 1 (Low Risk): An immediate ability to repay the credit facility is assumed.

Grade 2 (Medium Risk): The probability of indirect recovery of the credit facility is assumed.

Grade 3 (High Risk): The debtor presents a higher risk compared to Grade 1 and 2 on the existence of direct and indirect recovery of the credit facility.

Past due but not impaired loans

These represent loans where contractual interest or principal repayments are past due but the Group believes that impairment is not appropriate on the basis of the level of security and/or stage of collection of amounts owed to the Group.

Loans with conditions that were renegotiated

Loans with conditions that were renegotiated represent clients’ facilities that have been restructured in accordance with the new directive of the Central Bank which applied as at 1 July 2013. Under the new directive, restructuring of a client’s facilities covers any action that changes the terms and/or conditions of the client’s facilities in order to deal with existing or expected difficulties of the client to service the facilities in accordance with the existing repayment schedule.

The following table presents the Group’s loans and advances to customers according to the above classification at the dates indicated:

Loans and advances 30 September 31 December 31 December 2014 2013 2012 €'000 €'000 €'000 Carrying amount 3.267.651 3.563.949 4.168.575 Individually impaired: Grade 3 (high risk) ...... 2.113.981 1.591.171 722.569 Provisions for impairment ...... (1.080.199) (763.829) (385.899) Carrying amount ...... 1.033.782 827.342 336.670 Of which term loans that were renegotiated ...... 546.430 398.539 126.049 Past due but not impaired: Grade 1 (low risk) ...... 98.183 192.503 539.399 Grade 2 (medium risk) ...... 356.329 409.130 513.667 Grade 3 (high risk) ...... 23.405 41.539 28.115 Carrying amount ...... 477.917 643.172 1.081.181 Past due comprises: 0-30 days ...... 74.978 127.391 168.791

215

PROSPECTUS

Loans and advances 30 September 31 December 31 December 2014 2013 2012 €'000 €'000 €'000 30-60 days ...... 42.709 116.026 132.871 60-90 days ...... 57.197 95.307 119.509 90 days+ ...... 303.033 304.448 660.010 Carrying amount ...... 477.917 643.172 1.081.181 Of which term loans that were renegotiated ...... 152.160 247.259 414.267 Neither past due nor impaired: Grade 1 (low risk) ...... 1.353.100 1.490.404 2.213.806 Grade 2 (medium risk) ...... 453.463 647.666 597.460 Grade 3 (high risk) ...... 13.530 21.753 28.149 Carrying amount ...... 1.820.093 2.159.823 2.839.415 Of which term loans that were renegotiated ...... 509.676 717.023 716.690

Balances after individual impairment ...... 3.331.792 3.630.337 4.257.266 Collective impairment ...... (64.141) (66.388) (88.691) Total carrying amount ...... 3.267.651 3.563.949 4.168.575

The financial effect of collateral is calculated in accordance with the Group’s loan policy, taking into account, among other things, the forfeit value of collateral, and is limited to the fair value of loans covered. The financial effect of collateral held against non-performing loans and advances as at 30 September 2014 amounts to €1,5 billion, as compared to €1,3 billion as at 31 December 2013. The financial effects of collateral for loans classified as individually impaired as at 30 September 2014 amounted to €1,1 billion, compared to €0,9 billion as at 31 December 2013, while the financial effects of collateral for loans and advances past due but not impaired was €0,4 billion as at 30 September 2014, compared with €0,6 billion as at 31 December 2013.

5. PROVISION FOR IMPAIRMENT OF LOANS AND ADVANCES TO CUSTOMERS

The movement of provisions for impairment of loans and advances to customers is as follows:

Provisions for impairment of loans and advances

Provisions Income for suspension impairment account Total The Group €'000 €'000 €'000 As at 1 January 2014 ...... 665.384 164.833 830.217 Net write-offs of loans and advances ...... (4.663) (965) (5.628) Suspended income for the period ...... -- 58.400 58.400 Charge for the period ...... 259.056 -- 259.056 Exchange difference ...... 2.295 -- 2.295

216

PROSPECTUS

Provisions Income for suspension impairment account Total The Group €'000 €'000 €'000 As at 30 September 2014 ...... 922.072 222.268 1.144.340

Provisions Income for suspension impairment account Total €'000 €'000 €'000 The Group As at 1 January 2013 ...... 626.514 185.387 811.901 Net write-offs of loans and advances ...... (6.657) (7.500) (14.157) Sale of BNG ...... (254.787) (63.976) (318.763) Suspended income for the year – Continuing operations ...... -- 47.034 47.034 Suspended income for the year – Discontinued operations .... -- 3.888 3.888 Charge for the year – Continuing operations ...... 310.810 -- 310.810 Charge for the year – Discontinued operations ...... (6.260) -- (6.260) Exchange difference ...... (4.236) -- (4.236) As at 31 December 2013 ...... 665.384 164.833 830.217

Provisions Income for suspension impairment account Total €'000 €'000 €'000 The Group As at 1 January 2012 ...... 487.023 157.876 644.899 Net write-offs of loans and advances ...... (19.289) (18.844) (38.133) Suspended income for the year – Continuing operations ...... -- 21.838 21.838 Suspended income for the year – Discontinued operations ...... -- 24.517 24.517 Charge for the year – Continuing operations ...... 103.970 -- 103.970 Charge for the year – Discontinued operations ...... 58.386 -- 58.386 Exchange difference ...... (3.576) -- (3.576) As at 31 December 2012 ...... 626.514 185.387 811.901

217

PROSPECTUS

Provisions Income for suspension impairment account Total €'000 €'000 €'000 The Group As at 1 January 2011 ...... 379.564 154.671 534.235 Net write-offs of loans and advances ...... (35.974) (28.805) (64.779) Suspended income for the year ...... -- 32.010 32.010 Charge for the year ...... 142.484 -- 142.484 Exchange difference ...... 949 -- 949 As at 31 December 2011 ...... 487.023 157.876 644.899

6. RESCHEDULED LOANS AND ADVANCES TO CUSTOMERS

Net loans with conditions that were renegotiated are analysed below by sector and by geographic location:

The Group and the Bank 2013 2012 2011 €'000 €'000 €'000 Cyprus Greece Total Cyprus Greece Total Cyprus Greece Total

Trade ...... 135.676 -- 135.676 127.345 17.101 144.446 85.563 13.474 99.037 Construction and 564.255 -- 564.255 528.071 2.948 531.019 411.133 6.217 417.350 Real Estate ...... Manufacturing .... 58.625 -- 58.625 53.999 -- 53.999 32.496 -- 32.496 Tourism ...... 92.607 -- 92.607 123.844 1.284 125.128 130.451 1.434 131.885 Other sectors...... 304.840 -- 304.840 229.860 29.255 259.115 154.620 32.207 186.827 Retail ...... 206.818 -- 206.818 193.887 28.474 222.361 122.697 35.596 158.293 1.362.821 -- 1.362.821 1.257.006 79.062 1.336.068 936.960 88.928 1.025.888

The financial effects of collateral held related to loans with terms that were renegotiated for the Group, as at 31 December 2013 amounted to €1.298 million (2012: €1.173 million).

218

PROSPECTUS

7. ANALYSIS OF LOAN PORTFOLIO FROM BANKING SERVICES ACCORDING TO TRANSACTION PERFORMANCE STATUS AS AT 30 SEPTEMBER 2014

Performing credit facilities Non - Non - Total credit restructured Restructured performing facilities credit facilities credit facilities Total credit facilities €'000 €'000 €'000 €'000 €'000 1. Credit facilities to corporate legal entities ...... 1.819.117 399.260 325.294 724.554 1.094.563 Construction ...... 559.941 34.416 94.793 129.209 430.732 Wholesale and retail trade, repair of motor vehicles and motorcycles ...... 324.635 128.741 36.086 164.827 159.808 Accommodation and food service activities ...... 216.361 53.306 31.721 85.027 131.334 Real Estate Activities ...... 215.957 36.510 54.732 91.242 124.715 Manufacturing ...... 134.255 67.669 9.522 77.191 57.064 Other sectors ...... 367.968 78.618 98.440 177.058 190.910 2. Credit facilities to retail legal entities ...... 1.145.769 352.203 87.573 439.776 705.993 Wholesale and retail trade, repair of motor vehicles and motorcycles ...... 374.750 132.468 15.528 147.996 226.754 Construction ...... 287.879 29.749 23.282 53.031 234.848 Real Estate Activities ...... 121.313 25.572 15.821 41.393 79.920 Manufacturing ...... 119.325 47.912 11.491 59.403 59.922 Accommodation and food service activities ...... 63.267 27.267 3.857 31.124 32.143 Other sectors ...... 179.235 89.235 17.594 106.829 72.406 3. Credit facilities to private individuals ...... 1.441.846 653.186 116.191 769.377 672.469 Credit facilities for the purchase/construction of immovable property: ...... 716.207 397.915 43.766 441.681 274.526 (a) Owner occupied...... 633.502 357.697 38.491 396.188 237.314 (b) For other purposes ...... 82.705 40.218 5.275 45.493 37.212 Consumer loans ...... 447.516 151.664 37.324 188.988 258.528 Credit cards ...... 40.097 27.766 -- 27.766 12.331 Current accounts ...... 93.957 37.536 -- 37.536 56.421

219

PROSPECTUS

Performing credit facilities Non - Non - Total credit restructured Restructured performing facilities credit facilities credit facilities Total credit facilities €'000 €'000 €'000 €'000 €'000 Credit Facilities to sole traders ...... 144.069 38.305 35.101 73.406 70.663 4. Total facilities (1+2+3) ...... 4.406.732 1.404.649 529.058 1.933.707 2.473.025 Provisions ...... 1.139.085 37.606 17.468 55.074 1.084.011

8. ANALYSIS OF LOAN PORTFOLIO FROM BANKING SERVICES ACCORDING TO TRANSACTION PERFORMANCE STATUS AS AT 31 DECEMBER 2013

Performing credit facilities Non - Non - Total credit Non - Total credit restructured restructured facilities performing facilities credit facilities credit facilities credit facilities €'000 €'000 €'000 €'000 €'000 1. Credit facilities to corporate legal entities ...... 1.786.625 522.379 382.091 904.470 882.155 Construction ...... 537.774 48.062 132.510 180.572 357.202 Wholesale and retail trade, repair of motor vehicles and motorcycles ...... 311.664 163.285 43.730 207.015 104.649 Accommodation and food service activities ...... 217.128 60.784 32.878 93.662 123.466 Real Estate Activities ...... 213.605 62.463 43.814 106.277 107.328 Manufacturing ...... 137.086 82.066 17.901 99.967 37.119 Other sectors ...... 369.368 105.719 111.258 216.977 152.391 2. Credit facilities to retail legal entities ...... 1.147.058 391.345 205.712 597.057 550.001 Wholesale and retail trade, repair of motor vehicles and motorcycles ...... 381.135 155.522 39.428 194.950 186.185 Construction ...... 279.430 38.109 57.281 95.390 184.040 Real Estate Activities ...... 116.485 25.125 38.478 63.603 52.882 Manufacturing ...... 114.377 48.375 27.388 75.763 38.614 Accommodation and food service activities ...... 64.133 22.808 13.394 36.202 27.931 Other sectors ...... 191.498 101.406 29.743 131.149 60.349

