DNB Bank ASA (Incorporated with Limited Liability in Norway) U.S.$10,000,000,000 Medium-Term Note Program

DNB Bank ASA (incorporated with limited liability in Norway) U.S.$10,000,000,000 Medium-Term Note Program

Under the Medium-Term Note Program (the “Program”) described in this prospectus (the “Prospectus”), DNB Bank ASA (the “Issuer” or “the Bank”), subject to compliance with all relevant laws, regulations and directives, may from time to time issue notes (the “Notes”) denominated in any currency agreed by the Issuer and the relevant Dealer(s) (as defined below). The aggregate nominal amount of Notes outstanding will not at any time exceed U.S.$10,000,000,000 (or the equivalent in other currencies), subject to increase as provided herein. Notice of the aggregate principal amount of the Notes, interest (if any) payable in respect of the Notes, the issue price of the Notes and any other terms and conditions not contained herein which are applicable to each offering of the Notes, will be set out in the relevant Final Terms (the “Final Terms”) or, in the case of Exempt Notes (as defined below), a Pricing Supplement (as defined below). Any Notes issued under the Program on or after the date of this Prospectus are issued subject to the provisions herein. This does not affect any Notes issued prior to the date of this Prospectus.

The Notes may be issued on a continuing basis to the Dealers and any additional Dealer(s) appointed under the Program from time to time, which appointment may be for a specific issue or on an ongoing basis (each, a “Dealer” and, together, the “Dealers”). References in this Prospectus to the “relevant Dealer” shall, in relation to any issue of Notes, be to the Dealer agreeing to subscribe for such Notes or, in the case of each issue of Notes syndicated amongst a group of Dealers, the Lead Manager(s) of such issue.

Notes will be issued in fully registered form. Global Notes (as defined herein) representing the Notes will be held by or on behalf of The Depository Trust Company (“DTC”) for the benefit of participants in DTC or be registered in the name of a nominee for, and deposited with, a common depositary or common safekeeper for Euroclear Bank S.A./N.V. (“Euroclear”) and Clearstream Banking, société anonyme (“Clearstream, Luxembourg”). See “Settlement”. The first trade done off this Program will be settled with DTC on a stand-alone basis.

This Prospectus has been approved by the Central Bank of Ireland as competent authority under EU Directive 2003/71/EC, as amended (the “Prospectus Directive”). The Central Bank of Ireland only approves this Prospectus as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Directive. Such approval relates only to the Notes which are to be admitted to trading on a regulated market for the purposes of Directive 2004/39/EC (the “Markets in Financial Instruments Directive”) and/or which are to be offered to the public in any Member State of the European Economic Area (the “EEA”).

Application has been made to the Irish Stock Exchange plc (the “Irish Stock Exchange”) for Notes issued under the Program (other than Exempt Notes (as defined below)) within 12 months of the date of this Prospectus to be admitted to the official list of the Irish Stock Exchange (the “Official List”) and to trading on its regulated market (the “Main Securities Market”). This Prospectus constitutes a base prospectus for the purpose of the Prospectus Directive. The Main Securities Market is a regulated market for the purposes of the Markets in Financial Instruments Directive. References in this Prospectus to Notes being “listed” (and all related references) shall mean that such Notes have been admitted to the Official List and to trading on the Main Securities Market.

The applicable pricing supplement (the “Pricing Supplement”) in respect of the issue of any Exempt Notes will specify whether or not such Exempt Notes will be admitted to listing or trading on any non-EEA stock exchanges and/or markets, if applicable.

The requirement to publish a prospectus under the Prospectus Directive only applies to Notes which are to be admitted to trading on a regulated market in the European Economic Area and/or offered to the public in the European Economic Area other than in circumstances where an exemption is available under Article 3.2 of the Prospectus Directive (as implemented in the relevant Member State(s)). References in this Prospectus to “Exempt Notes” are to Notes for which no prospectus is required to be published under the Prospectus Directive. The Central Bank has neither reviewed nor approved any information in this Prospectus pertaining to Exempt Notes.

Prospective investors should have regard to the factors described under the section headed “Risk Factors”, beginning on page 1 of this Prospectus.

The Notes have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws and may not be offered or sold directly or indirectly within the United States or to or for the account or benefit of U.S. persons, as defined in Regulation S under the Securities Act (“Regulation S”), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Notes may be offered for sale only (i) in the United States, to qualified institutional buyers (“QIBs”) within the meaning of, and in reliance on, Rule 144A under the Securities Act (“Rule 144A”), or in a transaction not subject to the registration requirements of the Securities Act; or (ii) outside the United States in offshore transactions to persons other than U.S. persons in reliance on, and in accordance with, Regulation S, in each case, in compliance with applicable laws and regulations. Prospective purchasers are hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. See “Plan of Distribution and Transfer Restrictions—Selling Restrictions”.

EACH INITIAL AND SUBSEQUENT PURCHASER OF THE NOTES OFFERED HEREBY IN MAKING ITS PURCHASE WILL BE DEEMED TO HAVE MADE CERTAIN ACKNOWLEDGMENTS, REPRESENTATIONS AND AGREEMENTS INTENDED TO RESTRICT THE RESALE OR OTHER TRANSFER OF SUCH NOTES AND MAY IN CERTAIN CASES BE REQUIRED TO PROVIDE CONFIRMATION OF COMPLIANCE WITH SUCH RESALE OR OTHER TRANSFER RESTRICTIONS. SEE “PLAN OF DISTRIBUTION AND TRANSFER RESTRICTIONS—U.S. TRANSFER RESTRICTIONS”.

The Program provides that Notes may be listed or admitted to trading, as the case may be, on such other or further stock exchanges or markets as may be agreed between the Issuer and the relevant Dealer. The Issuer may also issue Notes which are not listed or admitted to trading on any market.

The Program has been rated “A+” (senior unsecured) by Standard & Poor’s Credit Market Services Europe Limited (“S&P”) and “(P)Aa2” (senior unsecured)/“(P)Baa1” (subordinated) by Moody’s Investors Service Limited (“Moody’s”). Subordinated Notes issued under the Program are expected to be assigned an “A-” rating by S&P. The Issuer’s long-term senior unsecured debt has been rated “AA (low)” by DBRS Ratings Limited (“DBRS”). Each of S&P, Moody’s and DBRS is established in the European Union and is registered under the Regulation (EC) No. 1060/2009 (as amended) (the “CRA Regulation”). Notes issued pursuant to the Program may be rated or unrated. Where a Tranche (as defined below) of Notes is rated, its rating will be specified in the applicable Final Terms, or, as the case may be, the applicable Pricing Supplement and will not necessarily be the same as the rating applicable to the Program. A security rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency. Arranger Barclays Dealers Barclays Goldman, Sachs & Co. The date of this Prospectus is May 26, 2016

IMPORTANT INFORMATION

This Prospectus constitutes a base prospectus in respect of all Notes other than Exempt Notes issued under the Program for the purposes of Article 5.4 of the Prospectus Directive. The Issuer accepts responsibility for the information contained in this Prospectus and the Final Terms or, as the case may be, the Pricing Supplement relating to any Tranche of Notes issued under the Program. In the case of a Tranche of Notes, which is the subject of a Pricing Supplement, each reference in this Prospectus to information being specified or identified in the relevant Final Terms shall be read and construed as a reference to such information being specified or identified in the relevant Pricing Supplement (in the case of Exempt Notes) unless the context requires otherwise. To the best of the knowledge and belief of the Issuer (having taken all reasonable care to ensure that such is the case) the information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information.

This Prospectus is to be read in conjunction with all documents which are deemed to be incorporated herein by reference. See “Documents Incorporated by Reference”. This Prospectus shall be read and construed on the basis that such documents are incorporated and form part of this Prospectus.

Neither the Arranger, the Dealers nor the Trustee (as defined below) have separately verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Arranger, the Dealers or the Trustee as to the accuracy or completeness of the information contained or incorporated by reference in this Prospectus or any information provided by the Issuer in connection with the Program, the Notes or their distribution. None of the Arranger, any Dealer or the Trustee accepts any liability in relation to the information contained or incorporated by reference in this Prospectus or any other information provided by the Issuer in connection with the Program.

The Issuer has not authorized any person to give any information or to make any representation not contained in or not consistent with this Prospectus or any other information supplied in connection with the Program or the Notes and, if given or made, such information or representation must not be relied upon as having been authorized by the Issuer, the Arranger or any of the Dealers.

Neither this Prospectus nor any other information supplied in connection with the Program or the Notes should be considered as a recommendation by the Issuer, the Arranger, the Dealers or the Trustee that any recipient of this Prospectus or any other information supplied in connection with the Program or any Notes should purchase any Notes. Each investor contemplating purchasing any Notes should make its own independent investigation of the Issuer’s financial condition and affairs, and its own appraisal of the Issuer’s creditworthiness. Investors should not construe the contents of this Prospectus as legal, business, financial or tax advice and should consult their own attorney, business advisor, financial advisor or tax advisor and make its own assessment of the risks involved. Neither this Prospectus nor any other information supplied in connection with the Program or the issue of any Notes constitutes an offer or invitation by or on the Issuer’s behalf or by or on behalf of the Arranger or any Dealer or the Trustee to any person to subscribe for or to purchase any Notes.

Neither the delivery of this Prospectus nor the offering, sale or delivery of any Notes shall in any circumstances imply that the information contained herein concerning the Issuer is correct at any time subsequent to the date hereof or that any other information supplied in connection with the Program is correct as of any time subsequent to the date indicated in the document containing the same. The Arranger and the Dealers expressly do not undertake to review the Issuer’s financial condition or affairs during the life of the Program or to advise any investor in the Notes of any information coming to their attention. Investors should review, among other things, the most recently published documents incorporated by reference into this Prospectus when deciding whether or not to purchase any Notes.

Copies of Final Terms relating to Notes which are admitted to the Official List and to trading on the Main Securities Market will be published on the website of the Central Bank of Ireland at http://www.centralbank.ie/regulation/securities-markets/prospectus/Pages/approvedprospectus.aspx and the

iii 0029834-0000195 ICM:24391105.2

website of the Irish Stock Exchange at www.ise.ie and will be available from the registered office of the Issuer and the specified offices of the Paying Agent (as defined below) for the time being in London.

Certain information under “Risk Factors” and “Description of the DNB Bank Group” has been extracted from publications from the Central Bank of Norway, Statistics Norway, Norges Bank, Eurostat and the OECD and references to any such third-party sources of information are included herein. The Issuer confirms that such information has been accurately reproduced and that, so far as it is aware, and is able to ascertain from information published by such sources, no facts have been omitted which would render the reproduced information inaccurate or misleading.

The Notes have not been, and will not be, registered under the Securities Act or with any securities regulatory authority or any state or other jurisdiction of the United States. Unless otherwise specified in any supplement to this Prospectus, each series of Notes is initially being privately placed exclusively to persons reasonably believed by the Dealers to be QIBs within the meaning of Rule 144A or in other transactions exempt from registration in accordance with Regulation S. Notes offered to QIBs in reliance on Rule 144A will initially be represented by one or more global notes (the “Rule 144A Global Notes”) and the Notes offered outside the United States in reliance on Regulation S will initially be represented by one or more global notes (the “Regulation S Global Notes” and, together with the Rule 144A Global Notes, the “Global Notes”). After their initial private placement, the Notes represented by Rule 144A Global Notes may be resold to QIBs in transactions satisfying the requirements of Rule 144A or in transactions exempt from registration in accordance with Regulation S. Prospective purchasers are hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. See “Plan of Distribution and Transfer Restrictions—Selling Restrictions”. Neither this Prospectus, any Final Terms nor any Pricing Supplement constitute an offer to sell or the solicitation of an offer to buy any Notes in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction.

The distribution of this Prospectus and the offer or sale of the Notes may be restricted by law in certain jurisdictions. None of the Issuer, the Arranger, the Dealers or the Trustee represent that this Prospectus may be lawfully distributed, or that any Notes may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such distribution or offering. In particular, no action has been taken by the Issuer, the Arranger, the Dealers or the Trustee which is intended to permit a public offering of any Notes or distribution of this Prospectus in any jurisdiction where action for that purpose is required. Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this Prospectus nor any advertisement or other offering material may be distributed or published in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and regulations. This Prospectus may only be used for the purposes for which it has been published. Persons into whose possession this Prospectus or the Notes may come must inform themselves about, and observe, any such restrictions on the distribution of this Prospectus and the offering and sale of the Notes. In particular, there are restrictions on the distribution of this Prospectus and the offer or sale of the Notes in the United States, the European Economic Area, the United Kingdom, Norway, Japan, Hong Kong, Singapore and Canada. See “Plan of Distribution and Transfer Restrictions”.

This Prospectus has been prepared on the basis that any offer of Notes in any Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) will be made pursuant to an exemption under the Prospectus Directive, as implemented in that Relevant Member State, from the requirement to publish a prospectus for offers of Notes. Accordingly, any person making or intending to make an offer in that Relevant Member State of Notes which are the subject of an offering contemplated in this Prospectus as completed by Final Terms in relation to the offer of those Notes may only do so in circumstances in which no obligation arises for the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive, in each case, in relation to such offer. Neither the Issuer nor any Dealer have authorized, nor do they authorize, the making of any offer of Notes in circumstances in which an obligation arises for the Issuer or any Dealer to publish or supplement a prospectus for such offer.

The Notes may not be a suitable investment for all investors. Each potential investor in the Notes must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor may wish to consider, either on its own or with the help of its financial and other professional advisers, whether it:

(i) has sufficient knowledge and experience to make a meaningful evaluation of the relevant Notes, the merits and risks of investing in the relevant Notes and the information contained or incorporated by reference in this Prospectus or any applicable supplement to this Prospectus;

(ii) has access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the relevant Notes and the impact such investment will have on its overall investment portfolio;

(iii) has sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes, including Notes with principal or interest payable in one or more currencies, or where the currency for principal or interest payments is different from the currency in which such potential investor’s financial activities are principally denominated;

(iv) understands thoroughly the terms of the relevant Notes and is familiar with the behavior of any relevant indices and financial markets; and

(v) is able to evaluate possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

Legal investment considerations may restrict certain investments. The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (1) Notes are legal investments for it, (2) Notes can be used as collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledge of any Notes. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of Notes under any applicable risk-based capital or similar rules.

STABILIZATION

Notes will be issued in tranches (each, a “Tranche”). In connection with the issue of any Tranche of Notes, one or more relevant Dealers (in such capacity, the “Stabilizing Manager(s)”) may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilizing Manager(s) (or persons acting on behalf of a Stabilizing Manager) will undertake stabilization action. Any stabilization action may begin on or after the date on which adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of Notes. Any stabilization action or over-allotment must be conducted by the relevant Stabilizing Manager(s) (or persons acting on behalf of any Stabilizing Manager(s)) in accordance with all applicable laws and rules.

NOTICE TO PROSPECTIVE INVESTORS IN THE UNITED STATES

In the United States, this Prospectus is being furnished on a confidential basis solely for the purpose of enabling a prospective investor to consider purchasing the Notes and it may not be forwarded or redistributed to any other person.

The Notes have not been, and will not be, registered under the Securities Act or with any securities regulatory authority or any state or other jurisdiction of the United States. The Notes may not be offered or sold directly or indirectly within the United States or to or for the account or benefit of U.S. persons, as defined in Regulation S

except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Notes may be offered for sale only (i) in the United States, to QIBs within the meaning of, and in reliance on, Rule 144A, or in a transaction not subject to the registration requirements of the Securities Act; or (ii) outside the United States in offshore transactions to persons other than U.S. persons in reliance on, and in accordance with, Regulation S except pursuant to an exemption from or in a transaction not subject to the registration requirements of the Securities Act, in each case, in compliance with applicable laws, and regulations. Prospective purchasers are hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. See “Plan of Distribution and Transfer Restrictions—Selling Restrictions”.

The Notes have not been recommended, approved or disapproved by any U.S. federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities have not passed upon the merits of the Program or confirmed the accuracy or determined the adequacy of this Prospectus. Any representation to the contrary is a criminal offense in the United States.

TABLE OF CONTENTS

Page

IMPORTANT INFORMATION ...... iii

RISK FACTORS ...... 1

PRESENTATION OF CERTAIN FINANCIAL AND OTHER INFORMATION ...... 25

DOCUMENTS INCORPORATED BY REFERENCE ...... 29

OVERVIEW OF THE ISSUER ...... 31

GENERAL DESCRIPTION OF THE PROGRAM ...... 35

USE OF PROCEEDS ...... 41

CAPITALIZATION ...... 42

SELECTED CONSOLIDATED FINANCIAL INFORMATION ...... 43

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...... 47

DESCRIPTION OF THE DNB BANK GROUP ...... 78

SELECTED STATISTICAL DATA ...... 86

RISK MANAGEMENT AND RISK-ADJUSTED PERFORMANCE ...... 109

MANAGEMENT ...... 123

SUPERVISION AND REGULATION ...... 134

TERMS AND CONDITIONS OF THE NOTES ...... 141

FORM OF FINAL TERMS ...... 172

FORM OF PRICING SUPPLEMENT ...... 180

TAXATION ...... 188

CERTAIN ERISA CONSIDERATIONS ...... 197

PLAN OF DISTRIBUTION AND TRANSFER RESTRICTIONS ...... 199

SETTLEMENT ...... 209

GENERAL INFORMATION ...... 213

0029834-0000195 ICM:24391105.2 vii

RISK FACTORS

In this Prospectus, “the Bank” and “the Issuer” refer to DNB Bank ASA, a subsidiary of DNB ASA. The “DNB Bank Group” refers to the Bank together with the Bank’s subsidiaries. The “DNB Group” refers to DNB ASA together with its subsidiaries. Before investing in the Notes, prospective investors should consider carefully the following risks and uncertainties in addition to the other information presented in this Prospectus. If any of the following risks actually occurs, the DNB Bank Group’s business, results of operations, financial condition or prospects could be materially adversely affected. In that event, the value of the Notes could decline, and you may lose part or all of your investment. The risks and uncertainties described below are those that the DNB Bank Group believes are material, but these risks and uncertainties are not the only ones the DNB Bank Group faces. Additional risks and uncertainties not presently known to the DNB Bank Group or that the DNB Bank Group currently deems immaterial may also have a material adverse effect on the business, results of operations, financial condition or prospects of the DNB Bank Group and could negatively affect the price of the Notes.

Prospective investors should carefully review the entire Prospectus and should reach their own views and decisions on the merits and risks of investing in the Notes in light of the investor’s personal circumstances. Furthermore, investors should consult their financial, legal and tax advisors to carefully review the risks associated with an investment in the Notes.

Risks Related to the Issuer

Risks Related to Macroeconomic Conditions

Disruptions and volatility in the global financial markets may adversely impact the DNB Bank Group.

The global capital and credit markets have been characterized by volatility and disruption in recent years. Challenging market conditions have resulted in greater volatility but also in reduced liquidity, widening of credit spreads and lack of price transparency in credit markets. Global markets and economic conditions have been negatively impacted for several years by various factors including market perceptions regarding the ability of certain EU Member States to service their sovereign debt obligations, including Greece, Ireland, Italy, Portugal and Spain. Concerns about credit risk (including that of sovereign governments) are influenced by the market’s perception of the global economy generally, as well as perceptions of the strength of the European banking sector. Growing uncertainty about the Chinese economy and its potential impact on financial markets and the real economy has increased since the summer of 2015. A further reduction in the growth rate of China’s economy, including its GDP growth, could negatively impact the global economy and economic conditions in Europe. Slower growth and higher unemployment than expected in Europe could trigger heightened credit risk in the financial markets.

Although Norway is not a member of the European Union, such developments significantly affect Norway and the DNB Bank Group since the European Union is one of Norway’s principal trading partners and Norway is a member of the broader European Economic Area. Economic conditions in the European Union are further subject to the risks of slowdown and volatility as a result of the considerable uncertainty surrounding the United Kingdom’s June 23, 2016 referendum on whether to exit the European Union and uncertainty as to whether and to what extent such an exit could also negatively impact the European markets.

The precise nature of all the risks and uncertainties DNB faces as a result of the global economic outlook cannot be identified and many of these risks are outside DNB’s control. No assurance can be given as to future economic conditions in any market or as to the sustainability of the improvement in any market.

Any further turbulence in credit or other markets could have a material adverse effect on, among others, the DNB Bank Group’s ability to access capital and liquidity on financial terms acceptable to it. Any of the

foregoing factors could have a material adverse effect on the DNB Bank Group’s business, financial condition and results of operations.

Negative economic developments and conditions in the markets in which the DNB Bank Group operates may adversely affect the DNB Bank Group’s business and results of operations and are likely to continue to do so if those conditions persist or recur.

The DNB Bank Group’s business activities are dependent on the level of banking, finance and financial services required by its customers. In particular, borrowing levels are heavily dependent on customer confidence, employment trends, the state of the economy and market interest rates at the time. The DNB Bank Group’s performance is significantly influenced by general economic conditions in Norway and, to a lesser extent, the other countries where it operates, as well as general global economic conditions as they may affect particular sectors of the economy that are important to the DNB Bank Group’s business. As the DNB Bank Group currently conducts the majority of its business in Norway, its performance is influenced by the level and cyclical nature of business activity in Norway, which is in turn affected by both domestic and international economic factors (for example, fluctuations in the price of oil and gas) and political events including those which have a negative impact on the global financial markets as described above under “—Disruptions and volatility in the global financial markets may adversely impact the DNB Bank Group”.

Lower oil prices towards the end of 2014 resulted in a significant depreciation of the Norwegian kroner and widening credit spreads. During 2015, oil prices continued to decrease primarily due to oversupply and uncertainty about future demand, and the Norwegian kroner weakened further. Major oil producers significantly revised their investment plans for the coming years and customer confidence was negatively impacted. Petroleum investments fell by nearly 15 per cent between 2014 and 2015 (source: Central Bank of Norway). Further, the 2015 GDP growth in Norway decreased to 1.0 per cent compared to 2.3 per cent in 2014 (source: Statistics Norway). Continued low oil price and reduced oil related investments may have a further adverse effect on the Norwegian economy and the DNB Group’s customers. The impact of these conditions could have a material adverse effect on the DNB Bank Group’s business, financial condition and results of operations.

In Norway, increases in real wages and low interest rates combined with a relatively low supply of housing have contributed to a significant increase in housing prices. According to Statistics Norway, housing prices in Norway have risen over 40 per cent since 2007, and about 6 per cent during 2015. The household leverage (debt to disposable income) ratio in Norway has also risen significantly over the past ten years and as of the end of 2015 stood at approximately 215 per cent (source: Central Bank of Norway). Housing price growth in Norway is generally expected to gradually decline (other than in the Oslo area) and real housing prices could reverse to some extent in the long term. A correction in housing prices, if accompanied by weakened economic conditions and/or higher unemployment, could have a material adverse effect on the Norwegian economy and a material adverse effect on the Bank’s financial condition.

The large influx of immigrants into Europe and any potential resultant increase in barriers to trade or migration among European countries in response thereto could also have a negative impact on growth in the region.

The unemployment rate in Norway has been at a historically low level in a European context. The unemployment rate in Norway at December 31, 2008 (based on the Labor Force Survey; source: Statistics Norway and Norges Bank) amounted to 2.9 per cent. However, the unemployment rate has been increasing over the past years, and is expected to increase further in the coming years. At year-end 2015, the unemployment rate amounted to 4.5 per cent (based on the Labor Force Survey; source: Statistics Norway and Norges Bank). Labor market developments such as increasing unemployment reflect the decline in activity in the petroleum sector and weaker growth in the Norwegian economy.

Adverse economic developments of the kind described above, along with market turmoil and recessionary economic conditions, especially in European countries, have affected the DNB Bank Group’s business in a number of ways, and such developments may continue to affect, among other things, the income, wealth,

liquidity, businesses and/or financial condition of the DNB Bank Group’s customers, which, in turn, could further reduce the credit quality of the DNB Bank Group’s loan portfolio and demand for the DNB Bank Group’s financial products and services. In addition, in a context of continued market turmoil, recessionary economic conditions and increasing unemployment coupled with declining consumer spending, the value of assets collateralizing the DNB Bank Group’s secured loans could decline significantly, which could result in increased impairments. See “—The DNB Bank Group is exposed to the risk of material deterioration in the quality of its loan portfolio and resulting impairments”.

Any or all of the conditions described above may have a material adverse effect on the DNB Bank Group’s business, financial condition and results of operations, and measures implemented by the DNB Bank Group might not be adequate to reduce any credit, market and liquidity risks.

Risks Related to the DNB Bank Group’s Loan Portfolio

The DNB Bank Group’s business is significantly affected by credit risk.

The DNB Bank Group is subject to credit risk, or the risk that the DNB Bank Group’s borrowers and other counterparties are unable to fulfill their payments obligations. Adverse changes in the credit quality of the DNB Bank Group’s borrowers or counterparties or a general deterioration in Norwegian, U.S., European or global economic conditions, or adverse changes arising from systemic risk in the global financial system, could affect the recoverability and value of the DNB Bank Group’s assets and require an increase in the DNB Bank Group’s impairments. Any significant increase in the DNB Bank Group’s credit risk may have a material adverse effect on its results of operations, financial condition or prospects.

The DNB Bank Group is exposed to the risk of material deterioration in the quality of its loan portfolio and resulting impairments.

The DNB Bank Group records impairments of its loans and guarantees in accordance with IFRS; however, the impairments made are based on available information, estimates and assumptions and are subject to uncertainty, and there can be no assurance that they will be sufficient to cover the amount of actual losses as they occur. The DNB Bank Group’s impairments totaled NOK 1,174 million in the three months ended March 31, 2016, compared to NOK 575 million in the corresponding period in 2015, and NOK 2,270 million in the full year 2015 compared to NOK 1,639 million in the full year 2014. Adverse changes in the credit quality of the DNB Bank Group’s borrowers and counterparties or a decline in collateral values would likely require an increase in individual impairments and/or in collective impairments, which in turn would adversely affect the DNB Bank Group’s financial performance.

The DNB Bank Group’s exposure to corporate customers is particularly subject to adverse changes in credit quality in the current economic environment in the DNB Bank Group’s markets. Further, actual loan losses and losses on other commitments vary over the business cycle. For example, as some of the economies of the markets in which the DNB Bank Group operates have deteriorated over the past three years, credit risk associated with certain borrowers and counterparties in these markets has increased. A significant increase in the size of the DNB Bank Group’s impairments, or write-offs of loans and guarantees not covered by impairments, would have a material adverse effect on the DNB Bank Group’s business, financial condition and results of operations.

Oil-related exposures

As at March 31, 2016, the DNB Bank Group’s oil, gas and offshore portfolio represented 8 per cent of total exposure at default. The significant drop in oil prices since the second half of 2014 increases the risks related to this portfolio. The average day rates for deep water rigs have dropped since then and so has rig utilization. There is a risk that the overall market balance will not improve for several years. The reduced rig activity has also led to reduced OSV (offshore supply vessel) demand and an increasing part of the fleet is in lay-up. In the first

quarter of 2016, DNB reported a significant negative risk migration within the Rig and OSV portfolios. The reduced oil price will continue to impact the oil-related industry, and this might result in a material adverse effect on the cash flows of the companies operating in this industry. This could have a significant impact on oil, gas and offshore companies’ profitability, and consequently on their respective credit quality and thus lead to a material increase in impairments on losses experienced by the DNB Bank Group on its loan portfolio. See “Selected Statistical Data—Gross and net impaired commitments”.

The shipping industry

As of March 31, 2016 loans to customers in the shipping sector represented 6 per cent of total exposure at default. The DNB Bank Group is a major supplier of credit to the shipping industry. The shipping industry is driven, among other things, by growth in international trade. The downturn in the global economy has negatively impacted world trade, and this has in turn resulted in material decreases in freight volumes and rates in the shipping industry, and corresponding material decreases in the revenues of businesses in the shipping industry. The tanker, dry bulk and container sectors have been particularly affected. Though the DNB Bank Group bases its internal credit analysis of the shipping industry on low expected rate estimates, actual rates for DNB’s shipping segments have historically been volatile and could be lower than expected; in recent years, shipping rates have exhibited significant downward pressure. Individual impairments within the shipping, offshore and logistic division increased from NOK 160 million in 2011 to NOK 943 million in 2012. Although some impairments were reversed in the following years, there is a risk that a deterioration in economic conditions may continue to impact the shipping industry, resulting in a material adverse effect on the cash flows of the companies operating in this industry as well as the ship values and values of other assets that serve as collateral for credit provided to lenders within this industry. Any of these adverse effects could have a significant impact on shipping companies’ profitability, and consequently on their respective credit quality, and thus lead to a material increase in impairments and losses experienced by the DNB Bank Group on its loan portfolio. See “Selected Statistical Data—Gross and net impaired commitments”.

The real estate market

The DNB Bank Group provides mortgage lending both in the retail and corporate markets. As of December 31, 2015, the DNB Bank Group’s Loans and receivable within real estate (commercial) amounted to NOK 196.3 billion. Further loans and receivables to private individuals of which the most part is residential mortgage lending amounted to NOK 724.1 billion as of December 31, 2015. Accordingly, a decline in the value of real estate, whether as a result of developments in the broader economy, a reduction in the availability of credit or otherwise, could reduce the value of the collateral for these loans significantly and, if accompanied by weakened economic conditions and/or higher unemployment, could have a material adverse effect on the quality of the DNB Bank Group’s real estate loans. This could in turn lead to a material increase in impairments recorded by the DNB Bank Group on its loan portfolio within this sector. See “Selected Statistical Data—Gross and net impaired commitments”.

In addition to its exposure to certain sectors, the DNB Bank Group has significant credit exposure to individual entities. In the event that any one or more of these entities were to experience difficult business or operating conditions such that the DNB Bank Group’s loans or guarantees were to become impaired, it could have a material impact on the DNB Bank Group’s results of operations.

Counterparty defaults could have a material adverse effect on the DNB Bank Group.

The DNB Bank Group routinely executes transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, funds and other institutional and corporate customers. Many of these transactions expose the DNB Bank Group to the risk that its counterparty in a foreign exchange, interest rate, commodity, equity or credit derivative contract will default on its obligations prior to maturity when the DNB Bank Group has an outstanding claim against that counterparty. Due to volatility in foreign exchange and fixed income markets since 2007, this risk has remained at an elevated level compared to

the period preceding the global financial and economic crisis. This counterparty risk may also be exacerbated when the collateral held by the DNB Bank Group cannot be realized or is liquidated at prices not sufficient to recover the full amount of counterparty exposure. Any of the foregoing could have a material adverse effect on the DNB Bank Group’s business, financial condition and results of operations. As a consequence of its transactions in financial instruments, including foreign exchange rate and derivative contracts, the DNB Bank Group is also exposed to settlement risk and transfer risk. Settlement risk is the risk of losing the principal on a financial contract due to default by the counterparty or after the DNB Bank Group has given irrevocable instructions for a transfer of a principal amount or security, but before receipt of the corresponding payment or security has been finally confirmed. Transfer risk is the risk attributable to the transfer of money from a country other than the country where a borrower is domiciled, which is affected by the changes in the economic conditions and political situation in the relevant countries.

The DNB Bank Group is exposed to sectoral and individual borrower credit concentration risks.

The DNB Bank Group has significant credit exposure to certain sectors, with the largest sector being residential mortgages, which as of March 31, 2016 accounted for 44 per cent of total exposure at default, followed to a lesser extent by commercial real estate which accounted for 11 per cent of total credit exposure, oil, gas and offshore which accounted for 8 per cent of total credit exposure and shipping which accounted for 6 per cent of total exposure. In the event that any of these sectors experiences increasingly difficult business or operating conditions, it could have a material impact on the DNB Bank Group’s asset quality and results of operations, financial condition or prospects. In the financial reporting for the first quarter of 2016, the Bank presented a significant deterioration in borrowers’ credit profiles within the oil, gas and offshore portfolio, in particular within rig and OSV (Oilfield Supply Vessels), increasing the impairments for the coming years.

In addition, the DNB Bank Group has significant credit exposure to certain individual borrowers. In the event that any of these borrowers experiences increasingly difficult business or operating conditions, it could have a material impact on the DNB Bank Group’s results of operations.

Risks Related to Market Exposure

The DNB Bank Group’s business is sensitive to volatility in interest rates and to changes in the competitive environment affecting spreads on its lending and deposits.

The DNB Bank Group is subject to the risks typical of banking activities, including interest rate fluctuations. Changes in interest rate levels, yield curves and spreads may affect the DNB Bank Group’s lending and deposit spreads. The DNB Bank Group is exposed to changes in the spread between the interest rates payable by it on deposits or its wholesale funding costs, and the interest rates that it charges on loans to customers and other banks. Although both the interest rates payable by DNB Bank Group on deposits, as well as the interest rates that it is able to charge on loans to customers and credit institutions, are in each case mainly floating rates or swapped into floating rates, there is a risk that the DNB Bank Group will not be able to reprice its floating rate assets and liabilities at the same time, giving rise to repricing gaps in the short or medium term. As applicable interest rates on several deposits are close to zero, it may not be possible in the future to offset in full or in part a decrease in interest rates on loans to customers by a corresponding decrease in interest rates on deposits.

The DNB Bank Group is also subject to intense competition for customer deposits and the current low interest rate environment puts pressure on the DNB Bank Group’s deposit spreads. The DNB Bank Group may not be able to lower its funding costs, whether relating to deposits or wholesale funding, in line with decreases in interest rates on its interest-bearing assets.

Interest rates are sensitive to several factors that are out of the DNB Bank Group’s control, including fiscal and monetary policies of governments and central banks, as well as domestic and international political conditions. An increase in interest rates could reduce the demand for credit, as well as contribute to an increase in defaults by the DNB Bank Group’s customers. Conversely, a reduction in the level of interest rates may adversely affect

the DNB Bank Group through, among other things, a decrease in demand for deposits and an increase in competition in deposit-taking and lending to customers. As a result of these factors, significant changes or volatility in the interest rates could have a material adverse impact on the business, financial condition or results of operations of the DNB Bank Group.

The DNB Bank Group has implemented risk management methods to mitigate and control these and other market risks, and exposures are constantly measured and monitored. However, it is difficult to predict changes in economic or market conditions and to anticipate the effects that such changes could have on the DNB Bank Group’s financial performance and results of operations. While the DNB Bank Group undertakes hedging operations in order to reduce its exposure to interest rate risk, it does not hedge all its risk exposure and there can be no assurance that its hedging strategies will be successful. If the DNB Bank Group is unable to adjust the interest rate payable on deposits in line with the changes in market interest rates receivable by it on loans, or if the DNB Bank Group’s monitoring procedures are unable to manage adequately the interest rate risk, its interest income could rise less or decline more than its interest expense, in which case the DNB Bank Group’s results of operations and financial condition or prospects could be negatively affected.

The DNB Bank Group is exposed to foreign exchange rate risk and the risk of devaluation or depreciation of any of the currencies in which it operates.

Changes in exchange rates, particularly in the NOK-USD and NOK-EUR exchange rates, affect the value of assets and liabilities denominated in foreign currencies, and may affect income from foreign exchange lending and trading. As a consequence of the significant drop in the oil price towards the end of 2014 and in 2015, the NOK weakened significantly against the USD, EUR and other currencies. The average USD/NOK rate amounted to 5.8768 in 2013 and increased to 8.0739 in 2015 (source: Central Bank). The EUR/NOK rate was 7.8087 and 8.9530, for the same periods (source: Central Bank). The DNB Bank Group’s reporting currency is the Norwegian kroner. However, a substantial portion of its assets and liabilities are denominated in currencies other than the Norwegian kroner, giving rise to translation risk. Although the majority of lending is in NOK, foreign currency lending, primarily denominated in USD, EUR and SEK, represented 31 per cent of the DNB Bank Group’s total loan portfolio as of March 31, 2016. Balance sheet items, including monetary assets and liabilities, of foreign branches and subsidiaries in currencies other than the NOK are translated into Norwegian kroner according to exchange rates prevailing on the balance sheet date, while profit and loss items are translated according to exchanges rates on the transaction date. Changes in net assets resulting from exchange rate movements are recognized in the income statement. A devaluation or depreciation of any such other currency in which the DNB Bank Group operates or in which it has credit exposures may result in significant losses for the DNB Bank Group. In addition, a depreciation of the NOK against other currencies in which loans are made to customers would result in an increase in the DNB Bank Group’s loan portfolio, which would result in an increase in risk-weighted assets and have a negative impact on capital ratios. In order to mitigate this translation risk, the DNB Bank Group seeks to hedge foreign exchange risk by seeking to match the currency of its assets with the currency of the liabilities that fund them. However, there can be no assurance that these hedging activities will be effective in part or in full, and hedge counterparties are subject to credit risk.

The DNB Bank Group is exposed to market price risk.

Market risk includes both risk which arises through ordinary trading activities, and risk which arises as part of banking activities and other business operations. Trading activities in the Bank mainly include market making, facilitation of corporate financing and proprietary trading. Market risk in banking activities can be broadly divided into risk related to the management of equity investments and risks stemming from the Group Treasury function. The Group Treasury is responsible for managing market risk stemming from funding activities, liquidity management, as well as asset and liability management. The most significant market risk factors are interest rate risk, credit spread risk arising in the bond portfolios and basis swap spread risk from the hedging of currency risk in connection with funding in foreign currencies. The fair value of financial instruments held by the DNB Bank Group, including bonds (government, corporate and mortgage), equities, cash in various currencies, investments in private equity, hedge and credit funds, commodities and derivatives (including credit

derivatives), are sensitive to volatility of and correlations between various market variables, including interest rates, credit spreads, equity prices and foreign exchange rates. To the extent volatile market conditions persist or recur, the fair value of the DNB Bank Group’s bond, derivative and structured credit portfolios, as well as other classes of assets, could fall more than estimated, and therefore cause the DNB Bank Group to record mark-to- market losses. Future valuations of the assets for which the DNB Bank Group has already recorded or estimated mark to market losses, which will reflect the then prevailing market conditions, may result in significant changes in the fair values of these assets. Further, certain financial instruments are recorded at fair value, which is determined by using financial models incorporating assumptions, judgments and estimations that are inherently uncertain and which may change over time or may ultimately be inaccurate. Any of these factors could require the DNB Bank Group to recognize further mark-to-market losses, which may have a material adverse effect on the DNB Bank Group’s business, financial condition and results of operations. In addition, because the DNB Bank Group’s trading and investment income depends to a great extent on the performance of financial markets, volatile market conditions could result in a significant decline in the DNB Bank Group’s trading and investment income, or result in a trading loss, which in turn could have a material adverse effect on the DNB Bank Group’s business, financial condition and results of operations.

Moreover, due to continued illiquid markets for certain asset classes, the fair value of certain of the DNB Bank Group’s exposures has proven difficult to estimate. Valuations in future periods, reflecting then-prevailing market conditions, may result in significant changes in the fair values of the DNB Bank Group’s exposure, even in respect of exposures such as credit market exposures, for which the DNB Bank Group has previously recorded valuation losses. In addition, the values of financial instruments are subject to uncertainty as they are based on estimates, assumptions and available information. As a result, estimates of fair value may differ materially both from estimates made by other financial institutions and from the values that would have been used if a market for these assets had been readily available. Thus, the value ultimately realized by the DNB Bank Group may be materially different from the current or estimated fair value. Any such difference could have a material adverse effect on the financial condition and/or liquidity of the DNB Bank Group.

To mitigate its exposure to the volatility in market pricing of certain of its assets, the DNB Bank Group uses fair value hedging to manage interest rate risk on long-term borrowings. In dislocated markets, hedging and other risk management strategies have proven not to be as effective as they are in normal market conditions due in part to the decreasing credit quality of hedge counterparties, including credit derivative product companies. A continued deterioration in economic and financial market conditions could lead to impairment charges and further mark-downs, and an illiquid market for financial instruments could cause spreads to widen, adversely affecting the pricing of financial instruments.

The DNB Bank Group has implemented risk management methods to mitigate and control these and other market risks to which it is exposed, and exposures are constantly measured and monitored. However, it is difficult to predict changes in economic or market conditions and to anticipate the effects that such changes could have on the DNB Bank Group’s financial performance and business operations.

Risks Related to Liquidity and Funding

Liquidity risk is inherent in the DNB Bank Group’s operations; this risk is exacerbated by current conditions in the global financial markets.

The DNB Bank Group is dependent on access to sufficient liquidity on acceptable terms in order to be able to meet its obligations as they fall due. This liquidity risk is inherent in banking operations and can be heightened by a number of enterprise-specific factors, including over-reliance on a particular source of funding (including, for example, short-term and overnight funding), changes in credit ratings or market-wide phenomena such as market dislocation and major disasters.

The DNB Bank Group is dependent on sufficient funding in order to carry out its lending business. The Bank’s funding requirements are, as for most commercial banks, largely covered through customer deposits. As of March 31, 2016, the Bank’s unconsolidated deposit to lending ratio amounted to 125.5 per cent, reflecting the fact that all loans held by DNB Boligkreditt were funded by covered bonds. Deposits are subject to fluctuation due to certain factors outside the DNB Bank Group’s control, such as competitive pressures, loss of customer confidence, depositors’ concerns relating to the economy in general, the financial services industry or the DNB Bank Group specifically, ratings downgrades, further deterioration in economic conditions and the existence and extent of deposit guarantees (which, under Norwegian law, currently apply to deposits up to NOK 2 million and will be decreased to EUR 100,000 by the end of 2018). Any of these factors on their own or in combination could lead to a reduction in the DNB Bank Group’s ability to access customer deposit funding on acceptable terms in the future and to sustained deposit outflows within a short period of time, both of which would have an impact on the DNB Bank Group’s ability to fund its operations and meet its minimum liquidity requirements. In addition, any uncertainty regarding the DNB Bank Group’s financial position may lead to withdrawal of deposits, resulting in a funding deficit for the DNB Bank Group.

A substantial part of the DNB Bank Group’s liquidity and funding requirements is also met through ongoing access to wholesale lending markets, including issuance of long-term debt market instruments such as covered bonds. The volume of these funding sources, in particular long-term funding, may be constrained during periods of reduced liquidity. Even a perception among market participants that a financial institution is experiencing greater liquidity risk can cause significant damage to the institution.

The DNB Bank Group’s liquidity could also be impaired by an inability to sell assets or redeem its investments, other outflows of cash or deterioration in the value of its collateral. These situations may arise due to circumstances that the DNB Bank Group is unable to control, such as continued general market disruption, loss in confidence in financial markets, uncertainty and speculation regarding the solvency of market participants, credit rating downgrades or operational problems that affect third parties. Although the DNB Bank Group expends significant effort in liquidity risk management and focuses on maintaining liquidity surplus in the short term, the DNB Bank Group is exposed to the general risk of liquidity shortfalls and cannot ensure that the procedures in place to manage such risks will be suitable to eliminate liquidity risk. Turbulence in the global financial markets and economy may adversely affect the DNB Bank Group’s liquidity and the willingness of certain counterparties and customers to do business with the DNB Bank Group, and the inability of the DNB Bank Group to anticipate and provide for unforeseen decreases or changes in funding sources could have a material adverse effect on the DNB Bank Group’s business, results of operations, financial condition or prospects.

The DNB Bank Group’s funding costs and its access to the debt capital markets depend significantly on its credit ratings.

The DNB Bank Group’s credit ratings are important to its business. As of the date of this Prospectus, the Bank is rated “Aa2” by Moody’s, “A+” by S&P and “AA (low)” by DBRS Ratings Limited (DBRS). The ratings from Moody’s and S&P carry negative outlooks, while the rating from DBRS carries a stable outlook. In March 2016, the Bank’s senior unsecured debt rating was upgraded one level by Moody’s, at the same time that the outlook was changed to negative. The negative outlook reflects Moody’s expectation that Norway’s slowing growth resulting from low oil prices and reduced oil investments will, over time, have a negative impact on the Bank’s performance. Moody’s expects this to negatively impact earnings and weaken credit quality for exposures related to offshore, shipping and commercial real estate. In addition Moody’s expects increased losses for the Bank’s exposures to oilfield services and offshore in the short- to medium-term. The negative outlook by S&P reflects S&P’s view of the negative economic trends affecting the Norwegian banking sector. In S&P’s view the domestic competition for market share in Norwegian mortgages supports further increases in asset prices and household debt, which presents a growing risk for the economy. In addition a potential swing in consumer confidence could reduce corporate investments, lower employment and depress asset quality. The DNB Bank Group’s business is also significantly affected by the credit rating of the Bank’s subsidiary DNB Boligkreditt AS (Boligkreditt). As of March 31, 2016, Boligkreditt’s outstanding covered bonds were rated

“Aaa” by Moody’s and “AAA” by S&P. There can be no assurance that the rating agencies will not downgrade the ratings of the Bank or the ratings of the Bank’s or Boligkreditt’s debt instruments (including the Program and Notes issued under the Program) either as a result of the DNB Bank Group’s or Boligkreditt’s financial position or changes to applicable rating methodologies used by Moody’s and S&P and any other relevant rating agency. A rating agency’s evaluation of the DNB Bank Group or Boligkreditt may also be based on a number of factors not entirely within the control of the DNB Bank Group or Boligkreditt, such as conditions affecting the financial services industry generally. Any reduction in the Bank’s credit ratings or the ratings of its or Boligkreditt’s debt instruments could adversely affect the DNB Bank Group’s liquidity and competitive position, undermine confidence in the DNB Bank Group, increase its borrowing costs, limit its access to the capital markets, or limit the range of counterparties willing to enter into transactions with it. Such development could have a material adverse effect on the DNB Bank Group’s business, financial situation, results of operations, liquidity and/or prospects.

Other Risks Related to the DNB Bank Group’s Business

The DNB Bank Group’s success depends on its ability to maintain its customer base.

The DNB Bank Group’s success depends on its ability to maintain its customer base and to offer its customers a wide range of high quality and competitive products and consistently high levels of service, delivered through channels acceptable to its customers. The DNB Bank Group has sought to achieve this objective by segmenting its branch networks to better serve the diverse needs of each industry segment through, among other things, cross-selling the products and services of the DNB Group’s subsidiaries through its marketing and distribution networks, and investing in digital delivery channels while closing little-used branches. Any failure to maintain the DNB Bank Group’s customer base or to offer the DNB Bank Group’s customers a wide range of high quality and competitive products or consistently high levels of service and competitive delivery channels could have a material adverse effect on the DNB Bank Group’s results of operations, financial condition or prospects.

The DNB Bank Group is exposed to systemic risk.

Given the high level of interdependence between financial institutions, the DNB Bank Group is and will continue to be subject to the risk of deterioration in the commercial and financial soundness, or perceived soundness, of other financial institutions. Within the financial services industry, the default of any one institution could lead to defaults by other institutions. Concerns about, or a default by, one institution could lead to significant liquidity problems, losses or defaults by other institutions, because the commercial and financial soundness of many financial institutions may be closely related as a result of their credit, trading, clearing or other relationships. Even the perceived lack of creditworthiness of, or questions about, a counterparty may lead to market-wide liquidity problems and losses or defaults by the DNB Bank Group or by other institutions. This risk is sometimes referred to as “systemic risk” and may adversely affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms and exchanges with whom the DNB Bank Group interacts on a daily basis. Systemic risk could have a material adverse effect on the DNB Bank Group’s ability to raise new funding and on its business, financial condition, results of operations, liquidity and/or prospects.

The DNB Bank Group is exposed to operational risks, including network interruptions and other failures or inadequacies in risk management and internal control procedures.

The DNB Bank Group’s business is dependent on its ability to process a very large number of transactions efficiently and accurately. Operations are carried out through a number of entities and also through internet banking platforms. Operational risk and losses, including monetary damages, reputational damage, costs and direct and indirect financial losses and/or impairments, can result from a variety of causes, including inadequacies or failures in internal processes, systems (e.g., information technology systems) or licenses from external suppliers; fraud or other criminal actions; employee errors; failure of outsourced services; failure to properly document transactions or agreements with customers, vendors, sub-contractors, co-operation partners and other third parties, or to obtain or maintain proper authorization; customer complaints; failure to comply

with regulatory requirements, including but not limited to anti-money laundering, data protection and antitrust regulations, or conduct of business rules; equipment failures; failure to protect the DNB Bank Group’s assets, including intellectual property rights and collateral; failure of physical and security protection; natural disasters or the failure of external systems, including those of the DNB Bank Group’s suppliers or counterparties; and failure to fulfill the DNB Bank Group’s obligations, contractual or otherwise. In particular, the DNB Bank Group and its customers have recently been, and may continue to be, affected by a number of serious network problems, which have affected certain of the DNB Bank Group’s internet banking and cash machine functions, resulting in intermittent service interruptions. See also “—The DNB Bank Group is increasingly dependent on information technology systems, which may fail, may not be adequate to the tasks at hand or may no longer be available”.

Although the DNB Bank Group has implemented risk controls and loss mitigation precautions and substantial resources are devoted to developing efficient procedures and to staff training, it is not possible to implement procedures which are fully effective in controlling operational risks. Some of the risk mitigating measures used by the DNB Bank Group are based on historical information, and the DNB Bank Group’s current policies may not comprehensively address the full impact of the global financial crisis or other unforeseen circumstances. Thus, as future development may significantly differ from observed historical development, there is a risk that such measures are inadequate in predicting future risk exposure. Furthermore, risk management methods may rely on estimates, assumptions and available information that may be incorrect or outdated. Any failure to successfully execute the DNB Bank Group’s operational risk management and control policies could have a material adverse effect on the DNB Bank Group’s financial condition and results of operations.

The DNB Bank Group is increasingly dependent on information technology systems, which may fail, may not be adequate to the tasks at hand or may no longer be available.

Banks and their activities are increasingly dependent on highly sophisticated information and communication technology (“ICT”) systems, including a significant shift away from physical bank branches and towards greater reliance on internet websites and the development and use of new applications on smartphones. ICT systems are vulnerable to a number of problems, such as software or hardware malfunctions, malicious hacking, physical damage to vital ICT centers and computer viruses. Harmonizing ICT systems across the DNB Bank Group to create a consistent ICT architecture poses significant challenges.

ICT systems need regular upgrading to meet the needs of changing business and regulatory requirements and to keep pace with possible expansion into new markets and the greater use, development and reliance on information and communication technology more broadly. The DNB Bank Group may not be able to implement necessary upgrades on a timely basis, and upgrades may fail to function as planned. In addition to costs that may be incurred as a result of any failure of its ICT systems or technical issues associated with, as well as the general cost of, upgrading its ICT systems, the DNB Bank Group could face fines from bank regulators if its ICT systems fail to enable it to comply with applicable banking or reporting regulations, including data protection regulations.

The DNB Bank Group maintains back-up systems for its operations, with one of those back-up systems being located in Norway outside of its premises. However, there are limited scenarios, for example in the event of a major catastrophe resulting in the failure of its information systems, where the DNB Bank Group could lose certain recently entered data with regard to its Norwegian operations or could lose more significant portions of data with regard to its international operations.

The DNB Bank Group is reliant on its outsourcing contracts for the maintenance and operation of its ICT systems. Should these companies become unwilling or unable to fulfill their obligations under the relevant outsourcing contract, the DNB Bank Group could find the effective functioning of its ICT systems compromised. In particular, the DNB Bank Group and its customers have been, and may in the future become, affected by network problems, which relate to third-party suppliers, and which have affected and might affect in the future certain of the DNB Bank Group’s internet banking and cash machine functions, resulting in service

interruptions. A major disruption to the DNB Bank Group’s ICT systems, whether under the scenarios outlined above or under other scenarios, could have a material adverse effect on the normal operation of the DNB Bank Group’s business and thus on its financial condition and results of operations.

Cybercrime

Similar to all major financial institutions, the DNB Bank Group’s activities have been, and are expected to continue to be, subject to an increasing risk of information and communication technology (“ICT”) crime in the form of Trojan attacks and denial of service attacks, the nature of which is continually evolving. Cybersecurity risks are foremost related to the DNB Bank Group’s internet bank users and include potential unauthorized access to privileged and sensitive customer information, including internet bank credentials as well as account and credit card information. The DNB Bank Group has made investments to address threats from cyber attacks; however, there can be no assurance that these investments will be successful in part or in full, or without significant additional expenditures. The DNB Bank Group may experience security breaches or unexpected disruptions to its systems and services in the future, which could in turn, result in liabilities or losses to the DNB Bank Group, its customers and/or third parties and have an adverse effect on the DNB Bank Group’s business, reputation and results of operations.

The DNB Bank Group is subject to a variety of risks as a result of its operations outside the Nordic markets.

The DNB Bank Group’s operations outside the Nordic markets (e.g. in Poland, the Baltic states, India and China) present various emerging market risks that do not apply, or apply to a lesser degree, to its businesses in the Nordic markets. In particular, the DNB Bank Group faces increased economic and political risk, including economic volatility, recession, inflationary pressure, exchange rate fluctuation risk and interruption of business, as well as increased risk of civil unrest, moratorium, imposition of exchange controls, sanctions relating to specific countries, expropriation, nationalization, renegotiation or nullification of existing contracts, sovereign default and changes in law or tax policy.

Competition in Norway and in the international markets in which the DNB Bank Group operates could have a negative effect on the DNB Bank Group’s business.

The DNB Bank Group faces intense competition in all of its areas of operation (including, among others, corporate and retail banking, investment banking and real estate brokering), both in Norway and the international markets in which it operates. Competition for customer lending and deposits is affected by customer demand, technological changes, the impact of consolidation in the banking industry, regulatory actions and other factors. The DNB Bank Group’s competitors are principally commercial and investment banks. The reoccurrence of a financial crisis could introduce additional competitive challenges, as during such crises many national governments seek to provide support in a variety of forms to banks organized in their jurisdictions. Depending on the level of government support and the financial strength of the banks in question, this support could strengthen the competitive position of these banks and intensify the competition faced by the DNB Bank Group. Mergers and acquisitions involving the largest Norwegian banks have resulted in a significant concentration of market share, a trend which may continue. Competition has further increased with the emergence of additional distribution channels such as internet and mobile telephone banking. If the DNB Bank Group is unable to provide competitive product and service offerings, it may fail to attract new customers and/or retain existing customers, experience decreases in its interest income and fee and commission income, and/or lose market share, the occurrence of any of which could have a material adverse effect on its business, financial condition and results of operations. Although the DNB Bank Group believes that it is in a strong position to continue to compete in the markets in which it operates, there can be no assurance that it will be able to continue to do so.

The DNB Bank Group could fail to attract or retain suitably qualified senior management or other key employees.

The DNB Bank Group’s performance is, to a large extent, dependent on the talents and efforts of highly skilled individuals, and the continued ability of the DNB Bank Group to compete effectively and implement its strategy depends on its ability to attract new employees and retain and motivate existing employees. Competition from within the financial services industry, including from other financial institutions, as well as from businesses outside the financial services industry for key employees is intense. Any loss of the services of key employees, particularly to competitors, or the inability to attract and retain highly skilled personnel in the future or the need to replace any senior management as a result of failures or perceived failures in management of the DNB Bank Group could have an adverse effect on the DNB Bank Group’s business.

Risks Related to the Legal and Regulatory Environments in which the DNB Bank Group Operates

The financial services industry is subject to intensive regulation, including capital adequacy regulation, and the regulatory framework is undergoing major changes.

The DNB Bank Group’s business is subject to ongoing regulatory and associated risks. The DNB Bank Group is subject to financial services laws and regulation (including, but not limited to, those relating to capital adequacy, conduct of business, anti-money laundering, payments, consumer credits, reporting, and corporate governance), as well as administrative actions and policies in Norway and in each other jurisdiction in which the DNB Bank Group carries on business. The Financial Supervisory Authority of Norway (“FSAN”) is the DNB Bank Group’s primary regulator, although DNB Bank Group is also subject to the supervision of regulators in each country where it has a branch or representative office, including Poland and the Baltic states.

The DNB Bank Group is required to maintain certain capital adequacy ratios, which are calculated in accordance with Basel III requirements, as implemented in Norwegian law and regulations (including the transitional Basel I floor). See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital and Capital Adequacy—Existing Regulation”. Any increase in the DNB Bank Group’s risk-weighted assets due to, among other things, a reduction in the internal credit ratings of borrowers, market volatility, widening credit spreads, changes in foreign exchange rates, decreases in collateral values, or further deterioration in the economic environment, could potentially reduce the DNB Bank Group’s capital adequacy ratios. If the DNB Bank Group were to experience a reduction in its capital adequacy ratios for any reason (including due to a change in the regulatory capital framework, as described below), it may have to reduce its lending or investments in other operations or, in more severe circumstances, raise further capital.

Changes in the supervision and regulation of financial institutions, particularly in Norway, could materially affect the DNB Bank Group’s business, the products and services offered or the value of its assets. Areas where changes or developments in regulation and/or oversight could have an adverse impact include, but are not limited to (i) general changes in government and regulatory policies or regimes which may significantly influence investor decisions or may increase the costs of doing business in the Nordic markets and other European markets, and such other markets where the DNB Bank Group carries out its business, (ii) changes in the capital adequacy framework and imposition of onerous compliance obligations, (iii) changes in competition and pricing environments, (iv) differentiation among financial institutions by governments with respect to the extension of guarantees of customer deposits and the terms attaching to such guarantees, and (v) expropriation, nationalization, confiscation of assets and changes in legislation relating to foreign ownership, producing legal uncertainty, which in turn may affect demand for the DNB Bank Group’s products and services.

Capital adequacy and liquidity requirements

At the international level, a number of regulatory and supervisory initiatives have been implemented in the past years in order to increase capital requirements, increase the quantity and quality of capital, and raise liquidity levels in the banking sector. Among such initiatives are a number of specific measures proposed by the Basel

Committee on Banking Supervision (the “Basel Committee”) and implemented by the European Union through CRD IV (as defined below).

The Norwegian government aims to submit a proposition to Stortinget, the Norwegian parliament, in respect of the European supervisory authorities and some important related legislative acts for consideration in the spring of 2016. The required legislative amendments will probably enter into force on July 1, 2016. Parallel to this, the government is working to incorporate the remaining legislation on financial services in the course of 2016. Norway introduced new capital requirements as of July 1, 2013 as the first step in the adaptation to the EU capital requirements regulations, CRR/CRD IV, which have involved a gradual increase in the formal capital requirements up to July 1, 2016. As of July 1, 2015, the minimum common equity Tier 1 capital requirement, including the buffer requirements, has been 12 per cent for the three financial institutions which the Norwegian authorities have defined as systemically important O-SIIs (other systemically important institutions) (including DNB ASA), and 11 per cent for other banks. As of July 1, 2016, this minimum requirement will increase to 13.5 per cent for the O-SIIs and to 11.5 per cent for the other banks.

The capital adequacy requirements for banks consist of two pillars. Pillar 1 encompasses minimum requirements and buffer requirements determined by the political authorities. FSAN’s Pillar 2 requirements are in addition to the Pillar 1 requirements and are expected to reflect institution-specific capital requirements relating to risks which are not covered or only partly covered by Pillar 1. The Pillar 2 requirement for DNB Bank, the DNB Bank Group and the DNB Group has been set at 1.5 per cent of common equity. The total common equity Tier 1 capital requirement for DNB Bank, the DNB Bank Group and the DNB Group will thus be 15 per cent at year- end 2016. DNB Bank, the DNB Bank Group and the DNB Group will fulfill this requirement through retained earnings and capital efficiency measures. As of March 31, 2016, the DNB Bank Group had a common equity Tier 1 capital ratio of 14.7 per cent and a capital ratio of 18.2 per cent (both including 50 per cent of interim profits), compared to 14.3 per cent and 17.9 per cent, respectively, as of December 31, 2015.

The nature of the DNB Bank Group’s business as well as external conditions are constantly changing. As a result and to ensure compliance with the changing regulatory landscape, the DNB Bank Group may need to increase its capital ratios in the future, by reducing its lending or investment in other operations or raising additional capital. Such capital, whether in the form of debt financing, hybrid capital or additional equity, may not be available on attractive terms, or at all. In addition, it is difficult to predict what regulatory requirements relating to capital may be imposed in the future or accurately estimate the impact that any currently proposed regulatory changes may have on the business, the products and services offered by DNB Bank Group and the values of its assets. For example, if any entity of the DNB Bank Group is required to make additional provisions, increase its reserves or capital, or exit or change its approach to certain businesses as a result of the initiatives to strengthen the regulation of credit institutions, this could materially adversely affect the DNB Bank Group’s results of operations or financial condition.

In addition, CRD IV includes requirements relating to the liquidity coverage ratio, or LCR. The Norwegian Ministry of Finance has decided to introduce the LCR ahead of the schedule contemplated by the European Union. Norwegian domestic systemically important banks, including the DNB Bank, the DNB Bank Group and the DNB Group, were required to meet the 100 per cent LCR requirement as of December 31, 2015. As a result and to ensure compliance with changes in these rules, the DNB Bank Group may need to hold additional liquid assets, which may have an adverse effect on its results of operations or financial condition.

Bank winding up and crisis management

On July 2, 2014, Directive 2014/59/EU providing for the establishment of an EU-wide framework for the recovery and resolution of credit institutions and investment firms (the “Bank Recovery and Resolution Directive” or “BRRD”) entered into force. The BRRD is designed to provide authorities with a credible set of tools to intervene sufficiently early and quickly in an unsound or failing institution so as to ensure the continuity of the institution’s critical financial and economic functions, while minimizing the impact of an institution’s failure on the economy and financial system.

The BRRD, under its terms, was required to be applied by European Union Member States from January 1, 2015, except for the general bail-in tool (see below) which was required to be applied from January 1, 2016. Norway will not be directly bound by the BRRD before it has been implemented into the Agreement on the European Economic Area, which entered into force on January 1, 1994 (the “EEA Agreement”) and even if Norway is seeking to adopt EU directives and regulations prior to their implementation in the EEA Agreement, no draft specific regulations have been suggested in Norway at present. Furthermore, some of the provisions of the BRRD relating to the supranational powers of the European Banking Authority appear to conflict with the Norwegian constitution, and implementation will therefore require approval from a three-quarters majority of the Norwegian Parliament. The Ministers of Finance in the EEA member states reached an agreement with the European Union Member States on October 14, 2014 on the principles of how the supranational powers of the European Banking Authority are to be implemented in the EEA and a proposal for the implementation of certain resolutions made by the EEA committee for the implementation of certain EU regulations and directives into the EEA Agreement, including among others, the resolution on the establishment of the European Banking Authority (Regulation (EU) No 1093/2010 of the European Parliament and of the Council) was sent to the Norwegian Parliament for approval on April 15, 2015. The parliamentary debate and resolution is scheduled to take place on June 13, 2016. Furthermore, it is expected that the Norwegian banking law commission will provide the Norwegian Government with its considerations on implementation of the BRRD and revisions to relevant Norwegian legislation during autumn 2016. With respect to Norwegian rules in force regarding loss absorption, please see “The Notes may become subject to provisions requiring liabilities to be written down or converted to equity” and “Supervision and Regulation—Regulatory Framework in Norway” below.

The BRRD contains four resolution tools and powers which may be used alone or in combination where the relevant resolution authority considers that (a) an institution is failing or likely to fail, (b) there is no reasonable prospect that any alternative private sector measures would prevent the failure of such institution within a reasonable timeframe, and (c) a resolution action is in the public interest: (i) sale of business – which enables resolution authorities to direct the sale of the firm or the whole or part of its business on commercial terms; (ii) bridge institution – which enables resolution authorities to transfer all or part of the business of the firm to a “bridge institution” (an entity created for this purpose that is wholly or partially in public control); (iii) asset separation – which enables resolution authorities to transfer impaired or problem assets to one or more publicly owned asset management vehicles to allow them to be managed with a view to maximizing their value through eventual sale or orderly wind-down (this can be used together with another resolution tool only); and (iv) bail-in which gives resolution authorities the power to write down certain claims, which would include claims in respect of the Notes, of unsecured creditors of a failing institution and/or to convert certain unsecured debt claims, which would include the Notes, to equity (the “general bail-in tool”), with such equity also being subject to any future application of the general bail-in tool.

The BRRD also provides for a Member State, in the event that the above resolution tools alone are insufficient to maintain financial stability, to be able to provide extraordinary public financial support through additional financial stabilization tools. These consist of the public equity support and temporary public ownership tools. Any such extraordinary financial support must be provided in accordance with the EU state aid framework.

An institution will be considered as failing or likely to fail when: it is, or is likely in the near future to be, in breach of its requirements for continuing authorization; its assets are, or are likely in the near future to be, less than its liabilities; it is, or is likely in the near future to be, unable to pay its debts as they fall due; or it requires extraordinary public financial support (except in limited circumstances).

In addition to the general bail-in tool, the BRRD provides for resolution authorities to have the further power to permanently write down or convert into equity capital instruments such as the Subordinated Notes at the point of non-viability and before any other resolution action is taken (non-viability loss absorption). Any shares issued to holders of the Notes upon any such conversion into equity may also be subject to any application of the general bail-in tool or other powers under the BRRD.

For the purposes of the application of any non-viability loss absorption measure, the point of non-viability under the BRRD is the point at which the relevant authority determines that the institution meets the conditions for

resolution (but no resolution action has yet been taken) or that the institution will no longer be viable unless the relevant capital instruments (such as the Subordinated Notes) are written down or converted or extraordinary public support is to be provided and without such support the appropriate authority determines that the institution would no longer be viable.

The powers set out in the BRRD will impact how relevant credit institutions and investment firms are managed as well as, in certain circumstances, the rights of creditors.

If the BRRD is implemented in Norway in line with the EU legislation, holders of Notes may be subject to write down or conversion into equity on any application of the general bail-in tool, which may result in such holders losing some or all of their investment in the Notes, or their rights in respect of the Notes and/or the value of their investment may otherwise be materially adversely affected.

In addition, the market price of the Notes could be adversely affected by the implementation or proposed implementation of BRRD in Norway and/or, following any such implementation, by any actual or anticipated use of the powers thereunder in respect of the Issuer and/or the Notes. Any action taken under such legislation in respect of the Bank or the DNB Group could also affect the ability of the Issuer to satisfy its obligations under the Notes.

Under the BRRD there is also a requirement for EU financial institutions to hold certain minimum levels of own funds and other eligible liabilities (“MREL”) which would be available to be written down or bailed-in in order to facilitate the rescue or resolution of a failing bank. Such requirements came into effect (subject to transitional provisions) in the EU from January 1, 2016. Given that Norway has not yet implemented the BRRD it is currently unclear how such requirements may be applied to Norwegian banks such as the Issuer in the future.

As it remains uncertain when and how the BRRD will be implemented in Norway, and in any event the Norwegian authorities could elect to adopt more onerous provisions than required under the EU legislation, it is difficult to anticipate the potential implications for the Issuer or any Notes issued under this Program.

Any of the changes in the supervision and regulation of financial institutions, or any other future changes, may have a material adverse effect on the DNB Bank Group’s business and operations, liquidity, results of operations and financial condition. Although the DNB Bank Group works closely with its regulators and continually monitors the regulatory framework and compliance, the timing and form of future changes in regulation can be unpredictable and are beyond the control of the DNB Bank Group. No assurance can be given that laws and regulations will be adopted, enforced or interpreted in a manner that will not have a material adverse effect on the DNB Bank Group’s business, financial situation, results of operations, liquidity and/or prospects.

In addition, there can be no assurance that debt and equity investors, analysts and other market professionals will not expect higher capital buffers and that any such market expectations will not increase the DNB Bank Group’s borrowing costs, limit its access to the capital markets or result in a downgrade of its ratings.

The Dodd-Frank Act

In the United States, the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act, of 2010 (the “Dodd-Frank Act”) has led to significant structural reforms affecting the financial services industry, including non-U.S. banks, by addressing, among other issues, systemic risk oversight, bank capital standards, the orderly liquidation of failing systemically significant financial institutions, and over-the-counter derivatives. The Dodd- Frank Act also contains the Volcker Rule, which broadly prohibits banking entities, including the Issuer and all of its global affiliates, from proprietary trading and sponsoring or investing in hedge, private equity and similar funds, subject to a number of exceptions.

The Department of the Treasury, the Financial Stability Oversight Council, the Securities and Exchange Commission, the Commodity Futures Trading Commission (the “CFTC”), Federal Reserve Board, the Office of the Comptroller of the Currency (the “OCC”), and the Federal Deposit Insurance Corporation (the “FDIC”) are engaged in extensive rule-making mandated by the Dodd-Frank Act. While many of the regulations under Dodd-Frank have been finalized or proposed, significant uncertainty remains on the overall impact Dodd-Frank could have on the Issuer or the financial services industry as a whole.

