Economic Stabilization Advisory Group | February 27, 2009

Governmental Assistance to the Financial Sector: an Overview of the Global Responses (v5)

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

The measures fall into the following categories:

„ guarantees of bank liabilities;

„ retail deposit guarantees;

„ central bank assistance measures;

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

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

The purpose of this publication is to provide an overview of the principal measures that have been taken in the major financial jurisdictions to support the financial system. The first version of this note was published on November 12, 2008. Since then, Governments in some jurisdictions have adopted further measures or amended measures previously adopted. The current version of the note takes into account those measures and is based on information available to us on February 27, 2009.

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

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Table of Contents

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ARGENTINA...... 3 AUSTRALIA...... 5 AUSTRIA ...... 9 BELGIUM...... 15 BRAZIL ...... 18 BULGARIA...... 27 CANADA...... 28 DENMARK...... 30 ESTONIA...... 33 FINLAND ...... 34 FRANCE...... 37 GERMANY...... 41 GREECE3 ...... 49 HONG KONG ...... 53 HUNGARY...... 56 ICELAND ...... 61 INDIA ...... 66 IRELAND ...... 84 ITALY...... 86 JAPAN ...... 91 LUXEMBOURG ...... 96 THE NETHERLANDS...... 98 NEW ZEALAND...... 102 NORWAY...... 105 PEOPLE’S REPUBLIC OF CHINA...... 107 PORTUGAL...... 109 REPUBLIC OF KOREA...... 112 RUSSIA ...... 114 SLOVAKIA...... 122 SLOVENIA...... 127 SPAIN...... 131 SWEDEN...... 134 SWITZERLAND...... 138 UKRAINE...... 141 UNITED ARAB EMIRATES (“UAE”)...... 144 UNITED KINGDOM...... 146 UNITED STATES OF AMERICA...... 155

All additions and updates are noted in blue text.

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

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

Financial entities must make

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

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

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AUSTRALIA SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT1 DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES On November 20, 2008, the The Government has passed Australia’s central bank (the No publicly announced RMBS Purchase Scheme Australian Government executed a legislation to give effect to its Reserve Bank of Australia) measures at this stage. 4 Deed of Guarantee which took effect proposal with respect to all periodically intervenes to The Government has from November 28, 2008 (the deposits of Australian banks, support the Australian dollar. established an A$8 billion “Guarantee”) and which put in place building societies and credit Residential Mortgage Backed the Australian Government unions and Australian Securities (“RMBS”) purchase Guarantee Scheme for Large subsidiaries of foreign-owned scheme that will apply to new Deposits and Wholesale Funding banks for a period of three (rather than existing) (“Guarantee Scheme”) for eligible years. issuances. Authorised Deposit-Taking Institutions (“ADIs”). The proposal takes effect A$4 billion is available for the through a “Financial Claims Government to act as a Eligible ADIs will include: Scheme” (“FCS”). Under the cornerstone investor for both FCS, the Australian Prudential bank and non-bank RMBS ▪ Australian owned banks; Regulation Authority (“APRA”) issuances. (as administrator of the FCS) ▪ Australian ADI subsidiaries of must apply for the winding-up An additional A$4 billion is foreign banks; of an ADI, and a declaration available for non-bank ▪ Australian branches of foreign must be made by the issuances only. Issuances ADIs; and responsible Government under this scheme have taken minister in order for the FCS to place. ▪ credit unions and building apply to that ADI (an “eligible societies. ADI”). Car Dealer Floor Plan An eligible ADI must make an Financing application to the Reserve Bank of Under the scheme, holders of 3 The Australian Government Australia as administrator of the protected accounts with net has initiated the establishment Guarantee Scheme for an eligibility credit balances are entitled to of a special purposes vehicle certificate ("Eligibility Certificate") in payment from APRA of the (“SPV”) financing trust to respect of the relevant deposits or balance plus accrued interest provide dealer floorplan wholesale funding liabilities. (subject to certain adjustments refinancing to eligible car Eligibility Certificates are issued at and compliance with the dealers affected by the exit the discretion of the Commonwealth provisions of the FCS). Also, from the Australian market of of Australia as guarantor. Once an APRA is assigned the relevant two major car dealer financiers. Eligibility Certificate has been issued account holder’s right to claim this amount from the ADI. in respect of a liability, it is published The SPV will raise capital by on the Guarantee Scheme website at selling its securitised assets http://www.guaranteescheme.gov.au. The amount of any deposit over A$1 million will only be covered (the dealer loans and related A copy of the Guarantee, the related by the FCS if a fee has been rights) to the four major banks rules of the Guarantee Scheme, a list paid by the eligible ADI (in line in Australia, with the support of of eligible institutions information with the fee for the Guarantee a Guarantee from the relating to the application procedure Scheme described in the Commonwealth of Australia.

