This document is a translation in English of the Interim Management Report on the Activities of the Bulgarian- American Credit Bank AD on consolidated basis for the twelve months of 2013. This translation is not official and is prepared for investors’convenience only. In case of discrepancies between this translation in English and the original text of the report in Bulgarian, the Bulgarian version shall prevail.

INTERIM MANAGEMENT REPORT ON THE ACTIVITIES OF THE BULGARIAN- AMERICAN CREDIT BANK AD ON CONSOLIDATED BASIS FOR THE TWELVE MONTHS OF 2013

SOFIA, JANUARY 30, 2014

GENERAL INFORMATION

For the past 2013 Bulgarian-American Credit Bank continued to pursue its main targets in connection with its development as a versatile bank, including lending of small and medium-sized enterprise (SME) financing and retail banking expanding by offering diverse retail loan products and transaction banking. The Bank is trying to extend its clients’ base through implementing contemporary banking technologies and ensuring the customers needs by providing complex services.

At the end of 2012 BACB officially started issuing international debit cards VPay and contactless international debit cards MasterCard Standard and MasterCard Gold to individuals as well as the debit cards VISA Business – to companies. The Bank successfully accomplished the project of issuing credit cards and presented to the market international revolving credit cards Visa Classic and Visa Gold with grace period for individuals. In the beginnig of April 2013 BACB started issuing MasterCard Business Credit credit cards for business customers. In August 2013 the Bank launched its new platform the Virtual Bank BACB Plus to customers. BACB Plus is the first virtual online bank in . It provides online banking throughout integrated system of various remote channels. The mobile application of the Virtual Bank provides active bank transactions. In addition to the significant number of remote products and services provided by the Virtual Bank in comparison to other banks online banking systems, BACB Plus provides completely remote posibility for a new client’s registration via Qualified electronic signature. Communication with clients is based on a new “friendly neighbourhood” via different communication channels with the BACB Plus employees such as phone, e-mail, Skype, chat, Facebook, forum, call-back option etc. In July 2013 BACB started sending the PIN code to a bank card on the cell phone of the client by SMS. BACB is the only bank in Bulgaria that offers this servise along with the service of delivering the bank cards on postal address. By the latter the set of sevices that provide the remote issuance and service of bank cards through the Virtual Bank, without visiting the bank office is completed. The Bank is in a process of implementing international debit cards with display and keyboard - VPAY CodeSure and VISA Business CodeSure that provide high level protection by changing the static 3D- Secure password for Internet transactios with a dynamic “One time password (OTP)”, access to the Virtual Bank with the same debit display card; confirmation of the Virtual Bank transactions by OTP and execution of all other transactions performed by debit cards.

The emphasis of BACB lending policy remains the green energy projects, renewable energy, environment projects and innovative business solutions. Simultaneously BACB continues to search for balance and diversification of its loan portfolio through exposures to corporate customers and other sectors with strong fundamentals such as renewable energy.

A special department in the Bank is responsible for the cooperation with the EU operational programs and financial institutions. The main purpose of the department is to offer the Bank’s clients variety of services throughout all stages of the development of the projects based on the EU operational programs.

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In the beginning of 2013 BACB signed an agreement with the National Guarantee Fund under the Rural Development Programme. The main purpose of the agreement is to facilitate and support the process of EU granting under the Programme. BACB is among the first seven partner banks selected in an open procedure under the Public Procurement Act. Projects totaling BGN 1.2 billion are anticipated to be financed through the National Guarantee Fund under the Programme. The Guarantee Fund will cover up to 80% of the risk under a loan, approved under the Programme. In order to broaden the range of financing opportunities to its clients on August 23, 2013 BACB executed an agreement with the National Guarantee Fund for issuance of guarantees under loans for projects in “Fishing” sector of Bulgaria and for issuance of contra-guarantees under bank guarantees issued for advance payments on projects approved under the Fishing Development Program 2007 – 2013. At the end of December 2013 the Bank executed an Amendment with the State Fund “Agriculture” for extending the term for refinancing loans under the Rural Development Program, as well as increasing the amount of the refinancing from BGN 500,000 to BGN 750,000. As of December 31, 2013 the Bank has disbursed loans in the amount of BGN 1.00 million to four customers, as well as approved for refinancing five new clients with loans in the amount of BGN 2.3 million