No assurance can be given that the Dodd-Frank Act and related regulations or any other new legislative changes enacted will not have a significant impact on the Issuer.

Governmental responses to recent market disruptions may be inadequate and may have unintended consequences.

The DNB Bank Group may be adversely affected by governmental responses to recent market disruptions in the countries where it operates. As a result of the global financial crisis and subsequent government intervention, there has been, and there may continue to be, a substantial increase in governmental policy responses to recent market disruptions, including reductions in public spending and the imposition of further fiscal austerity measures, and changes in monetary and interest rate policies.

The DNB Bank Group has no control over governmental policy changes or over changes in the interpretation of fiscal legislation by any tax authority. The measures taken by various European governments to stimulate the economy and/or support the banking system, including, among other things, the recent bank bail-out plans and austerity measures, may lead to an increase in the tax burden or to a reduction in tax benefits. Significant changes in governmental policy responses in Norway or in the other countries where the DNB Bank Group operates, or difficulties in implementing such responses or with the type and effectiveness of the impact of such responses, may have a relevant adverse impact on the activity, financial situation and operating results of the DNB Bank Group.

The DNB Bank Group is exposed to risks related to bribery, money laundering activities and sanctions violations, especially in its operations in emerging markets, and compliance with anti-money laundering and anti-terrorism financing rules involves significant cost and effort.

The DNB Bank Group is subject to rules and regulations regarding anti-bribery, anti-money laundering, anti- terrorist financing and economic sanctions. In general, the risk that banks will be subjected to or used for bribery or money laundering has increased worldwide. These risks are higher in emerging markets, such as the Baltic states, than in Norway and other more developed markets where the DNB Bank Group operates. The high turnover of employees, the difficulty in consistently implementing related policies and technology systems, and the general business conditions in emerging markets mean that the risk of the occurrence of money laundering is higher in these countries. Monitoring compliance with anti-money laundering and anti-terrorism financing rules can put a significant financial burden on banks and other financial institutions and pose significant technical problems. Although the DNB Bank Group believes that its current policies and procedures are sufficient to comply with applicable rules and regulations, it cannot guarantee that its group-wide anti-money laundering and anti-terrorism financing policies and procedures prevent instances of money laundering or terrorism financing. Any violation of anti-money laundering rules, or even the suggestion of violations, may have severe legal and reputational consequences for the DNB Bank Group and could, as a result, have a material adverse effect on the DNB Bank Group’s financial condition and results of operations. The DNB Bank Group also faces increased compliance and operational risks in its emerging market operations for the reasons described above.

The legal relationships between the DNB Bank Group and its customers are based on standardized contracts and forms created for a large number of commercial transactions; as a result, problems with the conditions in this documentation, or errors in it, could affect a large number of contracts with customers.

The DNB Bank Group maintains contractual relationships with a large number of customers. The DNB Bank Group uses general terms and conditions and standard templates for contracts and forms in the majority of its business areas and departments. The use of standard contracts and forms poses a significant risk due to the large number of contracts. As a result of ordinary evolution of laws and new judicial decisions, and the growing influence of European legislation on national laws, it is possible that not all the general terms and conditions, standard contracts and forms used by the DNB Bank Group comply with all of the applicable legal requirements at all times. If there are drafting errors, interpretive issues, or if the individual contractual terms or the contracts are deemed invalid in their entirety or in part, a large number of customer relationships may be adversely affected, which may result in claims for compensation or other legal consequences that may have an adverse effect on the financial condition and operating results of the DNB Bank Group.

Legal and regulatory claims arise in the conduct of the DNB Bank Group’s business.

In the ordinary course of its business, the DNB Bank Group is subject to regulatory oversight and liability risk. The DNB Bank Group is subject to regulation in each jurisdiction in which it operates. Regulation and regulatory requirements are continuously amended and new requirements are imposed on the DNB Bank Group, including, but not limited to, regulations on conduct of business, anti-money laundering, payments, consumer credits, capital requirements, reporting and corporate governance.

Furthermore, as part of its banking activities, the DNB Bank Group provides its customers with investment advice, other investment services and investment products and access to internally as well as externally managed funds, and serves as custodian of third-party funds. In the event of losses incurred by its customers due to investment advice, other services or products from the DNB Bank Group, or misconduct or fraudulent actions in connection with the provision of investment services or the sale of investment products or otherwise, the DNB Bank Group’s customers may seek compensation from or otherwise take legal action against the DNB Bank Group. See “Description of the DNB Bank Group—Litigation”. In certain cases, compensation might be sought from the DNB Bank Group even if the DNB Bank Group has no direct exposure to such risks, or has not recommended such counterparties to its customers.

The DNB Bank Group is involved in a variety of claims, disputes, legal proceedings and governmental investigations in jurisdictions where it operates. See “Description of the DNB Bank Group—Litigation”. Such claims, disputes and legal proceedings are subject to many uncertainties, and their outcomes and ultimate consequences are often difficult to predict, particularly in the earlier stages of a case or an investigation. These types of claims and proceedings may expose the DNB Bank Group to monetary damages, direct or indirect costs (including legal costs), direct or indirect financial loss, civil and criminal penalties, loss of licenses or authorizations, or loss of reputation, as well as the potential for regulatory restrictions on its businesses, any of which could have a material adverse effect on the DNB Bank Group’s business, financial condition and results of operations.

In particular, the Norwegian Consumer Council announced in January 2016 that it is planning to pursue a class action against DNB Asset Management, a wholly-owned subsidiary of DNB ASA offering asset management services. It intends to seek compensation for 137,000 investors in a fund managed by DNB Asset Management, and potentially investors in another fund also managed by DNB Asset Management, with respect to allegations that the fund was charging high fees for active management but actually was simply tracking an index. DNB Asset Management rejected such allegations in its response to a letter from the Norwegian Consumer Council stating the basis for their future claim. Legal action brought by the Norwegian Consumer Council could expose the DNB Group to potential liability and/or damage its reputation.

Even though the DNB Bank Group believes it has appropriately provided for contingent obligations in respect of claims, litigation and other proceedings, the outcome of any such claim, litigation or proceeding may differ from management expectations and expose the DNB Bank Group to unexpected costs and losses, reputational and other non-financial consequences and diversion of management attention.

Any of the above-mentioned factors or any other restrictions or limitations on the operations of financial institutions could have a material adverse effect on the DNB Bank Group’s business, financial condition, results of operations, liquidity and/or prospects.

The DNB Bank Group is exposed to the risk of changes in tax and VAT legislation and the interpretation of such legislation as well as changes in such rates.

The DNB Bank Group’s activities are subject to tax and VAT at various rates in the jurisdictions in which it operates, computed in accordance with local legislation and practice. Future actions by the Norwegian or other governments to increase tax or VAT rates or to impose additional taxes or duties would reduce the DNB Bank Group’s profitability. Revisions of tax or VAT legislation or changes in its interpretation as well as differences in opinion between the DNB Bank Group and tax authorities with respect to interpretation of relevant legislation might also affect the DNB Bank Group’s financial condition in the future. Such changes and the outcome of ongoing proceedings where the DNB Bank Group’s interpretation of tax and VAT legislation is challenged by tax authorities could have a material adverse effect on the DNB Bank Group’s business, financial situation, results of operations, liquidity and/or prospects. Further, there can be no assurance that any such change in tax and VAT legislation or the interpretation of tax and VAT legislation may not have a retroactive effect on the DNB Bank Group’s business, financial situation, results of operations, liquidity and/or prospects.

The DNB Bank Group may be impacted by changes in accounting policies or accounting standards and the interpretation of such policies and standards.

From time to time, the International Accounting Standards Board (the “IASB”) changes the financial accounting and reporting standards that govern the preparation of the DNB Bank Group’s financial statements. Further, changes may take place in the interpretation of, or differences of opinion may arise between the DNB Bank Group and competent authorities with regard to the application of, such standards. These changes can be difficult to predict and can materially impact how the DNB Bank Group records and reports its financial condition and results of operations. In some cases, the DNB Bank Group may be required to apply a new or revised standard, or alter the application of an existing standard, retroactively, rendering a restatement of prior period financial statements necessary. Any such change in the DNB Bank Group’s accounting policies or applicable accounting standards could materially affect its reported financial condition and/or results of operations.

Conflicts of interest, whether actual or perceived, may negatively impact the DNB Bank Group.

As the DNB Bank Group expands the scope of its business and its customer base, it must increasingly implement corporate governance policies on a group-wide level and address potential conflicts of interest, including situations where the DNB Bank Group provides services to a particular customer or its own proprietary investments or other interests conflict, or are perceived to conflict, with the interests of another customer, as well as situations where one or more of the DNB Bank Group’s businesses have access to material non-public information that may not be shared with other businesses within the DNB Bank Group. Appropriately identifying and dealing with conflicts of interest is complex, in part because internal breaches of policy can be difficult to discover. The DNB Bank Group’s reputation may be damaged, and the willingness of customers to enter into transactions in which such a conflict might arise may be affected, if the DNB Bank Group fails, or appears to fail, to identify and deal appropriately with conflicts of interest.

Financial services operations involve inherent reputational risk.

The DNB Bank Group’s reputation is one of its most important assets. Reputational risk, including the risk to earnings and capital from negative public opinion, is inherent in the financial services business. Negative public opinion can result from any number of causes, including misconduct by employees, non-compliance by members of the DNB Bank Group with applicable internal policies and regulations, the activities of business partners over which the DNB Bank Group has limited or no control, severe or prolonged financial losses, uncertainty about the DNB Bank Group’s financial soundness or reliability (including the reliability of its internet banking platforms) or the DNB Bank Group’s conduct of its business. Negative public opinion may adversely affect the DNB Bank Group’s ability to keep and attract customers, depositors and investors, as well as its relationships with regulators and the general public. For example, the DNB Bank Group has recently been subject to adverse publicity and an on-going inquiry launched by the Norwegian Ministry of Trade, Industry and Fisheries as a result of press reports resulting from the review of the documents known as the “Panama Papers” that the Luxembourg branch of the DNB Bank Group facilitated the establishment of “shell” companies in the Seychelles for its customers during the period 2006 to 2008. This incident or similar incidents in the future may have a material adverse effect on the DNB Bank Group’s business, results of operations, financial condition and prospects. The DNB Bank Group cannot ensure that it will be successful in avoiding damage to its business from reputational risk.

Risks Related to the Notes

A major part of the DNB Bank Group’s retail mortgage portfolio comprises the cover pool for the covered bonds issued by DNB Boligkreditt.

As of March 31, 2016, net loans to customers in the Bank’s wholly-owned subsidiary, DNB Boligkreditt AS (“Boligkreditt”) made up 37.6 per cent of total net loans to customers in the DNB Bank Group. Residential mortgages transferred by the Bank to Boligkreditt or originated by Boligkreditt through DNB distribution channels comprise the cover pool and thereby serve as security for holders of the covered bonds issued by Boligkreditt (and also counterparties under derivatives contracts entered into for hedging purposes in relation to such covered bonds). Once transferred, these mortgages do not form part of the general assets of the Bank that would be available to holders of the Notes in the case of insolvency or liquidation of the Bank. The DNB Bank Group intends to cover a significant part of its long-term funding requirement through the additional issuance of covered bonds, which will be secured origination of mortgages by Boligkreditt through DNB distribution channels and/or further transfers of retail mortgages from the Bank to Boligkreditt. The Notes are unsecured obligations of the Issuer, and the Noteholders are structurally subordinated to the covered bondholders and such hedge counterparties to the extent of the cover pool, and are not likely to ever have access to this cover pool should the Issuer become insolvent or be liquidated.

The Notes may become subject to provisions requiring liabilities to be written down or converted to equity.

If the BRRD is implemented in Norway, the Notes may become subject to the application of a general bail-in tool. Norway is not currently bound by the BRRD, and no draft specific regulations have been suggested in Norway at present. It is currently unclear how and when the BRRD will be implemented into the EEA Agreement and in Norway, and any such implementation may require appropriate consideration of applicable constitutional issues. However, it should be noted that the BRRD is deemed to be EEA relevant and, according to the EEA Agreement, Norway is obliged to implement it once implemented into the EEA Agreement. Presently, any Notes issued by the Issuer under this Program will be subject to the Act on Financial Enterprises and Financial Groups. See “Supervision and Regulation—Regulatory Framework in Norway” below.

Under the BRRD, a general bail-in tool would give resolution authorities the power to write down certain claims, which would include claims in respect of the Notes, of unsecured creditors of a failing institution and/or to convert certain unsecured debt claims, which would include the Notes, to equity, with such equity also being subject to any future application of the general bail-in tool. As a result, Holders of the Notes may become

subject to write down or conversion into equity on any application of the general bail-in tool, which may result in such holders losing some or all of their investment. The exercise of the bail-in power or any suggestion of such exercise could, therefore, materially adversely affect the rights of Holders, the price or value of their investment in any Notes and/or the ability of the Issuer to satisfy its obligations under the Notes. See “Risks Related to the Legal and Regulatory Environments in which the DNB Bank Group Operates” above.

A holder of a beneficial interest in a Global Note must rely on the procedures of the relevant clearing system and its participants to receive payments under the Notes.

Notes issued under the Program will be represented on issue by one or more Global Notes that may be deposited with a custodian for DTC or a common depositary or common safekeeper for Euroclear and Clearstream, Luxembourg. Except in the circumstances described in each Global Note, investors will not be entitled to receive Notes in definitive form. Each of DTC, Euroclear and Clearstream, Luxembourg and their respective direct and indirect participants will maintain records of the beneficial interests in each Global Note held through it. While the Notes are represented by a Global Note, investors will be able to trade their beneficial interests only through the relevant clearing systems and their respective participants.

While the Notes are represented by Global Notes, the Issuer will discharge its payment obligation under the Notes by making payments through the relevant clearing systems. A holder of a beneficial interest in a Global Note must rely on the procedures of the relevant clearing system and its participants to receive payments under the Notes. The Issuer has no responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in any Global Note.

Holders of beneficial interests in a Global Note will not have a direct right to vote in respect of the Notes so represented. Instead, such holders will be permitted to act only to the extent that they are enabled by the relevant clearing system and its participants to appoint appropriate proxies.

Risks related to the structure of a particular issue of Notes.

A range of Notes may be issued under the Program. A number of these Notes may have features which contain particular risks for potential investors. Set out below is a description of the most common such features:

If the Issuer has the right to redeem any Notes at its option, this may limit the market value of the Notes concerned and an investor may not be able to reinvest the redemption proceeds in a manner which achieves a similar effective rate of return.

An optional redemption feature is likely to limit the market value of Notes. During any period when the Issuer may elect to redeem Notes, the market value of such Notes generally will not rise substantially above the price at which they can be redeemed. This also may be true prior to any redemption period. The Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rate on the Notes. At those times, an investor generally would not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the Notes being redeemed and may only be able to do so at a significantly lower rate. Potential investors should consider reinvestment risk in light of other investments available at that time.

If the Issuer has the right to convert the interest rate on any Notes from a fixed rate to a floating rate, or vice versa, this may affect the secondary market and the market value of the Notes concerned.

Fixed/Floating Rate Notes may bear interest at a rate that converts from a fixed rate to a floating rate, or from a floating rate to a fixed rate. Where the Issuer has the right to effect such a conversion, this will affect the secondary market and the market value of such Notes since the Issuer may be expected to convert the rate when it is likely to produce a lower overall cost of borrowing. If the Issuer converts from a fixed rate to a floating rate in such circumstances, the spread on the Fixed/Floating Rate Notes may be less favorable than then prevailing spreads on comparable Floating Rate Notes tied to the same reference rate. In addition, the new floating rate at

any time may be lower than the rates on other Notes. If the Issuer converts from a floating rate to a fixed rate in such circumstances, the fixed rate may be lower than then prevailing rates on its Notes.

Notes which are issued at a substantial discount or premium may experience price volatility in response to changes in market interest rates.

The market values of securities issued at a substantial discount or premium to their nominal amount tend to fluctuate more in relation to general changes in interest rates than do prices for conventional interest-bearing securities. Generally, the longer the remaining term of the securities, the greater the price volatility as compared to conventional interest-bearing securities with comparable maturities.

The Issuer’s obligations under Subordinated Notes are subordinated. An investor in Subordinated Notes assumes an enhanced risk of loss in the event of the Issuer’s insolvency.

The Issuer’s obligations under Subordinated Notes are unsecured and subordinated.

On a liquidation, dissolution or winding-up of the Issuer by way of public administration (except, in any such case, a solvent liquidation, dissolution, or winding up solely for the purposes of reorganization, reconstruction or amalgamation of the Issuer, the terms of which reorganization, reconstruction or amalgamation have previously been approved by an Extraordinary Resolution (as defined in the Trust Deed) of the holders of the Notes of the relevant Series and do not provide that the Notes thereby become redeemable or repayable) (referred to herein as a “winding-up of the Issuer”), all claims in respect of the Subordinated Notes (including any amounts attributable to the Notes and any damages awarded for breach of any obligations thereunder) will rank pari passu without any preference among themselves; at least pari passu with claims in respect of Parity Securities; in priority to claims in respect of Junior Securities; and junior to any present or future claims of Senior Creditors. If, on a winding-up of the Issuer, the assets of the Issuer are insufficient to enable the Issuer to repay the claims of the more senior-ranking creditors in full, the Noteholders will lose their entire investment in the Subordinated Notes. If there are sufficient assets to enable the Issuer to pay the claims of senior-ranking creditors in full but insufficient assets to enable it to pay claims in respect of its obligations in respect of the Subordinated Notes and all other claims that rank pari passu with the Subordinated Notes, Noteholders will lose some (which may be substantially all) of their investment in the Subordinated Notes.

There is no restriction on the amount of securities or other liabilities that the Issuer may issue, incur or guarantee and which rank senior to, or pari passu with, the Subordinated Notes. The issue or guaranteeing of any such securities or the incurrence of any such other liabilities may reduce the amount (if any) recoverable by Noteholders during a winding-up of the Issuer and may limit the Issuer’s ability to meet its obligations under the Subordinated Notes.

Although Subordinated Notes may pay a higher rate of interest than comparable Notes which are not subordinated, there is a significant risk that an investor in such Notes will lose all or some of his investment should a winding-up of the Issuer occur.

In certain circumstances, some or all of the principal amount of any Subordinated Notes may be cancelled.

Under Norwegian legislation, if the Issuer’s most recent audited accounts reveal that its net assets are less than or equal to 25 per cent of its share capital, the general meeting of shareholders of the Issuer can, or the relevant Norwegian authorities can if the general meeting of shareholders of the Issuer does not do so: first, cancel share capital to compensate for the shortfall and secondly, if any remaining shortfall exceeds a substantial part (as determined by the general meeting of shareholders of the Issuer or by the relevant Norwegian authorities) of the Issuer’s subordinated loan capital, cancel, in whole or in part, such subordinated loan capital (which would include principal in respect of all Subordinated Notes).

Subordinated Notes: Capital Event Redemption

Where the applicable Final Terms or, as the case may be, the applicable Pricing Supplement specify that Condition 6(j) applies, if a Capital Event (as defined in the Terms and Conditions of the Notes) occurs, the Issuer may, at its option, but subject to the provisions of Condition 6(i), (if, and to the extent, then required), on giving not less than 30 nor more than 60 days’ notice to the Trustee and the Agent and, in accordance with Condition 13, the Noteholders (which notice shall be irrevocable), as further provided in Condition 6(j), redeem all (but not some only) of the outstanding Subordinated Notes comprising the relevant Series at the amount specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, together (if appropriate) with interest accrued to (but excluding) the date of redemption.

There can be no assurance that holders of Subordinated Notes will be able to reinvest the amounts received upon any such redemption at a rate that will provide the same rate of return as their investments in the Subordinated Notes, as the case may be.

Subordinated Notes: Call options are subject to the prior consent of the Norwegian FSA (if, and to the extent, then required)

In addition to the call right described above under “—Subordinated Notes: Capital Event Redemption”, Subordinated Notes may also contain provisions allowing the Issuer to call them after a minimum period of, for example, five years. To exercise such a call option, the Issuer must obtain the prior written consent of the Norwegian FSA (if, and to the extent, then required).

Holders of such Subordinated Notes have no rights to call for the redemption of such Notes and should not invest in such Notes in the expectation that such a call will be exercised by the Issuer. If required, the Norwegian FSA must agree to permit such a call, based upon its evaluation of the regulatory capital position of the Issuer and certain other factors at the relevant time. There can be no assurance that the Norwegian FSA will permit such a call. Holders of such Notes should be aware that they may be required to bear the financial risks of an investment in such Notes for a period of time in excess of the minimum period.

In certain circumstances, the Issuer can substitute or vary the terms of Subordinated Notes.

Where the applicable Final Terms or, as the case may be, the applicable Pricing Supplement specify that Condition 6(k) applies, if at any time a Capital Event occurs and is continuing, the Issuer may, subject to the provisions of Condition 6(i), (without any requirement for the consent or approval of the relevant Noteholders or, subject as provided in Condition 6(k), the Trustee) either substitute all (but not some only) of the relevant Subordinated Notes for, or vary the terms of the relevant Subordinated Notes and/or the terms of the Trust Deed so that they remain or, as appropriate, become, Qualifying Securities (as defined in Condition 6(k)) as further provided in Condition 6(k)). The Terms and Conditions of such substituted or varied Subordinated Notes may have terms and conditions that contain one or more provisions that are substantially different from the terms and conditions of the original Subordinated Notes, provided that the relevant Subordinated Notes remain or, as appropriate, become, Qualifying Securities in accordance with the Terms and Conditions of the Notes. While the Issuer cannot make changes to the terms of Subordinated Notes that, in its reasonable opinion, are materially less favorable to the holders of the relevant Subordinated Notes as a class, no assurance can be given as to whether any of these changes will negatively affect any particular holder. In addition, the tax and stamp duty consequences of holding such substituted or varied Subordinated Notes could be different for some categories of Noteholders from the tax and stamp duty consequences for them of holding the Subordinated Notes prior to such substitution or variation.

There are no events of default in relation to Subordinated Notes.

In the event that the Issuer fails to pay interest or principal when due on any Subordinated Note, the holders of such Notes shall be entitled to bring proceedings against the Issuer for payment of such amounts.

Risks Related to Notes generally

Set out below is a description of certain material risks relating to the Notes generally:

The conditions of the Notes contain provisions which may permit their modification without the consent of all Noteholders and confer certain discretions on the Trustee which may be exercised without the consent of the Noteholders and without regard to the individual interests of particular Noteholders.

The Terms and Conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Noteholders including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority.

The Terms and Conditions of the Notes also provide that the Trustee may, without the consent of Noteholders and without regard to the interests of particular Noteholders, (i) agree to any modification of, or to the waiver or authorization of any breach or proposed breach of, any of the provisions of the Notes or the Trust Deed or (ii) determine that any Event of Default or Potential Event of Default (as defined in the Trust Deed) shall not be treated as such, where, in any such case, it is not, in the opinion of the Trustee, materially prejudicial to the interests of the Noteholders so to do or (iii) agree, without such consent as aforesaid, to any modification which is of a formal, minor or technical nature or to correct a manifest or (to the satisfaction of the Trustee) proven error, or to comply with mandatory provisions of Norwegian law or (iv) agree to any substitution or variation pursuant to Condition 6(k). Any such modification shall be binding on the Noteholders and any such modification shall be notified to the Noteholders in accordance with Condition 13 as soon as practicable thereafter. In addition, the Trustee may, without the consent of the Noteholders, agree with the Issuer to the substitution of another company as principal debtor under any Notes in place of the Issuer, in the circumstances described in Condition 14 of the Notes and the Trust Deed, including the Trustee being satisfied that the interests of the Noteholders will not be materially prejudiced by the substitution.

The value of the Notes could be adversely affected by a change in law or administrative practice.

The Terms and Conditions of the Notes are based on English law and, in respect of Condition 3, Norwegian law in effect as at the date of issue of the relevant Notes. No assurance can be given as to the impact of any possible judicial decision or change to English law, Norwegian law or administrative practice after the date of issue of the relevant Notes and any such change could materially adversely impact the value of any Notes affected by it.

Risks Related to the Market generally

Set out below is a description of certain material market risks, including liquidity risk, exchange rate risk, interest rate risk and credit risk:

An active secondary market in respect of the Notes may never be established or may be illiquid and this would adversely affect the price at which an investor could sell the Notes.

Notes may have no established trading market when issued, and one may never develop. If a market does develop, it may not be liquid. Therefore, investors may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. This is particularly the case for Notes that are especially sensitive to interest rate, currency or market risks, are designed for specific investment objectives or strategies or have been structured to meet the investment requirements of limited categories of investors. These types of Notes generally would have a more limited secondary market and more price volatility than conventional debt securities. Illiquidity may have a severely adverse effect on the market value of Notes.

Investment in Notes which are not denominated in the investor’s home currency gives rise to exposure to movements in exchange rates which may adversely affect the value of such holding. In addition, the

imposition of exchange controls could hinder or preclude an investor’s ability to receive payments on those Notes.

The Issuer will pay principal and interest on the Notes in the Specified Currency. This presents certain risks relating to currency conversions if an investor’s financial activities are denominated principally in a currency or currency unit (the “Investor’s Currency”) other than the Specified Currency. These include the risk that exchange rates may significantly change (including changes due to devaluation of the Specified Currency or revaluation of the Investor’s Currency) and the risk that authorities with jurisdiction over the Investor’s Currency may impose or modify exchange controls. An appreciation in the value of the Investor’s Currency relative to the Specified Currency would decrease (i) the Investor’s Currency-equivalent yield on the Notes, (ii) the Investor’s Currency-equivalent value of the principal payable on the Notes and (iii) the Investor’s Currency- equivalent market value of the Notes.

Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate or the ability of the Issuer to make payments in respect of the Notes. As a result, investors may receive less interest or principal than expected, or no interest or principal.

The value of Fixed Rate Notes may be adversely affected by movements in market interest rates.

Investment in Fixed Rate Notes involves the risk that if market interest rates subsequently increase above the rate paid on the Fixed Rate Notes, this will adversely affect the value of the Fixed Rate Notes.

Credit ratings assigned to the Issuer or any Notes may not reflect all the risks associated with an investment in those Notes.

One or more independent credit rating agencies may assign credit ratings to the Program and/or to the Notes. The ratings may not reflect the potential impact of all risks related to structure, market, additional factors discussed above, and other factors that may affect the value of the Notes. A credit rating is not a recommendation to buy, sell or hold securities and may be revised, suspended or withdrawn by the rating agency at any time. In general, European regulated investors are restricted under the CRA Regulation from using credit ratings for regulatory purposes, unless such ratings are issued by a credit rating agency established in the EU and registered under the CRA Regulation (and such registration has not been withdrawn or suspended), subject to transitional provisions that apply in certain circumstances whilst the registration application is pending. Such general restriction will also apply in the case of credit ratings issued by non-EU credit rating agencies, unless the relevant credit ratings are endorsed by an EU-registered credit rating agency or the relevant non-EU rating agency is certified in accordance with the CRA Regulation (and such endorsement action or certification, as the case may be, has not been withdrawn or suspended).

Legal investment considerations may restrict certain investments.

The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (i) Notes are legal investments for it, (ii) Notes can be used as collateral for various types of borrowing and (iii) other restrictions apply to its purchase or pledge of any Notes. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of Notes under any applicable risk-based capital or similar rules is set out on the cover of this Prospectus.

PRESENTATION OF CERTAIN FINANCIAL AND OTHER INFORMATION

The Issuer’s unaudited consolidated financial statements as of and for the three months ended March 31, 2016 and audited consolidated financial statements as of and for the years ended December 31, 2013, 2014 and 2015 incorporated by reference in this Prospectus have been prepared and presented in accordance with International Financial Reporting Standards (“IFRS”), as approved by the European Union, in accordance with Section 3-9 of the Norwegian Accounting Act. The Issuer’s unaudited consolidated financial statements as of and for the three months ended March 31, 2016 incorporated by reference in this Prospectus have been reviewed by the Issuer’s independent auditors, Ernst & Young AS. The audited consolidated financial statements as of and for the years ended December 31, 2013, 2014 and 2015 incorporated by reference in this Prospectus have been audited by the Issuer’s independent auditors, Ernst & Young AS. Unless otherwise indicated, the financial data included or incorporated by reference in this Prospectus is extracted or derived from the unaudited consolidated financial statements of the Issuer or the annual audited consolidated financial statements of the Issuer.

For the convenience of the reader, certain summary consolidated financial information and certain selected consolidated financial information has been included in this Prospectus. See “Selected Consolidated Financial Information” and “Selected Consolidated Financial Information”. This information is not complete and should be read together with the financial statements incorporated by reference in this Prospectus.

In this Prospectus, references to “NOK”, “Norwegian kroner” and “kroner” are to the currency of Norway, references to “USD”, “U.S.$” and “U.S. dollars” are to the currency of the United States, references to “EUR”, “euro” and “€” are to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty on the Functioning of the European Union, as amended, references to “SEK” are to the currency of Sweden, references to “GBP” are to the currency of the United Kingdom, references to “JPY” are to the currency of Japan, references to “RUB” are to the currency of the Russian Federation, and references to “SGD” are to the currency of Singapore. Except as otherwise noted, all interest rates are on a per annum basis. Solely for the convenience of the reader, this Prospectus contains translations of certain NOK amounts into U.S. dollars at specified rates. Unless otherwise noted, all translations of NOK amounts into U.S. dollars for the year ended December 31, 2015 have been at the rate of NOK 8.8090 = U.S.$1.00, being the representative market rate prevailing in Oslo on December 31, 2015 and all translations of NOK amounts into U.S. dollars for the three months ended March 31, 2016 have been at the rate of NOK 8.8090 = U.S.$1.00, being the representative market rate prevailing in Oslo on March 31, 2016, in each case as reported by the Central Bank of Norway (the “Central Bank” or “Norges Bank”). No representation is made that kroner or U.S. dollar amounts referred to herein have been, could have been or could be converted into U.S. dollars or kroner, as the case may be, at this rate, at any particular rate, or at all. On May 18, 2016, the representative market rate was NOK 8.8090 = U.S.$1.00. See “—Exchange Rates and Currency Information”. Certain figures included in this Prospectus have been subject to rounding adjustments; accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them.

In this Prospectus, references to “Norway” are to the Kingdom of Norway and references to the “Government” are to the Norwegian government.

In this Prospectus, reference is made to lending and deposit spreads. The Issuer calculates lending and deposit spreads relative to the relevant money market rates; i.e., three-month NIBOR for most NOK products, the relevant LIBOR quotations for floating rate products in a foreign currency, and for fixed-rate/fixed-margin products, the relevant agreed reference rate. Accordingly, spreads on loans to customers represent the interest rate receivable on loans less relevant money market rates, while spreads on deposits represent the relevant money market rates less interest rate payable on customer deposits.

In this Prospectus, reference to “loans,” “average loans” or “loans to customers” refer to loans net of impairment.

In this Prospectus, reference is also made to “non-performing and doubtful loans and guarantees”. A loan is considered to be non-performing if the loan is not serviced in accordance with the applicable loan agreement, and where the default is not due to delays or incidental circumstances concerning the customer. Commitments are classified as non-performing no later than 90 days past the formal due date. Guarantees are considered to be defaulted once a claim has been made against the Bank. A performing loan is classified as doubtful if an individual impairment has been made.

In the interim financial information as of and for the three months ended March 31, 2016, the Issuer has chosen to amortize over the course of the year the cost associated with its participation in the Norwegian Bank Guarantee Fund. See “Note 5: Net Interest Income to the unaudited interim financial report as of and for the three months ended March 31, 2015”. The implementation and interpretation of IFRIC 21 in 2015, its application to the Norwegian Bank Guarantee Fund levy, and whether or not the cost of such levy ought to be amortized throughout the year to which it applies or taken entirely when incurred on 1 January 2016, may be applied differently by different market participants. While the Issuer believes it has appropriately chosen to amortize this cost, if it were to have incurred the entire cost on January 1, 2016, Net Interest Income for the three months ended March 31 would have been NOK 479 million less, though over the course of the entire year such a differential would reverse itself as no amortized costs would be incurred in future interim periods.

This Prospectus includes certain statistics and market share data. The Issuer believes that the statistics and market share data included in this Prospectus are useful in understanding the markets in which it operates. However, unless indicated otherwise, these figures are based on the Issuer’s internal calculations and estimates of market data and have not been independently verified. Accordingly, no assurances can be given that such internal calculations and estimates of market data are accurate. Some of the information contained in this Prospectus has been derived from official data of Statistics Norway. The Issuer has relied on the accuracy of this information without independent verification.

FORWARD-LOOKING STATEMENTS

This Prospectus contains forward-looking statements, which reflect management’s current expectations with respect to future events, financial and operating performance and future market conditions. Words such as “believe”, “anticipate”, “expect”, “aim”, “project”, “expect”, “intend”, “predict”, “target”, “may”, “might”, “assume”, “could”, “will” and “should” or other variations or comparable terminology are intended to identify forward-looking statements. Forward-looking statements appear in a number of places in this Prospectus including, without limitation, in the documents referred to in “Documents Incorporated by Reference” and in “Risk Factors”. These forward-looking statements address matters such as:

● performance of the global financial markets and the markets where the DNB Bank Group operates;

● the DNB Bank Group’s ability to maintain its customer base and the financial condition of the DNB Bank Group’s customers;

● future exposure to credit risk, including counterparty risk and credit concentration risk;

● future exposure to market risk, including changes or volatility in interest rates, lending spreads, deposit spreads, foreign exchange rates, asset prices and risks relating to the DNB Bank Group’s pension and medical care obligations towards its employees;

● future exposure to liquidity and funding risks and systemic risk;

● the DNB Bank Group’s ability to manage operational risk and information technology systems;

● political and economic conditions in markets outside the Nordic countries where the DNB Bank Group operates, including Poland and the Baltic states;

● future changes to regulation of the financial services industry, including capital adequacy requirements, and other governmental intervention;

● future exposure to legal risks related to the DNB Bank Group’s business; and

● changes in applicable laws and regulations, including taxes, or accounting standards or practices.

By their nature, forward-looking statements involve risk and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. While the Issuer has prepared these forward- looking statements in good faith and on the basis of assumptions it believes to be reasonable, any such forward- looking statements are not guarantees or warranties of future performance. The Issuer’s actual financial condition, results of operation and cash flows, and the development of the markets in which it operates, may differ materially from those expressed or implied in the forward-looking statements contained in this Prospectus.

The Issuer does not intend, and does not assume any obligation, to update any forward-looking statements contained herein, except as may be required by law. All subsequent written and oral forward-looking statements attributable to the Issuer or to persons acting on its behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this Prospectus.

AVAILABLE INFORMATION

The Issuer has agreed that, for so long as any Notes issued by it are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, it will, during any period in which it is neither subject to the reporting requirements of Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder, provide to any holder or beneficial owner of such restricted securities or to any prospective purchaser of such restricted securities designated by such holder or beneficial owner upon the request of such holder, beneficial owner or prospective purchaser, the information required to be provided by Rule 144A(d)(4) under the Securities Act.

EXCHANGE RATES AND CURRENCY INFORMATION

The following table sets forth, for the periods and dates indicated, average, high, low and period-end exchange rates, based on the representative market rate for the Norwegian kroner in relation to the U.S. dollar. The rates are expressed in NOK per U.S. dollar. The average rate means the annual average or period average, as applicable, of daily rates.

Average High Low Period-end

2011 ...... 5.6058 6.0274 5.2452 5.9740 2012 ...... 5.8183 6.1236 5.5567 5.5665 2013 ...... 5.8780 6.2525 5.4528 6.0719 2014 ...... 6.3084 7.4843 5.8997 7.4478 2015 ...... 8.0696 8.8455 7.3074 8.8455 January 2016 ...... 8.8309 8.9578 8.6641 8.6854 February 2016 ...... 8.6212 8.7294 8.5111 8.7292 March 2016 ...... 8.4937 8.6791 8.2692 8.2692 April 2016 ...... 8.2214 8.3592 8.0812 8.0812 May 2016 (through May 18)...... 8.1487 8.2263 8.0336 8.2263

Source: Norges Bank

These rates are provided solely for the convenience of the reader and are not necessarily the rates used in the preparation of the Issuer’s consolidated financial statements. No representation is made that Norwegian kroner amounts have been, could have been or could be converted into U.S. dollars at any of the exchange rates herein indicated or any other rate.

ENFORCEMENT OF CIVIL LIABILITIES

The Issuer is a Norwegian company, and a majority of its assets are located outside the United States. In addition, all of its directors and executive officers reside or are located outside the United States. As a result, investors may not be able to serve process within the United States upon these persons, or to enforce against these persons judgments obtained in U.S. courts predicated solely upon the civil liability provisions of U.S. federal or state securities laws.

The United States and Norway do not currently have a treaty providing for reciprocal recognition and enforcement of judgments, other than arbitration awards, in civil and commercial matters. Therefore, a final judgment for the payment of a fixed debt or a sum of money rendered by any U.S. court based on civil liability, whether or not predicated solely upon the U.S. federal securities laws, would not automatically be enforceable in Norway. In addition, there is doubt that a foreign judgment based upon U.S. securities laws would be enforced in Norway. There is also doubt as to the enforceability of judgments of this nature in several of the other jurisdictions in which the Issuer operates and where its assets are located.

DOCUMENTS INCORPORATED BY REFERENCE

The Issuer has incorporated by reference in this Prospectus important information about the Issuer, which means that (i) the incorporated documents are considered part of this Prospectus, and (ii) the Issuer can disclose important information to prospective purchasers of Notes by referring prospective purchasers to those documents. The following documents, which have previously been published and have been filed with the Irish Stock Exchange and the Central Bank of Ireland, shall be incorporated in, and form part of, this Prospectus:

(a) the unaudited consolidated quarterly financial statements of the Issuer for the financial three months ended March 31, 2016 (the “Issuer’s First Quarter Report 2016”) (https://www.dnb.no/portalfront/nedlast/no/om-oss/resultater/2016/1-kvartal/kvartalsrapport-dnb-bank- 1Q16-en.pdf), prepared in accordance with IFRS as approved by the European Union, in accordance with Section 3-9 of the Norwegian Accounting Act, being the information set out at the following pages of the Issuer’s First Quarter Report 2016:

Q1 2016

Income statement page 12 Balance sheet page 13 Statement of changes in equity page 14 Cash flow statement page 16 Notes to the accounts pages 17-39

(b) the audited consolidated annual financial statements of the Issuer for the financial years ended December 31, 2013, 2014 and 2015 (the “Annual Report 2013”, “Annual Report 2014” and “Annual Report 2015”, respectively) (https://www.dnb.no/portalfront/nedlast/no/om-oss/resultater/2013/annual- report-dnb-bank-2013.pdf?popup=true, https://www.dnb.no/portalfront/nedlast/no/om- oss/resultater/2014/annual-report-dnb-bank-2014.pdf, https://www.dnb.no/portalfront/nedlast/no/om- oss/resultater/2015/annual-report-dnb-bank-2015.pdf) prepared in accordance with IFRS as approved by the European Union, in accordance with Section 3-9 of the Norwegian Accounting Act, being the information set out at the following pages of the Issuer’s Annual Report 2013, Annual Report 2014, and Annual Report 2015, respectively:

2013 2014 2015

Income statement page 16 page 14 page 12 Balance sheet page 17 page 15 page 13 Statement of changes in equity page 18 page 16 page 14 Cash flow statement page 19 page 17 page 15 Accounting principles pages 20-29 pages 18-26 page 16-25 Notes to the accounts pages 30-115 pages 27-109 page 26-108 Auditor’s report page 117 page 111 page 110

(c) the Terms and Conditions set out in pages 135 to 161 of the base prospectus published by the Issuer dated 21 March 2012 (https://www.bourse.lu/issuer/documents/information?numEmet=22294#SignEmetDocsProg_showMo reDetails, see Documents-Programmes, located under Max. EUR 45,000,000,000 – Euro Medium Term Note Programme 2012 (Annual Update)).

Any other information not listed above but contained in the Issuer’s First Quarter Report 2016, Annual Report 2013, Annual Report 2014, or Annual Report 2015 is either not relevant for investors or is covered elsewhere in this Prospectus.

In relation to each issue of Notes, the relevant Final Terms, or Pricing Supplement as the case may be, shall be deemed to form a part of, and should be read together with, this Prospectus. Should any of the documents incorporated by reference in this Prospectus themselves incorporate by reference further information, such information does not form a part of this Prospectus.

Following the publication of this Prospectus, a supplement to this Prospectus may be prepared by the Issuer and approved by the Central Bank of Ireland in accordance with Article 16 of the Prospectus Directive. Statements contained in any such supplement or contained in any document incorporated by reference therein shall, to the extent applicable (whether expressly, by implication or otherwise), be deemed to modify or supersede statements contained in this Prospectus or in a document which is incorporated by reference in this Prospectus. Any statement so modified or superseded shall not, except as so modified or superseded, constitute a part of this Prospectus.

Copies of documents incorporated by reference in this Prospectus can be obtained upon request, free of charge, from the registered office of the Issuer and the specified office of the Paying Agent for the time being in London.

The Issuer has undertaken to the Dealers in the Program Agreement that, in the event of any significant new factor, material mistake or inaccuracy relating to the information included in this Prospectus which is capable of affecting the assessment of any Notes or any change in the condition of the Issuer which is material in the context of the Program or the issue of any Notes, the Issuer will prepare and publish a supplement to this Prospectus or publish a new prospectus for use in connection with any subsequent issue of Notes.

OVERVIEW OF THE ISSUER

The following overview should be read as an introduction to, in conjunction with, and as being qualified in its entirety by, the more detailed information that appears elsewhere in this Prospectus, including the DNB Bank Group’s audited consolidated financial statements incorporated by reference into this Prospectus. See “Risk Factors” for a discussion of certain factors that should be considered in connection with an investment in the Notes. Any decision to invest in the Notes should be based on the consideration of this Prospectus as a whole together with the relevant Final Terms. Certain terms used in this overview are defined elsewhere in this Prospectus, including under “Terms and Conditions of the Notes.”

Business Overview

Overview

The DNB Bank Group, which includes DNB Bank and its subsidiaries, is Norway’s largest bank group as measured by total assets (with NOK 2,343 billion as of March 31, 2016 and NOK 2,316 billion in assets as of December 31, 2015). DNB Bank offers corporate, retail and investment banking services and products to customers in Norway and internationally, including in Sweden, Poland and the Baltic states of Estonia, Latvia and Lithuania. DNB Bank is the largest company in the DNB Group. As of March 31, 2016, the DNB Bank Group had total assets of NOK 2,343 billion and loans to customers of NOK 1,524 billion, compared to total assets of NOK 2,316 billion and loans to customers of NOK 1,532 billion as of December 31, 2015. The DNB Bank Group’s profit for the three months ended March 31, 2016 was NOK 4.9 billion, compared to NOK 6.2 billion for the corresponding period in 2015, and its profit for the year ended December 31, 2015 was NOK 23.2 billion, compared to NOK 19.1 billion for the previous year.

The Bank is wholly owned by DNB ASA, which is the holding company of the DNB Group. The DNB Group is Norway’s largest financial services group in terms of total assets with total assets of NOK 2,599 billion as of December 31, 2015. DNB ASA conducts its banking operations through the DNB Bank Group and offers life insurance and pension saving products, non-life (property and casualty) insurance products and asset management services through its wholly-owned subsidiaries DNB Livsforsikring AS, DNB Forsikring AS and DNB Asset Management Holding AS, as set forth below in “—Legal Structure of the DNB Group”. The DNB Group offers a full range of financial services, including loans, savings and investment, payment transfers, advisory services, real estate broking, insurance and pension products for personal and corporate customers. The DNB Bank Group is among the world’s leading banks within its international priority areas, which include the energy, shipping and seafood sectors. The bank offers 24/7 customer service and telephone and online banking, and has a physical presence throughout Norway and in 19 other countries through its branch offices, post offices and in-store postal and banking outlets.

As of March 31, 2016, the DNB Group had approximately 2.1 million private individuals as customers, approximately 230,000 corporate customers and approximately 1.1 million life and pension insurance customers in Norway.

There are four main business segments included in the DNB Bank Group’s financial reporting structure. The reported figures for the different segments will reflect the Group’s total sales of products and services to the relevant segment. For a description of each segment, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Business areas”.

The chart below sets forth the legal structure of the DNB Group as of March 31, 2016:

Strategy, Vision and Values

The Bank is the main subsidiary of the DNB Group and the Bank’s strategy is therefore closely coordinated with the DNB Group’s overall strategy. DNB’s strategic platform consists of the Group’s vision, values and a shared customer value Proposition. The platform shows what should characterize the Group and sets a common direction.

DNB’s vision, values and customer value proposition are about putting the customers in focus. By having satisfied customers whose needs for financial services are well met, DNB aims to be the leading bank throughout Norway and a leading international player within selected customer segments, products and geographic areas.

DNB’s vision: Creating value through the art of serving the customer. DNB will create value for customers, owners, employees and society in general.

DNB’s values: Helpful, professional and show initiative. The values reflect what should characterize DNB. Employees who are helpful, professional and show initiative will ensure that customers always have a good experience when they contact DNB.

DNB’s customer value proposition: Here for you. Every day. When it matters the most. It is all about when, where and how DNB is there for its customers. Being there is about identifying customer needs in order to be able to offer the best solutions.

DNB gives priority to long-term value creation for its shareholders and aims to achieve a return on equity, a rate of growth and a market capitalization which are competitive in relation to its Nordic peers.

Recent Regulatory Developments

Agreement on European supervisory authorities

Due to a stipulation in the Norwegian Constitution which limits the capacity of the government to transfer powers to international organizations, it has not been possible to incorporate the EU regulations establishing the

European supervisory authorities, CRR/CRD IV, and a number of other legislative acts into the EEA Agreement and Norwegian legislation. In the autumn of 2014, Norway and the EU agreed on a solution, but it has proved time-consuming to implement the specific technical adaptations to the EU legislation. The government aims to submit a proposition to Stortinget, the Norwegian parliament, in respect of the European supervisory authorities and some important related legislative acts for consideration in the spring of 2016. The required legislative amendments will probably enter into force on July 1, 2016. Parallel to this, the government is working to incorporate the remaining legislation on financial services in the course of 2016.

New capital and liquidity requirements

Norway introduced new capital requirements as of July 1, 2013 as the first step in the adaptation to the EU capital requirements regulations, CRR/CRD IV, which have involved a gradual increase in the formal capital requirements up till July 1, 2016. As of July 1, 2015, the minimum common equity Tier 1 capital requirement, including the buffer requirements, has been 12 per cent for the three financial institutions which the Norwegian authorities have defined as systemically important O-SIIs (other systemically important institutions) (including DNB ASA), and 11 per cent for other banks. As of July 1, 2016, this minimum requirement will increase to 13.5 per cent for the O-SIIs and to 11.5 per cent for the other banks.

The capital adequacy requirements for banks consist of two pillars. Pillar 1 encompasses minimum requirements and buffer requirements determined by the political authorities. The Norwegian FSA’s Pillar 2 expectations are in addition to the Pillar 1 requirements and are expected to reflect institution-specific capital requirements relating to risks which are not covered or only partly covered by Pillar 1. The Pillar 2 requirement for DNB Bank, the DNB Bank Group and the DNB Group has been set at 1.5 per cent of common equity. The total common equity Tier 1 capital requirement for DNB Bank, the DNB Bank Group and the DNB Group will thus be 15 per cent at year-end 2016. DNB Bank, the DNB Bank Group and the DNB Group will fulfill this requirement through retained earnings and capital efficiency measures.

In order to be prepared for a possible implementation of future new EU regulations, the Ministry of Finance has asked the Norwegian FSA to prepare prospective rules on a non-risk based capital requirement in Norway, including definitions of the numerator and the denominator in the capital equation. The Norwegian FSA has also been asked to consider the most appropriate capital level for Norwegian banks, mortgage institutions and parent companies in financial undertakings, including whether such levels should be differentiated, given that a non- risk based capital requirement will be introduced without replacing other capital requirements. A draft regulation was sent for public hearing on April 12, 2016, until August 25, 2016.

The EU capital requirements regulations include stipulations on the Liquidity Coverage Ratio, LCR. In Norway, the Ministry of Finance has decided to introduce the LCR ahead of the EU schedule. The O-SIIs were required to meet the 100 per cent LCR requirement as early as from December 31, 2015. For other banks, the requirement is phased in by 70 per cent as of December 31, 2015, 80 per cent as of December 31, 2016 and 100 per cent as of December 31, 2017.

New crisis management regulations

On July 2, 2014, the EU directive for the winding-up and restructuring of banks, the BRRD, entered into force. The directive will also need to be implemented in Norway through the EEA Agreement. The purpose of the BRRD is to facilitate the winding-up of even the largest banks without an injection of government funds. The continuity of systemically important functions will be ensured through the recapitalization of the entire or parts of a bank by writing down or converting into share capital the bank’s subordinated loans and unsecured senior debt (bail-in).

Under the BRRD, each country will establish a national resolution fund. In accordance with the revised Deposit Guarantee Directive, each country must also have a deposit guarantee fund. Norway already has one of the best capitalized deposit guarantee funds in Europe with funds that are well above the combined EU requirements for the deposit guarantee fund and the resolution fund of 1.8 per cent of guaranteed deposits.

The implementation of the BRRD and the revised deposit guarantee directive will require extensive changes in the Norwegian crisis solution system, including the rules on public administration and the role of the Norwegian Banks’ Guarantee Fund. The Banking Law Commission is considering how the directives can be implemented in Norwegian law. This process and the work on draft legislation will probably be finalized in the course of the second half of 2016.

Regulation on interchange fees for card-based payment transactions

The Ministry of Finance has circulated for comment proposed rules to be implemented in Norwegian law corresponding to the EU regulation on interchange fees for card-based payment transactions (“interchange”). For debit card purchases, banks will not be allowed to charge a fee exceeding 0.2 per cent of the transaction value, while the maximum fee for credit card purchases will be 0.3 per cent. This will result in a reduction in banks’ income from payment card transactions. The Norwegian FSA recommends that the maximum rates for interchange fees be introduced in Norway as of July 1, 2016. In the EU, the rules were approved in April 2015, and the maximum fees became effective in December 2015.

Board of Directors

The Board of Directors of the Bank comprises Anne Carine Tanum (Chairman), Jarle Bergo, Lilian Hattrem and Kim Wahl.

GENERAL DESCRIPTION OF THE PROGRAM

The following is a brief overview only and should be read in conjunction with the rest of this Prospectus and, in relation to any Notes, in conjunction with the applicable Final Terms or, as the case may be, the applicable Pricing Supplement and, to the extent applicable, the Terms and Conditions of the Notes set out herein. Any decision to invest in any Notes should be based on a consideration of this Prospectus as a whole by any investor. The Issuer and any relevant Dealer may agree that Notes shall be issued in a form other than that contemplated in the Terms and Conditions of the Notes, in which event, in the case of Notes other than Exempt Notes and, if appropriate, a supplement to this Prospectus or a new Prospectus will be published.

Issuer DNB Bank ASA, a public limited company incorporated under the laws of the Kingdom of Norway on September 10, 2002 with registration number 984 851 006

Arranger Barclays Bank PLC

Dealers Barclays Capital Inc., Goldman, Sachs & Co.

Trustee The Law Debenture Trust Corporation p.l.c.

Issuing and Principal Paying Agent Citibank, N.A., London Branch

Registrar Citigroup Global Markets Deutschland AG

Amount The aggregate principal amount of Notes outstanding at any time shall not exceed U.S.$10,000,000,000 (or its equivalent in other currencies). The Program size may be increased from time to time without the consent of the holders of the Notes.

Distribution Notes may be distributed on a syndicated or non-syndicated basis or may be sold directly by the Issuer.

Currencies Any currency agreed between the Issuer and the relevant Dealer(s), subject to any applicable legal or regulatory restrictions.

Status The Notes may be issued by the Issuer on a subordinated or unsubordinated basis.

(a) The Unsubordinated Notes will constitute direct, unconditional, unsubordinated and unsecured obligations of the Issuer and will rank pari passu among themselves and (save for certain debts required to be preferred by law) equally with all other unsecured obligations (including deposits) (other than subordinated obligations, if any) of the Issuer, present and future, from time to time outstanding.

(b) The Subordinated Notes will constitute dated unsecured and subordinated obligations (ansvarlig lånekapital) of the Issuer and will at all times rank pari passu without any preference among themselves. In

the event of a liquidation, dissolution or winding-up of the Issuer by way of public administration (except, in any such case, a solvent liquidation, dissolution or winding-up solely for the purposes of a reorganization, reconstruction or amalgamation of the Issuer, the terms of which reorganization, reconstruction or amalgamation have previously been approved by an Extraordinary Resolution (as defined in the Trust Deed) of the holders of the Notes of the relevant Series and do not provide that the Notes thereby become redeemable or repayable), claims in respect of the Subordinated Notes shall rank:

(i) pari passu without any preference among themselves;

(ii) at least pari passu with claims in respect of Parity Securities;

(iii) in priority to claims in respect of Junior Securities; and

(iv) junior to any present or future claims of Senior Creditors.

Subordinated Notes – Loss Absorption Under Norwegian legislation, if the Issuer’s most recent audited accounts reveal that its net assets are less than or equal to 25 per cent of its share capital or less, the general meeting of shareholders of the Issuer can, or the relevant authorities can if the general meeting of shareholders of the Issuer does not do so: first, cancel share capital to compensate for the shortfall and secondly, if any remaining shortfall exceeds a substantial part (as determined by the general meeting of shareholders of the Issuer or by the relevant Norwegian authorities) of the Issuer’s subordinated loan capital, cancel, in whole or in part, such subordinated loan capital (which would include principal in respect of all Subordinated Notes).

To the extent that part only of the outstanding principal amount of any Subordinated Notes has been cancelled as provided above, interest will continue to accrue in accordance with the terms thereof on the then outstanding principal amount of such Subordinated Notes, as the case may be.

Subordinated Notes – Substitution or Where the applicable Final Terms or, as the case may be, the Variation applicable Pricing Supplement specify that Condition 6(k) applies, if at any time a Capital Event occurs and is continuing, the Issuer may, subject to the provisions of Condition 6(i), (if, and to the extent so required), either substitute all (but not some only) Subordinated Notes for, or vary their terms so that they remain or, as appropriate, become, Qualifying Securities (as defined in Condition 6(k)), as further provided in Condition 6(k).

Maturities Such maturities as may be agreed between the Issuer and the relevant Dealer(s), subject to such minimum or maximum maturity as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the Issuer or the relevant Specified Currency.

Issue Price The Notes may be issued at par, at a discount to, or premium over, par as specified in the applicable Final Terms or as the case may be, the applicable Pricing Supplement. The price and amount of the Notes to be issued will be determined by the Issuer and the relevant Dealer(s) at the time of issue in accordance with prevailing market conditions.

Issuance in Series The Notes will be issued in separate series (each, a “Series”) and the Notes of each Series will be subject to identical terms whether as to currency, denomination, interest or maturity or otherwise. Notes will be issued in tranches (each, a “Tranche”). The Notes of each Tranche that constitute the same Series will be subject to identical terms, except that the issue date, the issue price and the amount and date of the first payment of interest may be different in respect of different Tranches.

Denominations Notes will be issued in such denominations as may be agreed between the Issuer and the relevant Dealer(s) and as indicated in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement save that the minimum denomination of each Note (other than an Exempt Note) will be at least €100,000 (or, if the Notes are denominated in a currency other than euro, the equivalent amount in such currency at the time of issue) or such other amount as may be allowed or required from time to time by the relevant regulatory authority or any laws or regulations applicable to the relevant Specified Currency.

Interest Notes may be interest bearing or non-interest bearing. Interest may accrue at a fixed rate or a floating rate, which will be calculated by referring to a formula. The floating rate may be determined by reference to LIBOR or EURIBOR.

Interest Payments Interest may be paid monthly, quarterly, semi-annually or annually or as may be agreed between the Issuer and the relevant Dealer(s).

Exempt Notes The Issuer may agree with any Dealer and the Trustee that Exempt Notes may be issued in a form not contemplated by the Terms and Conditions of the Notes, in which event the relevant provisions will be included in the applicable Pricing Supplement.

Redemption The applicable Final Terms or, as the case may be, the applicable Pricing Supplement will indicate the redemption

amount, the scheduled maturity date (which in the case of Subordinated Notes, must be at least five years after the issue date in respect of such Notes) and will also indicate whether the relevant Notes can be redeemed prior to their stated maturity (other than for taxation reasons or (in the case of Subordinated Notes) following a Capital Event or (in the case of Unsubordinated Notes) following an Event of Default) or whether the relevant Notes will be redeemable at the option of the Issuer (“Issuer Call”) (which, in respect of Subordinated Notes, may not take place prior to the fifth anniversary of the Issue Date) and/or (in the case of Unsubordinated Notes) at the option of the Noteholders (“Investor Put”).

Where, in respect of such Notes, the applicable Final Terms or, as the case may be, the applicable Pricing Supplement specify that Condition 6(j) applies, if a Capital Event (as defined in Condition 6(j)) occurs the Issuer shall be entitled to redeem Subordinated Notes.

No early redemption of Subordinated Notes may take place without the prior written consent of the Financial Supervisory Authority of Norway (Finanstilsynet) (the “Norwegian FSA”) (if and to the extent such consent is required).

Taxation All payments in respect of the Notes will be made without withholding or deduction for or on account of Norwegian withholding taxes unless required by law. If such withholdings are required by Norwegian law, the Issuer will in certain circumstances pay certain additional amounts as described in, and subject to the exceptions set out in, Condition 7.

All payments in respect of the Notes will be made subject to any withholding or deduction required by FATCA. If such withholding or deduction is required, no additional amounts will be paid with respect to the withholding or deduction.

Further Issues The Issuer may from time to time, without the consent of the Holders of the Notes of any Series, create and issue further Notes and other debt securities having the same terms and conditions as any Series of Notes in all respects (or in all respects except for the issue date, issue price and the amount of the first payment of interest, if any, on them), which may be consolidated and form a single Series with the outstanding Notes of such Series.

Listing, Approval and Admission to Application has been made to the Central Bank of Ireland to Trading approve this document as a base prospectus. Application has also been made for Notes issued under the Program (other than Exempt Notes) during the 12 months from the date of this Prospectus to be admitted to listing on the Official List and to trading on the Main Securities Market.

Notes issued under the Program may be listed or admitted to trading on the Irish Stock Exchange. Notes which are neither listed nor admitted to trading on any market may also be issued.

The applicable Final Terms or, as the case may be, the applicable Pricing Supplement will state whether or not the relevant Notes are to be listed and/or admitted to trading and if so, on which stock exchanges and/or markets.

Exempt Notes may only be admitted to listing or trading on non-EEA stock exchanges and/or markets.

Form, Clearance and Settlement Notes offered in the United States to QIBs in reliance on Rule 144A will initially be represented by one or more Rule 144A Global Notes and Notes offered outside the United States in reliance on Regulation S will initially be represented by one or more Regulation S Global Notes.

Notes will be in fully registered form, unless otherwise specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement. Global Notes representing the Notes will be held by or on behalf of DTC for the benefit of participants in DTC or be registered in the name of a nominee for, and deposited with, a common depositary or common safekeeper for Euroclear and Clearstream Luxembourg.

Governing Law The Notes will be governed by, and construed in accordance with, English law except for the provisions of Condition 3, which will be governed by, and construed in accordance with, Norwegian law.

Ratings The Program has been rated “A+” (senior unsecured) by S&P and “(P)Aa2” (senior unsecured)/”(P)Baa1” (subordinated) by Moody’s. Subordinated notes issued under the Program are expected to be assigned an “A-” rating by S&P. The Issuer’s long-term senior unsecured debt has been rated “AA (low)” by DBRS. Series of Notes issued under the Program may be rated or unrated. Where a Series of Notes is rated, such rating will be disclosed in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement and will not necessarily be the same as the rating assigned to the Program. A security rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency.

Selling Restrictions and Transfer The Notes have not been, and will not be, registered under the Restrictions Securities Act and may not be offered or sold within the United States or to or for the account or benefit of U.S. persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. See “Plan of Distribution and Transfer Restrictions—U.S. Transfer Restrictions”. See “Subscription and Sale” below.

Risk Factors There are certain factors that may affect the Issuer’s ability to fulfill its obligations under the Notes. These are set out under the heading “Risk Factors”. Investors should carefully consider these risk factors and all of the information in this Prospectus before deciding to buy Notes.

USE OF PROCEEDS

The net proceeds from each issue of Notes will be used by the Issuer for general corporate purposes, including the repayment of borrowings incurred in the ordinary course of business.

CAPITALIZATION

The following table sets forth the Issuer’s consolidated capitalization as of March 31, 2016. Except as noted below, there has been no material change in the Issuer’s consolidated capitalization since March 31, 2016. This information should be read together with the Issuer’s unaudited consolidated financial statements incorporated by reference in this Prospectus.

As of March 31, 2016

(NOK millions)

Borrowings Commercial paper, nominal amount ...... 206,309 Bond debt, nominal amount(1) (2) ...... 585,268 Adjustments ...... 40,326 Subordinated loan capital and perp. subordinated loan capital securities ...... 29,826

Total borrowings...... 861,729

Equity Share capital ...... 18,314 Share premium ...... 20,611 Additional Tier 1 capital 8,067

Other equity ...... 129,447

Total equity ...... 176,440

Total capitalization ...... 1,038,169

______Notes: (1) Since March 31, 2016, the Issuer has issued further debt. On April 18, 2016 DNB Boligkreditt issued EUR 1,500,000,000 0.25% covered bonds due April 18, 2023 under its EUR 60,000,000,000 Covered Bond Program. (2) Minus own bonds. Nominal amount of outstanding covered bonds issued by DNB Boligkreditt totaled NOK 422.1 billion as of March 31, 2016. The cover pool market value was NOK 569.0 billion as of March 31, 2016.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The financial information set forth below is derived from the Issuer’s unaudited consolidated financial statements as of and for the three months ended March 31, 2016 and audited consolidated financial statements as of and for the years ended December 31, 2013, 2014 and 2015.

The following data should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in this Prospectus as well as the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

The table below sets forth consolidated income statement data for the Issuer for the periods indicated:

Three months ended March 31, Year ended December 31,

2016 2015 (unaudited) (unaudited) 2015 2014 2013 (NOK millions)

Total interest income ...... 13,397 14,874 57,793 61,682 60,713

Total interest expenses ...... (4,594) (6,262) (22,258) (29,074) (30,334)

Net interest income ...... 8,803 8,611 35,535 32,607 30,379

Commissions and fee income etc...... 2,001 2,090 8,694 8,148 7,595

Commissions and fees expenses etc...... (720) (615) (2,737) (2,258) (2,115)

Net gains on financial instruments at fair value ... 2,363 3,421 8,704 5,404 5,009

Profit from companies accounted for by the equity method ...... 86 30 (72) 226 362

Net gains on investment property ...... (5) 2 269 82 (86)

Other income ...... 545 637 2,051 2,519 2,390

Net other operating income ...... 4,270 5,566 16,909 14,122 13,156

Total income ...... 13,073 14,178 52,444 46,729 43,535

Salaries and other personnel expenses ...... (3,087) (2,649) (9,140) (10,095) (10,345)

Other expenses ...... (1,743) (2,041) (7,892) (7,714) (7,826)

Depreciation and impairment of fixed and intangible assets ...... (655) (553) (2,159) (2,028) (2,598)

Total operating expenses ...... (5,485) (5,243) (19,191) (19,836) (20,769)

Net gains/losses on fixed and intangible assets .... (6) 12 45 52 150

Impairments on loans and guarantees ...... (1,174) (575) (2,270) (1,639) (2,185)

Pre-tax operating profit ...... 6,408 8,371 31,028 25,306 20,730

Tax expenses ...... (1,498) (2,168) (7,755) (6,174) (5,042)

Profit from operations held for sale, after taxes ... (13) (47) (51) (22) 4

Profit for the period ...... 4,897 6,156 23,222 19,110 15,692

Three months ended March 31, Year ended December 31,

2016 2015 (unaudited) (unaudited) 2015 2014 2013

Portion attributable to shareholders ...... 4,782 6,142 22,848 19,110 15,692

Portion attributable to additional Tier 1 holders .. 115 14 374 0 0

Earnings/diluted earnings per share (NOK) ...... 126.79 104.34 85.68

Earnings per share for continuing operations excluding operations held for sale (NOK) ...... 127.07 104.46 85.66

The table below sets forth consolidated balance sheet data for the Issuer as of the periods indicated:

As of March 31, As of December 31, 2016 (unaudited) 2015 2014 2013 (NOK millions) Cash and deposits with central banks...... 166,587 19,317 58,505 167,171 Due from credit institutions ...... 177,526 297,457 355,577 176,796 Loans to customers ...... 1,523,768 1,531,932 1,447,465 1,350,656 Commercial paper and bonds at fair value ...... 203,515 207,063 187,765 191,232 Shareholdings ...... 7,435 8,794 9,709 13,511 Financial derivatives ...... 215,673 203,273 236,389 130,775 Commercial paper and bonds, held to maturity 16,728 19,162 31,927 63,318 Investment property ...... 2,122 2,333 4,743 4,615 Investments accounted for by the equity method ...... 4,222 4,091 3,275 3,096 Intangible assets ...... 4,100 4,176 4,315 4,464 Deferred tax assets ...... 1,087 1,138 1,197 1,086 Fixed assets ...... 7,916 8,059 8,128 7,816 Assets held for sale ...... 204 200 692 225 Other assets ...... 12,295 8,608 12,301 16,017

Total assets ...... 2,343,177 2,315,603 2,361,990 2,130,779 Due to credit institutions ...... 160,134 161,267 214,211 234,218 Deposits from customers ...... 937,464 957,322 951,049 891,256 Financial derivatives ...... 173,545 154,878 186,230 111,242 Debt securities issued...... 831,902 806,810 813,909 716,192 Payable taxes ...... 4,630 2,493 1,920 4,126 Deferred taxes ...... 6,468 6,461 4,537 2,042 Other liabilities 18,764 18,409 12,840 13,917 Liabilities held for sale ...... 56 71 100 53 Provisions ...... 1,514 1,225 1,133 1,398 Pension commitments ...... 2,435 2,301 5,434 3,652

As of March 31, As of December 31, 2016 (unaudited) 2015 2014 2013 (NOK millions) Subordinated loan capital ...... 29,826 30,953 29,319 26,276

Total liabilities ...... 2,166,737 2,142,191 2,220,681 2,004,372 Share capital ...... 18,314 18,314 18,314 18,314 Share premium ...... 20,611 20,611 20,611 20,611 Additional Tier 1 capital ...... 8,067 – – – Other equity ...... 129,447 126,133 102,383 87,482

Total equity ...... 176,440 173,412 141,309 126,407

Total liabilities and equity ...... 2,343,177 2,315,603 2,361,990 2,130,779

The table below sets forth selected consolidated key figures as of and for the periods indicated:

As of or for the

three months ended As of or for the year ended March 31, December 31,

2016 2015 2015 2014 2013

Key figures:

Rate of return/profitability

Net other operating income, per cent of total income ...... 32.7 39.3 32.2 30.2 30.2

Cost/income ratio (%)(1) ...... 42.0% 37.0% 36.6 42.4 46.4

Return on equity (%)(2) ...... 11.5% 17.0% 15.1 14.5 13.1

Financial strength at end of period

Common Equity Tier 1 capital ratio, transitional rules (%)(3) ...... 14.7 12.5 14.3 12.5 11.4

Tier 1 capital ratio, transitional rules (%)(3) ...... 15.6 13.4 15.3 12.9 11.8

Capital ratio, transitional rules (%)(3) ...... 18.2 15.5 17.9 15.2 13.9

Common Equity Tier 1 capital (NOK million)(3) .. 152,420 133,376 150,889 129,915 114,770

Risk-weighted volume, transitional rules (NOK million) ...... 1,040,334 1,069,597 1,056,731 1,038,396 1,004,718

Loan portfolio and impairment

Individual impairment relative to average net loans to customers (%) ...... (0.14) (0.15) (0.13) (0.14) (0.17)

Impairments relative to average net loans to customers (%) ...... (0.31) (0.16) (0.15) (0.12) (0.16)

Net non-performing and doubtful loans and guarantees, per cent of net loans(4) ...... 0.88 0.83 0.76 0.96 1.37

Net non-performing and net doubtful loans and 14,925 13,856 13,980 17,261 20,749

As of or for the

three months ended As of or for the year ended March 31, December 31,

2016 2015 2015 2014 2013 guarantees at end of period (NOK million) ......