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT1 DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES and information relating to the claims previous column). The The refinancing offered by the procedure, and a copy of an opinion A$1 million threshold applies SPV to eligible dealers is a given by the Australian Government per depositor per institution. transitional arrangement only solicitor on the validity and for a period of 12 months after enforceability of the guarantee can The Government has indicated which the funding level of the be found at that the FCS will be SPV will run down. Funding http://www.guaranteescheme.gov.au. administered so that it applies has not yet been provided to to all deposits held in eligible eligible car dealers under this In addition to those deposits which ADIs by all types of legal scheme but it is expected to be are the subject of an Eligibility entities, regardless of where provided shortly. Certificate, in order to qualify for an the depositor resides. It will Eligibility Certificate, the wholesale also apply to deposits held in Commercial Property funding liabilities must fall into one of any currency. The FCS will not Support Scheme the following categories: (i) a bank apply to financial products that bill; (ii) a certificate of deposit or a are not deposit products, such The Australian Government transferable deposit; (iii) a as market-linked investment and the the four largest debenture; (iv) commercial paper; products. domestic ADIs will establish a (v) a bond; or (vi) a note issued, corporation for the purposes of drawn or made by the eligible ADI. The deposit liabilities of the supporting the commercial Australian branches of foreign property assets of viable Certain other restrictions also apply ADI’s held by Australian Tax Australian businesses. to the types of wholesale funding Residents (as defined in the liability that will be guaranteed, previous column) are not The corporation will be 50% including: (i) the liability have a covered by the FCS. However, owned by the Commonwealth maximum term of 60 months; (ii) be deposits held in foreign ADIs of Australia and each of the unsecured; and (iii) must not be can be guaranteed under the four ADIs will own 12.5%. It ‘complex’. Liabilities with one or Guarantee Scheme described will initially be capitalised with more of the following features are in the previous column on A$4 billion contributed in likely to be regarded as complex: payment of the relevant fee. proportion to the shareholding of the participants. ▪ liabilities where the principal amount of the liability is not a fixed The corporation will provide sum but varies by reference to, or finance on fully commercial is derived from, the value of an terms for commercial property asset, index or commodity or is where the underlying assets linked to the credit standing of any and income streams are person; commercially sound.

▪ subordinated debt; The scheme will be limited to the refinancing of existing ▪ liabilities that may be converted Australian commercial property into equity; syndicated loans where the ▪ liabilities that include any cross- withdrawal of funding by a foreign bank participant

