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Annual Report

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TABLE OF CONTENTS

TABLE OF CONTENTS

KEY FIGURES FOR THE BANK AND THE GROUP, 2005-2006 ...... 2 1. BOARD OF DIRECTORS OF EMPORIKI BANK OF GREECE S.A. - BRIEF CURRICULA VITAE OF THE MEMBERS OF THE BOARD OF DIRECTORS ...... 3 2. PERFORMANCE OF THE STOCK - SHAREHOLDER STRUCTURE ...... 6 3. LETTER TO THE SHAREHOLDERS ...... 7 4. GLOBAL AND DOMESTIC ECONOMIC ENVIRONMENT ...... 9 5. ACTIVITIES OF EMPORIKI BANK GROUP ...... 11 6. TECHNOLOGICAL AND OPERATIONAL MODERNISATION ...... 19 7. CUSTOMER SERVICE CHANNELS ...... 20 8. RISK MANAGEMENT ...... 21 9. CORPORATE SOCIAL RESPONSIBILITY ...... 23 10. ANALYSIS OF EMPORIKI BANK GROUP FINANCIAL STATEMENTS ...... 26 11. THE CRÉDIT AGRICOLE GROUP ...... 29 12. EMPORIKI BANK GROUP - Consolidated Income Statement ...... 33 - Consolidated Balance Sheet ...... 34 - Consolidated Statement of Changes in Equity ...... 35 - Consolidated Cash Flow Statement ...... 36 - Independent Auditor’s Report ...... 37 13. EMPORIKI BANK - Income Statement ...... 40 - Balance Sheet ...... 41 - Statement of Changes in Equity ...... 42 - Cash Flow Statement ...... 43 - Independent Auditor’s Report ...... 44 14. CONDENSED FINANCIAL DATA AND INFORMATION FOR THE FINANCIAL YEAR 2006 ...... 46

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KEY FIGURES FOR THE BANK AND THE GROUP, 2005-2006

and Other Provisions,

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BOARD OF DIRECTORS OF EMPORIKI BANK OF GREECE S.A. 1.

BOARD OF DIRECTORS OF EMPORIKI BANK The Director, Mr. Jean-Frédéric De Leusse was elected by the BoD OF GREECE S.A. as a Non-Executive Member on August 24th, 2006, replacing the resigned Director, Mr. Leonidas Zonnios, and at the same meeting On December 31st, 2006 he was also elected Chairman of the Board of Directors. His election was ratified by the Extraordinary General Meeting of the Bank's 1. Jean-Frédéric D. De Leusse Shareholders held on November 23rd, 2006. Chairman Bank Executive, Non-Executive Member The Director, Mr. Bernard De Wit was elected by the BoD as a Non- Executive Member at its meeting on December 21st, 2004, replacing 2. Bernard Ch. De Wit the resigned Director, Mr. Michel Le Masson. His election was ratified Vice Chairman by the Ordinary General Meeting of the Bank's Shareholders held on Bank Executive, Non-Executive Member April 25th, 2006. On August 24th, 2006 he was also elected Vice Chairman of the Board of Directors. 3. Anthony N. Crontiras Chief Executive Officer The Director, Mr. Anthony Crontiras was elected by the BoD as an Economist-Business Consultant, Executive Member Executive Member at its meeting on October 20th, 2006, replacing the resigned Director, Mr. Jean-Luc Perron and at the same meeting 4. Christian M. Jacques he was also elected Chief Executive Officer. His election was ratified Deputy Chief Executive Officer by the Extraordinary General Meeting of the Bank's Shareholders Bank Executive, Executive Member held on November 23rd, 2006.

5. Pierre-René-Henri J. Harang The Director, Mr. Christian Jacques was elected by the BoD as an Bank Executive, Non-Executive Member Executive Member at its meeting on August 24th, 2006, replacing the resigned Director, Mr. George Provopoulos and at the same 6. Phokion Ph. Dimakakos meeting he was also elected Chief Executive Officer, a capacity he Bank Employee, Executive Member retained until October 20th, 2006, when he was elected Deputy Chief Executive Officer. His election was ratified by the Extraordinary 7. Nikolaos M. Ebeoglou General Meeting of the Bank's Shareholders held on November Business Consultant, Independent, Non-Executive Member 23rd, 2006.

8. Spyridon L. Lorentziadis The Director, Mr. Pierre-René-Henri Harang was elected by the BoD Certified Public Accountant-Business Consultant, Independent, Non- as a Non-Executive Member on August 24th, 2006, replacing the Executive Member resigned Director, Mr. Dimitrios Krontiras. His election was ratified by the Extraordinary General Meeting of the Bank's Shareholders held 9. Philippe J. Doré on November 23rd, 2006. Bank Executive, Non-Executive Member The Director, Mr. Phokion Dimakakos was elected by the Ordinary 10. Charlote-Maria-Ypatia C. Stratou General Meeting of the Bank's Shareholders held on May 14th, 2004, Bank Executive, Non-Executive Member as an Executive Member of the Board of Directors.

11. Panagiotis N. Tsakos The Director, Mr. Nikolaos Ebeoglou was elected by the Ordinary Captain M¡, Non-Executive Member General Meeting of the Bank's Shareholders held on May 14th, 2004, as an Independent, Non-Executive Member of the Board of Directors. 12. Despina S. Chalkidi Bank Employee, Executive Member The Director, Mr. Spyridon Lorentziadis was elected by the BoD as a Non-Executive Member on March 30th, 2006, replacing the resigned 13. Christoforos A. Hatzopoulos Director, Mr. Nicholas Beis and his election was ratified by the Foreign Press Agent, Independent, Non-Executive Member Ordinary General Meeting of the Bank's Shareholders held on June 5th, 2006. On August 24th, 2006, he was appointed by the BoD as The tenure of all the members of the Board of Directors expires on an Independent, Non-Executive Member and his appointment was the day on which the initial or deferred Ordinary General Meeting of ratified by the Extraordinary General Meeting of the Bank's the Bank's Shareholders for the year 2008 will be held. Shareholders held on November 23rd, 2006.

The Director, Mr. Philippe Doré was elected by the BoD as a Non-

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1. BOARD OF DIRECTORS OF EMPORIKI BANK OF GREECE S.A.

Executive Member on August 24th, 2006, replacing the resigned Vice-Chairman of the Board of Directors Director, Mr. Ioannis Fotopoulos and his election was ratified by the Bernard De Wit Extraordinary General Meeting of the Bank's Shareholders held on Born in 1959. He holds postgraduate degrees in Applied Economics November 23rd, 2006. and in Business Administration. He was appointed Vice-Chairman of the Board of Directors of Emporiki Bank in August 2006. He is Head The Director, Mrs. Charlote-Maria-Ypatia Stratou was elected by the of the International Subsidiaries Division of Crédit Agricole and a BoD as a Non-Executive Member on August 24th, 2006, replacing member of the Board of Directors of various subsidiaries of Crédit the resigned Director, Mr. Dimitrios Prokopiou, and her election was Agricole (in Portugal, in Belgium and in other countries). He has ratified by the Extraordinary General Meeting of the Bank's worked for KPMG (1992-2001), for the local branch of Crédit Agricole Shareholders held on November 23rd, 2006. in Orleans as Head of Management Control and Head of Financial Management (1989-1992), and has held executive positions in various The Director, Mr. Panagiotis Tsakos was elected by the BoD as a banks of the FORTIS, as is known today, Group (1983-1989). Non-Executive Member on November 29th, 2004, replacing the resigned Director, Mr. Nikolaos Tavoularis and his election was Chief Executive Officer ratified by the Ordinary General Meeting of the Bank's Shareholders Anthony Crontiras held on April 25th, 2005. Born in 1957. He holds a degree in Economics from the University of Athens and postgraduate degrees in Economics from the University The Director, Mrs. Despina Chalkidi was elected by the BoD as an of Pennsylvania and in Business Administration from INSEAD. He Executive Member on July 12th, 2006, replacing the resigned was appointed Chief Executive Officer of Emporiki Bank in October Director, Mr. Christos Bratsiakos and her election will be ratified by 2006. He has served as President of Danone Hellas S.A., Vice- the Ordinary General Meeting of the Bank's Shareholders to be held President and Chief Executive Officer of DELTA Dairy S.A. and Vice- on April 25th, 2007. President and General Manager of MISKO S.A. In 1989 he was appointed Business Development Manager of Barilla International in The Director, Mr. Christoforos Hatzopoulos was elected by the BoD France. In 1985, he was a Project Manager at Booz, Allen and as an Independent, Non-Executive Member on August 24th, 2006, Hamilton. replacing the resigned Director, Mrs. Marguerite Zoulovits and his election was ratified by the Extraordinary General Meeting of the Deputy Chief Executive Officer Bank's Shareholders held on November 23rd, 2006. Christian Jacques Born in 1956. He holds a degree in Law and a postgraduate degree The Board of Directors, at its meeting on March 22nd 2007, elected in Business Administration from the University of Rennes. In August Mr. Bruno Charrier, as a new Executive Member, in replacement of 2006, he was appointed Chief Executive Officer, and in October 2006, the resigned Director Mr. Christian Jacques. Mr. Bruno Charrier was Deputy Chief Executive Officer of Emporiki Bank. Before, he had been also appointed as Deputy Chief Executive Officer. Deputy General Manager at Emporiki Bank since 2004. He has been a member of the Board of Directors of the Hellenic-French Chamber of Commerce and Industry (2002-2005), a member of the Executive BRIEF CURRICULA VITAE OF THE MEMBERS OF THE Committee and Head of Marketing and Sales at a regional bank of BOARD OF DIRECTORS the Crédit Agricole Group (1997), a member of the Board of Directors of Espirito Santo Seguros (1996) and Managing Director of Chairman of the Board Tranquilidade Vida (1993). He joined the Crédit Agricole Group in Jean-Frédéric De Leusse 1989, while he previously held various positions in the Banques Born in 1957. He holds degrees from École Polytechnique and École Populaires Group (1984-1989). Nationale d’ Administration. He was appointed Chairman of the Board of Directors of Emporiki Bank in August 2006. At Crédit Agricole, he Non-Executive Member of the Board has been Head of International Development and a member of the Pierre-René-Henri Harang Executive Committee since February 2006 and Head of the He holds degrees in Business Administration and Law from a French International Retail and Private Banking Division since 2004. He has University. He has been working for the Crédit Agricole Group since also been Chief Executive Officer of Fédération Nationale du Crédit 1991, and has held various executive positions such as Head of Agricole since September 2001. He has served as President and Chief CALYON’s Credit Institutions Division and General Inspector Executive Officer of Sofipost (1996-2001) and has held executive specializing in credit risk analysis for structured capital market positions in the private offices of various ministers of the French transactions. Since 2006, he has been responsible for the integration government (1993-1995). He has been Director of Crédit Mutuel Centre of the newly acquired subsidiary foreign banks, particularly in Greece Est Europe and Chief Executive Officer of Assurances du Crédit Mutuel and in Egypt, into the Crédit Agricole Group. He started his career (1990-1993). He has served as a Special Assistant on legal issues at Bank Paribas (1997-1991). and as Legal Advisor to the Council of State in France (1985-1990).

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BOARD OF DIRECTORS OF EMPORIKI BANK OF GREECE S.A. 1.

Executive Member of the Board Non-Executive Member of the Board Phokion Dimakakos Charlote-Maria-Ypatia Stratou Born in 1962. He holds a degree in Economics from the University Born in 1954. She holds a degree in Economics. She is the Manager of Piraeus. He has been working at Emporiki Bank since 1988. He has of the CALYON Representative Office in Greece. In 1987, she been elected to the General Council of the Hellenic Federation of established the Banque Indosuez Representative Office in Greece. Bank Employee Unions (OTOE), he is Deputy Chairman of the She has held various positions in Bankers Trust (now known as Emporiki Bank Employee Union and an elected representative of the Deutsche Bank) (1976-1986), where she contributed to the employees on the Board of Directors of Emporiki Bank. development and promotion of the company’s Shipping Division.