220

PROSPECTUS

Performing credit facilities Non - Non - Total credit Non - Total credit restructured restructured facilities performing facilities credit facilities credit facilities credit facilities €'000 €'000 €'000 €'000 €'000 3. Credit facilities to private individuals ...... 1.456.103 688.488 192.280 880.768 575.335 Credit facilities for the purchase/construction of immovable property: ...... 729.297 413.766 81.445 495.211 234.086 (a) Owner occupied...... 644.823 370.025 74.392 444.417 200.406 (b) For other purposes ...... 84.474 43.741 7.053 50.794 33.680 Consumer loans ...... 444.473 149.945 68.263 218.208 226.265 Credit cards ...... 39.308 28.520 -- 28.520 10.788 Current accounts ...... 91.126 42.059 -- 42.059 49.067 Credit Facilities to sole traders ...... 151.899 54.198 42.572 96.770 55.129 4. Total facilities (1+2+3) ...... 4.389.786 1.602.212 780.083 2.382.295 2.007.491 Provisions ...... 825.853 34.100 21.308 55.408 770.445

The table below presents credit facilities at 30 June 2014 by year of origination:

Credit facilities to private individuals for the Credit facilities to private individuals – Total Loans Credit facilities to legal entities purchase/construction of immovable property other loans Non- Non- Non- Non- Total performing Total performing performing Total performing Loan origination credit credit credit credit Total credit credit credit credit date*: facilities facilities Provisions facilities facilities Provisions facilities facilities Provisions facilities facilities Provisions €000 €000 €000 €000 €000 €000 €000 €000 €000 €000 €000 €000 Within 1 year...... 212.802 73.083 31.308 138.926 58.933 23.602 13.888 464 362 59.988 13.686 7.344 1 - 2 years ...... 211.176 73.953 36.464 130.864 57.726 25.975 21.337 1.201 570 58.975 15.026 9.919 2 - 3 years ...... 338.580 135.020 48.149 214.514 96.682 31.785 46.844 6.366 2.537 77.222 31.972 13.827 3 - 5 years ...... 940.414 471.710 195.477 580.674 343.882 140.304 180.794 44.352 17.134 178.946 83.476 38.039 5 - 7 years ...... 1.182.784 713.067 267.118 832.874 525.476 163.322 251.865 126.294 65.257 98.045 61.297 38.539 7 - 10 years ...... 724.786 401.507 164.227 480.288 281.002 107.051 165.240 66.790 24.912 79.258 53.715 32.264 Over 10 years ...... 787.968 463.507 309.186 577.112 326.243 206.512 39.396 17.694 6.448 171.460 119.570 96.226

* Loan origination date is defined as the contractual loan origination date for each account, either new or restructured.

The table below presents credit facilities at 31 December 2013 by year of origination:

221

PROSPECTUS

Credit facilities to private individuals for the Credit facilities to private individuals – Total Loans Credit facilities to legal entities purchase/construction of immovable property other loans Non - Non - Non - Non - Total performing Total performing performing Total performing Loan origination credit credit credit credit Total credit credit credit credit date*: facilities facilities Provisions facilities facilities Provisions facilities facilities Provisions facilities facilities Provisions €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 Within 1 year...... 232.432 46.522 21.946 165.103 36.645 15.287 11.586 198 239 55.743 9.679 6.420 1 - 2 years ...... 266.136 70.660 28.143 162.003 52.828 18.904 35.954 1.878 679 68.179 15.954 8.560 2 - 3 years ...... 445.533 153.045 45.253 273.687 99.629 28.261 69.300 8.800 2.588 102.546 44.616 14.404 3 - 5 years ...... 870.118 384.833 149.242 528.568 278.593 106.033 172.620 40.293 12.961 168.930 65.947 30.248 5 - 7 years ...... 1.333.353 706.088 231.454 943.373 519.410 139.753 288.629 129.620 55.760 101.351 57.058 35.941 7 - 10 years ...... 504.436 262.781 99.995 318.948 185.407 63.655 117.555 38.864 11.630 67.933 38.510 24.710 Over 10 years ...... 737.778 383.562 249.820 542.001 259.644 158.049 33.653 14.433 5.243 162.124 109.485 86.527

* Loan origination date is defined as the contractual loan origination date for each account, either new or restructured.

9. EXPOSURE IN COUNTRIES WITH HIGH CREDIT RISK

The Group closely monitors developments in the international markets so that any measures needed to reduce credit risk are promptly taken. The monitoring of exposure in countries of high risk is centralised through systems that fully and on an ongoing basis cover all material exposures to these high- risk countries such as interbank placements, debt securities and their investments. Also, maximum acceptable levels are specified according to the rankings of the countries, taking into account their credit ratings, political, economic and other factors. The credit ratings of the countries and the bond implied ratings (which incorporate information about credit spreads of government bonds as well as other available financial data of the countries) are primarily considered when determining whether to classify a country as a “high risk” country.

At 31 December 2013

Cyprus Greece Ireland Italy Spain Hungary Slovenia Egypt Ukraine Total €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 Assets held for trading Government Bonds Book value (fair value) ...... 50 ------50 Bank Bonds Book value (fair value) ...... -- 23 ------22 -- -- 45 Derivatives Book value (fair value) ...... 1.340 ------1.340

222

PROSPECTUS

Cyprus Greece Ireland Italy Spain Hungary Slovenia Egypt Ukraine Total €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 Assets classified as loans and receivables Government bonds Book value (amortised cost) ... 328.165 ------328.165 Fair value ...... 275.024 ------275.024 Deposits in other banks Book value (amortised cost) ... 42.908 454 -- 328 936 445 ------45.071 Fair value ...... 42.908 454 -- 328 936 445 ------45.071 Advances to customers Book value (amortised cost) ... 3.456.901 11.537 1.195 1.953 34 113 3 414 5.278 3.477.428 Accumulated impairment losses (710.643) (25.498) (828) (3) ------(1.377) (738.349) Fair value ...... 3.456.901 11.537 1.195 1.953 34 113 3 414 5.278 3.477.428 Assets held for sale Government Bonds Nominal value ...... 2.545 ------2.545 Book value (fair value) ...... 2.304 ------2.304 Accumulated amount of the fair (300) ------(300) value reserve ...... Bank bonds Nominal value ...... 256 -- 10.000 4.000 ------14.256 Book value (fair value) ...... 256 -- 8.604 3.794 ------12.654 Accumulated impairment losses -- -- (1.277) ------(1.277) Accumulated amount of the fair ------(204) ------(204) value reserve ...... Other bonds Nominal value ...... -- 3.060 ------3.060 Book value (amortised cost) ... -- 2.021 ------2.021 Accumulated amount of the fair -- (1.044) ------(1.044) value reserve ...... Total book value ...... 3.831.924 14.035 9.799 6.075 970 558 25 414 5.278 3.869.078

223

PROSPECTUS

At 31 December 2012

Cyprus Greece Ireland Italy Spain Portugal Hungary Slovenia Total €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 Assets held for trading Government Bonds Book value (fair value) ...... 39 ------39 Bank Bonds Book value (fair value) ...... -- 10 ------103 113 Derivatives Book value (fair value) ...... 2.029 ------2.029 Assets held to maturity Government Bonds Nominal Value ...... 15.000 ------15.000 Book value (amortised cost) ...... 15.320 ------15.320 Fair value ...... 13.075 ------13.075 Other bonds Nominal value ...... -- 10.000 ------10.000 Book value (amortised cost) ...... -- 9.981 ------9.981 Fair value ...... -- 9.865 ------9.865 Assets classified as loans and receivables Government bonds Book value (amortised cost) ...... 330.696 ------330.696 Fair value ...... 209.756 ------209.756 Deposits in other banks ...... Book value (amortised cost) ...... 44.208 3.093 -- 418 555 -- 42 -- 48.316 Fair value ...... 44.208 3.093 -- 418 555 -- 42 -- 48.316 Advances to customers ...... Book value (amortised cost) ...... 3.981.824 578.638 1.701 2.030 64 6 131 5 4.564.399 Accumulated impairment losses ...... (375.353) (336.511) (315) ------(712.179) Fair value ...... 3.981.824 578.638 1.701 2.030 64 6 131 5 4.564.399 Assets held for sale

224

PROSPECTUS

Cyprus Greece Ireland Italy Spain Portugal Hungary Slovenia Total €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 Bank bonds Nominal value ...... 256 -- 10.000 4.000 ------14.256 Book value (fair value) ...... 256 -- 7.856 3.578 ------11.690 Accumulated impairment losses ...... -- -- (1.985) ------(1.985) Accumulated amount of the fair value ------(419) ------(419) reserve ...... Other bonds Nominal value ...... -- 13.028 ------13.028 Book value (amortised cost) ...... -- 9.366 ------9.366 Accumulated amount of the fair value -- (3.673) ------(3.673) reserve ...... Total book value ...... 4.374.372 601.088 9.557 6.026 619 6 173 108 4.991.949

225

PROSPECTUS

10. INVESTMENTS IN DEBT SECURITIES

The table below presents the analysis of the Group’s debt securities by Moody's credit rating as at the dates indicated:

Debt Securities 30 September 2014 2013 2012 2011 €'000 €'000 €'000 €'000 Aaa ...... 372.839 197.534 416.720 52.123 Aa1 ...... 29.957 17.266 15.158 63.222 Aa2 ...... -- -- 10.314 67.338 Aa3 ...... 11.109 10.045 3.537 140.007 A1 ...... 5.815 20.278 45.621 124.196 A2 ...... -- -- 6.068 67.206 A3 ...... -- 5.003 19.244 8.614 Baa1 to B3 ...... 33.772 64.523 403.603 551.535 Ca ...... 26 45 111 33.083 Caa1 & Caa2...... 9.689 -- 18.972 30.604 Caa3 ...... 325.835 330.519 -- -- Unrated ...... 263 252 384 8.732 789.305 645.465 939.732 1.146.660

During 2013, the Cypriot Government Bonds were downgraded from a rating of B3 at 31 December 2012 to a rating of Caa3 at 31 December 2013.

11. FAIR VALUE OF FINANCIAL INSTRUMENTS

The table below presents the analysis of financial instruments measured at fair value on the basis of the three-level hierarchy by reference to the source of data used to derive the fair values. The levels of hierarchy of fair value are as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Data other than quoted prices included within level 1 that is observable for the asset or liability, either directly or indirectly.

Level 3: Data for the asset or liability that is not based on observable market data.

30 September 2014 Level 1 Level 2 Level 3 Total €'000 €'000 €'000 €'000

Financial assets Derivatives Foreign currency forwards ...... -- 6.369 -- 6.369 Options ...... -- 182 -- 182 Interest rate swaps ...... -- 4.197 -- 4.197 -- 10.748 -- 10.748 Other financial assets held for trading

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30 September 2014 Level 1 Level 2 Level 3 Total €'000 €'000 €'000 €'000 Debt securities Government ...... -- 53 -- 53 Banks ...... 296 -- -- 296 Other issuers ...... 1.585 -- -- 1.585 Equity securities ...... 464 -- -- 464 2.345 53 -- 2.398 Investments available for sale Debt securities Government ...... 196.054 2.628 -- 198.682 Banks ...... 165.319 -- 9.950 175.269 Other issuers ...... 15.022 -- 1.370 16.392 Equity securities ...... 1.569 -- 7.094 8.663 377.964 2.628 18.414 399.006 Total ...... 380.309 13.429 18.414 412.152

30 September 2014 Level 1 Level 2 Level 3 Total €'000 €'000 €'000 €'000 Financial liabilities Derivatives ...... Foreign currency forwards ...... -- 1.516 -- 1.516 Options ...... -- 182 -- 182 Interest rate swaps...... -- 11.371 -- 11.371 Total ...... -- 13.069 -- 13.069

31 December 2013 Level 1 Level 2 Level 3 Total €'000 €'000 €'000 €'000 Financial assets Derivatives Foreign currency forwards ...... -- 1.803 -- 1.803 Options ...... -- 226 -- 226 Interest rate swaps...... -- 5.139 -- 5.139 -- 7.168 -- 7.168 Other financial assets held for trading Debt securities Government ...... -- 50 -- 50 Banks ...... 47 268 -- 315 Other issuers ...... 1.597 -- -- 1.597 Equity securities ...... 527 -- -- 527 2.171 318 -- 2.489 Investments available for sale Debt securities Government ...... 57.983 2.304 -- 60.287 Banks ...... 100.271 -- 8.860 109.131 Other issuers ...... 22.338 -- 2.021 24.359

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Equity securities ...... 942 -- 6.874 7.816 181.534 2.304 17.755 201.593 Total ...... 183.705 9.790 17.755 211.250

31 December 2013 Level 1 Level 2 Level 3 Total €'000 €'000 €'000 €'000 Financial liabilities Derivatives Foreign currency forwards ...... -- 2.665 -- 2.665 Options ...... -- 226 -- 226 Interest rate swaps ...... -- 13.212 -- 13.212 -- 16.103 -- 16.103 Total ...... -- 16.103 -- 16.103

The table below presents the analysis of financial instruments categorised at level 3 hierarchy:

Level 3 30 September 2014 2013 €'000 €'000 1 January ...... 17.755 16.722 Losses recognised in consolidated income statement in the category ‘Net losses on disposal and revaluation of foreign currencies and financial instruments’ 250 347 Repayments ...... (413) (718) Losses recognised in consolidated statement of comprehensive income ...... 822 1.404 30 September/31 December ...... 18.414 17.755

For the valuation at fair value of the investments in equity securities which are classified as Level 3, a valuation method based on the company's equity at which the investment in shares is held as well as estimates of the management of the Group have been used. Investments in debt securities, classified in Level 3, were valued using unobservable data that reflect however the assumptions that market participants would make to assess an asset or a liability, based on the best available information under current conditions.