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

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

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

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

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

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

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

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

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

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AUSTRIA1 SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Under the Inter-Bank Market The Austrian deposit guarantee The Financial Market Minimum capital Enhancement Act scheme does not provide for Stabilization Act requirements (Interbankmarktstärkungsgesetz – funding arrangements such as (Finanzmarktstabilitäts gesetz – IBSG) , up to €75 billion will be capital held directly in deposit FinStaG) provides for up to €15 Under the amended BWG, the made available for state guarantee scheme accounts (ex billion (or an additional amount FMA has to require a higher guarantees, sureties or similar ante funds). By contrast, the not utilized under the IBSG) for minimum capital if an adequate assumptions of liability. Austrian scheme provides for recapitalization measures. limitation of the risks arising financing based on ex post Potential beneficiaries of the from banking transactions and To this end, a separate entity has contributions from member measures will be credit banking operations of a credit been established as a clearing banks forming part of the institutions holding a license institution or group of credit house to facilitate the refinancing protection scheme of their pursuant to the Austrian institutions does not exist and of banks on the inter-bank market respective trade organization Banking Act (Bankwesengesetz proper recording and limitation (Oesterreichische Clearingbank (Fachverband). - BWG), including branches of of those risks cannot be AG – “OeCAG”). OeCAG is a foreign banks, and Austrian expected in the short term. specialised bank owned by major If any protection scheme is insurance companies. Such higher minimum capital Austrian credit institutions (as at unable to pay out the requirements will be imposed by February 19, 2009 the main guaranteed deposits or claims Once the aims of the the FMA immediately in cases shareholders are Raiffeisen in full, the protection schemes of recapitalization measures have where it is expected that other Zentralbank Österreich the other trade associations will been achieved, the State will measures will not be sufficient Aktiengesellschaft (27.04%), Erste be obliged to make dispose of its equity stakes to to ensure the proper recording Group Bank AG (19.03%), proportionate contributions to private investors. and limitation of risks as well as Unicredit Bank Austria AG cover the shortfall. In cases compliance with legal (18.51%), Hypo-Banken-Holding where the protection schemes There are, in principle, three regulations within due time. Gesellschaft.m.b.H. (12.66%), as a whole are unable to pay types of stabilisation measures Österreichische Volksbanken- out guaranteed deposits under the FinStaG: guarantees, State Ownership Aktiengesellschaft (11.77%) and (claims) in full, the protection recapitalisations and BAWAG P.S.K. (5.32%), 3- scheme originally concerned assumptions of liability. The The first and so far only Banken Beteiligung Gesellschaft must issue notes or, according following measures may be Austrian bank taken over by the m.b.H.(4.45%)). to the proposed stability taken by the Federal Minister of Austrian state is the public measures, take out a loan to Finance: sector lender Kommunalkredit OeCAG shall collect deposits from meet the remaining payment Austria AG previously owned by banks or insurance companies or obligations. The Federal (i) issue of guarantees for Volksbank AG (50,78%) and the raise funds on the inter-bank Minister of Finance may liabilities of banks or insurance Franco-Belgian group Dexia market and on-lend such funds to assume liability for such issue companies; (49%). The shares held by banks and insurance companies or loan. Dexia and Volksbank AG were in line with market conditions. (ii) assumption of liability vis-à- transferred to the Austrian state Recipient banks will have to pay The Austrian depositors’ vis banks or insurance for a total consideration of € 2. interest, taking into account an protection scheme has been companies; The Austrian state now holds adequate fee for state guarantees. amended with effect from 99.78% of Kommunalkredit To ensure the efficient October 1, 2008. Bank deposits (iii) granting of loans to banks or Austria AG. The Austrian organisation and market-oriented of natural persons will be insurance companies or the Association of Municipalities execution of fund raising and protected in their entirety until provision of own funds (Gemeindebund) remains a