Independent, Non-Executive Member of the Board Non-Executive Member of the Board Nikolaos Ebeoglou Panagiotis Tsakos He is a graduate of the Mechanical-Electrical Engineering School of Born in 1936. He studied Chartering and Insurance in the United the National Technical University of Athens (NTUA), and has followed Kingdom. In 1970, he founded Tsakos Shipping and Trading S.A., a postgraduate studies in Operational Research. He has been company which now constitutes the backbone of the Tsakos Group Chairman of the Board of Directors of the Hellenic Management of Companies. He has served as Vice-President of the Union of Greek Association (EEDE) since 2006, a member of the Board of Directors Shipowners and holds seats on the Boards of Directors of various of the Foundation for Economic and Industrial Research (IOBE) since Greek and international organizations. 2002, a member of the Board of Directors of Petros Petropoulos Industrial and Commercial S.A. since 2003 and Chief Executive Officer Executive Member of the Board of the Athens Laboratory of Business Administration (ALBA) since its Despina Chalkidi establishment in 1992. Born in 1962. She is a graduate of the School of Banking Studies. Since 1982, she has been working at Emporiki Bank. She is a member Non-Executive Member of the Board of the General Council of the Hellenic Federation of Bank Employee Spyridon Lorentziadis Unions (OTOE) and an elected representative of employees on the He holds a degree in Political Science and Economics from the Board of Directors of Emporiki Bank. University of Athens Law School. He is a certified public accountant and a member of the four-member Scientific Council of the Institute Independent, Non-Executive Member of the Board of Certified Public Accountants in Greece (SOEL). Since March 2005, Christoforos Hatzopoulos he has been a Senior Adviser on corporate governance and financial Born in 1947. He studied Political Science at the Institut d’ Études reporting issues at Emporiki Bank. In 2002, he joined, as a consultant, Politiques. Since 1975, he has been a shareholder and Director of the Ernst & Young. He started his career at Arthur Andersen where he was Hellenic Foreign Press Distribution Agency. He has served as appointed Chairman and Chief Executive Officer in 1998. President and has been a member of the Board of Directors of the International Publishers and Press Distributors Organization Non-Executive Member of the Board DISTRIPRESS. He is a member of the Board of Directors of the Philippe Doré Foundation for Economic and Industrial Research (IOBE). In June Born in 1966. He holds a degree in Civil Engineering from École 2006, he was elected President of the Hellenic-French Chamber of Nationale des Ponts et Chaussées. He has been Deputy Director of Commerce and Industry. He has founded the companies Hellenic International Development at Crédit Agricole since 2004. He has Kiosks (1973), Adrion Ltd (1994) and International Media Network served as Head of the Investment Portfolio Division at CALYON (1994- Ltd (2000). 2004), Manager of the Audit Division at Crédit Agricole Indosuez (1991-1995) and has held executive positions at Banque Indosuez Korea (1989-1991).

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2. PERFORMANCE OF THE STOCK

PERFORMANCE OF THE STOCK In 2006, the value of transactions on Emporiki Bank’s shares as a percentage of the total value of transactions in the banking sector and The average price of Emporiki Bank’s share in 2006 was EUR 25.56. in the Athens Exchange was 5.4% and 2.4% respectively. The total The share’s minimum closing price was EUR 21.60 and was recorded number of Emporiki Bank’s shares that were traded on the Athens on October 3rd, 2006, while its maximum closing price was EUR Exchange during 2006 was 75,449,644 shares. 31.04 and was recorded on February 24th, 2006. SHAREHOLDER STRUCTURE The capitalization (market value) of Emporiki Bank at the end of 2006 was approximately EUR 3.1 billion, corresponding to around 4.8% In August 2006, the shareholder Crédit Agricole S.A. increased its of the capitalization of listed banks and to around 2.0% of the participation in the share capital of Emporiki Bank from 8.83% to capitalization of all enterprises listed on the Athens Exchange. 71.97%. In December 2006, Crédit Agricole S.A. decreased its participation by selling shares to SACAM INTERNATIONAL S.A.S., corresponding to 5% of the Bank’s share capital. Table 1: Emporiki Bank’s Share Data for 2006 At the end of 2006, Crédit Agricole S.A. held 66.966% of Emporiki Closing Price (end-2006) 23.30 Bank’s share capital, SACAM INTERNATIONAL S.A.S. held 5.0% and Maximum Closing Price 31.04 all other shareholders (individuals and institutional investors) held Minimum Closing Price 21.60 28.034% of the share capital. Market Value of Emporiki Bank On December 31st, 2006, the share capital of Emporiki Bank (EUR millions – end-2006) 3,084.72 consisted of 132,391,468 shares. Number of shares (end-2006) 132,391,468

Sources: Athens Exchange, Monthly Statistical Bulletin Bloomberg

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LETTER TO THE SHAREHOLDERS 3.

LETTER TO THE SHAREHOLDERS adaption of the Bank and the Group to Crédit Agricole’s standards.

Ladies and Gentlemen, During 2006, we proceeded with a thorough audit of the loan portfolio and we adopted Crédit Agricole’s provisioning policy to align the risk We would like to welcome you to the first Annual Ordinary General management methodologies and accounting principles of Emporiki Meeting of the Shareholders of Emporiki Bank after the new with those of Crédit Agricole. The one-off adjustments made in this management assumed responsibility and we would like to thank you context amounted to EUR 386.5 million and were in line with the on behalf of all the members of the Board of Directors for attending range of estimates in the information memorandum of the public this Meeting. offering of Crédit Agricole in June 2006. Thus, although in 2006, there was a substantial improvement in the operating results of the Group Following a long and successful strategic co-operation, which started -an increase of 45.6% compared to 2005- and profits before taxes and in 2000, Crédit Agricole acquired the majority shareholding of one-off adjustments were higher than in 2005 by EUR 106.1 million Emporiki Bank through a public offering in August 2006. Emporiki’s amounting to EUR 338.8 million, the Group incurred a loss of EUR integration into the fourth largest financial group worldwide, in terms 234.7 million. of total assets, creates substantial advantages. This is the beginning of a new era for Emporiki Bank during which it will fight for a leading The provisioning policy was strict, but correct and prudent. Emporiki role in the Greek banking market. The integration of Emporiki Bank Bank definitely has a healthy balance sheet which is a guarantee for into the Crédit Agricole Group strengthens Emporiki’s position in a a dynamic and competitive course. Furthermore, the Bank has the period when competition has intensified on the domestic as well as highest non-performing loan coverage ratio in the Greek financial on the international level. system. In the area of risk management, it is amongst the three Greek banks which have in place an internal system (Value at Risk) for The first positive development which arose from Emporiki’s measuring market risk, certified by the Bank of Greece. This model, participation in the big family of Crédit Agricole was the upgrading the design of which was completed in 2006, will contribute to the of its credit rating which, based on ratings of the major international more accurate measurement of capital requirements and to the rating agencies, is the highest among all Greek banks, providing a reduction of regulatory capital. These developments, in conjunction substantial competitive advantage. Moreover, among the major Greek with the high credit rating, create the prerequisites which will enable banks, Emporiki is the only one which has access to the know-how the Bank to develop its competitive commercial advantages and to and the experience of a very large European financial institution, successfully implement its strategic objectives. such as Crédit Agricole, which will continuously support the Bank. The first phase of the important project for the transfer of know-how, Our objective is to transform Emporiki Bank into a model Greek credit i.e. the incorporation of Crédit Agricole’s best practices and policies, institution, placing particular emphasis on innovation, on has been completed and the foundations have been laid for the Bank competitiveness and on high level of customer service through to ‘change course’ and be transformed into a modern bank with an improvement in the quality of products and services offered. We are international orientation. systematically working towards this direction with great consistency, and the initial results are already visible. A new, flexible organizational structure was established in order to ensure increased efficiency in the Bank’s internal operations and to The adaptation and smooth integration of Emporiki Bank into the create the conditions for faster decision-making. The new Crédit Agricole Group is supported by the ‘Joining Forces’ program. organizational structure includes seven management units and It essentialy consists of Emporiki and Crédit Agricole joining forces focuses on the two large market segments, retail banking and and developing bonds so that Emporiki Bank as well as its corporate and investment banking. In addition, in the context of shareholders and employees reap significant benefits. The program strengthening corporate governance, the Chairman’s responsibilities has three objectives: aligning corporate governance and basic were separated from those of the Chief Executive Officer in procedures with Crédit Agricole’s standards, further developing accordance with Crédit Agricole’s corporate governance standards. commercial activity and improving efficiency. The program aims at Emporiki Bank becoming a model Greek bank with a customer- During 2006, a special program to improve sales efficiency (Sales centered approach, leveraging its brand-name, customer Performance Program) was developed and is now successfully being relationships and branch network. implemented throughout the Bank’s branch network, supporting salespersons in the branches. The three main pillars of the program Within the context of aligning the operating and corporate governance are the development of tools and sales procedures, the co-ordination framework of Emporiki with Crédit Agricole’s standards, vital operational of sales activities and the change of salespersons’ attitude towards sectors, such as financial services, risk management, and internal audit, an extravert and customer-centered sales culture. Salespersons are have been substantially upgraded. In addition, the foundations for provided with continuous training, information and support by the strengthening regulatory compliance have been laid through the sales coordinators and manage specific customers. In this way, they

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3. LETTER TO THE SHAREHOLDERS

are able to accurately determine the customer’s needs and to be emphasis on markets with favourable development prospects and systematically active in sales, not only promoting specific programs which have a competitive advantage for Greek banks. Our and products for specific periods of time. The salesperson becomes international banking presence will focus on countries which fulfill the financial advisor to the customer, develops a personal relationship these characteristics, particularly the Balkans. The decision which and is in a position to offer more products and services to efficiently was taken to cease the operations of the subsidiary in Germany, meet the customer’s needs. Emporiki Bank-Germany GmbH, is in line with this strategy.

In addition, the Pegasus II Program, which is currently being In addition, at the beginning of 2007 the merger by absorption of implemented, contributes to the centralization of operations and is Emporiki Asset Management S.A. with Hermes Mutual Fund expected to yield additional benefits, directly contributing to the Management Company S.A. was completed. With the new company reduction of costs, while also freeing up sales time at the network that emerged, Emporiki Asset Management M.F.M.C., substantial branches. economies of scale are achieved and the Bank’s position in the area of asset management for individuals and institutional investors is Within the framework of strengthening the customer-centered expected to be strengthened. approach at Emporiki, our primary goal is the service of the customer. The customer becomes the focal point and the quality of customer The progress that has been made in 2006 is due to the systematic service acquires particular importance. Our objective is to provide and co-ordinated efforts of all the employees of Emporiki. Human high quality services and products at competitive prices, to establish resources is the ‘key factor’ for achieving our common goals. Our a dynamic presence in the market through the creation and promotion staff’s participation is the decisive factor for the transformation of of new innovative products, and to increase the product sales per Emporiki into a modern bank, which will play a leading role in the customer with a view to increasing revenues and strengthening market and, at the same time, will offer substantial career prospects profitability. to its employees.