During the nine-month period ended 30 September 2014 there were no significant transfers between Levels 1 and 2

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PART IX. STATUTORY AND GENERAL INFORMATION

1. RELEVANT ARTICLES FROM ARTICLES OF ASSOCIATION

The following are relevant articles from the Articles of Association of the Bank:

3. Subject to the provision of the law and of these Articles of Association, any shares of the Company for the time being unissued shall remain under the control of the Directors, who may allot or otherwise dispose of all or any of them, to such persons and on such terms, and either above premium or at a premium or, subject to the provisions of Section 56 of the Law, at a discount and at such times as the Directors shall deem proper, and with full power to issue to any person a call for any shares, whether at premium or above premium (or at their nominal value with an additional amount) or, subject to the aforementioned, at a discount at such times and for such a consideration as the Directors may think proper.

4. If at any time the Share Capital is divided into various classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound up, be varied by the written consent of the holders of three-fourths of the issued shares of that class, or with the sanction of Special Resolution passed at a separate general meeting of the holders of the shares of the class. To each such separate General Meeting the provisions of these Articles (relating to general meetings) shall apply, but so that the necessary quorum at such Meetings shall be at least three persons holding or representing by proxy 51% of the issued shares of that class.

5. The rights conferred upon the holders of the shares of any class, issued with preferential or other rights, shall, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed not to be varied by the creation or issue of further shares ranking pari passu therewith.

6. There shall be no allotment of any Share Capital of the Company, unless the amount specified in the Prospectus as the minimum required has been covered by the subscriptions and the amount payable on the applications for subscription has been paid to and received by the Company.

9. Subject to any instructions to the contrary that may be contained in a special resolution approved in a general meeting of the company, all New Shares created, as well as any other securities which confer a right for the purchase of the shares of the Company or which are convertible into shares of the Company, shall, before their issuance, be offered to the shareholders of the Company pro rata according to the participation of each shareholder in the capital of the Company on a specific date to be determined by the Board of Directors. Any such offer shall be made by a notice in writing to the shareholders, in which the number of shares and/or other securities shall be specified, which confers a right to purchase shares of the Company or are convertible into shares of the Company, that the shareholders shall be entitled to acquire and the time period during which the offer, if it is not accepted, shall be considered to have been rejected if, until the expiry of the said time period, no written notice has been received from the person to which the offer is made or to which the rights have been conferred stating that he accepts all or part of the offered shares or other securities conferring a right to purchase shares of the Company or are convertible into shares of the Company, the Board of Directors may dispose thereof in such a manner as may be deemed more beneficial to the Company.

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If, for any reason, any difficulty arises in connection with the distribution of the New Shares to be issued and/or other securities, as provided above, amongst the shareholders, this difficulty shall be resolved by a decision of the Board of Directors unless the General Meeting of the Company has instructed otherwise.

10. The Company shall keep a Register of Members and a Directory of Members in pursuance of sections 105 and 106 of the Law.

13. Any application signed by or on behalf of any applicant to acquire shares of the Company, followed by the transfer of any such shares, shall constitute acceptance of the shares within the meaning of these Articles and, subject to the provisions of these Articles, each person who in this manner or any other accepts any shares and whose name is registered in the Register of Members for the purposes of these Articles shall be a member.

14. Any monies paid at the request of the Directors during or in connection with the transfer of any shares, whether in the form of deposits or calls or otherwise, shall be considered, directly upon the entry of the name of the transferee in the Register of Members as the holder of the said shares, as a debt owed to the Company and collected by it by the transferee and, in consequence, is payable by him.

If, pursuant to the terms for the transfer of any shares, all or part of the amount of the issuance price thereof is payable in instalments, such instalment shall be paid on its due date to the Company by the person who is currently and from time to time the registered holder of the shares or by his legal representative.

ALTERATION OF CAPITAL

54. The Company may from time to time by ordinary resolution increase the share capital by such sum, to be divided into shares of such amount, as the resolution shall prescribe.

GENERAL MEETINGS

58. The Company shall in each year hold a General Meeting as its Annual General Meeting in addition to any other meetings in the year, and shall specify the meeting as such in the notices calling it; and not more than fifteen months shall elapse between the date of one Annual General Meeting of the Company and that of the next, provided that, as long as the Company holds its first Annual General Meeting within eighteen months of incorporation, it shall not be required to convene an Annual General Meeting in the year of its incorporation or in the following year. The Annual General Meeting shall be held at such time and place as the directors may determine.

59. All General Meetings other than Annual General Meetings shall be called Extraordinary General Meetings.

PROCEDURES AND OPERATIONS OF GENERAL ASSEMBLY

61. An Annual General Meeting and Meeting called for the passing of a Special Resolution shall be called by 21 days notice in writing at the least. The notice shall be exclusive of the day on which it is served or deemed to be served and of the day for which it is given, and shall specify the place, the day and the hour or Meeting and, in case of special business, the general nature of that business and shall be given, in manner herein after mentioned or in such other manner, if any, as maybe described by the Company in General Meetings, to such persons as are, under the regulations of the Company, entitled to receive such notices from the Company;

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Provided that a Meeting of the Company shall, not withstanding that it is called by a shortened notice than that specified in this Regulation, be deemed to have been duly called if it is so agreed:

a. In the case of a Meeting called as the Annual General Meeting, by all the Members entitled to attend and vote thereat; and

b. In the case of any other Meeting, by a majority in number of the Members having a right to attend and vote at the Meeting being a majority together holding not less than 95% in nominal value of the shares giving that right.

VOTES OF MEMBERS

73. Subject to any rights or restrictions for the time being attached to any class or classes of shares, on a show of hands each Member present in person shall have one vote for each share of which he is the holder, while when a secret ballot is conducted, each Member shall have one vote for each share of which he is the holder.

74. In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the vote(s) of the other joint holder(s); and, for this purpose seniority shall be determined by the order in which the names stand in the Register of Members.

76. No member shall be entitled to vote at any general meeting unless all calls or other sums presently payable by him in respect of shares in the Company have been paid.

87. The presence of a Member in person will serve as a recall of a Proxy and the right of vote will be exercised by the Member.

POWERS AND DUTIES OF DIRECTORS

94. All the business of the Company shall be carried out and managed by the Directors, who may pay all expenses incurred in promoting and registering the Company as are not, by the Law or by these regulations, required to be exercised by the Company in a General Meeting subject, nevertheless, to any of these regulations, to the provisions of the Law and to such regulations being not inconsistent with the aforesaid regulations or provisions, as may be prescribed by the Company in a General Meeting, but no regulation made by the Company in a General Meeting shall invalidate any prior act of the Directors which would have been valid if that regulation had not been made.

94Α. The Directors may exercise all the powers of the Company to borrow money, and to charge or mortgage its undertaking, property and uncalled capital or any part thereof and, subject to the provisions of these Articles of Association, to issue bonds either at par, or below par, debenture stock convertible into shares or not and other securities, stock or certificates of any kind and under any terms they shall deem expedient, whether outright or as security for any debt, liability or obligation of the Company or any third party.

DIVIDENDS AND RESERVES

129. The Company in a General Meeting may declare dividends, but no dividend shall exceed the amount recommended by the Directors.

130. The Directors may from time to time pay to the members such interim dividends as appear to the Directors to be justified by the profits of the Company.

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133. Subject to the rights of persons, if any, entitled to shares with special rights as to dividends, all dividends shall be declared and paid according to the amounts paid or credited as paid on the shares in respect whereof the dividend is paid, but no amount paid or credited as paid on a share in advance of calls shall be treated for the purposes of this Paragraph of these Articles of Association as paid on the share. All dividends shall be appointed and paid proportionately to the amounts paid or credited as paid on the shares, on the basis of any portion of the period in respect of which the dividend is paid. But if any share is issued on terms providing that it shall rank for dividend as from a particular date, such share shall rank for dividend as from that date.

135Α. Subject to the reservation of approval by the Annual General Meeting of the Company, the directors may, in connection with any dividend that may be authorized or submitted for authorization during the said General Meeting (and provided that there is for this purpose a satisfactory number of unissued Ordinary Shares), decide and announce, prior to or at the same time as their announcement about the said dividend and any relevant information regarding the Company’s profits for the corresponding financial period or part thereof that the Members shall have the option of receiving in lieu of payment of such a dividend (or part thereof) additional Ordinary Shares credited as fully paid. In any such case the following provisions shall apply:

(a) The basis of allocation shall be determined by the Directors so that, if possible, the value of the additional Ordinary Shares (which shall be calculated with regard to the current average weighted share price) (including any fractional rights) that shall be granted in lieu of dividend payment shall be equal to the net amount of the said dividend, i.e. after deduction of any taxes or contributions by virtue of the law. For this purpose, “the average weighted price” of the Ordinary Share shall be equal to the average sale and purchase price of the share on the Cyprus Stock Exchange at the close of the first five working days of trading of Ordinary Shares, not including the corresponding dividend (ex-dividend), minus a percentage of five per cent (5%), or as the Directors may decide from time to time. It is provided that the Directors shall have the power to amend the basis of allocation of the said shares from time to time.

(b) The Directors shall provide written notice to the Members with regard to their option and shall send with or after the said notice an option form which will determine the procedure to be followed as well as the place and final deadline by which the duly completed option forms must be submitted in order to be valid.

(c) The dividend (or that part of the dividend in respect of which an option has been exercised) shall not be payable in connection with the Ordinary Shares for which the said option (“the selected Ordinary Shares”) was duly exercised. Instead, additional shares of the selected Ordinary Shares shall be granted on the basis of the aforementioned method of granting. For this purpose, the Directors will capitalize any such sums which are credited to any reserve account of the Company or which represent the premium received on the issuance of any of the Company’s shares, bonds or corporate bonds, or ensuing from undistributed profits of the Company, as the Directors may decide and which shall be equal to the total nominal amount of the additional Ordinary Shares which will be granted on this basis, and will dispose of the same for the full payment of the corresponding number of unissued shares to be allocated and distributed to the members of the selected Ordinary Shares as referred to above.

(d) The additional Ordinary Shares that shall be allocated will in all respects bear the same rights as the fully paid Ordinary Shares of the Company which will have been issued, except as to participation to the corresponding dividend (ex-dividend) (or option to reinvest in shares instead of this).