In May 2013 parliament elections were held. They resulted in forming a new coalition and a new government and caused some political instabilty with some of its first actions. Despite that, the stable position for managing outside shocks and the high creditworthness of the country remain in the fourth quarter. The recovery of the Bulgarian economy remain dependent on outside factors and developments in the . However, the latest data of Eurostat provide some optimism for the condition of the EU economy, reporting the end of the recession in the second quarter of the year after the record six quarters of downturn. An indication for the expected economic development of Bulgaria in 2013 is the expected low growth rate of GDP. Along with the request for budget revision and increase of the deficite to 2% of GDP, the Ministry of Finance downgraded its forecast for the economic growth to below 1% with 1.9% forecasted earlier. According to the Finance Minister the expected economic growth most probably will not exceed 0.6% mainly because the low level of investments in the country while the expectations for 2014 compile positive trends for the development of the European economics and recovery of the internal demand as a result of the improved economics. This forecast is in compliance with the opinion of the European Commision for the decrease of its forecast for the economic growth of Bulgaria for 2013 and 2014 to 0.5% and 1.5% respectively. The decrease of the forecasts compared with the prognosis in February is significant. In February the European Commission confirmed its last year opinion for expected GDP of 1.4% in 2013 and 2% in 2014 respectively. According to the Commission the unstable foreign economies and the weak labor market are the significant drawbacks of the Bulgarian economy. The Forecast emphasizes on the ongoing weakening of the labor market with expected increase of the unemployment with 2% in 2013 and stabilization in 2014. For 2013 the Commission expects moderate rate of inflation of 0.5% with slight increase to 1.4% in 2014. In its annual credit analysis for Bulgaria the rating agency Moody’s evaluates as moderate the ecenomical and institutional stability of the country, emphasising on the stable public finance. The expectations of Moody’s are for growth of GDP with 1.2% and 2.4% for 2013 and 2014 respectively. According to the company’s analisys the labor market processes still supress the faster recovery in the private consumption and subsequently in retail lending. Simultaneously the fact that the averge income in Bulgaria is lower than the average for the Eurozone is reported. The rating agency defines the fiscal and of Bulgaria as prudent while the bank supervision – as effective. The latter is a main factor for the banking system not becoming an additional burden for the budget in a possible enhancing of the global financial crysis. The effective bank supervision is also a prerequisite for keeping the confidence in the country. In its latest forecst the World Bank also revised its expectations for the economical growth of Bulgaria to 0.6% from 1.2% for 2013 and 1.7% for 2014 which is almost equal to the forecast of the Ministry of Finance. A slight improvement of the external conditions is reported, including mollification of the global markets and trade recovery. The temps of economic development in Bulgaria fall behind the average temp of growth of the eleven countries that joined the EU after 2004. For 2013 the GDP of these countries will icrease by 1% average and by 2.3% for 2014. The forecasts of the International Monetary Fund as at October for the global economy growth in 2013 and 2014 are significantly downgraded. The Bulgarian economy growth is expected not to exceed 0.5% with expected growth of 1.2% in April. For 2014 the parameter equals 1.6% against the April forecast

2 of 2.3%. The IMF expects the unemployment in Bulgaria to keep its current level of 12.4% and to decrease to 11.4% in 2014. The inflation is expected to reach 2.1% in 2013 and 1.9% in 2014. The current account deficit is expected to reach 1.2% in 2013 and to decrease to 0.3% in 2014.

According to the latest BNB data for the condition of the Bulgarian banking system1, the activities of the credit institutions remained under the influence of the inherent factors of the previous year – maintained stable liquidity position, increase of the attracted funds and mild credit activity. The growth of the attracted funds in November 2013 the total amount of the assets lead to the increase of the assets by 765 million (0.9%) to 85.4 billion. The available resourse is directed to low-risk investments – interbank deposits and securities that result in strengthening the liquid position of the system. The liquid assets of the banks increase and the liquidity ratio increased from 26.67% at the end of November 2013 to 25.77% at the end of April, mainly because of the increased cash funds and receivables from credit institutions. The monthly growth of the receivables from credit institutions (by BGN 1,245 million, 13.5%) and of the securities (BGN 115 million, 1.1%) is determined also by the transformation of assets from the rest of the balance positions. The cash funds (BGN 386 million or 4.3%), the fixed assets (BGN 63 million or 3.2%) as well as the affiliate companies (BGN 17 million, 4.5%) report decrease.

As of November 30 2013 the profit of the banking system equals BGN 565 and in November only it reaches BGN 53 million. The impairment costs of the banking system equals BGN 925 million as of November 30, 2013 and is 9.7% less than the same period last year and in November only reach BGN 85 million. The net (balance) share of the non-performing loans with more than 90 days overdue to the net loan portfolio of the system is 10.67% and has not changed significantly compared to the previous month.