With respect to Emporiki’s subsidiary companies, our strategic goal We are confident that the changes taking place in Emporiki Bank lay is to focus on the banking sector and to implement a portfolio solid foundations for a dynamic and competitive performance. The restructuring program with the sale of non-banking stakes, as well as weaknesses of the past have definitely been left behind and we are of those that are not profitable or have shown chronic weaknesses. positively looking forward to the future, certain that the Bank will re- In this context, and in order to focus our activities on bancassurance, gain its strength and value, playing a leading role in the banking our subsidiary Phoenix-Metrolife Emporiki was sold for a total scene. consideration of EUR 95 million, subject to further adjustments which are customary in such transactions. However, the collaboration between the Bank and the company concerning the distribution of some non-life insurance products will be continued. In addition, we have liquidated our participations in other companies that are not Jean-Frédéric De Leusse Anthony Crontiras active in the banking market (ICAP, MEDIA). Abroad, we will place Chairman of the Board of Directors Chief Executive Officer

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GLOBAL AND DOMESTIC ECONOMIC ENVIRONMENT 4.

GLOBAL AND DOMESTIC ECONOMIC Domestic economic environment ENVIRONMENT Developments in the Greek economy were positive in 2006. Economic Global economic environment activity accelerated, inflation fell and the public sector deficit was restrained under the 3% of GDP ceiling foreseen in the Stability and In 2006, developments in the global economy were positive, despite Growth Pact. the further substantial increase in international oil prices. The rate of growth of global real gross domestic product (GDP) accelerated According to estimates of the Ministry of Economy and Finance, the slightly (2006: 5.1%, 2005: 4.9%), due to the increase in economic economic growth rate accelerated (2006: 4.0%, 2005: 3.7%), as a activity in developed economies. result of the recovery in fixed capital investments (2006: 9.1%, 2005: -1.4%) and the significant increase in private consumption (2006: In particular in the euro area, the rate of economic growth accelerated 3.8%, 2005: 3.7%). notably (2006: 2.6%, 2005: 1.5%) as a result of a substantial increase in investments and net exports. In the USA, the deceleration in the Inflation declined despite the steep rise in economic activity. In 2005, investment growth rate, caused by the cooling of the real estate the average annual growth rate of the national consumer price index market, was counterbalanced by the increase in consumption and decelerated to 3.2% from 3.5% in 2005. The containment of exports, and the growth rate of GDP at constant prices accelerated inflationary pressures is associated with the revaluation of the euro marginally (2006: 3.3%, 2005: 3.2%). In Japan, economic recovery against the dollar and the imports of low cost products from emerging was more solidly based (2006: 2.8%, 2005: 2.7%), mainly driven by Asian economies. private investment and net exports. Fiscal consolidation continued in 2006 and the general government In the emerging and developing economies, the economic growth deficit was reduced to 2.6% of GDP (2005: 5.2% of GDP), while the rate remained at a high level (2006: 7.3%, 2005: 7.4%), with China and general government debt fell to 104.1% of GDP (2005: 107.5% of India recording the highest growth rates (nearly 10% and 8% GDP). respectively). The prospects for the Greek economy are favourable. In 2007, real Inflationary pressures were not particularly strong during 2006, GDP growth will stand close to the 2006 level and in any case will despite the further significant increase in the prices of oil and remain significantly higher than the growth rate in the euro area. The commodities caused by the intense demand for fuel and raw main factors boosting economic activity will be investment and private materials. Consumer prices -according to the average annual growth consumption. At the same time, fiscal indicators are expected to rate of the consumer price index- increased by 2.2% in the euro area, further improve. Fiscal discipline, without policy reversals, will by 3.3% in the USA and by 0.3% in Japan. contribute to conditions fostering the achievement of macroeconomic stability and the strong growth of the Greek economy in the long- Monetary policy in 2006 was restrictive with the main objective of term. sustaining inflationary pressures. In particular, the European Central Bank raised its minimum bid rate for main refinancing operations by Developments in the domestic banking system 125 basis points (to 3.50%), while the USA Federal Reserve Bank raised its base rate by 100 basis points (to 5.25%). The central bank In 2006, the high growth rate of the Greek economy had a positive of Japan abandoned its zero interest rate policy, increasing its base impact on banking activity. Household and business financing rate by 25 basis points. conditions continued to be favourable as real interest rates remained at relatively low levels despite the increase in interest rates during the In 2006, fiscal consolidation continued in most major economies. year consequent upon the rise in the European Central Bank policy The general government deficit as a percentage of GDP fell to 2.1% rate. in the euro area, to 2.3% in the USA and to 4.6% in Japan. Retail credit expansion was sustained at a high level, while credit to In 2007, the real GDP growth rate is expected to slightly slowdown businesses accelerated. More specifically, total loans to households in developed economies as well as in emerging and developing -including securitized loans- increased at a high, albeit decelerating economies, nonetheless remaining at a high level. However, it is rate (2006: 24.7%, 2005: 31.1%). This development reflects the worth noting that high oil and raw material prices or any wide deceleration in the annual growth rate of both housing loans (2006: fluctuations in these prices, as well as the long-standing US and 25.8%, 2005: 33.4%) and consumer loans (2006: 22.4%, 2005: major emerging economies current account imbalances, constitute 26.8%). Bank loans to households accounted for approximately 52% risk factors for sustaining high global economic growth rates. of all bank loans to businesses and households at the end of 2006.

Credit expansion to businesses -including securitized loans-

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4. GLOBAL AND DOMESTIC ECONOMIC ENVIRONMENT

accelerated (2006: 11.6%, 2005: 8.7%). Low interest rates, combined The growth in demand for loans by both households and businesses, with the favourable economic climate for new investments, combined with the rise in interest rates, contributed to the increased contributed to the increased demand for banking credit by profitability of banking institutions in 2006. This profitability stems businesses. It should be noted that in 2006 enterprises attracted not only from increased activity in the domestic market but also from significant funds -net amount of EUR 4.3 billion- by issuing bond the expansion of Greek banks into the Balkan market and other loans, which are being held in the portfolios of domestic banking emerging economies in the wider region. Greek bank’s strategic goal institutions. is to further expand their branch network and their activities in countries in which they are already operating. At the same time, they Liquidity of the banking institutions was reinforced during 2006, as are planning their penetration into the markets of other countries. in previous years, by the increase in deposits, as well as by loan securitizations and bond loan issuance. However, the annual growth The prospects for the Greek banking system are favourable. The loan rate of deposits slowed down (2006: 10.5%, 2005: 22.1%) due to the to GDP ratio is lower than in the euro area, indicating that there is decline in the growth rate of savings and sight deposits. room for further significant growth of banking activity. Banks will continue to focus on retail banking when expanding their activities, During 2006, the rise in interest rates in Greece was comparatively placing emphasis on upgrading the quality of customer service smaller than in the euro area. The positive differential between the through an enhanced variety of banking products so that they offer Greek interest rates and the respective euro area average decreased their customers greater flexibility and efficiently meet their needs. in new deposits, as well as in new loans to enterprises and new housing loans. On the contrary, it widened in new consumer loans.

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ACTIVITIES OF EMPORIKI BANK GROUP 5.

ACTIVITIES OF EMPORIKI BANK GROUP The bulk of new housing loans is disbursed through the Bank’s branch network. Nevertheless, in 2006 emphasis was placed on the more systematic development of Housing Loan Collaboration Programs A. RETAIL BANKING (with construction companies, real estate agents, etc.) by re- engineering IT procedures, on the development of relationships with In 2006, Emporiki Bank successfully implemented its strategy of collaborators on a centralized level, on the appointment of relationship expanding in the retail banking market in an especially competitive managers for selected collaborators and on the improvement of environment. It offered a wide range of innovative products with service for collaborators. The number of collaborators increased competitive terms seeking the best possible response to its clients’ significantly (45.3%), while there was a particularly large rise in both needs. It attempted to reach out to its customers providing the total number (55%) and the outstanding balance (76.6%) of comprehensive solutions by simultaneously promoting Group housing loans disbursed through the Collaboration Programs. subsidiary products with the objective of creating a multi-product relationship with the customer. It further strengthened its efforts to In 2007, housing loans will continue to be the primary axis for penetrate the retail banking market with the strong promotion of its expanding the Bank’s client base. In this direction, the Bank plans to products and services to customers through promotional sales create comprehensive offerings based on housing loans, to further programs as well as advertising campaigns. expand the Collaboration Programs with third parties and to transfer the existing clientele to fixed-interest rate loans with competitive Housing Credit pricing.

In 2006, housing credit was the primary axis for expanding the client Consumer Credit base and for strengthening Emporiki Bank’s position in retail banking. New housing loan disbursements were up by 60.1% compared to In 2006, Emporiki continued to penetrate the consumer credit market 2005 and constituted about 37% of the Bank’s total housing loan by promoting the existing ‘Cash4U’ series of products. Emphasis was portfolio. The sharp increase in new housing loans resulted in an placed on attracting new clients, as well as on transferring outstanding increase in the Bank’s market share in housing loans. consumer loan balances from other banks to Emporiki Bank.

Total housing loans increased, on an annual basis, by 30%, and In 2006, a total of 56,582 new consumer loans were disbursed in the accounted for 32% of Emporiki’s total loan portfolio at the end of 2006. total amount of EUR 903.3 million. More than half of the outstanding balances of new consumer loans came from loans backed by In 2006, the new home product line ‘My Home Welcome’ was created. collateral. It consists of two housing loans with fixed-interest rates for 3 and 5 years respectively, and a housing loan with a variable interest rate. Total consumer loans increased, on an annual basis, by about 23% These loans were marketed along with other products (consumer in 2006, and represented about 12.5% of the Bank’s total loan loans, credit cards, insurance, new deposit accounts, etc.), portfolio. constituting a comprehensive offering in the context of cultivating a broad multi-product relationship with the client. In 2006, the ‘Cash4U’ consumer loan product line was enriched with the ‘Cash4U Home Renovation’ loan which was offered with a In co-operation with its subsidiary Emporiki Life, the Bank offered life collateral option. At the same time, Emporiki began to offer life insurance coverage for its borrowers on all new housing loans granted insurance coverage for the borrower in collaboration with its subsidiary in 2006, thus ensuring loan repayment in the case of loss of life or total Emporiki Life. permanent disability. In 2007, in order to not only attract new clients but to also respond to In 2006, Emporiki focused on promoting the existing complete line its existing clients’ expectations, Emporiki will aim to promote new of fixed-interest rate housing loans with a duration ranging from three consumer loans and to develop a reward program for clients who to twenty-five years, implementing a very preferential pricing policy for repay their loans in a timely manner. medium-long term interest rates and providing the opportunity for its clients to select between previously agreed fixed-interest rate and Emporiki Bank Group’s subsidiary consumer credit bank, Emporiki floating interest-rate after the expiration of the initial loan maturity Credicom, is also active in consumer lending. The company was period. Furthermore, the Bank promoted the conversion of floating founded in 2003 by Emporiki Bank and Sofinco, a subsidiary of Crédit interest-rate housing loans to fixed-interest rate loans in order to retain Agricole, each having an equal shareholding of the company. existing clients and acquire new clients who were seeking protection against the upward trend in interest rates last year. Hence, Credicom develops its activities through collaboration agreements approximately two thirds of new housing loans disbursed in 2006 had with large retail chains. Emphasis is placed on automobile purchase a fixed-interest rate. financing through collaborations with dealers and importers, while it