Liquidity

Ratio of customer deposits to net loans to customers at end of period (%) ...... 61.5 65.5 62.5 65.7 66.0

Staff

Number of full-time positions at end of period ..... 10,505 10,792 10,608 10,854 11,186

______Notes: (1) Total operating expenses relative to total income. Total expenses exclude impairment losses for goodwill and other intangible assets. (2) Return on equity represents the shareholders’ share of profit for the period to average equity. Average equity is calculated as the average of montly end balances adjusted for AT 1 capital. The figure is also presented as return on allocated capital for DNB Bank Group in the financial statements. (3) Including 50 per cent of profit for the period, except for the full year figures. (4) Net loans include Loans to customers and Due from credit institutions

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the information set out in “Selected Consolidated Financial Information” and the Bank’s unaudited consolidated financial statements (including the notes thereto) for the three months ended March 31, 2016 incorporated by reference in this Prospectus and the Bank’s audited consolidated financial statements (including the notes thereto) as of and for the years ended December 31, 2015, December 31, 2014 and December 31, 2013 incorporated by reference in this Prospectus. The Bank’s unaudited consolidated financial statements for the three months ended March 31, 2016 and audited consolidated financial statements as of and for the years ended December 31, 2015, December 31, 2014 and December 31, 2013 have been prepared in accordance with IFRS as approved by the EU. See “Presentation of Certain Financial and Other Information”.

The following discussion contains certain forward-looking statements that involve risks and uncertainties. The DNB Bank Group’s future results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, without limitation, those discussed in the sections entitled “Forward- Looking Statements”, “Risk Factors” and “Description of the DNB Bank Group” elsewhere in this Prospectus.

As used in this section, the term “DNB Bank Group” is used to denote the Bank and its consolidated subsidiaries and the term “Bank” is used to denote DNB Bank ASA on a stand-alone basis.

Overview

The DNB Bank Group, which includes the Bank and its subsidiaries, is Norway’s largest bank group as measured by total assets (with NOK 2,343 billion as of March 31, 2016 and NOK 2,316 billion in assets as of December 31, 2015). DNB Bank offers corporate, retail and investment banking services and products to customers in Norway and internationally, including in Sweden, Poland and the Baltic states of Estonia, Latvia and Lithuania. DNB Bank is the largest company in the DNB Group. As of March 31, 2016, the DNB Bank Group had total assets of NOK 2,343 billion and loans to customers of NOK 1,524 billion, compared to total assets of NOK 2,316 billion and loans to customers of NOK 1,532 billion as of December 31, 2015. The DNB Bank Group’s profit for the three months ended March 31, 2016 was NOK 4.9 billion, compared to NOK 6.2 billion for the corresponding period in 2015, and its profit for the year ended December 31, 2015 was NOK 23.2 billion, compared to NOK 19.1 billion for the previous year.

The Bank is wholly owned by DNB ASA, which is the holding company of the DNB Group. The DNB Group is Norway’s largest financial services group in terms of total assets with total assets of NOK 2,599 billion as of December 31, 2015. DNB ASA conducts its banking operations through the DNB Bank Group and offers life insurance and pension saving products, non-life (property and casualty) insurance products and asset management services through its wholly-owned subsidiaries DNB Livsforsikring AS, DNB Forsikring AS and DNB Asset Management Holding AS, respectively, as set forth below in “Description of the DNB Bank Group—Legal Structure of the DNB Group.” The DNB Group offers a full range of financial services, including loans, savings and investment, payment transfers, advisory services, real estate broking, insurance and pension products for personal and corporate customers. The DNB Bank Group is among the world’s leading banks within its international priority areas, especially the energy, shipping and seafood sectors. The bank offers 24/7 customer service and telephone and online banking, and has a physical presence in 19 countries and throughout Norway through post offices, in-store postal and banking outlets and its branch offices.

Significant Factors Affecting the DNB Bank Group’s Financial Condition and Results of Operations

The DNB Bank Group’s financial condition, results of operations and prospects depend significantly upon the macroeconomic conditions prevailing in Norway and the global economy in general, as well as certain other factors described below. 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 DNB Bank Group.

Macroeconomic conditions

The macroeconomic environment is the most significant factor affecting the DNB Bank Group’s financial condition and results of operations. In particular, macroeconomic developments affect demand for, and pricing of, the DNB Bank Group’s products and services, as well as the quality of its assets. Macroeconomic factors, such as GDP growth or decline, rates of unemployment and inflation, affect, among others, the following:

● Corporate and retail customers’ investment activities, which in turn affect demand for credit and, as a result, the DNB Bank Group’s lending volumes.

● Asset quality and impairments of the DNB Bank Group’s loans.

● Developments in asset prices, including prices of equity and debt securities, which in turn particularly affect commission and fee income, gains on financial instruments at fair value and treasury, equity and corporate finance operations.

● Downgrades or upgrades in internal credit ratings of customers due to deterioration or improvement in their credit quality, which in turn directly affect the Bank’s regulatory capital levels and indirectly affect its ability to increase lending volumes.

● Volatility in interest rates, currency rates and commodity prices, which in turn affect customers’ demand for risk management products.

Norway

The macroeconomic environment in Norway is of primary importance to the DNB Bank Group. As of March 31, 2016, the majority of the DNB Bank Group’s loans to customers were extended by Norwegian business units, defined as business units of the DNB Bank Group located in Norway, and the majority of the DNB Bank Group’s deposits from customers originated from DNB Bank entities in Norway. For the three months ended March 31, 2016 and March 31, 2015, and the years ended December 31, 2015, 2014 and 2013, the majority of the DNB Bank Group’s income was attributable to its Norwegian business units.

In particular, the Norwegian residential mortgage market is important to the DNB Bank Group. Mortgages are a key product for the DNB Bank Group, representing a large portion of its retail lending portfolio in Norway and providing the Bank with cross-selling opportunities.

The Norwegian mainland GDP (Norway’s GDP excluding oil and shipping) has grown at an average annual rate of 2.75 per cent from 1990 to 2015 (source: Statistics Norway). In 2015, growth was lower at 1.0 per cent reflecting the reduced activity due to a general economic downturn driven primarily by declining oil prices. The unemployment rate rose from 3.9 per cent of the labor force in January 2015 to 4.8 per cent in January 2016, caused mainly by a reduction in activity in oil-related industries, which consequentially reduced employment levels in these industries. The level of inflation has been low throughout the period under consideration and is currently around the target of 2.5 per cent (annual core inflation, source: OECD Economic Outlook No 98: 2013: 1.49%, 2014: 3.07%, 2015: 2.40%). Real wage growth has remained high for an extended period of time, with average annual wages measured in constant NOK 2014 prices increasing from NOK 363,216 in 2000 to NOK 510,371 in 2014, which equals an annual real wage growth of 2.46 per cent (source: OECS Economic Outlook

No 98). Real wage growth combined with low mortgage rates has contributed to strong growth in real household income.

The table below sets out, with respect to the Norwegian mainland economy, (i) historical growth in GDP (as a percentage of change from the previous year); (ii) historical growth in the headline consumer price index (“CPI”) (as a percentage of change from the previous year); and (iii) the unemployment rate (as a percentage of the civilian labor force):

2007 2008 2009 2010 2011 2012 2013 2014 2015* Norway GDP growth rate 2.9 0.4 -1.6 0.6 1.0 2.7 2.2 1.3 1.1 CPI growth rate* 2.8 2.1 2.0 2.8 0.2 1.4 2.0 2.1 2.3 Unemployment rate 2.5 2.6 3.1 3.5 3.2 3.1 3.4 3.5 4.3

Source: OECD Economic Outlook No. 98, November 2015; *Statistics Norway (actual 2015 numbers)

According to Statistics Norway, housing prices in Norway have risen over 40 per cent since 2007, and about 6 per cent during 2015. Household credit growth in Norway has been at a high level at approximately 10 per cent annually since 2000 but as of January 2016 has recently declined to 6 per cent on an annualized basis (source: Monetary policy report, Central Bank of Norway). In spite of continuing low interest rates, the housing market is expected to experience lower growth rates going forward, driven by the recent increase in unemployment, which could gradually increase, particularly in eastern Norway. Housing price growth in Norway is expected to continue to gradually decline, and in the long term real housing prices could reverse to some extent. In some areas, such as Oslo, population growth is expected.

Large investments in the petroleum industry and energy production have resulted in generally higher oil and gas sector activity levels during the period under review. However, due to significantly lower oil prices and slow growth in the international economy during 2015, investments and activity in the oil and gas sector have decreased significantly and this development is expected to continue. Investments fell by 11.5 per cent from 2014 to 2015 (source: Statistics Norway), Norwegian exporters who are not connected to the petroleum industry may benefit from the downturn in oil prices. First, the fall in the oil price is beneficial for Norway’s most important trading partners, since they are net importers of oil and the fall in the oil price increases the buying power of those customers and supports the ongoing upturn. The kroner exchange rate, which has weakened significantly, also provides important help. It has improved profitability and competitiveness for Norwegian companies, both those that operate abroad and those who compete with foreign producers in the home market. Wage moderation in the coming years is also expected to have similar effects.

Poland and Baltic states

The DNB Bank Group operates in Poland and the Baltic states of Estonia, Latvia and Lithuania. As of December 31, 2015, NOK 66 billion, or approximately 4.3 per cent of the DNB Bank Group’s net loans and commitments to customers, was extended by business units in Poland and the Baltic states, defined as business units of the DNB Bank Group located in Poland and the Baltic states.

The Baltic states were severely affected by the global financial crisis that started in 2007 and, despite showing indications of recovery since the end of 2010, particularly in 2011, remain fragile. An upturn in exports, particularly to Germany and the Nordic region, has been an important factor contributing to the recovery, but European demand has not fully recovered, and domestic demand has remained comparatively weak. Unemployment, which rose steeply throughout the crisis, seemed to have passed a peak at the end of 2010, but remains higher than in many Western European countries (source: Eurostat).

Interest rates

Among the primary factors influencing the DNB Bank Group’s profitability are lending and deposit spreads, in addition to the long-term cost of funding and the return on its securities portfolio. The DNB Bank Group calculates lending and deposit spreads relative to the relevant money market rates; i.e. three-month NIBOR for most NOK products, the relevant LIBOR quotations for floating rate products in a foreign currency, and for fixed-rate/fixed-margin products, the relevant agreed reference rate. Accordingly, spreads on loans to customers represent the interest rate receivable on loans less relevant money market rates, while spreads on deposits represent the relevant money market rates less interest rate payable on customer deposits.

The lending spread has been gradually decreasing over the past years. In the three months ended December 31, 2015, the lending spread decreased compared to the three months ended December 31, 2013. In the same period the deposit spread improved significantly. As a consequence, the combined/weighted average spread has been relatively stable, and DNB Bank reported only a minor decrease in combined average spreads from the three months ended December 31, 2013 to the three months ended December 31, 2015.

The following table sets forth the key policy rate decisions of the Norwegian central bank for the period under review. The key policy rate is the interest rate on banks’ deposits (up to a specified limit) with the Norwegian central bank, the Norges Bank.

Changes in the key policy rate take effect from the first business day after the interest rate decision is announced.

Announcement Date Interest Rate March 17, 2016 0.50 December 17, 2015 0.75 June 18, 2015 1.00 May 7, 2015 1.25 October 23, 2014 1.50

Source: Norges Bank

Fluctuations in short-term and medium- to long-term interest rates impact DNB Bank Group’s net interest income differently depending on the re-pricing profile of the DNB Bank Group’s interest-earning assets and interest-bearing liabilities. For further information about the DNB Bank Group’s average interest rates earned or paid on selected balance sheet items, see “Selected Statistical Data”.

The DNB Bank Group’s re-pricing profile is often characterized by a higher level of short-term liabilities than short-term assets, particularly with respect to its traded assets and related liabilities. As a result, in an environment of declining short-term interest rates, the DNB Bank Group generally benefits from the re-pricing of more of its interest-bearing liabilities than of its interest-earning assets.

In assessing the profitability of its business, the DNB Bank Group also considers the cost of long-term funding in addition to lending and deposit spreads. After a peak at the end of 2011 and beginning of 2012, both covered bond and senior unsecured spreads decreased significantly during 2013 and 2014. Towards the second half of 2015 the situation in Greece worsened and the level of activity in the market dropped significantly, increasing the price of new issues. There was a general increase in margins for both covered bonds and ordinary senior debt through the second half of 2015. In the first quarter of 2016 funding spreads decreased again slightly.

Net interest income is the most important revenue source for the DNB Bank Group. For the three months ended March 31, 2016, net interest income constituted 67.3 per cent of the DNB Bank Group’s total income, compared to 60.7 per cent in the corresponding period in 2015. For the year ended December 31, 2015, net interest income constituted 67.8 per cent of the DNB Bank Group’s total income, compared to 69.8 per cent in both 2014 and 2013.

Changes in basis swap valuations

The DNB Bank Group’s results of operations can be significantly affected by changes in basis swap valuations, which result from changes in basis swap spreads and are reflected in the line item ‘Net gains (losses) on financial instruments at fair value’. Basis swaps are derivatives contracts entered into by the Bank when issuing senior bonds or raising other long-term funding in the international capital markets and exchanging the relevant currency into NOK.

Due to the small size and illiquidity of the Norwegian bond market, the DNB Bank Group is heavily dependent upon international funding hedged by basis swaps. In periods of volatility, when there is a stronger demand for so-called “safe” currencies such as the U.S. dollar, prices for swaps where USD will be supplied on a future date will increase, and so will the value of existing swap contracts, causing an increase in recorded income. In less volatile periods, when prices of new swap contracts decrease, so will the market value of existing swap contracts, which causes a decrease in recorded income. However, such changes in value recorded in a given period will be reversed in subsequent periods, either because the market stabilizes or because the maturity date of the derivative contract is approaching.

A significant portion of the changes in the DNB Bank Group’s net gains and losses on financial instruments at fair value is related to changes in basis swap spreads. In the first quarter of 2016 net gains due to changes in fair value of spreads on basis swap agreements related to funding amounted to NOK 1,003 million compared to NOK 1,810 million in the first quarter of 2015. The corresponding amounts for the financial years ended December 31, 2015, 2014 and 2013 were NOK 2,685 million, NOK 394 million and NOK (1,364) million, respectively.

Impairments on loans

The DNB Bank Group’s results of operations can be significantly affected by the amount of impairments on loans and guarantees that it records in its income statement. Several factors caused reduced asset quality and potentially increased impairments during the period under review including negative macro-economic development such as, for example, increased unemployment rates, reduced consumption and reduced investments. Furthermore, sector specific challenges such as low shipping freight rates or oversupply of rig and offshore supply vessels could have caused significant increased impairments. Individual impairments are recorded in the income statement if objective indications of a decrease in value can be found. Impairments on both performing and non-performing loans are calculated as the difference between the value of the loan on the balance sheet and the net present value of estimated future cash flows discounted by the effective interest rate. When a loss is considered final any previously recorded impairments on the balance sheet related to the commitment are reduced. This reduction is not recorded in the profit and loss statement. See “Selected Statistical Data—Developments in impairments”.

Impairments on loans and guarantees for the three months ended March 31, 2016 totaled NOK 1,174 million, an increase of 104.2 per cent compared to NOK 575 million in the corresponding period in 2015. The increased individual impairments were mainly related to exposures within the dry bulk, rig and offshore supply vessels sub-sectors. Collective impairment losses accounted for 55 per cent of total impairments for the three months ended March 31, 2016, reflecting both less favorable economic conditions in some industries and negative migration (the degradation in borrowers’ credit profiles) in some portfolios. At the end of March 2016, the Bank sold several portfolios of non-performing loans in Norway. These portfolios mainly consisted of unsecured loans which were classified as non-performing between 2008 and 2015. The sale had a positive pre-tax effect of approximately NOK 573 million in the first quarter of 2016. Adjusted for the sale of portfolios of non- performing loans, impairment losses totaled NOK 1,747 million in the first quarter of 2016. Impairments on loans and guarantees for the year ended December 31, 2015 increased to NOK 2,270 million from NOK 1,639 million for the year ended December 31, 2014.

As of March 31, 2016, net non-performing and doubtful loans and guarantees represented 0.88 per cent of net lending1, compared to 0.83 per cent as of March 31, 2015. Net non-performing and doubtful commitments amounted to NOK 14.9 billion as of March 31, 2016, compared to NOK 14.0 billion as of December 31, 2015.

Regulatory framework – recent developments

Capital ratio

On March 31, 2016, the FSAN responded to the Norwegian Ministry of Finance’s request to prepare proposals for a discussion paper and draft regulations concerning non-risk based leverage ratio requirements. The draft regulations suggest that a minimum 6 per cent non-risk based leverage ratio requirement for banks, finance companies, holding companies in a financial group and investment firms who provides certain investment services will be required. The Ministry of Finance circulated the draft regulation and the discussion paper for public comment on April 12, 2016. However, the FSAN’s current recommendation is that the implementation of the non-risk based leverage ratio requirement should be put on hold until EU legislation on this point is finalized. In addition, FSAN suggest that the leverage ratio should be addressed in the Pillar 2 assessments of the enterprises until 2018. As at March 31, 2016, the DNB Group reported a leverage ratio of 6.7 per cent.

Liquidity Coverage Ratio

New rules regarding LCR were implemented with effect from December 31, 2015. The requirement is 100 per cent LCR for systemically important institutions (DNB ASA, including the Bank) as of January 1, 2016, and 70 per cent for other institutions.

NSFR

Norway has so far not implemented NSFR rules and is awaiting the publication of EU regulations governing NSFR, which are expected sometime in 2016.

Regulations relating to MREL are not yet in place in Norway and the Bank cannot predict at this time how and when such rules might be implemented. However, it is expected that such rules will be in line with regulations to be implemented by the EU, although the FSAN has in the past elected to implement stricter rules that are stricter than those implemented by the EU.

Analysis of Results of Operations for the Three Months Ended March 31, 2016 and 2015

The table below presents the DNB Bank Group’s income statement for the three months ended March 31, 2016 and 2015:

Three months ended March 31,

2016 2015

(NOK millions) Total interest income ...... 13,397 14,874 Total interest expense ...... (4,594) (6,262)

Net interest income ...... 8,803 8,611 Commissions and fee income ...... 2,001 2,090 Commissions and fee expenses ...... (720) (615)

1 Net loans include Loans to customers and Due from credit institutions

Three months ended March 31,

2016 2015

(NOK millions) Net gains on financial instruments at fair value ...... 2,363 3,421 Profit from companies accounted for by the equity method ...... 86 30 Net gains on investment property ...... (5) 2 Other income ...... 545 637

Net other operating income ...... 4,270 5,566

Total income ...... 13,073 14,178 Salaries and other personnel expenses ...... (3,087) (2,649) Other expenses ...... (1,743) (2,041) Depreciation and impairment of fixed and intangible assets ...... (655) (553)

Total operating expenses ...... (5,485) (5,243) Net gains on fixed and intangible assets ...... (6) 12 Impairments on loans and guarantees ...... (1,174) (575)

Pre-tax operating profit ...... 6,408 8,371 Taxes ...... (1,498) (2,168) Profit from operations and non-current assets held for sale, after taxes ...... (13) (47)

Profit for the period ...... 4,897 6,156

The DNB Bank Group recorded profits of NOK 4,897 million in the first quarter of 2016, a decrease of 20.5 per cent compared to NOK 6,156 million in the first quarter of 2015. Adjusted for net gains after tax due to changes in fair value of spreads on basis swap agreements related to funding, the decline in profits was NOK 690 million, mainly reflecting restructuring costs and higher impairment losses.

Net interest income

The table below sets forth a breakdown of the DNB Bank Group’s net interest income for the periods ended March 31, 2016 and 2015.

Three months ended March 31, 2016 2015 (NOK millions) Total interest income ...... 13,397 14,874 Total interest expense ...... (4,594) (6,262)

Net interest income ...... 8,803 8,611

Net interest income increased by NOK 105 million, or 1.8 per cent, in the first quarter of 2016 compared to the first quarter of 2015. The increase in net interest income was due to higher volumes and exchange rate

movements. Despite the declining interest rate market, volume-weighted interest rates were stable from the first quarter of 2015.

Net other operating income

Net other operating income decreased by NOK 1,296 million, or 23.3 per cent, in the first quarter of 2016 compared to the first quarter of 2015. Adjusted for net gains due to changes in fair value of spreads on basis of swap agreements related to funding. operating income declined by NOK 489 million. Net gains on financial instruments excluding net gains due to changes in fair value of spreads on basis swap agreements related to funding resulted in a NOK 250 million decrease in income compared with the corresponding period of 2015, mainly due to lower customer and trading revenues. Net commissions and fees decreased by NOK 194 million or 13.2 per cent compared with the corresponding period in the previous year, partly due to lower income from corporate finance activities and slightly lower activity in the real estate market.

Total operating expenses

Total operating expenses increased by NOK 242 million or 4.6 per cent in the first quarter of 2016 compared to the first quarter of 2015. This increase was due to restructuring costs related to the reorganization of the personal customer segment through the closing of branch offices and a reduction in staff levels.

Impairments on loans and guarantees

Impairment losses on loans and guarantees totaled NOK 1,174 million, an increase of NOK 599 million, or 104 per cent, from the first quarter of 2015. Adjusted for the sale of portfolios of non-performing loans, impairment losses totaled NOK 1,747 million for the period.

Net individual impairments declined by NOK 2 million as compared to the first quarter of 2015 (including the positive effect of the portfolio sale). Individual impairments within the Shipping, Offshore and Logistic divisions increased by NOK 368 million in the first quarter 2016 compared to the first quarter 2015. The increase was mainly related to a negative migration (the degradation in borrowers’ credit profiles) primarily in the Rig and OSV (Offshore Supply Vessels) portfolios. Within the small and medium-sized enterprises segment individual impairments in the first quarter of 2016 decreased by NOK 77 million compared to the first quarter of 2015.

Collective impairments increased from NOK 44 million in the first quarter of 2015 to NOK 646 million in the first quarter of 2016, reflecting both less favorable economic conditions in some industries and negative migration in some portfolios.

Net non-performing and doubtful loans and guarantees amounted to NOK 14.9 billion as of March 31, 2016, an increase of NOK 0.9 billion from December 31, 2015. Net non-performing and doubtful loans and guarantees represented 0.88 per cent of the loan portfolio2.

Taxes

The DNB Bank Group’s estimated tax charge for the first quarter of 2016 was NOK 1,498 million, a decrease of NOK 670 million compared to the corresponding period in 2015. The estimated tax charge was 23 per cent of pre-tax operating profits.

Analysis of Results of Operations for the Years Ended December 31, 2015, 2014 and 2013

The table below presents the DNB Bank Group’s income statement for the years ended December 31, 2015, 2014 and 2013:

2 Net loans include Loans to customers and Due from credit institutions

Year ended December 31,

2015 2014 2013

(NOK millions) Total interest income ...... 57,793 61,682 60,713 Total interest expense ...... (22,258) (29,074) (30,334) Net interest income ...... 35,535 32,607 30,379 Commissions and fee income ...... 8,694 8,148 7,595 Commissions and fee expenses ...... (2,737) (2,258) (2,115) Net gains on financial instruments at fair value ...... 8,704 5,404 5,009 Profit from companies accounted for by the equity method ...... (72) 226 362 Net gains on investment property ...... 269 82 (86) Other income ...... 2,051 2,519 2,390 Net other operating income ...... 16,909 14,122 13,156 Total income ...... 52,444 46,729 43,535 Salaries and other personnel expenses ...... (9,140) (10,095) (10,345) Other expenses ...... (7,892) (7,714) (7,826) Depreciation and impairment of fixed and intangible assets ...... (2,159) (2,028) (2,598) Total operating expenses ...... (19,191) (19,836) (20,769) Pre-tax operating profit before impairment ...... 33,253 26,893 22,766 Net gains on fixed and intangible assets ...... 45 52 150 Impairments on loans and guarantees ...... (2,270) (1,639) 2,185 Pre-tax operating profit ...... 31,028 25,306 20,730 Taxes ...... (7,755) (6,174) (5,042) Profit from operations held for sale, after taxes ...... (51) (22) 4 Profit for the year ...... 23,222 19,110 15,692 Profit attributable to shareholders ...... 22,848 19,110 15,692 Profit attributable to additional Tier 1 capital holders ...... 374 0 0

The DNB Bank Group recorded a profit of NOK 23,222 million for the year ended December 31, 2015, an increase of NOK 4,112 million, or 21.5 per cent, from a profit of NOK 19,110 million for the year ended December 31, 2014. If adjusted for the effect of net gains after tax due to changes in fair value of spreads on basis swap agreements related to funding, there was an increase in profit of NOK 2,439 million. The improved profit performance mainly reflected an increase in net interest income and net other operating income and a reduction in costs.

The DNB Bank Group recorded profits of NOK 19,110 million in 2014, an increase of NOK 3,418 million from NOK 15,692 million for the year ended December 31, 2013. Adjusted for the effect of net gains after tax due to changes in fair value of spreads on basis swap agreements related to funding, there was an increase in profits of NOK 2,148 million. The improved profit performance reflected an increase in net interest income, reduced costs and lower impairment losses on loans.

Net interest income

The table below sets forth a breakdown of the DNB Bank Group’s net interest income for the years ended December 31, 2015, 2014 and 2013.

Year ended December 31, 2015 2014 2013 (NOK millions) Total interest income ...... 57,793 61,682 60,713 Total interest expense ...... (22,258) (29,074) 30,334 Net interest income ...... 35,535 32,607 30,379

Net interest income was NOK 35,535 million for the year ended December 31, 2015, an increase of NOK 2,928 million, or 9.0 per cent, compared to 2014. The increase was mainly attributable to exchange rate movements, and higher lending and deposit volumes. There was a reduction in average lending spreads from 2014 to 2015 while deposit spreads widened, which resulted in rather stable average combined spreads.

Net interest income was NOK 32,607 million for the year ended December 31, 2014, an increase of NOK 2,228 million, or 7.3 per cent, from NOK 30,379 million for the year ended December 31, 2013, Higher deposit and lending volumes combined with wider spreads had a positive effect on net interest income in 2014.

The Bank cut interest rates several times during 2015 based on reductions in the key policy rate undertaken by Norges Bank (the central bank of Norway). At year-end 2015, home mortgage rates were at historically low levels.

The short-term funding markets were generally sound in 2015 for banks with high credit ratings. As U.S. money market funds need to adapt to upcoming regulations, long-term maturities were not as attractive as they used to be. Combined with increasing demand for long-term investments among borrowers, this resulted in an increase in prices in the second half of the year. In the long-term funding markets, there was also a healthy supply of capital in the first half of the year. However, during the summer, the level of activity in the market dropped significantly, accompanied by rising prices on new issues. In September, the level of funding activity picked up, although margins widened. There was a general increase in margins for issuances by the Bank and by markets generally for both covered bonds and ordinary senior debt through the second half of 2015.

Net other operating income

The table below sets forth a breakdown of the DNB Bank Group’s net other operating income for the years ended December 31, 2015, 2014 and 2013.

Year ended December 31, 2015 2014 2013 (NOK millions) Money transfer fees ...... 3,596 3,480 3,335 Fees on asset management services ...... 351 305 255 Fees on custodial services ...... 363 358 327 Fees on securities broking ...... 314 350 262 Corporate finance ...... 777 740 497 Interbank fees ...... 29 35 37 Credit broking commissions ...... 781 630 473 Sales commissions on insurance products ...... 392 327 342 Fees on real estate broking ...... 1,220 1,095 1,144 Sundry commissions and fees ...... 870 829 923 Total commission and fee income etc...... 8,694 8,148 7,595

Year ended December 31, 2015 2014 2013 (NOK millions) Money transfer fees ...... (1,670) (1,341) (1,225) Fees on custodial services ...... (174) (160) (134) Interbank fees ...... (61) (67) (73) Credit broking commissions ...... (27) (56) (102) Commissions on the sale of insurance products ...... (95) (19) 0 Sundry commissions and fees on banking services ...... (710) (616) (581) Total commission and fee expenses etc...... (2,737) (2,258) (2,115) Net commission and fee income ...... 5,956 5,891 5,481 Net gains on financial instruments at fair value ...... 8,704 5,404 5,009 Profit from companies accounted for by the equity method ...... (72) 226 362 Net gains on investment property...... 269 82 (86) Total other income ...... 2,051 2,519 2,390 Net other operating income ...... 16,909 14,122 13,156

Net other operating income for the year ended December 31, 2015 increased by NOK 2,787 million, or 19.7 per cent, to NOK 16,909 million from NOK 14,122 million for 2014. Adjusted for the effect of net gains due to changes in fair value of spreads on basis swap agreements related to funding, there was a NOK 496 million increase in other operating income, primarily attributable to income from customer trading in fixed-income and currency instruments.

Net other operating income for the year ended December 31, 2014 increased by NOK 966 million, or 7.3 per cent, to NOK 14,122 million from NOK 13,156 million for 2013. Adjusted for the effect of net gains due to changes in fair value of spreads on basis swap agreements related to funding, other operating income declined by NOK 792 million. The reduction in income mainly reflected significant fluctuations in the Norwegian kroner rate and Norwegian interest rates towards the end of 2014.

Net commission and fee income

Net commission and fee income were NOK 5,956 million for the year ended December 31, 2015, representing an increase of NOK 65 million, or 1.1 per cent, compared to NOK 5,891 million the previous year. Increased digitalization will make it more challenging to maintain growth in the commission and fee income going forward, as online services generally charge a lower fee than in-branch services and the DNB Bank Group’s customers are increasingly migrating to online offering in respect of those services.

In 2014, net commission and fee income increased by NOK 410 million, or 7.5 per cent, compared to NOK 5,481 million in 2013, reflecting income from capital-light products such as real estate broking and investment banking services.

Net gains on financial instruments at fair value

Net gains on financial instruments at fair value were NOK 8,704 million for the year ended December 31, 2015, representing an increase of NOK 3,300 million, or 61.1 per cent, compared to net gains on financial instruments at fair value of NOK 5,404 million for 2014. The increase was mainly attributable to the NOK 2,291 million positive effect of net gains due to changes in fair value of spreads on basis swap agreements related to funding due to increased market volatility. The remaining increase was primarily attributable to income from customer trading in fixed-income and currency instruments.

Net gains on financial instruments at fair value were NOK 5,404 million for the year ended December 31, 2014, representing an increase of NOK 395 million, or 7.9 per cent compared to NOK 5,009 million in 2013. Changes

in fair values resulting from a negative development in credit spreads and lower income from the banking group’s market-making and proprietary trading had a pronounced effect on 2014 profits. This was partly due to extensive volatility in the equity, interest rate and foreign exchange markets towards the end of 2014.

Operating expenses

The table below sets forth a breakdown of the DNB Bank Group’s operating expenses for the years ended December 31, 2015, 2014 and 2013 and has been extracted from the audited consolidated financial statements incorporated by reference in this Prospectus.

Year ended December 31, 2015 2014 2013 (NOK millions) Salaries ...... (7,660) (7,340) (7,176) Employer’s national insurance contributions...... (1,124) (1,050) (1,014) Pension expenses (1) (2) ...... 770 (802) (683) Restructuring expenses (2) ...... (352) (237) (726) Other personnel expenses ...... (775) (666) (746) Total salaries and other personnel expenses ...... (9,140) (10,095) (10,345) Fees(3) ...... (1,497) (1,334) (1,114) IT expenses(3) ...... (2,397) (2,254) (2,383) Postage and telecommunications ...... (268) (278) (276) Office supplies ...... (87) (96) (85) Marketing and public relations ...... (845) (849) (838) Travel expenses ...... (271) (243) (212) Reimbursement to Norway post for transactions executed ...... (174) (231) (143) Training expenses ...... (72) (57) (46) Operating expenses on properties and premise(4) ...... (1,365) (1,483) (1,517) Operating expenses on machinery, vehicles and office equipment .... (100) (102) (129) Other operating expenses(5) ...... (817) (787) (1,082) Total other expenses ...... (7,892) (7,714) (7,826) Depreciation of machinery, vehicle and office equipment ...... (1,453) (1,348) (1,269) Other depreciation of tangible and intangible assets ...... (522) (570) (582) Impairments of activated systems development ...... (66) (4) (501) Impairment losses for goodwill (1) ...... (5) (57) Other impairments of fixed and intangible assets ...... (119) (99) (188) Total depreciation and impairment of fixed and intangible assets ...... (2,159) (2,028) (2,598) Total operating expenses ...... (19,191) (19,836) (20,769)

______Notes: (1) In the fourth quarter of 2015 DNB decided to change the DNB Bank Group’s pension scheme from a defined-benefit to a defined-contribution scheme with effect from December 2015. The change includes the majority of its employees in Norway who were members of the DNB Bank Group closed defined-benefit scheme. The change resulted in a one-time effect of NOK 1,808 million for the DNB Bank Group, which reduced the period’s pension cost. (2) In consequence of the restructuring process in the DNB Bank Group, provisions for restructuring costs were made in 2013. In addition, a reduction in pension commitments for employees who were granted severance packages was estimated, resulting in lower pension expenses. (3) Systems development fees totaled NOK 990 million for the DNB Bank Group in 2015, compared with NOK 889 million in 2014. Systems development fees totaled NOK 889 million for the DNB Bank Group in 2014, compared with NOK 658 million in 2013. (4) Costs relating to leased premises were NOK 1,042 million for the DNB Bank Group in 2015, compared with NOK 1,117 million in 2014. (5) In 2013 NOK 450 million was charged to the income statement in connection with the Supreme Court ruling regarding certain debt-financed structured products.

Operating expenses for the year ended December 31, 2015 amounted to NOK 19,191 million, a decrease of NOK 645 million, or 3.3 per cent, from 2014. Sizeable non-recurring effects had a positive impact on costs,

resulting in an overall cost reduction. The decline was mainly due to the transition from a defined-benefit to a defined-contribution pension scheme for DNB’s employees in Norway in the fourth quarter of 2015. The change resulted in a one-time effect of NOK 1,808 million for the DNB Bank Group, which reduced the period’s pension cost. System development fees and costs relating to leased premises also decreased from 2014 to 2015. The implementation of restructuring measures currently in progress is expected to result in lower costs in the longer term through reductions in both the number of employees, the number of branch offices and the number of production units. The number of employees in the banking group was reduced by 210 from 2014 to 2015.

Operating expenses for the year ended December 31, 2014 decreased by NOK 933 million, or 4.5 per cent, from 2013. Material non-recurring effects had a positive impact on costs, resulting in an overall cost reduction of NOK 933 million. The DNB Banking Group achieved its target of keeping ongoing operating expenses stable. This was attributable to a number of restructuring measures resulting in reductions in both the number of employees, the number of branch offices and the number of production units.

Impairments on loans and guarantees

The table below sets forth a breakdown of the DNB Bank Group’s impairments on loans and guarantees for the years ended December 31, 2015, 2014 and 2013:

2015 2014 2013 Amounts in NOK millions Loans (1) Guarantees Total Loans (1) Guarantees Total Loans (1) Guarantees Total Write-offs (1,446) (1,446) (823) (0) (823) (966) 0 (966) New/increased individual impairment (3,165) (124) (3,288) (2,984) (95) (3,078) (2,871) (200) (3,071) Total new/increased individual impairment (4,611) (124) (4,735) (3,806) (95) (3,901) (3,837) (200) (4,037) Reassessed individual impairment previous years 890 88 978 1,007 238 1,245 1,182 81 1,263 Recoveries on loans and guarantees previously written off (2) 1,742 1,742 677 677 457 0 457 Net individual impairment (1,979) (36) (2,015) (2,123) 143 (1,980) (2,199) (119) (2,318) Changes in collective impairment of loans (255) (255) 341 341 133 0 133 Impairment of loans and guarantees (2,234) (36) (2,270) (1,782) 143 (1,639) (2,066) (119) (2,185) Write-offs covered by individual impairment made in previous years 3,749 0 3,749 2,422 0 2,422 1,837 0 1,837

______Notes: (1) Including impairment of loans at fair value. (2) Recoveries in 2015 largely reflected the effects of the agreement with Lindorff Capital AS on the sale of portfolios of non- performing loans in Norway.

Impairments on loans and guarantees totaled NOK 2,270 million for the year ended December 31, 2015, an increase of NOK 631 million, or 38.5 per cent, from NOK 1,639 million in 2014. There was an increase in individual impairment losses in the shipping and offshore segments, while there was a reduction of NOK 1,060 million in the personal customer segment from 2014. This reduction in the personal customer segment was mainly a consequence of the sale of certain loan portfolios to Lindorff in the third quarter of 2015. Net individual impairment losses were virtually unchanged from 2014 to 2015.

Collective impairment losses rose by NOK 597 million, to NOK 255 million in 2015, mainly due to less favorable economic conditions in some industries, in particular oil & gas.

Impairments on loans and guarantees totaled NOK 1,639 million for the year ended December 31, 2014, a decrease of NOK 546 million, or 25.0 per cent, from NOK 2,185 million for the year ended December 31, 2013. NOK 337 million of the reduction represented individual impairments. There was an increase in impairment losses for small and medium-sized enterprises and Nordic corporates, while the level of impairments was reduced in the personal customer and shipping segments and in the Baltics and Poland. Reversals on collective impairments losses totaled NOK 341 million in 2014, compared with NOK 133 million in 2013.

Taxes

The DNB Bank Group’s total tax charge for the year ended December 31, 2015 was NOK 7,755 million, an increase of NOK 1,581 million from NOK 6,174 million in 2014. The nominal tax rate in Norway was 27 per cent in 2015. A change in the income tax rate in Norway to 25 per cent with effect from 2016 has been approved, reducing DNB Bank Group’s deferred tax asset by NOK 511 million. Business operations outside Norway are subject to local tax rates in their country of operation, and nominal tax rates range from 12 to 45 per cent.

The DNB Bank Group’s tax charge for the year ended December 31, 2014 was NOK 6,174 million, an increase of NOK 1,132 million from NOK 5,042 million for 2013. The tax charge increased from 24.3 per cent of pre-tax operating profits for 2013 to 24.4 per cent for 2014.

Business areas

As of January 1, 2015, DNB Finans’ operations in Sweden and Denmark are included in the large corporates and international customers segment. Previously, these operations were divided between the small and medium- sized enterprises segment and the personal customer segment. In the 2015 Financial Statement figures for previous periods have been adjusted correspondingly and are presented on an adjusted basis in this Prospectus, except as set out in the following sentence. In the section Year ended December 31, 2014 compared to year ended December 31, 2013 below, the 2014 segment numbers and the comparison to the financial year 2013, the 2014 numbers are based on the audited 2014 Financial Statement and are not adjusted to reflect the presentation in the 2015 Financial Statements.

Personal customers includes the banking group’s total products and activities to private customers in all channels, both digital and physical. DNB offers a wide range of products through Norway’s largest distribution network, comprising branches, telephone banking (24/7), digital banking, real estate broking as well as external channels (post offices and in-store postal and banking outlets).

Small and medium-sized is responsible for product sales and advisory services to small and medium- enterprises sized enterprises in Norway.

DNB aspires to be a local bank for the whole of Norway, while offering the products and expertise of a large bank. Customers in this segment range from small businesses and start-up companies to relatively large corporate customers, and the product offerings are adapted to the customers’ different needs. Small and medium-sized enterprises are served through the banking group’s large physical distribution network throughout Norway as well as digital and telephone banking (24/7).

Large corporates and includes large Norwegian and international corporate customers and all international customers customers served by DNB’s subsidiary banks in the Baltics, Poland, Sweden and Denmark. Operations are based on sound industry expertise and long-term customer relationships.

Trading includes market-making and other trading activities in fixed income, currencies and commodities (FICC) as well as equities, including risk management of the risk inherent in customer transactions. Markets’ trading activities support the customer activities.

Operations in DNB Baltics and Poland, which were previously reported as a separate profit center, were integrated for purposes of financial reporting into the Large Corporates and International business area with effect from the first quarter of 2013.

Three months ended March 31, 2016 compared to three months ended March 31, 2015

Personal Customers

DNB Bank’s pre-tax operating profits were NOK 2,258 million in the first quarter of 2016, an increase of NOK 20 million, or 0.9 per cent, compared with the first quarter of 2015.

Financial performance in the first quarter of 2016 was characterized by stable net interest income a reduction in operating expenses adjusted for restructuring costs and low impairment losses on loans as compared with the first quarter of 2015.

Net interest income increased by NOK 70 million or 2.1 per cent to NOK 3,396 million compared to the first quarter of 2015 while net other operating income decreased by 5.3 per cent to NOK 840 million.

Adjusted for a portfolio of fixed-rate loans sold from DNB Boligkreditt to DNB Livsforsikring in November 2015, loan volumes increased by 3.8 per cent from the first quarter of 2015. There was a 7.3 per cent increase in deposits during the same period. Volume-weighted interest rate spreads decreased slightly compared to both the first quarter of 2015 and the fourth quarter of 2015.

The reduction in other operating income from the first quarter of 2015 was mainly due to lower income from securities services, reduced income from real estate brokerage due to a lower level of activity in the housing market, and a weaker income trend for long-term savings products, reflecting reduced prices and pressure on margins. There was a positive income trend for insurance products during the same period.

Operating expenses increased by NOK 388 million from the first quarter 2015 to NOK 2,408 million. The increase was mainly due the restructuring of the branch network. Adjusted for restructuring costs, there was a reduction in operating expenses, partly due to lower activity within real estate brokerage and lower marketing expenditure.

Impairment of loans and guarantees in the first quarter of 2016 amounted to NOK 430 million, including reversals of NOK 559 million relating to the sale of portfolio of non-performing loans during the quarter.

Large Corporates and International

Pre-tax operating profits amounted to NOK 1,510 million in the first quarter 2016, a decrease of NOK 1,296 million, or 46.2 per cent, compared to the first quarter of 2015.

Rising volumes and widening spreads ensured growth in net interest income, in spite of a decline in other operating income. Rising costs and higher impairment losses on loans contributed to a reduction in profits from the first quarter of 2015.

The weakened Norwegian kroner strongly affected volumes, and average net loans to customers increased by 2.0 per cent from the first quarter of 2015. Adjusted for exchange rate movements, however, there was a decline in average net loans to customers, partly reflecting measures to reduce risk-weighted assets. During 2015,

especially in the fourth quarter, the Bank sold certain loans and entered into guarantee contracts relating to other exposures to help strengthen the Group’s capital adequacy ratios. Customer deposits were relatively stable from the first quarter of 2015. Adjusted for exchange rate movements, however, there was a 5.5 per cent decline in average deposits.

Due to increasing loan volumes combined with widening lending and deposit spreads, net interest income increased from the first quarter of 2015, from NOK 3,610 million to NOK 3,641 million.

There was an increase in net impairment losses on loans compared with the first quarter of 2015, from NOK 312 million to NOK 1,356 million, partly due to the exposure to oil-related industries, and increased collective impairments reflecting weaker economic conditions. Net non-performing and doubtful loans and guarantees amounted to NOK 10.4 billion as at March 31, 2016, compared with NOK 8.8 billion at the corresponding time in 2015.

Small and medium-sized enterprises

Pre-tax operating profits amounted to NOK 877 million in the first quarter of 2016, an increase of NOK 74 million, or 9.2 per cent, compared to the first quarter of 2015. An increase in net interest income and reduced impairment losses on loans resulted in an increase in profits from the first quarter of 2015.

Overall, rising volumes, wider deposit spreads and stable lending spreads ensured an increase in net interest income compared with the first quarter of 2015. Net other operating income remained at a satisfactory level in spite of a slight decline from the first quarter of 2015. The reduction was primarily due to somewhat weaker demand for currency and interest rate hedging products compared with the first quarter of 2015. Operating expenses increased by 8.8 per cent from the first quarter of 2015, mainly as a result of restructuring costs.

Impairment of loans and guarantees totaled NOK 251 million, a decrease from 290 million in the first quarter of 2015, primarily due to a small number of loans.

Trading

Pre-tax operating profits amounted to NOK 211 million in the first quarter of 2016, a decrease by NOK 263 million compared to the first quarter of 2015. Total income decreased by NOK 229 million and operating expenses increased by NOK 33 million.

Total income in the first quarter of 2016 was adversely affected by turbulence in the financial markets in January and February, and negative mark-to-market effects from widening credit spreads affected income from bonds.

Year ended December 31, 2015 compared to year ended December 31, 2014

Personal Customers

Pre-tax operating profits before impairments were stable as compared with the previous year, NOK 9,039 million and NOK 9,062 million for the year ended December 31, 2015 and 2014, respectively. Net reversals on impairment losses as a consequence of the sale of a portfolio of non-performing consumer loans to Lindorff resulted in an 11.5 per cent increase in pre-tax operating profits from 2014. Even though 2015 was characterized by strong competition for home mortgage customers, net loans to customers showed satisfactory growth. A portfolio of fixed-rate loans amounting to just under NOK 20 billion was sold from DNB Boligkreditt to DNB Livsforsikring in November 2015. The customers are still served by the Bank.

Growth in volumes and wider deposit spreads compensated for narrower lending spreads and ensured a rise in net interest income as compared to 2014. There was a positive trend in net other income, reflecting higher income from real estate broking, equities and foreign exchange products. Due to increased digitalization and

discount schemes linked to card use, there was a decline in income from payment services. The rise in expenses as compared to 2014 was mainly a consequence of the restructuring of the branch network, which resulted in an increase in provisions for severance packages and higher IT costs, and the impairment of capitalized systems development. A high level of activity in DNB Eiendom during the year also contributed to increasing costs. There was a net reversal of impairments of loans and guarantees amounting to NOK 939 million in 2015, reflecting the sale of non-performing consumer loans.

As a result of a higher self-service ratio, a total of 20 branch offices in Norway were closed in 2015, and staff levels were reduced by 200 full-time positions, mainly through natural attrition. DNB will continue the process to streamline its branch structure, and the number of branch offices serving personal customers is planned to be reduced from 116 to 57 during the first half of 2016. This will entail further staff cuts of approximately 500 full- time positions in the course of 2016. Parallel to this, the innovation of new, digital services, such as Vipps, will be strengthened.

Large Corporates and International

Pre-tax operating profits were NOK 10,829 million in 2015, a decrease of NOK 95 million, or 0.9 per cent, compared with 2014.

Rising volumes and stable spreads ensured healthy growth in net interest income from 2014, though rising costs and higher impairment losses on loans contributed to a small reduction in profits. The weakened Norwegian kroner strongly affected lending growth, and from year-end 2014 to year-end 2015 lending growth was 5.3 per cent. Adjusted for exchange rate movements, there was an underlying decline in the portfolio of 4.5 per cent during the year, partly in reflection of measures to reduce risk-weighted assets.

During 2015, especially in the fourth quarter, DNB sold certain loans and entered into guarantee contracts relating to other exposures to help strengthen the banking group’s capital adequacy ratios. Deposit volumes were unchanged from year-end 2014 to year-end 2015. Adjusted for exchange rate movements, there was a 7.7 per cent decline in deposits during the year.

Due to increasing loan volumes combined with unchanged lending spreads and wider deposit spreads, there was a rise in net interest income from 2014. In consequence of continued high volatility through 2015, there was strong demand for foreign exchange and interest rate and commodity hedging products, which generated increased income. In addition, there was a high level of activity in arranging debt capital, issues and within syndication. Costs and losses related to measures to reduce risk-weighted assets had a negative impact on income towards the end of 2015.

Net impairment of loan and guarantees for the year 2015 amounted to NOK 2,108 million compared to NOK 674 million in 2014. There was an increase in individual impairments mainly due to the exposure to oil-related industries and, to a lesser extent, to shipping industries.

Small and medium-sized enterprises

Pre-tax operating profits were NOK 3,414 million in 2015, an increase of NOK 297 million, or 9.5 per cent, compared with 2014. Higher income and relatively stable operating expenses helped raise pre-tax operating profits in spite of an increase in impairment losses on loans.

Higher volumes and wider deposit spreads contributed to strong growth in net interest income compared with 2014. Net other operating income showed a satisfactory trend from 2014. Demand for both currency and interest rate hedging products was at a satisfactory level and contributed to high income. Other product areas also showed a positive trend.

There was a moderate rise in expenses from 2014, mainly stemming from impairments related to IT projects and restructuring costs. Net impairment of loans increased by NOK 199 million and totaled NOK 1,068 million in

2015. Impairment losses in 2015 related primarily to a small number of customers, and impairment losses on loans in the mining sector represented the major part. No general deterioration has been observed in the quality of DNB’s portfolio of other loans to small and medium-sized corporate customers. Portfolio quality is considered to be satisfactory, and close follow-up of customers and preventive measures are vital to retaining the level of quality. Developments in oil-related sectors and the regions which are most seriously affected, are being closely monitored.

As the growth prospects for the general Norwegian economy have been revised downward, more moderate credit growth is anticipated in the market.

Trading

Pre-tax operating profits were NOK 1,087 million in 2015, a decrease of NOK 413 million, or 27.5 per cent, from 2014. Wider credit spreads reduced the market value of the bond portfolio during 2015, and income from market-making and proprietary trading was lower than in 2014. The decline in market values was partly offset by a rise in income from Norwegian fixed-income instruments and reduced provisions for counterparty risk on derivatives.

Year ended December 31, 2014 compared to year ended December 31, 2013

Personal customers

Pre-tax operating profits totaled NOK 9,136 million in 2014, an increase of NOK 1,179 million from 2013. Growth in net interest income and lower impairment losses on loans were the key factors behind the rise in profits.

The year 2014 was characterized by strong competition for home mortgage customers and moderate increases in both loans and deposits. Lending volume showed a favorable trend through the year, with higher lending growth in the second half, and total loans increased by 4.9 per cent from year-end 2013 to year-end 2014.

Net interest income rose by 9.1 per cent from 2013, totaling NOK 13.8 billion in 2014. Higher volumes combined with wider volume-weighted spreads were the main factors behind the increase. There were two rounds of interest rate adjustments on loans and deposits in 2014, effective in June and early December, respectively. These adjustments resulted in an improvement in both lending and deposit spreads.

Net other operating income totaled NOK 3.6 billion in 2014, a slight decline from the previous year due to reduced income from equity investments. There was a strong trend in product sales, with a healthy rise in income from securities management compared with 2013. DNB Eiendom is an important channel for property sales, and both the number of properties sold and income from real estate broking showed strong growth from 2013.

Total operating expenses were stable compared with 2013. Restructuring costs were lower in 2014 than in 2013, and adjusted for such costs, operating expenses decreased marginally. Due to a high level of activity and a positive trend in income from product sales, costs increased somewhat. In addition, there were rising IT expenses.

DNB is working continuously to streamline its distribution network and facilitate self-service solutions. The number of active mobile banking users increased by 36 per cent during the year. As a result of a higher self- service ratio, ten branch offices were closed in 2014, and a total of 64 branch offices were made cashless. Cashless branches no longer offer manual cash-handling services.

Large Corporates and International

Pre-tax operating profits amounted to NOK 10,586 million in 2014, an increase of NOK 1,423 million from 2013. An increase in income and lower impairment of loans were the main factors behind the rise in profits.

The weakened Norwegian kroner towards the end of 2014 strongly affected lending growth, and measured in Norwegian kroner resulted in an increase in net loans to customers of 11.3 per cent from year-end 2013.

Due to rising volumes combined with a widening of both lending and deposit spreads relative to the relevant 3-month money market rate, net interest income increased by 8.0 per cent from 2013.

Other operating income increased by 3.3 per cent to NOK 4,759 million compared with 2013. Lower gains from equities and shareholdings had a negative effect on income, while income from investment banking services had a positive effect.

Total operating expenses increased by 5.6 per cent to NOK 5,838 million compared with NOK 5,526 million in 2013. A high level of activity, increased product sales and higher IT costs were the main factors behind the increase. The number of full-time positions in Large Corporates and International declined by 331 in the course of 2014. The entire reduction took place in international operations.

Impairments of loans and guarantees were almost halved from 2013 to 2014. Impairment levels were positively affected by reversals on collective impairment losses, mainly due to developments in the shipping market. There was also a significant reduction in individual impairments relative to net loans to customers in 2014 compared to 2013.

Small and medium-sized enterprises

Pre-tax operating profits amounted to NOK 3,268 million in 2014, an increase of NOK 107 million or 3.4 per cent from 2013. The rise in profits reflected strong growth in both net interest income and other operating income.

Net interest income increased by 6.1 per cent to NOK 6,552 million from 2013 as a result of growth in both lending and deposit volumes and less negative deposit spreads. There was a significant increase in net other operating income of 10.9 per cent from 2013. Developments in interest rates and exchange rates gave an increase in income from foreign exchange and interest rate instruments in the second half of 2014.

The increase in expenses from 2013 mainly stemmed from increased sales of foreign exchange and fixed- income products, as well as from IT development and premises.

Impairments of loans and guarantees totaled NOK 895 million in 2014, an increase of 52.7 per cent from NOK 586 million in 2013. More than half of net impairment losses stemmed from five individual commitments in different industries in 2014.

Trading

Pre-tax operating profits amounted to NOK 1,500 million in 2014, a decrease of NOK 443 million from 2013.

Lower oil prices and greater uncertainty regarding the Norwegian economy resulted in a depreciation of the Norwegian kroner, reduced prices on Norwegian Treasury bills and equities and widening credit spreads towards the end of 2014. Income from market-making and proprietary trading also declined in the fourth quarter of 2014.

Financial Condition

Assets

The following table presents the assets of the DNB Bank Group as of March 31, 2016 and December 31, 2015, 2014 and 2013 and has been extracted from the consolidated financial statements incorporated by reference in this Prospectus. For a further analysis of certain items of the DNB Bank Group’s balance sheet, see “Selected Statistical Data”.

As of December 31, As of March 31, 2016 2015 2014 2013 (NOK millions) Cash and deposits with central banks ...... 166,587 19,317 58,505 167,171 Due from credit institutions ...... 177,526 297,457 355,577 176,796 Loans to customers ...... 1,523,768 1,531,932 1,447,465 1,350,656 Commercial paper and bonds at fair value ...... 203,515 207,063 187,765 191,232 Shareholdings ...... 7,435 8,794 9,709 13,511 Financial derivatives ...... 215,673 203,273 236,389 130,775 Commercial paper and bonds, held to maturity ..... 16,728 19,162 31,927 63,318 Investment property ...... 2,122 2,333 4,743 4,615 Investment accounted for by the equity method .... 4,222 4,091 3,275 3,096 Intangible assets ...... 4,100 4,176 4,315 4,464 Deferred tax assets ...... 1,087 1,138 1,197 1,086 Fixed assets ...... 7,916 8,059 8,128 7,816 Assets held for sale ...... 204 200 692 225

Other assets ...... 12,295 8,608 12,301 16,017

Total assets ...... 2,343,177 2,315,603 2,361,990 2,130,779

As of March 31, 2016, the DNB Bank Group’s total assets were NOK 2,343.2 billion, an increase of NOK 27.6 billion, or 1.2 per cent, from NOK 2,315.6 billion as of December 31, 2015. As of March 31, 2016, loans to customers decreased by NOK 8.2 billion, from NOK 1,531.9 billion as of December 31, 2015.

For a breakdown of the DNB Bank Group’s loans to customers as of December 31, 2015, 2014 and 2013, see “Selected Statistical Data—Distribution of commitments by industry sector”.

Liabilities and equity

The following table presents the total liabilities and equity of the DNB Bank Group as of March 31, 2016 and December 31, 2015, 2014 and 2013 and has been extracted from the consolidated financial statements incorporated by reference in this Prospectus. For a further analysis of certain items of the DNB Bank Group’s balance sheet, see “Selected Statistical Data”.

As of December 31, As of March 31, 2016 2015 2014 2013 (NOK millions) Due to credit institutions ...... 160,134 161,267 214,211 234,218 Deposits from customers ...... 937,464 957,322 951,049 891,256 Financial derivatives ...... 173,545 154,878 186,230 111,242 Debt securities issued ...... 831,902 806,810 813,909 716,192 Payable taxes ...... 4,630 2,493 1,920 4,126 Deferred taxes ...... 6,468 6,461 4,537 2,042 Other liabilities ...... 18,764 18,409 12,840 13,917 Liabilities held for sale ...... 56 71 100 53 Provisions ...... 1,514 1,225 1,133 1,398 Pension commitments ...... 2,435 2,301 5,434 3,652

Subordinated loan capital ...... 29,826 30,953 29,319 26,276

Total liabilities ...... 2,166,737 2,142,191, 2,220,681 2,004,372

Share capital ...... 18,314 18,314 18,314 18,314 Share premium ...... 20,611 20,611 20,611 20,611 8,353 0 Additional Tier 1 capital ...... 8,067 0 Other equity ...... 129,447 126,133 102,383 87,482

Total equity ...... 176,440 173,412 141,309 126,407

Total liabilities and equity...... 2,343,177 2,315,603 2,361,990 2,130,779

As of March 31, 2016, the DNB Bank Group’s total liabilities were NOK 2,166.7 billion, an increase of 1.15 per cent from NOK 2,142 billion as of December 31, 2015. Customer deposits decreased by NOK 19.9 billion, or 2.1 per cent, from December 31, 2015 to March 31, 2016.

Off-Balance Sheet Arrangements

In the ordinary course of its business, the DNB Bank Group issues various forms of guarantees and credit commitments in favor of its customers and enters into derivatives transactions for trading and risk management purposes on standardized terms and conditions with off-balance sheet risk. See Note 17 to the unaudited consolidated financial statements for the three months ended March 31, 2016 and Notes 15 and 48 to the audited consolidated financial statements for the year ended December 31, 2015, incorporated by reference in this Prospectus.

Liquidity and Funding

Management assesses the Bank’s access to long-term funding as having been sufficient throughout 2015, but the cost of new long-term funding is expected to be higher in 2016. Debt securities issued by the DNB Bank Group

totaled NOK 832 billion at March 31, 2016, NOK 807 billion at December 31, 2015 and NOK 814 billion at December 31, 2014.

In order to keep the DNB Bank Group’s liquidity risk at a low level, short-term and long-term limits have been established. These are consistent with the Basel III/CRD IV calculation methods. Among other things, this implies that customer loans are generally financed through customer deposits, long-term debt securities and primary capital. The DNB Bank Group stayed within the liquidity limits throughout 2015. A gradual adaptation to the liquidity requirements within the time limits stipulated by the Basel Committee and the Norwegian authorities is being planned.

The EU capital requirements regulations include stipulations on the Liquidity Coverage Ratio, LCR. In Norway, the Ministry of Finance has decided to introduce the LCR ahead of the EU schedule. The O-SIIs were required to meet the 100 per cent LCR requirement as early as from December 31, 2015. DNB Bank, the DNB Bank Group and the DNB Group were in compliance with these new requirements. For other banks, the requirement is phased in by 70 per cent as of December 31, 2015, 80 per cent as of December 31, 2016 and 100 per cent as of December 31, 2017.

Due to credit institutions

Set forth below is a breakdown of the DNB Bank Group’s loans and deposits from credit institutions as of March 31, 2016 and December 31, 2015, 2014 and 2013.

As of As of December 31, March 31, 2016 2015 2014 2013 (NOK millions) Due to credit institutions, fair value...... 27,065 131,531 186,573 209,832

Due to credit institutions, amortized cost ...... 133,069 29,735 27,637 24,386 Due to credit institutions ...... 160,134 161,267 214,211 234,218

Deposits from customers

Set forth below is a breakdown of the DNB Bank Group’s deposits from customers as of March 31, 2016 and December 31, 2015, 2014 and 2013.

As of December 31, As of March 31, 2016 2015 2014 2013 (NOK millions) Deposits from customers, trading ...... 47,952 42,176 48,209 54,943

Deposits from customers, amortized cost ...... 889,512 913,086 901,373 832,817

Deposits from customers ...... 937,464 957,322 951,049 891,256

Customer deposits decreased by NOK 19.9 billion, or 2.1 per cent as of March 31, 2016 compared to December 31, 2015. The DNB Bank Group’s ratio of customer deposits to loans to customers was 61.5 per cent as of March 31, 2016, compared to 62.5 per cent as of December 31, 2015, 65.7 per cent as of December 31, 2014 and 66.0 per cent as of December 31, 2013. The ratio of customer deposits to loans for DNB Bank (unconsolidated) was 125.5 per cent as of March 31, 2016, compared to 127.1 per cent as of December 31,

2015, 124.8 per cent as of December 31, 2014 and 124.9 per cent as of December 31, 2013. The difference between the DNB Bank Group’s and DNB Bank’s ratios primarily reflects the fact that loans not financed through DNB Boligkreditt were largely financed through customer deposits.

Debt securities issued

Set forth below is a breakdown by type of debt securities issued by DNB Bank Group as of March 31, 2016 and December 31, 2015, 2014 and 2013.

As of March 31, As of December 31,

2016 2015 2014 2013 (NOK millions) Commercial paper issued, nominal amount ...... 206,309 159,988 206,715 183,619 Bond debt, nominal amount ...... 585,268 608,004 562,483 508,618

Adjustments ...... 40,326 38,819 44,711 23,954

Total debt securities issued ...... 831,902 806,810 813,909 716,192

Set forth below is a breakdown by type of debt securities issued by DNB Bank Group as of March 31, 2016 and December 31, 2015, and the securities issued and redeemed and exchange rate movements and other adjustments in the securities portfolio for the three months ended March 31, 2016.

Balance Exchange Other Balance sheet Matured/ rate adjust- sheet March 31, Issued redeemed movements ments December 2016 Q1 2016 Q1 2016 Q1 2016 2016 31, 2015 (NOK millions) Commercial paper issued, 206,309 871,636 (814,605) (10,710) 159,988 nominal amount ...... Bond debt, nominal amount(1) ...... 585,268 35,933 (47,173) (11,496) 608,004

Adjustments ...... 40,326 1,507 38,819

Total debt securities issued ...... 831,902 907,568 (861,778) (22,205) 1,507 806,810 ______Note: (1) Minus own bonds. Nominal amount of outstanding covered bonds in DNB Boligkreditt totaled NOK 422.1 billion as of March 31, 2016. The cover pool market value was NOK 569.0 billion as of March 31, 2016.

Set forth below is a breakdown by type of debt securities issued by DNB Bank Group as of December 31, 2015 and December 31, 2014, and the securities issued and redeemed and exchange rate movements and other adjustments in the securities portfolio for the year ended December 31, 2015.

Exchange Balance rate Other Balance sheet Matured/ move- adjust- sheet December Issued redeemed ments ments December 31, 2015 2015 2015 2015 2015 31, 2014 (NOK millions) Commercial paper issued, nominal amount ...... 159,988 3,057,350 3,092,740 (11,338) 206,715 Bond debt, nominal amount(1) ...... 608,004 85,100 53,118 13,539 562,483 Adjustments ...... 38,819 (5,892) 44,711 Total debt securities issued ...... 806,810 3,142,451 3,145,858 2,201 (5,892) 813,909 ______Note: (1) Minus own bonds. Nominal amount of outstanding covered bonds in DNB Boligkreditt totaled NOK 446.4 billion as of December 31, 2015. The cover pool market value amounted to NOK 561.5 billion as of December 31, 2015.

On initial recognition, securities are recorded either at amortized cost or at fair value. For a more detailed explanation of which financial instruments are recorded at amortized cost and which are recorded at fair value, see paragraph 6, “Financial Instruments” of Note 1, “Accounting Principles”, to the audited consolidated financial statements for the year ended as of December 31, 2015, incorporated by reference in this Prospectus.

Set forth below is a breakdown by maturity of the Bank’s debt securities issued as of December 31, 2015:

As of December 31, 2015(1) (2)

Foreign NOK currency Total (NOK millions) 2016 ...... 7,080 239,391 246,471 2017 ...... 13,799 83,503 97,302 2018 ...... 16,794 76,411 93,205 2019 ...... 18,745 55,320 74,065 2020 ...... 10,043 69,404 79,447 2021 ...... 14,283 78,387 92,670 2022 and later ...... 5,146 79,686 84,832

Total bond debt, nominal amount ...... 85,890 682,101 767,991

Adjustments ...... 2,924 35,894 38,819

Debt securities issued ...... 88,814 717,996 806,810 ______Note: (1) Minus own bonds. Nominal amount of outstanding covered bonds in DNB Boligkreditt totaled NOK 446.4 billion as at December 31, 2015. The cover pool market value represented NOK 561.5 billion. (2) Includes hedged items.

As of March 31, 2016, debt securities issued were NOK 831,902 million, an increase of NOK 25,092 million, or 3.1 per cent, compared to NOK 806,810 million as of December 31, 2015, which itself was a decrease by NOK 7,099 million compared to NOK 813,909 million as of December 31, 2014. A majority of these securities were issued in the international capital markets. The Bank is a regular issuer of short- and long-term debt securities in the Norwegian and international capital markets and since March 31, 2016 its debt securities issued have increased somewhat, the substantial portion of such an increase resulted from additional issuances under the DNB Bank Group’s commercial paper programs that is within levels that the bank considers to be ordinary course, and the issuance of EUR 1,500,000,000 0.25% covered bonds due April 18, 2023 by DNB Boligkreditt under its EUR 60,000,000,000 Covered Bond Program. The Bank currently has a EUR 45,000,000,000 European Medium-Term Note Program, a US$18,000,000,000 USD Commercial Paper Program, a US$15,000,000,000 CD Program and a EUR 15,000,000,000 European Commercial Paper/CD Program. The Bank also has a Samurai bond Program.

DNB Boligkreditt issues covered bonds secured on mortgages (residential mortgages, mortgages over second homes and mortgages over joint debt of housing cooperatives) acquired from or originated through DNB Bank. DNB Boligkreditt is an important source of long-term funding of the DNB Bank Group’s operations, and is the main funding source for the DNB Bank Group’s mortgage lending operations in Norway. DNB Boligkreditt currently has a EUR 60,000,000,000 Covered Bond Program, a US$12,000,000,000 Covered Bond Program and an AUD 4,000,000,000 Covered Bond Program. As of March 31, 2016, DNB Boligkreditt had a mortgage loan portfolio of NOK 573,099 billion, consisting exclusively of Norwegian mortgages. As of March 31, 2016, debt securities issued by DNB Boligkreditt amounted to NOK 451,971 billion. In the event of bankruptcy, the covered bondholders have preferential rights to DNB Boligkreditt’s cover pool. At end-March 2016 the bank had invested NOK 6.3 billion in covered bonds issued by DNB Boligkreditt.

Capital and Capital Adequacy

The Basel Committee proposed a new international regulatory framework for capital and liquidity for banks in 2010 (Basel III). The EU has implemented the regulations in its capital requirements directive, CRD IV, and capital requirements regulation, CRR. The regulations entered into force as from January 1, 2014. Important parts of the Basel III regulations were transposed into Norwegian legislation as of July 1, 2013. As part of the Group’s Internal Capital Adequacy Assessment Process, ICAAP, the Board of Directors is in dialogue with Finanstilsynet regarding the capitalization of the Group.

Capital adequacy is reported in accordance with the EU’s new capital adequacy regulations for banks and investment firms (CRD IV/CRR). Valuation rules used in the statutory accounts form the basis for the consolidation, which is subject to special consolidation rules governed by the Consolidation Regulations.

The majority of the credit portfolios are reported according to the IRB approach. However, one portfolio, banks and financial institutions (DNB Bank) is still subject to final IRB approval from Finanstilsynet. The portfolio Large corporate clients rated by simulation models (DNB Bank) was approved in December 2015.

Due to Norwegian transitional rules, risk-weighted assets under the IRB approach cannot be reduced to below 80 per cent relative to the Basel I measurement, otherwise known as the Basel I “floor”. This is a stricter capital adequacy requirement than what is required in several European Union countries, including Sweden, where the full IRB approach from the Basel II framework has been chosen for measurements. Accordingly, without the transitional rules, the Bank’s Tier 1 ratio (as described below) would be higher.

For further details see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Regulatory Framework”.

Capitalization Policy

DNB aims to meet a common equity Tier 1 capital ratio target of minimum 15 per cent from year-end 2016 and approximately 15.5 per cent from year-end 2017. The capitalization targets relate to the Groupʼs risk-weighted

assets at any given time. The DNB Group’s capitalization levels are intended to support the Bank’s AA level rating target for ordinary long-term funding.

The payment of dividends is determined based on factors such as the need to maintain satisfactory financial strength and flexibility and developments in external parameters. For the DNB Group, the long-term dividend payout target is minimum 50 per cent. However, until the capital requirements have been satisfactory met, the payout ratio target is between 25 and 50 per cent.

In addition to the regulatory assessment and allocation of capital, an allocation of capital to the Bank’s business areas is made for management purposes, based on a calculation of risk-adjusted capital requirements.