The loans and advances (excluding the loans and advances to credit institutions) report minimal decrease on monthly basis by 0.1% as at the end of November or BGN 80 million mainly under the influence of the dynamics in all positions of the loan portfolio. The retail exposures decrease with BGN 24 million as well as the loans to enterprises – BGN 52 million. The consumer loans decrease by BGN 24 million (0.3%) while the mortgage loans remain almost unchanged. The loans to non-banking institutions and governments report decrease by BGN 2 million.

In November 2013 the amount of attracted funds is BGN 743 million (1.0%) due to increase in the deposits from non-credit institutions (BGN 271 million) and in the deposits from individuals and households (increase by BGN 427 million or 1.1%). The trend for decrease of the deposits from credit institutions (BGN 83 million) remains due to the changes in repo transactions and long-term financing. The maturity of subordinated debt is compensated in full by the significant increase in the hybrid (debt- equity) instruments – BGN 153 million, 27.6%. The balance capital of the bank sector has not been significantly changed compared to October 2013 (BGN 11.1 billion).

Management anticipates 2014 to be a year of challenges, but also one of new opportunities. Management believes that given the Bank’s conservative provisioning policy and high capital adequacy ratio BACB remains adequately positioned to face the economic difficulties of the Bulgarian SMEs and to present flexible solutions corresponding the needs of its corporate, SMEs and retail, potential and existing customers. The stable deposit base combined with prudent risk management and the Bank’s fast and versatile business model remain the Bank’s main strengths that will allow it to take advantage of the opportunities offered by the changing market environment.

OVERVIEW OF THE ACTIVITIES FOR THE TWELVE MONTHS OF 2013

Despite that in the reporting period the Bank successfully generates new business by disbursing new loans (approximatelly BGN 117.43 million), it is still not enough to neutralize the negative effect of the loans, disbursed before the Economic crisis. As a result the Bank’s loan portfolio reported a slight decrease of 8.09% in net loans and advances to clients. This is further influenced by the repayment of relatively large exposures, including acquired collaterals against decrease of the loan portfolio in the

1 BNB data as at 30.11.2013 (www.bnb.bg) 3 amount of BGN 19.03 million, as well as written-off principal receivables in the amount of BGN 31.7 million. The relative share of the net loans of the total assets of the Bank is 55.74%.

The gross loan portfolio reports decreased by approximatelly 12% compared to Y/e 2012 – from BGN 619 million to BGN 546.15 million. The decrease is influenced by the written-off exposures on the account of provisions for impairment in the amount of BGN 41.2 million.

The downward trend in interest rates paid on attracted funds continues. At the end of December 2013 the Bank’s attracted deposits amounted to BGN 607 million, which is a decrease by 2.58% compared to the Y/e 2012. Meanwhile the deposits decrease with BGN 8.76 million compared to the reported data at the end of the third quarter.

On May 22nd, 2013 the Bank repaid at maturity its last bond issue in the amount of EUR 12 million. As at the end of December the share of deposits in the total attracted funding represent 99.19%.

For the reported period the Bank registers a significant increase of the net interest income (by 262.3%) on an annual basis or total amount of BGN 5.61 million. This is a result mostly of the decreased by BGN 5.26 million interest costs (16%) compared to the reported data at December 31, 2012 with a stable deposit base and active liabilities management. During the quarter the factors influencing the net interest income are still the moderate income generated by the credit activitiy, as well as the low profitability on the interbanking money markets. The interest income of debt securities for the period January 1 – December 31, 2013 equals BGN 1.02 million. The distinction between the deposit products and deposit terms and conditions for individuals and legal entities, implemented in the previous quarters of 2013 gave the Bank the opportunity to decrease more aggressively the interest levels on deposit products for legal entities while keeping them still attractive. Despite of this change, the Bank maintains its stable deposit base with reduced funding costs.

For the twelve months of 2013 the Bank reported net fees and commissions income in the amount of BGN 2.18 million. This result exceeds with BGN 957 thousand the reported data for 2012 (78.38%). The main reason for that is the focused efforts for widening of the range of the products and services provided by the Bank.

Other operating income amounts to BGN (-46) thousand which is considerable decrease compared to the BGN 5.22 million for 2012. The high rate in 2012 was caused by recovered written-off receivables.

The operating expense increased with BGN 1.14 million or 6.67% on annual basis with reduced growth rate for the previous quarters. The administrative costs increased by 4.90% as a result of the wider range of the products and services provided by the Bank and the acitivities for their promotion. The personnel costs in 2013 increased with BGN 304 thousand compared with 2012 to BGN 6.25 million and represent 38.74% of the administrative costs. The depreciation expense is up with 22.65% YoY, which is driven mainly by the increase in depreciation expense of long-term assets by 70.63% while the depreciation in the investments properties remains almost unchanged. The Provision expenses decrease significantly with 50.82%, and for the twelve months of 2013 amount to BGN 6.6 million, compared to BGN 13.4 million at December 31, 2012 or a decrease of 50.82%.