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has also proceeded to collaborate with retail companies active in of the credit card product portfolio and its alignment with the Single other markets (distance sales, electrical and electronic equipment, Euro Payments Area (SEPA) specifications. food). Credicom’s total loan portfolio is growing at a fast rate, while its share of the consumer credit market is also continuously growing. In 2007, the Bank intends to continue to rationalize the credit card product portfolio and align it with SEPA specifications, to expand the In 2006, Credicom concentrated on financing new automobile credit card holder reward program and to increase Visa debit card purchases and ranked first among companies active in this field. usage for purchases. During the course of 2006, it established important new relationships and the number of collaborating companies exceeded 1,000. With respect to card acquiring through Points of Sale (POS), in 2006 Emporiki established 3,345 new agreements with enterprises, bringing In addition to consumer loans and credit cards, Credicom also offers the total number of collaborating enterprises to 39,147. In 2006, the specific financial products and services (e.g., stock financing) to number of POS devices stood at 34,440, of which the Bank had collaborating companies with the objective of providing installed 32,570. comprehensive solutions and strengthening collaboration. During 2006, the Bank proceeded with the rearrangement of a In 2007, the main objective of the company is to improve the quality reasonable number of POS devices by withdrawing inactive devices, of services offered and the level of customer service, as well as to by expanding collaboration with existing collaborating enterprises provide new, innovative products. It also aims to further develop and by activating existing devices with limited usage. Furthermore, the synergies with the Emporiki Bank Group and to expand in the area of development of software was completed to provide for the acceptance home furnishing financing. In addition, it intends to offer banking of the international Visa organization’s V pay card which fulfills SEPA products and services directly to the final consumer (direct marketing) specifications. by taking advantage of its broad client base. Lending to Small and Medium-Sized Enterprises Credit Cards Emporiki Bank places particular emphasis on SME lending in the In 2006, the Bank aimed at improving the quality of its credit card context of its expansion in the retail banking market. With the intent activities. Within this framework, it upgraded card features (insurance of providing the best possible coverage of the special needs of SMEs, coverage, flexible limits, etc.) and began a program of automatic credit it has created a series of ‘business solutions’, offering the most line increases for selected, punctual clients, while it adopted flexible modern and innovative products and services to small and medium- procedures for servicing client requests to increase and decrease sized enterprises. credit lines. At the same time, it developed cross-selling, offering a number of other products (investment and deposit products, housing During 2006, the Bank continued its expansion in the SME market, and consumer loans). The Bank’s market share in credit cards was establishing approximately 7,000 new relationships. Its loan portfolio strengthened. included more than 45,000 SMEs at the end of the previous year with a total outstanding loan balance of approximately EUR 5 billion. Last year 52,763 new credit cards were issued. The Bank introduced a new program with particularly competitive terms regarding the In 2006, it began to offer small and medium-sized enterprises the transfer of credit card balances, resulting in a 70% increase in pioneer to the Greek market ‘Smart b2b’ product. This consists of a transferred balances. It also introduced a customer reward program new means of business-to-business transactions. By using a to increase credit card usage and to strengthen customer loyalty, transaction card, a company can purchase goods from its suppliers while it successfully implemented a campaign aimed at encouraging in a safe manner, while retaining all the credit advantages as if paying the more intense use of credit cards. by cheque.

In 2006, a program to replace magnetic stripe debit cards with VISA In 2006, the ‘Easy Business’ line of products for small businesses chip technology cards, guaranteeing a higher level of security, was continued to be offered successfully. More specifically, the ‘Easy completed. The Bank also proceeded with the upgrading of ATMs and Business Open’ loan for working capital was repositioned in the market POS devices with EMV technology (Europay Mastercard Visa). The with more competitive terms, attracting a substantial number of clients. EMV standards, established by the Visa and Mastercard organisations, At the same time, the following loan products of the ‘Easy Business’ provide a very high-level of security for credit card holders and for line were successfully promoted: the ‘Easy Business Premises’ loan collaborating businesses when conducting their transactions. to meet fixed asset needs with an option providing protection against future interest rate fluctuations, the ‘Easy Equipment’ loan to cover the At the same time, in 2006 the implementation of a program to replace mechanical equipment needs of small enterprises, the ‘Easy Liquidity’ the EMPOROKARTA credit card with internationally-branded Visa and loan to cover working capital needs of a more permanent nature, and Mastercard credit cards commenced. This enabled the rationalization the ‘Easy Leasing’ loan for equipment leasing. In 2006, the entire line

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of ‘Easy Business’ loans, with the exception of the ‘Easy Leasing’ procedure of centralising and automating the SME banking business loan, also became available to medium-sized enterprises. operations.

Emporiki co-operates with the Credit Guarantee Fund of Small and The Bank places particular emphasis on continuously training Very Small Enterprises (TEMPME) in order to meet the needs of small salespersons and upgrading their role in order to elevate them to and very small enterprises, which cannot provide sufficient collateral, business consultants. Moreover, the client base segmentation based for short and long-term loans. on distinctive customer needs and the formulation of specific proposals for each client segment will contribute to more effective In the medium-sized enterprises market, emphasis was placed on client servicing and to improving the quality of the loan portfolio. implementing individualized customer pricing and on upgrading the quality of services offered. In 2006, Emporiki signed a new agreement In 2007, the Bank plans to create new innovative products as well as with the European Investment Bank for the financing of investment packages of products for SMEs, to better manage risk and to simplify programs in the total amount of EUR 50 million. These loans are the loan approval procedure. offered to medium-sized companies with especially favourable terms, and they are exempted from the tax under Law 128/1975. B. WHOLESALE BANKING In addition, comprehensive advisory services continued to be offered to medium-sized enterprises in order to enable them to take I. BUSINESS CREDIT advantage of the possibilities provided under Development Law 3299/2004. Within this framework, the Bank has established a line Corporate Lending of communication with medium-sized companies for the provision of complete information and specialized support at each stage of The Bank finances large corporations active in all sectors of the their investment program in order to ensure that their needs are fully economy, offering a wide range of modern products and services in met. order to service them in the best possible way. During the past year, it placed particular emphasis on strengthening its clients’ collaboration In 2006, Emporiki participated in syndicated and bond loans to cover with its subsidiary companies, both domestically and in the Balkan the financing needs of SMEs. The SMEs that were finaced were mainly region. active in the industry, trade and services sectors. In 2006, the restructuring and qualitative upgrading of the loan The Bank offers a series of loan products to SMEs so that they may portfolio continued. At the end of the year, the Bank’s total corporate be incorporated into the Third Community Support Framework loan portfolio included 1,540 clients. Of these, 770 were private operational programs. It also participates in a large number of enterprises, 700 were public entities and 70 were public enterprises operational programs of the Ministry of Economy and Finance, and organizations (DEKO). providing SMEs with financing for the completion of investments in the context of these programs. Emporiki participated in three syndicated loans to large corporations in the amount of EUR 31.5 million. In addition, it organized seventeen In 2006, informative presentations were organized in many cities bond loans and participated in another thirteen, with its total throughout Greece in order to present enterprises in the regional participation amounting to EUR 398.8 million. areas with comprehensive solutions for participating in development programs. Promotional programs strengthened the sale of products The Bank’s primary objectives are the acquisition of new, financially to SMEs, thus contributing to greater penetration in this particular sound clients, the financing of corporations in sectors with favourable market. prospects, the more effective credit risk management and the continuous improvement of customer service. Moreover, during the previous year, within the context of developing cross-selling, Emporiki continued to market its subsidiary companies’ Shipping Finance products (bancassurance, leasing, etc.) in order to better meet its clients’ needs. The year 2006 was characterized by a large amount of liquidity in the shipping sector, which resulted in increased prepaymants and The Bank’s key objective is to strengthen sales and expand its market repayments of loans. Despite the intense competition consequent share in the SME market. It has created a Business Information Hub upon these developments, the Bank ranked third among Greek banks with qualitative and financial data on potential and existing clients in active in shipping finance. It established new client relationships with order to provide information for its branch network with the objective traditional shipping groups and expanded its relationships with of more efficiently approaching and servicing its clientele. In addition, existing high-credit quality clients. it constantly upgrades the services it offers by strengthening the

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The Bank’s loan portfolio consists to a very large extent of healthy The Bank collaborates with CALYON in the field of bond loans which loans. At the end of 2006, 78.2% of the shipping loan portfolio are traded on the international markets, as well as in the merger and accounted for loans to ocean-going shipping, while the remaining acquisition sector. In 2007, the Bank plans to further promote high- 21.8% accounted for loans to coastal shipping. Of the ships financed, yield bonds and private placement bonds, and to provide asset 42% were less than 10 years old or new-built. backed securities to Greek companies.

The key objectives for the current year are to maintain the high quality Brokerage Services of the loan portfolio and to expand the client base with new clients playing a traditional role in shipping and exhibiting a strong financial The Bank operates as an investment services company and provides situation. brokerage services in the domestic and foreign capital markets. It also provides analyses and studies on capital market issues. Its clients Structured Finance are primarily client-individuals from its branch network, as well as domestic and foreign institutional investors. In 2006, the Bank participated in project finance activities in the public and private sectors. The outstanding balance of loans in this category In 2006, the Bank pursued a more competitive pricing policy in order increased by 73% and the Bank’s portfolio at the end of 2006 included to expand its client base and to increase fee income. Its market sixty structured deals. Structured financing took place in several presence was strengthened with the acquisition of approximately sectors: infrastructure, energy, and real estate development and 3,800 new clients. management, both domestically and in the wider Balkan region. In 2006, further progress was made towards the upgrading of In 2006, the Bank organized nine bond loans and participated in one operating systems supporting brokerage services in order to provide bond loan in the structured finance area with a total participation of better and faster customer service. Furthermore, the new ‘Three Day EUR 99.5 million. Credit Provision’ product was promoted in accordance with the prevailing institutional framework. Total income from brokerage The Bank has provided financing and consulting services to a number activities increased significantly (about 31.6%). of large projects (Attiki Odos, Rio-Antirio Bridge, wind energy parks, etc.) domestically, and it has also participated in the Midland An objective for 2007 is to develop brokerage services throughout Expressway project in England, AES Cartagena in Spain and Maritza the branch network by incorporating them into the product mix East III in Bulgaria, a portion of which has been undertaken in co- promoted by the branches, and by obtaining certification for branch operation with CALYON, the investment bank of the Crédit Agricole employees according to the new regulations of the supervisory Group. authorities. Also, the Bank intends to further promote specialized products and services (e.g. margin accounts, derivatives), as well as The objective for 2007 is to further expand activities, in co-operation to install new applications for forwarding customers’ orders to the with CALYON, in the area of self-financed and co-financed projects. branch network in order to provide its clientele with quicker service. An objective is also to provide financial advisory services for the initial projects that will be tendered in the context of the new institutional Venture Capital framework for Public Private Partnerships (PPP). Emporiki Bank is developing venture capital activities directly, while II. INVESTMENT BANKING it also has two venture capital subsidiary companies, Emporiki Venture Capital Developed Markets Ltd and Emporiki Venture Capital Investment Services Emerging Markets Ltd. The companies are headquartered in Cyprus and are wholly-owned by the Bank. In 2006, Emporiki Venture Capital Emporiki Bank provides underwriting and consulting services (for Funds Ltd and Emporiki Venture Capital Enterprises Ltd -100% owned IPOs on the Athens Exchange, mergers, acquisitions, privatizations, subsidiaries of Emporiki Bank- were merged by absorption with etc.) and also organizes bond and syndicated loans. Emporiki Venture Capital Developed Markets Ltd in accordance with the legislation in force in Cyprus regarding the restructuring of In 2006, underwriting activities were particularly limited as only two companies belonging in the same Group. IPOs took place in the Athens Exchange primary market. The Bank participated in both of these public offerings as primary underwriter In 2006, the total number of venture capital participations amounted with a total underwriting risk of EUR 20 million. It also participated in to twenty-four, of which fifteen were participations of the subsidiary the secondary market as an underwriter for the share capital increase companies. Venture capital participations span geographically of two companies. In addition, during 2006 it offered advisory services throughout Greece, Europe, the USA and Asia. for privatizations and company mergers. Within the framework of re-evaluating venture capital participations,