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES lending, OeCAG together with December 31, 2009 (the (Eigenmittel) to the entity; shareholder with 0.22% of the Oesterreichische Kontrollbank protection scheme’s cover shares. (OeKB) has established a web- obligation was previously limited (iv) acquisition of shares based clearing and auction to an amount of €20,000 per (whether in a capital increase or platform. Planned auctions have depositary and bank). from existing shareholders) or already been conducted over the Following the Commission’s convertible bonds; and clearing platform. Results and proposal, the coverage level for further information are available bank deposits of natural (v) transfer of assets of the on the OeCAG website persons may be guaranteed up company by way of a merger (http://www.clearingbank.at to a maximum amount of pursuant to § 235 of the Stock /de/Seiten/default.aspx). €100,000 from January 1, 2010. Corporation Act (Aktiengesetz – “AktG”). All such measures In addition, the Federal Minister of For claims of small companies should earn a return in line with Finance will be entitled to (mainly partnerships and small market conditions. (i) guarantee liabilities of OeCAG corporations which meet the and (ii) assume liability for losses criteria of Section 221 (1) If there is a risk that the bank or incurred by OeCAG in connection Austrian Companies Act insurance company cannot fulfill with such arrangements for a (Unternehmensgesetzbuch – their obligations vis-à-vis their limited period of time. The IBSG UGB) the protection scheme’s creditors and the above does not specify any maximum cover obligation has been mentioned measures are not period of time for such state increased to the maximum sufficient or are not available in guarantees given under (i). The amount of €50,000 per due time, the Federal Minister of Austrian state has issued depositary and bank. The Finance shall, in consultation guarantees of up to € 4 billion for claims of all other creditors will with the Federal Chancellor, be OeCAG, which covers all losses continue to be limited to the authorized to expropriate the occurring on or before December maximum amount of €20,000 owners of the bank against 31, 2010 and resulting from per depositary and bank payment of an adequate transactions entered into on or (subject to further exemptions, compensation where required to before October 31, 2009. e.g. for “big” companies, claims protect the national economy are not guaranteed at all).For from severe disruption. A spate OeCAG will also be entitled to legal entities the scheme’s entity (Finanzmarktbeteiligung issue notes. Any issue may be cover obligation remains limited Aktiengesellschaft des Bundes guaranteed by the Austrian state. to 90 % of the guaranteed – FiMBAG) was set up to carry deposit, so that an amount of up out such recapitalization The beneficiaries of these services to € 45,000 is paid out to small measures. The FiMBAG is are credit institutions holding a companies and small indirectly owned by the Republic license pursuant to the Austrian partnerships, and an amount of of Austria. Banking Act (Bankwesengesetz – up to € 18,000 to other legal BWG) (including branches of entities (subject to further Such recapitalization measures foreign banks) and Austrian exemptions). may be provided by the state in insurance companies. Credit the form of participation capital institutions and insurance The deposit guarantee only (Partiziptaionskapital). From a companies rendering services in applies to deposits in EEA regulatory perspective currencies (e.g. not to deposits participation capital is treated as

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Austria by using the EEA single in US$). Tier 1 capital. The most passport regime will not benefit prominent deal is Erste Group from the IBSG. Bank's intended €2.7 billion capital injection in the form of The Federal Minister of Finance is participation capital. But also empowered to guarantee notes other Austrian Banks such as (according to § 1 para 1 no 10 Volksbank (up to a maximum BWG) issued by banks with a nominal amount of € 1 billion), maturity of up to three years, Raiffeisen Zentralbank under certain circumstances the Österreich AG (amounting to duration can be extended up to 5 approx. € 1.75 billion) and Hypo years. According to § 1 para 1 no Group Alpe Adria (in the amount 10 BWG banks authorized to of up to € 1.5 billion) announced perform banking activities may to make use of the state money. issue securities in order to invest However, none of those deals the proceeds in banking activities. has closed yet. Participation This provision does not apply to capital is treated as core Tier 1 Austrian insurance companies. capital for regulatory purposes. Its structure is, in principle, Under this scheme the Republic of similar to preference shares Austria provides specific without voting rights attached. guarantees for (i) single bond issues, (ii) bond issues under a The Commission debt issuance programme, (iii) communication on the bond issues under a medium term recapitalisation of financial note programme and (iv) issuance institutions in the current of notes under commercial paper financial crisis issued on programmes. December 5, 2008 (C(2008) 8259 final) sets out a certain The guarantees issued by the entry level price for Republic of Austria are recapitalisations measures. unconditional and irrevocable. Following this, it has to be Sample forms of these guarantees distinguished between can be downloaded from the fundamentally sound banks and website of the Federal Ministry of distressed banks. In case of Finance. As at February 21, fundamentally sound banks an 2009, notes issued by Erste Bank, average required rate of return Kommunalkredit Austria AG, of 9.3% on ordinary shares (e.g. Raiffeisen Zentralbank Österreich participation capital) relating to AG and ÖsterreichischeVolksbank Euro area banks is required. A have been guaranteed under this minimum average rate of 8% scheme. may apply if (i) the participation capital is repaid at 110% of its Obligations guaranteed by the face value and (ii) where the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Republic of Austria qualify for zero State capital injections are on risk weighting for capital adequacy equal terms with significant purposes pursuant to §§146ff participation (30% or more) of Solvability Regulation private investors (only one third (Solvabilitätsverordnung). This of the private investors may be applies for obligations existing shareholders). denominated in euros only. In such case, the distribution of The amount of single facilities dividends to existing issued under this scheme is not shareholders (Altaktionäre) is restricted, but the total issuing limited to 17.5% of distributable volume covered under this profits as long as the State scheme may not exceed €75 capital injection lasts. This billion, excluding payments on limitation will not apply if the coupons and expenses. The conditions at (i) and (ii) above Republic of Austria guarantees are met (redemption above face fresh notes issued until June 30, value and significant 2009 – an extension of this period participation of private is subject to prior approval of the investors). European Commission. Recapitalization measure for § 2 para 5 FinStaG will also apply distressed banks require an to such measures (providing for average rate of return of 10% possible conditions attached to with no payment of dividends. stability measures). The stability measures confer No claims of banks or insurance additional rights on the Austrian companies against the State may Financial Market Authority be assigned or pledged to third (Finanzmarktaufsicht – FMA), parties and shall be subject of an which will be authorized to lay attachment (Pfändung). Moreover, down rules pursuant to which the IBSG does not confer a right banks will be required to take on on banks or insurance companies additional funds that are suitable to claim any such stabilization for the current risk situation and measures from the state. that go beyond the statutory minimum requirements. The scheme is scheduled to expire by December 31, 2009. According to a regulation issued However, state guarantees issued by the Federal Minister of under the IBSG before this date Finance on October 30, 2008 will not be affected. the assumption of liability for notes issued by banks pursuant to the IBSG and stability measures pursuant to the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES FinStaG can be linked to corresponding, appropriate conditions. These conditions may relate to:

▪ the sustainability (Nachhaltigkeit) of the business model of the benefiting company;

▪ the allocation of funds provided to the benefiting company, with a particular view on the lending needs of small- and medium-sized companies and the provision of mortgage loans to private households;

▪ the remuneration of directors, employees and third parties retained for carrying out their tasks;

▪ minimum capital requirements of the benefiting company;

▪ the distribution of dividends;

▪ the preservation of jobs at the company benefiting from the stability measures;

▪ the avoidance of distortion of competition;

▪ the calculation and amount of interest/(guarantee) fees payable by the company receiving such funds;

▪ the scope of information to be provided by the benefiting company; and

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES ▪ the content of the declaration to be published by the directors and the supervisory board of the benefiting company (such declaration must also contain an undertaking to comply with such conditions).

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

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BELGIUM PURCHASES OF TROUBLED SPECIAL CENTRAL BANK RECAPITALIZATION FINANCIAL ASSETS OR GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES The Belgian Government has The Belgian Government has Rescue of Fortis: On October 27, 2008, the offered to guarantee the announced that it will guarantee Belgian Government announced wholesale funding of Belgian bank deposits of up to €100,000 Increase of capital in the Fortis that it will invest €3.5 billion into credit institutions. This is – an increase of €80,000. This Bank by the BelgianState in the KBC Groep in the form of Tier 1 subject to a satisfactory measure is applicable for one amount of €4.7 billion on capital securities. assessment of the Belgian credit year, but may be renewed. On September 29, 2008, which institution’s solvency and November 14, 2008, the Belgian brought the shareholding of the The agreement reached on payment of remuneration. The Government implemented the Belgian State to 49% of the October 27, 2008 and confirmed guarantee applies to any form of legal background for the capital. on December 5, 2008 was wholesale funding as long as the increase of the deposit The Belgian State bought the signed off and closed on transaction is entered into or guarantee. remaining 50% + one share of December 19, 2008. rolled over between October 8, Fortis Bank from Fortis Holding 2008 and October 31, 2009 and for a total consideration of On January 22, 2009, KBC its maturity is not beyond €4.7 billion in cash.1 A portfolio reached an agreement with the Flemish Regional Government October 31, 2011. of structured products with fair for a non-dilutive core capital value of €10.4 billion was injection of €2.0 billion (subject The Government has also transferred by Fortis Bank to a to approval of the qualification announced plans to guarantee separately-managed entity as core capital by the Belgian all new bank loans of “systemic” jointly owned by the Fortis financial sector regulator CBFA). Belgian banks, i.e., inter-bank Group (66%), the Belgian State The capital support will enable deposits, bonds and institutional (24%) and BNP Paribas (10%). investments. Banks will have to KBC to maintain its tier-1 ratio pay a fee for the guarantee. The Belgian Government for banking activities at reached an agreement with BNP approximately 10.5% (of which Paribas on the subsequent 8% is core tier-1). The terms transfer of 75% of Fortis Bank and conditions will be similar to SA/NV in exchange for new those of the core capital issue shares to be issued by BNP subscribed by the Belgian State 2 in December 2008. In addition, Paribas for a value of an agreement was reached for a €8.25 billion; the Belgian State stand-by (non-dilutive) core will continue to own the capital facility in the amount of remaining 25% of the company. €1.5 billion. If needed, KBC may draw on this facility to maintain BNP Paribas will acquire 100% capital at adequate levels in the of Fortis Insurance Belgium for a future. total consideration of €5.73 billion in cash, subject to final closing adjustment. The Government of the Netherlands acquired Fortis Bank Nederland