For the reported period the Bank registered operating loss of BGN 9,99 million 2.

After the accrual of provisions for loan impairment at the amount of BGN 6.6 million and profit from discontinued operations (Imoti Direct REIT, in liquidation), the Bank reported negative net financial result of BGN 16.5 million as of December 31, 2013. For the last quarter of 2013 the annual net loss of the Bank has slightly decreased.

In the previous quarter BACB Management decided for the establishment of a new subsidiary of BACB – ‘BACB Trade’ - fully owned by BACB, with a main purpose financial and trade consulting.

2 All financial data for BACB as at 31.12.2013 in this report is unaudited and on consolidated basis 4

OVERVIEW OF THE FINANCIAL CONDITIONS AS OF DECEMBER 31, 2013

Loan portfolio and asset quality

Net loans and advances to customers decreased to BGN 433.95 million at December 31, 2013 (down by 8.09% compared to at December 31 2012) and represent 55.74% of the Bank’s total assets. The interbank deposits equal BGN 90.12 million (decrease by 25.21%) and form 11.58% of the total assets. Cash and balances with the in the amount of BGN 86 million decreased by 8.14% and formed 11.05% of total assets at December 31, 2013. Aiming to increase the profitability of its liquid assets the Bank maintained its investments in Bulgarian government bonds. The maturity of some of the government bonds held by the Bank is partially compensated by new investments in 2013. As a result the financial assets held for sale marked a significant increase reaching BGN 44.2 million at the end of 2013 or 5.68% of the total assets of BACB. The largest share in the amount of BGN 42.4 million is the portfolio of Bulgarian government bonds.

Loans in arrears of over 90 days (NPLs) accounted for 31.77% of gross loans at December 31, 2013. BACB continuously performs internal assessments and collateral stress tests to measure the impact of any possible further deterioration of the business environment on its portfolio. The ratio of total provisions (accounting and regulatory specific) to NPLs reached 104.12%. This is a result of the conservative policy followed in evaluation of loan impairment losses.

The ratio of accounting provisions to gross and classified loans amounted to 20.54% and 32.16% respectively, which significantly exceeded the average level for the banking system due to the hitherto prevailing focus of the Bank on financing of construction projects and investment in/development of real estate. The new strategy of the Bank targets further diversification of the loan portfolio aiming towards improved performance and decrease of exposures to certain sectors. During the reporting period upon Management resolution the Bank has written-off receivables in the amount of BGN 41.2 million on the account of the provisions for impairment.

Management anticipates that the pressure on the loan portfolio of the Bank will remain over 2014 due to its still prevailing correlation with the performance of sectors such as real estate and construction, which in turn are negatively impacted by the difficult internal and external economic environment. Still, a slight improvement in the credit ratios is expected and can be seen in the results for the last quarter of the past year.

In order to protect the asset quality of the Bank the Management continues to perform intense supervision of problem loans and implements work-out procedures. Within such loan work-out and foreclosure procedures the Bank acquired properties including land, which are classified as Investment properties and Assets held for sale amounting to BGN 54.4 million (newly acquired properties in the amount of BGN 3.894 million and dispossesed properties in the amount of BGN 261 thousand) and BGN 55.8 million respectively (acquired properties with balance value of BGN 16.54 million and dispossesed properties with balance value of BGN 531 thousand), at December 31, 2013. The acquired properties from the affiliate company Imoti Direct REIT are also classified as “Assets held for sale”. In the second and the third quarters of 2013 the Management of BACB decided to reclassify Investment properties with balance sheet value of BGN 9.2 million to Assets held for resale. The total amount under the both positions report an increase of 17.42% compared to Y/e 2012. These assets are subject to future disposition that is facilitated by a specialized unit in the Bank.

In the beginning of 2013 BACB signed an agreement with the National Guarantee Fund under the Rural Development Program. The main purpose of the agreement is to facilitate and support the process of EU granting under the Program. BACB is among the first seven partner banks selected in an open procedure under Public Procurement Act. Currently the Bank successfully operates under the Program and has approved guarantees in the amount of BGN 5.5 million, as well as submitted guarantees in the amount of BGN 1 million. Under the Program of NGF and Fishing Development Program the Bank has approved guarantee in the amount of BGN 1.4 million.

Liquidity and funding 5

In executing its funding strategy the Bank adheres to the principles of diversification and optimization of the funding base in securing its liquidity needs.

In 2013 BACB maintained stable deposit base with a minimal decrease of 2.58% of the customers deposits compared to the end of 2012. The active deposit activities of the Bank contributes to the decreased dependence of wholesale funding.