See also “Risk Management and Risk-Adjusted Performance—Capital Management” and “Supervision and Regulation—Capital Requirements”.

Capital and Capital Ratios

The DNB Group had a common equity Tier 1 capital ratio of 14.4 per cent and a capital adequacy ratio of 17.8 per cent at year-end 2015, compared with 12.7 and 15.2 per cent, respectively, at year-end 2014.

The DNB Bank Group had a common equity Tier 1 capital ratio of 14.3 per cent and a capital adequacy ratio of 17.9 per cent at year-end 2015, compared with 12.5 and 15.2 per cent, respectively, a year earlier. In addition, a separate requirement from the U.S. authorities to DNB Bank Group relating to the operations of the subsidiary DNB Markets Inc. in New York must be fulfilled, whereby the Tier 1 capital ratio for DNB Bank Group must be 6 per cent and the total capital adequacy ratio 10 per cent. At year-end 2015, this requirement was fulfilled by a wide margin.

DNB Bank ASA had a common equity Tier 1 capital ratio of 15.1 per cent and a capital adequacy ratio of 19.3 per cent at year-end 2015, compared to 13.2 per cent and 16.3, respectively, at year-end 2014, calculated in accordance with Basel II as in force in Norway.

Primary capital

As of March 31, As of December 2016 31, 2015 (NOK millions) Total equity ...... 171,657 173,412 Effect from regulatory consolidation ...... (531) (541) Additional Tier 1 capital instruments included in total equity ...... (8,053) (8,053) Net accrued interest on additional Tier 1 capital instruments ...... (10) (219) Common equity Tier 1 capital instruments ...... 163,062 164,599 Deductions Pension funds above pension commitments ...... (39) (38) Goodwill ...... (3,016) (3,029) Deferred tax assets that are not due to temporary differences ...... (641) (640) Other intangible assets ...... (1,013) (1,075) Group contribution, payable ...... (5,000) (5,000) Expected losses exceeding actual losses, IRB portfolios ...... (1,695) (2,309) Value adjustments due to the requirements for prudent valuation (AVA) ...... (1,111) (1,055) Adjustments for unrealized losses(gains) on debt recorded at fair value (414) (412) Adjustments for unrealized losses/(gains) arising from the institution’s own credit risk related to derivative liabilities (DVA) ...... (174) (150) Common Equity Tier 1 Capital ...... 149,960 150,889 Common equity Tier 1 capital incl 50 per cent of profit for the period ... 152,420 -

As of March 31, As of December 2016 31, 2015 (NOK millions) Additional Tier 1 capital instruments ...... 9,951 10,267 Tier 1 capital ...... 159,910 161,156 Perpetual subordinated loan capital ...... 5,415 5,702 Term subordinated loan capital ...... 21,767 22,185 Tier 2 capital 27,183 27,887 Total eligible capital ...... 187,093 189,043 Total eligible capital incl 50 per cent of profit for the period ...... 189,554 - Risk-weighted volume, transitional rules ...... 1,040,334 1,056,731 Minimum capital requirement, transitional rules ...... 83,227 84,539 Common Equity Tier 1 capital ratio, transitional rules (%) ...... 14.7 14.3 Tier 1 capital ratio, transitional rules (%) ...... 15.6 15.3 Capital ratio, transitional rules (%) ...... 18.2 17.9 Common equity Tier 1 capital ratio, transitional rules, excl 50 per cent of profit for the period (%) ...... 14.4 Tier 1 capital ratio, transitional rules, excl 50 per cent of profit for the period (%) ...... 15.4 Capital ratio, transitional rules, excl 50 per cent of profit for the period (%) ...... 18.0

Eksportfinans

The Bank has a 40 per cent ownership interest in Eksportfinans, and Eksportfinans is recognized in the DNB Bank Group financial statements in accordance with the equity method.

Financial market turbulence resulted in sizeable unrealized losses in Eksportfinans’ liquidity portfolio in the first quarter of 2008. In order to ensure an adequate capital base for the company, its Board of Directors implemented three measures:

● A share issue of NOK 1.2 billion aimed at the company’s owners was implemented, and all owners participated based on their proportional shares.

● A portfolio hedge agreement was entered into, and the owners were invited to participate. DNB Bank ASA’s share of the agreement corresponded to 40.43 per cent. The agreement secures Eksportfinans against further decreases in portfolio values of up to NOK 5 billion effective from February 29, 2008. Any recovery of values relative to nominal values will accrue to the participants in the portfolio hedge agreement as payment for their hedging commitment.

● During the first quarter of 2008, Eksportfinans’ largest owner banks, DNB Bank ASA, Nordea Bank AB and Danske Bank A/S, approved a committed credit line giving the company access to a liquidity reserve of up to USD 4 billion. The agreement is renewed yearly. The renewal in 2010 resulted in a reduction in the limit for the liquidity reserve to USD 2 billion. DNB Bank ASA’s share of this agreement represents USD 1.1 billion. Eksportfinans has not availed itself of this credit line.

DNB Bank ASA carries loans in its balance sheets which according to a legal agreement have been transferred to Eksportfinans and are guaranteed by DNB Bank ASA. Pursuant to the agreement, the Bank still carries interest rate risk and credit risk associated with the transferred portfolio. In accordance with IFRS, the loans have therefore not been removed from the balance sheet of the Bank. These portfolios totaled NOK 2.2 billion at December 31, 2015. The loans are set off against deposits/payments from Eksportfinans. DNB Bank ASA has also issued guarantees for other loans in Eksportfinans.

The transactions with Eksportfinans have been entered into on ordinary market terms as if they had taken place between independent parties.

Capital Expenditures

As a financial group, capital expenditures are not a material part of the DNB Bank Group’s expenses.

Critical Accounting Policies and Estimates

The DNB Bank Group’s accounting policies and estimates are described in “Accounting Principles” and in Note 1 to the financial statements incorporated by reference in this Prospectus. Estimates and discretionary assessments are subject to continual evaluation and are based on historic experience and other factors, including expected future events. By definition, the resulting accounting estimates will rarely be fully consistent with the final outcome. Management’s assessment of important estimates and assumptions is discussed below.

Classification of financial instruments

On initial recognition, financial assets are classified in one of the following categories according to the type of instrument and the purpose of the investment:

● Financial assets held for trading and derivatives carried at fair value with changes in value recognized in profit or loss (trading portfolio);

● Financial assets designated as at fair value with changes in value recognized in profit or loss;

● Financial derivatives designated as hedging instruments;

● Loans and receivables, carried at amortized cost;

● Held-to-maturity investments, carried at amortized cost; and

● Financial assets available for sale carried at fair value with changes in value recognized in other comprehensive income.

On initial recognition, financial liabilities are classified in one of the following categories:

● Financial liabilities held for trading and derivatives carried at fair value with changes in value recognized in profit or loss (trading portfolio);

● Financial liabilities designated as at fair value with changes in value recognized in profit or loss;

● Financial derivatives designated as hedging instruments; and

● Other financial liabilities carried at amortized cost.

Guidelines for classification in the various portfolios of the DNB Bank Group are given below.

Financial assets and liabilities in the trading portfolio

The trading portfolio mainly includes financial assets and liabilities in DNB Markets and financial derivatives not used for hedging accounting purposes. In addition, the portfolio includes securities borrowing and deposits that are used actively in interest rate and liquidity management and have a short remaining maturity.

Financial assets and liabilities designated as at fair value with changes in value recognized in profit or loss

Financial instruments are classified in this category if one of the following criteria is fulfilled:

● The classification eliminates or significantly reduces measurement or recognition inconsistency that would otherwise have arisen from measuring financial assets or liabilities or recognizing the gain and losses on them on different bases; or

● The financial instruments are part of a portfolio that is managed and evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.

These portfolios include commercial paper and bonds, equities, fixed-rate loans in Norwegian kroner, fixed-rate securities issued in Norwegian kroner, such as index-linked bonds, equity-linked bank deposits and other fixed- rate deposits in Norwegian kroner.

Financial derivatives designated as hedging instruments

This item includes hedging transactions entered into to manage interest rate risk on long-term borrowings and deposits in foreign currencies and currency risk on investments in subsidiaries.

Loans and receivables carried at amortized cost

This item includes portfolios of loans and receivables that are not traded in an active market or carried at fair value through profit or loss.

Loans and receivables carried at amortized cost are recorded at the transaction price plus direct transaction expenses. Recognition and subsequent measurement follow the effective interest method. Upon subsequent measurement, amortized cost is set at the net present value of contractual cash flows based on the expected life of the financial instrument, discounted by the effective interest rate.

Held-to-maturity investments carried at amortized cost

Held to maturity investments

Held-to-maturity investments are carried at amortized cost and recognized at the transaction price plus direct transaction expenses. Recognition and subsequent measurement follow the effective interest method.

Other financial liabilities carried at amortized cost

This category includes deposits from customers and credit institutions, commercial paper issued, bonds, subordinated loan capital and perpetual subordinated loan capital securities.

Issued financial guarantees

Contracts resulting in the DNB Bank Group having to reimburse the holder for a loss incurred because a specific debtor fails to make payment when due are classified as issued financial guarantees.

Financial instruments with the characteristics of equity

Issued additional Tier 1 capital instruments are instruments where DNB has a unilateral right not to repay interest or the principal to the investors. As a consequence of these terms, the instruments do not meet the requirements for a liability and are therefore presented on the line Additional Tier 1 capital within the Group’s equity. Transaction expenses and accrued interest are presented as a reduction in Other equity, while the advantage of the tax deduction for the interest will give an increase in Other equity.

Impairment of loans

Estimates of future cash flows are based on empirical data and management’s judgment of future macroeconomic developments and developments in the performance of the actual loans and on the situation at the balance sheet date. The estimates are the result of a process which involves the business areas and central credit units and represents management’s best estimate. When considering impairment of loans, there will be several elements of uncertainty with respect to the identification of objective evidence of impairment, the estimation of amounts and the timing of future cash flows, including the valuation of collateral.

Individual impairment

When estimating impairment of individual loans and guarantees, both the current and the future financial positions of the customer are considered. For corporate customers, the prevailing market situation is also reviewed, along with market conditions within the relevant industry and general market conditions which could affect the customers’ ability to repay the loans. In addition, potential restructuring, refinancing and recapitalization are taken into account. An overall assessment of these factors forms the basis for estimating the future cash flow. The discount period is estimated on an individual basis or based on empirical data about the period it normally takes to reach a solution to the problems that caused the objective indication of impairment.

Collective impairment

The expected future cash flow is estimated on the basis of expected losses and the anticipated economic situation for the respective groups. Expected losses are based on historical loss experience for the relevant groups. The economic situation is assessed by means of economic indicators for each group based on external information about the markets. Various parameters are used depending on the group in question. Key parameters are production gaps, which give an indication of capacity utilization in the economy, housing prices, oil prices, salmon prices and shipping freight rates. The economic indicators that are used show a high degree of correlation with historical impairment. To estimate the net present value of expected future cash flows for loans subject to collective impairment, a discount factor based on observed empirical data from individually evaluated loans is used.

Fair value of financial derivatives and other financial instruments

The fair value of financial instruments that are not traded in an active market is determined by using different valuation techniques. The banking group considers and chooses techniques and assumptions that as far as possible are based on observable market data representing the market conditions on the balance sheet date. When measuring financial instruments for which observable market data are not available, the banking group makes assumptions regarding what market participants would use as the basis for valuing similar financial instruments. The valuations require application of significant judgment when calculating liquidity risk, credit risk and volatility among others. Changes in these factors would affect the estimated fair value of the banking group’s financial instruments. For more information see note 28 Financial instruments at fair value.

Income taxes, including deferred tax assets and uncertain tax liabilities

The banking group is subject to income taxes in a number of jurisdictions. Significant judgment is required in determining the income tax in the consolidated financial statements, including assessments of recognized deferred tax assets and uncertain tax liabilities.

Deferred tax assets are recognized to the extent it is probable that the banking group will have future taxable income against which they can be utilized. Extensive assessments must be made to determine the amount which can be recognized, included the expected time of utilization, the level of profits computed for tax purposes as well as strategies for tax planning and the existence of taxable temporary differences.

There will be uncertainty related to the final tax liability for many transactions and calculations. The banking group recognizes liabilities related to the future outcome of tax disputes based on estimates of changed income taxes. When assessing the uncertain tax liabilities to be recognized in the balance sheet, the probability of the liability arising is considered. If the final outcome of the tax disputes deviates from the amounts recognized in the balance sheet, the deviations will impact the income tax expense in the income statement for the applicable period.

DESCRIPTION OF THE DNB BANK GROUP

Overview

The DNB Bank Group, which includes DNB Bank and its subsidiaries, is Norway’s largest bank group as measured by total assets (with NOK 2,316 billion in assets as of December 31, 2015). DNB Bank offers corporate, retail and investment banking services and products to customers in Norway and internationally, including in Sweden, Poland and the Baltic states of Estonia, Latvia and Lithuania. The Bank is the largest company in the DNB Group. As of March 31, 2016, the DNB Bank Group had total assets of NOK 2,343 billion and loans to customers of NOK 1,524 billion, compared to total assets of NOK 2,316 billion and loans to customers of NOK 1,532 billion as of December 31, 2015. The DNB Bank Group’s profit for the three months ended March 31, 2016 was NOK 4.9 billion, compared to NOK 6.2 billion for the corresponding period in 2015, and its profit for the year ended December 31, 2015 was NOK 23.2 billion, compared to NOK 19.1 billion for the previous year.

The DNB Bank Group’s head office is located in Oslo. The Bank is wholly owned by DNB ASA, the holding company of the DNB Group. The DNB Group is Norway’s largest financial services group in terms of total assets with total assets of NOK 2,599 billion as of December 31, 2015. DNB ASA conducts its banking operations through the Bank and offers life insurance and pension saving products, non-life (property and casualty) insurance products and asset management services through its wholly-owned subsidiaries DNB Livsforsikring AS, DNB Forsikring AS and DNB Asset Management Holding AS, as set forth below in “— Legal Structure of the DNB Group”. The Group offers a full range of financial services, including loans, savings and investment, payment transfers, advisory services, real estate broking, insurance and pension products for personal and corporate customers. DNB is among the world’s leading banks within its international priority areas, especially the energy, shipping and seafood sectors. The bank offers 24/7 customer service and telephone and online banking, and has a physical presence in 19 countries and throughout Norway through its branch offices, post offices and in-store postal and banking outlets.

The Issuer wholly owns DNB Boligkreditt AS, a company which provides loans secured by residential property for up to 75 per cent of the property’s appraised value. DNB Boligkreditt is licensed to operate as a mortgage institution with the right to issue covered bonds and has a key role in ensuring the DNB Group’s long-term funding.

As of March 31, 2016, the DNB Group had approximately 2.1 million private customers, about 230,000 corporate customers and around 1.1 million life and pension insurance customers in Norway.

Recent and Planned Changes

The DNB Bank Group has observed that almost all of its customers prefer to interact with it via digital methods. Accordingly, the Bank is implementing extensive measures to adjust its branch structure to changes in customer behavior. Parallel to this, additional resources are being allocated to the customer service center and to the innovation of new digital services, such as expanding on its popular financial transaction mobile software application Vipps.

DNB will reduce the number of branches serving personal customers from 116 to 57 during the first six months of 2016. Changes are also being made in the corporate market, with a reduction from 63 to 46 locations.

DNB Eiendom will retain its presence in current locations.

Despite the planned reductions, DNB will continue to have branches in all counties in Norway. The reduction in the number of branch offices will lead to a reduction in the number of employees. In 2015, staff at the branch offices was reduced by 200 full-time positions, mainly as a result of natural attrition. The described reduction in branch numbers will entail a further reduction of some 600 full-time positions at DNB branches during 2016.

History of the Bank

The Bank traces its roots back to 1822, when Norway’s first savings bank, Christiana Sparebank, was founded. The Bank was formed through mergers of several Norwegian banks. The name DnB NOR Bank ASA was adopted in 2003, when DnB Holding ASA and Gjensidige NOR ASA merged. The bank subsidiaries of DNB Holding ASA and Gjensidige NOR ASA, Den norske Bank ASA and Gjensidige NOR Sparebank ASA, respectively, merged on January 19, 2004.

On November 11, 2011, the Bank changed its name from DnB NOR Bank ASA to DNB Bank ASA. On the same date, several other DNB Group companies changed their names, including the holding company of the DNB Group, which changed its name from DnB NOR ASA to DNB ASA.

The registered office of the Bank is at Dronning Eufemias gate 30, N-0191 Oslo, Norway and its telephone number is +47 915 03000.

Legal Structure of the DNB Group

In accordance with the requirements of the Norwegian regulatory authorities, the banking, asset management and insurance activities of the DNB Group are organized as separate limited companies under the holding company DNB ASA. Banking activities are conducted by the Bank and its subsidiaries. All asset management activities are organized under a common holding company, DNB Asset Management Holding AS. DNB Livsforsikring ASA offers life insurance and pension saving products, both products with guaranteed returns and products with a choice of investment profile. DNB Skadeforsikring AS offers non-life (property and casualty) insurance products as part of a total product package for retail customers and small- and medium-sized companies.

The chart below sets forth the legal structure of the DNB Group as of March 31, 2016:

Strategy, Vision and Values

The Bank is the main subsidiary of the DNB Group and the Bank’s strategy is therefore closely coordinated with the DNB Group’s overall strategy.

DNB’s strategic platform consists of the Group’s vision, values and a shared customer value proposition. The platform shows what should characterize the Group and sets a common direction.

DNB’s vision: Creating value through the art of serving the customer. DNB will create value for customers, owners, employees and society in general.

DNB aspires to become a strategic adviser for a greater number of customers by capitalizing on the Bank’s industry expertise and adapting products and services to customers’ overall financial needs. In order to achieve an attractive position as a primary bank, DNB must ensure that its full range of financial services is competitive.

DNB Bank Group Operational Structure

The DNB Bank Group’s core businesses are retail and corporate banking, which it operates through its Personal Banking Norway, Corporate Banking Norway and Large Corporate and International business areas, respectively.

The DNB Bank Group also provides investment banking services through DNB Markets and cross-sells certain asset management and life insurance products offered by the Insurance and Asset Management companies, for which the DNB Bank Group receives fee and commission income. The Bank is also a large private settlement bank in Norway. As of December 31, 2015, the DNB Bank Group’s total assets represented 89 per cent of the DNB Group’s total assets, and its profit for the year represented 94 per cent of the DNB Group’s profit for the year.

The DNB Group’s staff and support units provide infrastructure services to the business areas. In addition, they perform functions for the governing bodies and management of the DNB Group. The size and capacity of support units in the DNB Group is a function of the volume of business and the DNB Group’s strategy. The operational structure of the DNB Group differs from its legal structure; although the support units are each designated as separate and independent entities.

The chart below shows the DNB Group’s operating structure as of the date of this prospectus:

Reporting Structure – Business Segments

Financial governance in DNB is adapted to the different segments. The income statements and balance sheets for the segments are presented in accordance with internal financial reporting principles, according to which revenues, costs and capital requirements are allocated to the segments based on a number of assumptions. Reported figures for the different segments thus reflect the Group’s total sales of products and services to the relevant segments. The follow-up of total customer relationships and segment profitability are two important dimensions when making strategic priorities and deciding on where to allocate the Group’s resources.

A description of the DNB Bank Group’s business segments for financial reporting purposes as of the date of this Prospectus is set out below.

Personal Customers

This segment includes the banking group’s 2.1 million personal customers in Norway. The customers are offered a wide range of services through Norway’s largest distribution network, comprising branch offices, telephone banking (24/7), digital banking, mobile banking solutions, real estate broking as well as external channels such as post offices and in-store postal and banking outlets.

Personal Customers includes the Group’s total sales of products and services to personal customers in Norway, both digital and physical, with the exception of residential mortgages recorded under Traditional pension products, where returns accrue to the policyholders.

For the three months ended March 31, 2016, the segment Personal Customers recorded a pre-tax operating profit of NOK 2,258 million, compared to a pre-tax operating profit of NOK 2,238 million for the three months ended March 31, 2015. For the year ended December 31, 2015, Personal Customers recorded a pre-tax operating profit of NOK 9,979 million, compared to NOK 8,949 million for 2014, amounting to 32.2 per cent and 35.4 per cent of the DNB Bank Group’s pre-tax operating profit for 2015 and 2014, respectively. As of December 31, 2015, loans to customers amounted to NOK 685 billion, while deposits from customers totaled NOK 393 billion.

The Bank is working to adapt products, service concepts and cost levels to the banking market of the future. In response to a higher self-service ratio, a total of 20 branch offices in Norway were closed in 2015, and staff levels were reduced by 200 full-time positions, mainly through natural attrition. The Bank will continue streamlining its branch structure, as the number of branch offices serving personal customers will be reduced from 116 to 57 during the first half of 2016. This should entail further staff cuts of approximately 500 full-time positions in the course of 2016.

In the DNB Bank Group’s consolidated financial statements, the residential loan portfolio of DNB Boligkreditt is reported as part of the Personal customers. The remaining part of the DNB Boligkreditt business is reported as part of Other operations. A portfolio of fixed-rate loans amounting to just under NOK 20 billion was sold from DNB Boligkreditt to DNB Livsforsikring in November 2015.

DNB Eiendom is reported within Personal Customers and is Norway’s largest real estate broker. The company offers services related to the sale of residential and holiday properties and housing projects, as well as advisory services in connection with the sale of other real estate. In recent years, DNB Eiendom has experienced strong growth in market share and turnover and has 125 offices across Norway.

Small and Medium-Sized Enterprises

The segment is responsible for product sales and advisory services to small and medium-sized enterprises in Norway. The Bank aspires to be a local bank for the whole of Norway, while offering the products and expertise of a large bank. Customers in this segment range from small businesses and start-up companies to relatively large corporate customers, and the product offerings are adapted to the customers’ different needs. Small and medium-sized enterprises are served through the banking group’s physical distribution network throughout Norway as well as digital and telephone banking (24/7).

The needs of companies are rapidly becoming more digital. During the last two years, there has been a more than 80 per cent reduction in manual corporate services from branch offices, and 70 per cent of all inquiries to the bank’s customer service center are now being made from digital platforms. Changes in customer behavior, combined with increasing digitalization, mean that customers with straightforward needs can be served well and more efficiently through the bank’s digital channels.

For reporting purposes, this segment includes the DNB Bank Group’s total sales of products and services to small and medium-sized enterprises in Norway.

For the three months ended March 31, 2016, the segment recorded a pre-tax operating profit of NOK 877 million, compared to a pre-tax operating profit of NOK 803 million for the three months ended March 31, 2015. For the year ended December 31, 2015, Small and Medium-Sized Enterprises recorded a pre-tax operating profit of NOK 3,414 million, compared to NOK 3,117 million for 2014, amounting to 11.0 per cent and 12.3 per cent of the DNB Bank Group’s pre-tax operating profit for 2015 and 2014, respectively. As of December 31, 2015, loans to customers amounted to NOK 220 billion, while deposits from customers amounted to NOK 167 billion.

Large Corporates and International

This segment includes the Bank’s largest Norwegian corporate customers, public sector and international customers, including all customer segments in the Baltics and Poland.

For the three months ended March 31, 2016, the segment recorded a pre-tax operating profit of NOK 1,510 million, compared to a pre-tax operating profit of NOK 2,806 million for the three months ended March 31, 2015. For the year ended December 31, 2015, Large Corporates and International recorded a pre-tax operating profit of NOK 10,829 million, compared to NOK 10,924 million for 2014, amounting to 34.9 per cent and 43.2 per cent of the DNB Bank Group’s pre-tax operating profit for 2015 and 2014, respectively. As of December 31, 2015 loans to customers amounted to NOK 570 billion, while deposits from customers amounted to NOK 380 billion.

In order to increase the DNB Group’s Tier 1 capital ratio, adjustments were made to reduce the division’s use of capital by selling certain loans and entering into syndication and guarantee contracts. These changes were made where returns were low or where the potential for profitable growth is not satisfactory.

Large Corporates and International serves large corporate customers in Norway and is responsible for the DNB Bank Group’s international operations, including the service of local customers in the Baltics and Poland. Long-

term customer relationships based on sound industry and product expertise are key to the success of this business area. International initiatives are based on expertise within the business area’s strategic priority areas, which are shipping, energy and seafood.

DNB Næringskreditt is 100 per cent owned by DNB Bank ASA. The mortgage institution was established to issue covered bonds secured by a cover pool comprising commercial property. DNB Næringsmegling is a large commercial property adviser and broker, and it manages portfolios which can be used to obtain long-term funding for the DNB Bank Group through the issuance of covered bonds.

The Large Corporates and International business area serves Norwegian customers through central customer service departments, financial services and business centers and regional offices in Norway, as well as through the DNB Bank Group’s telephone and Internet banks. In addition, the DNB Bank Group’s corporate clients are offered services internationally through offices and branches in several countries around the world.

Trading

This segment comprises market making and proprietary trading in fixed income, foreign exchange and commodity products, as well as equities, including the hedging of market risk inherent in customer transactions. Customer activities are supported by trading activities.

For the three months ended March 31, 2016, Trading recorded a pre-tax operating profit of NOK 211 million, compared to a pre-tax operating profit of NOK 474 million for the three months ended March 31, 2015. For the year ended December 31, 2015, Trading recorded a pre-tax operating profit of NOK 1,087 million, compared to NOK 1,500 million for 2014, amounting to 3.5 per cent and 5.9 per cent of the DNB Bank Group’s pre-tax operating profit for 2015 and 2014, respectively.

Large fluctuations in exchange rates, interest rates and commodity prices in 2015 contributed to increasing demand for hedging products. Low interest rates resulted in demand for interest rate hedging of loans among corporate customers. The lower price of oil contributed to a weaker Norwegian kroner and increased income from foreign exchange and commodity hedging. Falling oil prices and volatile markets had an impact on the equity and debt capital market activities and advisory services in connection with mergers and acquisitions in Norway.

Competition

The DNB Bank Group operates in highly competitive markets, particularly for residential mortgages, which is the principal product of its Personal Banking Norway business area. The DNB Bank Group’s competitors include Nordea Bank Norge (a subsidiary of the Nordic banking group Nordea), SpareBank 1, Danske Bank and Handelsbanken. See also “Risk Factors—Competition in Norway and in the international markets in which the DNB Bank Group operates could have a negative effect on the DNB Bank Group’s business”.

The following table sets out Norwegian lending and deposit market shares of the DNB Bank Group as of December 31, 2015, 2014 and 2013.

As of December 31, 2015 2014 2013 (%) Retail customers(1) Total lending to households (2) (3) 25.4 26.0 26.5 Deposits from households (2)(4) 30.6 30.9 31.9 Corporate customers(1) Total lending to corporate customers (5) 10.9 11.3 11.3 Deposits from corporate customers (6) 38.3 38.1 36.6

Source: Statistics Norway, DNB ______Note: (1) Based on nominal values. (2) Households are defined as employees, recipients of property income, pensions and social contributions, students etc., housing cooperatives etc., unincorporated enterprises within households and non-profit institutions serving households. (3) Total loans include all credits extended to Norwegian customers by domestic commercial and savings banks, state banks, insurance companies and finance companies. (4) Domestic commercial and savings banks. (5) Total loans include all credits extended to Norwegian customers by domestic commercial and savings banks, state banks, insurance companies, finance companies and foreign institutions, as well as bonds and commercial paper. Excluding loans to financial institutions, central government and social security services. (6) Excluding deposits from financial institutions, central government and social security services.

Employees

The DNB Bank Group believes its employees are its most important resource in developing and maintaining good customer relationships and creating value. Ethics are emphasized in all parts of the organization and are viewed as a key to maintaining trust from the outside world. Ethics and anti-corruption are organized under the DNB Group’s compliance unit. A particularly important task is to implement ongoing measures aimed at all employees in Norway and in the organization’s international operations to ensure the right attitudes across the DNB Group. Based on a risk-based approach, the purpose is to implement targeted initiatives in those parts of the organization which are deemed to be most exposed to ethical challenges and corruption risk. Training and other activities are tailored to give units and employees the best possible and most relevant assistance.

As of March 31, 2016, the DNB Bank Group had 11,840 employees, calculated on a full-time equivalent basis, of whom 3,174 were located outside Norway, a decrease from 12,064 employees (3,312 of whom were located abroad) as of December 31, 2015.

The DNB Bank Group implemented further restructuring and downsizing processes in 2015, whereby the number of full-time positions was reduced by 263. The processes were carried out in accordance with the DNB Group’s restructuring rules and were implemented after discussions with the Group’s employee representatives. A total of 271 severance packages were granted based on individual applications in 2015. Seniority and age determined the amount of severance pay, and the applications were approved on the condition that the employees under consideration would not be replaced.

On February 3, 2016, the Bank announced that extensive measures will be implemented to adjust the number of branch offices and employees to the new banking reality in the digital age.

The Bank will reduce the number of branches serving personal customers from 116 to 57 during the first six months of 2016. Changes are also being made in the corporate market, with a reduction from 63 to 46 locations. DNB Eiendom will retain their presence in current locations. The described changes will entail a further reduction of some 600 full-time positions at DNB branches during 2016.

Information Technology

IT and Operations is a support unit within the DNB Group. IT and Operations delivers tools to employees in all business areas and support units in Norway and internationally, as well as easy-to-use solutions for the Bank’s customers. The unit delivers account, credit and payment services to Corporate Banking Norway, Personal Banking Norway and Large Corporates and International. IT and Operations is also responsible for the Group’s procurement, premises and security services.

A number of advisory bodies have been established within the DNB Group including the IT Group Council. This is an advisory body for the head of IT and Operations in connection with prioritization, decision-making and follow-up of the Bank’s IT development projects with an aim to ensure that the bank’s strategic goals are met.

Insurance

DNB Bank Group’s insurance Program is an integral part of its operational risk management. The DNB Bank Group enters into insurance contracts to limit the financial consequences of undesirable events which occur in spite of established security routines and other risk-mitigating measures. The DNB Bank Group has a broad- based insurance Program that includes, among other things, coverage relating to professional indemnity (PI), directors and officers liability (D&O), and property and criminal attacks (internal and external fraud and crime, including “bankers blanket bond and computer crime/cyber risk”).

Real Property

The Bank’s principal executive offices are located in Oslo, Norway. It also operates through a number of other offices and branches located throughout the Nordic markets, the Baltic markets and elsewhere internationally. The Bank does not own any material real property.

Litigation

Due to its extensive operations in Norway and abroad, the DNB Bank Group will regularly be party to a number of legal actions. None of the current disputes are expected to have any material impact on the banking group’s financial position.

The DNB banking group is subject to a number of complaints and disputes relating to structured products and other investment products.

The action against seven Norwegian municipalities for the settlement of interest rate swaps on commercial terms was settled in the second quarter of 2015, resulting in a reduction in the Bank’s pre-tax operating profit of NOK 159 million.

A civil action was brought before a U.S. court of law against DNB Markets Inc. (Minc) and the other arrangers of a USD 300 million Senior Note issue in 2010 on behalf of Overseas Shipholding Group (OSG). In the third quarter of 2015 the case was settled. Minc’s share of the settlement was USD 250,000.

The Norwegian Consumer Council announced in January 2016 that it is planning to pursue a class action against DNB Asset Management, a wholly-owned subsidiary of DNB ASA offering asset management services. It intends to seek compensation for 137,000 investors in a fund managed by DNB Asset Management, and potentially investors in another fund also managed by DNB Asset Management, with respect to allegations that the fund was charging high fees for active management but was simply tracking an index. DNB Asset Management rejected such allegations in its response to a letter from the Norwegian Consumer Council stating the basis for their future claim. The Norwegian Consumer Council’s legal action is likely to take a considerable time to reach a resolution through the Courts and liability of the DNB Group is uncertain. DNB Asset Management will vigorously defend any legal action brought by the Norwegian Consumer Council.

SELECTED STATISTICAL DATA

Average Balances and Interest Rates

The following table sets forth average balances and average interest rates on selected balance sheet items for the three years ended December 31, 2015, 2014 and 2013. Average balances have been calculated based on average monthly volumes.

Average interest rate(1) Average volume 2015 2014 2013 2015 2014 2013 (%) (NOK millions) Assets Due from credit institutions ...... 0.25 0.34 0.27 647,358 527,612 475,307 Loans to customers ...... 3.31 3.84 3.98 1,501,783 1,382,551 1,332,814 Commercial paper and bonds ...... 2.14 2.33 2.43 200,597 187,608 178,521

Liabilities Due to credit institutions ...... 0.41 0.60 0.76 331,697 291,074 312,182 Deposits from customers ...... 0.89 1.41 1.58 1,062,719 990,029 933,759 Securities issued .... 1.51 1.66 1.71 847,755 759,273 711,262 ______Note: (1) Average interest rate in per cent is calculated as total interest in NOK for the specific products in relation to the appurtenant average capital.

Return on Equity and Risk-Adjusted Capital

Year ended December 31, 2015 2014 2013 (%) Return on equity(1) ...... 15.1 14.5 13.1 Return on allocated capital(2) Personal Customers ...... 22.7 23.3 36.1 Small and medium-sized enterprises ..... 12.0 11.6 11.4 Large Corporates and International ..... 10.9 13.6 12.1 Trading ...... 11.2 16.1 17.8 ______Notes: (1) Return on equity represents the shareholders’ share of profit for the period to average equity. Average equity is calculated as the average of montly end balances adjusted for AT 1 capital. The figure is also presented as return on allocated capital for DNB Bank Group in the financial statements. (2) Allocated capital for the segments is calculated based on the external capital adequacy requirement (Basel III) which must be met by the DNB Banking Group. In consequence of stricter external capital requirements and the authorities’ signals of additional capital requirements for home mortgages, allocated capital to Personal customers were adjusted upwards in 2015. This resulted in a lower return on capital compared with the preceding periods.

Loans and Guarantees

On initial recognition, the DNB Bank Group classifies loans in its loan portfolio as (i) financial assets designated as at fair value with changes in value recognized in profit or loss, or as (ii) loans and receivables carried at amortized cost. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Classification of financial instruments”. The following table sets forth, as of the dates indicated, the DNB Bank Group’s loan portfolio classified by loans carried at amortized cost and loans designated at fair value:

As of March As of December 31, 31, 2016 2015 2014 2013 (NOK millions) Loans at amortized cost Loans to customers, nominal amount ...... 1,413,075 1,417,866 1,343,600 1,228,610 Individual impairments ...... (8,701) (8,484) (9,646) (9,695) Loans to customers, after individual impairments ...... 1,404,374 1,409,382 1,333,954 1,218,915 + Accrued interest and amortization ...... 2,329 2,313 2,509 2,762 Individual impairments of accrued interest and amortization ...... (626) (656) 680 710 Collective impairments ...... (3,097) (2,524) 2,139 2,315 Loans to customers, at amortized cost ...... 1,402,980 1,408,515 1,333,645 1,218,652

Loans at fair value Loans to customers, nominal amount ...... 119,190 122,098 110,712 130,344 + Accrued interest ...... 154 187 273 378 + Adjustment to fair value ...... 1,443 1,132 2,835 1,281 Loans to customers, at fair value ...... 120,788 123,417 113,820 132,004 Loans to customers ...... 1,523,768 1,531,932 1,447,465 1,350,656

Distribution of loans and commitments by industry sector(1)

The following tables set forth, as of the dates indicated, the DNB Bank Group’s total loans and commitments by industry sector, net of individual impairments:

As of December 31, 2015 Industry Total loans Loans and Unutilized and receivables Guarantees credit lines commitments (NOK millions) Private individuals ...... 724,094 284 199,188 923,567 Transportation by sea and pipelines and vessel construction ...... 126,222 9,933 42,701 178,856 Real estate ...... 196,336 2,341 26,165 224,841 Manufacturing ...... 92,767 24,229 72,416 189,412 Services...... 97,914 6,074 25,566 129,554 Trade ...... 41,006 5,451 25,756 72,212 Oil and gas ...... 31,906 4,554 38,117 74,577 Transportation and communication ...... 59,283 8,555 26,733 94,571 Building and construction ...... 48,737 13,674 25,180 87,590 Power and water supply ...... 33,784 8,366 23,860 66,010 Seafood ...... 16,289 266 5,075 21,630 Hotels and restaurants ...... 8,896 421 2,588 11,905

As of December 31, 2015 Industry Total loans Loans and Unutilized and receivables Guarantees credit lines commitments (NOK millions) Agriculture and forestry ...... 6,846 56 2,657 9,559 Central and local government ...... 14,440 483 10,870 25,793 Other sectors ...... 32,962 4,609 26,970 64,542 Total customers, nominal amount after individual impairments ...... 1,531,480 89,297 553,841 2,174,619 – Collective impairments, customers ...... (2,524) (2,524) + Other adjustments ...... 2,976 (198) 2,778 Loans to customers ...... 1,531,932 89,099 553,841 2,174,873 Credit institutions, nominal amount after individual impairments ...... 297,399 8,935 46,682 353,016 + Other adjustments ...... 58 58 Loans to and due from credit institutions 297,457 8,935 46,682 353,074 ______Note: (1) The breakdown into principal industry sectors is based on standardized sector and industry categories set up by Statistics Norway. Customers are classified according to their main line of business.

As of December 31, 2014 Industry Total loans Loans and Unutilized and receivables Guarantees credit lines commitments (NOK millions) Private individuals ...... 709,947 330 182,428 892,705 Transportation by sea and pipelines and vessel construction ...... 121,413 11,730 47,544 180,687 Real estate ...... 193,984 2,679 22,225 218,888 Manufacturing ...... 77,414 26,660 59,522 163,596 Services...... 79,583 7,182 30,769 117,533 Trade ...... 36,710 5,330 26,771 68,812 Oil and gas ...... 28,591 4,987 58,512 92,089 Transportation and communication ...... 45,280 9,033 28,690 83,003 Building and construction ...... 49,160 13,584 27,774 90,518 Power and water supply ...... 35,100 12,122 26,191 73,413 Seafood ...... 17,405 202 7,011 24,618 Hotels and restaurants ...... 6,961 321 2,331 9,613 Agriculture and forestry ...... 8,359 69 3,664 12,091 Central and local government ...... 13,020 304 7,054 20,379 Other sectors ...... 21,739 1,279 50,563 73,581 Total customers, nominal amount after individual impairment ...... 1,444,666 95,811 581,049 2,121,527 – Collective impairments, customers ...... (2,139) (2,139) + Other adjustments ...... 4,937 (154) 4,783 Loans to customers ...... 1,447,465 95,657 581,049 2,124,171 Credit institutions, nominal amount after individual impairments ...... 355,494 7,063 25,863 388,420 + Other adjustments ...... 84 84 Loans to and due from credit institutions ...... 355,577 7,063 25,863 388,503

______Note: (1) The breakdown into principal industry sectors is based on standardized sector and industry categories set up by Statistics Norway. Customers are classified according to their main line of business.

As of December 31, 2013 Industry Loans and Guarantees Unutilized Total loans receivables credit lines and commitments (NOK millions) Private individuals ...... 672,810 337 130,404 803,552 Transportation by sea and pipelines and vessel construction ...... 121,581 10,943 30,630 163,153 Real estate ...... 188,420 3,125 15,647 207,193 Manufacturing ...... 57,547 16,602 32,122 106,271 Services...... 72,971 8,393 32,218 113,582 Trade ...... 33,599 4,767 22,068 60,434 Oil and gas ...... 25,349 14,310 51,048 90,707 Transportation and communication ...... 33,396 3,098 21,478 57,972 Building and construction ...... 47,348 12,702 20,258 80,309 Power and water supply ...... 30,054 14,135 32,588 76,776 Seafood ...... 18,933 282 5,525 24,740 Hotels and restaurants ...... 9,208 409 1,598 11,215 Agriculture and forestry ...... 8,090 798 4,617 13,505 Central and local government ...... 8,085 297 6,855 15,237 Other sectors ...... 21,869 3,670 67,799 93,338 Total customers, nominal amount after individual impairments ...... 1,349,259 93,869 474,855 1,917,983 – Collective impairments, customers ...... 2,315 - - 2,315 + Other adjustments ...... 3,712 (170) - 3,542 Loans to customers ...... 1,350,656 93,700 474,855 1,919,211 Credit institutions, nominal amount after individual impairments ...... 176,768 5,318 13,507 195,593 + Other adjustments ...... 28 0 - 28 Loans to and from credit institutions ..... 176,795 5,318 13,507 195,621 ______Note: (1) The breakdown into principal industry sectors is based on standardized sector and industry categories set up by Statistics Norway. Customers are classified according to their main line of business.

Distribution of customer deposits by industry sector(1)

The following table sets forth, as of the dates indicated, the DNB Bank Group’s customer deposits by industry sector:

As of December 31, Industry 2015 2014 2013 (NOK millions) Private individuals ...... 353,110 343,765 323,102 Transportation by sea and pipelines and vessel construction ...... 65,040 61,909 66,090 Real estate ...... 44,782 41,309 36,213

As of December 31, Industry 2015 2014 2013 (NOK millions) Manufacturing ...... 57,701 63,669 33,535 Services...... 126,262 154,339 137,780 Trade ...... 32,743 37,190 40,573 Oil and gas ...... 23,777 31,648 40,928 Transportation and communication ...... 50,144 45,873 37,395 Building and construction ...... 21,023 20,143 18,713 Power and water supply ...... 21,787 29,096 27,576 Seafood ...... 5,301 4,446 5,863 Hotels and restaurants ...... 2,395 2,573 2,636 Agriculture and forestry ...... 4,317 4,735 3,546 Central and local government ...... 52,253 45,693 40,786 Finance ...... 96,210 64,074 75,879 Total deposits from customers, nominal amount ...... 956,846 950,461 890,614 Adjustments ...... 476 587 642 Deposits from customers ...... 957,322 951,049 891,256 ______Note: (1) The breakdown into principal industry sectors is based on standardized sector and industry categories set up by Statistics Norway. Customers are classified according to their main line of business.

Geographic distribution of commitments

The following tables set forth, as of the dates indicated, the geographic distribution by customer address of the DNB Bank Group’s gross loans and commitments before accounting for individual and collective impairments:

As of December 31, 2015 Location of customer, by address Loans and Unutilized Total loans and receivables Guarantees credit lines commitments (NOK millions) Oslo ...... 268,847 12,527 190,376 471,750 Eastern and southern Norway ...... 460,311 18,918 115,592 594,821 Western Norway ...... 194,641 8,515 52,410 255,565 Northern and central Norway ...... 201,741 9,142 39,898 250,781 Total Norway ...... 1,125,540 49,101 398,275 1,572,917 Sweden ...... 61,739 7,337 38,139 107,215 United Kingdom ...... 118,315 3,536 17,597 139,448 Other Western European countries ...... 296,492 5,430 34,741 336,663 Russia ...... 926 4 5 935 Estonia ...... 5,132 110 184 5,425 Latvia ...... 16,798 395 1,451 18,644 Lithuania ...... 28,951 849 3,301 33,101 Poland ...... 18,680 732 3,090 22,502 Other Eastern European countries ...... 801 262 33 1,095 Total Europe outside Norway ...... 547,834 18,653 98,541 665,029 USA and Canada ...... 47,033 17,046 80,907 144,985 Bermuda and Panama (2) ...... 29,861 2,665 5,647 38,174 Other South and Central American countries ...... 18,891 2,638 6,585 28,115 Total America ...... 95,785 22,349 93,139 211,273 Singapore (2) ...... 14,204 1,952 505 16,661

As of December 31, 2015 Location of customer, by address Loans and Unutilized Total loans and receivables Guarantees credit lines commitments (NOK millions) Hong Kong ...... 3,452 702 4,154 Other Asian countries ...... 16,768 3,854 3,493 24,115 Total Asia ...... 34,425 5,806 4,700 44,930 Liberia (2) ...... 10,044 2,043 601 12,688 Other African countries ...... 1,093 90 551 1,733 Oceania (2) ...... 22,649 372 4,715 27,736 Commitments(3) ...... 1,837,370 98,414 600,523 2,536,300 – Individual impairments ...... (8,484) (181) (8,665) – Collective impairments ...... (2,524) (2,524) + Other adjustments ...... 3,034 (198) 2,836 Net loans and commitments ...... 1,829,390 98,034 600,523 2,527,947 ______Notes: (1) Based on the customer’s address. (2) Represents shipping loans and commitments. (3) All amounts represent gross loans and guarantees respectively before individual impairment.

As of December 31, 2014 Location of customer, by address Total loans Loans and Unutilized and receivables Guarantees credit lines commitments (NOK millions) Oslo ...... 262,349 12,451 173,744 448,544 Eastern and southern Norway ...... 460,017 19,475 137,478 616,970 Western Norway ...... 183,794 10,064 53,693 247,551 Northern and central Norway ...... 197,774 10,426 40,388 248,588 Total Norway ...... 1,103,934 52,416 405,303 1,561,653 Sweden ...... 67,408 6,438 31,736 105,582 United Kingdom ...... 142,020 5,087 19,338 166,445 Other Western European countries ...... 274,681 10,329 39,241 324,251 Russia ...... 1,498 162 253 1,912 Estonia ...... 4,801 187 356 5,344 Latvia ...... 16,575 395 2,511 19,482 Lithuania ...... 26,893 1,010 5,160 33,063 Poland ...... 18,133 709 2,626 21,812 Other Eastern European countries ...... 937 218 36 1,191 Total Europe outside Norway ...... 552,946 24,535 101,601 679,083 USA and Canada ...... 56,164 15,041 80,054 151,259 Bermuda and Panama (2) ...... 22,384 2,276 3,026 27,686 Other South and Central American countries ...... 10,104 2,268 4,388 16,760 Total America ...... 88,651 19,585 87,468 195,704 Singapore (2) ...... 13,426 1,247 1,526 16,200 Hong Kong ...... 5,835 65 5,901 Other Asian countries ...... 20,258 2,832 4,361 27,451 Total Asia ...... 39,520 4,079 5,952 49,551 Liberia (2) ...... 9,590 1,970 504 12,064 Other African countries ...... 765 95 165 1,025 Oceania (2) ...... 14,401 337 5,918 20,656

As of December 31, 2014 Location of customer, by address Total loans Loans and Unutilized and receivables Guarantees credit lines commitments (NOK millions) Commitments(3) ...... 1,809,807 103,017 606,912 2,519,736 – Individual impairments ...... (9,647) (143) (9,790) – Collective impairments ...... (2,139) (2,139) + Other adjustments ...... 5,021 (154) 4,867 Net loans and commitments ...... 1,803,042 102,720 606,912 2,512,675 ______Notes: (1) Based on the customer’s address. (2) Represents shipping loans and commitments. (3) All amounts represent gross loans and guarantees respectively before individual impairment.

As of December 31, 2013 Location of customer, by address Total loans Loans and Unutilized and receivables Guarantees credit lines commitments (NOK millions) Oslo ...... 245,571 39,893 90,272 375,736 Eastern and southern Norway ...... 440,386 21,946 167,772 630,104 Western Norway ...... 175,082 11,547 43,142 229,771 Northern and central Norway ...... 189,053 9,374 34,848 233,276 Total Norway ...... 1,050,093 82,759 336,034 1,468,886 Sweden ...... 67,963 800 30,734 99,497 United Kingdom ...... 65,868 761 14,738 81,367 Other Western European countries ...... 161,950 5,485 30,992 198,427 Russia ...... 2,183 566 96 2,845 Estonia ...... 4,363 87 5 4,455 Latvia ...... 17,028 445 1,747 19,220 Lithuania ...... 23,870 980 2,270 27,120 Poland ...... 17,569 1,059 2,465 21,092 Other Eastern European countries ...... 502 105 9 616 Total Europe outside Norway ...... 361,296 10,288 83,055 454,639 USA and Canada ...... 35,287 465 56,378 92,129 Bermuda and Panama (2) ...... 16,376 1,367 3,901 21,643 Other South and Central American countries ...... 11,368 2,350 4,220 17,938 Total America ...... 63,030 4,182 64,498 131,710 Singapore (2) ...... 12,016 16 287 12,320 Hong Kong ...... 3,578 0 9 3,588 Other Asian countries ...... 14,007 2,151 2,993 19,152 Total Asia ...... 29,602 2,168 3,290 35,059 Liberia (2) ...... 15,352 57 753 16,161 Other African countries ...... 490 16 11 516 (2) Oceania ...... 15,934 2 722 16,659 Commitments(3) ...... 1,535,797 99,472 488,362 2,123,631 – Individual impairments ...... 9,770 284 - 10,055 – Collective impairments ...... 2,315 - - 2,315 + Other adjustments ...... 3,740 (170) - 3,571

Net loans and commitments ...... 1,527,452 99,018 488,362 2,114,832 ______Notes: (1) Based on the customer’s address. (2) Represents shipping loans and commitments. (3) All amounts represent gross loans and guarantees respectively before individual impairment.

Loan concentration

As of March 31, 2016, the DNB Bank Group’s 20 largest exposures were not material relative to total assets or net lending.

Non-performing, doubtful and impaired commitments

The DNB Bank Group records loans at their nominal value, with the exception of impaired commitments and reduced rate loans.

A loan is considered to be non-performing if the loan is not serviced in accordance with the loan agreement, and where the default is not due to delays or incidental circumstances concerning the customer. Commitments are classified as non-performing no later than 90 days past the formal due date. Guarantees are considered to be defaulted once a claim has been made against the Bank.

A performing loan is classified as doubtful if an individual impairment has been made.

Individual impairments are recorded in the accounts if objective indications of a decrease in value can be found. Impairments on both performing and non-performing loans are calculated as the difference between the value of the loan on the balance sheet and the net present value of estimated future cash flows discounted by the effective interest rate. Renegotiation of loan terms to ease the position of the borrower qualifies as objective indications of impairment. In accordance with IFRS, the best estimate is used to assess future cash flows. The effective interest rate used for discounting is not adjusted to reflect changes in the credit risk and terms of the loan due to objective indications of impairment being identified.

Impaired commitments comprise all doubtful commitments and the part of non-performing commitments where an individual impairment has been made.

Gross non-performing and gross doubtful commitments net of individual impairments comprise net non- performing and net doubtful commitments.

Loans which have not been individually evaluated for impairment are evaluated collectively in groups. Loans which have been individually evaluated, but not written down, are also evaluated in groups. Collective impairments are taken based on this evaluation.

The following table sets forth, as of the dates indicated, the impairment and coverage ratios for the DNB Bank Group’s gross non-performing and gross doubtful commitments:

As of December 31, 2015 2014 2013 Non-performing commitments ...... 15,055 16,754 16,665 Doubtful commitments ...... 7,641 11,298 14,139 Gross non-performing and gross doubtful commitments ...... 22,647 27,051 30,804 Individual impairments ...... (8,665) (9,790) (10,055) Collective impairments ...... (2,524) (2,139) (2,315) Provision ratio (%)(1)...... 49.4 44.1 40.2 Collateral for non-performing and doubtful 11,674 16,879 19,080

commitments ...... Coverage ratio (%)...... 101.0 106.5 102.1 ______Note: (1) The provision ratio includes individual and collective impairment as a percentage of gross non-performing and gross doubtful loans and guarantees.

Collateral security

Depending on the market and type of transaction, DNB Bank Group uses collateral security to reduce risk. Collateral security can be in the form of physical assets, guarantees, cash deposits or netting agreements. The main types of collateral used are mortgages on residential property, commercial property and other real property, ships, rigs, registrable movables, accounts receivable, inventories, plant and equipment, agricultural chattel and fish-farming concessions. The principal rule is that physical assets should be insured by the debtor. In addition, negative pledges are used, where the customer is required to keep all assets free from encumbrances with respect to all lenders.

The credit process is based on an assessment of the customer’s debt servicing capacity in the form of ongoing future cash flows. The source of such cash flows varies depending on customer segment and the customer’s operations or the loan object. The main sources of the cash flow included in such assessments are earned income and income from the business operations which are being financed. In addition, the extent to which the Bank’s exposure will be covered through the realization of collateral in connection with a possible future default or reduction in future cash flows is taken into account. When assessing mortgages backed by residential property, external appraisals are used. The large majority of home mortgages are within 80 per cent of the property’s appraised value, and external parameters are used to regularly review home values. Evaluations of the value of collateral in the corporate market are based on a going concern assumption, with the exception of situations where impairments have been made. In addition, factors which may affect the value of collateral, such as concession terms or easements and sales costs, are taken into account. With respect to evaluations of both collateral in the form of securities and counterparty risk, the estimated effects of enforced sales are also considered. The main principle for valuing collateral is to use the expected realization value at the time the Bank may need to realize the collateral. Extensive rules have been prepared as part of the credit process, including maximum rates for all types of collateral and realization guidelines. Valuations of collateral are made when approving new loans and in connection with the annual renewal and are considered to be part of credit decisions. A procedure has been established for the periodic control of the values on which the extension of credit is based.

Repossessed properties and other assets

Repossessed assets are assets acquired by units within DNB Bank Group as part of the management of non- performing and impaired commitments. At the time of acquisition, such assets are valued at their estimated realizable value. Any deviation from the carrying value of non-performing and impaired commitments at the time of acquisition is classified as impairment. Repossessed assets are recorded on the balance sheet according to the type of asset. When acquiring shares or mutual fund holdings, the assets are evaluated according to the principles described in paragraph 7 of the “Accounting Principles” to the audited consolidated financial statements for the year ended December 31, 2015 incorporated by reference in this Prospectus. Upon final sale, the difference relative to carrying value is recognized in the income statement according to the type of asset.

Gross and net impaired commitments

The following table sets forth, for the periods indicated, the gross and net impaired loans and guarantees for the DNB Bank Group’s principal customer groups(1):

Gross impaired Total individual commitments impairments Net impaired commitments As of December 31, As of March As of December 31, 31,

2015 2014 2013 2015 2014 2013 2016 2015 2015 2014 2013 (NOK millions) Private individuals ...... 4,502 5,368 6,410 (1,841) (2,297) (2,928) 2,570 3,028 2,661 3,071 3,482 Transportation by sea, pipeline and vessel construction ...... 3,665 5,753 6,509 (1,620) (1,891) (1,556) 1,998 2,071 2,045 3,862 4,953 Real estate ...... 3,716 3,864 5,475 (1,426) (1,347) (1,767) 2,291 2,665 2,289 2,517 3,708 Manufacturing ...... 2,643 2,149 3,026 (1,113) (1,373) (844) 1,518 789 1,530 776 2,182 Services ...... 952 1,293 1,214 (593) (620) (708) 767 521 359 673 506 Trade ...... 977 1,855 818 (502) (590) (431) 441 308 476 1,265 387 Oil and gas ...... 0 42 175 0 (41) (38) 0 0 0 0 137 Transportation and communication ...... 1,825 859 1,305 (726) (363) (538) 1,334 417 1,099 495 767 Building and construction ...... 1,020 1,899 1,836 (550) (937) (861) 629 900 470 962 975 Power and water supply ...... 394 45 113 (77) (16) (45) 31 28 317 29 68 Seafood ...... 13 146 99 (8) (120) (41) 13 61 5 26 58 Hotels and restaurants .. 167 160 322 (49) (57) (94) 99 112 118 103 228 Agriculture and forestry ...... 172 231 183 (63) (87) (80) 86 106 110 144 103 Central and local government...... 11 0 0 (5) 0 6 0 7 0 Other sectors ...... 126 68 60 (92) (49) (49) 22 9 34 19 11 Total customers ...... 20,184 23,733 27,545 (8,665) (9,790) (9,980) 11,804 11,016 11,519 13,943 17,565 Credit institutions ...... 0 0 80 0 0 (75) 0 0 0 5 Total impaired loans and guarantees ...... 20,184 23,733 27,625 (8,665) (9,790) (10,055) 11,804 11,016 11,519 13,943 15,570 Non-performing loans and guarantees not subject to impairment ... 2,461 3,318 3,179 3,121 2,841 2,461 3,318 3,179 Total non-performing and impaired loans and guarantees ...... 22,645 27,051 30,804 (8,665) (9,790) (10,055) 14,925 13,856 13,980 17,261 20,749 ______Note: (1) Includes loans and guarantees subject to individual impairment and total non-performing loans and guarantees not subject to impairment. The breakdown into principal customer groups corresponds to the EU’s standard industrial classification, NACE Rev.2.

Developments in write-offs and impairments

When a loss is considered final any previously recorded impairments on the balance sheet related to the commitment is reduced. This reduction is not recorded in the profit and loss statement. In the table below these write-offs are classified as “write-offs covered by individual impairments made in previous years.”

Write-offs in excess of previously recorded individual impairments and write-offs without individual impairments are classified as “write-offs” in the profit and loss statement.

The following table sets forth, for the periods indicated, the DNB Bank Group’s write-offs on loans and guarantees and changes in net individual and collective impairments:

Three months ended March 31, Year end December 31, 2016 2015 2015 2014 2013 (NOK millions) Write-offs covered by individual impairments made in previous years ...... 634 1,220 3,749 2,422 1,837

Profit and loss Write-offs(1) ...... (163) (119) (1,446) (823) (966) New individual impairments...... (1,393) (1,073) (3,288) (3,078) (3,071) Total new individual impairments ...... (1,556) (1,191) (4,735) (3,901) (4,037) Reassessed individual impairments ...... 381 467 978 1,245 1,263 Recoveries on loans and guarantees previously written off ...... 646 194 1,742 677 457 Net individual impairments ...... (528) (530) (2,015) (1,980) (2,318) Change in collective impairments on loans(2) ...... (646) (44) (255) 341 133 Impairments on loans and guarantees(1) ...... (1,174) (575) (2,270) (1,639) (2,185) Of which impairments on loans ...... (1,172) (549) (2,234) (1,782) (2,066) Of which impairments on guarantees ...... (2) (26) (36) 143 (119) ______Notes: (1) Including impairment of loans at fair value. (2) Recoveries in 2015 largely reflected the effects of the agreement with Lindorff Capital AS on the sale of portfolios of non-performing loans in Norway.

The following tables set forth, for the periods indicated, the total individual impairments allocated according to the DNB Bank Group’s principal industry sectors (1):

Year ended December 31, 2015 Recoveries on loans and New Reassessed guarantees individual individual previously Net impairment impairment written off2) impairment (NOK millions) Private individuals ...... (835) 188 1,642 995 Transportation by sea and pipelines and vessel construction ...... (1,027) 139 1 (886) Real estate ...... (344) 140 3 (202) Manufacturing ...... (882) 154 12 (716) Services...... (165) 64 19 (82) Trade ...... (233) 69 10 (155) Oil and gas ...... (0) (0) Transportation and communication ...... (588) 55 24 (509) Building and construction ...... (422) 87 27 (308) Power and water supply ...... (60) 1 1 (59) Seafood ...... (8) 49 0 41 Hotels and restaurants ...... (21) 9 1 (10) Agriculture and forestry ...... (27) 22 3 (2) Central and local government ...... (0) 0 0 (0) Other sectors ...... (124) 2 0 (121) Total customers ...... (4,735) 978 1,742 (2,015)

Year ended December 31, 2015 Recoveries on loans and New Reassessed guarantees individual individual previously Net impairment impairment written off2) impairment (NOK millions) Credit institutions ...... 0 Change in collective impairments on loans(2) ...... (255) Impairments on loans and guarantees ... (4,735) 978 1,742 (2,270) Of which individual impairment of guarantees ...... (124) 88 (36) ______Notes: (1) The breakdown into principal industry sectors is based on standardized sector and industry categories set up by Statistics Norway. Customers are classified according to their main line of business. (2) Recoveries in 2015 largely reflected the effects of the agreement with Lindorff Capital AS on the sale of portfolios of non-performing loans in Norway.

Year ended December 31, 2014 Recoveries on loans and New Reassessed guarantees individual individual previously Net impairment impairment written off impairment (NOK millions) Private individuals ...... 1,066 334 537 195 Transportation by sea and pipelines and vessel construction ...... 666 296 89 281 Real estate ...... 450 173 5 272 Manufacturing ...... 635 116 4 515 Services...... 260 62 3 195 Trade ...... 362 34 14 314 Oil and gas ...... 36 20 0 16 Transportation and communication ...... 81 98 6 (23) Building and construction ...... 155 75 9 71 Power and water supply ...... 48 1 0 47 Seafood ...... 85 3 0 82 Hotels and restaurants ...... 20 22 0 (2) Agriculture and forestry ...... 30 9 1 20 Central and local government ...... 0 0 0 0 Other sectors ...... 11 1 8 2 Total customers ...... 3,905 1,245 677 1,984 Credit institutions ...... (4) 0 0 (4) Change in collective impairments on loans ... - - - (341) Impairments on loans and guarantees ...... 3,901 1,245 677 1,639 Of which individual impairment of guarantees ...... 95 238 0 (143) ______Note: (1) The breakdown into principal industry sectors is based on standardized sector and industry categories set up by Statistics Norway. Customers are classified according to their main line of business.

Year ended December 31, 2013 Recoveries on loans and New Reassessed guarantees individual individual previously Net impairment impairment written off impairment (NOK millions) Private individuals ...... 1,175 236 408 531 Transportation by sea and pipelines and vessel construction ...... 916 354 0 562 Real estate ...... 454 142 4 308 Manufacturing ...... 248 237 9 2 Services...... 166 60 5 101 Trade ...... 184 64 12 108 Oil and gas ...... 16 14 0 2 Transportation and communication ...... 349 38 3 308 Building and construction ...... 377 60 5 312 Power and water supply ...... 51 1 1 49 Seafood ...... 19 1 0 18 Hotels and restaurants ...... 17 19 0 (2) Agriculture and forestry ...... 28 30 0 (2) Central and local government ...... 0 0 0 0 Other sectors ...... 36 7 8 21 Total customers ...... 4,037 1263 457 2,318 Credit institutions ...... 0 0 0 0 Change in collective impairments on loans .. - - - (133) Impairments on loans and guarantees ...... 4,037 1,263 457 2,185 Of which individual impairment of guarantees ...... 200 81 0 119 ______Note: (1) The breakdown into principal industry sectors is based on standardized sector and industry categories set up by Statistics Norway. Customers are classified according to their main line of business.

Developments in impairments on loans and guarantees

The following table sets forth, for the periods indicated, developments in impairments and write-offs on loans and guarantees:

2015 2014 2013 (NOK millions) Impairments as of January 1 (12,608) (13,084) (12,501) New impairments ...... (1,994) (1,895) (1,380) Increased impairments ...... (1,295) (1,183) (1,691) Reassessed impairments ...... 978 1,245 1,263 Write-offs covered by impairments ...... 3,749 2,422 1,837 Changes in individual impairments and accrued interest and amortization ..... 24 35 (5) Changes in collective impairments ...... (255) 341 133 Changes due to exchange rate movement ...... (444) (489) (739) Impairments as of end of period ...... (11,845) (12,608) (13,084) Of which individual impairments ...... (8,665) (9,790) (10,055) Of which individual impairments of accrued interest and amortization ...... (656) (680) (714) Of which collective impairments ...... (2,524) (2,139) (2,315)

The amount of the impairments charged to operating expenses was NOK 1,174 million in the three months ended March 31, 2016 (compared to NOK 575 million in the corresponding period in 2015) and NOK 2,270 million, NOK 1,639 million and NOK 2,185 million in the years ended December 31, 2015, 2014 and 2013, respectively.

Liquid assets

As part of ongoing liquidity management, the Bank has invested in a portfolio of securities. The portfolio can be used in different ways to regulate the liquidity requirement and as a basis for furnishing collateral for operations in various countries. Among other things, the securities serve as collateral for short- and long-term borrowing from several central banks and as a basis for liquidity buffers to meet regulatory requirements. The table below specifies liquid assets in the DNB Bank Group as at March 31, 2016.

March 31, 2016 (NOK millions) Cash and deposits with central banks 163,494 Deposits with other banks(1) 173,531 Securities issued or guaranteed by sovereigns, central banks or multilateral development banks(2) 100,455 Securities issued or guaranteed by municipalities or public sector entities 12,168 Covered bonds - issued by other institutions 83,196 - own issued 12,650 Securities issued by non-financial corporates 1,295 Securities issued by financial corporates and ABS 3) 28,044 Total 574,832 ______Notes: (1) Including securities received in reverse repo transactions. (2) Including hold-to-maturity portfolio.

The DNB Bank Group’s exposure to Portugal, Ireland, Italy, Greece and Spain through DNB Markets’ international bond portfolio mainly comprises residential mortgage-backed securities. The portfolio does not include any investment in treasury bonds issued by these countries. The DNB Bank Group’s exposure to these countries as of December 31, 2015 represented a minor part of the Bank Group’s total exposures.

Classification of financial instruments

Most financial assets and financial liabilities on DNB Bank Group’s balance sheet are carried at amortized cost. This primarily applies to loans, deposits and borrowings, but also to investments in bonds held to maturity. Long-term borrowings in Norwegian kroner are carried at fair value, while long-term borrowings in other currencies are carried at amortized cost. Hedge accounting may be applied. See paragraph 8 of the “Accounting Principles” to the audited consolidated financial statements for the year ended as of December 31, 2015, incorporated by reference in this Prospectus.

The tables below set forth, as of the dates indicated, the fair and book values, as applicable, of the DNB Bank Group’s financial assets and financial liabilities:

As of December 31, 2015 Financial instruments Financial Financial at fair value through derivatives instruments profit and loss designated as carried at Investments Designated hedging amortized held to Trading at fair value instruments cost(1) maturity Total (NOK millions) Cash and deposits with central banks ...... 1,097 12,557 5,663 19,317 Due from credit institutions 282,854 2 14,602 297,457 Loans to customers ...... 37,640 85,777 1,408,515 1,531,932 Commercial paper and bonds at fair value ...... 125,580 81,482 207,063 Shareholdings ...... 7,603 1,190 8,794 Financial derivatives ...... 165,866 37,408 203,273 Commercial paper and bonds, held to maturity ...... 19,162 19,162 Other assets ...... 8,608 8,608 Total financial assets ...... 620,641 181,008 37,408 1,437,388 19,162 2,295,606 Due to credit institutions ..... 129,082 2,449 29,735 161,267 Deposits from customers .... 42,176 2,060 913,086 957,322 Financial derivatives ...... 154,044 834 154,878 Debt securities issued ...... 159,932 88,490 558,388 806,810 Other liabilities ...... 5,359 13,050 18,409 Subordinated loan capital ... 1,241 29,712 30,953 Total financial liabilities(2) 490,594 94,240 834 1,543,971 2,129,640 ______Notes: (1) Includes hedged liabilities. (2) Contractual obligations of financial liabilities designated as at fair value totaled NOK 91,948 million.

As of December 31, 2014 Financial instruments at fair value through profit Financial Financial and loss derivatives instruments Designated designated as carried at Investments at fair hedging amortized held to Trading value instruments cost(1) maturity Total (NOK millions) Cash and deposits with central banks ...... 515 15,034 42,956 58,505 Due from credit institutions ... 340,082 251 15,244 355,577 Loans to customers ...... 8,120 105,700 1,333,645 1,447,465 Commercial paper and bonds at 123,500 64,265 187,765 fair value ...... Shareholdings ...... 8,159 1,550 9,709 Financial derivatives ...... 194,609 41,781 236,389 Commercial paper and bonds, 31,927 31,927 held to maturity ...... Other assets ...... 12,301 12,301 Total financial assets ...... 674,984 186,802 41,781 1,404,145 31,927 2,339,639

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As of December 31, 2014 Financial instruments at fair value through profit Financial Financial and loss derivatives instruments Designated designated as carried at Investments at fair hedging amortized held to Trading value instruments cost(1) maturity Total (NOK millions) Due to credit institutions ...... 183,865 2,708 27,637 214,211 Deposits from customers ...... 48,209 1,466 901,373 951,049 Financial derivatives ...... 185,127 1,102 186,230 Debt securities issued ...... 206,669 83,283 523,957 813,909 Other liabilities ...... 50 12,790 12,840 Subordinated loan capital ...... 1,261 28,058 29,319 Total financial liabilities(2) ... 623,921 88,718 1,102 1,493,816 2,207,557 ______Notes: (1) Includes hedged liabilities. (2) Contractual obligations of financial liabilities designated as at fair value totaled NOK 84,681 million.