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in 2006 seven venture capital participations were wholly liquidated market funds, 23.4% equity funds, 22.6% bond funds, 4% balanced and one was partially liquidated for a total profit of EUR 19.7 million. funds and 0.08% funds of funds. One new participation was undertaken for USD 1.4 million with an obligation of a total investment of up to USD 5 million. Also, capital In the area of portfolio management services for institutional investors, appreciations in the amount of EUR 0.8 million were recorded. total funds under management reached EUR 827 million at the end of 2006, with portfolio returns reaching remarkably satisfactory levels. The objective for 2007 is to sell some of the participations ensuring Customer portfolios include a wide variety of investment options such significant profit and to investigate the participation in new, profitable as domestic and foreign government and corporate bonds, domestic venture capital schemes. and foreign stocks, derivatives and structured investment products, as well as liquidity management products. In the area of brokerage, custodian and deposit services, the company mainly co-operates with C. ASSET MANAGEMENT the Emporiki Bank Group, as well as with major credit institutions in Greece and abroad. Deposits - Investment products In 2006, the company provided advisory services and related research At the end of 2006, Bank total deposits reached EUR 16,248 million, studies to potential customers in order to assist them in better registering an increase of 10.3%. The increase was due to the growth organizing and managing their assets, and proceeded with selling of time deposits by 36.2%, while sight and savings deposits declined Emporiki Bank Group products to institutional investors. At the same by 7.6% and 2.7% respectively. In 2006, the Bank promoted new time time, it continued to provide portfolio management services to deposits with maturities other than those already offered, in particular Emporiki Bank Group companies. 4, 5, 7, 8, 10 and 11 month maturities. Furthermore, the Bank abolished the ‘Welcome’ time deposit products and readjusted its Emporiki Asset Management M.F.M.C. collaborates with Crédit interest rates on other time deposit categories in order to reduce Agricole Asset Management (CAAM) France and its subsidiary capital funding costs. company in Luxembourg. The company is the sole representative and distributor of these companies’ mutual funds in the Greek market and In 2006, a new deposit product was offered by the Bank entitled ‘Salary has the right to contract with third parties for the distribution of their Account’. This deposit product provides a higher interest rate than products. In 2006, new contracts were signed with sub-distributors for the classic savings account rate, together with a special package of the distribution of CAAM mutual funds. The total amount of mutual products (i.e. more favourable interest rate terms on a Home Extra funds sold amounted to EUR 48.5 million at the end of 2000. In January Salary loan, a subscription-free for the first year open personal loan, 2007, the company started promoting the CAAM Arbitrage VaR2 and a subscription-free for the first three years Mastercard credit card, CAAM Dynarbitrage VaR4 mutual funds throughout the Emporiki etc.). Moreover, the Bank continued to offer Guaranteed Capital branch network achieving particularly positive results. In the context Investment Products offering higher returns in comparison to more of its collaboration with CAAM, the company will proceed with the first traditional types of deposits. issue of a series of structured products for the Greek market.

In 2007, the Bank plans to improve existing banking products, as well The objectives of Emporiki Asset Management M.F.M.C. for 2007 are as to promote new products, either individually or as part of special to continue to offer a high level of investment services to individuals packages, in order to better meet its customers’ needs. and institutional investors, while expanding its customer base and increasing funds under management. Furthermore, the company will Asset Management for Individuals and Institutional Investors aim to develop and promote in the Greek market new investment products in collaboration with CAAM. It will also aim to improve the Emporiki Bank Group offers asset management services to level of knowledge of its certified sales-force from the collaborating individuals and institutional investors through its subsidiary company networks and of the salespersons at the Emporiki branch network in Emporiki Asset Management M.F.M.C. The company resulted from order to more efficiently promote investment products to its customers. the merger by absorption of the subsidiary Emporiki Asset Management S.A. with the subsidiary Hermes Mutual Fund Personal Banking Management Company S.A. The merger commenced in 2006 and was completed in January 2007. In the personal banking area, Emporiki Bank services affluent individuals, providing products and services from the domestic as At the end of 2006, total mutual funds under management reached well as the international capital and money markets. EUR 1,465 million. The company ranked fourth in the market in terms of total mutual fund assets. The annual returns of all types of mutual In 2006, the Bank provided its customers with a wide range of funds were amongst the highest in the market. The composition of the investment options (mutual funds, international bonds, structured mutual fund portfolio at the end of 2006 was as follows: 50% money investment products, etc), while it placed special emphasis on

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providing Crédit Agricole Asset Management VAR2 and VAR4 mutual Group will positively contribute to the company’s growth. A key funds in co-operation with its subsidiary Emporiki Asset Management. objective for 2007 is to more intensively promote sales throughout the Furthermore, it continued to co-operate with Crédit Agricole Emporiki Bank branch network, as well as to develop relationships with Luxembourg S.A. and Crédit Agricole Swiss S.A. to provide investment third parties (e.g. equipment dealers, real estate agencies, etc.) in products and services. order to use their networks to promote the company’s sales. In addition, the company plans to adopt competitive pricing for selected Products and services were marketed through a selected number of large customers and to provide specialized products to entrepreneurs network branches in order to better take advantage of the existing and small and medium-sized enterprises in order to more effectively clientele and to attract new clients. At the same time, the training respond to their needs. program for investment advisers on modern investment products and sales techniques was completed. Insurance

A key objective for 2007 is to market personal banking products and Emporiki Bank and Crédit Agricole have signed an agreement with services through a larger number of network branches, while the Groupama International regarding the sale of the entire share capital marketing of Cédit Agricole mutual fund products will be expanded to of the subsidiary Phoenix-Metrolife Emporiki, which is active in the include mutual funds that are invested both in mature and in emerging life and general insurance sector. The participation of Emporiki Bank markets. and Crédit Agricole in the share capital of Phoenix-Metrolife Emporiki is 89.84% and 10.16% respectively. The acquisition by Groupama International concerns all Phoenix-Metrolife Emporiki activities, D. TREASURY MANAGEMENT however, the Bank will continue to collaborate on distributing selected general insurance products with the company. In 2006, Emporiki Bank held a significant position in the interbank money, foreign exchange and bond markets. The Bank ranked sixth In 2006, Phoenix-Metrolife Emporiki reported an after-tax profit of EUR among primary dealers of Greek government bonds, thus improving 625,000, following four consecutive years of losses. The return to its position. Emporiki Bank was also among the top five primary bond profitability was mainly due to the increased activity in profitable dealers in terms of volume of transactions. insurance sectors, as well as to further proceeding with the rationalization of the loss-making vehicle insurance sector by applying The Bank enriched the range of guaranteed capital investment a more correct pricing policy and by promoting new vehicle insurance products by adding four new products. Moreover, it significantly policy packages. In addition, a reduction in operating costs and the increased the volume of fixed rate loans by aligning interest rate centralization of company procedures also positively contributed to pricing with market levels and by creating flexible repayment options. profitability. In 2006, it also launched the procedure for active foreign currency management. In 2006, Phoenix-Metrolife Emporiki created a new series of health products entitled ‘Charin Ygeias’ which includes three hospital programs replacing older ones. Furthermore, it promoted the new E. OTHER GROUP ACTIVITIES pioneer ‘Ygeias Doron’ service. This service provides a free card for all insured clients to undergo diagnostic examinations at Leasing particularly competitive prices at the DIAGNOSI S.A. diagnostic center network. In the leasing sector, Emporiki Bank Group is active through Emporiki Leasing. In 2006, Emporiki Leasing implemented a more selective Phoenix-Metrolife Emporiki offers its products through an organized sales policy to client-companies in good financial standing in the sales network consisting of branches and offices (agency system), context of upgrading the quality of its client base. New contracts brokers and insurance agents. It also uses the Bank’s branch network, amounted to EUR 170.8 million, reflecting a significant increase while it performs insurance operations directly without intermediaries. (69.8%) compared to 2005. Nearly this entire sum was disbursed in 2006. About 71.5% accounted for real-estate leasing and the remaining Bancassurance 28.5% accounted for professional equipment and motor vehicles. Emporiki Bank is active in the bancassurance market through Emporiki During the previous year, the ‘Easy Leasing’ standardized product Life, its life insurance subsidiary. The company was founded in 2001 line was enriched while actions were taken to incorporate it into the by Emporiki Bank and the life insurance company Predica, a branch network everyday sales practices. In 2006, 62% of the total subsidiary of Crédit Agricole. The company is 50% equally owned by value of new contracts came from the Bank’s branch network. each shareholder. Emporiki Life uses the Crédit Agricole bancassurance business model. It is anticipated that the provision of know-how from the Crédit Agricole

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Emporiki Life offers ten insurance and savings products to individuals the best management of the Bank’s and the Group’s real estate and to small and medium-sized enterprises, which are all marketed holdings, providing leasing and rental management services. Capital exclusively throughout the Emporiki Bank branch network. gains from the sale of the Bank’s real estate property amounted to EUR 4.6 million. It also provided real estate management services for third In 2006, the number of issued insurance policies more than doubled parties, primarily Bank customers that are resident abroad. At the and emphasis was placed on more efficiently organising the same time, it launched a new IT application for the management of company’s activities, on using the Bank’s branch network in order to real estate of third parties in order to more effectively monitor relevant promote bancassurance products and on providing after-sale client relationships. Moreover, it offered services for the management customer service. In addition, training of Emporiki Bank officers was of insurance contracts for the coverage of the Bank’s property, strengthened in order to provide the best possible promotion of products and operations. bancassurance products, and a dynamic bancassurance promotion policy towards customers was adopted. In the area of valuations, Emporiki Real Estate provided its services for Emporiki Bank Group and for third parties. It organized a valuation The key objectives for 2007 are the more intensive penetration of high- system in order to ensure the reliability and quality of valuations and income clients, the best possible support to the Bank’s branch network to limit the Bank’s credit risk vis-à-vis its clients. It also established the for the promotion of bancassurance products and the strengthening framework for the computerization of valuation procedures in order to of the company’s market position. align them with the Bank’s respective IT applications and to reduce operating costs. Real Estate Development and Management In 2006, Emporiki Real Estate established relationships with real estate The Emporiki Bank Group is active in real estate management and agents. In this area, it collaborates with well-known real estate agents development though its subsidiary Emporiki Real Estate. The in the Greek market. company was founded in 2001 with Emporiki Bank as the main shareholder, and subsequently Emporiki Bank took over full ownership Emporiki Bank is participating through Emporiki Real Estate in the of the company in 2006. project supervised by the Bank of Greece regarding the construction of real estate price indices which will be used by financial institutions Emporiki Real Estate has undertaken the management of Emporiki in the framework of compliance with Basel II principles. Bank Group’s real estate property. In addition, it is active in the real estate market, providing advisory services for the management and Long-Term Operational Leasing of Vehicles exploitation of real estate property for selected investors and for institutions having large real estate holdings, while it directly Emporiki Bank Group is active in the sector of operational leasing of participates in investment programs and real estate development private passenger cars through its subsidiary Emporiki Rent. The projects. company was founded in 2000 by Emporiki Bank and the Karenta S.A. and P.J. Condellis Industrial and Commercial S.A. companies. In the area of property development, Emporiki Real Estate participates in the Marina Zeas S.A. investment consortium which, following the Emporiki Bank participated in the share capital of Emporiki Rent with completion of revamping the harbour and land facilities of the Zea 51%, while the other two shareholders each held a 24.5% share. At touristic marina in 2005, has undertaken their exploitation. It also the end of 2006, Emporiki Credicom, a subsidiary of Emporiki Bank, participates in an investment consortium with the objective of reached an agreement to acquire the Karenta S.A. and P.J. Condellis developing, operating and exploiting the Port of Heraklion in Crete. Industrial and Commercial S.A. shares. The procedure is in the final stage of approval and completion of the transfer. In 2006, Emporiki Real Estate sold its shares in its subsidiary companies Thermaikos Emporiki S.A. and Therma Emporiki S.A., In 2006, the number of new leasing contracts amounted to 891. The realizing a significant capital gain, and absorbed its subsidiary fleet of cars numbered 3,342 at the end of 2006 (annual increase of Kolonos Emporiki S.A. 6,9%) and the company’s market share was estimated at 3.7%, as in 2005. In the area of advisory services, the company offered services for projects financed by the Bank (Drama Greehhouses, Imathia The majority of sales are made directly by Emporiki Rent. In 2006, Greenhouses, Tele-heating Unit in Serres), as well as for projects direct company sales represented 46% of total sales, 28.1% of sales concerning public companies and organizations (development of the were made through the Bank’s branch network, 7.1% through the real estate property of the Public Power Corporation, and of the network of the other two shareholders, and 18.8% through other Organization of School Buildings). networks (dealers and vehicle vendors, brokers, insurers, etc).