On May 22nd, 2013 the Bank repaid at maturity its last bond issue in the amount of EUR 12 million.

The active deposit gathering contributes to the decrease of the Bank’s dependence on wholesale funding.

The gross loans-to-deposit ratio amounted to 89.98% at December 31 2013.

The liquidity position of the Bank remained strong with total liquid assets at December 31, 2013 (Cash and balances with the Central Bank, short-term loans and advances to banks and marketable securities at balance sheet value) of BGN 218.51 million. The liquid assets to total deposits ratio was 36.00% at December 31, 2013

Since the beginning of the year, the value of the debt securities portfolio of the Bank is almost unchanged, slightly increasing with 3.61%, while the cash and cash equivalents are down by 8.14%. The maintaining of the debt securities portfolio through acquisition of Bulgarian government bonds by BACB for the reporting period is aiming to improve the profitability of the liquid assets of the Bank. Since the beginning of 2013 the new investments in government bonds equal BGN 10.19 million, partially compensated by matured bonds in August held by the Bank in the amount of BGN 5 million. Meanwhile for the twelve-month period part of the ZUNK bonds in USD and EUR held by BACB matured as well as one of the issues of the government bonds in EUR. BACB received principal payments in the amount of BGN 1 million face value.

As of December 31, 2013 the government bonds portfolio of the Bank is with balance sheet value of BGN 42.4 million (2012 – BGN 40.9 million).

Capital resources

In spite of absorbing additional accounting and regulatory specific provisions for credit risk, the Bank’s total capital adequacy ratio remained high and amounted to 17.50% at December 31, 2013, which exceeded the Bulgarian National Bank requirement of 12%.

The capital and liquidity positions of BACB have been additionally strengthened by the successful capital increase accomplished in 2011, as a result of which a total amount of BGN 48.3 million have been raised.

A detailed discussion on the major risks and uncertainties that the Bank faces is presented in the Annual Consolidated Report on the Activities for 2011, which has been disclosed to the Financial Supervision Commission (FSC) and the public and is available at the Bank’s internet site https://www.bacb.bg/eng/financial_information

CORPORATE EVENTS

1. On January 28, 2013 BACB published its preliminary consolidated and individual financial reports as of December 31, 2012, together with the respective interim activity reports and letter to the shareholders

2. On March 22, 2013 BACB published in the Commercial Register the Call Notice for the Annual General Meeting of the Shareholders (AGM) to be held on April 23, 2013 from 11:00 at the central office of the Bank on 2 Slavyanska Street. The agenda and the materials for the AGM are available at the Bank’s internet site here: https://www.bacb.bg/general_meetings 6

3. On March 27, 2013. BACB published its audited consolidated and individual financial statements for 2012. Comprehensive information on these financial statements was made available at the web site of the Bank here: https://www.bacb.bg/financial_information

4. On April 18, 2013 the Bank disclosed information under art. 148b of POSA regarding notification under art. 145 of POSA, received from the shareholder Gramercy Select Master Fund.

5. On April 23rd 2013, the Annual General Meeting of the Shareholders of the “Bulgarian-American Credit Bank” (“BACB”) took place. The General Meeting of the Shareholders (GMS) approved: (1) the Audited BACB Annual Consolidated Financial Statements for 2012 and the Annual Consolidated Management Report of BACB for 2012 and (2) the Audited BACB Annual Financial Statements for 2012 and the Annual Management Report of BACB for 2012. The General Meeting of the Shareholders adopted a decision for re-election as members of the Supervisory Board of Mr. Evgenii Yakimov Ivanov – independent member of the Supervisory Board and Mr. Kiril Alexandrov Manov – independent member of the Supervisory Board, for a new term of office till July 5th 2016. After the re-election of the above mentioned persons the Supervisory Board of BACB shall include five members with term of office till July 5th 2016, namely: (1) Ms. Tzvetelina Borislavova Karagyozova; (2) Mr. Jason Lyle Cook; (3) Mr. Evgenii Yakimov Ivanov – independent member of the Supervisory Board; (4) Mr. Kiril Alexandrov Manov – independent member of the Supervisory Board; (5) Mr. Martin Boychev Ganev. Under item 8 of the Agenda a letter from Deloitte Audit OOD was reported to the General Meeting of the Shareholders. Deloitte Audit OOD in its capacity of specialized audit company was proposed to be appointed as a registered auditor of BACB for 2013 as per the proposed resolution included in the Agenda materials under item 8 of the Agenda. With the above mentioned letter Deloitte Audit OOD informed BACB that with the forthcoming conclusion and execution of a license agreement for a product, granted by Visa Europe Services Inc., based on technology owned by EMUE, a conflict with the professional independence of the auditor occurs. Therefore Deloitte Audit OOD withdraws its application for re-election as an independent auditor of the annual financial statements of BACB, from the GMS, convened for April 23, 2013. In relation to the above mentioned, the General Meeting of the Shareholders adopted a procedural decision not to vote on the proposal under item 8 of Agenda as included in the GMS agenda materials. Subsequently the General Meeting of the Shareholders did not adopt a decision under this Agenda item. The BACB Management informed the General Meeting that a new extraordinary General Meeting of the Shareholders shall be convened. The extraordinary GMS Agenda shall include appointment of registered auditor of BACB for 2013 recommended by the Audit Committee. The General Meeting of the Shareholders adopted decisions under the rest of the items on the preannounced Agenda of the meeting; further information for the decisions taken is included in the Minutes of the meeting disclosed on April 29, 2013