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PURCHASES OF TROUBLED SPECIAL CENTRAL BANK RECAPITALIZATION FINANCIAL ASSETS OR GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES INSTITUTIONS OTHER MEASURES (Holding) N.V., including Fortis’s interest in ABN AMRO and other operations, for a total consideration of €16.8 billion.

Dexia S.A.: The Belgian, French and Luxembourg Governments and other investors invested a total of €6.4 billion in Dexia,3 a specialist in lending to local governments in Europe. Dexia announced on October 20, 2008 that it would seek regulatory approval to create a balance sheet for its holding company and merge its three national balance sheets into one, indicating that it is intent on avoiding a break-up along national lines.

Following the authorization of the European Commission, the Belgian, French and Luxembourg Governments signed, on November 19, 2008, an agreement settling the modalities of the temporary guarantee plan granted by the three States on October 9, 2008.

1 More than 2,000 minority shareholders of Fortis Holding have challenged, before the Belgian courts, the validity of the decision of the board of directors of Fortis Holding to sell the shares in Fortis Bank to the Belgian State. The main objective of their legal action was to suspend the sale to the Belgian State. On November 18, 2008, the Commercial Tribunal of Brussels rejected such legal action insofar as it challenged the validity of the board of directors’ decision, but appointed an expert panel to assess if the sale price is ‘adequate’. Some shareholders have appealed this decision and the Court of Appeal of Brussels decided on December 12, 2008, to suspend the transfer of Fortis Bank and Fortis Insurance Belgium to BNP until a general meeting of shareholders votes on these transfers, on February 12, 2009 at the latest. As a result of this decision, until February 12, 2009, Fortis Bank will remain in the hands of the Belgian State - which cannot transfer the 50% plus one share to anyone, and Fortis Insurance Belgium will remain in Fortis Holding. The transfer of the portfolio of structured assets is also suspended. Notwithstanding, BNP must maintain its inter-bank relationship with Fortis Bank. An expert panel, appointed by the Court of Appeal, will assess whether the sale price is adequate considering market conditions. The Belgian Government is currently considering, based on its counsels’ advice, which step to take next. The expert panel has started its work and a first draft report is expected on January 30, 2009. Following the decision of the Court of Appeal, an extraordinary shareholders meeting has been convened by the board of directors of Fortis SA to be held on February 11, 2009 in Brussels. The shareholders will vote on (i) the appointment of new directors,(ii) the sale of Fortis Bank Nederland and Fortis Verzekeringen Nederland to the State of

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the Netherlands, (iii) the sale of 50%+1 share of Fortis Bank SA to the Belgian State, followed by the subsequent sale by the Belgian State to BNP Paribas of these shares, and the incorporation of a newco with the structured products of Fortis Bank and (iv) the sale of Fortis Insurance Belgium NV by Fortis Holding NV to BNP Paribas. At the general shareholders’meeting of Fortis held on February 11, 2009, the shareholders voted against the sale to BNP Paribas and the sale to the Government of The Netherlands. Consequently, negociation have been restarted and are currently still going on.