As of December 31, 2013 Financial instruments at fair value through profit Financial Financial and loss derivatives instruments Designated designated as carried at Investments at fair hedging amortized held to Trading value instruments cost(1) maturity Total (NOK millions) Cash and deposits with central banks ...... 73,897 266 93,008 167,171 Due from credit institutions ... 166,158 313 10,325 176,796 Loans to customers ...... 3,604 128,400 1,218,652 1,350,656 Commercial paper and bonds at fair value ...... 116,119 75,113 191,232 Shareholdings ...... 9,850 3,661 13,511 Financial derivatives ...... 110,706 20,069 130,775 Commercial paper and bonds, held to maturity ...... 63,318 63,318 Other assets ...... 16,017 16,017 Total financial assets ...... 480,335 207,752 20,069 1,338,003 63,318 2,109,477 Due to credit institutions ...... 172,597 37,235 24,386 234,218 Deposits from customers ...... 54,943 3,495 832,817 891,256 Financial derivatives ...... 107,877 3,365 111,242 Debt securities issued ...... 181,989 73,352 460,850 716,192 Other liabilities ...... 83 0 13,833 13,917 Subordinated loan capital ...... 1,252 25,025 26,276 Total financial liabilities(2) ... 517,490 115,335 3,365 1,356,911 0 1,993,101 ______Notes: (1) Includes hedged liabilities. (2) Contractual obligations of financial liabilities designated as at fair value totaled NOK 113,029 million.

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Maturity profiles of assets, liabilities and financial derivatives

The tables below set forth the DNB Bank Group’s maturity structure for liquidity and funding as of December 31, 2015:

Residual maturity as of December 31, 2015(1) From 1 month From From Up to 1 to 3 3 months 1 year Over No fixed month months to 1 year to 5 years 5 years maturity Total (NOK millions) Assets Cash and deposits with central banks ..... 19,317 19,317 Due from credit institutions ...... 184,533 102,938 4,244 2,046 3,713 297,473 Lending to customers ...... 182,780 104,616 99,621 335,774 811,837 (2,524) 1,532,104 Commercial paper and bonds, at fair value ...... 1,609 6,425 24,628 140,115 33,853 206,629 Commercial paper and bonds, held to maturity ...... 1,695 17,467 19,162 Shareholdings ...... 14,140 14,140 Other assets ...... 3,056 3,056 Total ...... 388,239 217,035 128,493 479,630 866,870 11,616 2,091,881 Liabilities Due to credit institutions ...... 123,606 21,489 678 15,447 37 161,257 Deposits from customers ...... 957,059 957,059 Debt securities issued ...... 59,201 123,809 71,670 434,533 86,114 775,326 Other liabilities etc. ... 805 3,955 228 4,989 Subordinated loan capital(2) ...... 29,722 731 30,453 Total ...... 1,140,671 149,253 72,576 479,702 86,882 1,929,084 Financial derivatives Financial derivatives, gross settlement ...... Incoming cash flows . 653,849 432,276 313,975 437,103 275,019 2,112,222 Outgoing cash flows . 650,951 430,079 314,828 449,945 276,924 2,122,727 Financial derivatives, net settlement ...... 1,797 2,195 3,607 21,652 12,437 41,687 Total financial derivatives...... 4,694 4,393 2,754 8,810 10,531 31,182 ______Notes: (1) Nominal future interest payments in excess of accrued interest are not included. (2) The maturity structure for subordinated loan capital is based on final maturities and does not reflect options to make early redemptions.

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Residual maturity as of December 31, 2014(1) From 1 month From From Up to 1 to 3 3 months 1 year Over 5 No fixed month months to 1 year to 5 years years maturity Total (NOK millions) Assets Cash and deposits with central banks ..... 58,506 58,506 Due from credit institutions ...... 266,095 61,001 6,091 22,376 13 355,575 Lending to customers 162,980 91,886 80,904 290,737 821,645 (2,139) 1,446,013 Commercial paper and bonds at fair value ...... 11,530 3,600 17,765 119,221 31,864 183,980 Securities held to maturity ...... 1,244 30,684 31,927 Shareholdings ...... 0 15,186 15,186 Other assets ...... 2,774 831 3605 Total ...... 499,110 159,261 104,760 434,408 884,205 13,047 2,094,791 Liabilities Due to credit institutions ...... 202,805 4,893 3,130 3,335 33 214,197 Deposits from customers ...... 950,634 950,634 Debt securities issued 63,553 99,214 107,084 325,091 181,546 776,488 Other liabilities etc. 1,002 3,766 267 5,035 Subordinated loan capital(2) ...... 4,937 18,747 4,792 28,476 Total ...... 1,217,993 107,873 115,419 347,173 186,371 1,974,830 Financial derivatives Financial derivatives, gross settlement ...... Incoming cash flows . 626,933 526,125 335,505 482,064 258,019 2,228,646 Outgoing cash flows . 608,274 518,659 332,828 494,517 267,354 2,221,632 Financial derivatives, net settlement ...... 1,889 1,678 4,179 21,859 14,968 44,573 Total financial derivatives...... 20,547 9,144 6,856 9,405 5,634 51,587 ______Notes: (1) Nominal future interest payments in excess of accrued interest are not included. (2) The maturity structure for subordinated loan capital is based on final maturities and does not reflect options to make early redemptions.

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Residual maturity as of December 31, 2013(1) From From From Up to 1 1 month 3 months 1 year Over 5 No fixed month to 3 months to 1 year to 5 years years maturity Total (NOK millions) Assets Cash and deposits with central banks ..... 166,019 477 675 167,170 Lending to and deposits with credit institutions ...... 143,418 27,790 5,606 176,814 Lending to customers 133,189 78,956 72,941 264,818 802,968 (2,315) 1,350,556 Commercial paper and bonds at fair value ...... 3,148 19,565 27,149 111,769 27,595 189,227 Securities held to maturity ...... 24,441 617 38,259 63,318 Shareholdings ...... 14,565 14,565 Other assets ...... 2,917 805 3,722 Total ...... 445,774 129,705 130,812 378,009 868,822 12,250 1,965,372 Liabilities Due to credit institutions ...... 179,437 25,457 26,150 3,135 234,179 Deposits from customers 890, 839 890,839 Debt securities issued 84,616 85,291 67,077 289,763 172,659 699,406 Other liabilities etc. ... 581 3,690 272 4,543 Subordinated loan capital(2) ...... 310 21,337 4,011 25,658 Total ...... 1,155,784 114,438 93,499 314,234 176,669 1,854,625 Financial derivatives Financial derivatives, gross settlement ...... Incoming cash flows . 768,974 365,380 223,969 487,327 265,834 2,111,483 Outgoing cash flows . 771,544 365,767 224,860 493,183 271,768 2,127,123 Financial derivatives, net settlement ...... 1,077 1,484 4,407 21,386 16,067 44,422 Total financial derivatives...... (1,494) 1,096 3,516 15,529 10,133 28,781

______Notes: (1) Not including value adjustments for financial instruments fair value. (2) The maturity structure for subordinated loan capital is based on final maturities and does not reflect options to make early redemptions.

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Specification of the DNB Bank Group’s largest investments in shares, mutual funds and equity certificates(1) as of December 31, 2015

Number of Ownership shares share (%)(2) Recorded value (NOK thousands) Carrying amount in NOK 1,000 Financial institutions Bank of New York ...... 100,000 879,775 Storebrand (3)...... 6,830,976 1.5 238,743 VISA Europe ...... 2 204,548 Other financial institutions ...... 429,530 Total financial institutions ...... 1,752,595

Norwegian companies American Shipping Company (3) ...... 4,005,100 7.0 106,135 Grieg Seafood (3) ...... 22,220,738 20.0 688,843 Koksa Eiendom ...... 16,198,752 13.0 145,600 Marine Harvest (3) ...... 1,270,184 151,914 Nordic Semiconductor (3) ...... 4,156,929 3.0 179,787 Norsk Hydro (3) ...... 9,523,085 315,500 Norway Royal Salmon (3) ...... 2,008,940 5.0 160,715 Norwegian Air Shuttle (3) ...... 303,185 1.0 98,141 Norwegian Property (3) ...... 28,777,466 5.0 261,587 NRC Group (3) ...... 1,850,000 5.0 103,600 Odfjell (3) ...... 5,849,395 9.0 165,538 Orkla(3) ...... 3,094,424 216,919 Statoil(3) ...... 3,419,549 422,998 Telenor(3) ...... 2,474,422 366,957 Yara International (3) ...... 436,063 166,969 Other Norwegian companies ...... 1,215,094 Total Norwegian companies ...... 4,766,297

Companies based abroad ...... Bakkafrost(3)...... 209,224 54,775 Cape Investment Corp...... 9,261 14.0 44,895 Deep Sea Supply(3) ...... 41,120,000 16.0 64,970 Ezra Holdings(3) ...... 207,000,000 7.0 130,228 Frontline Ltd/Bermuda(3) ...... 2,028,495 51,970 Golar LNG(3) ...... 3,963,000 5.0 534,837 Hoegh Lng Holdings(3) ...... 416,500 0.0 39,255 Prosafe(3) ...... 16,452,500 0.1 345,503 Seadrill(3) ...... 9,165,506 0.0 280,006 Subsea 7(3) ...... 1,024,150 64,573 Other companies based abroad ...... 325,948 Total companies based abroad ...... 1,936,959

Mutual funds ...... Mutual funds ...... 365 Private equity funds ...... 337,113

Other funds ...... 234

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Number of Ownership shares share (%)(2) Recorded value Total mutual funds ...... 337,712

Total investments in shares, mutual funds and equity certificates ...... 8,793,563 ______Notes: (1) Equity certificates represent investments in savings banks. (2) Ownership share in per cent is based on the company’s total share capital and does not include derivative contracts. (3) Shares and funds carried at fair value in Markets totaled NOK 6,724 million at year-end 2015. Markets’ equity investments are mainly an instrument in hedging its equity derivative exposure through the business area’s market-making activities. Value at Risk for the equity operations in Markets represented NOK 3.4 million at year-end 2015.

Financial Derivatives

Financial derivatives are contracts stipulating financial values in the form of interest rate terms, exchange rates and the value of equity instruments for fixed periods of time. Corresponding contracts stipulating prices on commodities and indexes are also defined as financial derivatives. Financial derivatives include swaps, forward contracts and options as well as combinations thereof, including forward rate agreements (FRAs), financial futures and agreements on the transfer of securities. The DNB Bank Group enters into financial derivatives transactions in order to manage liquidity and market risk arising from the DNB Bank Group’s ordinary operations. In addition, the Bank trades financial derivatives for its own account.

“Over the counter” (OTC) options or forward contracts are contracts entered into outside any formal exchange. The contracts are customized according to the customer’s requirements with respect to the underlying object, number, price, expiration terms and maturity. The advantage of OTC derivatives compared with the standardized market is that customers are not limited to standardized contracts and can buy the precise position they wish. The disadvantage is that it can be difficult to find other contracting parties and to sell the contracts on the secondary market. Clearing of non-standardized OTC options is regulated by separate standard conditions stipulated by the clearing house NOS ASA, and the relationship between the actors in the market, is regulated through agreements similar to those in the standardized market.

The following derivatives are employed for both trading and hedging purposes by the DNB Bank Group:

● Forward contracts: contracts to buy or sell interest rate terms, amounts in foreign currencies, shares or commodities on a specified future date at a fixed price. Forward contracts are customized contracts traded between counterparties in the OTC market.

● Forward rate agreements: agreements that fix the interest rate for a future period for an agreed amount. When the contract matures, only the difference between the agreed interest rate and the actual market interest rate is exchanged.

● Interest rate futures: standardized contracts whereby the counterparties agree to exchange specific interest rate instruments at a fixed price on a specified date. The contracts are traded on an exchange. The value of interest rate futures follows the price trend on underlying interest rate instruments.

● Swaps: transactions in which two parties exchange cash flows on a fixed amount over an agreed period. The majority of swaps are customized and traded outside any formal exchange. The most important types of swaps traded by the DNB Bank Group are:

 interest rate swaps in which fixed rates of interest are exchanged for floating or floating rates of interest are exchanged for fixed

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 cross-currency interest rate swaps in which parties exchange both currency and interest payments

 equity swaps in which interest rate returns are exchanged for equity returns.

● Options: agreements giving the buyer the right, but not the obligation, to either buy (call option) or sell (put option) a specific quantity of a financial instrument or commodity at a predetermined fixed price. The buyer pays a premium to the seller for this right. Options are traded both as OTC (customized) and standardized contracts.

● Interest swaptions: option contracts affording protection against an interest rate rise (for the buyer/borrower) or an interest rate fall (for the seller/lender). By paying a premium in advance, the customer gains the right, but not the obligation, to use predetermined interest rate swap contracts in the future. Depending on the structure, the swaption may be exercised on a specific future date (European option) or at any time during the term of the option (American option).

The table below shows the nominal values of financial derivatives according to type of derivative as well as the positive and negative market values. Positive market values are entered as assets on the balance sheet, whereas negative market values are entered as liabilities. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Fair Value of Financial Derivatives and Other Financial Instruments” for a more detailed description of the measurement of financial derivatives.

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As of December 31, 2015 2014 2013

Total Positive Negative Total Positive Negative Total Positive Negative nominal market market nominal market market nominal market market values value value values value value values value value

(NOK millions) Interest rate contracts Forward rate agreements ...... 2,379,037 1,310 1,282 2,813,508 2,211 2,295 1,576,725 713 862 Swaps ...... 2,843,591 97,540 66,703 1,399,266 116,788 78,917 2,382,493 80,674 38,564 OTC options, bought and sold...... 42,465 447 634 62,891 1,023 695 29,003 886 719 Other OTC contracts ...... 1,687 248 1,687 19 1,562 20 0

Total interest rate contracts ...... 5,266,781 99,546 68,618 4,277,352 120,042 81,908 3,989,844 82,293 40,145 Foreign exchange contracts Forward contracts ...... 118,804 8,498 1,283 152,034 8,870 2,358 1,182,546 3,137 1,495 Swaps ...... 1,822,098 40,285 40,376 2,807,022 56,958 41,736 676,484 19,881 46,264 OTC options, bought and sold...... 190,208 789 510 68,692 972 907 52,447 628 610 Total foreign exchange contracts ...... 2,131,110 49,572 42,170 3,027,748 66,800 45,002 1,911,478 23,646 48,370

Equity-related contracts Forward contracts ...... 7,896 1,586 375 11,737 1,956 475 2,518 622 967 OTC options, bought and sold...... 821 92 10 953 155 115 2,385 277 62 Total OTC derivatives ...... 8,718 1,679 386 12,690 2,111 590 4,903 900 1,029 Futures, bought and sold ...... 2,897 79 108 2,971 1 1 345 9 11 Options, bought and sold ...... 2,795 39 67 3,862 77 90 2,017 32 18 Total exchange-traded contracts ...... 5,693 118 174 6,833 78 91 2,362 41 29 Total equity-related contracts ...... 14,410 1,797 560 19,523 2,190 681 7,265 941 1,058

Commodity-related contracts Swaps ...... 28,486 5,542 5,375 41,930 7,172 6,576 67,644 1,873 1,204 Total commodity related contracts ...... 28,486 5,542 5,375 41,930 7,172 6,576 67,644 1,873 1,204 Collaterals received/paid Total collaterals received/paid ...... 46,817 38,155 40,184 52,062 22,023 20,465

Total financial derivatives ...... 7,440,787 203,273 154,878 7,366,553 236,389 186,230 5,976,231 130,775 111,242

Of which: Applied for hedging purposes 479,261 37,408 834 464,316 41,781 1,103 350,458 20,069 3,365 Interest rate swaps ...... 36,613 327 40,960 597 18,101 2,529 Cross Currency interest rate swaps ..... 795 508 820 506 1,968 835

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RISK MANAGEMENT AND RISK-ADJUSTED PERFORMANCE

Risk Management

The primary aim of risk management is to achieve an optimal balance between the DNB Group’s risk of losses and its earnings potential in a long-term perspective. Risk management implies that profitability is considered relative to risk, while ensuring that the Group is secured against unintentional risk. Healthy risk management is based on a strong risk culture, which is characterized by a high level of awareness concerning risk and risk management in the organization. A common risk management framework provides the basis for developing a sound culture and for effective management of the Group.

All managers are responsible for risk within their own area of responsibility. Risk is managed through personal authorizations and risk limits. Risk management functions and the development of risk management tools are undertaken by units which are independent of operations in individual business areas.

As an integral part of the DNB Group, the DNB Bank Group is subject to the DNB Group risk management policies as summarized in this section.

Responsibilities and organization

Risk management in the DNB Group is based on a model with three lines of defense. Key risk management principles are clear goals and strategies, policies and guidelines, as well as an effective operating structure and transparent reporting.

The first line of defense is the operational management’s governance and internal control, including processes and activities to reach defined goals relating to operational efficiency, reliable financial reporting and compliance with laws and regulations. The business units own the risk and are responsible for daily risk management within their area. They shall at all times ensure that risk management and risk exposure are within the limits and overarching principles decided by the Board of Directors.

The second line of defense represents independent functions which monitor and follow up the operational management’s governance and internal control. The functions are established to ensure that the first line of defense is properly designed and functions as intended. The second line of defense is responsible for setting the premises for risk management and for coordination across organizational units. The risk management function supervises the implementation of effective risk management in the first line, and is responsible for identification, quantification, analysis and reporting of all risks. The function develops classification models and processes that help business units manage risk. The compliance function ensures that operations are carried out in compliance with applicable laws and regulations. Internal control over financial reporting monitors financial risks and accounting issues.

The third line of defense is Group Audit, which reviews and evaluates group management’s overall governance and internal control. Group Audit reviews risk management in the first and second lines of defense, and identifies potential improvements in operations by evaluating risk management and internal control. Group Audit is independent of the Group’s executive management and reports to the Board of Directors of DNB ASA.

Board of Directors

The Board of Directors of DNB ASA carries responsibility for ensuring that the Group is adequately capitalized relative to the risk and scope of operations, and that capital requirements stipulated in laws and regulations are met. The Board of Directors of DNB ASA sets long-term targets for the DNB Group’s risk profile through the risk appetite framework. The Board of Directors continually monitors the DNB Group’s capital situation.

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The Board of Directors of DNB ASA annually reviews the DNB Group’s principal risk areas and internal control. The review, which is based on reporting from the group chief executive, aims to document the quality of the work performed in key risk areas and to identify any weaknesses and needs for improvement. The Board of Directors of DNB Bank ASA, and other significant subsidiaries annually evaluate the companies’ key risk areas and internal control.

The Risk Management Committee monitors the DNB Group’s internal control and risk management systems, and makes sure that they function effectively. In addition, the committee advises the Board of Directors with respect to the Group’s risk profile, including the future risk appetite and strategy. Advice to the Board of Directors may include strategies for capital and liquidity management, credit risk, market risk, operational risk, risk related to compliance and reputation, as well as other risks within the DNB Group. The committee makes preparations for the Board’s monitoring of risk management within the DNB Group, which includes reviewing and assessing group management’s risk reporting.

The Audit Committee evaluates the quality of the work performed by DNB Group Audit and the statutory auditors, and shall ensure that the Group has independent and effective external and internal audit procedures, as well as a satisfactory financial reporting in compliance with laws and regulations. The Audit Committee considers and submits a recommendation regarding the choice of statutory auditor for the Group and the statutory auditor’s remuneration. The Committee assesses and monitors the independence of the auditor. The committee also supervises the financial reporting process, and reviews the statutory audit of the annual accounts and consolidated accounts. The committee makes preparations for the Board’s monitoring of the financial reporting process, and also reviews and assesses the Group’s financial reports.

Group chief executive and executive bodies

The group chief executive is responsible for implementing risk management measures that help achieve targets for operations set by the Board of Directors of DNB ASA, including the development of effective management systems and internal control. The group management meeting is the group chief executive’s collegiate body for management at group level. All important decisions concerning risk and capital management will generally be made in consultation with the group management team. Authorizations must be in place for the extension of credit and for position and trading limits in all critical financial areas. All authorizations are personal. Authorizations are determined by the Board of Directors of DNB ASA, along with overall limits, and can be delegated in the organization, though any further delegation must be approved and followed up by the relevant person’s immediate superior.

A number of advisory bodies have been established to assist in preparing documentation and implementing monitoring and control within various specialist areas.

Group Risk Management

Group Risk Management is the central, independent risk management unit in DNB Group. The entity is headed by the DNB Group’s chief risk officer, CRO, who reports directly to the group chief executive. The CRO sets the premises for risk taking and internal control, and assesses and reports the DNB Group’s risk situation. The majority of the DNB Group’s risk entities are organized in Group Risk Management.

Divisions have been established in Group Risk Management with group-wide responsibility for credit risk, market and liquidity risk, operational risk, model development and stress testing, validation, risk reporting and analysis, compliance and AML/sanctions. There are requirements for impartiality and independence in risk management, and all units with special functions within risk management shall as a rule be independent and have high integrity. Good interaction between risk functions and business operations is nevertheless a prerequisite for the development of a good risk culture. Operative risk management is organized in the business areas.

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Compliance

The compliance function is an independent function which identifies, evaluates, gives advice on, monitors and reports on the DNB Group’s compliance risk. The function is headed by the DNB Group compliance officer, GCO, who reports to the Board of Directors via the group chief executive. All business areas and support units, as well as large subsidiaries and international entities, have a compliance function with responsibility for ensuring compliance with relevant regulations. The compliance functions in international entities and the Group’s operations in the Baltics and Poland report directly to the GCO. The responsibility for ethics in the DNB Group is also organized under the compliance function.

Audit

Independent and effective audits help ensure satisfactory risk management and internal controls as well as reliable financial reporting. Group Audit receives its instructions from the Board of Directors of DNB ASA, which also approves the department’s annual plans and budgets.

Group Audit should verify that adequate and effective risk management and internal control are in place. Group audit should also assess whether risk identification, established management processes and control measures effectively contribute to strengthening the DNB Group’s ability to reach targets.

Risk reporting

According to the DNB Group policy on risk management, the DNB Group aims to maintain a low risk profile and will only assume risk which is comprehensible and possible to follow up. The DNB Group is committed not to offer products or services or perform other acts which entail a significant risk of contributing to unethical conduct, the infringement of human or labor rights, corruption or serious environmental harm.

Group policy for risk management

The Board of Directors of DNB ASA has approved the group policy for risk management, which should serve as a guide for the DNB Group’s overall risk management and describes the ambitions for attitudes to and work on risk in the DNB Group. The risk management policy is a common framework for risk management in all units in the DNB Group.

The Board of Directors has also approved group policies for compliance and ethics, which are also owned by the Group’s CRO.

All activity in the group involves risk. The ability to manage risk is the core of financial activity and a prerequisite for value creation over time. According to the DNB Group policy on risk management, the DNB Group aims to maintain a low risk profile. The DNB Group shall only assume risk which is understood and can be followed up and shall not be associated with activities that can harm its reputation. There is a clear separation between risk which is taken actively, where return should be maximized, and risk which should be held to an acceptably low level. The culture of the group shall be characterized by individual responsibility, transparent methods and processes that support good risk management. Risk management shall have good quality and high information value.

Capital Management

Assessment of risk profile and capital requirements

Pursuant to the Norwegian Public Limited Liability Companies Act, all companies must at all times have an adequate equity base which takes into account the extent of the company’s activities and the risk they involve. Capital adequacy regulations specify a minimum primary capital requirement, which includes credit risk, market risk and operational risk. In addition to meeting the minimum requirement, the DNB Group must satisfy various

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buffer requirements. The difference between buffer requirements and minimum requirements lies in the consequences of non-compliance. Non-compliance with minimum requirements could result in the bank being restructured or wound up, while the consequence of non-compliance with buffer requirements is that measures must be implemented to strengthen capitalization. Non-compliance with buffer requirements will result in restrictions on dividend payments, interest payments on hybrid securities and variable remuneration payments to employees.

On October 22, 2015, the DNB Group published the outcome for the DNB Group of the FSAN’s Supervisory Review and Evaluation Process (“SREP”) for 2015. The Pillar 2 requirement for the Bank, the Bank Group and the DNB Group set as a result of the SREP is currently 1.5 per cent of risk-weighted assets (“RWA”). The Pillar 2 requirement relates to risks not covered by Pillar 1 and must be met with common equity tier 1 capital. The Pillar 2 requirement is in addition to the minimum and combined buffer requirements under Pillar 1.

The Pillar 2 requirement is the supervisory authority’s assessment of many factors at a given point in time and may be revised upwards or downwards on an ongoing basis. Taking into account stated Pillar 2 and buffer requirements, the common equity tier 1 requirement for the Bank, the DNB Bank Group and the DNB Group at year-end 2015 was 13.5 per cent. Assuming that the Pillar 2 requirement for the Bank, the Bank Group and the DNB Group remains at 1.5 per cent. and the buffer requirements do not change beyond those increases already announced, the common equity tier 1 requirement would be 15.0 per cent by year-end 2016. The requirements will be adjusted to reflect any future changes in the Pillar 2 add-on or the buffer requirements.

In the event of non-compliance with the combined requirements, including the Pillar 2 requirements, the bank will have to explain the reason therefore to FSAN and account for planned measures.

According to the DNB Group’s capital strategy and dividend policy, the Group aims to be among the best capitalized financial services groups in the Nordic region based on equal calculation principles. Dividends will be determined based on factors such as the need to maintain satisfactory financial strength and developments in external parameters. The Bank’s capitalization guidelines specify a targeted capitalization level, the frequency of reviews of the Bank’s capital situation and the measurement methods to be used, such as risk-adjusted capital and the use of stress tests. The capitalization guidelines are reviewed each year based on ICAAP and feedback from the authorities through SREP.

On its Capital Markets Day in November 2015, DNB Group raised its common equity Tier 1 capital ratio target to minimum 15.0 per cent. The long-term target as from year-end 2017 is a common equity Tier 1 capital ratio of 15.5 per cent. The capitalization targets are based on the Group’s prevailing risk-weighted assets at any given time.

Basel III

The majority of the Bank’s credit portfolios are reported according to the IRB approach. However, one portfolio, banks and financial institutions, is still subject to final IRB approval from FSAN. The portfolio Large corporate clients rated by simulation models was approved in December 2015.

Capital adequacy

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Risk-weighted volume (pursuant to the transitional rules) included in the calculation of the DNB Bank Group’s formal capital adequacy requirement increased by NOK 18.3 billion to NOK 1,056.7 billion as of December 31, 2015, but decreased to NOK 1,040.3 billion as of March 31, 2016.

The DNB Group’s capitalization level is intended to support the Bank’s AA level rating target for ordinary long- term funding. As of March 31, 2016, the DNB Bank Group had a common equity Tier 1 capital ratio of 14.7 per cent and a capital ratio of 18.2 per cent (both including 50 per cent of interim profits), compared to 14.3 per cent and 17.9 per cent, respectively, as of December 31, 2015.

Due to Norwegian transitional rules, risk-weighted assets for 2013, 2014, 2015 and the first quarter of 2016 could not be reduced below 80 per cent relative to the Basel I measurement. Without the transitional rules, the Bank’s Tier 1 ratio would be higher.

Risk-adjusted capital requirements

The DNB Bank Group quantifies risk by measuring risk-adjusted capital requirements. The quantification of risk-adjusted capital is based on statistical probability calculations for the various risk categories on the basis of historical data. As it is impossible to guard against all potential losses, DNB has stipulated that risk-adjusted capital should cover 99.97 per cent of potential losses within a one-year horizon. This level is in accordance with an “AA” level rating target for ordinary long-term debt.

Risk-adjusted capital and average losses over a normal business cycle are elements in calculations of risk- adjusted return, which is a key financial management parameter in the internal management of the DNB Group. The calculations are included in the financial planning for the business areas and are reported each quarter. Risk-adjusted return is a measurement parameter in the pricing model and is reported monthly in automated management systems. Risk-adjusted capital is also used as decision support for risk management.

The similarities between the framework for risk-adjusted capital and the capital adequacy regulations increase as a greater part of the DNB Group’s portfolios are reported according to the IRB approach. The underlying risk drivers for credit risk, and in part operational risk, are largely the same. Nevertheless, the confidence levels differ, and risk-adjusted capital provides a more conservative calculation.

The DNB Bank Group quantifies risk-adjusted capital for the following risk categories: credit risk, market risk, operational risk and business risk. A significant diversification or portfolio effect arises when the various risks are considered together, as it is unlikely that all losses will occur at the same time. An economic downturn will normally have a negative effect on most areas, but there will be a diversification effect, as not all areas will be affected equally negatively. The diversification effect between risk categories and business areas implies that the DNB Group’s risk-adjusted capital will be lower than if the business areas had been independent companies.

Estimated risk level

As of March 31, 2016, the DNB Bank Group estimated its net risk-adjusted capital at NOK 66.5 billion, a decrease of NOK 2.0 billion from December 31, 2015.

The risk-adjusted capital for credit risk declined by NOK 1.4 billion in the first quarter of 2016, reflecting a decrease in credit volumes in the large corporates portfolio. The strengthening of the Norwegian kroner in the end of March 2016 accounted for more than half of the decrease in credit volumes (EAD) for large corporates. The negative trend in oil-related sectors and specific shipping segments that started in 2015 continued in the first quarter of 2016.

As expected, the dry bulk shipping segment continued to face challenges throughout the first quarter of 2016. Freight rates reached an all-time low, and the prospects for this segment are weak. The container segment is also experiencing a slow trend, as there continues to be excess supply in this market. The situation in the offshore service vessels and rigs segments deteriorated, and the market is expected to remain challenging.

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The operational risk situation in the first quarter of 2016 was challenging due to unstable IT services. Internal systems experienced several disruptions and DNB’s ability to deliver services to its customers was negatively affected. Mitigating measures have been taken.

DNB’s market risk exposure remained stable in the first quarter of 2016.

As of December 31, 2015, the net risk-adjusted capital for the DNB Bank Group was estimated at NOK 68.5 billion, a decrease of NOK 4.3 billion from December 31, 2014. The risk-adjusted capital for credit declined by NOK 3.3 billion in 2015, reflecting a reduction in credit volumes in the large corporate portfolio towards the end of the year. There was continued sound and stable credit quality in most portfolios. However, some sectors showed a negative trend in 2015, mainly oil service and offshore, but also energy and some shipping segments. The reduction in oil and gas investments had the most pronounced effect on oil service companies. A number of companies were struggling with tight liquidity and reduced debt servicing capacity. As expected, there were continuing challenges in the dry bulk shipping segment throughout 2015. Freight rates were at historically low levels, and there are weak prospects for this segment. The container segment also showed a sluggish trend, and there is considerable excess supply in this market.

DNB’s market risk exposure was reduced by NOK 2.2 billion during 2015, reflecting the sale of property investments and the transition from a defined-benefit to a defined-contribution pension scheme for the Group’s employees.

Up until year-end 2015, the DNB Bank Group had a defined-benefit occupational pension scheme for all employees in Norway who were employed in the Group prior to December 31, 2010 and a defined-contribution scheme for all employees employed after January 1, 2011. The defined-benefit occupational pension scheme was in the form of a group pension scheme funded by DNB Livsforsikring AS. The defined-benefit occupational pension scheme was terminated on December 31, 2015. This implied that all members of the defined-benefit scheme were converted to the defined-contribution scheme and that paid-up policies were issued for earned entitlements. Paid-up policies were also issued to pensioners. Employees who are on sick leave or who are partially disabled will remain enrolled in the defined-benefit pension scheme until they are reported fit for work or start drawing a retirement pension. Employees who are members of the pension plan in the Norwegian Public Service Pension Fund will not be affected by the changes. The closing of the defined-benefit scheme reduced pension commitments in the bank’s balance sheet, with a non-recurring effect for DNB Bank ASA and the banking group of NOK 1,778 million and NOK 1,808 million, which reduced pension expenses for 2015 in the income statement. As at December 31, 2015 the remaining net pension commitment amounted to NOK 2,193 million, although reduced after termination of most defined-benefit schemes.

During 2015, DNB completed “MoveIT”, a very extensive project whereby the IT infrastructure was upgraded and the Group’s data processing centers were moved to a single location. Comprehensive measures were initiated to achieve optimal operational security and reduce the risk related to the project. Again in 2015, information technology was identified as one of the key risk areas for the bank in light of the rapidly increasing pace of change within digital services and products.

Stress testing

Stress testing is an important tool in assessing the capitalization of the Group and is also used in financial planning. Stress tests are used in the capital planning process in order to determine how changes in the macroeconomic environment will affect the need for capital. The group management team is involved in developing stress tests and considers actions and strategies based on the results.

DNB took part in the stress tests of European banks in 2011 and 2014, coordinated by the European Banking Authority (EBA). The stress tests assess European banks’ resilience to severe shocks and losses, such as loan losses, market risk and reductions in net interest income, and the resulting effects on the banks’ common equity Tier 1 capital ratios. DNB will also participate in the EU stress test in 2016.

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The ICAAP stress test assumes a significant deterioration of the macroeconomic situation, and shows how the changed conditions could affect the Group’s total risk situation, profit performance and capitalization. A stress scenario based on relevant risk factors is worked out every year. The scenario is reviewed by ALCO and approved by the CRO. The stress test uses DNB’s model for risk-adjusted capital to estimate losses.

Risk appetite

The Board of Directors of DNB ASA sets long-term targets for the DNB Group’s risk profile through the risk appetite framework, which was developed in 2012 and taken into use as of January 1, 2013. The risk appetite framework aims to ensure that risk is managed and integrated with the DNB Group’s governance processes in a practical, structured, transparent and synchronized manner. The risk appetite framework should provide a holistic and balanced view of the risk in the business. In 2015, the framework consisted of 16 statements which establish targets for risk dimensions and levels. To support the framework a set of governance principles and operational procedures and responsibilities within the DNB Group have been defined. The targeted risk profile will also be reflected in other parts of the risk management framework, including the establishment of authorizations and business limits. The risk appetite framework will be reviewed at least annually. The Board of Directors also regularly reviews risk levels, the framework structure and the reporting of relevant risk categories.

Limits determined on the basis of the DNB Group’s risk appetite are operationalized in the business areas and support units. In the DNB Group’s governance system, risk appetite is expressed in the form of target figures for selected indicators. Monitoring risk indicators that reflect the operations they cover enables the DNB Group to ascertain whether risk remains within the targeted level. Risk indicators will typically be expressed as limits (for quantifiable risk) or qualitative assessments of the risk level. They may not necessarily be expressed by using the same measurement parameters as those used for the DNB Group, though they must support the same risk topics and trends. Continual monitoring of these target figures ensures that the risk topics that are defined as the most important are also monitored and discussed in the operative parts of the organization.

Risk categories

Risk measurement and monitoring constitute an integral part of the DNB Group’s management processes. For risk management purposes, the DNB Group distinguishes between the following risk categories: credit risk, market risk, liquidity risk, market risk in life insurance, insurance risk, operational risk and business risk. Since the DNB Bank Group does not carry out any insurance activities, risks relating to insurance are not discussed in this Prospectus.

Business risk

Business risk relates to fluctuations in profits due to changes in external factors such as the market situation, government regulations or the loss of income due to a weakened reputation. Reputational risk is often a consequence of other risk categories. The DNB Bank Group’s business risk is primarily handled through the strategy process and ongoing efforts to safeguard and improve the DNB Bank Group’s reputation. When determining and following up the DNB Bank Group’s risk appetite, reputational risk is defined as a separate risk dimension.

In addition to the above-mentioned risk categories the DNB Bank Group is exposed to strategic risk, which can be defined as the risk of a decline in profits if the DNB Bank Group fails to exploit existing strategic opportunities. The DNB Bank Group’s strategic risk is not measured or reported individually, but is discussed as part of the annual strategy process.

Credit risk

Credit risk (or counterparty risk) is the risk of financial losses due to failure on the part of the banking group’s customers (counterparties) to meet their payment obligations towards DNB Bank Group. Credit risk refers to all

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claims against customers/counterparties, principally loans, but also obligations related to other approved credits, guarantees, fixed-income securities, undrawn credits and interbank deposits, as well as counterparty risk incurred in connection with derivative trading. In addition, there are significant elements of counterparty risk in the settlement risk which arises in connection with payment transfers and the settlement of contracts. Credit risk also includes concentration risk, including risk associated with large exposures to one and the same customer, concentration within a geographic area or industry or exposures to homogeneous customer groups. Residual risk is the risk that the collateral provided for a credit exposure fails to meet expectations.

Credit policy

According to the DNB Group’s credit policy, approved by the boards of directors of DNB ASA and the Bank, the principal objective for credit activity is that the loan portfolio should have a quality and a composition which secure the DNB Group’s profitability in the short and long term. The quality of the credit portfolio should be consistent with the DNB Group’s low risk profile target.

Credit risk management and measurement

The risk appetite framework defines maximum limits for credit exposure. Limits have been set for increases in EAD, both in total and for individual industry segments. Large concentrations of risk shall be avoided. A limit for total credit risk has also been set, measured as expected loss (EL). The limit for expected losses should identify all types of credit risk and is measured by using the Group’s internal credit models.

The DNB Group’s credit policy regulates credit activity in the Bank. A customer’s debt servicing capacity is the key element when considering whether to approve a credit. If a customer has not proven a satisfactory debt servicing capacity, credit should normally not be extended even if the collateral is adequate. The value of collateral should be assessed based on estimated realization value.

All corporate customers granted credit must be classified according to risk in connection with every significant credit approval and, unless otherwise decided, at least once a year. In the personal banking market, where there are a large number of customers, the majority of credit decisions should be made on the basis of automated scoring and decision support systems. Risk classification should reflect long-term risk associated with each customer and the customer’s credit commitment.

Credits showing a negative development are identified and followed up separately. If financial covenants have been breached, or if a loss event has occurred in cases where no impairment losses have been made, the credit will be put on a watchlist for special monitoring. Loss events include serious financial problems on the part of the debtor, the approval of grace periods due to the debtor’s financial problems or serious breaches of contract. In addition customers classified as high risk shall also be considered as a watchlist candidate. When a customer is placed on a watchlist, a new risk classification should be made, the collateral reviewed and an action plan prepared for the customer relationship. Each time the commitment is reviewed, an assessment should be made of whether a loss event has occurred. If a loss event has occurred, a loan loss equation should be prepared, which in turn could result in impairment losses.

Exposure to the limits set in the risk appetite framework is reported to group management each month. If the limits are exceeded, it will be immediately reported to the Board of Directors, accompanied by an action plan explaining how the risk will be handled. A quarterly risk report for the Group is distributed to the Board of Directors, giving an extensive description of the risk appetite status and other developments in the risk situation.

Developments in credit risk are monitored closely. Each month, the credit portfolios are analyzed and reported along several dimensions, such as industry segment, customer segment and geography. This reporting is undertaken by a unit that is independent of the business units. In the internal monitoring of credit risk, all portfolios are measured and reported according to IRB models, independent of whether the portfolio is scored in models approved for use in capital adequacy calculations.

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Risk-adjusted capital for credit risk is calculated for all facilities and forms the basis for assessing the profitability of the individual facilities. Calculations of risk-adjusted capital are based on risk parameters in the IRB models.

The DNB Group has extensive experience with classification systems as support for credit decisions and monitoring. Data and analytical tools are an integrated part of risk management.

The DNB Group’s credit risk models provide a basis for statistically based calculations of expected losses from a long-term perspective and risk-adjusted capital from a portfolio perspective. The calculations are based on several risk parameters, with the most important being:

● Probability of default, which is used to measure credit quality. Customers are classified based on the probability of default.

● Exposure at default, which is an estimated figure which includes amounts drawn under credit limits or loans as well as a percentage share of committed, undrawn credit lines.

● Loss given default, which indicates how much the DNB Group expects to lose if the customer fails to meet his obligations, taking into account the collateral provided by the customer and other relevant factors.

Based on these parameters, the DNB Group puts customers into risk classes DNB’s models for risk classification of customers are adapted to different industries and segments and are upgraded where subsequent verification shows that the explanatory power has declined over time. DNB divides its portfolio into ten risk grades based on the PD for each commitment. Commitments in default, categorized as defaulted, are assigned a PD of 100 per cent.

Validation is a key element in assuring the quality of the IRB system and can be divided into quantitative and qualitative validation. Quantitative validation tests the risk models, whereas qualitative validation tests the structure of the IRB system and whether it is used as intended. At least once a year, the Board of Directors is required to present a validation report detailing whether the DNB Group’s credit risk is adequately classified and quantified.

The table below summarizes the development probability of default for loans and guarantees to customers of the DNB Group.

As of December 31, 2015 2014 2013 (NOK billions) Probability of default 0.01%-0.75% ...... 1,541.3 1,449.8 1,331.8 Probability of default 0.75%-243.0% ...... 404.6 479.0 489.4 Probability of default 2.0%-impaired ...... 214.7 175.3 166.9 Non-performing and doubtful commitments ...... 22.6 27.1 30.7 Total loans, guarantees and commitments ...... 2,183.3 2,131.2 2,018.8

Market risk

Market risk is the risk of losses due to unhedged positions in the foreign exchange, interest rate, commodity and equity markets. The risk arises in consequence of fluctuations in profits due to changes in market prices or exchange rates. Market risk includes both risk that arises through ordinary trading activities and risk that arises as part of banking activities and other business operations.

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The risk-adjusted capital for market risk should, at a confidence level of 99.97 per cent, cover all potential losses related to market risk. The model has a one-year time horizon. Exposure included in the model could be either actual exposure or limits and is a conservative estimate where the Group is assumed to be incorrectly positioned relative to market developments. The realization period is the time required to realize positions in highly volatile markets and varies from two days for positions in the most commonly traded currencies to 250 trading days for the bank’s investment portfolio.

Financial instruments in the DNB Bank Group are divided into 25 risk categories. Risk-adjusted capital for the risk categories is calculated on the basis of expected developments in the value of an asset class or risk factor. To estimate annual losses, the value of each underlying instrument is simulated over a period of one year. Subsequent to this, losses for each potential realization period are estimated.

The risk-adjusted capital for market risk in operations other than life insurance decreased from NOK 9.1 billion at year-end 2014 to NOK 6.9 billion at year-end 2015. The main reason is reduced risk of losses related to the bank’s pension commitments. There was a decline in basis swap risk from trading activities due to lower volatility. Mark-to-market adjustments of swap contracts entered into in connection with the Group’s long-term financing of loans, basis swaps, are not included in the measurement of risk-adjusted capital for market risk. These contracts may have significant effects on the accounts from one quarter to the next. However, as the contracts are generally held to maturity, these effects will be balanced out over time.

The value of items on and off the balance sheet is affected by interest rate movements. The interest rate sensitivity table below shows potential losses for the DNB Bank Group excluding Baltics and Poland resulting from parallel one percentage point changes in all interest rates. The calculations are based on a hypothetical situation where interest rate movements in all currencies are unfavorable for the DNB Bank Group relative to the Bank’s positions. Also, all interest rate movements within the same interval are unfavorable for the DNB Bank Group. The figures will thus reflect maximum losses for the DNB Bank Group.

The calculations are based on the banking group’s positions as at December 31 and market rates on the same date. The table does not include administrative interest rate risk and interest rate risk tied to non-interest-earning assets.

From From From Up to 1 months 3 months 1 year Over Amounts in NOK million 1 month to 3 months to 1 year to 5 years 5 years Total December 31, 2015 NOK 374 35 246 545 420 218 USD 1 96 78 22 3 5 EUR 0 59 74 30 12 32 GBP 8 25 20 6 2 21 SEK 89 29 121 8 1 6 Other currencies 19 20 33 8 17 50 December 31, 2014 NOK 327 59 79 173 248 113 USD 78 29 47 72 9 65 EUR 44 7 2 6 20 35 GBP 10 15 3 8 1 8 SEK 26 17 19 5 1 19 Other currencies 30 17 11 9 11 37 ______Note: The figures do not include the operations in DNB Baltics and Poland, and are otherwise identical to DNB Bank ASA.

Liquidity risk

Liquidity risk is the risk that the DNB Bank Group will be unable to meet its obligations as they fall due, and the risk that the DNB Bank Group will be unable to meet its liquidity obligations without a substantial rise in appurtenant costs. Liquidity is vital to financial operations, though this risk category will often be conditional in

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the respect that it will not materialize until other events give rise to concern regarding the DNB Bank Group’s ability to meet its obligations.

Liquidity risk management and measurement

Liquidity risk is managed and measured by several techniques, as no single technique can fully quantify this type of risk. The techniques include the monitoring of balance sheet key ratios, average residual maturity on term funding and future funding requirements, including refinancing needs.

The bank’s liquidity management is organized based on a clear authorization and reporting structure, and is in accordance with the regulations on prudent liquidity management. The Board of Directors regularly reviews the bank’s liquidity risk and determines limits and guidelines. The Board reviews the limits each year or more frequently if required. The limit structure for liquidity risk is in compliance with the structure in the Basel III framework. The limits for LCR and NSFR are part of the Group’s risk appetite framework, along with the ratio of deposits to net loans.

Liquidity risk is managed through short and long-term limits. The short-term limits restrict the net refinancing requirement within one week, one month and three months. The long-term limits set requirements for the share of lending and other illiquid assets which is to be financed by stable sources such as customer deposits or funding with a residual maturity of minimum 12 months.

In addition to maintaining a broad deposit and funding base from both retail and corporate customers, liquidity management in the DNB Group aims to ensure diversified funding of other business activities. In many small countries like Norway, with small domestic financial markets, the banks rely on international funding in various currencies for part of their lending in the domestic market. The international funding will contribute to volatility in the Group’s results, in the form of basis swap risk. As part of the diversification of funding sources, the bank focuses on having good relationships with a large number of international investors. Senior debt is mainly issued through a European Medium Term Note Program of EUR 45 billion. In addition, senior Programs have been established in US dollars and Japanese yen. Covered bond Programs have also been established in Europe, the US and in Australia.

Covered bonds are an important instrument for long-term funding. The bonds are issued by the bank’s subsidiaries DNB Boligkreditt AS and DNB Næringskreditt AS, and are secured by the companies’ residential mortgage and commercial mortgage portfolios, respectively. During periods of turmoil, covered bonds have proved to be a more robust and considerably lower priced funding instrument than ordinary senior bonds. Over the next few years, DNB will thus seek to cover a large share of its long-term funding requirement through the issuance of covered bonds.

DNB Bank has a well-established short-term commercial paper Program in the U.S., through a USD 18 billion USCP Program with maturities of up to 13 months. U.S. short-term funding sources are further diversified through a so-called Yankee CD Program, totaling USD 15 billion, with maturities of up to 18 months. The certificates of deposits are issued by the DNB branch in New York, which also operates the Program. This has helped ensure stable short-term funding in the U.S. market during periods of turbulence in other markets. In Europe, the bank has a multi-currency ECP Program of EUR 15 billion with maturities of up to 12 months which is operated at the head office in Oslo and provides funding from other market players than in the US Programs.

As a bank with a high credit rating in a relatively strong economy, DNB Bank attract substantial funds from other banks, central banks and money market funds. These include both operating deposits and excess liquidity from both domestic and international banks. A major share of these funds represents short-term deposits from money market funds which also have short-term deposits in central banks. Together with commercial paper funding, this creates a liquidity buffer in the short end.

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Even though DNB Bank is a well-established international borrower that has enjoyed ample access to international markets during periods of market turbulence, it also uses the domestic market for diversification purposes. Domestic funding also helps limit the market risk related to price movements in the basis-swap market, causing volatility in profits and losses. The Norwegian domestic covered bond market has outgrown the Norwegian government bond market in terms of outstanding volumes, and is regarded by market participants as just as liquid as the government bond market.

As an element in ongoing liquidity management, DNB Bank needs to have a holding of securities that can be used to regulate the Group’s liquidity requirements and serve as collateral for operations in the currencies in which the bank is active. The securities are used, among other things, as collateral for short-term loans in central banks and serve as liquidity buffers to fulfill regulatory liquidity requirements. Market risk in the liquidity portfolio is measured on an ongoing basis. In addition, developments in the credit rating of the underlying securities are followed up and reported on an ongoing basis.

The Bank’s liquidity portfolio consists of an international portfolio and a Norwegian portfolio. At year-end 2015 the liquidity portfolio totaled NOK 187 billon. The Norwegian liquidity portfolio totaled NOK 73 billion at year-end 2015, of which NOK 40 billion represented Norwegian government and other level 1 public sector bonds. Other level 1 assets in the form of covered bonds totaled NOK 23 billion, while the remainder represented level 2A assets.

Level 1 and level 2A refer to the categorization of liquid assets in the LCR framework, where level 1 represents the most liquid assets. The international liquidity portfolio totaled NOK 114 billion at year-end 2015, comprising a trading portfolio and a multi-currency bond portfolio held to maturity (HTM). The trading portfolio totaled NOK 94 billion; 59 per cent of the securities in this portfolio had an AAA rating. The international trading portfolio consisted of 48 per cent covered bonds and 52 per cent public bonds at year-end 2015.

For the DNB Bank Group’s liquidity and funding maturity structure, see “Selected Statistical Data—Maturity profiles of assets, liabilities and financial derivatives”.

Operational risk

Operational risk is the risk of losses due to deficiencies or errors in internal processes and systems, human errors or external events. Operational risk also includes compliance risk, which is the risk of losses caused by violation of laws and regulations or similar obligations, as well as legal risk, which often arises in connection with the documentation and interpretation of contracts and different legal practices in locations where the DNB Bank Group has operations.

Unlike most other types of risk, operational risk normally does not give higher expected returns the higher the risk. The Group’s quality assurance process shall help DNB reach its low operational risk target.

Operational risk management and measurement

The risk appetite framework specifies certain maximum limits for operational risk. Operational risk in the DNB Bank Group shall be characterized by few and small operational loss events. Total annual losses resulting from operational events shall have no pronounced effect on the Group’s return on equity. Critical IT events are reported as a separate risk appetite statement, focusing on identifying and following up risk-mitigating measures. DNB has laid down group guidelines for the management of operational risk in the Group. There shall be sound operational risk management in the Group, which will be reflected in higher-quality operations and customer service and lower risk, and thereby stronger financial performance and increased shareholder values.

Special groups have been established in all of the Group’s business areas and support units to support management in managing operational risk. Responsibilities include assessing and reporting identified risks and

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helping to prevent operational losses. To ensure independence relative to business operations, these persons are organized in the business areas’ respective staff units. Their work also includes making sure that operations are in compliance with relevant laws and regulations. All reporting is a two-way process, both through the line organization and through the Group’s central risk unit. The international units have strengthened their risk functions by having a separate operational risk unit, and strengthening its role through direct representation in the respective management teams. In order to limit the consequences of serious events, operational disruptions etc., comprehensive contingency and business continuity plans have been drawn up.

For a long time, DNB has quantified the number of events and net losses for the individual business areas. Operational loss events in the Group which result in losses of more than NOK 50,000 and near events with a loss potential of more than NOK 100,000 are registered, reported and followed up on an ongoing basis in the Group’s event database. Compliance breaches are registered in the database irrespective of the resulting financial loss.

The annual status report is a key element in the DNB Group’s operational risk management. All of the DNB Group’s business areas and staff and support units carry out an extensive self-assessment of their current status in this field, combined with a process to identify areas of risk that more units may have in common. Thereafter, concrete risk-mitigating measures are identified. These processes are part of the Group’s internal control reporting. In addition, developments in operational risk are reported each quarter to group management and the Board of Directors as an element in the DNB Group’s risk reporting.

The Group’s insurance coverage is an element in operational risk management. Insurance contracts are entered into to limit the financial consequences of undesirable events which occur in spite of established security routines and other risk-mitigating measures. The insurance Program also covers legal liabilities the DNB Group may face related to its operations.

The risk-adjusted capital for operational risk for the DNB Bank Group was NOK 8.6 billion, NOK 8.4 billion, NOK 8.2 billion and NOK 8.3 billion as of March 31, 2016 and December 31, 2015, 2014 and 2013, respectively.

Business risk

Business risk is the risk of losses due to external factors such as the market situation or government regulations. Such risk also includes loss of income due to a weakened reputation.

Business risk is manifested in an unexpected decline in profits. Such a decline can be caused by competitive conditions resulting in lower volumes and pressure on prices, competitors introducing new products, government regulations or negative media coverage. Losses arise if the DNB Group fails to adapt its cost base to such changes.

Negative media coverage may be a consequence of other risk factors, but is handled as business risk in the DNB Group. A damaged reputation can have an adverse impact on all business areas, independent of where in the DNB Group or in the rest of the financial industry the original incident occurred.

Since early April 2016, DNB has attracted public attention in connection with revelations after the “Panama Papers” leak of confidential documents. On April 11, 2016 DNB’s Board of Directors sent a written report to the Ministry of Trade, Industry and Fisheries in response to inquiries on the topic. The reason for the report was that the bank’s subsidiary in Luxembourg facilitated the establishment of 42 companies in the Seychelles for customers during the period 2006 to 2008. In the report, the Board presents the findings which have thus far resulted from internal investigations. The Board has asked group management to implement the following additional measures:

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● Consider the organization of DNB’s operations in Luxembourg (including a description of current procedures and the division of responsibilities and roles), with special focus on private banking operations.

● Consider the products and services distributed by the private banking division, with special focus on aspects which may give rise to reputational issues.

● Consider the principles for management and control of international subsidiaries, with special focus on the workforce situation and resources, governance, board composition and compliance.

● In cooperation with the Board of Directors, consider the expertise and resources relating to the internal audit function.

Business risk management and measurement

As business risk may arise due to various risk factors, a broad range of tools is applied to identify and report such risk.

Sound strategic planning is instrumental in reducing business risk. Reputational risk is managed through policies and business activities, including compliance.

The DNB Group’s active commitment to corporate social responsibility and the code of ethics for employees also have a positive impact on business risk.

Reputational risk is managed by monitoring media coverage, while the competitive situation is managed by analyzing market trends and developments in market shares.

The DNB Group has developed a model for calculating business risk per business area. The model is based on past fluctuations in income and costs and is structured so that if all other factors are kept constant, high income volatility raises the risk level and thus risk-adjusted capital. Vice versa, a highly flexible cost structure will reduce risk-adjusted capital.

The risk-adjusted capital for business risk for the DNB Bank Group was NOK 6.2 billion, NOK 6.2 billion, NOK 6.0 billion and NOK 4.2 billion as of March 31, 2016 and December 31, 2015, 2014 and 2013, respectively. A new calculation of risk-adjusted capital for business risk was implemented as from the first quarter of 2014.

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MANAGEMENT

Recent changes

As from January 1, 2016 a new regulation on financial institutions was implemented in Norway, the Act on Financial institutions and financial groups, implying, among others, changes in governing bodies. According to the regulation, there will no longer be a Supervisory Board or a Control Committee. The responsibilities of the Control Committee are to be transferred to the internal audit and other governing bodies. As a substitution for the Supervisory Board, the new regulation offers the possibility to establish a Corporate Assembly. Whether to establish a Corporate Assembly is to be decided by management and the employees together. DNB has decided not to establish a Corporate Assembly.

The new regulation also implies changes with regard to the board of directors and the number of members. Following the change in legislation the Board of Directors of DNB ASA decided to reduce the number of members in DNB Bank ASA to four, of whom one is an employee representative. Further, the number of members of the Board of Directors of DNB ASA has been reduced to seven, of whom five are shareholder representatives and two are employee representatives.

Until December 31, 2015, the DNB Group and the DNB Bank Group had both a Control committee and a Supervisory Board. The Control Committee’s main responsibility was to supervise the Bank’s activities to ensure that they complied with all applicable laws, regulations and licenses, as well as with the Bank’s articles of association and resolutions adopted by the Bank’s decision-making bodies. The main responsibility of the Supervisory Board was to supervise the board of directors (the “Board of Directors”) and the chief executive officer’s (the ”CEO”) management of the Bank.

The Supervisory Board was discontinued on December 31, 2015.

Board of Directors

Responsibilities and organization

The Board of Directors establishes, plans and budgets for the Bank’s business, remains informed of the Bank’s financial position and ensures that the Bank’s business, its accounts and the management of its assets and liabilities are subject to adequate control. In order to perform its responsibilities, the Board of Directors must make such inquiries as it considers necessary, and must also supervise the day-to-day management of the Bank and its business in general. In accordance with the Bank’s articles of association, the Board of Directors must consist of up to four members, three of whom are elected by the shareholders and two of whom are representatives for the employees. Moreover, the employees have the right to appoint an observer to the Board. Members are elected for terms of up to two years. The Chairman and Vice-chairman are elected separately by the annual general meeting for a term of up to two years. The current Chairman is Anne Carine Tanum and the current Vice-chairman is Jarle Bergo. The aggregate compensation paid to the Board of Directors in 2015 was NOK 3,709,000.

Set forth below are details regarding the members of the Bank’s Board of Directors:

Name Current position Member since End of current term

Anne Carine Tanum Chairman 1999 2018 Jarle Bergo Vice-chairman 2011 2018 Kim Wahl Member 2013 2017 Lillian Hattrem Member employee representative 2016 2017

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Name Current position Member since End of current term

Tore Muller Andresen Deputy for employee 2016 2017 representative Eli Solhaug Observer - employee 2016 2017 representative Marianne Haldis Deputy observer - employee 2016 2017 Steinsbu representative

The business address of the Board of Directors is c/o DNB ASA, Dronning Eufemias gate 30, 0191 Oslo, Norway.

Biographies of the Board of Directors

Set out below are brief biographies of the members of the Board of Directors, including their relevant management expertise and experience, an indication of any significant principal activities performed by them outside the DNB Group and the names of companies and partnerships of which any member of the Board of Directors is or has been a member of the administrative, management or supervisory bodies or partner during the previous five years (not including directorships and executive management positions in subsidiaries of the Company).

Anne Carine Tanum, Chairman, (born 1954) Board chairman of DNB and DNB Bank (board member since 1999) and chairman of the Compensation Committee. Mrs Tanum has a law degree from the University of Oslo. She is the long-standing managing director and owner of Tanum AS and former board member in DnB Holding, Den norske Bank and Vital Forsikring.

Principal activity/position outside the DNB Group: Professional board member Business address: Krusegate 11, 0263 Oslo, Norway Current directorships and management positions: Board chairman of the Norwegian National Opera and Ballet, E-CO Energi Holding AS, E-CO Energi AS and Nordisk Film Kino AS. Vice-chairman of the board of Oslo University Hospital. Board member for Cappelen Damm AS, Try AS, Europris AS and IRIS AS. Former board chairman for the Norwegian Broadcasting Corporation, NRK.

Previous directorships and management positions Tanum AS (owner and CEO), Den Norske held in the last five years: Bokhandelforening (Deputy chairman of the board of directors), Helse Øst RHF (member of the board of directors), Den Norske opera og ballett AS (Deputy chairman of the board of directors) and Stiftelsen WWF Verdens Naturfond (member of the board of directors)

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Jarle Bergo, board member, (born 1945) has been a member of the Board of Directors since 2011. He held various positions in Norges Bank from the late 1960s and ended his career as deputy governor in 2008. Mr Bergo was alternate executive director of the International Monetary Fund (IMF) through 2010. He has also previously served as business manager for the Norwegian Banks’ Guarantee Fund, as member of the board of Oslo Børs and as member of various committees and expert groups, including the Council of Ethics for the Government Pension Fund – Global in 2002. Mr Bergo holds an economics degree from the University of Oslo.

Principal activity/position outside the DNB Group: Professional board member Business address: Rådyrveien 5, 1914 Ytre-Enebakk, Norway Current directorships and management positions: None Previous directorships and management positions International Monetary Fund (IMF) (Alternate held in the last five years: executive director)

Kim Wahl, board member, (born 1960) has been a member of the Board of Directors since 2011. Mr Wahl is chairman and owner of private investment company Strømtangen AS. He is a founding member, and was for 20 years a partner and deputy, in the European private equity firm IK Investment Partners. Mr Wahl also has experience from the U.S. investment bank Goldman Sachs in London and New York. Mr Wahl has held a number of directorships in various industries. He is chairman and a founding member of the foundation Voxtra, established in 2008 with operations in aid and local investments in East Africa. Furthermore, he is a board member of UPM Kymmene Corporation, Intermediate Capital Group plc and the Kavli Trust. Mr Wahl has an MBA from Harvard University.

Principal activity/position outside the DNB Group: Professional board member Business address: Strømstangen 5, 1367 Snarøya Current directorships and management positions: Board member for: UPM KYMMENE OY, INTERMEDIATE CAPITAL GROUP PLC Board chairman for: Strømstangen AS, CEKI AS, Stiftelsen Voxtra, Voxtra AS Deputy board member in Mountainair AS Previous directorships and management positions None held in the last five years:

Lillian Hattrem, board member, (born 1972) has a degree in economics, accounting and project management from BI Norwegian Business School. She was employed in the retail department of Sparebanken NOR from 1999 and has since 2003 worked as employee representative full time. Since 2006, she has been employee representative at DNB. Mrs Hattrem has been a member of the Supervisory Board of DNB since 2007, member of the electoral committee of the Supervisory Board of DNB, deputy in central appointments committee, director of Finansforbundet Oslo/Akershus and deputy to Forbundsstyret i Finansforbundet, the Executive Committee in the Finance Sector Union.

Principal activity/position outside the DNB Group: Professional board member Business address: Ødegårdssvingen 2, 1405 Langhus Current directorships and management positions: None Previous directorships and management positions None held in the last five years:

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Tore Muller Andresen, board member, (born 1962). Mr Andresen has been a member of the Board of Directors since 2016. Mr Andresen holds a graduate Diploma in Economics. He has been with the company since 1982, was elected employee representative in 2007 and became a full-time employee representative when he was elected in Finansforbundet DNB in 2014. He was previously a deputy member of the Supervisory Board for two terms.

Principal activity/position outside the DNB Group: Deputy for employee representative Business address: Kolstien 83A, 5097 Bergen Current directorships and management positions: None Previous directorships and management positions None held in the last five years:

Eli Solhaug, observer, (born 1963) has been a member of the Board of Directors since 2011. Mrs Solhaug has a degree in coaching and relationship management and project management from Akershus University College and BI Norwegian Business School. Mrs Solhaug started her career at Norway Post Savings Bank in 1982 and then worked in the Post Office and Post Bank. Since 1999 Mrs Solhaug has been a full-time union safety representative in DNB Financial Association, and has been Group Chief Safety Delegate in DNB since 2010. Mrs Solhaug has been a member of the Supervisory Board of DNB ASA and DNB Bank ASA since 2007 and is an observer on the board of the Finance Sector Union DNB.

Principal activity/position outside the DNB Group: Observer - employee representative Business address: Hagaløkka 16 B, 0963 Oslo Current directorships and management positions: None Previous directorships and management positions None held in the last five years:

Marianne Haldis Steinsbu, observer, (born 1960) has been observer since 2016. Mrs Steinsbu has a graduate degree in Business from BI Norwegian Business School, Oslo. Mrs Steinsbu also studied Foundation Psychology and German at the University of Bergen. Mrs Steinsbu has been employed in the Group since 1980. She has worked in various business areas of the bank and has six years’ experience in banking from Luxembourg and Latvia. Mrs Steinsbu now works as head of DNB Cash Management Academy. She has many years experience in the supervisory boards of DNB Bank and Holding. Mrs Steinsbu is also a director of “Sport and Culture “ in DNB and has held various positions in the Finance Sector Union.

Principal activity/position outside the DNB Group: Deputy observer - employee representative Business address: Noreveien 45 a, 0379 Oslo Current directorships and management positions: None Previous directorships and management positions None held in the last five years:

Independence

The Bank complies with applicable rules regarding the independence of the Board of Directors. Anne Carine Tanum, Jarle Bergo and Kim Wahl are independent.

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Board committees

The DNB ASA board of directors has established an audit committee and a compensation committee. The DNB Bank Group’s operations are within the purview of both of these committees.

Audit committee

The audit committee assists the Board of Directors of the Bank in fulfilling its supervisory responsibilities by, among other things, monitoring the Bank’s financial reporting process, the effectiveness of the internal control and risk management systems established by the board of directors of the Bank, the CEO and the Bank’s management and the effectiveness of the Bank’s internal audit function. The audit committee is further accountable for keeping itself informed as to the statutory audit of the annual and consolidated accounts and reviewing and monitoring the impartiality and independence of the external auditors and in particular the provision of additional services. In addition, the audit committee is accountable for the guidance and evaluation of the Bank’s internal audit function. Members of the audit committee are currently Tore Olaf Rimmereid, Jarle Bergo, Berit Svendsen and Jaan Ivar Semlitsch, as appointed by the board of directors at the statutory meeting following the annual general meeting of shareholders in 2011. The CEO and the Chief Audit Executive are present at meetings with the right to participate in discussions, but without the right to vote. The members of the audit committee are independent of the Bank, the executive management of the Bank and the Bank’s major shareholders.

Risk Management committee

The risk management committee monitors the Group’s internal control and risk management systems, as well as the internal audit, and makes sure that they function effectively. In addition, the committee advises the Board of Directors with respect to the Group’s risk profile, including the Group’s current and future risk appetite and strategy. Advice to the Board of Directors may include strategies for capital and liquidity management, credit risk, market risk, operational risk and risk related to compliance and reputation, as well as other risks within the Group. The committee assists the Board of Directors with risk monitoring and management within the Group, which includes reviewing and assessing Group management’s risk reporting. The committee’s particular focus is on the Group’s capitalization (ICAAP), significant changes in models for calculating risk-adjusted capital and risk-adjusted returns, as well as monitoring of risk limits and strategies. The committee consists of four members elected by the Board of Directors for terms of up to two years. Members of the risk management committee are currently Tore Olaf Rimmerieid, Jarle Bergo, Berit Svendsen and Jaan Ivar Semlitsch.

Compensation committee

The compensation committee is responsible for preparing and presenting proposals on compensation issues to the Board of Directors. When preparing such proposals, the compensation committee takes into account the long-term interests of shareholders, investors and other stakeholders in the Bank. The duties of the compensation committee include preparing proposals regarding the Bank’s compensation policy and underlying instructions and guidelines for compensation of the executive officers to be decided by the annual general meeting of shareholders. Furthermore, the committee prepares proposals regarding the compensation of the CEO, other members of the Bank’s management as well as the Chief Audit Executive and, based on the proposal by the CEO, of the Group Compliance Officer and the Head of Group Credit Control. The compensation committee follows up annually, at minimum, on the application of the Bank’s compensation policy and underlying instructions through an independent review by the Group Internal Audit as well as an assessment of the Bank’s compensation policy and compensation system with the participation of the appropriate Group Control Functions. The compensation committee also has the duty to annually monitor, evaluate and report to the board of directors on Programs of variable compensation for members of the Bank management as well as on the application of the guidelines for compensation of executive officers. At the request of the Board of Directors, the compensation committee also prepares other issues for the consideration of the board of directors. Members of the compensation committee are currently Anne Carine Tanum, Tore Olaf Rimmereid, Vigdis Mathisen and Berit Svendsen. The CEO participates in the meetings, without the right to

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vote. Further, the CEO does not participate in the consideration of his own employment terms and conditions. The members of the compensation committee are independent of the Bank and the executive management of the Bank. All members are independent of the Bank’s major shareholders.

The Control Committee was discontinued on December 31, 2015.

Bank Management

Responsibilities and organization

The Bank’s executive management team consists of 12 members. The CEO is appointed at a joint meeting of the Board of Directors and is responsible for the Bank’s day-to-day management. Responsibility for the management of the Bank is distributed among the business areas. The table below sets out the name, current position, year of appointment and business address for each of the members of the executive management team.

Year of Name Current position appointment Business address DNB ASA Rune Bjerke CEO 2007 Dronning Eufemias gate 30, 0191 Oslo DNB ASA Bjørn Erik Næss CFO 2008 Dronning Eufemias gate 30, 0191 Oslo DNB ASA Trond Bentestuen Group executive vice-president 2013 Dronning Eufemias Personal Banking Norway gate 30, 0191 Oslo DNB ASA Kjerstin Braathen Group executive vice-president 2013 Dronning Eufemias Corporate Banking Norway gate 30, 0191 Oslo DNB ASA Harald Serck-Hanssen Group executive vice-president 2013 Dronning Eufemias Large Corporations and gate 30, 0191 Oslo International DNB ASA Ottar Ertzeid Group executive vice-president 2003 Dronning Eufemias DNB Markets gate 30, 0191 Oslo DNB ASA Tom Rathke Group executive vice-president 2013 Dronning Eufemias Wealth Management gate 30, 0191 Oslo DNB ASA Solveig Hellebust Group executive vice-president 2009 Dronning Eufemias HR gate 30, 0191 Oslo DNB ASA Liv Fiksdahl Group executive vice-president 2013 Dronning Eufemias IT and operations gate 30, 0191 Oslo DNB ASA Thomas Midteide Group executive vice-president 2013 Dronning Eufemias Corporate communications gate 30, 0191 Oslo DNB ASA Kari Olrud Moen Group executive vice-president 2013 Dronning Eufemias Products gate 30, 0191 Oslo

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Year of Name Current position appointment Business address

Relations DNB ASA Terje Turnes Group executive vice president 2015 Dronning Eufemias Risk Management gate 30, 0191 Oslo

Brief biographies of the members of Bank management

Set out below are brief biographies of the members of Bank management, including their relevant management expertise and experience and names of companies and partnerships of which a member of Bank management is or has been a member of the administrative, management or supervisory bodies or partner during the previous five years (not including directorships and executive management positions in subsidiaries of the Company).