6. On June 17, 2013 BACB published in the Commercial Register the Call Notice for the Extraordinary General Meeting of the Shareholders (AGM) to be held on July 18, 2013 from 11:00 at the central office of the Bank on 2 Slavyanska Street. The agenda and the materials for the AGM are available at the Bank’s internet site here: https://www.bacb.bg/general_meetings

7. On July 18, 2013, the Extraordinary General Meeting of the Shareholders of the “Bulgarian- American Credit Bank” (“BACB”) took place with the following Agenda and proposed resolutions as per the Call Notice for the GSM, published in the Commercial Register on June 17th 2013. The General Meeting of the Shareholder took the following decision under Item 1 of the Agenda, as follows: Pursuant to the provisions of art. 114 of POSA the General Meeting of the Shareholders APPROVES “Bulgarian-American Credit Bank” to acquire ownership titles through sale-purchase of real estate 7 properties from the seller Imoti Direct REIT, located in Burgas and , as follows: 1. Acquisition through purchase-sale of real estate properties, located in Burgas, 13 Hristo Botev Str; 2. Acquisition through purchase-sale of real estate properties, located in Sofia, Simeonovsko Shose Blvd; 3. Acquisition through purchase-sale of real estate properties, located in Sofia, Gen.Stoletov Str., Area “ГГЦ-Зона В-17”, Banishora district; 4. Acquisition through purchase-sale of real estate properties, located in Sofia, 100, 102, 104 Odrin Str.; 5. Acquisition through purchase-sale of real estate properties, located in Sofia, 32-34 Str,; 6. Acquisition through purchase-sale of real estate properties, located in Sofia, area “Tsarigradsko Shose 7 – 11 km. which real estate properties are described in detail and individualized in the Minutes of the extraordinary General Meeting of the Shareholders, held on July 18th 2013, under purchase prices of the separate properties specified in the Minutes of the GMS and equal to the market appraisals of the real estate properties, prepared pursuant to the requirements of POSA and pointed out in the Report under 114a of POSA. The General Meeting of the Shareholders ASSIGNES and AUTHORIZES the Executive Directors of BACB to take all and any actions in regard with entering into and execution of transactions for BACB as a purchaser, purchasing the above mentioned real estate properties from the seller Imoti Direct REIT under price and material terms and conditions under the Sale-purchase agreement/s as per the decision of the General Meeting of the Shareholders and other terms and conditions as they deem appropriate. Detailed information in regard with the real estate properties subject of the sale, the acquisition prices and the other specific terms and conditions under the sale-purchase transactions can be found in the Minutes of the General Meeting of the Shareholders, dated July 18th 2013. The Minutes are announced within the statutory deadlines.