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

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

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

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES modifications were announced increased from 25% to 30% the on October 30.14 rate of mandatory application of resources in the agriculture and On November 25, 2008, the animal husbandry sectors, the BCB announced new changes so-called rural eligibilities to rules regarding the (elegibilidades rurais). compulsory deposits (private Therefore, banks shall have an and public banks that invest additional credit of R$ 4.5 billion funds in BNDES’ inter-bank to finance these sectors. certificate of deposits (“CDI”) will be able to deduct such amount Additionally, the following from the compulsory deposits), measures were taken: with an estimate of an additional acceleration of Banco do Brasil R$ 6.2 billion to the BNDES.15 S.A. disbursements; additional resources from several funds, On December 18, 2008, the totalling R$ 5 billion; increase of CMN amended the by-laws of the directed credit with reserves, the FGC16, allowing the FGC to totalling R$ 5.5 billion; increase invest a maximum of 50% of its of the rural savings from 65% to net worth in the acquisition of 70%, totalling R$ 2.5 billion; credit portfolios of small and permission for the indirect medium-sized banks. Before this financing of producers by means measure, such acquisitions by of purchasing agro industries FGC were limited to 20% of its and trading CPRs (Rural net worth. Product Bonds); and grant a minimum price for the In order to stimulate the acquisition of products (stock acquisition of small-sized banks’ formation – AGE), entitlement to credit portfolios by larger producers (difference among financial institutions on market and minimum prices) December 26, 2008, the CMN and credits for enacted Resolution No. commercialization for the next 3,67317, establishing that the crop. new accounting rules for the On November 26, 2008, the registration of financial assets by National Monetary Council banks will only be valid as of created special credit facilities January 1, 2010 (previously for the agriculture and animal such rules were to be valid as of husbandry sectors, for the January 1, 2009). The CMN payment of up to 40% of the understands that the current instalments of BNDES’ loans accounting rules are simpler and due in 2008. (Amount of credit therefore stimulate the facility: R$ 500 million).16 acquisition of risky credit portfolios of small banks by Investments and Production

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

On December 30, 2008 (in an Aiming at the financing of extraordinary meeting), the investments and production, the CMN decided to make changes following measures were taken: in the calculation of the financial the maintenance of the BNDES institutions’ Reference Networth goal of R$ 90 billion in credit; (Patrimônio de Referência) keeping the long-term interest relating to leasing transactions. rate (“TJLP”) at 6.25%; and With this measure, CMN granting the Merchant Marine expects an estimated impact of Fund an additional R$ 10 billion. R$ 40 billion into the economy. On January 22, 2009, the On January 21, 2009, the BCB Federal Government was Monetary Policy Committee authorized, by means of (“COPOM”) reduced the SELIC Provisional Measure No. 45325, basic interest rate from 13.75% to grant additional funds in an to 12.75% per year. COPOM amount of up to R$ 100 billion to expects to stimulate the the BNDES, for its lending economy by such reduction of activities. It is an attempt to the interest rate. ensure cheaper credit to companies, enabling them to keep their investment plans (i.e. having Petrobras keep its investment plans of R$ 20 billion for the next few years).

Civil Construction Financing:

A Working Capital Line of R$ 3 billion, of the Brazilian Federal Savings Bank has been adopted.

On November 7, 2008, the Brazilian Government enacted Provisional Measure No. 445,6 which authorizes the Brazilian Federal Savings Bank to use part of its dividends resulting from its profits in years 2008 to 2010 in a fund destined to assist the construction industry in

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

Auto Industry:

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

In addition to the abovementioned measures, the Brazilian Government enacted Decree No. 6,696 on December 17, 200819, establishing the reduction of PI rates (excise tax) levied on cars and trucks. The new rates will be valid until March 31, 2009.

Naval Industry:

On December 19, 2008, the Brazilian Government enacted Decree No. 6,70420, which suspended the levy of IPI (excise tax) on the acquisition, made by Brazilian naval shipyards, of materials and equipments, with the purpose of building, maintaining, modernizing, converting or repairing of ships.

Small- and Medium-Sized Companies:

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

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

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

On February 12, 2009, the State of São Paulo Government announced its plans to “unburden” the private sector, specially benefiting micro and small companies. Among such measures, the easier access to credit from state entities (without guarantees requirements) and the reduction of financing interest rate are pointed out. Additionally, the State of São Paulo Government postponed until December 31, 2009 the reduction of ICMS tax for some sectors (such as food, cosmetics, etc.).

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

The payment dates of the following taxes were postponed:

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES IPI (tax on manufactured products) payment date postponed from the 15th to 25th; PIS/COFINS (social contributions) payment date postponed from the 20th to day 25th; and Withholding Income Tax payment date postponed from the 10th to the 20th. Furthermore, there was an acceleration of the tax credits devolution.