In the real estate management sector, the company strived to achieve

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5. ACTIVITIES OF EMPORIKI BANK GROUP

F. INTERNATIONAL ACTIVITIES As far as corporate credit is concerned, they focus on financing companies with a solid financial performance, while financing a Emporiki Bank develops its activities through its subsidiary banks significant number of companies representing Greek interests. operating throughout Southeastern Europe, and in particular in Companies financed are primarily in the trade, real estate Albania, Bulgaria, Romania and Cyprus. management and development, construction and manufacturing sectors. At the end of the previous year, the subsidiary Emporiki Bank-Albania S.A. operated seven branches, Emporiki Bank-Bulgaria EAD operated In 2007, the Bank will aim to further expand its subsidiary banks’ sixteen branches, Emporiki Bank-Romania S.A. operated eight activities especially in the Balkan region where development potential branches and one office, and Emporiki Bank-Cyprus Ltd operated is particularly favourable. At the same time, within the context of twelve branches. rationalizing Emporiki Bank’s presence abroad, a decision was taken at the beginning of 2007 to cease the operations of Emporiki Bank- The subsidiary banks abroad are active in retail and corporate Germany GmbH. banking, offering a wide range of competitive products and services.

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TECHNOLOGICAL AND OPERATIONAL MODERNIZATION 6.

TECHNOLOGICAL AND OPERATIONAL In 2006, concerning the further development and modernization of MODERNIZATION the IT infrastructure supporting the Bank’s more efficient operation, a management system for the corporate database was implemented. In 2006, IT activities were focused on supporting the business This infrastructure will initially support the management of data and initiative to simplify and transfer branch operations to a centralized information required for the Bank’s compliance with the Basle II level. In this context, IT infrastructure was developed to implement regulatory framework and for the Management Information System centralized support for foreign trade services and for housing and (MIS) operation. In 2006, the IT system supporting cost/profitability consumer loan provision. A central service, where foreign trade by organizational unit as well as a new budgeting system were services are gathered, processed and executed, has already completed. These IT systems are operating on a pilot basis so that commenced operations so that the customers are provided with necessary adjustments are finalised and they become fully prompt and reliable service. operational in 2007. The main objectives are to complete implementation of the product cost/profitability system and to During 2006, the IT systems for sales and customer relationship commence implementation of the customer cost /profitability system management were upgraded and functionality was enhanced in order within the year. to improve the support of branch operations. In addition, the replacement of existing magnetic stripe cards with new chip In 2006, in the area of production systems, operation of the Bank’s technology cards continued, enabling customers to conduct their IT Disaster Recovery Center was successfully tested. In the event of transactions with greater security. Moreover, in order to improve a disaster, this center will enable resumption of the Bank’s most customer service, in 2006 a wide-ranging program commenced with important functions within a short period of time and with guaranteed the objective of upgrading and replacing the Bank’s network of ATMs data integrity. with modern international standard compliant ATMs.

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7. CUSTOMER SERVICE CHANNELS

CUSTOMER SERVICE CHANNELS particular, the volume and worth of value transfer transactions showed a significant increase (25% and 87% respectively). In 2006, The Bank has reorganized its branch network placing emphasis on businesses used Emporiki e.Banking quite extensively and the worth its customer-oriented approach and methods of operation. The of their value transfer transactions increased by 118%. expansion and restructuring of the Bank’s network is implemented in line with the Bank’s strong orientation in retail banking activities, During 2006 the Bank harnessed its investment in 3D Secure providing the best possible level of customer service. technology, as the only issuing and acquiring bank in Greece in the e-commerce field. The Emporiki Secure e.Payments service provides At the end of 2006, the Bank's network comprised 370 branches, 708 enterprises, which use the Bank for clearing their customers’ credit ATMs, 4 AEMs, 12 exchange bureaux and 100 KIOSKS. The branches card transactions, with protection against potential disputed are distinguished into three types according to the range of services transactions. With the Emporiki Bank Secure service, the holders of offered to customers: full-service branches (KPE), SME and retail registered Visa and Mastercard credit cards issued by Emporiki Bank customer branches (KMME+I), and retail customer branches (KEI). are protected against any illegal use of their cards for purchases over the Internet. During the previous year, there was a substantial Furthermore, the Bank responds to its customers’ current needs and increase in both the number of enterprises which collaborate with expectations by vigorously developing alternative customer service the Bank using the ∂mporiki Secure e.Payments service and the networks. The specialised Direct Banking Customer Service Center number of credit cards activated in the Emporiki Bank Secure service. handles, on a 24/7 basis, all alternative channels customer requests in an efficient and timely manner. A key objective of the Bank is to upgrade the security of its electronic banking channels in 2007, providing an extra level of protection for In 2006, Emporiki Bank launched a new customer-oriented service, its customers during their banking transactions. The Bank also plans Emporiki Phone Banking, while upgrading all alternative channels to provide targeted services per customer segment with the objective service offerings. At the same time, the Emporiki e.Banking service of efficiently responding to the special needs of each customer was enhanced with new services for individuals, while special segment. It also plans to provide Emporiki Phone Banking in the emphasis was placed on upgrading the quality of services provided English language, and to launch the Emporiki Alerts service (alerting to corporate clients. There was a considerable increase in the number customers via SMS, e-mail, etc.). Furthermore, Emporiki Bank plans of both registered (25%) and activated (21%) e.Banking customers, to fully automate electronic payment procedures and to upgrade its as well as in the total number of value transfer and informative ATM network in order to enhance functionality and service offering, e.Banking transactions (individuals: 31%, businesses: 37%). In thus better serving its customers.

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RISK MANAGEMENT 8.

RISK MANAGEMENT risk management in the framework of the Basel II compliance and in cooperation with Crédit Agricole. It is developing a new function, Emporiki Bank applies methodologies in order to identify, assess, which will be based on permanent control processes across the Bank, measure and monitor all risks deriving from on and off-balance sheet with a view to adopting a new Operational Risk Management items, as well as from all its operations, systems and processes, both framework in alignment with Crédit Agricole’s standards. at the Bank and at the Group level. Data and losses related to operational risk are kept in a historical After Emporiki Bank joined Crédit Agricole, a number of new database, which is planned to be upgraded by using Credit Agricole’s challenges regarding its operations emerged. More specifically, collecting and monitoring operational risk tools. following identification of the gaps between Emporiki Bank’s and Crédit Agricole’s practices, Emporiki Bank is proceeding with the Regarding capital adequacy requirements in the context of Basel II, upgrading of its processes and systems in specific areas. In 2006, the Bank has chosen to implement the Standardised Approach, while Emporiki Bank proceeded with the preparatory work needed to at that same time laying the foundation that will enable it to adopt the comply with the Basel II principles. The action plan is based on a Advanced Measurements Approach. Basel II Program under the code name Basel II consisting of a number of projects. In 2006, the Bank established a Basel II Programme The Bank’s Disaster Recovery Centre is in place and activities are Management Office that supports the implementation of these already under way for the development of the Business Continuity projects in alignment with Crédit Agricole’s Basel II strategy and Plan, which will cover the entire range of the Bank’s operations. planning. Moreover, in line with the requirements of the supervisory framework, the Bank does have in place compliance operations. Credit risk Financial Risks Credit risk assessment involves two levels: First, the counterparty risk, defined as the probability of borrowers defaulting over a specific Financial risk management plays a significant role in the context of time horizon; second, the concentration risk, defined as excessive the overall risk management. The area of financial risks is being re- loan exposure to specific enterprises, sectors, geographical regions assessed and reconsidered in the framework of the alignment with or countries. Crédit Agricole’s principles and practices and in compliance with Basel II requirements. The credit risk area, however, has been affected by new developments related to the ‘Joining Forces’ Project in several Market and credit risks emerging from trading activities are managed aspects. The credit decision process has been revised according to in accordance with established risk management policies and Crédit Agricole’s standards. Regarding corporate counterparty risk, procedures. Risk Management along with other control units ensures the rating system Anadefi, Crédit Agricole’s group-wide rating system, that these risks are properly identified, monitored, and managed. is in the process of implementation across the Emporiki Bank Group. At the same time, the Bank has initiated the implementation of all the The Bank monitors on a daily basis the market risks of its trading necessary modifications to fulfil the new reporting standards to Credit portfolio, resulting from changes in interest rates, share prices and Agricole. foreign exchange rates.

In retail lending, Emporiki Bank applies specific scorecards. The Emporiki Bank seeks to mitigate the market risk associated with its Bank is in the process of enhancing credit assessment of retail credit trading portfolio by employing hedging strategies that correlate applications, in cooperation with Crédit Agricole, through behavioural movements of interest rates, prices, and spreads. It uses a scoring development as well as application scoring development for combination of cash instruments and derivatives to hedge its market mortgage exposures. The Bank assesses the credit risk per loan exposures. portfolio and calculates the maximum loss, which may result from these portfolios. Thus, the Bank is able to monitor the progress made The Bank employs in-house monitoring systems to assess on a daily concerning the quality of its portfolio, and input the necessary data basis the Maximum Potential Loss (Value at Risk-VaR), which may into the in-house provisions allocation system in order to have the result under normal conditions from the trading portfolio. The method possibility to take measures to more than cover the average expected employed is the Historical Simulation, using a 10-day as well as a 1- annual loss corresponding to its accounting provisions (impairment day horizon and a confidence interval of 99%, in accordance with control). the BIS rules. To control the risk undertaken, the Bank imposes risk limits based on the Value at Risk. Operational risk and the Permanent Control Function Emporiki Bank performs Back Testing in order to confirm the The Bank has launched a number of actions regarding operational effectiveness of the Value at Risk model. To assess the risks which

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8. RISK MANAGEMENT

may arise from extreme changes in the markets, the Bank has as credit policy and processes, trading book policy and strategy, developed a crisis simulation program (Stress Testing), which is capital assessment and pricing, and disclosure strategy. The third applied to the trading portfolio on a weekly basis. area focuses on data and systems issues, such as data warehouse implementation, data definitions, quality and controls, and Basel II In 2006, Emporiki Bank continued to pursue a strategy of investing reporting tools. The fourth area relates to model and methodology in investment grade international and Greek corporate bonds. issues such as the estimation of portfolio risk factors, collateral Emporiki Bank uses advanced credit risk assessment systems for evaluation, financial risks, etc. Finally, the fifth area focuses on corporate bonds, and the risk undertaken is included in the risk limits operational risk issues, such as operational risk strategy and policy, set. methodology design, loss data collection methodology, Business Continuity Plan, and reporting. The planning of the Basel II Program Liquidity risk is monitored through Gap Analysis, which classifies has taken into consideration Crédit Agricole’s Basel II strategy and according to maturity date all the cash flows derived from balance policy. sheet accounts. Moreover, a Gap Analysis for interest rate risk of the Banking Book is performed, where all the cash flows derived from Special emphasis has been placed on and considerable resources each account of the Balance Sheet are classified according to the have been allocated to data & IT systems, and the development of repricing date. models and methodologies. More specifically, Emporiki Bank has been implementing a new credit Data Warehouse that is designed to Drawing on international risk management practices, and in function as a single repository for all credit-related data of the Bank. compliance with the requirements of the Bank of Greece, during 2006 The new Data Warehouse will enable timely and accurate data scenarios involving extreme changes in interest rates were applied, analysis and will lead to improvements in terms of data quality, credit and calculations concerning the impact on net interest income, risk management, reporting, etc. economic value of equity, capital adequacy and liquidity were made. At the same time, the Bank developed a new application for the This Data Warehouse will be the foundation for the Basel II engine purpose of monitoring its position and liquidity ratios on a daily system implementation. The Bank implements the Basel II Engine basis, in line with the new supervisory framework introduced by the solution for the calculation of regulatory capital. This application will Bank of Greece. also facilitate regulatory and internal reporting and stress testing. Moreover, it will lead to a more reliable calculation of capital Basel II Capital Adequacy Framework requirements through the efficient use of credit risk mitigants.