Rune Bjerke, Group chief executive officer, (born 1960) was appointed CEO of the DNB Bank Group in 2007. He was formerly president and CEO of Hafslund ASA and has also been president and CEO of Scancem International. Mr Bjerke has held a number of board positions in large companies. He has also served as finance commissioner of the Oslo City Council and as political adviser of Norway’s Ministry of Petroleum and Energy. Mr Bjerke is Chairman of the board of directors of the Norwegian Bankers Association. He holds an economics degree from the University of Oslo and a master’s degree in public administration from Harvard University.

Current directorships and management positions: Statoil ASA (Member of the corporate assembly), Stipendienfonds E.ON Ruhrgas (Member of Council) Board chairman in Doorstep AS. Board member in: Finansnæringens Servicekontor FNS, Finansnæringens Fellesorganisasjon FNO, FNO Servicekontor

Previous directorships and management positions Hafslund ASA (President and CEO), Hafslund held in the last five years: Marked AS (member of the board of directors), Board of Directors (member of the board of directors), Hafslund Venture AS (member of the board of directors), Hafslund Sikkerhet AS (member of the board of directors), Tomra ASA (member of the board of directors), EBL (Energibedriftenes Landsforening) (member of the board of directors), REC ASA (member of the board of directors) and NET AS (Nordic Exchanger Technology) (member of the board of directors)

Bjørn Erik Næss, CFO, (born 1954) was appointed CFO of the Bank in March 2008. Prior to this he was executive vice president and CFO of Aker Kværner ASA, Orkla ASA and Carlsberg Breweries AS (Denmark). Mr Næss has extensive experience in executive positions both in Norway and abroad over the past 25 years. Mr Næss is a graduate of the Norwegian School of Economics and Business Administration and completed an executive Program at Darden Business School in the United States.

Current directorships and management positions: Chairman of the Election Committee in Oslo Børs VPS. Member of election committee in Eksportfinans.

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Previous directorships and management positions Aker Kværner ASA (CFO), Aker Pensjonskasse AS held in the last five years: (Chairman of the board of directors), Aker Insurance AS(Chairman of the board of directors), Aker Kværner Shared Services AS (Chairman of the board of directors), Aker Kværner Oil and Gas Group AS (Chairman of the board of directors), Aker Solutions AS (Chairman of the board of directors), Aker PLC Group AS (member of the board of directors), Aker Kværner E&C Group AS (member of the board of directors), Aker Kværner E&C Europe AS (Chairman of the board of directors) and Aker Kværner E&C Americas AS (Chairman of the board of directors)

Harald Serck-Hanssen, Group executive vice president – Large Corporations and International, (born 1965) was appointed head of Large Corporates and International in January 2013, having previously served as head of the Shipping, Offshore and Logistics (“SOL”) division. Mr Serck-Hanssen joined DNB in 1998 and has headed various divisions in SOL. He has previous experience with Stolt-Nielsen Shipping and the Odfjell Group. Mr Serck-Hanssen has a BA (Hons) degree in business studies from the University of Stirling and has also completed an advanced management Program at INSEAD Fontainebleau.

Current directorships and management positions: Krags Familielegat(board member) Previous directorships and management positions DNB Large Corporates and International - Shipping held in the last five years: (executive vice president)

Ottar Ertzeid, Group executive vice president – DNB Markets, (born 1965) was appointed Group executive vice president of DNB Markets in 2003. Mr Ertzeid has previously been head and deputy head of DnB Markets and has also worked in various other positions within the FX/Treasury area in the former DnB. Mr Ertzeid’s professional experience includes time spent as CFO of DnB Boligkreditt AS and head of finance of Realkreditt AS. Mr Ertzeid is Deputy chairman of the board of directors of Bankenes Sikringsfond and a member of the board of directors of Verdipapirforetakenes Sikringsfond. Mr Ertzeid is a graduate of BI Norwegian Business School.

Current directorships and management positions: Oslo Børs VPS Holding ASA (member of the board of directors) and Dextra Artes AS (Deputy chairman of the board of directors), Verdipapirforetakenes Sikringsfond(Deputy chairman of the board of directors), Bankenes sikringsfond (board chairman)

Previous directorships and management positions Oslo Børs ASA (member of the board of directors) held in the last five years:

Tom Rathke, Group executive vice president – Wealth Management, (born 1956) was appointed head of Wealth Management in January 2013, having previously served as head of Insurance and Asset Management. Mr Rathke has also served as chief executive of DNB’s subsidiary, DNB Livsforsikring, and board chairman of DNB Asset Management and DNB Skadeforsikring. He was previously managing director of Gjensidige NOR’s investment fund company Avanse, prior to which he held managerial positions in Vesta and If Skadeforsikring. Mr Rathke also has experience with SAS and Dyno. Mr Rathke is a graduate of BI Norwegian School of

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Management, has a master’s degree in business administration from the University of Wisconsin and has completed the Advanced Management Program (AMP) at Harvard University.

Current directorships and management positions: Member of Nomination Committee in Norsk Tillitsmann, Statoil ASA

Previous directorships and management positions Four Season Venture V (member of the board of held in the last five years: directors and member of the advisory board)

Solveig Hellebust, Group executive vice president – HR, (born 1967) was appointed Group executive vice president of HR on April 1, 2009. Prior to this, Ms Hellebust was vice president of Human Resources and Communications at Pronova BioPharma ASA. Her prior professional experience includes several years at Telenor ASA (corporate staff HR) and at BI Norwegian School of Management (associate professor in economics). Ms Hellebust holds a PhD in international economics from the Norwegian University of Life Sciences, an MSc in agricultural economics from the University of Illinois, and an MSc in business and economics from BI Norwegian School of Management.

Current directorships and management positions: Finans Norge Bransjestyre Arbeidsgiver (chief executive) Guldheim AS(deputy chairman/CEO)

Previous directorships and management positions Pronova BioPharma ASA (vice-president human held in the last five years: resources and communications)

Kjerstin Braathen, Group executive vice president – Corporate Banking Norway, (born 1970) was appointed head of Corporate Banking Norway in January 2013, having previously served as head of Shipping, Offshore and Logistics (“SOL”), in Oslo. She has many years’ experience as a relationship manager and senior relationship manager in SOL. She joined DNB in 1999 from Hydro Agri International. Ms Braathen has a Master in Management degree from Ecole Supérieure de Commerce de Nice-Sophia Antipolis.

Current directorships and management positions: None Previous directorships and management positions None held in the last five years:

Liv Fiksdahl, Group executive vice president – IT and Operations, (born 1965) was appointed head of IT and Operations in January 2013. She was previously head of Operations, held various executive positions within operations and administration and was head of Bank Production in Corporate Banking and Payment Services. Prior to this, Ms Fiksdahl held customer-oriented positions in Union Bank of Norway, Handelsbanken and Fokus Bank. She holds a masters degree from Trondheim Business School.

Current directorships and management positions: Sparebankforeningen (deputy chairman), Doorstep AS (board member)

Previous directorships and management positions None held in the last five years:

Trond Bentestuen, Group executive vice president – Personal Banking Norway, (born 1970) was appointed head of Personal Banking Norway in January 2013. He was previously head of Marketing, Communications and eBusiness. Mr Bentestuen joined DNB in 2009, leaving his position as head of Marketing and Communications at Expert ASA. In addition, he previously worked as a press officer and communications adviser at Telenor.

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Mr Bentestuen has a bachelor of arts degree in journalism and political science from Temple University, California, and training from the Armed Forces.

Current directorships and management positions: Doorstep AS(board member) Previous directorships and management positions Group executive vice president – Expert ASA held in the last five years:

Kari Olrud Moen, Group executive vice president – Products, (born 1969) was appointed head of Products in January 2013. She was previously head of the Corporate Center. Before joining DNB in 2005, Ms Olrud Moen was state secretary at the Ministry of Finance. She also worked as a consultant at McKinsey & Co, as an adviser for the Conservative Party’s parliamentary group and as a consultant in the Budget Department at the Ministry of Finance. Ms Olrud Moen is a graduate of the Norwegian School of Economics and has an MBA from the University of California, Berkeley.

Current directorships and management positions: Cermaq ASA(Member Nomination Committee)

Previous directorships and management positions None held in the last five years:

Thomas Midteide, Group executive vice president – Corporate Communications, (born 1974) was appointed head of Corporate Communications in January 2013. He has previously served as executive vice president of External Communication. Mr Midteide joined DNB in 2009, leaving his position as head of Communications at SAS. He has also been a communications officer at VISA Norway and a reporter at NRK. Mr Midteide has a journalism degree from Oslo University College.

Current directorships and management positions: None Previous directorships and management positions None held in the last five years:

Terje Turnes, Group executive vice president – Chief Risk Officer from 2015, (born 1963). Mr Turnes was educated at Trondheim Business School and the Norwegian School of Management. He is the former head of DNB’s Baltic operations and head of DNB’s London branch, prior to which he headed both the Manufacturing Industry Section and the Energy Section in Corporate Banking. Mr Turnes joined DNB in 1989.

Current directorships and management positions: None Previous directorships and management positions None held in the last five years:

No company in the DNB Bank Group has issued loans or securities to any members of the Supervisory Board, the Board of Directors, the Control Committee or the Bank’s management that are not on ordinary terms for employees of the DNB Bank Group.

The DNB Bank Group is not aware of any potential conflicts of interest between the duties to the DNB Bank Group of each of the persons listed above under the headings “—Supervisory Board”, “—Board of Directors”, “—Control Committee” and “—Bank Management” and his or her private interests or other duties.

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Shareholders

The Bank is wholly owned by DNB ASA, a publicly traded company on the Oslo Stock Exchange. The following table sets forth as of March 31, 2016 the 20 largest shareholders of DNB ASA, the number of shares held by each shareholder and the percentage of outstanding shares represented by each shareholding:

Ownership in per Shares in 1,000 cent Norwegian Government/Ministry of Trade, Industry and Fisheries 553,792 34.00 DNB Savings Bank Foundation 152,564 9.37 Folketrygdfondet 93,085 5.71 Fidelity International Limited (FIL) 50,259 3.09 BlackRock 39,203 2.41 MFS Investment Management 39,058 2.40 Schroder Investment 30,112 1.85 T. Rowe Price Group 26,510 1.63 The Vanguard Group 22,428 1.38 State Street Global Advisors 21,193 1.30 Newton Investment Management/BNY Mellon 20,951 1.29 SAFE Investment Company 20,508 1.26 DNB Asset Management 18,305 1.12 KLP Asset Management 16,030 0.98 BNP Paribas Investment/Alfred Berg 15,721 0.97 Storebrand Asset Management 15,579 0.96 Henderson Global Investors 15,048 0.92 Danske Capital 14,132 0.87 The Capital Group 13,193 0.81 EARNEST Partners 13,178 0.81 Total largest shareholders 1,190,848 73.11 Other shareholders 437,951 26.89 Total 1,628,799 100.00

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SUPERVISION AND REGULATION

Overview

The Bank is the result of a merger between Gjensidige NOR Sparebank ASA and Den norske Bank ASA, as registered in the Register of Business Enterprises on January 19, 2004, and in which Gjensidige NOR Sparebank ASA was the acquiring entity. This entity subsequently changed its name to DnB NOR Bank ASA and further changed its name to DNB Bank ASA in November 2011. The most relevant Norwegian legislation applicable to Norwegian commercial banks is:

● the Public Limited Liability Company Act of 1997 (“PLCA”);

● the Norwegian Financial Supervision Act of 1956, which regulates the supervision of, among other things, financial institutions and investments firms by the Financial Supervisory Authority of Norway (the ”FSAN”); and

● the Act on Financial Enterprises and Financial Groups of April 10, 2015 No. 17 ("FEA").

Supervisory and Other Regulatory Authorities

Several governmental bodies are responsible for administering legislation governing financial institutions in Norway.

The Ministry of Finance

The Ministry of Finance grants all licenses to engage in banking activities. The Ministry of Finance also issues regulations pursuant to the FEA on many important issues relating to financial institutions, including capital adequacy ratios. The Ministry of Finance may revoke any license to engage in banking and insurance activities for violations of applicable laws and regulations.

Finanstilsynet (The Financial Supervisory Authority of Norway, or FSAN)

FSAN was created pursuant to the Act on Financial Supervision of 7 December 1956 No. 1, which sets forth the responsibilities and powers of FSAN. FSAN is an independent governmental entity with its own administrative staff and a five-member board of directors. However, the Ministry of Finance oversees the activities of FSAN and administrative decisions made by FSAN may be appealed to the Ministry of Finance.

FSAN’s mission is to ensure that financial institutions and financial markets in Norway function safely and efficiently. It establishes general rules and regulations for the entire financial industry in Norway and grants licenses to all financial enterprises and limited licenses to certain other companies, for example companies providing payments services. Any amendments to the articles of association of such institutions must be approved by FSAN.

FSAN is responsible primarily for supervising and inspecting banks, insurance companies, financing companies, securities brokerage firms, collective investment fund management companies, real estate brokers, debt collectors, auditors, accountants, insurance brokers and financial holding companies.

Norges Bank

Norges Bank, or the Central Bank, is the executive and advisory body for Norwegian monetary, credit and foreign exchange policy. Norges Bank is a separate legal entity owned by the Government and its executive board has seven members, all appointed by the King. Norges Bank carries out ordinary and central bank functions and has important functions in relation to the banking sector. Norges Bank is required to ensure that

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the financial system functions satisfactorily and may provide liquidity loans and make deposits with banks. Norges Bank also carries out money market operations.

Regulatory Framework in Norway

Overview

The Bank and its subsidiaries are subject to the supervision of the FSAN. The FSAN prepares and/or issues regulations and supervises the operations of Norwegian financial institutions, among other things with regard to capital adequacy, accounting, governance structures and risk control and procedures. The FSAN has a range of tools to facilitate its supervision, such as the right to carry out site visits, and to interview the employees of an institution under its supervision and inspect the books and record of such institutions. In the event that the FSAN considers the operations of an institution to be unsound or that the institution is in breach of applicable laws or regulations within the FSAN’s jurisdiction, it may impose administrative sanctions on that institution, and it may also revoke the institution’s license to operate.

Norway is not a member of the EU, but as a member of the European Economic Area (the “EEA”), it has implemented almost all relevant EU directives and regulations relating to financial services in its local legislation.

Authorizations

Under Norwegian law, any institution that accepts deposits from the general public and provides credit must obtain a banking license. The Bank, as a savings bank, was originally granted a license according to the Norwegian Savings Bank Act of May 24, 1961 No. 1. However, since its conversion into a public limited company, the Bank is subject to the ongoing regulatory requirements of the FEA.

Regulation of Banking Activities

The new FEA (Finansforetaksloven) came into force on January 1, 2016. The FEA replace the Savings Bank Act (Sparebankloven), the Commercial Banks Act (Forretningsbanloven), the Financial Institutions Act (Finansieringsvirksomhetsloven) and the Guarantee Schemes Act (Banksikringsloven), as well as parts of the Insurance Activity Act (Forsikringsvirksomhetsloven). The main purpose of the new FEA was to consolidate the current legislation, but also make the financial legislation more simple and accessible for financial institutions and public authorities. Among other things, the changes concern new capital requirements, regulations on exchanging customer information between group companies, regulation of financial institutions’ use of names, regulations on company bodies, outsourcing and customer service.

The FEA contains rules on incorporation, articles of association and share capital, governing bodies, business and dissolution/liquidation of commercial banks. The FEA also contains a requirement that banks shall make sure that the relation between market risk and other risk concerning the enterprise's total assets, shares, equity certificates and other assets, including assets which consists of real estate, and the enterprise's core capital is justifiable.

A commercial bank may engage in all the business and services customary or natural for banks, and shall not conduct any activities other than what follows from applicable rules, the license and the financial enterprise's articles of association, pursuant to FEA section 13-1. However, under FEA section 13-9 a bank may, without violating FEA section 13-1, have qualified holdings (more than 10% of the capital or the votes) in enterprises which cannot be part of a finance group so long as the reported value of the holding does not exceed 15% of the bank's capital pursuant to the last quarterly or yearly accounts. Such holdings may not in the aggregate exceed 60% of a bank's equity and subordinated capital. The abovementioned does not prevent the bank from temporarily operating or participating in the operation of such business to the extent necessary for the bank to recover a claim.

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As a commercial bank, the Bank is subject to a number of specific rules under the FEA. According to these rules, the articles of association of the Bank must initially be approved by the FSAN. The same applies to certain types of amendments to the articles of association pursuant to the Regulation of December 1, 2015 No. 1376 on approval of amendments to the articles of association in financial enterprises and financial foundations. Furthermore, the Bank’s equity may not be increased, decreased or repaid by means other than through distribution of retained profits, unless approved by the FSAN. Moreover, under FEA section 10-4, the distribution of share capital, dividends, owner's shares and primary capital shall not be set higher than what is deemed proper and compatible with prudence and standards of fair dealing, taking into annual results, potential future losses or the need for further capital in the financial enterprise. Resolutions regarding a decrease, increase or repayment of share capital are only valid when approved by the FSAN. Furthermore, the Bank needs consent from the FSAN to subscribe subordinated loans.

Capital Requirements

Norwegian banks are subject to ongoing capital adequacy requirements, which implement EU Directives based on the Basel II regime. Investors should consider the following discussion in connection with “Risk Management and Risk-Adjusted Performance—Capital Management.”

In line with the recommendations of the Basel Committee on Banking Supervision (the “Basel Committee”), the regulatory approach in the FEA is divided into three pillars;

● Pillar 1 – Calculation of minimum regulatory capital: Banks shall at all times satisfy capital adequacy requirements reflecting credit risk, operational risk and market risk. The current requirement is that equity shall constitute at least 8 per cent of risk-weighted assets. Equity can be in the form of core and supplementary capital. Core capital will typically consist of equity capital, while supplementary capital can be subordinated loan capital. The capital requirements must be complied with at all times. Banks are obligated to document their compliance with these requirements by reporting to the FSAN on quarterly basis.

● Pillar 2 – Assessment of overall capital needs and individual supervisory review: banks must have a process for assessing their overall capital adequacy in relation to their risk profile and strategy for maintaining their capital levels. The FSAN shall review and evaluate such internal capital adequacy assessments and strategies and may take supervisory action if it is not satisfied with the result of such an evaluation process.

● Pillar 3 – Disclosure of information: Banks are required to disclose relevant information on their activities, risk profile and capital situation.

Due to the recent period of financial and economic stress in the financial markets, a number of initiatives have been taken both globally (the “Basel Committee” and “G20”) and regionally (EU/EEA) to raise the level and quality of banks’ regulatory capital.

In December 2009, the Basel Committee proposed a number of fundamental reforms to the regulatory capital framework. In December 2010, January 2011 and July 2011, the Basel Committee issued its final guidance on proposed changes to the capital requirements (“Basel III”). The Basel III reforms include a substantial strengthening of existing capital rules, including by raising the minimum common equity requirement and the total Tier 1 capital requirement. Banks will be required to maintain, in the form of common equity, a capital conservation buffer. Banks will also be required to build up a countercyclical capital buffer, also consisting of common equity, during periods of excessive credit growth. In addition, a leverage ratio will be introduced, together with a liquidity coverage ratio and net stable funding ratio. The Basel III reforms will also require Tier 1 and Tier 2 capital instruments to be more loss-absorbing.

Implementation of the Basel III reforms is subject to a series of transitional arrangements and will be phased in over a period of time. In the EEA, the Basel III reforms will be implemented by way of a new Directive and a

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European Regulation (known as CRD IV, or an amended Capital Requirements Directive), which will replace Directives 2006/48/EC and 2006/49/EC.

The EU Parliament has adopted amendments to the Capital Requirements Directive (“CRD”), which will include the following:

● an EU/EEA-wide harmonization of the definition and availability of hybrid capital for banks;

● a binding obligation on banks to have sound remuneration policies;

● a requirement that extra capital must be held if supervisors are concerned about the adequacy of a bank’s risk management;

● increased capital requirements for complex resecuritization transactions;

● non-risk-sensitive measures complementing the Basel II capital requirements; and

● a requirement for banks to build up extra capital buffers in economic upturns, which they can draw on in a downturn (“dynamic provisioning”).

CRD is almost fully implemented into Norwegian law, and any amendments to the CRD are expected to be implemented into Norwegian law. The Banking Law Commission, which was appointed by Royal Decree on April 6, 1990, was commissioned to undertake a full review of current financial legislation with a view to modernization, coordination and revision of the legislative framework. The Banking Law Commission has put considerable emphasis on the coordinated implementation in Norwegian legislation of the EU/EEA regulatory system in the financial services field.

The Basel Committee originally contemplated implementation of the Basel III reforms as of January 1, 2013. However, implementation of these reforms in the European Economic Area through CRD IV has been delayed. The most recent text of CRD IV was published on April 16, 2013, in the form approved by the European Parliament. The current schedule for the implementation of CRD IV is dependent on completion of the translation of CRD IV text for publication in the European Official Journal by June 30, 2013, in which case implementation will be January 1, 2014. If the translation is published after June 30, 2013, CRD IV will be implemented from July 1, 2014. Full implementation is expected from 2019.

To complement CRD IV legislative package, the European Commission published on June 6, 2012, a legislative proposal for a directive providing for the establishment of an EU-wide framework for the recovery and resolution of credit institutions and investment firms, known as the RRD. The purpose of the draft RRD is to provide authorities with common tools and powers to address banking crises pre-emptively in order to safeguard financial stability and minimize taxpayers’ exposure to losses. CRD IV contemplates that the Basel III Non- Viability Requirements will be implemented in the European Economic Area by way of the RRD and the RRD Loss Absorption Requirement. If such statutory loss absorption at the point of non-viability is not implemented by December 31, 2015, then the latest draft of CRD IV indicates that the European Commission shall review and report on whether provision for such a requirement should be contained in CRD IV and, in light of that review, come forward with appropriate legislative proposals.

In November 2011, the EBA published the formal recommendation and final aggregate results of a recapitalization exercise. The purpose of the exercise was to test the resilience of European banks’ capital in the case of valuation losses due to sovereign credit shocks. Based on the exercise, the EBA concluded that the Bank passed the sovereign debt exposure buffer requirements, and that it has no government bonds which have been written down in its portfolio. The Bank does not have a need for a buffer to be held against sovereign debt exposures based on current market prices.

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The EBA has set the limit for common equity Tier 1 capital at a minimum 9.0 per cent. The FSAN supports the EBA’s recommendation for bank recapitalization, and under prevailing EBA policy as adopted by Norwegian regulation (with effect from July 1, 2012), financial institutions are required to have a common equity Tier 1 capital ratio of minimum 9.0 per cent after adjusting for any unrealized losses on investments in European sovereign debt. Any bank, finance company or mortgage institution with a lower level, or with a level only slightly greater than 9.0 per cent, will be monitored closely.

In March 2013, the Ministry of Finance released the proposal for Norwegian implementation of the Basel III rules in Norway. According to this proposal (which has not yet been implemented), all Norwegian financial institutions will be subject to a 9.0 per cent common equity Tier 1 minimum requirement and 12.5 per cent total capital requirement as of July 1, 2013. In respect of the DNB Bank Group, these requirements will increase by one percentage point each year to reach a common equity Tier 1 ratio and total capital ratio of 12.0 per cent and 15.5 per cent, respectively, as of July 1, 2016. In addition, the ratio may be further increased, including by a counter-cyclical buffer of up to 2.5 per cent, which would have to be met with common equity Tier 1 capital.

In parallel with the capital adequacy proposal, the Norwegian Ministry of Finance published a consultation paper with a proposal suggesting that banks calculating credit risk under the IRB approach, such as the DNB Bank Group, will have to increase their risk weighting of residential mortgages to a minimum level that may be set as high as 35 per cent.

In line with the DNB Group’s capitalization policy, the DNB Group keeps a significant liquidity reserve in DNB ASA (the holding company) for capitalization of the Bank and other subsidiaries. The DNB Group was able to meet the EBA’s sovereign exposure buffer requirements by redistributing available internal capital resources. No external capital injection was required.

Limitations on Large Exposures

A Norwegian bank cannot have a risk-weighted engagement with a single customer exceeding an amount corresponding to 25 per cent of the bank’s own funds (ansvarlig lånekapital). The EU has adopted certain amendments to the large exposures rules in the CRD (including restricting exposures in the interbank market), which were implemented into Norwegian law in 2011.

Regulation of Investment Services Provided by the Bank (DNB Markets)

The Bank also holds a license as an investment firm and is therefore also regulated by the Securities Trading Act. The Securities Trading Act implements the EEA rules corresponding to Directive 2004/39/EC (the Markets in Financial Instruments Directive (the “MiFID”)). The investment services provided by the Bank (other than investment advice) are performed by DNB Markets, which is a department within the Bank and not a separate legal entity.

Deposit Guarantee Schemes

The FEA requires that all savings banks and commercial banks incorporated in Norway shall be members of the Norwegian Banks’ Guarantee Fund. The Guarantee Fund provides a deposit guarantee of NOK 2 million per depositor per bank, should a member bank be unable to meet its commitments. The Norwegian deposit guarantee scheme implements Directive 94/19/EC and Norway have been given until 2018 to reduce the deposit guarantee level to EUR 100,000.

Payment and Capital Adequacy Problems in a Financial Institution

The FEA regulates liquidity and capital adequacy problems in certain financial institutions (finansforetak), including banks. All savings banks and commercial banks incorporated in Norway are required by the FEA to be members of the Norwegian Banks’ Guarantee Fund.

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Chapter 21 of the FEA contains various notification and intervention rules that escalate based on the seriousness of the liquidity and capital adequacy problems of the bank in question.

The board of directors, the chief executive officer and the auditor of a financial institution (finansforetak) each have a duty to notify the FSAN if there is reason to fear that:

● the institution will not be able to fulfill its obligations as they fall due;

● the institution will not be able to satisfy the minimum requirements for capital or other soundness and stability requirements specified by act or regulation; or

● circumstances have occurred that may result in a serious loss of confidence or a financial loss which will significantly weaken or threaten the soundness of the institution.

In such instances (regardless of whether notification has been given or not) the FSAN is given relatively broad powers to promptly enforce measures it considers necessary. In the first instance, the institution itself shall be involved in the process. One of the FSAN’s powers is to ensure that the institution prepares an “audited statement of financial position,” which is a vital policy instrument for determining the institution’s financial situation.

If the audited statement of financial position shows that a “significant part” of the equity and/or 25 per cent of the share capital is lost, the board of directors is immediately obligated to call for a general meeting. “Equity” in this regard is the total amount of core capital and additional capital. Determining what is “significant” will depend on a discretionary assessment. The general meeting shall decide whether the institution has sufficient capital for continued, sound operations and, if so, whether operations should continue. Such decision to continue must be made with a two-thirds majority. If it is decided not to continue operations, the general meeting may vote by simple majority to transfer the institution’s business in its entirety to other financial institutions. If such a resolution is not passed, the general meeting shall pass a resolution to liquidate the institution. If the general meeting does not pass such a resolution (or passes resolutions which the FSAN does not approve of), the FSAN shall appoint a liquidation board to liquidate the company. In this case, the below rules on public administration will apply.

The general meeting of the shareholders, or the relevant authorities if the general meeting of shareholders of the Issuer does not do so, can cancel share capital to compensate for the shortfall, please refer to “Risks Related to the Notes”.

If the audited statement of financial position shows that a significant part of the subordinated loan capital is lost, the board of directors shall present a proposal to the general meeting for a write-down of the share capital corresponding to the losses incurred. If the general meeting does not pass a resolution to this effect, the Norwegian Ministry of Finance may decide that the share capital shall be written down by the amount of capital which pursuant to the audited statement of financial position is lost. Corresponding resolutions may be passed for write-downs of subordinated loan capital (unless otherwise expressly stated in the loan agreements). In addition, the Ministry of Finance may (if necessary in order to ensure continued, sound operations) decide that the share capital must be increased. In this connection, the Ministry of Finance can specify subscription conditions and decide that the pre-emptive right of existing shareholders shall be waived. The share increase of share capital assumes that private or public capital is available in the share issue. If not, the alternative will be public administration as further described below. It is this process that resulted in the state obtaining ownership interests in a number of Norwegian banks at the beginning of the 1990s.

Public Administration and Winding-up

Norwegian banks are not subject to normal insolvency proceedings, i.e. debt settlement proceedings and/or bankruptcy proceedings initiated pursuant to the normal insolvency legislation. Instead, a special regime of

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proceedings – public administration proceedings – applies to banks as further described in Chapter 21 of the FEA.

In the event of illiquidity, or failure to satisfy capital requirements, the FSAN immediately notifies the Ministry of Finance. The Ministry of Finance may decide that the bank shall be placed under public administration, provided that the bank is unable to meet its liabilities as they fall due and that sufficient financial basis for continued, sound operations cannot be secured. The same applies if the bank is unable to meet the capital adequacy requirements unless these are waived by the FSAN. If the parent company in a financial group is placed under public administration, the Ministry of Finance may also decide that all or parts of the group shall be placed under public administration. The decision of the Ministry of Finance is made on a discretionary basis. If the Ministry of Finance decides not to place the bank under public administration, the provisions in Chapter 21 of the F as described above will apply.

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TERMS AND CONDITIONS OF THE NOTES

The following are the Terms and Conditions of the Notes which (subject to the removal of the wording in italics in Condition 9(a) which shall not form part of the Terms and Conditions) will be incorporated by reference into each global Note and each definitive Note, in the latter case only if permitted by the relevant stock exchange or other relevant authority (if any) and agreed by the Issuer and the relevant Dealer at the time of issue but, if not so permitted and agreed, such definitive Note will have endorsed thereon or attached thereto such Terms and Conditions. Part A of the applicable Pricing Supplement (as defined below) in relation to any Tranche (as defined below) of Exempt Notes (as defined below) may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with the following Terms and Conditions, replace or modify the following Terms and Conditions for the purpose of such Notes. The applicable Final Terms (as defined below) or, as the case may be, the applicable Pricing Supplement (as defined below) (or the relevant provisions thereof) will be endorsed upon, or attached to, each global Note and definitive Note. Reference should be made to “Form of Final Terms” and “Form of Pricing Supplement” for a description of the content of the Final Terms or, as the case may be, the Pricing Supplement which will specify which of such terms are to apply in relation to the relevant Notes.

This Note is one of a Series (as defined below) of Notes issued by DNB Bank ASA (the “Issuer”) which is constituted by a Trust Deed (such Trust Deed as modified and/or supplemented and/or restated from time to time, the “Trust Deed”) dated 26 May 2016 made between the Issuer and The Law Debenture Trust Corporation p.l.c. (the “Trustee”, which expression shall include any successor as Trustee).

References herein to the “Notes” shall be references to the Notes of this Series and shall mean, in relation to any Notes represented by a global Note, units of each Specified Denomination in the Specified Currency.

References herein to “Exempt Notes” shall be references to Notes for which no prospectus is required to be published under Directive 2003/71/EC (as amended, including by Directive 2010/73/EU), or any relevant implementing measure in a relevant Member State of the European Economic Area.

An Agency Agreement (as amended, supplemented or restated from time to time, the “Agency Agreement”) dated 26 May 2016 has been entered into in relation to the Notes between the Issuer, the Trustee, Citibank, N.A., London Branch as issuing and principal paying agent and agent bank (the “Agent”, which expression shall include any successor agent), the other paying agents named therein (together with the Agent, the “Paying Agents”, which expression shall include any additional or successor paying agents), Citibank, N.A., London Branch as Exchange Agent (the “Exchange Agent”, which expression shall include any successor exchange agent), Citigroup Global Markets Deutschland AG as registrar (the “Registrar”, which expression shall include any successor registrar) and Citigroup Global Markets Deutschland AG as transfer agent (the “Transfer Agent”, which expression shall include any additional or successor transfer agent). References herein to the “Calculation Agent” shall be references to the person so identified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement.

The final terms for this Note (or the relevant provisions thereof) are set out in (i) in the case of Notes other than Exempt Notes, Part A of a final terms document (the “Final Terms”) relating to the Notes which completes these Terms and Conditions or (ii) in the case of Exempt Notes, a pricing supplement (the “Pricing Supplement”) which replaces or modifies these Terms and Conditions and may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with the Conditions, replace or modify these Terms and Conditions for the purposes of this Exempt Note. References to the “applicable Final Terms” or, as the case may be, to the “applicable Pricing Supplement” are to Part A of the Final Terms (or the relevant provisions thereof) or, as the case may be, to the Pricing Supplement (or the relevant provisions thereof) which are endorsed upon, as attached to, this Note.

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The Trustee acts for the benefit of the holders for the time being of the Notes (the “Noteholders”, which expression shall, in relation to any Notes represented by a global Note, be construed as provided below) in accordance with the provisions of the Trust Deed.

As used herein, “Tranche” means all Notes which are identical in all respects (including as to listing) and “Series” means a Tranche of Notes together with any further Tranche or Tranches of Notes which are (i) expressed to be consolidated and form a single series and (ii) identical in all respects (including as to listing) except for their respective Issue Dates, Interest Commencement Dates and/or Issue Prices.

Copies of the Trust Deed and the Agency Agreement are obtainable during normal business hours by prior appointment at the registered office for the time being of the Trustee being at Fifth Floor, 100 Wood Street, London EC2V 7EX and at the specified office of each of the Paying Agents, the Registrar and the Transfer Agent. Copies of the applicable Final Terms or, as the case may be, the applicable Pricing Supplement may be obtained, upon request, free of charge, from the registered office of the Issuer and the specified offices of the Paying Agents, the Registrar and the Transfer Agent save that, if this Note is an Exempt Note, the applicable Pricing Supplement will only be obtainable by a Noteholder holding one or more Notes and such Noteholder must produce evidence satisfactory to the Issuer and/or the Paying Agent as to its holding of such Notes and identity. If this Note is admitted to trading on the Irish Stock Exchange’s regulated market, the applicable Final Terms will also be published on the website of the Central Bank at http://www.centralbank.ie/regulation/securities-markets/prospectus/Pages/approvedprospectus.aspx and the website of the Irish Stock Exchange at www.ise.ie. The Noteholders are deemed to have notice of, are entitled to the benefit of, and are bound by, all the provisions of the Trust Deed and the applicable Final Terms or, as the case may be, the applicable Pricing Supplement and are deemed to have notice of all the provisions of the Agency Agreement which are applicable to them. The statements in these Terms and Conditions include summaries of, and are subject to, the detailed provisions of the Trust Deed.

Words and expressions defined in the Trust Deed, the Agency Agreement or used in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement shall have the same meanings where used in these Terms and Conditions unless the context otherwise requires or unless otherwise stated and provided that, in the event of inconsistency between the Trust Deed and the Agency Agreement, the Trust Deed will prevail and, in the event of any inconsistency between the Trust Deed or the Agency Agreement and the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, the applicable Final Terms or, as the case may be, the applicable Pricing Supplement will prevail.

1 Form, Denomination and Title

The Notes are in registered form and, in the case of definitive Notes, serially numbered, in the Specified Currency and the Specified Denomination(s). Save as provided in Condition 11, Notes of one Specified Denomination may not be exchanged for Notes of another Specified Denomination.

This Note is a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note or a combination of any of the foregoing, depending upon the Interest Basis shown in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement.

This Note is an Unsubordinated Note or a Subordinated Note, as indicated in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement.

Subject as set out below, title to the Notes will pass upon registration of transfers in accordance with the provisions of the Agency Agreement. The Issuer, the Trustee, the Replacement Agent (as defined in the Agency Agreement), the Registrar, any Transfer Agent and any Paying Agent may deem and treat the registered holder of any Note as the absolute owner thereof (whether or not overdue and notwithstanding any notice of ownership or writing thereon or notice of any previous loss or theft thereof) for all purposes but, in the case of any global Note, without prejudice to the provisions set out

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in the next succeeding paragraph, the expressions “Noteholder” and “holder of Notes” and related expressions shall be construed accordingly.

For so long as The Depository Trust Company (“DTC”) or its nominee is the registered holder of a global Note or for so long as any common nominee for Euroclear Bank S.A./N.V. (“Euroclear”) and/or Clearstream, Luxembourg is the registered holder of a global Note, each person (other than DTC or Euroclear and/or Clearstream Banking, société anonyme (“Clearstream, Luxembourg”), as the case may be) who is for the time being shown in the records of DTC or Euroclear or Clearstream, Luxembourg, as the case may be, as the holder of a particular nominal amount of such Notes (in which regard any certificate or other document issued by such clearing system as to the nominal amount of such Notes standing to the account of any person shall, save in the case of manifest error, be conclusive and binding for all purposes, including any form of statement or printout of electronic records provided by the relevant clearing system in accordance with its usual procedures and in which the holder of a particular nominal amount of such Notes is clearly identified together with the amount of such holding) shall be treated by the Issuer, the Trustee, the Agent, the Replacement Agent and any other Paying Agent as the holder of such nominal amount of such Notes for all purposes other than with respect to the payment of principal or interest on the Notes, for which purpose, in the case of Notes represented by global Notes, the registered holder or, in the case of a global Note registered in the name of DTC or its nominee, DTC or its nominee or, in the case of a global Note registered in the name of any common nominee for Euroclear and/or Clearstream, such common nominee shall be treated by the Issuer, the Trustee, the Agent and any other Paying Agent as the holder of such Notes in accordance with and subject to the terms of the relevant global Note and the expressions “Noteholder” and “holder of Notes” and related expressions shall be construed accordingly.

Notes which are represented by a global Note will be transferable only in accordance with the rules and procedures for the time being of DTC and/or Euroclear and/or Clearstream, Luxembourg, as the case may be.

References to DTC and/or Euroclear and/or Clearstream, Luxembourg shall, whenever the context so permits, be deemed to include a reference to any additional or alternative clearing system approved by the Issuer, the Trustee, the Agent and the Registrar.

2 Status of the Unsubordinated Notes

This Condition applies only to Unsubordinated Notes specified as such in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement and references to “Notes” in this Condition shall be construed accordingly.

The Notes are direct, unconditional, unsubordinated and unsecured obligations of the Issuer and rank pari passu among themselves and (save for certain debts required to be preferred by law) equally with all other unsecured obligations (including deposits) (other than subordinated obligations, if any) of the Issuer, present and future, from time to time outstanding. So long as any of the Notes remains outstanding (as defined in the Trust Deed), the Issuer undertakes to ensure that the obligations of the Issuer under the Notes rank and will rank pari passu with all other unsecured and unsubordinated obligations (including deposits) of the Issuer and with all its unsecured and unsubordinated obligations under guarantees of obligations of third parties, in each case except for any obligations preferred by mandatory provisions of applicable law.

3 Status of the Subordinated Notes

This Condition 3 applies only to Subordinated Notes specified as such in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement and references to “Notes” and “Noteholders” in this Condition 3 shall be construed accordingly.

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(a) Status and ranking

The Notes constitute dated, unsecured and subordinated obligations (ansvarlig lånekapital) of the Issuer, and will at all times rank pari passu without any preference among themselves. The Notes are subordinated as described in Condition 3(b).

(b) Liquidation, dissolution or other winding-up

In the event of a liquidation, dissolution or winding-up of the Issuer by way of public administration (except, in any such case, a solvent liquidation, dissolution, or winding-up solely for the purposes of a reorganisation, reconstruction or amalgamation of the Issuer, the terms of which reorganisation, reconstruction or amalgamation have previously been approved by the Trustee or an Extraordinary Resolution (as defined in the Trust Deed) of the holders of the Notes of the relevant Series and do not provide that the Notes thereby become redeemable or repayable), claims of the Noteholders (and the Trustee on their behalf) against the Issuer in respect of or arising under the Notes and the Trust Deed (including any amounts attributable to the Notes and any damages awarded for breach of any obligations thereunder) shall rank:

(i) pari passu without any preference among themselves;

(ii) at least pari passu with claims in respect of Parity Securities;

(iii) in priority to claims in respect of Junior Securities; and

(iv) junior to any present or future claims of Senior Creditors.

Under Norwegian legislation, if the Issuer’s most recent audited accounts reveal that its net assets are less than or equal to 25 per cent of its share capital, the general meeting of shareholders of the Issuer can or the relevant Norwegian authorities pursuant to powers granted to them under Chapter 21 of the Norwegian Financial Enterprises and Financial Groups Act (in Norwegian: Lov om finansforetak og finanskonsern av 10. april no. 17) (the “Financial Enterprises Act”) can if the general meeting of shareholders of the Issuer does not do so: first, cancel share capital to compensate for the shortfall and secondly, if any remaining shortfall exceeds a substantial part (as determined by the general meeting of shareholders of the Issuer or by the relevant Norwegian authorities) of the Issuer’s subordinated loan capital, cancel, in whole or in part, such subordinated loan capital (which would include principal in respect of all Subordinated Notes).

The Issuer shall give not more than 30 nor less than five Business Days’ (as defined in Condition 4(b)(i)) prior notice to the Trustee, the Agent and the Registrar and to the Noteholders in accordance with Condition 13 of any cancellation of principal in respect of any Subordinated Notes pursuant to this Condition 3(c).

To the extent that part only of the outstanding principal amount of any Subordinated Notes has been cancelled as provided above, interest will continue to accrue in accordance with the terms hereof on the then outstanding principal amount of such Subordinated Notes.

(d) Definitions

In these Terms and Conditions, the following terms shall bear the following meanings:

“Junior Securities” means all classes of share capital of the Issuer and any obligations of the Issuer ranking or expressed to rank junior to the Notes.

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“Norwegian FSA” means the Financial Supervisory Authority of Norway (Finanstilsynet) or such other agency of the Kingdom of Norway which assumes or performs the functions which, as at the Issue Date are performed by such Authority.

“Parity Securities” means any present or future instruments issued by the Issuer which are eligible to be recognised as Tier 2 Capital from time to time by the Norwegian FSA, any guarantee, indemnity or other contractual support arrangement entered into by the Issuer in respect of securities (regardless of name or designation) issued by a subsidiary of the Issuer which are eligible to be recognised as Tier 2 Capital and any instruments issued, and subordinated guarantees, indemnities or other contractual support arrangements entered into, by the Issuer which rank, or are expressed to rank, pari passu therewith, but excluding Junior Securities.

“Senior Creditors” means (a) depositors of the Issuer, (b) other unsubordinated creditors of the Issuer and (c) subordinated creditors of the Issuer in respect of any present or future obligation, whether dated or undated, of the Issuer which by its terms is, or is expressed to be, subordinated in the event of liquidation, dissolution, administration or other winding-up of the Issuer, by way of public administration or otherwise, to the claims of depositors and all other unsubordinated creditors of the Issuer, excluding Parity Securities and Junior Securities.

“Tier 2 Capital” means Tier 2 capital (Tilleggskapital) as described in paragraph 16 of the Norwegian regulation of 1990-06-01 no. 435 about calculation of risk capital of financial institutions, clearing houses and securities trading companies (FOR 1990- 06-01 nr 435: Forskrift om beregning av ansvarlig lånekapital for finansinstitusjoner, oppgjørssentraler og verdipapirforetak), as amended or replaced.

4 Interest

(a) Interest on Fixed Rate Notes

Each Fixed Rate Note bears interest from (and including) the Interest Commencement Date at the rate(s) per annum equal to the Rate(s) of Interest. Interest will be payable in arrear on the Interest Payment Date(s) in each year up to (and including) the Maturity Date.

If the Notes are in definitive form, except as provided in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, the amount of interest payable on each Interest Payment Date in respect of the Fixed Interest Period ending on (but excluding) such date will amount to the Fixed Coupon Amount. Payments of interest on any Interest Payment Date will, if so specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, amount to the Broken Amount(s) so specified.

As used in these Terms and Conditions, “Fixed Interest Period” means the period from (and including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date.

Except in the case of Notes in definitive form where a Fixed Coupon Amount or Broken Amount is specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, interest shall be calculated in respect of any period by applying the Rate of Interest to:

(A) in the case of Fixed Rate Notes which are represented by a global Note, the aggregate outstanding nominal amount of the Fixed Rate Notes represented by such global Note; or

(B) in the case of Fixed Rate Notes in definitive form, the Calculation Amount,

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and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Fixed Rate Note in definitive form comprises more than one Calculation Amount, the amount of interest payable in respect of such Fixed Rate Note shall be the aggregate of the amounts (determined in the manner provided above) for each Calculation Amount comprising the Specified Denomination without any further rounding.

“Day Count Fraction” means, in respect of the calculation of an amount of interest in accordance with this Condition 4(a):

(i) if “Actual/Actual (ICMA)” is specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement:

(a) in the case of Notes where the number of days in the relevant period from (and including) the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to (but excluding) the relevant payment date (the “Accrual Period”) is equal to or shorter than the Determination Period during which the Accrual Period ends, the number of days in such Accrual Period divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Dates (as specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement) that would occur in one calendar year; or

(b) in the case of Notes where the Accrual Period is longer than the Determination Period during which the Accrual Period ends, the sum of:

(1) the number of days in such Accrual Period falling in the Determination Period in which the Accrual Period begins divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Dates (as specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement) that would occur in one calendar year; and

(2) the number of days in such Accrual Period falling in the next Determination Period divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Dates that would occur in one calendar year; and

(ii) if “30/360” is specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, the number of days in the period from (and including) the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to (but excluding) the relevant payment date (such number of days being calculated on the basis of a year of 360 days with 12 30-day months) divided by 360.

In these Terms and Conditions:

“Determination Period” means the period from (and including) a Determination Date to (but excluding) the next Determination Date (including, where either the Interest Commencement Date or the final Interest Payment Date is not a Determination Date, the period commencing on the first Determination Date prior to, and ending on the first Determination Date falling after, such date); and

“sub-unit” means, with respect to any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, with respect to euro, means one cent.

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(b) Interest on Floating Rate Notes

(i) Interest Payment Dates

Each Floating Rate Note bears interest from (and including) the Interest Commencement Date and such interest will be payable in arrear on either:

(A) the Specified Interest Payment Date(s) in each year specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement; or

(B) if no Specified Interest Payment Date(s) is/are specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, each date (each such date, together with each Specified Interest Payment Date, an “Interest Payment Date”) which falls the number of months or other period specified as the Specified Period in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date.

Such interest will be payable in respect of each “Interest Period” (which expression shall, in these Terms and Conditions, mean the period from (and including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date).

If a Business Day Convention is specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement and (x) if there is no numerically corresponding day in the calendar month in which an Interest Payment Date should occur or (y) if any Interest Payment Date would otherwise fall on a day which is not a Business Day, then, if the Business Day Convention specified is:

(1) in any case where Specified Periods are specified in accordance with Condition 4(b)(i)(B) above, the “Floating Rate Convention”, such Interest Payment Date (i) in the case of (x) above, shall be the last day that is a Business Day in the relevant month and the provisions of (B) below shall apply mutatis mutandis or (ii) in the case of (y) above, shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event (A) such Interest Payment Date shall be brought forward to the immediately preceding Business Day and (B) each subsequent Interest Payment Date shall be the last Business Day in the month which falls in the Specified Period after the preceding applicable Interest Payment Date occurred; or

(2) the “Following Business Day Convention”, such Interest Payment Date shall be postponed to the next day which is a Business Day; or

(3) the “Modified Following Business Day Convention”, such Interest Payment Date shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event such Interest Payment Date shall be brought forward to the immediately preceding Business Day; or

(4) the “Preceding Business Day Convention”, such Interest Payment Date shall be brought forward to the immediately preceding Business Day.

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In these Terms and Conditions, “Business Day” means a day which is both:

(A) a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in London and any Additional Business Center specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement; and

(B) either (1) in relation to any sum payable in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney and Auckland, respectively) or (2) in relation to any sum payable in euro, a day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET2) System (the “TARGET2 System”) is open.

(ii) Rate of Interest

The Rate of Interest payable from time to time in respect of Floating Rate Notes will be determined in the manner specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement.

(A) Screen Rate Determination for Floating Rate Notes

Where Screen Rate Determination is specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will, subject as provided below, be either:

(1) the offered quotation; or

(2) the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the offered quotations,

(expressed as a percentage rate per annum) for the Reference Rate being the Reference Rate specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, provided that in the case of Notes other than Exempt Notes, the Reference Rate in respect of Floating Rate Notes shall be LIBOR or EURIBOR, which appears or appear, as the case may be, on the Relevant Screen Page as at the Specified Time on the Interest Determination Date in question plus or minus (as indicated in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement) the Margin (if any), all as determined by the Agent. If five or more of such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Agent for the purpose of determining the arithmetic mean (rounded as provided above) of such offered quotations.

If the Relevant Screen Page is not available or if, in the case of sub-paragraph (1) above, no such offered quotation appears or, in the case of sub-paragraph (2) above, fewer than three such offered quotations appear, in each case at the time specified in

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the preceding paragraph, the Agent shall request the principal London office of each of the Reference Banks to provide the Agent with its offered quotation (expressed as a percentage rate per annum) for the Reference Rate at approximately the Specified Time on the Interest Determination Date in question. If two or more of the Reference Banks provide the Agent with such offered quotations, the Rate of Interest for such Interest Period shall be the arithmetic mean (rounded if necessary to the fifth decimal place with 0.000005 being rounded upwards) of such offered quotations plus or minus (as appropriate) the Margin (if any), all as determined by the Agent. “Reference Banks” means (i) in the case of a determination of LIBOR, the principal London office of four major banks in the London inter-bank market, (ii) in the case of a determination of EURIBOR, the principal Eurozone office of four major banks in the Eurozone interbank market, or (iii) in the case of a determination of any other Reference Rate, the principal Relevant Financial Centre office of four major banks in the interbank market of the Relevant Financial Centre, in each case selected by the Agent, in consultation with the Issuer.

If on any Interest Determination Date one only or none of the Reference Banks provides the Agent with such offered quotations as provided in the preceding paragraph, the Rate of Interest for the relevant Interest Period shall be the rate per annum which the Agent determines as being the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the rates, as communicated to (and at the request of) the Agent by the Reference Banks or any two or more of them, at which such banks were offered, at approximately the Specified Time on the relevant Interest Determination Date, deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate by leading banks in the London interbank market (if the Reference Rate is LIBOR) or the Eurozone interbank market (if the Reference Rate is EURIBOR) or the interbank market of the Relevant Financial Centre (if any other Reference Rate is used) plus or minus (as appropriate) the Margin (if any) or, if fewer than two of the Reference Banks provide the Agent with such offered rates, the offered rate for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate, or the arithmetic mean (rounded as provided above) of the offered rates for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate, at which, at approximately the Specified Time on the relevant Interest Determination Date, any one or more banks (which bank or banks is or are in the opinion of the Issuer and the Trustee suitable for such purpose) informs the Agent it is quoting to leading banks in the London interbank market (if the Reference Rate is LIBOR) or the Eurozone interbank market (if the Reference Rate is EURIBOR) or the inter-bank market of the Relevant Financial Centre (if any other Reference Rate is used) plus or minus (as appropriate) the Margin (if any), provided that, if the Rate of Interest cannot be determined in accordance with the foregoing provisions of this paragraph, the Rate of Interest shall be determined as at the last preceding Interest Determination Date (though substituting, where a different Margin is to be applied to the relevant Interest Period from that which applied to the last preceding Interest Period, the Margin relating to the relevant Interest Period, in place of the Margin relating to that last preceding Interest Period).

(B) ISDA Determination for Floating Rate Notes

Where ISDA Determination is specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will be the

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relevant ISDA Rate plus or minus (as indicated in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement) the Margin (if any). For the purposes of this Condition 4(b)(ii)(B), “ISDA Rate” for an Interest Period means a rate equal to the Floating Rate that would be determined by the Agent under an interest rate swap transaction if the Agent were acting as Calculation Agent for that swap transaction under the terms of an agreement incorporating the 2006 ISDA Definitions, as published by the International Swaps and Derivatives Association, Inc. and as amended and updated as at the Issue Date of the first Tranche of the Notes (the “ISDA Definitions”) and under which:

(1) the Floating Rate Option is as specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement;

(2) the Designated Maturity is a period specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement; and

(3) the relevant Reset Date is the day specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement.

For the purposes of this Condition 4(b)(ii)(B), “Floating Rate”, “Calculation Agent”, “Floating Rate Option”, “Designated Maturity” and “Reset Date” have the meanings given to those terms in the ISDA Definitions.

Where Linear Interpolation is specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement in respect of an Interest Period, the Rate of Interest for such Interest Period shall be calculated by the Agent by straight line linear interpolation by reference to two rates based on the relevant Reference Rate (where Screen Rate Determination is specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement) or the relevant Floating Rate Option (where ISDA Determination is specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement), one of which shall be determined as if the Designated Maturity were the period of time for which rates are available next shorter than the length of the relevant Interest Period and the other of which shall be determined as if the Designated Maturity were the period of time for which rates are available next longer than the length of the relevant Interest Period; provided, however that if there is no rate available for the period of time next shorter or, as the case may be, next longer, then the Agent shall determine such rate at such time and by reference to such sources as it determines appropriate.

“Designated Maturity” means: (a) in relation to Screen Rate Determination, the period of time designated in the Reference Rate, and (b) in relation to ISDA Determination, the Designated Maturity.

(iii) Minimum Rate of Interest and/or Maximum Rate of Interest

If the applicable Final Terms or, as the case may be, the applicable Pricing Supplement specifies a Minimum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the provisions of Condition 4(b)(ii) above is less than such Minimum Rate of Interest, the Rate of Interest for such Interest Period shall be such Minimum Rate of Interest.

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If the applicable Final Terms or, as the case may be, the applicable Pricing Supplement specifies a Maximum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the provisions of Condition 4(b)(ii) above is greater than such Maximum Rate of Interest, the Rate of Interest for such Interest Period shall be such Maximum Rate of Interest.

(iv) Determination of Rate of Interest and Calculation of Interest Amounts

The Agent will at or as soon as practicable after each time at which the Rate of Interest is to be determined, determine the Rate of Interest for the relevant Interest Period.

The Agent will calculate the amount of interest (the “Interest Amount”) payable on the Floating Rate Notes for the relevant Interest Period, by applying the Rate of Interest to:

(A) in the case of Floating Rate Notes which are represented by a global Note, the aggregate outstanding nominal amount of the Notes represented by such global Note; or

(B) in the case of Floating Rate Notes in definitive form, the Calculation Amount;

and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Floating Rate Note in definitive form comprises more than one Calculation Amount, the Interest Amount payable in respect of such Note shall be the aggregate of the amounts (determined in the manner provided above) for each Calculation Amount comprising the Specified Denomination without any further rounding.

“Day Count Fraction” means, in respect of the calculation of an amount of interest in accordance with this Condition 4(b):

(i) if “Actual/Actual (ISDA)” or “Actual/Actual” is specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, the actual number of days in the Interest Period divided by 365 (or, if any portion of that Interest Period falls in a leap year, the sum of (A) the actual number of days in that portion of the Interest Period falling in a leap year divided by 366 and (B) the actual number of days in that portion of the Interest Period falling in a non-leap year divided by 365);

(ii) if “Actual/365 (Fixed)” is specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, the actual number of days in the Interest Period divided by 365;

(iii) if “Actual/365 (Sterling)” is specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, the actual number of days in the Interest Period divided by 365 or, in the case of an Interest Payment Date falling in a leap year, 366;

(iv) if “Actual/360” is specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, the actual number of days in the Interest Period divided by 360;

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(v) if “30/360”, “360/360” or “Bond Basis” is specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, the number of days in the Interest Period divided by 360, calculated on a formula basis as follows:

[360 (Y2 - Y1)] [30 (M2 - M1)]  (D2 - D1) Day Count Fraction = 360

where:

“Y1” is the year, expressed as a number, in which the first day of the Interest Period falls;

“Y2” is the year, expressed as a number, in which the day immediately following the last day included in the Interest Period falls;

“M1” is the calendar month, expressed as a number, in which the first day of the Interest Period falls;

“M2” is the calendar month, expressed as a number, in which the day immediately following the last day included in the Interest Period falls;

“D1” is the first calendar day, expressed as a number, of the Interest Period, unless

such number would be 31, in which case D1 will be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last day

included in the Interest Period, unless such number would be 31 and D1 is greater

than 29, in which case D2 will be 30;

(vi) if “30E/360” or “Eurobond Basis” is specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, the number of days in the Interest Period divided by 360, calculated on a formula basis as follows:

[360  (Y2 - Y1)] [30  (M2 - M1)]  (D2 - D1) Day Count Fraction = 360

where:

“Y1” is the year, expressed as a number, in which the first day of the Interest Period falls;

“Y2” is the year, expressed as a number, in which the day immediately following the last day included in the Interest Period falls;

“M1” is the calendar month, expressed as a number, in which the first day of the Interest Period falls;

“M2” is the calendar month, expressed as a number, in which the day immediately following the last day included in the Interest Period falls;

“D1” is the first calendar day, expressed as a number, of the Interest Period, unless

such number would be 31, in which case D1 will be 30; and

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“D2” is the calendar day, expressed as a number, immediately following the last day included in the Interest Period, unless such number would be 31, in which case D2 will be 30; and

(vii) if “30E/360 (ISDA)” is specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, the number of days in the Interest Period divided by 360, calculated on a formula basis as follows:

[360  (Y2 - Y1)] [30  (M2 - M1)]  (D2 - D1) Day Count Fraction = 360

where:

“Y1” is the year, expressed as a number, in which the first day of the Interest Period falls:

“Y2” is the year, expressed as a number, in which the day immediately following the last day included in the Interest Period falls;

“M1” is the calendar month, expressed as a number, in which the first day of the Interest Period falls;

“M2” is the calendar month, expressed as a number, in which the day immediately following the last day included in the Interest Period falls;

“D1” is the first calendar day, expressed as a number, of the Interest Period, unless (i)

that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last day included in the Interest Period, unless (i) that day is the last day of February but not

the Maturity Date or (ii) such number would be 31, in which case D2 will be 30.

(v) Notification of Rate of Interest and Interest Amounts

The Agent or the Calculation Agent will cause the Rate of Interest and each Interest Amount for each Interest Period and the relevant Interest Payment Date to be notified to the Issuer, the Trustee and any stock exchange on which the relevant Floating Rate Notes are for the time being listed (by no later than the first day of each Interest Period) and notice thereof to be published in accordance with Condition 13 as soon as possible after their determination but in no event later than the fourth London Business Day (as defined below) thereafter. Each Interest Amount and Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without prior notice in the event of an extension or shortening of the Interest Period. Any such amendment will be promptly notified to each stock exchange on which the relevant Floating Rate Notes are for the time being listed and to the Noteholders in accordance with Condition 13. For the purposes of this Condition 4(b)(v), the expression “London Business Day” means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for general business in London.

(vi) Determination or Calculation by Trustee

If for any reason at any relevant time the Agent or, as the case may be, the Calculation Agent defaults in its obligation to determine the Rate of Interest or the Agent defaults in its

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obligation to calculate any Interest Amount in accordance with the above provisions, in accordance with Condition 4(b)(iv) above, the Trustee or an expert appointed on its behalf shall determine the Rate of Interest at such rate as, in its absolute discretion (having such regard as it shall think fit to the foregoing provisions of this Condition, but subject always to any Minimum Rate of Interest or Maximum Rate of Interest specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement), it shall deem fair and reasonable in all the circumstances or, as the case may be, the Trustee shall calculate the Interest Amount(s) in such manner as it shall deem fair and reasonable in all the circumstances and each such determination or calculation shall be deemed to have been made by the Agent or the Calculation Agent, as applicable.

(vii) Certificates to be Final

All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 4(b), whether by the Agent or, if applicable, the Calculation Agent, shall (in the absence of wilful default, bad faith or manifest error) be binding on the Issuer, the Trustee, the Agent, the Calculation Agent (if applicable), the other Paying Agents, the Registrar, the Exchange Agent, the Transfer Agent and all Noteholders and (in the absence as aforesaid) no liability to the Issuer or the Noteholders shall attach to the Agent or, if applicable, the Calculation Agent or the Trustee in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions.

Each Note (or in the case of the redemption of part only of a Note, that part only of such Note) will cease to bear interest (if any) from the date for its redemption unless payment of principal is improperly withheld or refused or, in the case of Subordinated Notes, the consent of the Norwegian FSA for such payment has not been given or, having been given, has been withdrawn and not replaced. In such event, interest will continue to accrue as provided in the Trust Deed and these Terms and Conditions.

To the extent that part only of the outstanding principal amount of any Subordinated Notes has been cancelled as provided above, interest will continue to accrue in accordance with the terms hereof on the then outstanding principal amount of such Subordinated Notes, as the case may be.

5 Payments

(a) Method of Payment

Subject as provided below:

(i) payments in a Specified Currency other than euro will be made by credit or transfer to an account in the relevant Specified Currency (which, in the case of a payment in Japanese Yen to a non-resident of Japan, shall be a non-resident account) maintained by the payee with, or, at the option of the payee, by a cheque in such Specified Currency drawn on, a bank in the principal financial centre of the country of such Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney and Auckland respectively); and

(ii) payments in euro will be made by credit or transfer to a euro account (or any other account to which euro may be credited or transferred) specified by the payee or, at the option of the payee, by a euro cheque.

References to “Specified Currency” will include any successor currency under applicable law.

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(b) Payments Subject to Fiscal and Other Laws

Payments will be subject in all cases, to (i) any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 7 and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the “Code”) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, official interpretations thereof, or (without prejudice to the provisions of Condition 7) law implementing an intergovernmental approach thereto.

The holder of a global Note shall be the only person entitled to receive payments in respect of Notes represented by such global Note and the Issuer will be discharged by payment to, or to the order of, the holder of such global Note in respect of each amount so paid. Each of the persons shown in the records of DTC, Euroclear or Clearstream, Luxembourg as the beneficial holder of a particular nominal amount of Notes represented by such global Note must look solely to either DTC, Euroclear or Clearstream, Luxembourg, as the case may be, for such beneficial holder’s share of each payment so made by the Issuer to, or to the order of, the holder of such global Note.

All amounts payable to DTC or its nominee as registered holder of a global Note in respect of Notes denominated in a Specified Currency other than U.S. dollars shall be paid by transfer by the Registrar to an account in the relevant Specified Currency of the Exchange Agent on behalf of DTC or its nominee for payment in such Specified Currency or conversion into U.S. dollars in accordance with the provisions of the Agency Agreement.

Payments of principal in respect of any Notes (whether in definitive or global form) will be made in the manner provided in Condition 5(a) above to the persons in whose name such Notes are registered at the close of business on the business day (being for this purpose a day on which banks are open for business in the city where the Registrar is located) immediately prior to the relevant payment date against presentation of such Notes at the specified office of the Registrar or a Transfer Agent.

Payments of interest due on a Note (whether in definitive or global form) will be made in the manner specified in Condition 5(a) above to the person in whose name such Note is registered (i) where the Notes are in global form, at the close of the business day (being for this purpose a day on which DTC and/or Euroclear and Clearstream, Luxembourg, as the case may be, are open for business) before the relevant due date and (ii) where the Notes are in definitive form, at the close of business on the fifteenth day (whether or not such fifteenth day is a business day (being for this purpose a day on which banks are open for business in the city where the specified office of the Registrar is located)) prior to such due date (in the case of (i) and (ii), each the “Record Date”). In the case of payments by cheque, cheques will be mailed to the holder (or the first named of joint holders) at such holder’s registered address on the business day (as described above) immediately preceding the due date.

If payment in respect of any Notes is required by credit or transfer as referred to in Condition 5(a), application for such payment must be made by the holder to the Registrar not later than the relevant Record Date.

(d) Payment Day

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If the date for payment of any amount in respect of any Note is not a Payment Day, the holder thereof shall not be entitled to payment until the next following Payment Day in the relevant place and shall not be entitled to further interest or other payment in respect of such delay. For these purposes, “Payment Day” means any day which is (subject to Condition 8):

(i) a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in:

(A) in the case of Notes in definitive form only, the relevant place of presentation;

(B) any Additional Financial Centre specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement; and

(ii) either (1) in relation to any sum payable in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney and Auckland respectively) or (2) in relation to any sum payable in euro, a day on which the TARGET2 System is open.

(e) Interpretation of Principal and Interest

Any reference in these Terms and Conditions to principal in respect of the Notes shall be deemed to include, as applicable:

(i) any additional amounts which may be payable with respect to principal under Condition 7 or under any undertaking or covenant given in addition thereto, or in substitution therefor, pursuant to the Trust Deed;

(ii) the Final Redemption Amount of the Notes;

(iii) the Early Redemption Amount of the Notes;

(iv) the Optional Redemption Amount(s) (if any) of the Notes;

(v) in relation to Zero Coupon Notes, the Amortised Face Amount (as defined in Condition 6(e)); and

(vi) any premium and any other amounts (other than interest) which may be payable by the Issuer under or in respect of the Notes.

Any reference in these Terms and Conditions to interest in respect of the Notes shall be deemed to include, as applicable, any additional amounts which may be payable with respect to interest under Condition 7 or under any undertaking or covenant given in addition thereto, or in substitution therefor, pursuant to the Trust Deed.

6 Redemption and Purchase

(a) At Maturity

Unless previously redeemed or purchased and cancelled as specified below or (pursuant to Condition 6(k)) substituted, each Note will be redeemed by the Issuer at its Final Redemption Amount specified in, or determined in the manner specified in, the applicable Final Terms or, as the case may be, the

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applicable Pricing Supplement in the relevant Specified Currency on the Maturity Date together (if appropriate) with interest accrued to (but excluding) the date of redemption.

(b) Redemption for Tax Reasons

Subject, in the case of Subordinated Notes to the provisions of Condition 6(i), the Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time (if this Note is not a Floating Rate Note) or on any Interest Payment Date (if this Note is a Floating Rate Note), on giving not less than 30 nor more than 60 days’ notice to the Trustee and the Agent and, in accordance with Condition 13, the Noteholders (which notice shall be irrevocable), if the Issuer satisfies the Trustee immediately before the giving of such notice that:

(i) on the occasion of the next payment due under the Notes, the Issuer has or will become obliged to pay additional amounts as provided or referred to in Condition 7 as a result of any change in, or amendment to, the laws or regulations of the Kingdom of Norway or any political subdivision or any authority thereof or any authority or agency therein having power to tax, or any change in the application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after the Issue Date of the first Tranche of the Notes; and

(ii) such obligation cannot be avoided by the Issuer taking reasonable measures available to it,

provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts were a payment in respect of the Notes then due.

Prior to the publication of any notice of redemption pursuant to this Condition, the Issuer shall deliver to the Trustee a certificate signed by two Directors of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred, and an opinion of independent legal advisers of recognised standing to the effect that the Issuer has or will become obliged to pay such additional amounts as a result of such change or amendment and the Trustee shall be entitled to accept the certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent set out above, in which event it shall be conclusive and binding on the Noteholders.

Notes redeemed pursuant to this Condition 6(b) will be redeemed at their Early Redemption Amount referred to in Condition 6(e) below together (if appropriate) with interest accrued to (but excluding) the date of redemption.

This Condition 6(c) is not applicable for Subordinated Notes prior to five years from their Issue Date and references to “Notes” in this Condition 6(c) shall be construed accordingly.

Subject, in the case of Subordinated Notes, to the provisions of Condition 6(i), if the Issuer Call is specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement to apply, the Issuer shall, having given:

(i) not less than 15 nor more than 30 days’ notice (or not less than any other minimum period of notice nor more than any other maximum period of notice as may be specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement) to the Noteholders in accordance with Condition 13; and

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(ii) not less than 15 days before the giving of the notice referred to in (i), notice to the Trustee, the Agent and the Registrar,

(which notices shall be irrevocable and shall specify the date fixed for redemption), redeem all or some only of the Notes then outstanding on any Optional Redemption Date and at the Optional Redemption Amount(s) specified in, or determined in the manner specified in, the applicable Final Terms or, as the case may be, the applicable Pricing Supplement together, if appropriate, with interest accrued to (but excluding) the relevant Optional Redemption Date. Any such redemption must be of a nominal amount not less than the Minimum Redemption Amount or not more than the Higher Redemption Amount, in each case as may be specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement. In the case of a partial redemption of Notes, the Notes (or, as the case may be, parts of Notes) to be redeemed (“Redeemed Notes”) will be selected individually by lot (without involving any part only of a Note in the case of Redeemed Notes represented by definitive Notes) and in accordance with the rules of DTC and/or Euroclear and/or Clearstream, Luxembourg (to be reflected in the records of Euroclear and Clearstream, Luxembourg as either a pool factor or a reduction in nominal amount, at their discretion), as the case may be, in the case of Redeemed Notes represented by a global Note, in each case not more than 30 days prior to the date fixed for redemption (such date of selection being hereinafter called the “Selection Date”). In the case of Redeemed Notes represented by definitive Notes, a list of the serial numbers of such Redeemed Notes will be published in accordance with Condition 13 not less than 15 days prior to the date fixed for redemption. No exchange of the relevant global Note will be permitted during the period from (and including) the Selection Date to (and including) the date fixed for redemption pursuant to this Condition 6(c) and notice to that effect shall be given by the Issuer to the Noteholders in accordance with Condition 13 at least five days prior to the Selection Date.