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(e) The Directors can take any action they may deem necessary or appropriate in order to implement the said capitalization, and they shall have full power to make any adjustments they may deem appropriate with regard to fractional rights of the allocated shares.

WINDING UP

149. If the Company shall be wound up, the liquidator may, with the sanction of an Extraordinary Resolution of the Company and any other sanction required by the Law, divide amongst the Members in kind the whole or any part of the assets of the Company (whether they consist of property of the same kind or not) and may, for such purpose, set such value as he may deem fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members.

The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees for the benefit of the contributors, as the liquidator, with the like sanction, shall think fit, but so that no member shall be compelled to accept any shares or other securities whereon there is any liability.

2. MATERIAL CONTRACTS

2.1 There are no material contracts, other than contracts entered into in the ordinary course of business, to which the Bank or any other member of the Group is a party or entered into by any member of the Group and which contain provisions which any member of the Group has any obligation for or commitment to which is material to the Group at the date of the Prospectus.

2.2 It is noted that, during the three (3) years preceding the date of this Prospectus, contracts were signed for the acquisition of land in the Amathounta area, Ayios Tychonas in Limassol at a price of €15,5 million from the Holy Archbishopric of Cyprus on 23 March 2012 and for the acquisition of a building in Amphipoleos Street in Strovolos at a price of €21,0 million from Clin Company Ltd on 8 August 2012.

2.3 Hellenic Alico Life Insurance Company Ltd was established in Cyprus in 2000 and commenced operations in 2001, following an agreement between the Bank (72,50% shareholding) and American Life Insurance Group (ALICO AIG Life, today Metlife Alico) (27,50% shareholding) with the purpose of providing life insurance products exclusively to the customers of the Bank. The company holds a licence to conduct insurance business in life, life associated with investments, personal accidents and diseases. The establishment agreement defines the obligations of the two organisations in the creation of the Hellenic Alico Life Insurance Company Ltd. This deal includes two other supporting agreements:

a. Bancassurance Fee Agreement – agreement between Hellenic Alico Life Insurance Company Ltd and the Bank for the sale and promotion of insurance products.

b. Technical Assistance Fee Agreement – agreement between Hellenic Alico Life Insurance Company Ltd and Metlife Alico for technical support.

The establishment agreement has no expiration date and the two supporting agreements are subject to renewal every two years. The last renewal, however, was for three years (1 January 2013 – 31 December 2015). The next renewal is on 1 January 2016.

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3. OTHER STATUTORY INFORMATION

Besides the information contained in the Prospectus and the financial statements of the Group:

3.1 Since 26 October 2014, announcement date of the Bank’s nine month financial results ending 30 September 2014, during which the events after the reporting period are described, there were no other significant changes in the financial position of the Group.

3.2 The adverse circumstances that have affected the prospects of the Bank since the date of the last audited financial statements are stated in Part V, Paragraph 12.2.

3.3 From time to time the Group is subject to various pending claims or counter claims in connection with its activities in the ordinary course. The Bank is currently facing the following procedures which could have material importance for the financial standing and profitability of the Bank:

a. A complaint filed with the Commission of Protection of Competition regarding an alleged breach of the Protection for the Competition Law in force and applicable in Cyprus by JCC Payments Systems Ltd and its bank shareholders which issue credit cards and are members of the payment systems VISA and/or MasterCard, including the Bank, in connection with domestic interchange fees. This may result in the payment of a fine equivalent to as high as 10% of the Bank’s annual turnover. At this stage, the outcome of the case and, therefore the possibility of the imposition of any fine, cannot be predicted.

b. A claim brought by a customer client for approximate damages of approximately €20,0 million and approximately $10,3 thousand for alleged improper or unlawful disclosure of information or breach of the statutory duty of banking secrecy by the Bank in relation to accounts of the claimant with the Bank. The claim is currently pending and the Bank has been advised by counsel that the claimant is unlikely to prevail.

c. A claim brought by a customer client for approximate damages of €7,2 million in relation to, amongst other things, alleged illegal charges and illegal interest, unjust enrichment, illegal charges and fees relating to cheque payments (factoring) and illegal bonded charges. The claim is currently pending and the Bank has been advised by counsel that the claimant is unlikely to prevail.

3.4 Material Tax Disputes:

a. The Bank has a court action against the Cyprus Tax Authority concerning a final assessment raised following a VAT audit carried out for the period 1 April 2007 to 30 September 2012. The Bank has paid the amount assessed (€862,1 thousand plus interest and 10% penalty). Following an objection to the Minister of Finance on two of the issues concerning which tax was imposed, the Minister has decided in favour of the Bank and an amount of €188,9 thousand plus interest and penalties is refundable but has not yet been received. The Court has not yet set a date for the relevant hearing. The outcome of the case, the outcome of which relates to item (b) below as well, is important because it affects the ongoing operations of the Bank.

b. The Cyprus Commercial Banks, via the Association of Cyprus Banks, lodged a complaint to the European Commission against Cyprus with regard to VAT assessed on the Banks in respect of amounts invoiced by payment networks (such as VISA International, MasterCard and AMEX) for the processing, clearing and settlement of payment cards. The complaint has not yet been examined by the Commission. The

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amount assessed for the Bank is €492,8 thousand plus interest and a 10% penalty and is included in the total amount assessed (€862,1 thousand) mentioned in Paragraph 3.4(a) above. The outcome of this case is important because it affects the ongoing operations of the Bank.

3.5 There are no patents or licences or industrial, commercial or financial contracts that would be of fundamental importance to the business or profitability of the Bank and on which the Bank or any of its subsidiaries are dependent.

3.6 As of the date of the Prospectus, management has not assumed any final commitment regarding future material investments of the Bank or its subsidiaries.

3.7 As at the date of the Prospectus, the Bank has not entered into any short-term loan, bank overdraft or debenture that mortgages or charges the Bank’s assets, except other than what is required within the ordinary course of the Bank’s business.

3.8 In the recent past, there has been disruption in the activities of the Bank that has affected the financial position of the Group:

a. the sale of the Russian Subsidiary on 5 June 2014; and

b. the sale of the BNG on 26 March 2013.

3.9 At the date of the Prospectus there are no employee share option schemes.

3.10 During the last and current fiscal year, there has been no public offer for the acquisition of shares by or for the Bank. Article 13 of the Public Offer Law 2007 (as amended) and Article 201(1) of the Companies Law, Cap. 113 contain provisions for compulsory acquisition of shares. Article 201 (2) of the Companies Law, Cap. 113, contains provisions that allow a shareholder to require the redemption of shares he holds in a company, provided the conditions in this article are provided for.

4. EXCHANGE RATES

In the Prospectus, all references to “$”, “U.S. dollars” or “USD” are to the lawful currency of the United States of America and all references to “Euro”, “EUR” and “€” are to the lawful currency introduced at the start of the third stage of the European Economic and Monetary Union in accordance with the Treaty Establishing the European Community, as amended, which was adopted by the Cyprus as at 1 January 2008. All references to the “Eurozone” are to the Member States of the European Union that have adopted the Euro as their national currency in accordance with the Treaty on European Union signed at Maastricht on 7 February 1992. All references to the “Ruble” are to the Russian ruble.

The following table sets forth, for the periods indicated, the high, low, average and period end daily reference exchange rates published by the ECB expressed in Euros as against the USD. The rates may differ from the actual rates used in the preparation of the financial statements and other financial information included in this Prospectus.

The rates set forth below are provided solely for convenience purposes and were not used by us in the preparation of the financial statements.

On 12 November 2014, the ECB daily reference exchange rate for the Euro against the USD was Euro 1 = USD1.2467.

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USD per Euro 1,00 Period High Low Average 1 End Year 2011 ...... 1.4882 1.2889 1.3920 1.2939 2012 ...... 1.3454 1.2089 1.2848 1.3194 2013 ...... 1.3814 1.2550 1.3281 1.3791 Month (2014) January ...... 1.3687 1.3516 1.3610 1.3516 February ...... 1.3813 1.3495 1.3659 1.3813 March ...... 1.3942 1.3732 1.3823 1.3788 April ...... 1.3872 1.3700 1.3813 1.3850 May ...... 1.3953 1.3607 1.3732 1.3607 June ...... 1.3658 1.3528 1.3592 1.3658 July ...... 1.3688 1.3379 1.3539 1.3379 August ...... 1.3422 1.3177 1.3316 1.3188 September ...... 1.3151 1.2583 1.2901 1.2583 October ...... 1.2823 1.2524 1.2673 1.2524 November (until 12 November 2014) ...... 1.2517 1.2393 1.2472 1.2467

(1) The average of the exchange rates on each business day for the relevant period

5. TAX REGIME

At the date of the Prospectus, the following provisions relating to tax laws are in force. It is implied that, in the event of amendment to the legislation, the provisions in force at the time will apply. Prospective investors are encouraged to seek professional advice with regard to any proposed amendment to the tax laws or proposed new tax laws to be enacted at the date of issue of the Prospectus as well as any future amendment to legislation or new legislation.

Investors are also urged to seek professional advice with regard to the tax regime of their country of residence or of any country where they may have tax obligations.

5.1 Tax regime of the Bank

The Bank is a legal person (public company) registered in Cyprus. It is a tax resident of Cyprus and is taxed in accordance with the provisions of the Tax Laws of Cyprus. In addition to the taxes imposed in accordance with the provisions of the Tax Laws, the Bank, is, on an annual basis, subject to the special levy on credit institutions pursuant to the provisions of the relevant law. This is imposed on the total deposits less inter-bank deposits of the Bank as at 31 December of the preceding year at the rate of 0,15%.

Any activities of the Bank and/or of its subsidiaries or branches in other countries are subject to tax in accordance with the tax laws of those countries, taking also into consideration the provisions of any Agreements for the Avoidance of Double Taxation concluded between Cyprus and those other countries and the provisions of the directives and regulations of the European Union.

5.2 Tax Regime of the Investor

The tax position of each investor is affected by numerous factors and parameters and it is up to each investor to seek professional advice.

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5.3 Taxation of Dividend Income

i. Corporations – Cyprus Tax Residents

Dividends distributed by a Cyprus Tax Resident Company from profits which were not subject to a defence contribution due to the deemed distribution provisions of the legislation are exempt from tax. The exemption does not apply if such dividends are paid indirectly (through a tax efficient structure of group companies resident in Cyprus) after the end of four years from the end of the year in which the distributed profits accrued.

According to the Income Tax Law, No 118 (I) 2002 to 2014 (as amended), a Cyprus Tax Residents Corporation is a corporation, the management and control of which, is exercised in Cyprus.

ii. Individuals – Cyprus Tax Residents

Dividends distributed by Cyprus Tax Resident Corporations to Cyprus Tax Resident Individuals are subject to a special defence contribution withholding at source at the rate provided by the tax legislation in force at the time of distribution (2014 – 17%).

According to the Income Tax Law, No 118 (I) 2002 to 2014 (as amended), a Cyprus Tax Resident individual, as defined by the Cyprus tax laws, is an individual who resides in Cyprus for a period or periods which in total exceed 183 days in the tax year. The tax year is identical to the calendar year.

iii. Non-Cyprus Tax Residents

Dividends distributed by a Cyprus Tax Resident Corporation to a non-Cyprus Tax Resident, corporation or individual, are exempt from tax in Cyprus irrespective of the existence or not of an agreement for the avoidance of double taxation between Cyprus and the recipient’s country of residence and the provisions of such agreement. It is, however, a prerequisite that non-Cyprus Tax Resident individuals and corporations submit to the Bank a duly completed questionnaire in order to enable the Bank to determine their non-resident status for that specific year. The questionnaire is submitted on an annual basis or whenever during the year there is a change in tax residence.