8. In accordance with art. 114 of the Public Offering of Securities Act (POSA) and pursuant to a resolution of the General Meeting of the Shareholders dated July 18, 2013, on July 24, 2013 the Bulgarian-American Credit Bank AD as a purchaser acquired from the seller Imoti Direct REIT through a sale-purchase agreement /notary deed/ the ownership titles on real estate properties, located in Sofia, representing, as follows: 1. REGULATED PLOT OF LAND with area of 8,370 sq.m., representing RPL VII-992 by the city plan of Sofia, “Simeonovo - Sever” area and being PLOT OF LAND with identification No. 68134.1973.2798 by the cadastral map and cadastral registers of Sofia, Sofia Municipality (with sale price in the amount of BGN 3,541,740 VAT excluded); 2. REGULATED PLOT OF LAND with area of 2,840 sq.m., representing RPL VIII-992 by the city plan of Sofia, “Simeonovo - Sever” area and being PLOT OF LAND with identification No. 68134.1973.2799 by the cadastral map and cadastral registers of Sofia, Sofia Municipality (with sale price in the amount of BGN 1,201,738 VAT excluded); 3. REGULATED PLOT OF LAND with area of 6,677 sq.m., representing RPL VIII-1013 by the city plan of Sofia, “GGC-Zona V-17” area and being PLOT OF LAND with identification No. 68134.512.160 by the cadastral map and cadastral registers of Sofia, Sofia Municipality (with sale price in the amount of BGN 6,657,786 VAT excluded); 4. REGULATED PLOT OF LAND with area of 4,273 sq.m., representing RPL VIII-1017 by the city plan of Sofia, “GGC-Zona V-17” area and being PLOT OF LAND with identification No. 68134.512.647 by the cadastral map and cadastral registers of Sofia, Sofia Municipality (with sale price in the amount of BGN 4,218,097 VAT excluded); 5. Real estate property, located in Sofia, Vazrajdane area, 100 Odrin Str., representing REGULATED PLOT OF LAND IX-7 in quarter 176 by the city plan of Sofia, “Center – West direction”, with area of 255 sq.m. (with sale price in the amount of BGN 523,274 VAT excluded); 6. Real estate property, located in Sofia, Vazrajdane area, 102 Odrin Str., representing PLOT OF LAND No. 6 in quarter 176 by the city plan of Sofia, “Center – West direction”, with area of 240 sq.m. (with sale price in the amount of BGN 492,494 VAT excluded);

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7. Real estate property, located in Sofia, Vazrajdane area, 102 Odrin Str., representing PLOT OF LAND No. 5 in quarter 176 by the city plan of Sofia, “Center – West direction”, with area of 255 sq.m. (with sale price in the amount of BGN 523,274 VAT excluded); 8. Real estate property, located in Sofia, 32-34 Osogovo Str., representing REGULATED PLOT OF LAND IV-19,20 in quarter 217 by the city plan of Sofia, “Center – West direction”, with area of 480 sq.m. (with sale price in the amount of BGN 1,027,894 VAT excluded); 9. PLOT OF LAND No. 1391 in quarter 15 by the city plan of Sofia, “Tzarigradsko Shose 7 – 11 km.” with area of 3,032 sq.m., being PLOT OF LAND identification No. 68134.1504.1391 by the cadastral map and cadastral registers of Sofia, Sofia Municipality (with sale price in the amount of BGN 778,451 VAT excluded); 10. PLOT OF LAND No. 1692 in quarter 15 by the city plan of Sofia, “Tzarigradsko Shose 7 – 11 km.” with area of 3,434 sq.m., being PLOT OF LAND identification No. 68134.1504.1692 by the cadastral map and cadastral registers of Sofia, Sofia Municipality (with sale price in the amount of BGN 881,662 VAT excluded); 11. PLOT OF LAND No. 1693 in quarter 15 by the city plan of Sofia, “Tzarigradsko Shose 7 – 11 km.” with area of 1,242 sq.m., being PLOT OF LAND identification No. 68134.1504.1693 by the cadastral map and cadastral registers of Sofia, Sofia Municipality (with sale price in the amount of BGN 318,877 VAT excluded);

9. In accordance with art. 114 of the Public Offering of Securities Act (POSA) and pursuant to a resolution of the General Meeting of the Shareholders dated July 18, 2013, on July 24, 2013 the Bulgarian-American Credit Bank AD as a purchaser acquired from the seller Imoti Direct REIT through a sale-purchase agreement /notary deed/ the ownership titles on real estate properties, located in Burgas, described in detail in the Minutes of the General Meeting of the Shareholders of BACB held on July 18, 2013 and disclosed to the general public within the statutory deadline.

10. On September 27, 2013, the Extraordinary General Meeting of the Shareholders of the “Bulgarian- American Credit Bank” AD (“BACB”) took place with the following Agenda and proposed resolutions as per the Call Notice published in the Commercial Register on August 26, 2013. Under item 1 of the Agenda the General Meeting of the Shareholders appointed the specialized audit company „Deloitte Audit” EOOD to audit the Financial Statements of BACB for 2013.

11. On September 30.,2013 the appointment of Mr. Ilian Petrov Georgiev, CIN 7101237082 as an Executive Director and representative of BACB was registered in the Commercial Register with the Registry Agency. The above mentioned circumstance was registered in the Commercial Register pursuant to BACB Management Board resolution dated September 09, 2013 and Supervisory Board resolution dated September 10, 2013. As of September 30, 2013 BACB shall be represented by the Executive Directors Mr. Vassil Stefanov Simov, Ms. Tanya Ilieva Keremidchieva and Mr. Ilian Petrov Georgiev, any two of them acting always jointly.