(d) Redemption at the Option of the Noteholders (Investor Put)

This Condition 6(d) is not applicable for Subordinated Notes and references to “Notes” in this Condition 6(d) shall be construed accordingly.

If the Investor Put is specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement to apply, upon the holder of any Note giving to the Issuer in accordance with Condition 13 not less than 15 nor more than 30 days’ notice the Issuer will, upon the expiry of such notice, redeem, subject to, and in accordance with, the terms specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, in whole (but not in part), such Note on the Optional Redemption Date and at the Optional Redemption Amount together, if appropriate, with interest accrued to (but excluding) the Optional Redemption Date. It may be that before an Investor Put can be exercised, certain conditions and/or circumstances will need to be satisfied. Where relevant, the provisions will be set out in the applicable Pricing Supplement.

If this Note is in definitive form and held outside DTC or Euroclear or Clearstream, Luxembourg, to exercise the right to require redemption of this Note under this Condition the holder of this Note must deliver such Note at the specified office of any Transfer Agent or the Registrar at any time during normal business hours of such Transfer Agent or the Registrar falling within the notice period, accompanied by a duly completed and signed notice of exercise in the form (for the time being current) obtainable from any specified office of any Transfer Agent or the Registrar (a “Put Notice”) and in which the holder must specify a bank account (or, if payment is by cheque, an address) to which payment is to be made under this Condition.

If this Note is cleared through DTC, to exercise the right to require redemption of this Note under this Condition the holder of this Note must, within the notice period, give notice to the Registrar of such exercise in the form of a Put Notice acceptable to the Registrar and irrevocably instruct DTC to debit such holder’s securities account with this Note on or before the Optional Redemption Date in accordance with applicable DTC practice.

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If this Note is represented by a global Note or is a Note in definitive form and held through Euroclear or Clearstream, Luxembourg, to exercise the right to require redemption of this Note under this Condition the holder of this Note must, within the notice period, give notice to the Agent or the Registrar of such exercise, where applicable, in accordance with the standard procedures of Euroclear and Clearstream, Luxembourg (which may include notice being given on his instruction by Euroclear, Clearstream, Luxembourg, or any common depositary or common safekeeper, as the case may be, for them to the Agent by electronic means) in a form acceptable to Euroclear or Clearstream, Luxembourg, as the case may be, from time to time.

Any Put Notice given by a holder of any Note pursuant to this Condition 6(d) shall be irrevocable except, in the case of Unsubordinated Notes, where prior to the due date of redemption an Event of Default shall have occurred and the Trustee has declared the Notes to be immediately due and repayable pursuant to Condition 9 in which event such holder, at its option, may elect by notice to the Issuer to withdraw the notice given pursuant to this Condition 6(d).

(e) Early Redemption Amounts

For the purpose of Condition 6(b) above and Condition 6(j) and Condition 9 below, the Notes will be redeemed at the Early Redemption Amount calculated as follows:

(i) in the case of Notes with a Final Redemption Amount equal to the Issue Price, at the Final Redemption Amount thereof;

(ii) in the case of Notes (other than Zero Coupon Notes) with a Final Redemption Amount which is or may be less or greater than the Issue Price or which is payable in a Specified Currency other than that in which the Notes are denominated, at the amount specified in the applicable Final Terms, or Pricing Supplement, as the case may be, or if no such amount is so specified, at their nominal amount; or

(iii) in the case of Zero Coupon Notes, at an amount (the “Amortised Face Amount”) equal to the sum of:

(A) the Reference Price specified in the applicable Final Terms; and

(B) the product of the Accrual Yield specified in the applicable Final Terms (compounded annually) being applied to the Reference Price from (and including) the Issue Date to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and payable.

(f) Purchases

Subject, in the case of Subordinated Notes to the provisions of Condition 6(i), the Issuer or any of its subsidiaries may at any time purchase beneficially or procure others to purchase beneficially for its account Notes at any price in the open market or otherwise. Such Notes may be held, reissued, resold or, at the option of the Issuer, surrendered to any Paying Agent and/or the Registrar for cancellation.

(g) Cancellation

All Notes which are redeemed will forthwith be cancelled. All Notes so cancelled and the Notes purchased and cancelled pursuant to Condition 6(f) shall be forwarded to the Agent.

(h) Late payment on Zero Coupon Notes

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If the amount payable in respect of any Zero Coupon Note upon redemption of such Zero Coupon Note pursuant to Conditions 6(a), (b), (c) or (d) above or Condition 6(j) below or upon its otherwise becoming due and repayable as provided in Condition 9 is improperly withheld or refused, the amount due and repayable in respect of such Zero Coupon Note shall be the amount calculated as provided in Condition 6(e)(iii) as though the references therein to the date fixed for the redemption or the date upon which such Zero Coupon Note becomes due and payable were replaced by references to the date which is the earlier of:

(i) the date on which all amounts due in respect of such Zero Coupon Note have been paid; and

(ii) five days after the date on which the full amount of the moneys payable in respect of such Zero Coupon Notes has been received by the Agent, the Registrar or the Trustee and notice to that effect has been given to the Noteholders in accordance with Condition 13.

(i) Consent

In the case of Subordinated Notes, no early redemption in any circumstances, purchase under Condition 6(f) or substitution or variation under Condition 6(k) shall take place without the prior written consent of the Norwegian FSA (if, and to the extent, then required by the Norwegian FSA). In addition, in respect of any redemption of Subordinated Notes pursuant to Condition 6(b) or 6(j) only, and except to the extent the Norwegian FSA no longer so requires, the Issuer may only redeem the Notes before five years after the Issue Date if the Issuer demonstrates to the satisfaction of the Norwegian FSA that the circumstance that entitles it to exercise such right of redemption was not reasonably foreseeable as at the Issue Date. For the avoidance of doubt, redemption of Subordinated Notes under Condition 6(a) or repayment pursuant to Condition 9 shall not require the consent of the Norwegian FSA.

(j) Redemption upon Capital Event – Subordinated Notes

This Condition 6(j) applies only to Subordinated Notes and where this Condition 6(j) is specified as being applicable in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, and references to “Notes” in this Condition shall be construed accordingly.

If a Capital Event occurs, the Issuer may, at its option, but subject to the provisions of Condition 6(i), on giving not less than 30 nor more than 60 days’ notice to the Trustee and the Agent and, in accordance with Condition 13, the Noteholders (which notice shall be irrevocable), at any time (in the case of all Notes other than Floating Rate Notes) or on any Interest Payment Date (in the case of Floating Rate Notes) redeem all (but not some only) of the Notes at their Early Redemption Amount referred to in Condition 6(e) above together (if appropriate) with interest accrued to (but excluding) the date of redemption. Upon the expiry of the relevant notice period, the Issuer shall redeem the Notes.

“Applicable Banking Regulations” means at any time the laws, regulations, requirements, guidelines and policies relating to capital adequacy then in effect in Norway including, without limitation to the generality of the foregoing, those regulations, requirements, guidelines and policies relating to capital adequacy adopted by the Norwegian Ministry of Finance and/or the Norwegian FSA from time to time and then in effect (whether or not such requirements, guidelines or policies have the force of law and whether or not they are applied generally or specifically to the Issuer or to the Issuer and its subsidiaries).

A “Capital Event” means the determination by the Issuer, after consultation with the Norwegian FSA, that, as a result of a change in Norwegian law or Applicable Banking Regulations or any change in the official application or interpretation thereof becoming effective on or after the Issue Date of the first Tranche of the Notes, the Notes are excluded in whole or in part from Tier 2 capital, such determination to be confirmed by the Issuer to the Trustee in a certificate signed by two authorised

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Directors of the Issuer, upon which certificate the Trustee shall be entitled to rely without further enquiry and without assuming any liability to any person for so doing.

Prior to the publication of any notice of redemption pursuant to this Condition, the Issuer shall deliver to the Trustee a certificate signed by two Directors of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred and the Trustee shall be entitled to accept and rely on the certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent set out above without further enquiry and without assuming any liability to any person for so doing, in which event it shall be conclusive and binding on the Noteholders.

(k) Substitution or Variation – Subordinated Notes

This Condition 6(k) applies only to Subordinated Notes and where this Condition 6(k) is specified as being applicable in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, and references to “Notes” in this Condition shall be construed accordingly.

If at any time a Capital Event occurs and is continuing, the Issuer may, subject to the provisions of Condition 6(i) (without any requirement for the consent or approval of the Noteholders or, subject as provided below, the Trustee) on giving not less than 30 nor more than 60 days’ notice to the Trustee and the Agent and, in accordance with Condition 13, the Noteholders (which notice shall be irrevocable) either substitute all (but not some only) of the Notes for, or vary the terms of the Notes and/or the terms of the Trust Deed so that they remain or, as appropriate, become, Qualifying Securities (as defined below), provided that such substitution or variation does not itself give rise to any right of the Issuer to redeem the substituted or varied securities that are inconsistent with the redemption provisions of the Notes.

The Trustee shall (at the request and expense of the Issuer) agree to the substitution of the Notes for, or the variation of the terms of the Notes so that they remain or, as appropriate, become, Qualifying Securities as aforesaid, provided that (i) the Trustee receives the certificate in the form described in the definition of Qualifying Securities in accordance with the provisions thereof, and (ii) the terms of the proposed Qualifying Securities or the agreement to such substitution or variation, as the case may be, would not impose, in the Trustee’s opinion, more onerous obligations or any liabilities upon it or reduce its protections.

(l) Definitions

In these Terms and Conditions, the following terms shall bear the following meanings:

“Optional Redemption Amount” means, in respect of any Note, its principal amount or such other amount as may be specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement.

“Qualifying Securities” means securities issued directly or indirectly by the Issuer that:

(a) have terms not materially less favorable to the Noteholders as a class than the terms of the Notes (as reasonably determined by the Issuer, and provided that a certification to such effect of two authorised Directors of the Issuer shall have been delivered to the Trustee not less than five Business Days prior to (i) in the case of a substitution of the Notes, the issue of the relevant securities or (ii) in the case of a variation of the Notes, such variation, as the case may be), and, subject thereto, they shall (1) have a ranking at least equal to that of the Notes prior to such substitution or variation, as the case may be, (2) have at least the same interest rate and the same Interest Payment Dates as those from time to time applying to the Notes prior to such substitution or variation, as the case may be, (3) have the same redemption rights as the Notes

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prior to such substitution or variation, as the case may be, (4) comply with the then current requirements of the Norwegian FSA in relation to Tier 2 Capital, (5) preserve any existing rights under the Notes to any accrued interest which has not been paid in respect of the period from (and including) the Interest Payment Date last preceding the date of substitution or variation, as the case may be, or, if none, the Interest Commencement Date, and (6) where the Notes which have been substituted or varied had a published rating from a Rating Agency immediately prior to their substitution or variation, each such Rating Agency has ascribed, or announced its intention to ascribe, an equal or higher published rating to the relevant Qualifying Securities; and

(b) are listed on a recognised stock exchange, if the Notes were listed immediately prior to such substitution or variation, as selected by the Issuer and approved by the Trustee.

“Rating Agency” means Standard & Poor’s Credit Market Services Europe Limited, Moody’s Investors Service Limited or Dominion Bond Rating Services or their respective successors.

7 Taxation

All payments of principal and interest in respect of the Notes by the Issuer will be made without withholding or deduction for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of the Kingdom of Norway or any political subdivision or any authority or agency thereof or therein having power to tax, unless such withholding or deduction is required by law. In such event, the Issuer will pay such additional amounts as shall be necessary in order that the net amounts received by the holders of the Notes after such withholding or deduction shall equal the respective amounts of principal and interest which would otherwise have been receivable in respect of the Notes, as the case may be, in the absence of such withholding or deduction; except that no such additional amounts shall be payable with respect to any Note:

(i) presented for payment in the Kingdom of Norway; or

(ii) presented for payment by or on behalf of a holder who is liable for such taxes, duties, assessments or governmental charges in respect of such Note by reason of his having some connection with the Kingdom of Norway other than the mere holding of such Note; or

(iii) presented for payment more than 30 days after the Relevant Date (as defined below) except to the extent that the holder thereof would have been entitled to an additional amount on presenting the same for payment on such thirtieth day assuming that day to have been a Payment Day (as defined in Condition 5(d)).

As used herein, the “Relevant Date” means the date on which such payment first becomes due, except that, if the full amount of the moneys payable has not been duly received by the Trustee or the Agent or the Registrar, as the case may be, on or prior to such due date, it means the date on which, the full amount of such moneys having been so received, notice to that effect is duly given to the Noteholders in accordance with Condition 13.

8 Prescription

The Notes will become void unless claims in respect of principal and/or interest are made within a period of ten years (in the case of principal) and five years (in the case of interest) after the Relevant Date (as defined in Condition 7) therefor.

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9 Events of Default and Enforcement relating to Unsubordinated Notes

This Condition shall apply only to Unsubordinated Notes and references to “Notes” in this Condition shall be construed accordingly.

(a) Default

The Trustee at its discretion may, and if so requested in writing by the holders of at least one-fifth in nominal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution, shall (subject in each case to being indemnified and/or secured and/or prefunded to its satisfaction), (but in the case of the happening of any event described in Condition 9(a)(ii), only if the Trustee shall have certified in writing to the Issuer that such event is, in its opinion, materially prejudicial to the interests of the Noteholders), give notice in writing to the Issuer that each Note is, and each Note shall thereupon immediately become, due and repayable at its Early Redemption Amount (as described in Condition 6(e)) together with accrued interest as provided in the Trust Deed if any of the following events (each an “Event of Default”) shall occur:

(i) the Issuer is in default, for any reason whatsoever, for more than 14 days in the payment of any interest in respect of the Notes or for more than seven days in the payment of any principal due on the Notes; or

(ii) the Issuer is in default in the performance of any of its obligations (other than to make payments in respect of the Notes) contained in the Notes or the Trust Deed and (except where the Trustee considers such failure to be incapable of remedy when no such continuation or notice as is hereinafter referred to would be required) such default shall continue for more than 30 days (or such longer period as the Trustee may permit) after written notice requiring such default to be remedied shall have been given by the Trustee to the Issuer; or

(iii) the Issuer goes into liquidation (except in connection with a merger or reorganisation in such a way that all assets and liabilities of the Issuer pass to another legal person in universal succession by operation of law); or

(iv) the Issuer suspends payment or announces its inability to meet its financial obligations when they fall due; or

(v) public administration, insolvency, or moratorium proceedings are instituted against the Issuer which shall not have been dismissed or stayed within 60 days after institution, or if the Issuer applies for institution of such proceedings in respect of itself or offers or makes an arrangement for the benefit of creditors.

There are no events of default in relation to Subordinated Notes.

According to the Norwegian Regulations no. 435 of June 1, 1990 about calculation of risk capital of financial institutions, clearing houses and security trading companies (FOR 1990-06-01 nr 435: Forskrift om beregning av ansvarlig lånekapital for finansinstitusjoner, oppgjørssentraler og verdipapirforetak) (as amended and replaced), Subordinated Notes must not contain provisions permitting a Noteholder to exercise an option to redeem a Subordinated Note before the stated redemption date. Notwithstanding the foregoing, in the event that the Issuer fails to pay interest or principal when due on any Subordinated Note, the holders of such Notes shall be entitled to institute proceedings against the Issuer for payment of such amounts.

(b) Enforcement

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The Trustee may at any time, at its discretion and without notice, take such steps, actions or proceedings against the Issuer as it may think fit to enforce the provisions of the Trust Deed and the Notes (other than any payment obligation of the Issuer under or arising from the Subordinated Notes or the Trust Deed, including, without limitation, payment of any principal or interest in respect of the Subordinated Notes, including any damages awarded for breach of any obligations but not including any amounts due and payable to the Trustee or any Appointee (as defined in the Trust Deed), the payment or enforcement of which shall not be restricted by the limitation on enforcement described in this Condition 9(b)) and in no event shall the Issuer, by virtue of the institution of any such steps, actions or proceedings, be obliged to pay any sum or sums, in cash or otherwise, sooner than the same would otherwise have been payable by it pursuant to these Conditions and the Trust Deed in respect of the Subordinated Notes, nor will the Trustee accept the same, otherwise than during or after a winding up or dissolution of the Issuer. The Trustee shall not be bound to take any such steps, actions or proceedings or any other action in relation to the Trust Deed or the Notes unless (i) it shall have been so directed by an Extraordinary Resolution or so requested in writing by the holders of at least one-fifth in nominal amount of the Notes then outstanding and (ii) it shall have been indemnified and/or secured and/or prefunded to its satisfaction.

No Noteholder shall be entitled to proceed directly against the Issuer unless the Trustee, having become bound so to proceed, fails to do so within a reasonable period and the failure shall be continuing.

10 Replacement of Notes

Should any Note be lost, stolen, mutilated, defaced or destroyed, it may be replaced at the specified office of the Registrar outside the United Kingdom, upon payment by the claimant of such costs and expenses as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Notes must be surrendered before replacements will be issued.

11 Transfer and Exchange of Notes

(a) Form of Notes

Notes of each Tranche sold to qualified institutional buyers (“QIBs”) within the meaning of Rule 144A under the U.S. Securities Act of 1933, as amended (the “Securities Act”) will initially be represented by a permanent global Note in registered form, without interest coupons (the “Rule 144A Global Note”), deposited with a custodian for, and registered in the name of a nominee of, DTC. Notes in definitive form issued in exchange for Rule 144A Global Notes or otherwise sold or transferred in accordance with the requirements of Rule 144A under the Securities Act, together with the Rule 144A Global Notes, are referred to herein as “Rule 144A Notes.”

Rule 144A Notes shall bear the legend set forth in the Rule 144A Global Note (the “Legend”). Upon the transfer, exchange or replacement of Rule 144A Notes, or upon specific request for removal of the Legend, the Registrar shall (save as provided in Condition 11(f)) deliver only Rule 144A Notes with such legend or refuse to remove such Legend, as the case may be, unless there is delivered to the Issuer such satisfactory evidence as may reasonably be required by the Issuer, which may include an opinion of U.S. counsel, that neither the Legend nor the restrictions on transfer set forth therein are required to ensure compliance with the provisions of the Securities Act.

Notes of each Tranche sold outside the United States in reliance on Regulation S under the Securities Act will initially be represented by a permanent global Note in registered form, without interest coupons (the “Regulation S Global Note” and, together with the Rule 144A Global Note, the “Registered Global Notes”), which will either (i) be deposited with a custodian for, and registered in the name of a nominee of, DTC for the accounts of Euroclear and Clearstream, Luxembourg or (ii) be

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deposited with a common depositary or common safekeeper, as the case may be, for Euroclear and Clearstream, Luxembourg, and registered in the name of a common nominee of, Euroclear and Clearstream, Luxembourg or in the name of a nominee of the common safekeeper, as specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement. Notes in definitive form issued in exchange for Regulation S Global Notes or otherwise sold or transferred in reliance on Regulation S under the Securities Act, together with the Regulation S Global Notes, are referred to herein as “Regulation S Notes.” Beneficial interests in a Regulation S Global Note registered in the name of a nominee of DTC may be held only through DTC directly, by a participant in DTC, or indirectly, through a participant in DTC, including Euroclear or Clearstream, Luxembourg.

Subject as otherwise provided in this Condition 11, Notes in definitive form may be exchanged or transferred in whole or in part in the authorised denominations for one or more definitive Notes of like aggregate nominal amount.

(b) Exchange of interests in Registered Global Notes for Notes in definitive form

Interests in the Regulation S Global Note and the Rule 144A Global Note will be exchangeable for Notes in definitive form if (i) DTC or Euroclear and/or Clearstream, Luxembourg, as the case may be, notifies the Issuer that it is unwilling or unable to continue as depositary for such Registered Global Note or (ii) if applicable, DTC ceases to be a “Clearing Agency” registered under the U.S. Securities Exchange Act of 1934, as amended (“Exchange Act”), or the Issuer has been notified that either Euroclear or Clearstream, Luxembourg has been closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or has announced its intention permanently to cease business or has in fact done so, and a successor depositary or alternative clearing system satisfactory to the Issuer, the Trustee and the Agent is not available, or (iii) in the case of Unsubordinated Notes, an Event of Default (as defined in Condition 9) has occurred and is continuing with respect to such Notes or, in the case of Subordinated Notes, a payment default has occurred and is continuing with respect to such Notes. Upon the occurrence of any of the events described in the preceding sentence, the Issuer will cause the appropriate Notes in definitive form to be delivered provided that, notwithstanding the above, no Regulation S Notes in definitive form will be issued until the expiry of the period that ends 40 days after completion of the distribution of each Tranche of Notes, as certified by or on behalf of the relevant distributors (the “Distribution Compliance Period”).

Transfers of a Registered Global Note registered in the name of a nominee for DTC shall be limited to transfers of such Registered Global Note, in whole but not in part, to a nominee of DTC or to a successor of DTC or such successor’s nominee.

(d) Transfers of interests in Rule 144A Notes

Transfers of Rule 144A Notes or beneficial interests therein may be made:

(i) to a transferee who takes delivery of such interest through a Rule 144A Note where the transferee is a person whom the transferor reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A, without certification; or

(ii) to a transferee who takes delivery of such interest through a Regulation S Global Note, upon receipt by the Registrar of a written certification substantially in the form set out in the Agency Agreement, duly completed and amended as appropriate (a “Transfer Certificate”), copies of which are available from the specified office of the Registrar or any Transfer Agent, from the transferor to the effect that such transfer is being made in accordance with Regulation S and that, if such transfer is being made prior to expiry of the applicable

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Distribution Compliance Period, the interests in the Notes being transferred will be held immediately thereafter through Euroclear and/or Clearstream, Luxembourg; or

(iii) otherwise pursuant to the Securities Act or an exemption therefrom, subject to receipt by the Issuer of such satisfactory evidence as the Issuer may reasonably require, which may include an opinion of U.S. counsel, that such transfer is in compliance with any applicable federal securities laws of the United States or any applicable securities laws of any State thereof,

and in each case, in accordance with any applicable federal securities laws of the United States or any applicable securities laws of any State thereof or any other jurisdiction of the United States.

(e) Transfers of interests in Regulation S Global Notes

Prior to expiry of the applicable Distribution Compliance Period, transfers by the holder of, or of a beneficial interest in, a Regulation S Global Note to a transferee in the United States will only be made:

(i) upon receipt by the Registrar of a duly completed Transfer Certificate from the transferor of the Note or beneficial interest therein to the effect that such transfer is being made to a person whom the transferor reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A; or

(ii) otherwise pursuant to the Securities Act or an exemption therefrom, subject to receipt by the Issuer of such satisfactory evidence as the Issuer may reasonably require, which may include an opinion of U.S. counsel, that such transfer is in compliance with any applicable securities law of any state of the United States,

and, in each case, in accordance with any applicable federal securities laws of the United States or any applicable securities laws of any State thereof or any other jurisdiction of the United States.

After expiry of the applicable Distribution Compliance Period (i) beneficial interests in Regulation S Global Notes registered in the name of a nominee for DTC may be held through DTC directly, by a participant in DTC, or indirectly through a participant in DTC and (ii) such certification requirements will no longer apply to such transfers.

(f) Exchanges and transfers of Notes generally

Holders of Notes in definitive form may exchange such Notes for interests in a global Note of the same type at any time.

Transfers of beneficial interests in global Notes will be effected by DTC, Euroclear or Clearstream, Luxembourg, as the case may be, and, in turn, by participants and, if appropriate, indirect participants in such clearing systems acting on behalf of beneficial transferors and transferees of such interests. A beneficial interest in a global Note will be transferable and exchangeable for Notes in definitive form or for a beneficial interest in another global Note only in accordance with the rules and operating procedures for the time being of DTC, Euroclear or Clearstream, Luxembourg, as the case may be (the “Applicable Procedures”).

Upon the terms and subject to the conditions set forth in the Agency Agreement, a Note in definitive form may be transferred in whole or in part (in the authorised denominations set out in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement) by the holder or holders surrendering the Note for registration of the transfer of the Note (or the relevant part of the Note) at the specified office of the Registrar or any Transfer Agent, with the form of transfer thereon duly executed by the holder or holders thereof or their attorney or attorneys duly authorised in writing and upon the Registrar or, as the case may be, the relevant Transfer Agent, after due and careful enquiry, being

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satisfied with the documents of title and the identity of the person making the request and subject to such reasonable regulations as the Issuer, the Trustee and the Registrar, or as the case may be, the relevant Transfer Agent prescribe, including any restrictions imposed by the Issuer on transfers of Notes originally sold to a U.S. person. Subject as provided above, the Registrar or, as the case may be, the relevant Transfer Agent will, within three business days (being for this purpose a day on which banks are open for business in the city where the specified office of the Registrar or, as the case may be, the relevant Transfer Agent is located) of the request (or such longer period as may be required to comply with any applicable fiscal or other laws or regulations) authenticate and deliver, or procure the authentication and delivery of, at its specified office to the transferee or (at the risk of the transferee) send by mail to such address as the transferee may request, a new Note in definitive form of a like aggregate nominal amount to the Note (or the relevant part of the Note) transferred. In the case of the transfer of part only of a Note in definitive form, a new Note in definitive form in respect of the balance of the Note not transferred will be so authenticated and delivered or (at the risk of the transferor) sent to the transferor.

Exchanges or transfers by a holder of a Note in definitive form for an interest in, or to a person who takes delivery of such Note through, a global Note will be made no later than 60 days after the receipt by the Registrar or as the case may be, relevant Transfer Agent of the Note in definitive form to be so exchanged or transferred and, if applicable, upon receipt by the Registrar of a written certification from the transferor.

(g) Registration of transfer upon partial redemption

In the event of a partial redemption of Notes under Condition 6, the Issuer shall not be required to register the transfer of any Note, or part of a Note, called for partial redemption.

(h) Closed Periods

No Noteholder may require the transfer of a Note to be registered during the period of 30 days ending on the due date for any payment of principal or interest on that Note.

(i) Costs of exchange or registration

The costs and expenses of effecting any exchange or registration of transfer pursuant to the foregoing provisions (except for the expenses of delivery by other than regular mail (if any) and, if the Issuer shall so require, for the payment of a sum sufficient to cover any tax or other governmental charge or insurance charges that may be imposed in relation thereto which will be borne by the Noteholder) will be borne by the Issuer.

12 Agent, Paying Agents, Exchange Agent, Transfer Agent and Registrar

The names of the initial Agent, the initial Registrar and the other initial Paying Agents, the initial Exchange Agent and the initial Transfer Agent and their initial specified offices are set out in the Agency Agreement.

The Issuer is entitled, with the prior written approval of the Trustee (such approval not to be unreasonably withheld or delayed), to vary or terminate the appointment of any Paying Agent or the Registrar or the Exchange Agent or the Transfer Agent or any Calculation Agent and/or appoint additional or other Paying Agents or additional or other Registrars, Exchange Agents, Transfer Agents or Calculation Agents and/or approve any change in the specified office through which any Paying Agent, Registrar, Exchange Agent, Transfer Agent or Calculation Agent acts, provided that:

(i) so long as the Notes are listed on any stock exchange or admitted to listing by any other relevant authority there will at all times be a Transfer Agent (which may be the Registrar),

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with a specified office in such place as may be required by the rules and regulations of such stock exchange or other relevant authority;

(ii) there will at all times be a Paying Agent (which may be the Agent) with a specified office in a city in continental Europe outside Norway;

(iii) there will at all times be an Agent;

(iv) there will at all times be a Transfer Agent having a specified office in a place approved by the Agent;

(v) so long as any of the global Notes are held through DTC or its nominee, there will at all times be an Exchange Agent with a specified office in London; and

(vi) there will at all times be a Registrar with a specified office outside the United Kingdom and, so long as the Notes are listed on any stock exchange or admitted to listing by any other relevant authority, in such place as may be required by the rules and regulations of the relevant stock exchange or other relevant authority.

Notice of any variation, termination, appointment or change will be given to the Noteholders promptly in accordance with Condition 13.

In acting under the Agency Agreement, the Agent, the Paying Agents, the Exchange Agent, the Transfer Agent and the Registrar act solely as agents of the Issuer and, in certain circumstances specified therein, of the Trustee and do not assume any obligation to, or relationship of agency or trust with, any Noteholders. The Agency Agreement contains provisions permitting any entity into which the Agent, any Paying Agent, the Exchange Agent, the Transfer Agent and the Registrar is merged or converted or with which it is consolidated or to which it transfers all or substantially all of its assets to become the successor agent.

13 Notices

All notices regarding the Notes to be given by the Issuer will be deemed to be validly given if sent by first class mail or (if posted to an address overseas) by airmail to the holders (or the first named of joint holders) at their respective addresses recorded in the Register and will be deemed to have been given on the fourth day after mailing and, in addition, for so long as any Notes are listed on a stock exchange or are admitted to listing, quotation or trading by another relevant authority and the rules of that stock exchange or relevant authority so require, such notice will be published in a daily newspaper of general circulation in the place or places required by those rules.

Until such time as any definitive Notes are issued, there may (provided that, in the case of Notes listed on a stock exchange, the rules of such stock exchange (or other relevant authority) permit), so long as the global Note(s) is or are held in its/their entirety on behalf of DTC or Euroclear and/or Clearstream, Luxembourg, be substituted for such publication in such newspaper(s) or mailing the delivery of the relevant notice to DTC and/or Euroclear and/or Clearstream, Luxembourg, as the case may be, for communication by them to the holders of the Notes. Any such notice shall be deemed to have been given to the holders of the Notes on the day after the day on which the said notice was given to DTC and/or Euroclear and/or Clearstream, Luxembourg, as the case may be.

Notices to be given by any holder of the Notes shall be in writing and given by lodging the same, together with the relative Note or Notes, with the Registrar. Whilst any of the Notes is represented by a global Note, such notice may be given by any holder of a Note to the Registrar via DTC and/or Euroclear and/or Clearstream, Luxembourg, as the case may be, in such manner as the Registrar and/or

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DTC and/or Euroclear and/or Clearstream, Luxembourg, as the case may be, may approve for this purpose.

14 Meetings of Noteholders, Modification, Waiver and Substitution

(a) Meetings of Noteholders

The Trust Deed contains provisions for convening meetings of the Noteholders to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of the Notes or any of the provisions of the Trust Deed. The Issuer, with the agreement of the Trustee, may modify or vary such provisions for convening meetings to reflect the requirements from time to time of DTC, Euroclear, and/or Clearstream, Luxembourg. Any such modification or variation will be notified to the Noteholders in accordance with Condition 13. Such a meeting may be convened by the Issuer or the Trustee and shall be convened by the Issuer if required in writing by Noteholders holding not less than 5 per cent in nominal amount of the Notes for the time being remaining outstanding. The quorum at any such meeting for passing an Extraordinary Resolution is one or more persons holding or representing not less than 50 per cent in nominal amount of the Notes for the time being outstanding, or at any adjourned meeting one or more persons being or representing Noteholders whatever the nominal amount of the Notes so held or represented, except that at any meeting the business of which includes the modification of certain provisions of the Notes or the Trust Deed (including, but not limited to, modifying the date of maturity of the Notes or any date for payment of interest thereof, reducing or cancelling the amount of principal or the rate of interest payable in respect of the Notes or altering the currency of payment of the Notes), the quorum shall be one or more persons holding or representing not less than two-thirds in aggregate nominal amount of the Notes for the time being outstanding, or at any adjourned such meeting one or more persons holding or representing not less than one-third in aggregate nominal amount of the Notes for the time being outstanding. An Extraordinary Resolution passed at any meeting of the Noteholders shall be binding on all the Noteholders, whether or not they are present at the meeting.

(b) Modification, Waiver and Substitution

The Trustee may agree, without the consent of the Noteholders, to any modification of, or to the waiver or authorisation of any breach or proposed breach of, any of the provisions of the Notes or the Trust Deed, or determine, without any such consent as aforesaid, that any Event of Default or Potential Event of Default (as defined in the Trust Deed) shall not be treated as such, where, in any such case, it is not, in the opinion of the Trustee, materially prejudicial to the interests of the Noteholders so to do or may agree, without any such consent as aforesaid, (a) to any modification which is of a formal, minor or technical nature or to correct a manifest or (to the satisfaction of the Trustee) proven error, or to comply with mandatory provisions of Norwegian law or (b) to any substitution or variation pursuant to Condition 6(k) . Any such modification shall be binding on the Noteholders and any such modification shall be notified to the Noteholders in accordance with Condition 13 as soon as practicable thereafter.

In connection with the exercise by it of any of its trusts, powers, authorities and discretions (including, without limitation, any modification, waiver, authorisation, determination or substitution), the Trustee shall have regard to the general interests of the Noteholders as a class (but shall not have regard to any interests arising from circumstances particular to individual Noteholders (whatever their number)) and, in particular but without limitation, shall not have regard to the consequences of any such exercise for individual Noteholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Noteholder be entitled to claim, from the Issuer, the Trustee or any other person any indemnification or payment in respect of any tax consequences of any such exercise upon individual Noteholders except to the extent already provided for in Condition 7 and/or any undertaking or covenant given in addition to, or in substitution for, Condition 7 pursuant to the Trust Deed.

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The Trustee may, without the consent of the Noteholders, but subject to the provisions of Condition 6(i), in the case of Subordinated Notes only, agree with the Issuer, to the substitution in place of the Issuer (or of any previous substitute under this Condition) (the “Substituted Obligor”) as the principal debtor under the Notes and the Trust Deed of another company, being a subsidiary of the Issuer or a successor in business of the Issuer or a subsidiary of the successor in business of the Issuer, subject to (a) unless such substituted company is a successor in business of the Issuer, the Notes being unconditionally and irrevocably guaranteed by the Issuer or its successor in business, (b) the Trustee being satisfied that the interests of the Noteholders will not be materially prejudiced by the substitution and (c) certain other conditions set out in the Trust Deed being complied with. In the case of such a substitution the Trustee may agree, without the consent of the Noteholders, to a change in the law governing the Notes and/or the Trust Deed provided that such change would not in the opinion of the Trustee be materially prejudicial to the interests of the Noteholders.

Notice of any such substitution shall be given by the Substituted Obligor to the Noteholders in accordance with Condition 13 and the provisions of the Trust Deed.

15 Indemnification of the Trustee and Trustee Contracting with the Issuer

The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including provisions relieving it from taking action unless indemnified and/or secured and/or prefunded to its satisfaction.

The Trust Deed also contains provisions pursuant to which the Trustee is entitled, inter alia, (a) to enter into business transactions with the Issuer and/or any of its subsidiaries and to act as trustee for the holders of any other securities issued or guaranteed by, or relating to, the Issuer and/or any of its subsidiaries, (b) to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such transactions or, as the case may be, any such trusteeship without regard to the interests of, or consequences for, the Noteholders, and (c) to retain and not be liable to account for any profit made or any other amount or benefit received thereby or in connection therewith. Condition 3 applies only to amounts payable in respect of the Notes and nothing in Conditions 3 or 9 shall affect or prejudice the payment of the costs, charges, expenses, liabilities or remuneration of the Trustee or the rights and remedies of the Trustee in respect thereof.

16 Further Issues

The Issuer shall be at liberty from time to time, without the consent of the Noteholders, to create and issue further notes having terms and conditions the same as the Notes or the same in all respects save for the issue date, the issue price and the amount and date of the first payment of interest thereon and so that the same shall be consolidated and form a single Series with the outstanding Notes provided, however, that for purposes of U.S. federal income taxation (regardless of whether any Noteholders are subject to U.S. federal income tax laws) such further notes are either (i) not issued with original issue discount, (ii) issued with less than a de minimis amount of original issue discount, or (iii) issued in a “qualified reopening” for U.S. federal income tax purposes.

17 Provision of Information

For so long as any Notes remain outstanding and are “restricted securities” (as defined in Rule 144(a)(3) under the Securities Act), the Issuer shall, during any period in which it is neither subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act nor exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, make available to any holder of, or beneficial owner of an interest in, such Notes in connection with any resale thereof and to any prospective purchaser designated by such holder or beneficial owner, in each case upon request, the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the Securities Act.

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18 Third Party Rights

Save as provided in Condition 17, no rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of the Notes, but this does not affect any right or remedy of any person which exists or is available apart from that Act.

19 Governing Law and Submission to Jurisdiction

(a) The Trust Deed, Agency Agreement and the Notes and any non-contractual obligations arising therefrom or in connection therewith are governed by, and shall be construed in accordance with, English law except for the provisions of Condition 3 and clause 5 of the Trust Deed which shall be governed by, and shall be construed in accordance with, the laws of the Kingdom of Norway.

(b) The Issuer agrees, for the exclusive benefit of the Trustee, the Paying Agents and the Noteholders that the courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with the Trust Deed, the Agency Agreement and/or the Notes (including a dispute relating to any non-contractual obligations arising therefrom or in connection therewith) and that accordingly any suit, action or proceedings (together referred to as “Proceedings”) arising out of or in connection with the Trust Deed, the Agency Agreement and the Notes (including any Proceedings relating to any non-contractual obligations arising out of or in connection therewith) may be brought in such courts.

The Issuer hereby irrevocably waives any objection which it may have now or hereafter to the laying of the venue of any such Proceedings in any such court and any claim that any such Proceedings have been brought in an inconvenient forum and hereby further irrevocably agrees that a judgment in any such Proceedings brought in the English courts shall be conclusive and binding upon it and may be enforced in the courts of any other jurisdiction.

Nothing contained in this Condition shall limit any right to take Proceedings against the Issuer in any other court of competent jurisdiction, nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction, whether concurrently or not.

The Issuer appoints DNB Bank ASA (London Branch) at its registered office for the time being at The Walbrook Building, 25 Walbrook, London EC4N 8AF as its agent for service of process, and undertakes that, in the event of DNB Bank ASA (London Branch) ceasing so to act or ceasing to be registered in England, it will appoint another person approved by the Trustee as its agent for service of process in England in respect of any Proceedings.

Nothing herein shall affect the right to serve proceedings in any other manner permitted by law.

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FORM OF FINAL TERMS

Set out below is the form of Final Terms which will be completed for each Tranche of Notes which are not Exempt Notes issued under the Program.

[Date]

DNB Bank ASA

Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes]

under the U.S.$10,000,000,000 Medium Term Note Program

PART A – CONTRACTUAL TERMS

Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth in the Prospectus dated 26 May 2016 [and the supplement[s] to the Prospectus dated [date]] which [together] constitute[s] a base prospectus for the purposes of Directive 2003/71/EC as amended, including Directive 2010/73/EU and including any relevant implementing measures in a relevant Member State of the European Economic Area (the “Prospectus Directive”). This document constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of the Prospectus Directive and must be read in conjunction with the Prospectus [as so supplemented]. Full information on the Issuer and the offer of the Notes is only available on the basis of the combination of these Final Terms and the Prospectus [as so supplemented]. The Prospectus [and the supplement[s]] [is] [are] available for viewing [at [website]] [and] during normal business hours at [address] and copies may be obtained from the website of the Irish Stock Exchange (www.ise.ie) and the website of the Central Bank of Ireland (www.centralbank.ie).

[The following alternative language applies if the first Tranche of a Series which is being increased was issued under a Prospectus with an earlier date.]

[Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the ”Conditions”) set forth in the Prospectus dated [original date] which are incorporated by reference in the Base Prospectus dated [date]. This document constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of Directive 2003/71/EC as amended, including Directive 2010/73/EU and including any relevant implementing measures in a relevant Member State of the European Economic Area (the “Prospectus Directive”) and must be read in conjunction with the Prospectus dated 26 May 2016 [and the supplement[s] to the Prospectus dated [date] which [together] constitute[s] a base prospectus for the purposes of the Prospectus Directive, including the Conditions incorporated by reference in the Base Prospectus. Full information on the Issuer and the offer of the Notes is only available on the basis of the combination of these Final Terms and the Base Prospectus dated 26 May 2016 [as so supplemented]. Copies of the Prospectus [and the supplement[s]] are available for viewing [at [website]] [and] during normal business hours at [address] and copies may be obtained from [address].

(Include whichever of the following apply or specify as “Not Applicable” (N/A). Note that the numbering should remain as set out below, even if “Not Applicable” is indicated for individual paragraphs or sub-paragraphs. Italics denote directions for completing the Final Terms.)

1 (i) Series Number: [ ]

(ii) Tranche Number: [ ]

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(iii) Date on which the Notes will be [The Notes will be consolidated and form a single Series consolidated and form and single with [identify earlier Tranches] on the Issue Date][Not Series: Applicable]

2 Specified Currency: [ ]

3 Aggregate Nominal Amount:

(i) Series: [ ]

(ii) Tranche: [ ]

4 Issue Price: [ ] per cent of the Aggregate Nominal Amount [plus accrued interest from [insert date] (if applicable)]

5 (i) Specified Denomination(s): [ ][and integral multiples of [ ]] (N.B. This means the minimum integral amount in which transfers can be made.)

(ii) Calculation Amount: [ ] (If only one Specified Denomination, insert the Specified Denomination. If more than one Specified Denomination, insert the highest common factor. N.B. There must be a common factor in the case of two or more Specified Denominations.)

6 (i) Issue Date: [ ]

(ii) Interest Commencement Date: [specify/Issue Date/Not Applicable] (N.B. An Interest Commencement Date will not be relevant for certain Notes, for example Zero Coupon Notes.)

7 Maturity Date: [Fixed rate – specify date/Floating Rate – Interest Payment Date falling in or nearest to [specify month and year]]

8 Interest Basis: [[ ] per cent Fixed Rate] [[LIBOR/EURIBOR] +/- [ ] per cent] [Floating Rate] [Zero Coupon] (further particulars specified below)

9 Redemption/Payment Basis: Subject to any purchase and cancellation or early redemption, the Notes will be redeemed on the Maturity Date at [100]/[ ] per cent of their nominal amount]

10 Change of Interest Basis: [ ] [Not Applicable] (N.B. Specify the date when any fixed to floating change occurs or cross refer to paragraphs 13 and 14 below and identify there.)

11 Put/Call Options: [Investor Put]

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[Issuer Call] [(further particulars specified in paragraph(s) below)]

12 (i) Status of the Notes: [Unsubordinated] [Subordinated]

(if Subordinated Notes include)

(a) Redemption upon occurrence [Applicable – Condition 6(j) applies] [Not Applicable] of Capital Event and amounts (If applicable specify the amount payable on redemption payable on redemption therefor for Capital Event.) [Applicable – Condition 6(k) applies][Not Applicable] (b) Substitution or variation

(ii) Date Board approval for [ ] issuance of Notes obtained:

PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE

13 Fixed Rate Note Provisions [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph.)

(i) Rate(s) of Interest: [ ] per cent per annum [payable in arrear on each Interest Payment Date]

(ii) Interest Payment Date(s): [ ] in each year up to and including the Maturity Date (N.B. This will need to be amended in the case of irregular coupons.)

(iii) Fixed Coupon Amount(s): [[ ] per Calculation Amount] [Not Applicable]

(iv) Broken Amount(s): [ ] per Calculation Amount, payable on the Interest Payment Date falling [in/on] [ ] [Not Applicable]

(v) Day Count Fraction: [Actual/Actual (ICMA)] [30/360]

(vi) Determination Date(s): [[ ] in each year] [Not Applicable] [Insert regular interest payment dates, ignoring issue date or maturity date in the case of a long or short first or last coupon. N.B. This will need to be amended in the case of regular interest payment dates which are not of equal duration. N.B. Only relevant where Day Count Fraction is Actual/Actual (ICMA.)]

14 Floating Rate Note Provisions [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph.)

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(i) Specified Period(s)/Specified [ ] Interest Payment Dates:

(ii) First Interest Payment Date: [ ]

(iii) Business Day Convention: [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention]

(iv) Additional Business Center(s): [ ] [Not Applicable]

(v) Manner in which the Rate of [Screen Rate Determination/ISDA Determination] Interest and Interest Amount is to be determined:

(vi) Party responsible for calculating [ ] [Not Applicable] the Rate of Interest and Interest Amount (if not the Agent):

(vii) Screen Rate Determination:

 Reference Rate: [ ] month [LIBOR][EURIBOR]

 Interest Determination [ ] Date(s): (Second day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in London prior to the start of each Interest Period if LIBOR (other than euro LIBOR or Sterling LIBOR), first day of each Interest Period if Sterling LIBOR and the second day on which the TARGET2 System is open prior to the start of each Interest Period if EURIBOR or euro LIBOR.)

 Relevant Screen Page: [ ] (In the case of EURIBOR, if not Reuters EURIBOR01 ensure it is a page which shows a composite rate)

(viii) ISDA Determination

 Floating Rate Option: [ ]

 Designated Maturity: [ ]

 Reset Date: [ ]

(ix) Linear Interpolation: [Not Applicable/Applicable – the Rate of Interest for the [long/short] [first/last] Interest Period shall be calculated using Linear Interpolation]

(x) Margin(s): [+/-] [ ] per cent per annum

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(xi) Minimum Rate of Interest: [ ] per cent per annum

(xii) Maximum Rate of Interest: [ ] per cent per annum

(xiii) Day Count Fraction: [Actual/Actual (ISDA)] [Actual/Actual] [Actual/365 (Fixed)] [Actual/365 (Sterling)] [Actual/360] [30/360] [360/360] [Bond Basis] [30E/360 (ISDA)] [30E/360] [Eurobond basis]]

15 Zero Coupon Note Provisions [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph)

(i) Accrual Yield: [ ] per cent per annum

(ii) Reference Price: [ ]

(iii) Day Count Fraction in relation to Early Redemption Amounts and [30/360] late payment: [Actual/360] [Actual/365]

PROVISIONS RELATING TO REDEMPTION

16 Issuer Call [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph)

(i) Optional Redemption Date(s): [ ]

(ii) Optional Redemption [ ] per Calculation Amount Amount(s):

(iii) If redeemable in part:

(a) Minimum Redemption [ ] Amount:

(b) Higher Redemption [ ] Amount:

(iv) Notice period if other than as set out in Condition 6(c): [ ]

(N.B. When setting notice periods, the Issuer is advised to consider the practicalities of distribution of information

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through intermediaries, for example, clearing systems (which require a minimum of 5 business days' notice for a call) and custodians, as well as any other notice requirements which may apply, for example, as between the Issuer and the Agent)

17 Investor Put [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph)

(i) Optional Redemption Date(s): [ ]

(ii) Optional Redemption [ ] per Calculation Amount Amount(s):

18 Final Redemption Amount: [ ] per Calculation Amount

19 Early Redemption Amount(s) payable on [ ] per Calculation Amount redemption for taxation reasons or on event of default:

GENERAL PROVISIONS APPLICABLE TO THE NOTES

20 Form of Notes:

Form: [Registered Notes:]

[Regulation S Global Note registered in the name of a nominee for [DTC/a common depositary for Euroclear and Clearstream, Luxembourg/a common safekeeper for Euroclear and Clearstream, Luxembourg]

[Rule 144A Global Note registered in the name of a nominee for DTC]

[Definitive Notes (specify nominal amounts)]

21 Additional Financial Center(s): [Not Applicable/give details] (Note that this paragraph relates to the place of payment, and not Interest Period end dates to which sub-paragraphs 14(iv) relates)

THIRD PARTY INFORMATION

[[Relevant third party information], has been extracted from [specify source]. The Issuer confirms that such information has been accurately reproduced and that, so far as it is aware and is able to ascertain from information published by [specify source], no facts have been omitted which would render the reproduced information inaccurate or misleading.]

Signed on behalf of DNB Bank ASA:

By: ...... Duly authorized

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PART B – OTHER INFORMATION

1 LISTING AND ADMISSION TO TRADING:

(i) Listing and admission to trading: [Application has been made by the Issuer (or on its behalf) for the Notes to be admitted to trading on the regulated market of the [Irish Stock Exchange] and listed on the official list of the [Irish Stock Exchange] with effect from [ ].]

[Application is expected to be made by the Issuer (or on its behalf) for the Notes to be admitted to trading on the regulated market of the [Irish Stock Exchange] and listed on the official list of the [Irish Stock Exchange] with effect from [ ].]

(ii) Estimate of total expenses related to [ ] admission to trading:

2 RATINGS: [The Notes to be issued [[have been]/[are expected to be]] rated [insert details] by [insert credit rating agency name(s)].]

(The above disclosure should reflect the rating allocated to Notes issued under the Program generally or, where the issue has been specifically rated, that rating.)

3 INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE ISSUE:

[Save for any fees payable to the [Managers/Dealers], so far as the Issuer is aware, no person involved in the issue of the Notes has an interest material to the offer. The [Managers/Dealers] and their affiliates have engaged, and may in the future engage, in investment banking and/or commercial banking transactions with, and may perform other services for, the Issuer and its affiliates in the ordinary course of business] [Amend as appropriate if there are other interests]

[(When adding any other description, consideration should be given as to whether such matters described constitute “significant new factors” and consequently trigger the need for a supplement to the Prospectus under Article 16 of the Prospectus Directive.)]

4 YIELD: (Fixed Rate Notes only)

Indication of yield: [ ]

5 OPERATIONAL INFORMATION:

(i) CUSIP: [ ]

(ii) ISIN Code: [ ]

(iii) Common Code: [ ]

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(iv) Clearing system(s) other than [Not Applicable/(give name(s) and number(s))] Euroclear Bank S.A./N.V., Clearstream Banking, société anonyme and DTC and the relevant identification number(s):

(v) Delivery: Delivery [against/free of] payment

(vi) Names and addresses of [ ] additional Paying Agent(s):

(vii) Intended to be held in a manner [Yes. Note that the designation “yes” simply means that which would allow Eurosystem the Notes are intended upon issue to be deposited with one eligibility: of the ICSDs as common safekeeper (and registered in the name of a nominee of one of the ICSDs acting as common safekeeper) and does not necessarily mean that the Notes will be recognized as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at any or all times during their life. Such recognition will depend upon the ECB being satisfied that Eurosystem eligibility criteria have been met.] / [No. Whilst the designation is specified as “no” at the date of these Final Terms, should the Eurosystem eligibility criteria be amended in the future such that the Notes are capable of meeting them the Notes may then be deposited with one of the ICSDs as common safekeeper (and registered in the name of a nominee of one of the ICSDs acting as common safekeeper). Note that this does not necessarily mean that the Notes will then be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem at any time during their life. Such recognition will depend upon the ECB being satisfied that Eurosystem eligibility criteria have been met.]

6 DISTRIBUTION

(i) If syndicated, names of Managers: [Not Applicable/give names]

(ii) If non-syndicated, name of relevant [Not Applicable/give name] Dealer:

(a) U.S. Selling Restrictions: [Reg. S Category 2; TEFRA not applicable]

(b) [Whether sales to QIBs under [Yes: Rule 144A only/No] Rule 144A are permitted to be made:]

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FORM OF PRICING SUPPLEMENT

Set out below is the form of Pricing Supplement which will be completed for each Tranche of Notes which are Exempt Notes issued under the Program.

[Date]

DNB Bank ASA

Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes]

under the U.S.$10,000,000,000 Medium Term Note Program

PART A – CONTRACTUAL TERMS

This document constitutes the Pricing Supplement of the Notes described herein. This document must be read in conjunction with the Prospectus dated 26 May 2016 [and the supplement[s] to the Prospectus dated [date]] (the “Prospectus”). Full information on DNB Bank ASA (the “Issuer”) and the offer of the Notes is only available on the basis of the combination of this Pricing Supplement and the Prospectus. Copies of the Prospectus may be obtained from the website of the Irish Stock Exchange (www.ise.ie) and the website of the Central Bank of Ireland (www.centralbank.ie).

Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the “Conditions”) set forth in the Base Prospectus [dated 26 May 2016 which are incorporated by reference in the Prospectus].

1 Issuer DNB Bank ASA

2 (i) Series Number: [ ]

(ii) Tranche Number: [ ]

(iii) Date on which the Notes will [The Notes will be consolidated and form a single Series be consolidated and form and with [identify earlier Tranches] on the Issue Date][Not single Series: Applicable]

3 Specified Currency: [ ]

4 Aggregate Nominal Amount:

(i) Series: [ ]

(ii) Tranche: [ ]

5 Issue Price: [ ] per cent of the Aggregate Nominal Amount [plus accrued interest from [insert date] (if applicable)]

6 (i) Specified Denomination(s): [ ][and integral multiples of [ ]]

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(N.B. This means the minimum integral amount in which transfers can be made.)

7 (i) Issue Date: [ ]

(ii) Interest Commencement Date: [specify/Issue Date/Not Applicable] (N.B. An Interest Commencement Date will not be relevant for certain Notes, for example Zero Coupon Notes.)

8 Maturity Date: [Fixed rate – specify date/Floating Rate – Interest Payment Date falling in or nearest to [specify month and year]]

9 Interest Basis: [[ ] per cent Fixed Rate] [[LIBOR/EURIBOR] +/- [ ] per cent] [Floating Rate] [Zero Coupon] (further particulars specified below)

10 Redemption/Payment Basis: Subject to any purchase and cancellation or early redemption, the Notes will be redeemed on the Maturity Date at [100]/[ ] per cent of their nominal amount]

11 Change of Interest Basis: [ ] [Not Applicable]

(N.B. Specify the date when any fixed to floating change occurs or cross refer to paragraphs 14 and 15 below and identify there.)

12 Put/Call Options: [Investor Put] [Issuer Call] [(further particulars specified in paragraph(s) below)]

13 (i) Status of the Notes: [Unsubordinated] [Subordinated]

(if Subordinated Notes [Applicable – Condition 6(j) applies [Not Applicable (If include) applicable specify the amount payable on redemption for Capital Event) (a) Redemption upon [Applicable – Condition 6(k) applies] occurrence of Capital [Not Applicable] Event and amounts payable on redemption therefor

(b) Substitution or variation

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(ii) Date Board approval for [ ] issuance of Notes obtained:

PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE

14 Fixed Rate Note Provisions [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph)

(i) Rate(s) of Interest: [ ] per cent per annum [payable [annually/semi- annually/quarterly] in arrear on each Interest Payment Date]

(ii) Interest Payment Date(s): [ ] in each year up to and including the Maturity Date (N.B. This will need to be amended in the case of irregular coupons)

(iii) Fixed Coupon Amount(s): [[ ] per Calculation Amount] [Not Applicable]

(iv) Broken Amount(s): [ ] per Calculation Amount, payable on the Interest Payment Date falling [in/on] [ ] [Not Applicable]

(v) Day Count Fraction: [Actual/Actual (ICMA)] [30/360]

(vi) Determination Date(s): [[ ] in each year] [Not Applicable] [Insert regular interest payment dates, ignoring issue date or maturity date in the case of a long or short first or last coupon N.B. This will need to be amended in the case of regular interest payment dates which are not of equal duration N.B. Only relevant where Day Count Fraction is Actual/Actual (ICMA)]

15 Floating Rate Note Provisions [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph)

(i) Specified Period(s)/Specified [ ] Interest Payment Dates:

(ii) First Interest Payment Date: [ ]

(iii) Business Day Convention: [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention]

(iv) Additional Business Center(s): [ ] [Not Applicable]

(v) Manner in which the Rate of [Screen Rate Determination/ISDA Determination] Interest and Interest Amount is to be determined:

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(vi) Party responsible for [ ] [Not Applicable] calculating the Rate of Interest and Interest Amount (if not the Agent):

(vii) Screen Rate Determination:

 Reference Rate: [ ] month [LIBOR][EURIBOR]

 Interest [ ] Determination Date(s): (Second day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in London prior to the start of each Interest Period if LIBOR (other than euro LIBOR or Sterling LIBOR), first day of each Interest Period if Sterling LIBOR and the second day on which the TARGET2 System is open prior to the start of each Interest Period if EURIBOR or euro LIBOR)

 Relevant Screen [ ] Page: (In the case of EURIBOR, if not Reuters EURIBOR01 ensure it is a page which shows a composite rate)

(viii) ISDA Determination

 Floating Rate Option: [ ]

 Designated Maturity: [ ]

 Reset Date: [ ]

(ix) Linear Interpolation: [Not Applicable/Applicable – the Rate of Interest for the [long/short] [first/last] Interest Period shall be calculated using Linear Interpolation]

(x) Margin(s): [+/-] [ ] per cent per annum

(xi) Minimum Rate of Interest: [ ] per cent per annum

(xii) Maximum Rate of Interest: [ ] per cent per annum

(xiii) Day Count Fraction: [Actual/Actual (ISDA)] [Actual/Actual] [Actual/365 (Fixed)] [Actual/365 (Sterling)] [Actual/360] [30/360] [360/360] [Bond Basis]

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[30E/360 (ISDA)] [30E/360] [Eurobond basis]]

16 Zero Coupon Note Provisions [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph)

(i) Accrual Yield: [ ] per cent per annum

(ii) Reference Price: [ ]

(iii) Day Count Fraction in relation [30/360] to Early Redemption Amounts and late payment: [Actual/360]

[Actual/365]

PROVISIONS RELATING TO REDEMPTION

17 Issuer Call [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph)

(i) Optional Redemption Date(s): [ ]

(ii) Optional Redemption [ ] per Calculation Amount Amount(s):

(iii) If redeemable in part:

(a) Minimum [ ] Redemption Amount:

(b) Higher Redemption [ ] Amount:

(iv) Notice period if other than as set out in Condition 6(c): [ ]

(N.B. When setting notice periods, the Issuer is advised to consider the practicalities of distribution of information through intermediaries, for example, clearing systems (which require a minimum of 5 business days' notice for a call) and custodians, as well as any other notice requirements which may apply, for example, as between the Issuer and the Agent)

18 Investor Put [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph)

(i) Optional Redemption Date(s): [ ]

(ii) Optional Redemption [ ] per Calculation Amount

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Amount(s):

19 Final Redemption Amount: [ ] per Calculation Amount

20 Early Redemption Amount(s) payable [ ] per Calculation Amount on redemption for taxation reasons or on event of default:

GENERAL PROVISIONS APPLICABLE TO THE NOTES

21 Form of Notes:

Form: [Registered Notes:]

[Regulation S Global Note registered in the name of a nominee for [DTC/a common depositary for Euroclear and Clearstream, Luxembourg/a common safekeeper for Euroclear and Clearstream, Luxembourg]

[Rule 144A Global Note registered in the name of a nominee for DTC]

[Definitive Notes (specify nominal amounts)]

22 Additional Financial Center(s): [Not Applicable/give details] (Note that this paragraph relates to the place of payment, and not Interest Period end dates to which sub-paragraphs 15(iv) relates)

23 Other final terms [Not Applicable/give details]

RESPONSIBILITY

The Issuer accepts responsibility for the information contained in this Pricing Supplement. [[Relevant third party information], has been extracted from [specify source]. The Issuer confirms that such information has been accurately reproduced and that, so far as it is aware and is able to ascertain from information published by [specify source], no facts have been omitted which would render the reproduced information inaccurate or misleading.]

Signed on behalf of DNB Bank ASA:

By: ...... Duly authorized

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PART B – OTHER INFORMATION

1 LISTING AND ADMISSION TO TRADING:

(i) Listing and admission to trading: [Application has been made by the Issuer (or on its behalf) for the Notes to be admitted to trading on [ ] with effect from [ ].]

[Application is expected to be made by the Issuer (or on its behalf) for the Notes to be admitted to trading on [ ] with effect from [ ].]

(ii) Estimate of total expenses related to [ ] admission to trading:

2 RATINGS: [The Notes to be issued [[have been]/[are expected to be]] rated [insert details] by [insert credit rating agency name(s)].]

(The above disclosure should reflect the rating allocated to Notes issued under the Program generally or, where the issue has been specifically rated, that rating.)

3 INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE ISSUE:

4 YIELD: (Fixed Rate Notes only)

Indication of yield: [ ]

5 USE OF PROCEEDS:

[As specified in the Prospectus] [ ]

6 OPERATIONAL INFORMATION:

(i) CUSIP: [ ]

(ii) ISIN Code: [ ]

(iii) Common Code: [ ]

(iv) Clearing system(s) other than [Not Applicable/(give name(s) and number(s))] Euroclear Bank S.A./N.V., Clearstream Banking, société anonyme and DTC and the relevant identification

186

number(s):

(v) Delivery: Delivery [against/free of] payment

(vi) Names and addresses of [ ] additional Paying Agent(s):

(vii) Intended to be held in a [Yes. Note that the designation “yes” simply means that the manner which would allow Notes are intended upon issue to be deposited with one of Eurosystem eligibility: the ICSDs as common safekeeper (and registered in the name of a nominee of one of the ICSDs acting as common safekeeper) and does not necessarily mean that the Notes will be recognized as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at any or all times during their life. Such recognition will depend upon the ECB being satisfied that Eurosystem eligibility criteria have been met.] / [No. Whilst the designation is specified as “no” at the date of this Pricing Supplement, should the Eurosystem eligibility criteria be amended in the future such that the Notes are capable of meeting them the Notes may then be deposited with one of the ICSDs as common safekeeper (and registered in the name of a nominee of one of the ICSDs acting as common safekeeper). Note that this does not necessarily mean that the Notes will then be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem at any time during their life. Such recognition will depend upon the ECB being satisfied that Eurosystem eligibility criteria have been met.]

7 DISTRIBUTION

(i) If syndicated, names of Managers: [Not Applicable/give names]

(ii) If non-syndicated, name of relevant [Not Applicable/give name] Dealer:

(a) U.S. Selling Restrictions: [Reg. S Category 2; TEFRA not applicable]

(b) [Whether sales to QIBs under [Yes: Rule 144A only/No] Rule 144A are permitted to be made:]

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TAXATION

TO ENSURE COMPLIANCE WITH INTERNAL REVENUE SERVICE (IRS) CIRCULAR 230, EACH TAXPAYER IS HEREBY NOTIFIED THAT: (A) ANY TAX DISCUSSION HEREIN IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED BY THE TAXPAYER FOR THE PURPOSE OF AVOIDING U.S. FEDERAL INCOME TAX PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER; (B) ANY SUCH TAX DISCUSSION WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) THE TAXPAYER SHOULD SEEK ADVICE BASED ON THE TAXPAYER’S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISER.

United States Federal Income Tax Considerations

The following is a summary of certain U.S. federal income tax considerations relevant to U.S. Holders (as defined below) acquiring, holding and disposing of Notes. This summary addresses only the U.S. federal income tax considerations for initial purchasers of Notes at their issue price (as defined below) that will hold the Notes as capital assets (generally, property held for investment). This summary is based on the U.S. Internal Revenue Code of 1986 (the “Code”), final, temporary and proposed U.S. Treasury regulations, administrative and judicial interpretations, all of which are subject to change, possibly with retroactive effect.

This summary does not address the material U.S. federal income tax consequences of every type of Note which may be issued under the Program, and the relevant Final Terms may contain additional or modified disclosure concerning the material U.S. federal income tax consequences relevant to such type of Note as appropriate. This summary does not discuss all aspects of U.S. federal income taxation that may be relevant to investors in light of their particular circumstances, such as investors subject to special tax rules (including, without limitation: (i) financial institutions; (ii) insurance companies; (iii) dealers or traders in stocks, securities, or currencies or notional principal contracts; (iv) regulated investment companies; (v) real estate investment trusts; (vi) tax- exempt organizations; (vii) partnerships, pass-through entities, or persons that hold Notes through pass-through entities; (viii) investors that hold Notes as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes; (ix) investors that have a functional currency other than the U.S. Dollar and (x) U.S. expatriates and former long-term residents of the United States), all of whom may be subject to tax rules that differ significantly from those summarized below. This summary does not address U.S. federal estate, gift or alternative minimum tax considerations, Medicare contribution tax on net investment income considerations, or non-U.S., state or local tax considerations. This discussion assumes that there will be no substitution of another entity in place of the Issuer as principal debtor in respect of the Notes. Moreover, the summary deals only with Notes with a term of 30 years or less. The U.S. federal income tax consequences of owning Notes with a longer term may be discussed in the applicable Final Terms.

For the purposes of this summary, a “U.S. Holder” is a beneficial owner of Notes that is for U.S. federal income tax purposes (i) an individual who is a citizen or resident of the United States, (ii) a corporation created in, or organized under the laws of, the United States or any state thereof, including the District of Columbia, (iii) an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source or (iv) a trust the administration of which is subject to the primary supervision of a U.S. court and which has one or more United States persons who have the authority to control all substantial decisions of the trust. A “Non-U.S. Holder” is a beneficial owner of Notes that is not a U.S. Holder.

This summary should be read in conjunction with any discussion of U.S. federal income tax consequences in any Prospectus supplement or in the applicable Pricing Supplement. To the extent there is any inconsistency in the discussion of U.S. tax consequences to holders between this Prospectus, any Prospectus supplement and the applicable Final Terms, holders should rely on the tax consequences described in any Prospectus supplement or in the applicable Pricing Supplement instead of this Prospectus. The Issuer generally intends to treat Notes issued under the Program as debt, unless otherwise indicated in any Prospectus supplement or in the applicable Pricing Supplement. Certain Notes, however, such as Notes with extremely long maturities, may be treated as

188

other than debt for U.S. federal income tax purposes. The tax treatment of Notes to which a treatment other than as debt may apply may be discussed in any Prospectus supplement or in the applicable Pricing Supplement. The following disclosure applies only to Notes that are treated as debt for U.S. federal income tax purposes.

U.S. Holders

Payments of Interest

General

Interest on a Note, including the payment of any additional amounts whether payable in U.S. Dollars or a currency other than U.S. Dollars (a “foreign currency”), other than interest on a “Discount Note” that is not “qualified stated interest” (each as defined below under “Original Issue Discount—General”), will be taxable to a U.S. Holder as ordinary income at the time it is received or accrued, in accordance with the holder’s method of accounting for tax purposes. Interest paid by the Issuer on the Notes and OID (as defined below), if any, accrued with respect to the Notes (as described below under “Original Issue Discount”) and payments of any additional amounts will generally constitute income from sources outside the United States.

Foreign Currency Denominated Interest

If an interest payment is denominated in, or determined by reference to, a foreign currency, the amount of income recognized by a cash basis U.S. Holder will be the U.S. Dollar value of the interest payment, based on the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. Dollars.

An accrual basis U.S. Holder may determine the amount of income recognized with respect to an interest payment denominated in, or determined by reference to, a foreign currency in accordance with either of two methods. Under the first method, the amount of income accrued will be based on the average exchange rate in effect during the interest accrual period (or, with respect to an accrual period that spans two taxable years of a U.S. Holder, the part of the period within the taxable year).

Under the second method, the U.S. Holder may elect to determine the amount of income accrued on the basis of the exchange rate in effect on the last day of the accrual period or, in the case of an accrual period that spans two taxable years, the exchange rate in effect on the last day of the part of the period within the taxable year. Additionally, if a payment of interest is actually received within five business days of the last day of the accrual period, an electing accrual basis U.S. Holder may instead translate the accrued interest into U.S. Dollars at the exchange rate in effect on the day of actual receipt. Any such election will apply to all debt instruments held by the U.S. Holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the U.S. Holder, and will be irrevocable without the consent of the IRS.

Upon receipt of the interest payment (including a payment attributable to accrued but unpaid interest upon the sale or other disposition of a Note) denominated in, or determined by reference to, a foreign currency, the U.S. Holder will recognize U.S. source exchange gain or loss (taxable as ordinary income or loss) equal to the difference, if any, between the amount received (translated into U.S. Dollars at the spot rate on the date of receipt) and the amount previously accrued, regardless of whether the payment is in fact converted into U.S. Dollars.

Original Issue Discount

General

The following is a summary of the principal U.S. federal income tax consequences of the ownership of Notes issued with original issue discount (“OID”). The following summary does not discuss Notes that are characterized as contingent payment debt instruments for U.S. federal income tax purposes. In the event that the

189

Issuer issues contingent payment debt instruments, the applicable Final Terms may describe the material U.S. federal income tax consequences thereof.