5.4 Deemed Distribution Provisions

A Cyprus Tax Resident Company which does not distribute its accounting after-tax profits within a period of two years from the year to which these profits refer is, at the end of the second year, deemed to distribute 70% of these profits. The company is obliged to remit to the tax authorities the defence contribution which relates to these profits at the rate provided by the relevant provisions of the Special Contribution for the Defence of the Republic Law in force at the time (2014–17%), on account of its shareholders.

This provision of the law applies only to such part of the profit relating to Cyprus tax resident shareholders (individuals and corporations). However, even though it does not apply to the profits relating to non-tax resident shareholders, in cases where the defence contribution on deemed distribution has been paid and at the time of distribution of these profits, the percentage rate for non-tax resident shareholders increases (compared to the corresponding percentage at the end of the second year following the year to which the profits refer), the dividend distributable to the non-tax resident shareholders may be paid after withholding of the defence contribution. The defence contribution

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5.5 Taxation of profits on disposal of shares and securities

Profits on disposal of shares and securities (bearing title) are exempt from tax in Cyprus. Furthermore, gains on disposal of shares traded on a recognised stock exchange are exempt from capital gains tax in Cyprus.

5.6 Additional Taxes may be imposed on the Bank and its Subsidiary Companies

Additional taxes may be imposed on the Bank and its subsidiaries as a result of the enactment of new or the revision of existing tax legislation . This may also result in increased taxation on income distributed by or received by the Bank and its subsidiaries in the form of dividends and interest. No assurances may be given in respect of any new laws or revisions to the existing legislation that may be enacted after the date of the Prospectus. Additionally, no assurances may be given that any new laws or revisions to existing legislation that may be enacted may not negatively affect the ability of the Bank and of its subsidiaries to fulfil their obligations.

Current and proposed legislation that may result in the imposition of additional taxes on the Bank and its subsidiaries includes The Income Tax Law, The Special Contribution on the Defence of the Republic Law, The Special Levy on Credit Institutions Law, The Immovable Property Tax Law, The Capital Gains Tax Law, The Stamp Duty Law, The Assessment and Collection of Taxes Law, The Collection of Taxes Law.

i. The Establishment and Operation of a Deposits Protection Fund and Resolution of Credit and Other Institutions and Related Matters Law.

In accordance with the provisions of the law, the Administrative Committee formed for this purpose may impose on the banking institutions exceptional contributions in excess of those already provided by the Special Levy on Credit Institutions Law of 2011 and of the amounts already paid under the Deposits Protection Scheme.

ii. The Tax Collection Law of 1962 and 2014

On 20 June 2014, the Tax Collection Law 2014 (80(Ι)/2014), was enacted amending the Tax Collection Law of 1962. According to this law, customer deposits with the Bank, may under certain circumstances and procedures, be subject to confiscation by the Inland Revenue Department in cases where the customer owes amounts in respect of income tax, special defence contribution, capital gains tax, immovable property tax, special contributions for employees, retirees and self-employed in the private sector or the public and the wider public sector, as well as stamp duty. This law may, under certain circumstances reduce the level of collateral available to the Group, necessitating a readjustment of collaterals and as a result an increase in provisions.

iii. Foreign Account Tax Compliance Act – FATCA

The Cyprus tax authorities have entered into negotiations with the relevant U.S. Authorities for the conclusion of a bilateral agreement between the two countries, within the framework of the relevant U.S. law, with a view to combatting tax evasion through the exchange of information. According to this agreement, when ratified and entered into force, financial institutions will be obliged to disclose to the U.S. tax authorities, through the Cyprus tax authorities, information on U.S. tax residents who maintain accounts or a financial relationship with these institutions.

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iv. Council Directive on the Administrative Cooperation in the Field of Taxation 2011/16/EU

The Council of the European Union has proposed an amendment to this directive. With this amendment a new provision will be introduced that will oblige each Member State to automatically exchange information in respect of tax periods commencing from 1 January 2014 with other Member States, concerning items which are paid, secured or held by a financial institution for the direct or indirect benefit of a beneficial owner who is a natural person resident in any of the other Member States. The items concerned are the following: dividends; capital gains; any other income generated with respect to the assets held in a financial account; any amount with respect to which the financial institution is the obligor or debtor, including any redemption payments; and account balances. It is also proposed that the European Commission and the European Council shall assess the further strengthening of the efficiency and functioning of the automatic exchange of information and the raising of the standard thereof, aiming at implementation of the following amendments by 2017:

1. The competent authority of each Member State shall from 1 January 2017, by automatic exchange, communicate to the competent authority of any other Member State, information regarding taxable periods concerning individuals resident in that other Member State, on all categories of income and capital listed in existing paragraph 1 of article 8 of the directive as they are to be understood under the national legislation of the Member State communicating the information; and

2. The lists of categories and items laid down in existing paragraph 1 and 3a of the directive is to be extended to include other categories and items, including royalties.

Member States are required to amend their national legislation and regulations by 31 December 2014 so as to comply with the provisions of the directive, as this will be amended and apply these provisions from 1 January 2015 onwards.

The possible introduction of new taxes, contributions or levies may have a material adverse effect on the business activities, financial position and results of the Group.

6. LEGAL AND REGULATORY FRAMEWORK

The CSE operates in accordance with the Securities and Cyprus Stock Exchange Laws and Regulations, and the investment services, the exercise of investment activities, the Operation of Regulated Markets and other Related Matters Law 144(I)/2007 and any special regulation and/or directive issued under this law, and the Transparency Requirements (Marketable Securities admitted to trading on a regulated market) Law of 2007 and any special regulations and/or directives issued under this law, as the above laws and/or regulations and/or directives have been amended and are in effect.

The operation of the Bank is governed by the Companies Law, Cap. 113 and the Banking Law N66(1)/1997 in force as amended from time to time.

The Group prepares annual audited consolidated financial statements based on IFRS, which are made public as required by the regulation in effect.

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6.1 Regulation and Supervision of Banks in Cyprus - The Regulatory Framework

In this section, references are made to the existing applicable laws, regulations and directives, which constitute the regulatory and supervisory framework which the Bank is subject to and is obliged to comply with.

The Central Bank is currently the regulator and supervisor of all banking institutions operating in Cyprus and is the competent authority for their supervision and licensing. The authority of the Central Bank derives from the provisions of the Central Bank Law (Law. 138 (I) / 2002, as amended) (the “Central Bank Law”) and the Business of Credit Institutions Law (N. 66 (I) / 1997, as amended). In exercising its supervisory role, the Central Bank is guided by the recommendations of the Basel Committee on Banking Supervision, the guidelines issued by the EBA, and the rules of the European Union which promote the adoption of best practices and standards. In this connection, various directives, circulars and guidelines regarding prudential supervision are issued by the Central Bank to all banks operating in Cyprus. The supervision of banks incorporated in Cyprus, including both their domestic and foreign subsidiaries and branches, is exercised by the Central Bank on a consolidated basis.

The Central Bank in its supervisor capacity, has issued a number of directives (e.g. Directive on Loan Origination Process and Processes of Reviewing Existing Loans, Directive on Arrears Management, Directive on Loan Impairment and Provisioning Procedures, Directive on the Definitions of Non- Performing and Restructured Credit Facilities, Directive on Governance and Management Arrangements in Credit Institutions), which govern, inter alia, issues relating to internal governance and operation, non-performing loans, new credit facilities, collection and processing of information to manage credit risk, calculation of capital requirements and financial exposures. Through these directives, the Central Bank has also imposed more stringent restrictions in relation to the directors and shareholders of financial institutions, as well as in relation to the exposures of these persons and their related persons.

By virtue of the provisions of the Central Bank Law and without prejudice to the obligations resulting from the participation of the Central Bank in the European system of central banks, the main tasks of the Central Bank are (a) the contribution, as an integral part of the system, to the definition and implementation of the monetary policy of the European Community; (b) the holding, keeping and management of the official reserves of Cyprus, including the foreign exchange and gold reserves of the Central Bank and of the state; (c) the conduct of foreign exchange operations and the management of foreign reserves that may be held with the Central Bank for management; (d) the licensing and supervision of credit institutions; (e) ensuring the stability of the financial system; (f) the provision of services or performance of the tasks of banker and financial agent of Cyprus in financial matters; (g) the promotion, regulation and oversight of the smooth operation of the payment, clearing and/or settlement systems; (h) the collection, compilation and distribution of statistical data, including the data required for the fulfilment of the tasks of the Central Bank, as an integral part of the system vis-à-vis the ECB; and (i) its participation as a member in international monetary and economic organisations, subject to the approval of the ECB.

If a credit institution breaches any law, regulation or directive, the Central Bank is empowered to, amongst other things (a) require the relevant credit institution to take appropriate measures to remedy the breach or to restrict its operations by imposing conditions on its license (which may include, requiring the relevant credit institution to take certain actions or refrain from taking certain actions, imposing limitations on the acceptance (and solicitation) of deposits, the granting of credit or the making of investments, prohibiting the entering into certain transactions, requiring the removal of corporate officers, requiring the holding of own funds in excess of prescribed levels and requiring the implementation of policies on the treatment of certain assets and risks); (b) impose fines; (c) assume control of, and carry on in the credit institution’s name, the business of the credit institution, for so long as the Central Bank considers necessary; (d) demand the increase of a credit institution’s share capital;

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(e) demand that the credit institution prepares and submits a recovery plan and submit information so that the Central Bank can prepare a resolution plan; (f) demand that dividends be limited or withheld and (g) revoke the licence of the credit institution.

During at least the last 18 months, the existing legislative supervisory and regulatory framework within which the Bank operates, has been subjected to major changes and modifications. Since March 2013, when the MoU between Cyprus and the Troika was signed, the House of Parliament of Cyprus has enacted and/or amended certain laws, aiming to manage, consolidate, restructure and restore the solvency of the banking system in Cyprus, i.e.:

a. The Consolidation of Credit and Other Institutions Law (Law 17 (I) / 2013 as amended), pursuant to the provisions of which the rules and methods of implementing reorganisation measures to financial institutions facing viability problems were established.

This law sets out five resolution measures which can be adopted by the Resolution Authority, either in isolation or together when a bank becomes or may become non-viable. These measures include increasing the share capital from private sources, selling operations, transferring assets, rights or liabilities to a bridge bank, transferring assets and rights in an asset management company, and rescuing with its own resources (bail-in).

In the implementation of the bail-in measure, the Resolution Authority, has, amongst others, the power to (a) write down or convert debt and obligations of the institution under resolution into shares or other title deeds of the institution; (b) reduce, including the reduction to zero, the value of or the outstanding amount due in respect of debts and obligations of the institution under resolution; (c) cancel securities issued by an institution under resolution; (d) demand the conversion of debt instruments or other instruments which contain a contractual conversion clause, notwithstanding the provisions based on which contractual conversion clauses may be activated; (e) demand from an institution under resolution to issue new shares, or other securities, including preference shares and contingent convertible instruments, which will be offered to affected by the implementation of bail-in measure parties; and (f) amend or modify the maturity of debt instruments issued by the institution under resolution or to amend the amount of payable interest under such instruments, as well as the suspension of their payment for a temporary period of time.

b. The Management of Financial Crisis Law (Law 200 (I) / 2011 as amended), the purpose of which is, inter alia, the management of capital and the conditional support of credit institutions with public funds. According to Article 5A of Law no. 200(I)/2011, as this has been amended, on the advice of the Central Bank, the Council of Ministers, may, as a pre- condition for taking supporting measures to restore the capital adequacy of the financial institution or restricting the state aid at the minimum state level possible, decide on the management of a financial institution’s capital instruments so as to strengthen its basic own funds including its share capital.

c. The Establishment and Operation of the Deposit Protection and Resolution of Credit and Other Institutions Scheme and Other Related Matters Law (Law 16 (I) / 2013), which aims both to finance the implementation of reorganisation measures and also to provide compensation to depositors of institutions which are covered.