Emporiki Bank has developed an integrated approach in preparing Concerning models and methodologies, the Bank has initiated the for Basel II compliance. Based on the Basel II Programme, the Bank implementation of a new corporate obligor credit rating, which is has been implementing a number of projects in order to be able, in compliant with the requirements of Crédit Agricole, and will constitute the first place, to follow the Standardised Approach for the calculation the basis for the implementation of the advanced Basel II of capital requirements for credit and operational risks. The second methodologies. The development of new application and behavioral stage of the Basel II planning focuses on the more advanced scorecards, that has been initiated, will evaluate individual retail approaches in alignment with Crédit Agricole’s strategy. obligors and will lead to the implementation of the advanced Basel II methodologies for the retail portfolio. Given all of the above actions, The Basel II Program is organized along five main areas. The first it is expected that the assessment of the creditworthiness of obligors area concerns organisation and governance issues such as group will be enhanced, resulting in improved credit granting decisions, risk governance and organisational structure realignment. The enabling the development of more accurate risk adjusted pricing second area concerns issues related to policies and processes, such methods.

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CORPORATE SOCIAL RESPONSIBILITY 9.

CORPORATE SOCIAL RESPONSIBILITY ñ The new Regulatory Compliance Program was presented to the Group subsidiary companies active abroad as well as to the Bank’s In 2006, a new era began for Emporiki Bank with its inclusion in the top management. Crédit Agricole S.A. international network. A notable characteristic is ñ 357 branch staff members were trained on the special Regulatory the common commitment to apply the principles of the Global Compliance Program with respect to money laundering, for a total Compact for Sustainable Development: to respect human and labor of 977 training hours. rights, to protect the natural environment and to strengthen ñ The «Sanctions List of Individuals and Entities Subject to Restrictive transparency and the fight against corruption. Measures» program was included on the Intranet. ñ A database was created including data on individuals and entities In 2006, Emporiki Bank improved its corporate governance, aligned for which details are requested by relevant judicial and fiscal its operating framework for the prevention of money laundering and authorities. terrorist financing with Crédit Agricole’s model system, achieved the ñ The search procedure for data requested by Supervisory highest credit rating in the domestic banking market, continued to Authorities was centralized resulting in the elimination of care for customer satisfaction, to support the very small firms, to care bureaucracy. for its human resources and for society at large. At the same time, ñ The expansion, processing and reporting to supervisory authorities Emporiki Bank concentrated on strengthening its environmental of cases as indicated by the law for the prevention of money responsibility and was assessed for its sustainability by independent laundering was continued. In particular, in 2006, 983 cases were research institutions. investigated, 135 cases were processed and 94 reports and 167 special reports were submitted. 1. We strengthened the Corporate Governance framework 3. The highest credit rating in the domestic banking market In 2006, Emporiki Bank strengthened its Corporate Governance with the following actions: Emporiki Bank fully harmonised its provisions policy with the model of the parent company Crédit Agricole S.A. and enjoys the highest ñ It separated the role and responsibilities of the Chairman of the credit rating among Greek banks. Board of Directors from those of the Chief Executive Officer. Rating Agency ñ It adopted a Code of Conduct, which governs the Emporiki Bank S&P’s MOODY’s FITCH Group and which is aligned with the Code of Conduct of the parent A Aa3 A+ company Crédit Agricole. In short, the Code of Conduct mainly refers to the relationships of the Emporiki Bank Group with its clients and partners, to customers’ rights, to the discretion that 4. We finance small and very small enterprises must be upheld by personnel and to the implementation of a straight communication policy with shareholders. During 2006, the Bank granted 75 short-term and 46 medium-to-long ñ It updated the Internal Operating Regulation. term loans guaranteed by the Credit Guarantee Fund of Small and ñ It established the Remuneration Committee, monitored by the Very Small Enterprises (TEMPME). Board of Directors, and the Coordinating Information Technology Also, within the framework of the EQUAL Community Initiative “Social Committee according to the Bank of Greece Governor’s Act economy in Greece: framework, pilot trials and support structures”, 2577/09.03.2006. Emporiki Bank participates in the preparation of a study aimed at the ñ The Audit Committee convened eight (8) times, exercising the formation of specific proposals for the development and utilization of responsibilities in accordance with the Bank of Greece Governor’s the latest forms of financing social economy companies. Act 2577/09.03.2006. ñ The Audit Division carried out regular and ad hoc audits totalling 5. Home loans to socially excluded population groups 108,000 auditing hours. Emporiki Bank continues to issue loans to socially excluded 2. We prevent money laundering population groups. During 2006 the Bank granted 42 home loans to Roma and 94 home loans to repatriated Greeks. In 2006, Emporiki Bank aligned the operation of Regulatory Compliance with the requirements of the Bank of Greece Governor’s 6. We evaluate our customers’ complaints Act 2577/09.03.2006 and with the strengthened FIDES program (Formalize – Institute – Develop – Evaluate – Supervise) of the parent The new Emporiki Bank Group Code of Conduct explicitly demands company Crédit Agricole S.A. Within this framework, the following that personnel should use their skills to service customers, as well actions were taken in order to improve internal structures and as the right of every client to receive equal treatment and impartial procedures: information, clear explanations and advice in good faith.

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9. CORPORATE SOCIAL RESPONSIBILITY

In 2006, a total of 876 written and verbal complaints were recorded, Assigning Positions of responsibility of which 814 were made by private customers and 62 were made by On 31.12.2006, all of the 16 executive management positions were corporate customers. The complaints mainly concerned the quality held by men. Furthermore, 2,905 of employees held positions of of services, fees and various charges. Emporiki Bank evaluates responsibility, of which 1,617 were men (55.7%) and 1,288 were customer complaints and is interested in constantly improving its women (44.3%). procedures and products and services offered. Training 7. Human resources In 2006, the number of employees that participated in training activities was 2,318, of which 1,065 were men and 1,253 were women. At Emporiki Bank equality is a corporate value. The Bank applies the The trainees participated in 4,529 seminars, representing a total of principle of equality in recruiting, in making job placements, in 79,763 training hours. The training index (total hours of training / total assigning responsibility positions, in promotions, in training and in employees) was 12.7. remuneration. Training covered subjects such as banking operations, sales, IT applications, Regulatory Compliance, leadership skills, and Renewal bancassurance products. Expenditure on training activities, not In 2006 Emporiki Bank renewed its personnel with 202 recruitments, including the remuneration of employees and related operational of which 60 were men and 142 were women, against 131 recruitments expenses, amounted to EUR 806,962. in 2005. At the same time, in 2006, 299 employees departed, of which 102 Remuneration were men and 197 were women. The increased departure of women The average gross monthly earnings for men stands at EUR 2,758 and relative to that of men is interpreted as a result of the change in the for women at EUR 2,094 (data of December 2006). The lower average retirement terms according to the pension Laws No 3371/05 and salaries for women (by 24.07%) are due to the lower level of 3455/06. participation in middle and high-level positions of responsibility and It should be noted that in 2006 the Bank did not have in place an to their fewer years of Bank service. incentives-based voluntary retirement program. Health and Safety Composition and education level In 2006 the Bank collaborated with a certified company for the On 31.12.2006 the Bank’s personnel numbered 6,2711 in total, of provision of on-site medical services and safety technicians which 3,052 were men (48.7%) and 3,219 were women (51.3%), throughout the entire country. Total expenditure for health and safety against 6,368 employees in 2005. services amounted to EUR 60,690. Out of the total number of Bank employees, 221 persons, Furthermore, a surgery and a dentist’s surgery as well as a representing 3.52% of the workforce, are persons with a disability. counselling centre are available at the Bank’s central offices. With respect to the educational level, 7.78% of employees are holders of Master’s or Doctoral degrees, 38.9% are University or University- Welfare level graduates, 41.8% are High School graduates and the remaining In 2006, Emporiki Bank continued to care for its personnel with the represent 11.4%. following programs: ñ Insurance programs Age and years of service – Uninsured employees’ children, cost EUR 13,907 The average personnel age is 43 years. With respect to years of – Supplementary Hospital Coverage, cost EUR 1,065,157 service, men have on average 18.3 years of service and women have – Financial assistance to children of employees, cost EUR 1,972,040 13.7 years of service. The average service record for the Bank – Group life insurance, cost EUR 463,933 employees is 15.9 years. ñ Loans with favourable terms to active and retired employees, for housing needs, emergency needs, the purchase of computers and Job position placement school supplies. In 2006, 4,151 employees were placed in the branch network, ñ Hosting 414 children at childcare centres, 567 children at summer representing 66.2% of the personnel, of which 1,874 were men and camps, and 355 children at the Bank’s camp at Varibobi, total cost 2,277 were women. EUR 1,546,724. In 2006, 2,120 employees worked in the executive and branch ñ Monetary awards totalling EUR 73,775 to children of employees network support Divisions, representing 33.8% of the personnel, of and retirees who received top grades in their studies. which 1,178 were men and 942 were women. ñ Financial support to employees’ unions totalling EUR 530,000.

8. Social solidarity

1 Employees at the Bank’s branch abroad are not included in this calculation. In 2006, the Bank’s social solidarity was demonstrated through

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CORPORATE SOCIAL RESPONSIBILITY 9.

sponsorships, donations in kind, the presence of the Bank’s choir, through pulping. In addition, the IT centre has installed 5 receptacles and the employee blood donation. In summary: for recycling batteries and toners. For the management of Laser – Social, educational, cultural, research, athletic, and business printer consumables, we work with a company that undertakes the institutions, as well as hospitals and Local Authority institutions, collection and waste disposal of these items. were sponsored with approximately EUR 1,615,400. – The following donations in kind were given to 63 entities: Financing of renewable sources of energy ñ 774 books to libraries, schools, institutions and researchers. In 2006, Emporiki continued to support the development of ñ Equipment supplies, such as 92 desks, 270 chairs, 71 Renewable Energy Sources providing technical know-how and computers, 23 cabinets, 15 bookshelves, 16 filing cabinets, 37 specialization in the financing of energy projects. The Bank has tables, 3 photocopy machines, 4 fax machines, silk-screen approved loan requests of approximately EUR 240 million for wind printings, etc. power, hydroelectric energy and combined electricity/heat power – The Bank’s choir performed in 10 concerts for a total cost of EUR generation, representing total electrical energy of 263 MWe and 103,390. thermal energy of 102.5 MWth. – Employees voluntarily donated 865 units of blood. In 2007 Emporiki Bank intends to offer a product which will cover the special needs and requirements of small and medium-sized 9. Our environmental responsibility customer-enterprises for the generation of Electrical Energy from Renewable Energy Sources and, in particular, the installation of Environmental Management System Photovoltaic Systems. In 2006, the Bank launched the Environmental Management System through which it aims to improve its eco-efficiency, to reduce its 10. Evaluation of our Corporate Social Responsibility operating costs and to contribute to the improvement of the quality of everyday life. In 2006, the following independent research institutions assessed our sustainability on behalf of international stock market indices. We know our emissions ñ Sam Research (www.sam-group.com) on behalf of the Dow Jones In 2006, the consumption of electrical energy and petroleum, the Sustainability Index. The total sustainability score of Emporiki Bank business-related travel by private passenger cars and the use of stands at 50%, against 48% of the banking industry average at company vehicles, all impacted the natural environment with the global level and against 84% of the world’s best rated bank.