A Note, other than a Note with a term of one year or less (a “Short-Term Note”), will be treated as issued with OID (a “Discount Note”) if the excess of the Note’s “stated redemption price at maturity” (as defined below) over its issue price is at least a de minimis amount (0.25 per cent of the Note’s stated redemption price at maturity multiplied by the number of complete years to its maturity). An obligation that provides for the payment of amounts other than qualified stated interest before maturity (an “installment obligation”) generally will be treated as a Discount Note if the excess of the Note’s stated redemption price at maturity over its issue price is equal to or greater than 0.25 per cent of the Note’s stated redemption price at maturity multiplied by the weighted average maturity of the Note. A Note’s weighted average maturity is the sum of the following amounts determined for each payment on a Note (other than a payment of qualified stated interest): (i) the number of complete years from the issue date until the payment is made multiplied by (ii) a fraction, the numerator of which is the amount of the payment and the denominator of which is the Note’s stated redemption price at maturity. Generally, the “issue price” of a Note under the applicable Final Terms will be the first price at which a substantial amount of such Notes included in the issue of which the Note is a part is sold to persons other than bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers. The “stated redemption price at maturity” of a Note is the total of all payments provided by the Note that are not payments of “qualified stated interest.” A “qualified stated interest” payment is generally any one of a series of stated interest payments on a Note that are unconditionally payable at least annually at a single fixed rate (with certain exceptions for lower rates paid during some periods), or a variable rate (in the circumstances described below under “Variable Interest Rate Notes”), applied to the outstanding principal amount of the Note. Solely for the purpose of determining whether a Note has OID, the Issuer will be deemed to exercise any call option that has the effect of decreasing the yield on the Note, and the U.S. Holder will be deemed to exercise any put option that has the effect of increasing the yield on the Note. If a Note has de minimis OID, a U.S. Holder must include the de minimis amount in income as stated principal payments are made on the Note, unless the holder makes the election described below under “—Election to Treat All Interest as Original Issue Discount”. A U.S. Holder can determine the includible amount with respect to each such payment by multiplying the total amount of the Note’s de minimis OID by a fraction equal to the amount of the principal payment made divided by the stated principal amount of the Note.

U.S. Holders of Discount Notes must include OID in income calculated on a constant-yield method before the receipt of cash attributable to the income, and will generally have to include in income increasingly greater amounts of OID over the life of the Discount Notes. The amount of OID includible in income by a U.S. Holder of a Discount Note is the sum of the daily portions of OID with respect to the Discount Note for each day during the taxable year or portion of the taxable year on which the U.S. Holder holds the Discount Note (“accrued OID”). The daily portion is determined by allocating to each day in any “accrual period” a pro rata portion of the OID allocable to that accrual period. Accrual periods with respect to a Note may be of any length selected by the U.S. Holder and may vary in length over the term of the Discount Note as long as (i) no accrual period is longer than one year and (ii) each scheduled payment of interest or principal on the Note occurs on either the final or first day of an accrual period. The amount of OID allocable to an accrual period equals the excess of (a) the product of the Discount Note’s adjusted issue price at the beginning of the accrual period and the Discount Note’s yield to maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period) over (b) the sum of the payments of qualified stated interest on the Discount Note allocable to the accrual period. The “adjusted issue price” of a Discount Note at the beginning of any accrual period is the issue price of the Note increased by (x) the amount of accrued OID for each prior accrual period and decreased by (y) the amount of any payments previously made on the Note that were not qualified stated interest payments.

Election to Treat All Interest as Original Issue Discount

A U.S. Holder may elect to include in gross income all interest that accrues on a Note using the constant-yield method described above under “Original Issue Discount—General” with certain modifications. For purposes of

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this election, interest includes stated interest, OID, de minimis OID, as adjusted by any amortizable bond premium (described below under “Notes Purchased at a Premium”). If a U.S. Holder makes this election for the Note, then, when the constant-yield method is applied, the issue price of the Note will equal its cost, the issue date of the Note will be the date of acquisition, and no payments on the Note will be treated as payments of qualified stated interest. This election will generally apply only to the Note with respect to which it is made and may not be revoked without the consent of the IRS. However, if the Note has amortizable bond premium, the U.S. Holder will be deemed to have made an election to apply amortizable bond premium against interest for all debt instruments with amortizable bond premium, other than debt instruments the interest on which is excludible from gross income, held as of the beginning of the taxable year to which the election applies or any taxable year thereafter.

Variable Interest Rate Notes

Notes that provide for interest at variable rates (“Variable Interest Rate Notes”) will generally bear interest at a “qualified floating rate” and thus will be treated as “variable rate debt instruments” under U.S. Treasury regulations governing accrual of OID. A Variable Interest Rate Note will qualify as a “variable rate debt instrument” if (a) its issue price does not exceed the total non-contingent principal payments due under the Variable Interest Rate Note by more than a specified de minimis amount and (b) it provides for stated interest, paid or compounded at least annually, at (i) one or more qualified floating rates, (ii) a single fixed rate and one or more qualified floating rates, (iii) a single objective rate, or (iv) a single fixed rate and a single objective rate that is a qualified inverse floating rate, and (c) it does not provide for any principal payments that are contingent (other than as described in (a) above).

A “qualified floating rate” is any variable rate where variations in the value of the rate can reasonably be expected to measure contemporaneous variations in the cost of newly borrowed funds in the currency in which the Variable Interest Rate Note is denominated. A fixed multiple of a qualified floating rate will constitute a qualified floating rate only if the multiple is greater than 0.65 but not more than 1.35. A variable rate equal to the product of a qualified floating rate and a fixed multiple that is greater than 0.65 but not more than 1.35, increased or decreased by a fixed rate, will also constitute a qualified floating rate. In addition, two or more qualified floating rates that can reasonably be expected to have approximately the same values throughout the term of the Variable Interest Rate Note (e.g. two or more qualified floating rates with values within 25 basis points of each other as determined on the Variable Interest Rate Note’s issue date) will be treated as a single qualified floating rate. Notwithstanding the foregoing, a variable rate that would otherwise constitute a qualified floating rate but which is subject to one or more restrictions such as a maximum numerical limitation (i.e. a cap) or a minimum numerical limitation (i.e. a floor) may, under certain circumstances, fail to be treated as a qualified floating rate unless the cap or floor is fixed throughout the term of the Note.

An “objective rate” is a rate that is not itself a qualified floating rate but which is determined using a single fixed formula and which is based on objective financial or economic information (e.g. one or more qualified floating rates or the yield of actively traded personal property). A rate will not qualify as an objective rate if it is based on information that is within the control of the Issuer (or a related party) or that is unique to the circumstances of the Issuer (or a related party), such as dividends, profits or the value of the Issuer’s stock (although a rate does not fail to be an objective rate merely because it is based on the credit quality of the Issuer). Other variable interest rates may be treated as objective rates if so designated by the IRS in the future. Despite the foregoing, a variable rate of interest on a Variable Interest Rate Note will not constitute an objective rate if it is reasonably expected that the average value of the rate during the first half of the Variable Interest Rate Note’s term will be either significantly less than or significantly greater than the average value of the rate during the final half of the Variable Interest Rate Note’s term. A “qualified inverse floating rate” is any objective rate where the rate is equal to a fixed rate minus a qualified floating rate, as long as variations in the rate can reasonably be expected to inversely reflect contemporaneous variations in the qualified floating rate. If a Variable Interest Rate Note provides for stated interest at a fixed rate for an initial period of one year or less followed by a variable rate that is either a qualified floating rate or an objective rate for a subsequent period and if the variable rate on the Variable Interest Rate Note’s issue date is intended to approximate the fixed rate (e.g.

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the value of the variable rate on the issue date does not differ from the value of the fixed rate by more than 25 basis points), then the fixed rate and the variable rate together will constitute either a single qualified floating rate or objective rate, as the case may be.

A qualified floating rate or objective rate in effect at any time during the term of the instrument must be set at a “current value” of that rate. A “current value” of a rate is the value of the rate on any day that is no earlier than three months prior to the first day on which that value is in effect and no later than one year following that first day.

If a Variable Interest Rate Note that provides for stated interest at either a single qualified floating rate or a single objective rate throughout the term thereof qualifies as a “variable rate debt instrument”, then any stated interest on the Note which is unconditionally payable in cash or property (other than debt instruments of the Issuer) at least annually will constitute qualified stated interest and will be taxed accordingly. Thus, a Variable Interest Rate Note that provides for stated interest at either a single qualified floating rate or a single objective rate throughout the term thereof and that qualifies as a “variable rate debt instrument” will generally not be treated as having been issued with OID unless the Variable Interest Rate Note is issued at a “true” discount (i.e., at a price below the Note’s stated principal amount) in excess of a specified de minimis amount. OID on a Variable Interest Rate Note arising from “true” discount is allocated to an accrual period using the constant yield method described above by assuming that the variable rate is a fixed rate equal to (i) in the case of a qualified floating rate or qualified inverse floating rate, the value, as of the issue date, of the qualified floating rate or qualified inverse floating rate, or (ii) in the case of an objective rate (other than a qualified inverse floating rate), a fixed rate that reflects the yield that is reasonably expected for the Variable Interest Rate Note.

In general, any other Variable Interest Rate Note that qualifies as a “variable rate debt instrument” will be converted into an “equivalent” fixed rate debt instrument for purposes of determining the amount and accrual of OID and qualified stated interest on the Variable Interest Rate Note. Such a Variable Interest Rate Note must be converted into an “equivalent” fixed rate debt instrument by substituting any qualified floating rate or qualified inverse floating rate provided for under the terms of the Variable Interest Rate Note with a fixed rate equal to the value of the qualified floating rate or qualified inverse floating rate, as the case may be, as of the Variable Interest Rate Note’s issue date. Any objective rate (other than a qualified inverse floating rate) provided for under the terms of the Variable Interest Rate Note is converted into a fixed rate that reflects the yield that is reasonably expected for the Variable Interest Rate Note. In the case of a Variable Interest Rate Note that qualifies as a “variable rate debt instrument” and provides for stated interest at a fixed rate in addition to either one or more qualified floating rates or a qualified inverse floating rate, the fixed rate is initially converted into a qualified floating rate (or a qualified inverse floating rate, if the Variable Interest Rate Note provides for a qualified inverse floating rate). Under these circumstances, the qualified floating rate or qualified inverse floating rate that replaces the fixed rate must be such that the fair market value of the Variable Interest Rate Note as of the Variable Interest Rate Note’s issue date is approximately the same as the fair market value of an otherwise identical debt instrument that provides for either the qualified floating rate or qualified inverse floating rate rather than the fixed rate. Subsequent to converting the fixed rate into either a qualified floating rate or a qualified inverse floating rate, the Variable Interest Rate Note is converted into an “equivalent” fixed rate debt instrument in the manner described above.

Once the Variable Interest Rate Note is converted into an “equivalent” fixed rate debt instrument pursuant to the foregoing rules, the amount of OID and qualified stated interest, if any, are determined for the “equivalent” fixed rate debt instrument by applying the general OID rules to the “equivalent” fixed rate debt instrument and a U.S. Holder of the Variable Interest Rate Note will account for the OID and qualified stated interest as if the U.S. Holder held the “equivalent” fixed rate debt instrument. In each accrual period, appropriate adjustments will be made to the amount of qualified stated interest or OID assumed to have been accrued or paid with respect to the “equivalent” fixed rate debt instrument in the event that these amounts differ from the actual amount of interest accrued or paid on the Variable Interest Rate Note during the accrual period.

If a Variable Interest Rate Note, such as a Note the payments on which are determined by reference to an index, does not qualify as a “variable rate debt instrument”, then the Variable Interest Rate Note will be treated as a

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contingent payment debt obligation. The proper U.S. federal income tax treatment of Variable Interest Rate Notes that are treated as contingent payment debt may be more fully described in the applicable Final Terms.

Short-Term Notes

In general, an individual or other cash basis U.S. Holder of a Short-Term Note is not required to accrue OID (calculated as set forth below for the purposes of this paragraph) for U.S. federal income tax purposes unless it elects to do so (but may be required to include any stated interest in income as the interest is received). Accrual basis U.S. Holders and certain other U.S. Holders are required to accrue OID on Short-Term Notes on a straight- line basis or, if the U.S. Holder so elects, under the constant-yield method (based on daily compounding). In the case of a U.S. Holder not required and not electing to include OID in income currently, any gain realized on the sale or other disposition of the Short-Term Note will be ordinary income to the extent of the OID accrued on a straight-line basis (unless an election is made to accrue the OID under the constant-yield method) through the date of sale or other disposition. U.S. Holders who are not required and do not elect to accrue OID on Short- Term Notes will be required to defer deductions for interest on borrowings allocable to Short-Term Notes in an amount not exceeding the deferred income until the deferred income is realized.

For purposes of determining the amount of OID subject to these rules, all interest payments on a Short-Term Note are included in the Short-Term Note’s stated redemption price at maturity. A U.S. Holder may elect to determine OID on a Short-Term Note as if the Short Term Note had been originally issued to the U.S. Holder at the U.S. Holder’s purchase price for the Short-Term Note. This election shall apply to all obligations with a maturity of one year or less acquired by the U.S. Holder on or after the first day of the first taxable year to which the election applies, and may not be revoked without the consent of the IRS.

Foreign Currency Notes

OID for any accrual period on a Discount Note that is denominated in, or determined by reference to, a foreign currency will be determined in the foreign currency and then translated into U.S. Dollars in the same manner as stated interest accrued by an accrual basis U.S. Holder, as described above under “—Payments of Interest”. Upon receipt of an amount attributable to OID (whether in connection with a payment of interest or the sale or other disposition of a Note), a U.S. Holder may recognize exchange gain or loss, which will be ordinary gain or loss measured by the difference between the amount received (translated into U.S. Dollars at the exchange rate on the date of receipt) and the amount previously accrued, regardless of whether the payment is in fact converted into U.S. Dollars.

Notes Purchased at a Premium

A U.S. Holder that purchases a Note for an amount in excess of its principal amount, or for a Discount Note, its stated redemption price at maturity, may elect to treat the excess as “amortizable bond premium”, in which case the amount required to be included in the U.S. Holder’s income each year with respect to interest on the Note will be reduced by the amount of amortizable bond premium allocable (based on the Note’s yield to maturity) to that year. In the case of a Note that is denominated in, or determined by reference to, a foreign currency, bond premium will be computed in units of foreign currency, and any such bond premium that is taken into account currently will reduce interest income in units of the foreign currency. On the date bond premium offsets interest income, a U.S. Holder may recognize U.S. source exchange gain or loss (taxable as ordinary income or loss) measured by the difference between the spot rate in effect on that date, and on the date the Notes were acquired by the U.S. Holder. Any election to amortize bond premium shall apply to all bonds (other than bonds the interest on which is excludable from gross income for U.S. federal income tax purposes) held by the U.S. Holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the U.S. Holder, and is irrevocable without the consent of the IRS. See also “Original Issue Discount –Election to Treat All Interest as Original Issue Discount”. A U.S. Holder that does not elect to take bond premium into account currently will recognize a capital loss when the Note matures.

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Sale or Other Disposition of Notes

A U.S. Holder’s tax basis in a Note will generally be its cost, increased by the amount of any OID included in the U.S. Holder’s income with respect to the Note and the amount, if any, of income attributable to de minimis OID included in the U.S. Holder’s income with respect to the Note, and reduced by (i) the amount of any payments that are not qualified stated interest payments, and (ii) the amount of any amortizable Note premium applied to reduce interest on the Note. A U.S. Holder’s tax basis in a foreign currency Note will be determined by reference to the U.S. Dollar cost of the Notes. The U.S. Dollar cost of a Note purchased with a foreign currency will generally be the U.S. Dollar value of the purchase price on the date of purchase or, in the case of Notes traded on an established securities market, as defined in the applicable U.S. Treasury regulations, that are purchased by a cash basis U.S. Holder (or an accrual basis U.S. Holder that so elects), on the settlement date for the purchase.

A U.S. Holder will generally recognize gain or loss on the sale or other disposition of a Note equal to the difference between the amount realized on the sale or other disposition and the tax basis of the Note. The amount realized on a sale or other disposition for an amount in foreign currency will be the U.S. Dollar value of this amount on the date of sale or other disposition or, in the case of Notes traded on an established securities market, as defined in the applicable U.S. Treasury regulations, sold by a cash basis U.S. Holder (or an accrual basis U.S. Holder that so elects), on the settlement date for the sale. Such an election by an accrual basis U.S. Holder must be applied consistently from year to year and cannot be revoked without the consent of the IRS. Except to the extent described above under “—Original Issue Discount—Short-Term Notes” or attributable to accrued but unpaid interest or changes in exchange rates (as described below), gain or loss recognized on the sale or other disposition of a Note will be capital gain or loss and will generally be treated as from U.S. sources for purposes of the U.S. foreign tax credit limitation. In the case of a U.S. Holder that is an individual, estate or trust, the maximum marginal federal income tax rate applicable to capital gains is currently lower than the maximum marginal rate applicable to ordinary income if the Notes are held for more than one year. The deductibility of capital losses is subject to significant limitations.

Gain or loss recognized by a U.S. Holder on the sale or other disposition of a Note that is attributable to changes in exchange rates will be treated as U.S. source ordinary income or loss. However, exchange gain or loss is taken into account only to the extent of total gain or loss realized on the transaction.

Disposition of Foreign Currency

Foreign currency received as interest on a Note or on the sale or other disposition of a Note will have a tax basis equal to its U.S. Dollar value at the time the interest is received or at the time of the sale or other disposition. Foreign currency that is purchased will generally have a tax basis equal to the U.S. Dollar value of the foreign currency on the date of purchase. Any gain or loss recognized on a sale or other disposition of a foreign currency (including its use to purchase Notes or an exchange for U.S. Dollars) will be U.S. source ordinary income or loss.

Backup Withholding and Information Reporting

In general, payments of principal, interest and accrual of OID on, and the proceeds of a sale, redemption or other disposition of, the Notes, payable to a U.S. Holder by a U.S. paying agent or other U.S. intermediary will be reported to the IRS and to the U.S. Holder as may be required under applicable regulations. Backup withholding will apply to these payments (including payments of OID) if the U.S. Holder fails to provide an accurate taxpayer identification number or certification of exempt status or otherwise to comply with the applicable backup withholding requirements. Certain U.S. Holders are not subject to backup withholding.

Disclosure Requirements

U.S. Treasury Regulations meant to require the reporting of certain tax shelter transactions (“Reportable Transactions”) could be interpreted to cover transactions generally not regarded as tax shelters, including

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certain foreign currency transactions. Under the U.S. Treasury Regulations, certain transactions with respect to the Notes may be characterized as Reportable Transactions including, in certain circumstances, a sale, exchange, retirement or other taxable disposition of a foreign currency Note. Persons considering the purchase of such Notes should consult with their tax advisers to determine the tax return obligations, if any, with respect to an investment in such Notes, including any requirement to file IRS Form 8886 (Reportable Transaction Disclosure Statement).

Foreign Financial Asset Reporting

Certain U.S. Holders that own “specified foreign financial assets” that meet certain U.S. Dollar value thresholds generally are required to file an information report with respect to such assets with their tax returns. The Notes generally will constitute specified foreign financial assets subject to these reporting requirements unless the Notes are held in an account at certain financial institutions. U.S. Holders are urged to consult their tax advisers regarding the application of these disclosure requirements to their ownership of the Notes.

Non-U.S. Holders

A Non-U.S. Holder generally should not be subject to U.S. federal income or withholding tax on any payments on the Notes and gain from the sale, redemption or other disposition of the Notes unless: (i) that payment and/or gain is effectively connected with the conduct by that Non-U.S. Holder of a trade or business in the U.S.; (ii) in the case of any gain realized on the sale or exchange of a Note by an individual Non-U.S. Holder, that Holder is present in the U.S. for 183 days or more in the taxable year of the sale, exchange or retirement and certain other conditions are met; or (iii) the Non-U.S. Holder is subject to tax pursuant to provisions of the Code applicable to certain expatriates.

Foreign Account Tax Compliance Act

Pursuant to certain provisions of the U.S. Internal Revenue Code of 1986, commonly known as “FATCA”, a foreign financial institution (as defined by FATCA) may be required to withhold on certain payments it makes (foreign passthru payments) to persons that fail to meet certain certification, reporting or related requirements. The Issuer is a foreign financial institution for these purposes. A number of jurisdictions (including Norway) have entered into, or have agreed in substance to, intergovernmental agreements with the United States to implement FATCA (IGAs), which modify the way in which FATCA applies in their jurisdictions. Under the provisions of IGAs as currently in effect, a foreign financial institution in an IGA jurisdiction would generally not be required to withhold under FATCA or an IGA from payments that it makes. Certain aspects of the application of the FATCA provisions and IGAs to instruments such as the Notes, including whether withholding would ever be required pursuant to FATCA or an IGA with respect to payments on instruments such as the Notes, are uncertain and may be subject to change. Even if withholding would be required pursuant to FATCA or an IGA with respect to payments on instruments such as the Notes, such withholding would not apply to foreign passthru payments made prior to January 1, 2019 and the Notes issued on or prior to the date that is six months after the date on which final regulations defining foreign passthru payments are filed with the U.S. Federal Register generally would be grandfathered for purposes of FATCA withholding, in either case unless materially modified after such date (including by reason of a substitution of the Issuer). Holders should consult their own tax advisers regarding how these rules may apply to their investment in the Notes.

Norwegian Taxation

Payments of principal and interest on the Notes issued under the Program to persons who have no connection with Norway other than the holding of such Notes issued by the Issuer are, under present Norwegian law, not subject to Norwegian tax, and may hence be made without any withholding tax or deduction for any Norwegian taxes, duties, assessments or governmental charges.

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Capital gains or profits realized on the sale, disposal or redemption of such Notes by persons who have no connection with Norway other than the holding of the Notes are not, under present Norwegian law, subject to Norwegian taxes or duties.

No Norwegian issue tax or stamp duty is payable in connection with the issues of the Notes. The Notes will not be subject to any Norwegian estate duties.

Persons considered domiciled in Norway for tax purposes will be subject to Norwegian income tax of a flat rate of 25 per cent on interest received in respect of the Notes. In a tax settlement between the Norwegian government and the opposition parties dated May 4, 2016 it is consensus that the corporate tax income rate should be reduced to 23 per cent by 2018. Likewise, capital gains or profits realized by such persons on the sale, disposal or redemption of the Notes will be subject to Norwegian taxation.

Following the Norwegian Government's proposal for a tax reform which was announced on October 7, 2015, the finance committee of the Norwegian Parliament reached agreement on May 4, 2016 that a new tax will be introduced for the added value of financial services (finansskatt) from 2017. No details have been published, and the form in which the tax will be imposed will not be presented before publication of the national budget in October 2016.

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CERTAIN ERISA CONSIDERATIONS

Unless otherwise provided in the applicable Final Terms, the Notes should be eligible for purchase by employee benefit plans and other plans subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and/or the provisions of section 4975 of the Code and by governmental, church and non- U.S. plans that are subject to state, local, other federal law of the United States or non-U.S. law that is substantially similar to ERISA or the Code (“Similar Law”) subject to consideration of the issues described in this section. ERISA imposes certain requirements on “employee benefit plans” (as defined in section 3(3) of ERISA) subject to ERISA, including entities such as collective investment funds and separate accounts whose underlying assets include the assets of such plans (collectively, “ERISA Plans”), and on those persons who are fiduciaries with respect to ERISA Plans. Investments by ERISA Plans are subject to ERISA’s general fiduciary requirements, including the requirements of investment prudence and diversification and the requirement that an ERISA Plan’s investments be made in accordance with the documents governing the ERISA Plan. The prudence of a particular investment must be determined by the responsible fiduciary of an ERISA Plan by taking into account the ERISA Plan’s particular circumstances and all of the facts and circumstances of the investment including, but not limited to, the matters discussed under “Risk factors”.

Section 406 of ERISA and section 4975 of the Code prohibit certain transactions involving the assets of an ERISA Plan (as well as those plans that are not subject to ERISA but which are subject to section 4975 of the Code, such as individual retirement accounts (together with ERISA Plans, the “Plans”)) and certain persons (referred to as “parties in interest” or “disqualified persons”) having certain relationships to such Plans, unless a statutory or administrative exemption is applicable to the transaction. A party in interest or disqualified person, including a Plan fiduciary, who engages in a prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code.

The Issuer, the Trustee, the Dealers, the Arranger or any other party to the transactions referred to in this Prospectus may be parties in interest or disqualified persons with respect to many Plans. Prohibited transactions within the meaning of section 406 of ERISA or section 4975 of the Code may arise if any of the Notes is acquired or held by a Plan, including but not limited to where the Issuer, the Trustee, the Dealers, the Arranger or any other party to such transactions is a party in interest or a disqualified person. Certain exemptions from the prohibited transaction provisions of section 406 of ERISA and section 4975 of the Code may be applicable, however, depending in part on the type of Plan fiduciary making the decision to acquire any Notes and the circumstances under which such decision is made. Included among these exemptions are section 408(b)(17) of ERISA and section 4975(d)(20) of the Code (relating to transactions between a person that is a party in interest (other than a fiduciary or an affiliate that has or exercises discretionary authority or control or renders investment advice with respect to assets involved in the transaction) solely by reason of providing services to the plan, provided that there is adequate consideration for the transaction), Prohibited Transaction Class Exemption (“PTCE”) 91-38 (relating to investments by bank collective investment funds), PTCE 84-14 (relating to transactions effected by a qualified professional asset manager), PTCE 95-60 (relating to transactions involving insurance company general accounts), PTCE 90-1 (relating to investments by insurance company pooled separate accounts) and PTCE 96-23 (relating to transactions determined by in-house asset managers). Prospective investors should consult with their advisors regarding the prohibited transaction rules and these exceptions. There can be no assurance that any of these exemptions or any other exemption will be available with respect to any particular transaction involving any Notes.

Governmental plans (as defined in section 3(32) of ERISA) and certain church plans (as defined in section 3(33) of ERISA) and non-U.S. plans (as described in section 4(b)(4) of ERISA), while not subject to the fiduciary responsibility provisions of ERISA or the prohibited transaction provisions of section 406 of ERISA and section 4975 of the Code, may nevertheless be subject to Similar Law. Fiduciaries of any such plans should consult with their counsel before purchasing the Notes to determine the need for, if necessary, and the availability of, any exemptive relief under any Similar Law.

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Accordingly, each purchaser and subsequent transferee of any Notes will be deemed by such purchase or acquisition of any such Notes to have represented and warranted, on each day from the date on which the purchaser or transferee acquires such Notes (or any interest therein) through and including the date on which the purchaser or transferee disposes of such Notes (or any interest therein), either that (a) it is not a Plan or any entity whose underlying assets include, or are deemed for purposes of ERISA or the Code to include, the assets of any Plan or a governmental, church or non-U.S. plan which is subject to any Similar Law or (b) its acquisition, holding and disposition of such Notes (or any interest therein) will not constitute or result in a prohibited transaction under section 406 of ERISA or section 4975 of the Code (or, in the case of a governmental, church or non-U.S. plan subject to Similar Law, a violation of any Similar Law) for which an exemption is not available.

Each Plan fiduciary who is responsible for making the investment decisions whether to purchase or commit to purchase and to hold any of the Notes should determine whether, under the documents and instruments governing the Plan, an investment in such Notes is appropriate for the Plan, taking into account the overall investment policy of the Plan and the composition of the Plan’s investment portfolio. Any Plan proposing to invest in such Notes (including any governmental, church or non-U.S. plan) should consult with its counsel to confirm that such investment will not constitute or result in a non-exempt prohibited transaction and will satisfy the other requirements of ERISA and the Code (or, in the case of a governmental, church or non-U.S. plan, any Similar Law).

The sale of any Notes to a Plan is in no respect a representation by the Issuer, the Trustee, the Dealers, the Arranger or any other party to the transactions that such an investment meets all relevant legal requirements with respect to investments by Plans generally or any particular Plan, or that such an investment is appropriate for Plans generally or any particular Plan.

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PLAN OF DISTRIBUTION AND TRANSFER RESTRICTIONS

The Notes are being offered on a continuous basis for sale by the Issuer to or through Barclays Capital Inc. and Goldman, Sachs & Co., together with such other Dealers as may be appointed by the Issuer with respect to a particular Series of Notes (the ”Dealers”), pursuant to a Program agreement entered into on May 24, 2016 (as amended and modified or supplemented from time to time, the “Program Agreement”). One or more Dealers may purchase the Notes, as principal or agent, from the Issuer from time to time for resale to investors and other purchasers at varying prices relating to prevailing market prices at the time of resale as determined by any Dealer, or, if so specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, for resale at a fixed offering price. Any Dealers of the Notes that are not U.S. registered broker- dealers will agree that they will offer and sell the Notes within the United States only through U.S. registered broker-dealers. If the Issuer and a Dealer agree, a Dealer may also utilize its reasonable efforts on an agency basis to solicit offers to purchase the Notes.

Unless otherwise specified in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement, any Notes sold to one or more Dealers as principal will be purchased by such Dealer(s) at a price equal to 100 per cent of the principal amount thereof or such other price as may be set forth in the applicable Final Terms or, as the case may be, the applicable Pricing Supplement less a percentage of the principal amount equal to a commission as agreed upon by the Issuer and the relevant Dealer(s). A Dealer may sell the Notes it has purchased from the Issuer as principal to certain dealers less a concession equal to all or any portion of the discount received in connection with such purchase. Such Dealer may allow, and such dealers may reallow, a discount to certain other dealers. After the initial offering of the Notes, the offering price (in the case of Notes to be resold at a fixed offering price), the concession and the reallowance may be changed.

The Issuer may withdraw, cancel or modify any offering contemplated hereby without notice and may reject offers to purchase any Notes in whole or in part. Each Dealer shall have the right, in its discretion reasonably exercised, without notice to the Issuer, to reject in whole or in part any offer to purchase the Notes received by it on an agency basis.

The Issuer has agreed to indemnify the Dealers severally against certain liabilities (including liabilities under the Securities Act) or to contribute to payments the Dealers may be required to make in respect thereof. The Issuer has also agreed to reimburse the Dealers for certain other expenses.

The Dealers and their respective affiliates 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. Certain of the Dealers and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for the Issuer, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the Dealers and their respective affiliates may make or hold a broad array of investments, including serving as counterparties to certain derivative and hedging arrangements, and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) 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 securities and instruments of the Issuer. The Dealers and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such instruments.

No Notes will have an established trading market when issued. From time to time, each of the Dealers may make a market in the Notes, but no Dealer is obligated to do so and may discontinue any market-making activity at any time, and there can be no assurance that there will be a secondary market for the Notes or liquidity in the

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secondary market if one develops. The offering of the Notes by the Dealers is subject to receipt and acceptance and subject to the Dealers’ right to reject any order in whole or in part.

It is expected that delivery of Notes will be made against payment therefore on the relevant Issue Date, which may be more than three business days following the date of pricing. Under Rule 15c6-1 of the Exchange Act, trades in the U.S. secondary market generally are required to settle within three business days (“T+3”), unless the parties to any such trade expressly agree otherwise. Accordingly, if an Issue Date is more than three business days following the relevant date of pricing, purchasers who wish to trade Notes in the United States between the date of pricing and the date that is three business days prior to the relevant Issue Date will be required, by virtue of the fact that such Notes initially will settle beyond T+3, to specify an alternative settlement cycle at the time of any such trade to prevent a failed settlement. If an Issue Date is more than three business days following the relevant date of pricing, purchasers of Notes who wish to trade Notes between the date of pricing and the date that is three business days prior to the relevant Issue Date should consult their own adviser.

Price Stabilization and Short Positions

In connection with the issue of Notes under the Program, the Dealers, acting directly or through subsidiaries, may over-allot or effect transactions that stabilize, maintain or otherwise affect the market price of the Notes with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail for a limited period. Such stabilizing, if any, shall be in compliance with all relevant laws and regulations. These transactions may include stabilizing transactions pursuant to which the Dealers, acting directly or through subsidiaries, may bid for or purchase Notes in the open market or otherwise for the purpose of stabilizing the market price of the Notes. Each of the Dealers, acting directly or through subsidiaries, may also create a short position for its account by selling more Notes in connection with the offering than it is committed to purchase from the Issuer, and in such case may purchase Notes in the open market following completion of the offering to cover all or a portion of such short position.

The Dealers may also impose a penalty bid. This occurs when a particular Dealer repays to the Dealers a portion of the subscription price discount received by it because the Dealers have repurchased Notes sold by or for the account of such Dealer in stabilizing or short covering transactions.

Neither the Issuer nor any of the Dealers makes any representation or prediction as to the direction or magnitude of any effect that the transactions described in the immediately preceding paragraph may have on the price of the Notes. In addition, neither the Issuer nor the Dealers makes any representation that the Dealers will engage in any such transactions or that such transactions, once commenced, will not be discontinued without notice.

Selling Restrictions

United States

The Notes have not been and will not be registered under the Securities Act and the Notes may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from, or in transactions not subject to the registration requirements of, the Securities Act.

Each Dealer has represented and each further Dealer appointed under the Program will be required to represent that, except as permitted by the Program Agreement, it will not offer or sell the Notes of any Series (i) as part of their distribution at any time or (ii) otherwise until 40 days after the completion of the distribution of an identifiable tranche of which such Notes are a part, except in accordance with Rule 903 of Regulation S or Rule 144A under the Securities Act as set forth below. Accordingly, neither it, its affiliates nor any persons acting on its or their behalf have engaged or will engage in any directed selling efforts with respect to the Notes, and it and they have complied and will comply with the offering restrictions requirement of Regulation S. Each Dealer agrees, and each further Dealer appointed to the Program will be required to agree, that, at or prior to confirmation of sale of Notes (other than a sale pursuant to Rule 144A), it will have sent to each distributor,

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dealer or person receiving a selling concession, fee or other remuneration that purchases Notes from it during the distribution compliance period a confirmation or notice to substantially the following effect:

“The Notes covered hereby have not been registered under the U.S. Securities Act of 1933, as amended (the ”Securities Act”) and may not be offered and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the completion of the distribution of an identifiable tranche of Notes of which such Notes are a part, except in either case in accordance with Regulation S or Rule 144A under the Securities Act. Terms used above have the meanings given to them by Regulation S under the Securities Act.”

Each Dealer represents and agrees that neither it nor any of its affiliates (as defined in Rule 501(b) of Regulation D under the Securities Act (“Regulation D”)), nor any person acting on its or their behalf, has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer and sale of the Notes in the United States.

The Dealers only may directly through their respective U.S. broker-dealer affiliates arrange for the offer and resale of Notes within the United States only to qualified institutional buyers in accordance with Rule 144A. Each Dealer represents that it has not entered, and agrees that it will not enter, into any contractual arrangement with any distributor with respect to the distribution or delivery of the Notes, except with its affiliates or with the prior written consent of the Issuer.

In addition, until 40 days after the completion of the distribution of the Notes, an offer or sale of Notes within the United States by any dealer whether or not participating in the offering may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A under the Securities Act.

Terms used in the preceding paragraphs but not otherwise defined have the meanings given to them by Regulation S under the Securities Act.

Public Offer Selling Restriction under the Prospectus Directive

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), each Dealer has represented and agreed, and each further Dealer appointed under the Program will be required to represent and agree, that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of Notes which are the subject of the offering contemplated by the Prospectus as completed by the Final Terms in relation thereto to the public in that Relevant Member State except that it may, with effect from and including the Relevant Implementation Date, make an offer of such Notes to the public in that Relevant Member State:

(a) at any time to any legal entity which is a qualified investor as defined in the Prospectus Directive;

(b) at any time to fewer than 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the Issuer for any such offer; or

(c) at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of Notes referred to in (a) to (c) above shall require the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive, or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

For the purposes of this provision, the expression “an offer of Notes to the public” in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information

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on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (as amended, including by Directive 2010/73/EU,) and includes any relevant implementing measure in the Relevant Member State.

United Kingdom

Each Dealer has represented and agreed, and each further Dealer appointed under the Program will be required to represent and agree, that:

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the “FSMA”)) received by it in connection with the issue or sale of any Notes in circumstances in which Section 21(1) of the FSMA would not, if the Issuer was not an authorized person, apply to the Issuer; and

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to any Notes in, from or otherwise involving the United Kingdom.

Norway

Notes denominated in Norwegian kroner may not be offered or sold within Norway or outside Norway to Norwegian citizens abroad, without the Notes prior thereto having been registered in the Norwegian Central Securities Depository.

Each Dealer has represented, warranted and agreed that it has not made and will not make an offer of Notes to the public in Norway prior to the publication of a prospectus in relation to the Notes which has been approved by the competent authority in Norway or, where appropriate, approved in another Relevant Member State and notified to the competent authority in Norway, all in accordance with the Prospectus Directive, except that it may make an offer of Notes to the public in Norway at any time:

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

(b) to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive); or

(c) in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 (2) of the Prospectus Directive and the Securities Trading Act chapter 7.

For the purposes of this provision, the expression an “offer to the public” means the communication in any form and by any means of sufficient information on the terms of the offer so as to enable an investor to decide to purchase or subscribe to the instruments offered, and the expression “Prospectus Directive” means Directive EC/2003/71 as amended by Directive 2010/73.

Japan

The Notes have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended, the “Financial Instruments and Exchange Act”). Accordingly each Dealer has represented and agreed that it has not, directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell any Notes in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the benefit of, any

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resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and other relevant laws and regulations of Japan.

Hong Kong

Each Dealer has represented and agreed that (i) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Notes (except for Notes which are a “structured product” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong (the “SFO”)) other than (a) to “professional investors” as defined in the SFO and any rules made under the SFO; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance; and (ii) it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Notes, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the SFO and any rules made under the SFO.

Singapore

Each Dealer has acknowledged that this Prospectus has not been registered as a prospectus with the Monetary Authority of Singapore (the “MAS”). Accordingly, each Dealer has represented and agreed that it has not offered or sold any Notes or caused such Notes to be made the subject of an invitation for subscription or purchase and will not offer or sell such Notes or cause such Notes to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this Prospectus or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of such Notes, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Note:

This Prospectus has not been registered as a prospectus with the MAS. Accordingly, this Prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Notes may not be circulated or distributed, nor may the Notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under section 274 of the SFA, (ii) to a relevant person pursuant to section 275(1), or any person pursuant to section 275(1A), and in accordance with the conditions specified in section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

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securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Notes pursuant to an offer made under Section 275 of the SFA except:

(1) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;

(2) where no consideration is or will be given for the transfer;

(3) where the transfer is by operation of law;

(4) as specified in Section 276(7) of the SFA; or

(5) as specified in Regulation 32 of the Securities and Futures (Offer of Investments)(Share and Debentures) Regulations 2005 of Singapore.

Canada

The Notes may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the Notes must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this Prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the Dealers are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

General

No action has been or will be taken in any jurisdiction by the Issuer or any Dealer that would, or is intended to, permit a public offering of the Notes, or possession or distribution of this Prospectus or any other offering material, in any country or jurisdiction where action for that purpose is required. Persons into whose hands this Prospectus comes are required by the Issuer and the Dealers to comply with all applicable laws and regulations in each country or jurisdiction in which they purchase, offer, sell or deliver Notes or have in their possession, distribute or publish this Prospectus or any other offering material relating to the Notes, in all cases at their own expense.

Without prejudice to the above paragraphs, each Dealer has agreed that it will (to the best of its knowledge and belief) comply with all applicable securities laws and regulations in force in any jurisdiction in which it purchases, offers, sells or delivers Notes or possesses or distributes the Prospectus and will obtain any consent, approval or permission required by it for the purchase, offer, sale or delivery by it of Notes under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers, sales or deliveries and none of the Issuer, the Trustee, any Agent, the Arranger nor any other Dealer shall have any responsibility therefor.

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None of the Issuer, the Trustee, any Agent, the Arranger nor the Dealers represent that the Notes may at any time lawfully be sold in compliance with any applicable registration or other requirements in any jurisdiction, or pursuant to any exemption available thereunder, or assumes any responsibility for facilitating such sale.

U.S. Transfer Restrictions

As a result of the following restrictions, purchasers of the Notes are advised to consult legal counsel prior to making any offer, resale, pledge or transfer of such Notes.

Rule 144A Notes

Each purchaser of Notes within the United States pursuant to Rule 144A, by accepting delivery of this Prospectus, will be deemed to have represented, agreed and acknowledged that:

(a) It is (i) a qualified institutional buyer within the meaning of Rule 144A (a “QIB”), (ii) acquiring such Notes for its own account or for the account of a QIB and (iii) aware, and each beneficial owner of such Notes has been advised, that the sale of such Notes to it is being made in reliance on Rule 144A.

(b) The Notes have not been and will not be registered under the Securities Act and may not be offered, sold, pledged or otherwise transferred except (i) in accordance with Rule 144A to a person that it and any person acting on its behalf reasonably believe is a QIB purchasing for its own account or for the account of a QIB, (ii) in an offshore transaction in accordance with Rule 903 or Rule 904 of Regulation S or (iii) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available), or (iv) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any State of the United States.

(c) Either (A) it is not and for so long as it holds a Note (or any interest therein) will not be (i) an “employee benefit plan” as defined in Section 3(3) of ERISA that is subject to Title I of ERISA, (ii) a “plan” as defined in and subject to Section 4975 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), (iii) an entity whose underlying assets are deemed for purposes of ERISA or the Code to include the assets of any such employee benefit plan subject to ERISA or other plan subject to Section 4975 of the Code, or (iv) a governmental, church or non-U.S. plan which is subject to any U.S. federal, state, local, non-U.S. or other law, that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code, or (B) its acquisition, holding and disposition of the Notes will not constitute or result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code (or in the case of such a governmental, church or non-U.S. plan, under any such substantially similar U.S. federal, state, local, non-U.S. or other law) for which an exemption is not available.

(d) It will deliver to each person to whom it transfers the Notes notice of any restrictions on transfer of such Notes.

(e) Such Notes, unless the Issuer determines otherwise in compliance with applicable law, will bear a legend to the following effect:

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER (2) IN AN OFFSHORE

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TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE); OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR RESALES OF THIS NOTE. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, REPRESENTS AND AGREES FOR THE BENEFIT OF THE ISSUER THAT IT WILL NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.

BY ITS ACQUISITION AND HOLDING OF THIS NOTE (OR ANY INTEREST THEREIN), THE PURCHASER OR HOLDER WILL BE DEEMED TO HAVE REPRESENTED AND AGREED THAT EITHER (A) IT IS NOT AND FOR SO LONG AS IT HOLDS THIS NOTE (OR ANY INTEREST HEREIN) WILL NOT BE (I) AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), THAT IS SUBJECT TO TITLE I OF ERISA, (II) A “PLAN” AS DEFINED IN AND SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), (III) AN ENTITY WHOSE UNDERLYING ASSETS ARE DEEMED FOR PURPOSES OF ERISA OR THE CODE TO INCLUDE THE ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR OTHER PLAN SUBJECT TO SECTION 4975 OF THE CODE, OR (IV) A GOVERNMENTAL, CHURCH OR NON-U.S. PLAN WHICH IS SUBJECT TO ANY U.S. FEDERAL, STATE, LOCAL, NON-U.S.OR OTHER LAW, THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR (B) ITS ACQUISITION, HOLDING AND DISPOSITION OF THE NOTES WILL NOT CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR IN THE CASE OF SUCH A GOVERNMENTAL, CHURCH OR NON-U.S. PLAN, ANY SUCH SUBSTANTIALLY SIMILAR U.S. FEDERAL, STATE, LOCAL,NON-U.S. OR OTHER LAW) FOR WHICH AN EXEMPTION IS NOT AVAILABLE.;

(f) It understands that the Issuer, the Agent, the Registrar, the Dealers and their affiliates, and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements, and agrees that if any of the acknowledgments, representations or agreements deemed to have been made by it by its purchase of the Notes are no longer accurate, it shall promptly notify the Issuer and the Dealers. If it is acquiring any Notes for the account of one or more qualified institutional buyers it represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgments, representations and agreements on behalf of each such account.

(g) It understands that the Notes offered in reliance on Rule 144A will initially be represented by the Rule 144A Global Note. Before any interest in the Rule 144A Global Note may be offered, sold, pledged or otherwise transferred to a person who takes delivery in the form of an interest in a Regulation S Global Note, it will be required to provide a Transfer Agent with a written certification (in the form provided in the Agency Agreement) as to compliance with applicable securities laws.

(h) It has received the information, if any, requested by it pursuant to Rule 144A and has had full opportunity to review such information.

Prospective purchasers are hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A.

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Regulation S Notes

Each purchaser of Notes outside the United States pursuant to Regulation S and each subsequent purchaser of such Notes in resales prior to the expiration of the distribution compliance period, by accepting delivery of this Prospectus and the Notes, will be deemed to have represented, agreed and acknowledged that:

(a) It is, or at the time Notes are purchased will be, the beneficial owner of such Notes and (i) it is not a U.S. person and it is located outside the United States (within the meaning of Regulation S) and (ii) it is not an affiliate of the Issuer or a person acting on behalf of such an affiliate.

(b) It understands that such Notes have not been and will not be registered under the Securities Act and that, prior to the expiration of the distribution compliance period, it will not offer, sell, pledge or otherwise transfer such Notes except (i) in accordance with Rule 144A under the Securities Act to a person that it and any person acting on its behalf reasonably believe is a QIB purchasing for its own account or the account of a QIB or (ii) in an offshore transaction in accordance with Rule 903 or Rule 904 of Regulation S, in each case in accordance with any applicable securities laws of any State of the United States.

(c) It is not and for so long as it holds a Note (or any interest therein) will not be (i) an “employee benefit plan” as defined in Section 3(3) of ERISA that is subject to Title I of ERISA, (ii) a “plan” as defined in and subject to Section 4975 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), (iii) an entity whose underlying assets are deemed for purposes of ERISA or the Code to include the assets of any such employee benefit plan subject to ERISA or other plan subject to Section 4975 of the Code, or (iv) a governmental, church or non-U.S. plan which is subject to any U.S. federal, state, local, non- U.S. or other law, that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code.

(d) It agrees that it will deliver to each person to whom it transfers the Notes notice of any restrictions on transfer of such Notes.

(e) It understands that such Notes, unless otherwise determined by the Issuer in accordance with applicable law, will bear a legend to the following effect:

THE NOTE EVIDENCED HEREBY (THE “NOTE”) HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 AS AMENDED (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AUTHORITY, OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, (1) REPRESENTS THAT IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION; AND (2) AGREES FOR THE BENEFIT OF THIS ISSUER THAT DURING THE PERIOD COMMENCING AFTER THE COMPLETION OF THE DISTRIBUTION OF THE NOTES THAT IS 40 DAYS AFTER SUCH DATE (THE “DISTRIBUTION COMPLIANCE PERIOD”), THE NOTES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OF BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION,” “UNITED STATES,” AND “U.S. PERSON” HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

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BY ITS ACQUISITION AND HOLDING OF THIS NOTE (OR ANY INTEREST THEREIN), THE PURCHASER OR HOLDER WILL BE DEEMED TO HAVE REPRESENTED AND AGREED THAT IT IS NOT AND FOR SO LONG AS IT HOLDS THIS NOTE (OR ANY INTEREST HEREIN) WILL NOT BE (I) AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), THAT IS SUBJECT TO TITLE I OF ERISA, (II) A “PLAN” AS DEFINED IN AND SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), (III) AN ENTITY WHOSE UNDERLYING ASSETS ARE DEEMED FOR PURPOSES OF ERISA OR THE CODE TO INCLUDE THE ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR OTHER PLAN SUBJECT TO SECTION 4975 OF THE CODE, OR (IV) A GOVERNMENTAL, CHURCH OR NON-U.S. PLAN WHICH IS SUBJECT TO ANY U.S. FEDERAL, STATE, LOCAL, NON-U.S.OR OTHER LAW, THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE.

(f) It understands that the Issuer, the Registrar, the Dealers and their affiliates, and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements, and agrees that if any of the acknowledgments, representations or agreements deemed to have been made by it by its purchase of the Notes are no longer accurate, it shall promptly notify the Issuer and the Dealers.

(g) It understands that the Notes offered in reliance on Regulation S will be represented by the Regulation S Global Note. Prior to the expiration of the distribution compliance period (as that term is defined in Regulation S), before any interest in the Regulation S Global Note may be offered, sold, pledged or otherwise transferred to a person who takes delivery in the form of an interest in the Rule 144A Global Note, it will be required to provide a Transfer Agent with a written certification (in the form provided in the Agency Agreement) as to compliance with applicable securities laws.

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SETTLEMENT

The information set out below is subject to any change in or reinterpretation of the rules, regulations and procedures of DTC, Euroclear or Clearstream, Luxembourg (together, the “Clearing Systems”) currently in effect. Investors wishing to use the facilities of any of the Clearing Systems are advised to confirm the continued applicability of the rules, regulations and procedures of the relevant Clearing System. None of the Issuer, the Trustee, the Agent, the Registrar or any other party to the Agency Agreement will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the Notes held through the facilities of any Clearing System or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

Book-Entry Systems

DTC

DTC has advised the Issuer that it is a limited purpose trust company organized under the New York Banking Law, a member of the Federal Reserve System, a “banking organization” within the meaning of the New York Banking Law, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to Section 17A of the Exchange Act. DTC holds securities that its participants (“Direct Participants”) deposit with DTC. DTC also facilitates the clearance and settlement among Direct Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Direct Participants’ accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants” and, together with Direct Participants, “Participants”).

Under the rules, regulations and procedures creating and affecting DTC and its operations (the “DTC Rules”), DTC makes book-entry transfers of Registered Notes among Direct Participants on whose behalf it acts with respect to Notes accepted into DTC’s book-entry settlement system (“DTC Notes”) as described below and receives and transmits distributions of principal and interest on DTC Notes. The DTC Rules are on file with the U.S. Securities and Exchange Commission. Direct Participants and Indirect Participants with which beneficial owners of DTC Notes (each, a “Beneficial Owner”) have accounts with respect to the DTC Notes similarly are required to make book-entry transfers and receive and transmit such payments on behalf of their respective Beneficial Owners. Accordingly, although Beneficial Owners who hold DTC Notes through Direct Participants or Indirect Participants will not possess Registered Notes, the DTC Rules, by virtue of the requirements described above, provide a mechanism by which Direct Participants will receive payments and will be able to transfer the interest of the Beneficial Owners in respect of the DTC Notes.

Purchases of DTC Notes under the DTC system must be made by or through Direct Participants, which will receive a credit for the DTC Notes on DTC’s records. The ownership interest of each Beneficial Owner is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participants through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the DTC Notes are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in DTC Notes, except in the event that use of the book-entry system for the DTC Notes is discontinued.

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To facilitate subsequent transfers, all DTC Notes deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of DTC Notes with DTC and their registration in the name of Cede & Co. or such other DTC nominee effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the DTC Notes; DTC’s records reflect only the identity of the Direct Participants to whose accounts such DTC Notes are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

Redemption notices shall be sent to DTC. If less than all of the DTC Notes within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to DTC Notes unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the DTC Notes are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal and interest payments on the DTC Notes will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Issuer or the relevant agent (or such other nominee as may be requested by an authorized representative of DTC), on the relevant payment date in accordance with their respective holdings shown in DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name”, and will be the responsibility of such Participant and not of DTC or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the Issuer, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants.

Under certain circumstances, including if there is an Event of Default under the Notes, DTC will exchange the DTC Notes for definitive Notes in registered form, which it will distribute to its Participants in accordance with their proportionate entitlements and which, if representing interests in a Rule 144A Global Note, will be legended as set forth under “Plan of Distribution and Transfer Restrictions—U.S. Transfer Restrictions”.

A Beneficial Owner shall give notice to elect to have its DTC Notes purchased or tendered, through its Participant, to the relevant agent, and shall effect delivery of such DTC Notes by causing the Direct Participant to transfer the Participant’s interest in the DTC Notes, on DTC’s records, to the relevant agent. The requirement for physical delivery of DTC Notes in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the DTC Notes are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered DTC Notes to the relevant agent’s DTC account.

DTC may discontinue providing its services as depository with respect to the DTC Notes at any time by giving reasonable notice to the Issuer or the relevant agent. Under such circumstances, in the event that a successor depository is not obtained, DTC Note certificates are required to be printed and delivered.

The Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, DTC Note certificates will be printed and delivered to DTC.

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Since DTC may only act on behalf of Direct Participants, who in turn act on behalf of Indirect Participants, any Beneficial Owner desiring to pledge DTC Notes to persons or entities that do not participate in DTC, or otherwise take actions with respect to such DTC Notes, will be required to withdraw its Registered Notes from DTC as described below.

Euroclear and Clearstream, Luxembourg

Euroclear and Clearstream, Luxembourg each holds securities for its customers and facilitates the clearance and settlement of securities transactions by electronic book-entry transfer between their respective account holders.

Euroclear and Clearstream, Luxembourg provide various services including safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Euroclear and Clearstream, Luxembourg also deal with domestic securities markets in several countries through established depository and custodial relationships. Euroclear and Clearstream, Luxembourg have established an electronic bridge between their two systems across which their respective participants may settle trades with each other.

Euroclear and Clearstream, Luxembourg customers are world-wide financial institutions, including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations. Indirect access to Euroclear and Clearstream, Luxembourg is available to other institutions that clear through or maintain a custodial relationship with an account holder of either system.

Book-Entry Ownership and Payment in Respect of DTC Notes

The Issuer may apply to DTC in order to have any Tranche of Notes represented by a Global Note accepted in its book-entry settlement system. Upon the issue of any such Global Note, DTC or its custodian will credit, on its internal book-entry system, the respective nominal amounts of the individual beneficial interests represented by such Global Note to the accounts of persons who have accounts with DTC. Such accounts initially will be designated by or on behalf of the relevant Dealer. Ownership of beneficial interests in such a Global Note will be limited to Direct Participants or Indirect Participants, including, in the case of any Regulation S Global Note (as defined herein), the respective depositaries of Euroclear and Clearstream, Luxembourg. Ownership of beneficial interests in a Global Note accepted by DTC will be shown on, and the transfer of such ownership will be effected only through, records maintained by DTC or its nominee (with respect to the interests of Direct Participants) and the records of Direct Participants (with respect to interests of Indirect Participants).

Payments in U.S. dollars of principal and interest in respect of a Global Note accepted by DTC will be made to the order of DTC or its nominee as the registered holder of such Note. In the case of any payment in a currency other than U.S. dollars, payment will be made to the Exchange Agent on behalf of DTC or its nominee and the Exchange Agent will (in accordance with instructions received by it) remit all or a portion of such payment for credit directly to the beneficial holders of interests in the Global Note in the currency in which such payment was made and/or cause all or a portion of such payment to be converted into U.S. dollars and credited to the applicable Participants’ account.

The Issuer expects DTC to credit accounts of Direct Participants on the applicable payment date in accordance with their respective holdings as shown in the records of DTC unless DTC has reason to believe that it will not receive payment on such payment date. The Issuer also expects that payments by Participants to beneficial owners of Notes will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers, and will be the responsibility of such Participant and not the responsibility of DTC, the Principal Paying Agent, the Registrar or the Issuer. Payment of principal, premium, if any, and interest, if any, on Notes to DTC is the responsibility of the Issuer.

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Transfers of Notes Represented by Global Notes

Transfers of any interests in Notes represented by a Global Note within DTC, Euroclear and Clearstream, Luxembourg will be effected in accordance with the customary rules and operating procedures of the relevant clearing system. The laws in some States within the United States require that certain persons take physical delivery of securities in definitive form. Consequently, the ability to transfer Notes represented by a Global Note to such persons may depend upon the ability to exchange such Notes for Notes in definitive form.

Similarly, because DTC can only act on behalf of Direct Participants in the DTC system who in turn act on behalf of Indirect Participants, the ability of a person having an interest in Notes represented by a Global Note accepted by DTC to pledge such Notes to persons or entities that do not participate in the DTC system or otherwise to take action in respect of such Notes may depend upon the ability to exchange such Notes for Notes in definitive form. The ability of any holder of Notes represented by a Global Note accepted by DTC to resell, pledge or otherwise transfer such Notes may be impaired if the proposed transferee of such Notes is not eligible to hold such Notes through a direct or indirect participant in the DTC system.

Subject to compliance with the transfer restrictions applicable to the Notes described under “Plan of Distribution and Transfer Restrictions—Transfer Restrictions”, cross-market transfers between DTC, on the one hand, and directly or indirectly through Clearstream, Luxembourg or Euroclear account holders, on the other hand will be effected by the relevant clearing system in accordance with its rules and through action taken by the Registrar, a Paying Agent and any custodian (“Custodian”) with whom the relevant Global Notes have been deposited.

On or after the Issue Date for any Series, transfers of Notes of such Series between account holders in Clearstream, Luxembourg and Euroclear and transfers of Notes of such Series between participants in DTC will generally have a settlement date three business days after the trade date (T+3). The customary arrangements for delivery versus payment will apply to such transfers.

Cross-market transfers between account holders in Clearstream, Luxembourg or Euroclear and DTC participants will need to have an agreed settlement date between the parties to such transfer. Because there is no direct link between DTC, on the one hand, and Clearstream, Luxembourg and Euroclear, on the other, transfers of interests in the relevant Global Notes will be effected through the Registrar, a Paying Agent and the Custodian receiving instructions (and, where appropriate, certification) from the transferor and arranging for delivery of the interests being transferred to the credit of the designated account for the transferee. In the case of cross-market transfers, settlement between Euroclear or Clearstream, Luxembourg account holders and DTC participants cannot be made on a delivery-versus-payment basis. The securities will be delivered on a free delivery basis and arrangements for payment must be made separately.

DTC, Clearstream, Luxembourg and Euroclear have each published rules and operating procedures designed to facilitate transfers of beneficial interests in Global Notes among participants and account holders of DTC, Clearstream, Luxembourg and Euroclear. However, they are under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued or changed at any time. None of the Issuer, the Agents or any Dealer will be responsible for any performance by DTC, Clearstream, Luxembourg or Euroclear or their respective direct or indirect participants or account holders of their respective obligations under the rules and procedures governing their operations and none of them will have any liability for any aspect of the records relating to or payments made on account of beneficial interests in the Notes represented by Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial interests.

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GENERAL INFORMATION

Authorization

The establishment of the Program and the issue of Notes have been duly authorized by a resolution of the Board of Directors of the Issuer dated December 7, 2011 and the update of the Program was authorized by a resolution of the Board of Directors of the Issuer dated December 9, 2015.

Listing and Admission to Trading

Application has been made to the Irish Stock Exchange for Notes issued under the Program (other than Exempt Notes) during the 12 months from the date of the Prospectus to be admitted to the Official List and trading on its Regulated Market. However, Notes may be issued pursuant to the Program which will not be listed on the Irish Stock Exchange or any other stock exchange or which will be listed on such stock exchange as the Issuer and the relevant Dealer(s) may agree.

Documents Available

For the period of 12 months from the date of this Prospectus, copies of the following documents will be available for inspection at the registered office of the Issuer and from the specified offices of the Paying Agents for the time being:

(i) the constitutional documents (with an English translation thereof) of the Issuer;

(ii) the Program Agreement, the Trust Deed, the Agency Agreement, the Issuer-ICSDs Agreement and the forms of the Notes (in global and definitive form);

(iii) the unaudited consolidated quarterly financial statements of the Issuer for the three months ended March 31, 2016;

(iv) the audited consolidated annual financial statements of the Issuer for the financial years ended December 31, 2013, 2014 and 2015, together with the auditor’s reports prepared in connection therewith;

(v) the most recently published audited consolidated annual financial statements of the Issuer and the most recently published unaudited interim financial statements (if any) of the Issuer, in each case together with any audit or review reports prepared in connection therewith; and

(vi) this Prospectus, any supplement to this Prospectus, each document incorporated by reference in this Prospectus from time to time and each Final Terms and each Pricing Supplement (save that Pricing Supplements relating to Exempt Notes will only be available for inspection by a holder of such Notes and such holder must produce evidence satisfactory to the Issuer and the relevant Paying Agent as to its holding of Notes and identity).

In addition, a copy of this Prospectus, any supplement to this Prospectus, each document incorporated by reference in this Prospectus from time to time and each Final Terms relating to Notes which are admitted to trading on the Irish Stock Exchange’s regulated market will also be available on the website of the Central Bank of Ireland (www.centralbank.ie).

Clearing Systems

The Notes have been accepted for clearance through Euroclear and Clearstream, Luxembourg. The appropriate common code and International Securities Identification Number (ISIN) allocated by Euroclear, Clearstream,

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Luxembourg for each Tranche of Notes will be specified in the relevant Final Terms or, as the case may be, the applicable Pricing Supplement. In addition, the Issuer will make an application for Notes to be accepted for trading in book-entry form by DTC. The CUSIP number for each Tranche of Notes, together with the relevant common code and ISIN (if applicable), will be specified in the relevant Final Terms or, as the case may be, the applicable Pricing Supplement. If the Notes are to clear through an additional or alternative clearing system, the appropriate information will be specified in the relevant Final Terms or, as the case may be, the applicable Pricing Supplement. Euroclear, Clearstream, Luxembourg and DTC are the entities in charge of keeping the book-entry records.

The address of Euroclear is Euroclear Bank, 1, Boulevard du Roi Albert II, B-1210 Brussels, Belgium; the address of Clearstream, Luxembourg is Clearstream Banking SA, 42 Avenue JF Kennedy, L-1855 Luxembourg, Luxembourg; and the address of DTC is 55 Water Street, New York, NY 10041–0099, United States.

Conditions for Determining Price

The issue price and amount of the Notes of any Tranche to be issued will be determined at the time of the offering of such Tranche in accordance with prevailing market conditions.

Yield

In relation to any Tranche of Fixed Rate Notes (other than Fixed Rate Notes which are Exempt Notes), an indication of the yield in respect of such Notes will be specified in the applicable Final Terms. The yield is calculated at the Issue Date of the Notes on the basis of the relevant Issue Price. The yield indicated will be calculated as the yield to maturity as at the Issue Date of the Notes and will not be an indication of future yield.

Material Change

There has been no material adverse change in the prospects of the Issuer since December 31, 2015, and there has been no significant change in the financial position of the Issuer or the DNB Bank Group since March 31, 2016.

Litigation

Save as disclosed in “Description of the DNB Bank Group—Litigation”, neither the Issuer nor any member of the DNB Bank Group is or has been involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Issuer is aware) in the 12 months preceding the date of this Prospectus which may have, or have in such period had, a significant effect on the financial position or profitability of the Issuer or the DNB Bank Group.

Certificates

The Trust Deed provides that the Trustee may rely on any certificate or report from an expert or any other person in accordance with the provisions of the Trust Deed whether or not any such certificate or report or any engagement letter or other document entered into by the Trustee in connection therewith contains any limit on the liability of such expert or such other person.

Investments in subsidiaries as of December 31, 2015

Amounts in NOK thousands (values in NOK unless otherwise indicated)

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Ownership Share Number of Nominal share in per Carrying capital shares Value cent amount

Foreign subsidiaries

DNB Invest Denmark DKK 12,765 228 12,765,228 468 DKK 12,765,228 100.00 10,684,100

DNB Bankas EUR 190,205 5,710,134 EUR 190,205 100.00 3,550,993

DNB Banka EUR 191,178 191,178,337 EUR 191,178 100.00 2,255,764

DNB Pank EUR 9,376 937,643 EUR 9,376 100.00 965,233

DNB Bank Polska PLN 1,257,200 1,257,200,000 PLN 1,257,200 100.00 1,773,565

DNB Asia1 USD 1,500,000 150,000,000 USD 1,500,000 100.00 13,196,625

DNB Asia1 SGD 20,000 20,000,000 SGD 20,000 100.00 100,769

DNB Brasil BRL 600 600,000 BRL 600 100.00 2,727

DNB Capital2 USD USD 100.00 21,114,600

DNB Luxembourg EUR 70,000 70,000 EUR 70,000 100.00 672,200

DNB Markets Inc. USD 1 1,000 USD 1 100.00 3,224

DNB Sweden SEK 100,000 100,000,000 SEK 100,000 100.00 15,163,666

DNB (UK) Limited GBP 200 200,000 GBP 200 100.00 15,041,659

Domestic subsidiaries

Aksje- og Eiendomsinvest 100 100,000 100 100.00 38,721

Bryggetorget Holding 3,250 2,500 3,250 100.00 107,076

Digital Wallet 297 2,971 297 100.00 7,500

DNB Boligkreditt 3,497,000 34,970,000 3,497,000 100.00 29,784,000

DNB Eiendom 10,003 100,033 10,003 100.00 158,021

DNB Eiendomsutvikling 91,000 91,000,000 91,000 100.00 238,731

DNB Gjenstandsadministr- asjon 3,000 30 3,000 100.00 3,000

DNB Invest Holding 100,000 200,000 100,000 100.00 229,480

DNB Meglerservice 1,200 12 1,200 100.00 10,221

DNB Næringskreditt 550,000 550,000 550,000 100.00 5,240,942

DNB Næringsmegling 1,000 10,000 1,000 100.00 24,000

DNB Polish Properties 1,200 1,200 1,200 100.00 65,113

E6 Logistikk 30 3,000 30 100.00 22,398

Godfjellet 8,030 8,030 8,030 100.00 8,447

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Ownership Share Number of Nominal share in per Carrying capital shares Value cent amount

Kongsberg Industrieiendom 100 1,000 100 100.00 10,000

Total investments in subsidiaries 120,472,774 ______Note: (1) DNB Asia Ltd has part of its share capital denominated in SGD (due to local requirements) and a part of its share capital denominated in USD. (2) DNB Capital LLC, a limited liability company, has paid-in capital of USD 2.4 billion.

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INDEPENDENT AUDITORS

Independent Auditors

The Issuer’s consolidated financial statements at and for the years ended December 31, 2013, 2014 and 2015 incorporated by reference in this Prospectus have been audited by Ernst & Young AS, an independent public accounting firm, as stated in their report incorporated by reference herein. The Issuer’s unaudited consolidated financial statements as of and for the three months ended March 31, 2016 incorporated by reference in this Prospectus have been reviewed by Ernst & Young AS.

The address of Ernst & Young AS is Dronning Eufemias gate 6, P.O. Box 20, NO-0051 Oslo, Norway. Ernst & Young AS is a member of the Norwegian Institute of Public Accountants.

Legal Matters

Certain legal matters in connection with the offering of the Notes will be passed upon for the Issuer by Allen & Overy LLP, U.S. legal counsel to the Issuer. Certain legal matters in connection with the offering of the Notes will be passed upon for the Arranger and Dealers by Linklaters LLP, U.S. and English legal counsel to the Arranger and Dealers, and Advokatfirmaet Wiersholm AS, Norwegian legal counsel to the Arranger and Dealers.

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THE ISSUER DNB Bank ASA Dronning Eufemias gate 30 N-0191 Oslo Norway ARRANGER Barclays Bank PLC 5 North Colonnade Canary Wharf London E14 4BB United Kingdom DEALERS Barclays Capital Inc. Goldman, Sachs & Co. 745 Seventh Avenue 200 West Street New York, New York 10019 New York, NY 10282 United States United States

TRUSTEE IRISH LISTING AGENT The Law Debenture Trust Corporation p.l.c. Arthur Cox Listing Services Limited Fifth Floor Earlsfort Centre 100 Wood Street Earlsfort Terrace London EC2V 7EX Dublin 2 United Kingdom Ireland

ISSUING AND PRINCIPAL PAYING AGENT REGISTRAR and EXCHANGE AGENT Citibank, N.A., London Branch Citigroup Global Markets Deutschland AG Citigroup Centre Reuterweg 16 Canada Square, Canary Wharf 60323 Frankfurt London E14 5LB Germany United Kingdom LEGAL ADVISERS To the Issuer as to English law as to United States law Allen & Overy LLP Allen & Overy LLP One Bishops Square 52 avenue Hoche London E1 6AD 75379 Paris Cedex 08 United Kingdom France

To the Arranger and the Dealers as to Norwegian law as to United States and English law Advokatfirmaet Wiersholm AS Linklaters LLP PO Box 1400 Vika One Silk Street N-0115 Oslo London EC2Y 8HQ Norway United Kingdom

AUDITORS LEGAL ADVISERS Ernst & Young AS To the Trustee as to English law Dronning Eufemias gate 6 Linklaters LLP P.O. Box 20 One Silk Street NO-0051 Oslo London EC2Y 8HQ Norway United Kingdom