The ECB is the central bank of the Eurozone and is responsible for the administration of the monetary policy of the Eurozone. The ECB and the national central banks together perform the tasks they have been entrusted with and constitute the Eurosystem, which comprises the ECB and the national central banks of those countries that have adopted the Euro. Council Regulation (EU) 1024/2013 confers on the ECB specific tasks concerning policies relating to the prudential supervision of credit institutions,

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PROSPECTUS with a view to contributing to the safety and soundness of credit institutions and the stability of the financial system within the European Union and each Member State, with full regard and duty of care for the unity and integrity of the internal market based on equal treatment of credit institutions with a view to preventing regulatory arbitrage. On 4 November 2014 the ECB will assume the sole power to license business credit institutions established in participating Member States and to supervise the important institutions in the participating Member States. This mechanism is one of the key elements of Europe’s banking union, through the establishment of a SSM designed to safeguard the safety and soundness of the European banking system.

More precisely, the ECB will be exclusively competent to carry out, for prudential supervisory purposes, inter alia, the following tasks in relation to all credit institutions established in the participating Member States, i.e.: (a) to authorise credit institutions and to withdraw authorisations of credit institutions established in participating Member States; (b) for credit institutions established in a participating Member State, which wish to establish a branch or provide cross- border services in a non-participating Member State, to carry out the tasks of the competent authority of the home Member State; (c) to assess notifications of the acquisition and disposal of qualifying holdings in credit institutions; (d) to ensure compliance of credit institutions with requirements on the areas of own funds requirements, securitisation, large exposure limits, liquidity, leverage, and reporting and public disclosure of information on those matters; (e) to ensure compliance of credit institutions in the areas of governance arrangements, including the fit and proper requirements for the persons responsible for the management of credit institutions, risk management processes, internal control mechanisms, remuneration policies and practices and effective internal capital adequacy assessment processes, including internal ratings based models; (f) to carry out supervisory reviews, including where appropriate in coordination with EBA, stress tests and their possible publication, in order to determine whether the arrangements, strategies, processes and mechanisms put in place by credit institutions and the own funds held by these institutions ensure a sound management and coverage of their risks, and on the basis of that supervisory review to impose on credit institutions specific additional own funds requirements, specific publication requirements, specific liquidity requirements and other measures; (g) to carry out supervision on a consolidated basis over credit institutions’ parent companies established in one of the participating Member States, including over financial holding companies and mixed financial holding companies, and to participate in supervision on a consolidated basis, including in colleges of supervisors without prejudice to the participation of national competent authorities in those colleges as observers, in relation to parent companies not established in one of the participating Member State; (h) to participate in supplementary supervision of a financial conglomerate in relation to the credit institutions included in it and to assume the tasks of a coordinator where the ECB is appointed as the coordinator for a financial conglomerate; and (i) to carry out supervisory tasks in relation to recovery plans, and early intervention where a credit institution or group in relation to which the ECB is the consolidating supervisor, does not meet or is likely to breach the applicable prudential requirements, and, only in the cases explicitly stipulated by relevant European Union law for competent authorities, structural changes required from credit institutions to prevent financial stress or failure, excluding any resolution powers.

The Central Bank has adopted the recommendations of the Basel Committee and the European Union directives on banking matters in its supervisory role. As at 1 January 2014, the provisions of the CRR/CRD IV, dated 26 June 2013, are in force. CRD IV was partially adopted through a directive by the Central Bank (relating to remunerations). The rest of the provisions of CRD IV will be integrated in an upcoming law. The CRR is a comprehensive and risk-sensitive framework, setting prudential requirements that form the basis of a single European rulebook for all credit institutions operating within the European Union.

In relation to the recovery and resolution of credit institutions, Directive 2014/59/EU of the European Parliament and of the Council entered into force on 2 July 2014, establishing a framework for the recovery and resolution of credit institutions and investment firms. This directive equips the Central Bank with common and effective tools and powers to tackle bank crises pre-emptively, safeguarding

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All financial institutions in Cyprus are obligated to supervise and enforce the provisions of the Prevention and Suppression of Money Laundering Activities Law (Law. 188 (I) / 2007, as amended), the main purpose of which is to prevent the use of the financial system for money-laundering offences, establishing offences that apply to money-laundering acts, and establishing a framework that allows investigations and freezing assets that relate to criminal offenses, such as tax evasion and terrorist financing. The law provides also for a mandatory reporting of suspicious transactions to the Cypriot Unit for Combating Money Laundering (MOKAS) and the obligation to take the appropriate preventive measures (e.g. identification of customers, record keeping, and mandatory reporting) which applies to all persons who are engaged in financial businesses.

6.2 Foreign Investment & Capital Restrictions

In July 2003, the Capital Movement Law (Law. 115 (I) / 2003, as amended) was passed and entered into force on 1 May 2004, the date of the accession of Cyprus to the European Union. The Act, inter alia, repealed the Exchange Control Act (Cap. 199), thus completing the abolition of exchange control. Based on the Capital Movement Law, residents in Member States of the European Union and third countries are free to conduct direct investment in Cyprus. There remain, however, some limitations in relation to investments in real estate by persons not originating from Member States of the European Union, under the provisions of the Immovable Property Acquisition (Aliens) Law (Cap. 109, as amended). In such a case, a license which can be granted by the Ministerial Council, is required.

However, immediately after the decisions of the Eurozone of 25 March 2013 which, as a result of the consolidation measures taken in connection with Laiki Bank and the Bank of Cyprus, caused unprecedented disruption in the market and deterioration in confidence, the Central Bank imposed restrictive measures in respect of the movement of capital, both within and outside Cyprus. Today, all restrictive measures movement of capital within Cyprus have been removed. In relation to the movement of capital from abroad, note that all funds entered or entering Cyprus from abroad after 15 March 2013, are not subject to such restrictive measures. The measures currently in place are governed by the provisions of the 31st Decree of the Enforcement of Temporary Restrictive Measures on Transactions, dated 29 August 2014.

7. TRADING SECURITIES IN CYPRUS

As at the date of this Prospectus, the provisions relating to the operations of the stock exchange market below are applicable. It is understood that in case the legislation is amended, the prevailing provisions will apply. Prospective investors are advised to consult their advisors with respect to existing legislation, as well as to any future amendments or new legislation on this subject.

7.1 General

The CSE was established as a legal entity in the form of a public corporate body under the Cyprus Securities and Stock Exchange Laws and Regulations which were passed by the House of Representatives in 1993 and 1995, respectively. The first trading session on the CSE was held on 29 March 1996.

MiFID was integrated into Cyprus law on 1 November 2007. Cyprus enacted the Investment Services and Activities and Regulated Markets Law of 2007 (Law 144(I)/2007), implementing directives 2004/39/EC and 2006/73/EC of the European Parliament and of the Council on 26 October 2007.

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7.2 Market Regulation

The stock market in Cyprus operates in accordance with the Securities and Cyprus Stock Exchange Laws and Regulations and the Investment Services and Activities and Regulated Markets Law 144 (I)/2007 and its relevant Regulations and/or Directives and the Transparency Requirements (Transferable Securities Admitted to Trading on a Regulated Market) Law of 2007 and its relevant Regulations and/or Directives, as well as the above mentioned Laws and/or Regulations and/or Directives as amended and in force.

The CSE currently manages a regulated market and a market in the form of a multilateral trading facility (the “Emerging Companies Market”), which operate under the Cyprus Securities and Stock Exchange Law and the Investment Services and Activities and Regulated Markets Law. The principal participants of the CSE are the Operators which, based on laws and regulations, are the members (brokerage offices) and custodians of the CSE, listed issuers and investors.

Additionally, in accordance with the Securities and Cyprus Stock Exchange (Central Securities Depository and Central Registry) Law, the CSE has responsibility for the establishment and management of a Central Depository/Registry. Listed and unlisted securities can be registered in the Central Depository/Registry by the issuers that wish the CSE to maintain their registry.

7.3 Membership in the CSE

Membership is mandatory for investment firms and banks so as to transact on the CSE. Membership is subject to the approval of the board of the CSE and the licensing, when required, is approved by the CySEC (or in the case of a bank, by the Central Bank). In addition, investment firms must appoint at least one official representative to be responsible for carrying out transactions on the CSE. Representatives must meet certain qualifications required by law and need to pass the relevant examinations administered by the above-said authorities. CSE Members engage in transactions through the OASIS Electronic Trading System (the “OASIS system”).

The Dematerialized Securities System (the “DSS”) is a system that is connected to the OASIS system and is used for cash settlements and the clearing of transactions concluded on the CSE, as well as for the posting of all entries in the Central Depository/Registry of the CSE. The Central Registry is an activity of the CSE which is a public legal entity. For any new listed security on the CSE, the CSE has the responsibility to maintain its registry from its date of listing. For the completion of a transfer or pledge or any transaction related to securities, a company needs to be registered with the Central Registry.

7.4 Trading on the CSE

Trading in the Securities Market of the CSE is conducted through the remote registration of orders in the OASIS system, from the Members’ offices. The sessions are conducted daily during the hours specified by the board of the CSE, Monday to Friday, except for public holidays.

The maximum price variation of the securities on the Main Market, Shipping Companies Market and Major Projects Market, outside warrants and subscription rights, is scalable as stated below:

a. The first price limit variation is +10% or -10% on the starting price of the security (reference value).

b. If orders to buy at the maximum limit or orders to sell at the minimum limit remain unexecuted at the best prices to buy or sell for 15 consecutive minutes, the daily price fluctuation limit for the starting price is extended to +20% or -20% respectively on the starting price.

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The above does not apply to securities to which the AMEM/Automated Volatility Interrupter applies.

For securities to which the AMEM/Automated Volatility Interrupter applies, the threshold variation extends either up or down by 30% on the security’s starting price. The AMEM/Automated Volatility Interrupter applies only to the shares of the Bank of Cyprus. Following an announcement of CySEC dated 27 October 2014 and the decision of CySEC to ask the CSE Council for the continuation of the suspension of trading of the shares of the Bank of Cyprus, the CSE announced the continuation of the suspension of trading of the above shares from 1 November 2014 until the listing of all its shares on the CSE and the ATHEX.

The maximum daily price variation of the securities on the Parallel Market, Alternative Market and Investment Companies Market, except warrants and Subscription Rights, is scalable as stated below:

a. The first price limit variation is +10% or -10% on the starting price of the security (reference value).

b. If orders to buy at the maximum limit or orders to sell at the minimum limit remain unexecuted at the best prices to buy or sell for 15 consecutive minutes, the daily price fluctuation limit is extended to 20% or -20% respectively on the starting price.

The trading price of Global Depositary Receipts varies in the same proportion to the potential daily limit of the price fluctuation of the underlying value in the primary market trades, unless the CSE council decides otherwise.

Shares traded in the special category have as the daily fluctuation limit +20% or -20% on the starting price, which is fixed throughout the course of the trading session.

The maximum price variation of the securities on the Special Characteristics Market, except warrants and subscription rights, is scalable as stated below:

a. The first price limit variation is +10% or -10% on the starting price of the security (reference value).

The maximum price variation of the bond market securities is scalable as stated below:

a. The first price limit variation is +30% or -30% on the starting price of the security (reference value).

For securities of traded collective Investment Market Schemes the same trading limits applicable to the Parallel Market, Alternative Market, Investment Companies Market and GDRs apply.

The trading price of the warrants and subscription rights varies indefinitely, unless the CSE Boards decide otherwise.

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7.5 Settlement and Clearing

CSE assumes the responsibility for the clearance and settlement of the exchange transactions by updating the registries and transmitting the cash equivalent of the transactions to the brokers of the sellers.