equivalent of tCO2 25,166.57, against tCO2 25,260.92 in 2005. Of our ñ Ethical Investment Research Service (www.eiris.org). In March total emissions, 96.1% are due to the consumption of electrical 2007 Emporiki Bank was re-included in the FTSE4 Good

energy. The eco-efficiency indicator, tCO2 / number of employees, http://www.ftse.com/Indices/FTSE4Good_Index_Series/Downloads was 4.01 against 3.97 in 2005. /FTSE4Good_March_2007_Review.pdf ñ Stock at Stake on behalf of «Ethibel Sustainability Index». The Bank We monitor the consumption of water continues to be included in the «Ethibel Sustainability Excellence In 2006, Emporiki consumed a total of 71,135.09 m3 of water, Constituents» http://www.ethibel.org/pdf/ESI_E_constituents.pdf, representing 11.34 m3 consumption of water per employee. as well as in the «Ethibel Investment Register data bank» http://www.ethibel.org/subs_e/3_register/sub3_2.ihtml. The Ethibel Recycling index is calculated and maintained by Standard&Poor’s. In 2006, we recycled 142,400 kilos of inactive old cardboard files

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10. ANALYSIS OF EMPORIKI BANK GROUP’S FINANCIAL STATEMENTS

ANALYSIS OF EMPORIKI BANK GROUP’S FINANCIAL STATEMENTS1

RESULTS 2006

In 2006, the operating performance of Emporiki Bank Group improved significantly. Group profit, before tax, provisions and one-off adjustments resulting from the alignment with Crédit Agricole’s accounting principles and risk assessment methodology, amounted to EUR 338.8 million, registering an increase of 45.6% compared to 2005.

The largest part of Emporiki Bank’s integration into the Crédit Agricole Group was completed in 2006 by aligning Emporiki’s management practices with those of Crédit Agricole. The one-off adjustments (before tax) of EUR 386.5 million, made for the afore mentioned an increase of 7.2%, as a result of the increase in new loan integration, negatively impacted on Emporiki Bank Group results. disbursements and in fees from brokerage activities. Emporiki Bank Group incurred a loss (after tax and minority interest) amounting to EUR 234.7 million versus a EUR 76 million profit (after Net income from insurance operations amounted to EUR 19.8 million, tax and minority interest) in 2005. registering an increase of 17.2%. This increase may be attributed to decreased expenses in the Phoenix-Metrolife Emporiki subsidiary, as well as to the substantial progress made in implementing a bancassurance concept by the subsidiary company Emporiki Life, (€ millions) which sold more than 12,000 new contracts through the Bank’s branch network.

(€ millions)

In particular, Group net operating income increased by 19.6%, reaching EUR 988.5 million2. Net interest income increased by 19.3% and the net interest margin improved to 3.40% (2005: 3.15%). This development reflects the widening of the deposit margin and the increasing penetration of retail banking into the Group’s loan portfolio. Income from financial transactions stood at EUR 9.0 million (decrease Net fee and commission income stood at EUR 156.6 million, reflecting of 33.4%). Income from investment securities increased significantly to EUR 38.3 million, compared to EUR 7.1 million in 2005, mainly due to the liquidation of venture capital participations and of available-for-sale securities. 1. The amounts are in EUR millions. Percentage changes and ratios, rounded off to one or two decimal points, are based on the amounts as expressed in EUR thousands in the Condensed Financial Data and Information for the Financial Year 2006. Other operating income stood at EUR 29.6 million (increase of 1.9%) 2. If one-off adjustments are not included, net income amounts to EUR 991.2 million (increase and mainly resulted from the liquidation of foreclosed property of 20%). collaterals.

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ANALYSIS OF EMPORIKI BANK GROUP’S FINANCIAL STATEMENTS 10.

BALANCE SHEET 2006

At the end of 2006, Group total assets amounted to EUR 22,795.9 million, registering an increase of 13.9%.

Group loans (net of provisions) amounted to EUR 17,226.2 million. The annual growth rate of loans was 10.2%, lower than the asset growth rate and as a result the share of loans in assets decreased to 75.6% in 2006 versus 78.1% in 2005. Emporiki Bank loans accounted for 93.8% of Group loans.

Disbursements of Bank new housing loans increased by 60.1%. Total housing loans amounted to EUR 5,446 million, registering a 29.6% increase. New consumer loan disbursements increased by 35%. Total consumer loans amounted to EUR 2,151 million (increase of 22.9%). The Group’s position in the consumer credit market is further strengthened by the increase in loans issued by its subsidiary On the expenditure side, Group total operating expenses amounted company, Emporiki Credicom. Credicom’s loans increased by EUR to EUR 672.2 million (increase of 14.5%)3. The cost-to-income ratio4 335 million in 2006 and totaled EUR 621.8 million at the end of the improved to 68% in 2006 from 71% in 2005. If one-off adjustments are year. not included in operating expenses, the cost-to-income ratio drops even lower to 65.3%. The share of household loans in the Bank’s total loan portfolio increased to 44.1% from 38.6% in 2005. Staff costs amounted to EUR 427.9 million (increase of 15.6%) and included an extraordinary expense of EUR 21.7 million for the Bank loans to SMEs increased by 9.9% and reached EUR 5,074 alignment of the Bank’s accounting principles with those of Crédit million. Agricole regarding the method of providing for employee benefits. At the end of 2006, Bank non-performing loans accounted for 5.9% The number of Emporiki Bank Group employees at the end of 2006 of total loans, while total provisions corresponded to 104.9% of non- stood at 7,609 as against 7,658 at the end of 2005. performing loans.

Depreciation and amortization stood at EUR 37.5 million (increase of Emporiki Bank Group deposits and repos amounted to EUR 16,656.8 6.7%)5. million at the end of 2006, registering an increase of 11.6%. Emporiki Bank deposits and repos accounted for 98.3% of Group total Other operating expenses amounted to EUR 206.8 million, registering deposits and repos. an increase of 13.8%. This was mainly derived from increased expenses related to advertising and product promotion. Furthermore, Bank time deposits increased significantly (36.2%), while sight other operating expenses included the extraordinary expenses related deposits and savings deposits declined (-7.6% and -2.7% to the acquisition of Emporiki Bank and its integration into the Crédit respectively). Agricole Group. Group equity (excluding minority interests) declined by 22.4%, mainly Provisions for 2006 amounted to EUR 539.2 million and included due to the loss reported by the Group, and stood at EUR 832.1 additional impairment losses of the loan portfolio (EUR 299.4 million), million. In 2006, the Group’s Tier I ratio stood at 7.6% and the total as well as extra provisions for expected losses on litigation cases capital adequacy ratio at 9.1%. and for adjustments related to the impairment of receivables. The Bank’s Tier I Ratio stood at 7.8% and the total capital adequacy ratio at 9.4%. In December 2006, Emporiki Bank concluded a EUR 170 million loan and a EUR 200 million loan with Crédit Agricole in order to increase the Tier I ratio and the Tier II regulatory capital

3. If one-off adjustments are not included, net expenses amount to EUR 647.3 million (increase respectively. of 10.3%). 4. The cost-to-income ratio is defined as the sum of Staff Costs, Depreciation and Amortisation and Other Operating Expenses over Net Operating Income. 5. If one-off adjustments are not included, depreciation and amortisation stands at EUR 34.3 million (decrease of 2.6%).

27 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 28 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 29

THE CRÉDIT AGRICOLE GROUP 11.

THE CRÉDIT AGRICOLE GROUP

29 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 30

11. THE CRÉDIT AGRICOLE GROUP

30 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 31

THE CRÉDIT AGRICOLE GROUP 11.

31 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 32

12. EMPORIKI BANK GROUP

EMPORIKI BANK GROUP

ñ Consolidated Income Statement ñ Consolidated Balance Sheet ñ Consolidated Statement of Changes in Equity ñ Consolidated Cash Flow Statement ñ Independent Auditor’s Report

The Consolidated Financial Statements as at December 31st, 2006 are available on Emporiki Bank’s website, www.emporiki.gr, under INVESTORS/FINANCIAL STATEMENTS/YEARLY.

32 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 33

EMPORIKI BANK GROUP 12.

33 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 34

12. EMPORIKI BANK GROUP

34 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 35

EMPORIKI BANK GROUP 12.

35 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 36

12. EMPORIKI BANK GROUP

36 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 37

EMPORIKI BANK GROUP 12.

37 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 38

12. EMPORIKI BANK GROUP

38 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 39

EMPORIKI BANK 13.

EMPORIKI BANK

ñ Income Statement ñ Balance Sheet ñ Statement of Changes in Equity ñ Cash Flow Statement ñ Independent Auditor’s Report

The Financial Statements as at December 31st, 2006 are available on Emporiki Bank’s website, www.emporiki.gr, under INVESTORS/FINANCIAL STATEMENTS/YEARLY.

39 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 40

13. EMPORIKI BANK

40 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 41

EMPORIKI BANK 13.

41 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 42

13. EMPORIKI BANK

42 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 43

EMPORIKI BANK 13.

43 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 44

13. EMPORIKI BANK

44 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 45

EMPORIKI BANK 13.

45 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb etisiosApologismos06 AG new 12-04-07 15:15 Page 46

14. CONDENSED FINANCIAL DATA AND INFORMATION FOR THE FINANCIAL YEAR 2006

CONDENSED FINANCIAL DATA AND INFORMATION FOR THE FINANCIAL YEAR 2006

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CONDENSED FINANCIAL DATA AND INFORMATION FOR THE FINANCIAL YEAR 2006 14.

47 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb SUMMARY OF THE MINUTES OF THE ANNUAL ORDINARY GENERAL MEETING OF THE SHAREHOLDERS OF EMPORIKI BANK OF GREECE S.A.

April 25, 2007

The Ordinary General Meeting of the Shareholders of Emporiki Bank was held on April 25, 2007. The Meeting was attended by shareholders and representatives thereof, who represented 105,744,890 shares out of a total of 132,391,468 shares.

The General Meeting: ñ Approves and ratifies the submitted Financial Statements for the financial year 2006, the Condensed Financial Data and Information for the financial year 2006 and the related Income Statement, as prepared and published by the Board of Directors. ñ Declares that no dividend is to be paid for the financial year 2006. ñ Releases by vote, effected by roll-call, the members of the Board and the auditors from any liability for damages relating to the financial year 2006. ñ Ratifies the election of new members of the Board to replace resigned members. ñ Elects the new 17-member Board of Directors for a four year tenure. ñ Elects and appoints five independent members of the Board for the entire four year tenure of the members of the Board of Directors. ñ Approves and grants, in accordance with article 23, para. 1, C.L. 2190/1920, permission to members of the Board and Managers to participate in the Boards or in the Management of Group companies pursuing objectives similar or related to those of the Bank. ñ Approves the emoluments paid to the members of the Board for the year 2006, and preapproves the emoluments of the members of the Board for the year 2007, which also include fees and other remunerations of the non-executive members. ñ Approves the remunerations of the independent members of the Board who were also members of the Audit Committee for the year 2006, and preapproves the remunerations of the independent members of the Board who are also members of the Audit Committee for the year 2007. ñ Appoints the firm PRICEWATERHOUSECOOPERS as Certified Auditors, and elects one regular and one substitute Auditor for the year 2007.

Athens, April 25, 2007 The Chairman of the Board of Directors

Jean-Frédéric DE LEUSSE WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb ExetisiosApologismos06 agglika 12-04-07 16:19 Page 1

Annual Report

ATHENS 2007 WorldReginfo - c794bd2f-741a-4697-bb0d-569758d907bb