12. On October 29, 2013 BACB published its preliminary consolidated and individual financial reports as of September 30, 2013, together with the respective interim activity reports and letter to the shareholders

ADDITIONAL INFORMATION FOR THE FIRST TWELVE MONTHS OF 2013

1. The accounting policy of the Group was not changed; 2. Changes have occurred in the economic group controlled by the Bank, as follows:  BACB established Sole owner joint-stock company “BACB Trade”, registered in the Commercial Register on June 27, 2013. The registered capital of the company is BGN 50 000, divided in 50 000 shares with face value of BGN 1.00 100% of the share capital is owned by BACB;  The General Meeting of the Shareholders of Imoti Direct REIT held on September 30 2013 adopted decisions for as follows: (1) dissolution and liquidation of the company; (2)

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determination of term for liquidation not later than December 31, 2014; (3) appointment of Ms. Katya Bineva for Liquidator of the company and (4) relieving of office of the Board of Directors members as of the date of the registration of the liquidation in the Commercial Register. As of the date of this Interim Management Report, Imoti Direct REIT have received the decision of the Financial Supervision Commission under the request for approval of the dissolution and liquidation and withdrawal of the license of the company as well as the approval of the liquidator appointment;  The General Meeting of the Shareholders of Imoti Direct REIT held on December 31 2013 adopted a decision for approval of the Initial Liquidation Balance off Imoti Direct REIT – in liquidation; 3. No changes in the economic organization of the Bank were made such as restructurings, disposal of companies from its economic group, leasing of assets, in kind contributions by the Bank, long-term investments/mergers, winding up of activity. 4. The Bank does not publish earnings estimates or forecasts; 5. Information on the persons having direct or indirect interest of at least 5% of the votes in the general meeting of the shareholders at December 31, 2013 and changes in their shareholding since September 30, 2013 is as follows: According to: (1) the shareholders’ book kept by the Central Depository AD; (2) data from the shareholders’ notifications as per art. 145 and 146 of POSA; and (3) the power of attorneys and the accompanying constitutive documents of shareholders, presented at the General Meeting of the Shareholders, the persons having direct or indirect shareholding (as per art. 146 of POSA) of 5% or more than 5% of the voting shares of the Bank at December 31, 2013 are as follows:

Shareholder Number of Per cent of the Number of Per cent of the shares owned at voting shares at shares owned at voting shares at December 31, December 31, September 30, September 30, 2013 2013 2013 2013 CSIF 15,167,642 61.429% 15,167,642 61.429% Tzvetelina Borislavova Karagyozova – person 15,167,642 61,429% 15,167,642 61,429% holding control of the direct shareholder CSIF (holder of 99.99% of the capital of CSIF) Gramercy Select Master Fund 8,670,606 35.218% 8,670,606 35.218%

6. Information on the shares held by members of the Management Board and the Supervisory Board of the Bank at December 31, 2013 and for changes occurred after September 30, 2013;

The following table contains information about the members of the Management Board and the Supervisory Board of the Bank who own shares of the Bank.

Number of Number of Per cent of the Per cent of the shares owned shares owned voting shares voting shares Member of a (directly and (directly and Name owned at owned at governing body indirectly) at indirectly) at December 31, September 30, December 31, September 30, 2013 2013 2013 2013 Silvia Kirilova Management Board 1,600 0.006% 1,600 0.006%

7. The Bank and the members of its economic group are not parties to any pending court, administrative or arbitration proceedings concerning liabilities or obligations amounting to 10% or more than 10% of their own equity;

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8. Within its ordinary course of business, in particular the intense management of classified loans the Bank is party to foreclosure and insolvency proceedings against borrowers for collection of delinquent loan amounts; 9. Information on loans, guarantees or any engagements extended by the Bank to a single person or their subsidiary, including related parties;

BACB is a bank and its main business is extending loans and accepting deposits. The interim reports of BACB, the annual reports, and its prospectus, contain detailed information on the loan portfolio, large exposures and asset quality of the Group.

TRANSACTIONS WITH RELATED PARTIES

Pursuant to the applicable accounting standards related parties are parties where one of the parties can control or exercise significant influence on the other when making financial decisions and decisions on the activity of the company.

1. Transactions between related parties concluded during the reporting period that had significant effect on the financial condition or the results of operation during the period;

The Bank executes transactions with related parties only in the regular course of its business. These transactions are executed at an arm’s length basis and include extension of loans, accepting of deposits and transactions with securities.

2. Changes in the transactions executed with related parties disclosed in the annual report that have had significant effect on the financial condition or the results of operation of the Bank for the twelve months of 2012;

For details on these transactions, if any, please see the “Related Parties Transactions” section of the Notes to the Consolidated Financial Statements as of December 31 2013.

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