To participate in the DSS administered by the CSE, each investor, natural or legal person is obliged to have a securities account/investor share, which is determined by a securities account, with a member of the CSE or through a custodian. A DSS account includes a securities account and a special account. The securities account holds all the securities of each investor and consists of one or more sub- accounts, known as operator accounts. Operator accounts operate through a specified member of the CSE or guardian, known as handlers. The handlers are the only bodies who can have access to balances and other information concerning an operator account.

Persons participating in the trading transactions market for the execution of transactions, as defined in the rules of the CSE (they enter orders in the trading system), are not entitled to participate in the settlement of transactions. There are trading members based in Cyprus and trading members based outside Cyprus.

The clearing members are those persons involved in the clearance of transactions and concern both the Direct Clearing Members (“DCM”) and the General Clearing Members (“GCM”). DCM are involved with clearing, assume the trading risk and clear transactions that have been executed by them as trading members. GCM are involved with clearing, assume trading risk and clear transactions that might have been executed either by themselves as trading members or by other trading members. A GCM is not necessarily a trading member also. According to the terms of the Regulatory Administrative Act 450/2014 which entered into force on the 6 October 2014, a member who is not a clearing member needs to collaborate for the clearance of his transactions with one GCM.

According to an announcement of the CSE dated 29 September 2014, by 6 October 2014 the transition to the new settlement cycle was implemented as determined by the decision of the board of the CSE. The settlement cycle of the transactions executed on listed securities that are traded on its markets is shortened from T+3 (completion of settlement within three (3) working days after the execution of a transaction) to T+2 (completion within two (2) working days). This change is in accordance with the new European Regulation in relation to the Central Securities Depository Regulation, which among other things aims to harmonise securities settlement cycles in the European Union.

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection on normal working days between 9.00 a.m. and 12.00 p.m. at the registered office of the Bank, at Corner of Limassol & Athalassa Avenue, P.O. Box 24747, 1394 Nicosia, during the validity period of this Prospectus:

 The Articles and Memorandum of Association of the Bank.

 The consolidated audited financial statements of the Bank for the financial years ended on 31 December 2011, 2012 and 2013 and the reviewed condensed consolidated financial statements for the period ended 30 June 2014.

 The consents in Part IX. Paragraph 10.

 The prospectus dated 30 September 2013 and the complementary prospectus dated 8 December 2013 for the issue of new ordinary shares and the issue of CCS 1 and CCS 2.

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9. INCORPORATION BY REFERENCE

The audited consolidated financial statements of the Group for the years 2011, 2012 and 2013 and the condensed consolidated financial statements for the period ended 30 September 2014 are incorporated in this Prospectus by reference, according to the provision of Article 28 of the Regulation 809/2004 of the Commission of the European Union.

Audited consolidated financial statements for the year ended 31 December 2012 include restated information. The restated information is presented as comparative information to the consolidated financial statements for the year ended 31 December 2013. For additional information see Part VII, Paragraph 1.

Investors can obtain free copies of the audited consolidated financial statements of the Group for the years 2011, 2012 and 2013 and the unaudited condensed consolidated financial statements for the period ended 30 September 2014 on normal working days between 9.00 a.m. and 12.00 p.m., at the registered office of the Bank, at Corner Limassol & Athalassa Avenue, P.O. Box 24747, 1394 Nicosia as well as on the Bank’s official website www.hellenicbank.com.

Reference Document Pages Consolidated financial statements 2011 Annual Report 2011 [64-139] Auditors report for the year ended 31 December 2011 Annual Report 2011 [62-63] Consolidated financial statements 2012 Annual Report 2012 [60-149] Auditors report for the year ended 31 December 2012 Annual Report 2012 [58-59] Consolidated financial statements 2013 Annual Report 2013 [62-175] Auditors report for the year ended 31 December 2013 Annual Report 2013 [60-61] Reviewed, condensed consolidated financial Reviewed, condensed consolidated financial statements for the period statements for the period ended 30 September 2014 ended 30 September 2014 [3-48]

The content found on the official website of the Group is not part of this Prospectus, except the information incorporated into this Prospectus by reference.

10. CONSENTS

10.1 This Prospectus has been presented to and approved by the Board of Directors of the Bank. The Directors of the Bank have shown reasonable diligence to collect and record all the information required by law and they assume responsibility for the accuracy, correctness and completeness of the information and data contained in this Prospectus. The Directors state that they have taken all reasonable care to ensure that the information contained in the Prospectus is, to their knowledge, in accordance with the facts and contains no omission likely to affect its content.

10.2 The signatories of this Prospectus, having exercised all due diligence to formulate responsible knowledge, certify that the information contained in the Prospectus is true and complete, with no omissions likely to affect the content of the Prospectus or to mislead investors.

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10.3 The Underwriter responsible for drawing up the Prospectus, Hellenic Bank (Investments) Ltd., has given and has not withdrawn its written consent for the issue of this Prospectus of Hellenic Bank Public Company Ltd. dated 14 November 2014 to the references to its name in the form and context in which it appears in this document.

Board of Directors Hellenic Bank Public Company Limited Nicosia

14 November 2014

Dear Sirs,

With this letter, we give and do not withdraw our consent for the references to our name in the form and context in which it appears in the Prospectus of Hellenic Bank Public Company Limited dated 14 November 2014.

With Regards,

Hellenic Bank (Investments) Ltd

Underwriter responsible for drawing up the Prospectus

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10.4 The auditor of the Bank, KPMG Limited, has given and has not withdrawn its written consent for the issue of this Prospectus of Hellenic Bank Public Company Ltd. dated 14 November 2014 to the references to its name in the form and context in which it appears in this document.

Board of Directors Hellenic Bank Public Company Limited Nicosia

14 November 2014

Dear Sirs,

We are the auditors of Hellenic Bank Public Company Limited (the “Bank”) for the years 2011, 2012 and 2013. No audited financial statements have been prepared for any other period after 31 December 2013.

The financial statements of the Bank for the years ended 31 December 2011, 2012 and 2013 have been audited by us according to the International Auditing Standards and in our reports for these financial statements we have provided our opinion with no qualification.

Our Audit Report for the year ended 31 December 2012 included an emphasis of matter, which draws attention to the estimates and assumptions used for the preparation of the financial statements on a going concern basis, concerning the current economic uncertainties prevailing in Cyprus and the restructuring of the banking system in Cyprus. These factors could adversely affect the financial results, capital requirements and liquidity of the Company and the Group.

With this letter, we give and do not withdraw our consent for the references to our name in the form and context in which it appears in the Prospectus of the Bank dated 14 November 2014.

With Regards

KPMG Limited

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10.5 The legal advisor of the issue Mr. Alecos Markides has given and has not withdrawn his written consent to the references to his name in the form and context in which it appears in the Prospectus of the Bank dated 14 November 2014.

Board of Directors Hellenic Bank Public Company Ltd Nicosia

14 November 2014

I, the undersigned attorney, Alecos Markides with this present letter I confirm the following in relation to the Prospectus of the Hellenic Bank Public Company Ltd (the “Bank”), dated 14 November 2014:

1. The said Bank is incorporated by law and operates in accordance with the Companies Law, Cap. 113 and has the power to issue security titles to the public.

2. The proposal for listing securities is not subject to any limitation on the right to transfer.

3. All general information about the issuer and its capital referred to in this Prospectus are consistent with the data and Bank documents in the Bank’s file with the Department of Registrar of Companies and Official Receiver.

4. That in connection with this share capital increase and this Prospectus there is compliance with the provisions of Companies Law, Cap. 113, under the provisions of the Public Offer and Prospectus Law of 2005 of the Republic of Cyprus (as amended) and Regulation (EC) 809/2004 (as amended) of the Commission of the European Union as well as any other applicable laws and regulations.

I authorise the Cyprus Securities and Exchange Commission to disclose in its sole discretion, if it deems it appropriate, any of the information referred to in this statement to the public or to any persons it deems appropriate.

I hereby give and do not withdraw my consent for the inclusion of my affirmation dated 14 November 2014 in the form and context in which it appears in the Prospectus of the Bank dated 14 November 2014.

Alecos Markides Attorney Nicosia

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10.6 The Sole Global Coordinator and Joint Placement Agent, Deutsche Bank AG, London Branch, has given and has not withdrawn its written consent for the reference to its name in the form and context in which it appears in this Prospectus.

Board of Directors Hellenic Bank Public Company Limited Nicosia

14 November 2014

Dear Sirs,

With Regards, Deutsche Bank AG, London Branch Sole Global Coordinator and Joint Placement Agent

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10.7 The Joint Placement Agent, Axia Ventures Group Limited, has given and has not withdrawn its written consent for the reference to its name in the form and context in which it appears in this Prospectus.

Board of Directors Hellenic Bank Public Company Limited Nicosia

14 November 2014

Dear Sirs,

With Regards, Axia Ventures Group Limited Joint Placement Agent

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SELECTED DEFINITIONS

Additional Tier 1 capital As per the definition included in CRR/CRD IV, the transitional provisions imposed by Central Bank, directives and regulations of the Central Bank and any other relevant guidelines and regulations of the European Union as applied in Cyprus or any requirement that may apply to the Cypriot banking sector as part of the economic adjustment programme in Cyprus.

Affiliates A company in which the Bank holds directly or indirectly through related companies not less than twenty per cent. (20%) or more of the voting rights or of the company’s capital or where the Bank or other company of the Bank’s group exercises over the company significant influence or where the company and the Bank are or have been arranged under a single administration or have administrative, management or other bodies the majority of each body consisting mainly of the same persons (and as the term Affiliates is defined by the Banking Law 66(I) of 1997 as amended).

Article 5A Means article 5A of Law 105(I)/2013 which amended the Restructuring of Financial Institutions Law (L.200(I)/2011).

Article 5B Means article 5B of Law 105 (I)/2013 which amended the Restructuring of Financial Institutions Law (L.200(I)/2011).

Basel II Basel II is the second of the Basel Accords, issued by the Basel Committee on Banking Supervision (now extended and effectively superseded by Basel III) which consists of recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision.

Basel III Basel III is a global, voluntary regulatory standard on bank capital adequacy, stress testing and market liquidity risk. It was agreed upon by the members of the Basel Committee on Banking Supervision in 2010–11, and will be gradually introduced from 2013 until 2019. Basel III was developed in response to the deficiencies in financial regulation revealed by the financial crisis of 2007–08 and its main objective was to strengthen bank capital, increase bank liquidity and decrease bank leverage.

Board of Directors Means the Board of Directors of the Bank.

Capital Adequacy Ratio/Total Calculated in accordance with the provision included in Capital Ratio CRR/CRD IV, the transitional provisions imposed by Central Bank and any other relevant guideline and regulations of the European Union as applied in Cyprus or any requirement that may apply to the Cypriot banking sector as part of the economic adjustment programme in Cyprus.

CCS 1 The Convertible Capital Securities 1.

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CCS 2 The Convertible Capital Securities 2.

Central Bank The Central Bank of Cyprus.

Central Depository/Registry: Means the Central Registry of listed securities on the CSE.

Common Equity Tier 1 capital As per the definition include in CRR/CRD IV, the transitional provisions imposed by Central Bank, directives and regulations of the Central Bank and any other relevant guidelines and regulations of the European Union as applied in Cyprus or any requirement that may apply to the Cypriot banking sector as part of the economic adjustment programme in Cyprus.

Common Equity Tier 1 Ratio / Calculated in accordance with the provisions included in CET1 Ratio CRR/CRD IV, the transitional provisions imposed by Central Bank, directives and regulations of the Central Bank and any other relevant guidelines and regulations of the European Union as applied in Cyprus or any requirement that may apply to the Cypriot banking sector as part of the economic adjustment programme in Cyprus.

Competent Authority/Competent Means the Central Bank the ECB, the CySEC, the Ministry of Supervisory Authority Finance, the Council of Ministers of the Republic of Cyprus and any other competent authority.

Comprehensive Assessment Test Means the AQR and the adverse stress test scenario which was performed in cooperation with the EBA to test the balance sheet resilience of the Bank under stress scenarios

Core Tier 1 capital Same as Common Equity Tier 1 capital.

CRR/CRD IV Means the legislative proposals published by the European Commission on 26 June 2013 and that are in effect since 1 January 2014 which relate to the directive and regulation on the prudential oversight of credit institutions.

CSE Means the Cyprus Stock Exchange.

CSE Member/Operator Means any broker, brokerage firm, Cyprus investment firm or a broker partnership which is registered in the CSE member register.

CySEC Means the Cyprus Securities and Exchange Commission.

Deutche Bank Means Deutche Bank A.G., London Branch, 1 Great Winchester Street, London EC2N 2DB, United Kingdom

Directors/Members of the Board of Means the Directors of the Bank. Directors

Excluded Territories The United States (including its territories and possessions, any

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SELECTED DEFINITIONS state of the United States and the District of Columbia), Canada, Australia, South Africa, Japan or any other country, without exception, in which according to the laws thereof, the offer or the mailing or distribution of this Prospectus is illegal or violates any applicable laws, rules or regulations or People of the United States (“U.S. Persons”) (within the meaning of Regulation S of the Securities Act of the United States of 1933, “United States Securities Act of 1933”, as amended).

Exercise Application Means the application for the exercise of Subscription Rights by Holders which can be used for the exercise of Subscription Rights.

Exercise Period Means the period from 2 December 2014 to 11 December 2014 during which Beneficiaries and investors who acquire Subscription Rights during trading on the CSE can exercise the Subscription Rights they hold.

Exercise Price Means the exercise price of the Subscription Rights, i.e. €0,0375.

Hellenic Bank or Bank or The Hellenic Bank Public Company Limited. Company or Issuer

Hellenic Bank Group or Group Means the Hellenic Bank Public Company Limited and its subsidiary companies.

Holder Means the Holder or any other Investor who acquired Subscription Rights during their trading on the CSE, who hold them at their time of exercise.

Issue Means the current Subscription Rights Issue according to this Prospectus.

Joint Placement Agents Each of Deutsche Bank A.G., London Branch, 1 Great Winchester Street, London EC2N 2DB, United Kingdom (“Deutsche Bank”) and Axia Ventures Group Limited, G. Kranidioti 10, Nice Day House, 6th Floor, P.C. 1065 Nicosia, Cyprus

Last Date of Exercise of Means the last date, i.e. 11 December 2014 when Beneficiaries Subscription Rights and investors who acquire Subscription Rights during their trading on the CSE may exercise their Subscription Rights.

Letter of Allotment/Exercise Means the allocation letter regarding the Bank’s Subscription Rights Issue which on 25 November 2014 will be sent to the Beneficiaries registered in the Central Depository/Registry of CSE on the Record Date, i.e., on 19 November 2014, and which can be used for their exercise.

Minimum Capital Requirements Requirements established in accordance with the provisions of CRR/CRD IV, the transitional provisions imposed by Central Bank, directives and regulations of the Central Bank and any

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SELECTED DEFINITIONS other relevant guidelines and regulations of the European Union as applied in Cyprus or any requirement that may apply to the Cypriot banking sector as part of the economic adjustment programme in Cyprus.

New Shares Means the new, Ordinary Shares of nominal value €0,01 each, which will arise from (a) the exercise of Subscription Rights and Presubscription Right from the Holders and/or (b) the allocation of new unsubscribed shares which will remain according to the procedure to be determined at the discretion of the Board of Directors and as stated in this Prospectus.

New Unsubscribed Shares Means new shares which correspond to unexercised Subscription Rights. As defined in the prospectus dated 30 September 2013, means Non viable insolvent, bankrupt, not able to pay a substantial part of its obligations as they fall due or not able to continue its unhindered operation or undergoing restructuring or put under resolution pursuant to the Resolution of Credit & Other Institutions Law (L.17(I)/2013, as amended) or any other event or condition which is determined by applicable laws, regulations, requirements, guidelines and policies regarding the capital requirements of Hellenic Bank Public Company Limited or any other legislation for absorption of losses status or any other definition given by the Central Bank or other competent authority.

Ordinary Shares Means the fully paid ordinary, registered shares of the Bank.

Pillar 1 Pillar 1 of Basel III are the guidelines for calculating the Minimum Capital Requirements to cover credit risk, market risk and operational risk.

Pillar 2 Pillar 2 of Basel III includes rules to ensure that adequate capital is in place to support any risk exposures of the Group and requires appropriate risk management, reporting and governance policies. It also provides a framework for dealing with systemic risk, business risk, concentration risk, strategic risk, reputational risk, liquidity risk, legal and compliance risk which are not covered under Pillar 1. The Internal Capital Adequacy Assessment Process (ICAAP) is an internal exercise to assess Pillar 2 risks and hold appropriate levels of capital to cover such risks.

PIMCO Means the company Pacific Investment Management Company, LLC.

Presubscription Application for the Means the application by Holders who have exercised in time all Acquisition of New of their Subscription Rights for the acquisition of New Shares/Presubscription Unsubscribed Shares. Application

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SELECTED DEFINITIONS

Presubscription Period Means the period from 2 December 2014 to 11 December 2014 during which Subscription Rights Beneficiaries and investors who acquire Subscription Rights during trading on the CSE can subscribe to acquire any New Unsubscribed Shares as specified in Part IV of this Prospectus.

Presubscription Right The Holders of Subscription Rights who will exercise all of their Subscription Rights in time may, concurrently with the exercise of their Subscription Rights, exercise their Presubscription Right to acquire any New Unsubscribed Shares, i.e. shares that correspond to the unexercised Subscription Rights, at a price equal to the Exercise Price, i.e. €0,0375 per New Share, provided that the exercise of such Holder’s Subscription Rights and Presubscription Right does not result in such investor holding equal or in excess of 30,0% of the issued share capital of the Bank after giving effect to the issue of shares pursuant to the Subscription Rights and Presubscription Right.. New Shares issued pursuant to a Presubscription Right will be allocated on a pro rata basis up to 100% of the number of New Shares corresponding to the Subscription Rights exercised by such Holder. If the Presubscription Right is in excess of the aforementioned limit of 100%, then satisfying the excess percentage will be at the discretion of the Board.

Prospectus Means the prospectus dated 14 November 2014, which has been prepared pursuant to the Public Offer and Prospectus Law of 2005 (as amended) and Regulation 809/2004 of the Commission of the European Union as amended.

Prospectus Law Means the Public Offer and Prospectus Law (Law 114(Ι)/2005) (as amended) which incorporates into national law the Prospectus Directive and the Regulation (EC) No 809/2004 (as amended) of the Commission of the European Union.

Prospectus Directive Means the European Union act titled “Directive 2003/71/EC of the European Parliament and Council at 4 November 2003 related to the publication of a prospectus during a public offer of securities or during their listing for trading as amended by the directive 2001/34/EC” as amended by the Directive 2010/78/EC of the European Parliament and Council at 24 November 2010

Record Date Means the 19 November 2014.

Resolution Authority The Central Bank, in its capacity as resolution authority pursuant to the provisions of the Resolution of Credit and Other Institutions Laws (L. 17(I)/2013, as amended).

Shareholders Means current shareholders who are registered as shareholders of Hellenic Bank Public Company Limited.

Shareholder Register Means the shareholders register of Hellenic Bank Public

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SELECTED DEFINITIONS Company Limited.

Securities Subscription Rights and New Shares.

Securities Act Means Securities Act of 1933 of the United States of America, as amended

Solvency Hellenic Bank Public Company Limited will be deemed solvent if, (a) it is able to repay its debts to creditors when these fall due and (b) its assets are worth more than its liabilities (except its liabilities to CCS 1 and CCS 2 holders and any other securities ranking pari passu with them).

Stock Market Laws and The in effect Securities and Stock Exchange Laws and Regulations Regulations of the CSE as may be amended, revised or replaced.

Subscription Rights Means Subscription Rights offered to Beneficiaries through this Prospectus.

Subscription Rights Beneficiaries / Means the bank shareholders recorded in the Shareholders Beneficiaries Register, on the Record Date, i.e. on 19 November 2014.

Subsidiary Has the meaning given to the term “subsidiary” company in the Companies Law, Cap. 113.

Subscription Price Means the price at which the shares corresponding to the unexercised Subscription Rights will be offered, and which shall be not less than the price at which the offer is conducted.

Subscription Rights Register Means the Subscription Rights Register to purchase Shares of this issue held on the Central Depository/Registry of the CSE.

Subscription Rights Trading Means the period from 28 November 2014 to 5 December 2014 Period during which Subscription Rights will be traded on the CSE.

Supervisory Authority Means the Central Bank of Cyprus or any other competent/regulatory authority.

Tier 1 capital As per the definition included in CRR/CRD IV, the transitional provisions imposed by Central Bank, directives and regulations of the Central Bank and any other relevant guideline and regulations of the European Union as applied in Cyprus or any requirement that may apply to the Cypriot banking sector as part of the economic adjustment programme in Cyprus.

Tier 2 capital As per the definition included in CRR/CRD IV, the transitional provisions imposed by Central Bank, directives and regulations of the Central Bank and any other relevant guideline and regulations of the European Union as applied in Cyprus or any requirement that may apply to the Cypriot banking sector as part of the economic adjustment programme in Cyprus.

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SELECTED DEFINITIONS

Tier 1 Ratio Calculated in accordance with the provision included in CRR/CRD IV, the transitional provisions imposed by Central Bank, directives and regulations of the Central Bank and any other relevant guideline and regulations of the European Union as applied in Cyprus or any requirement that may apply to the Cypriot banking sector as part of the economic adjustment programme in Cyprus.

Troika Means the European Commission, the European Central Bank and the International Monetary Fund.

VAT Means Value Added Tax. It is imposed on each taxable delivery of goods or provision of services, i.e. each delivery of goods or provision of services carried out within Cyprus by a person subject to tax, within their business activities or for the promotion of their business, and is subject to the specific transaction not being tax-exempt, under VAT law. In addition, VAT is imposed on imports of goods and on the acquisition of any goods within Cyprus.

VAT is an indirect tax on consumption. It is an indirect tax because between the consumer, who is the final payee of the tax, and the VAT Services, there is a businessman-seller (person subject to tax) acting as an intermediary who receives the tax from customers and attributes it to the public funds.

VAT is imposed on transactions that take place at all stages of the goods and services production process and the transfer and distribution process.

Working day Means any day, other than a Saturday or a Sunday or a bank holiday, on which commercial banks are open to the public in Cyprus.

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The below responsible persons declare that, having taken all due measures for this purpose, the information presented in this Prospectus is, to their knowledge, in accordance with the facts and that there are no omissions that could have altered its content.

On behalf of the issuer, Hellenic Bank Public Company Ltd:

Irena A. Georgiadou, Chairwoman ......

Marinos S. Yannopoulos, Director ......

David Whalen Bonano, Director ......

Vassos Y. Komodromos, Director ......

Ioannis A. Matsis, Director ......

Marianna Pantelidou Neophytou, Director ......

Dr. Evripides A. Polycarpou, Director ......

Georgios Fereos, Director ......

Ioannis Ch. Charilaou, Director ......

Dr. Andreas G. Charitou, Director ......

Christodoulos A. Hadjistavris, Director ......

On behalf of the Underwriter:

Hellenic Bank (Investments) Ltd Underwriter responsible for drawing up the Prospectus

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