Changes to Income Tax:

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

Changes to Tax on Financial Transactions:

On December 12, 2008, Decree No. 6.691/08 provided for the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES reduction from 3% to 1.5% per annum of rate of the Tax on Financial Transactions (“IOF”) levied on loans and financings granted to individuals.17

Minimum Wage

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

Infra-Structure

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

1 For Resolução CMN No. 3251/2004, see https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=104212266&method=detalharNormativo. For Resolução CMN No. 3400/2006, see https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=106276675&method=detalharNormativo. 2 For Provisional Measure No. 442, see: http://www.planalto.gov.br/ccivil_03/_Ato2007-2010/2008/Mpv/442.htm - to be voted in the Senate. Also see Resolução Bacen No. 3622 https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108098613&method=detalharNormativo. 3 Circular Bacen No. 3414. See https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108100557&method=detalharNormativo. 4 For Provisional Measure No. 443, see: http://www.planalto.gov.br/ccivil/_Ato2007-2010/2008/Mpv/443.htm. 5 Circular Bacen No. 3417/2008. See https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108105748&method=detalharNormativo. 6 For Provisional Measure No. 445, see https://www.planalto.gov.br/ccivil_03/_Ato2007-2010/2008/Mpv/445.htm. 7 The BCB had increased the percentage of the compulsory reserve deposits relating to leasing operations, starting at 5% in May, 2008 up to 25% in January 2009 (estimated). After the crisis, the BCB kept the compulsory reserve deposits relating to leasing transactions on a 15% rate, with expectation for future increases only in January, 2009. 8 Circular Bacen No. 3405/2008. See https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108093173&method=detalharNormativo. 9 Circular Bacen No. 3408/2008. See https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108098141&method=detalharNormativo. 10 Circular Bacen No. 3412/2008. See https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108099445&method=detalharNormativo. 11 Circular Bacen No. 3413/2008. See https://www3.bcb.gov.br/normativo/detalharNormativo.do?N=108099939&method=detalharNormativo.

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

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

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

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

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CANADA SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES The Canadian Lenders The Canada Deposit Insurance In coordination with other major The 2009 Federal Budget On October 10, 2008, the On November 11, 2008, Assurance Facility announced Corporation (“CDIC”), a federal central banks, Canada’s central proposed a framework for the Ministry of Finance announced a changes were announced to the on October 23, 2008, that it will Crown corporation, insures bank, the Bank of Canada, Canadian Government to inject program to provide additional regulatory capital requirements insure certain categories of deposits at member institutions, lowered its key lending rate by capital directly into federally liquidity to Canadian financial for banks and other federally- senior unsecured wholesale which include most Canadian 0.5% on October 8, 2008, 0.25% regulated financial institutions. institutions through the purchase regulated, deposit-taking debt with a term to maturity of at chartered banks, as well as on October 21, 2008 and 0.75% Proposed amendments to the of up to $25 billion of mortgage- institutions. Debt covered by the least three months. Institutions various other deposit-taking on December 9, 2008. This federal Financial Administration backed securities. On Canadian Lenders Assurance eligible to participate in the institutions. The CDIC protects was followed by a further 0.5% Act authorize such capital November 12, 2008, the Ministry Facility and similar foreign facility include (i) deposit-taking funds in savings and checking rate cut on January 20, 2009, injections. of Finance announced that the programs can now be assigned financial institutions accounts, and term deposits leaving the rate at 1.00%. purchase program would be the same risk weighting for incorporated, amalgamated or with a term of less than five increased from C$25 billion to regulatory capital purposes as continued under the federal years, for as much as The Bank of Canada has C$75 billion. The size of the the debt of the sovereign Bank Act or Trust and Loan C$100,000 (US$ 91,470). increased the amount of liquidity program was further increased guarantor during the term of the Companies Act, (ii) associations it makes available to financial to C$125 billion as part of the guarantee even if that term is and central cooperative The 2009 Federal Budget tabled institutions, has expanded the 2009 Federal Budget. less than the term to maturity of societies regulated under the on January 27, 2009 proposed scope of institutions eligible to the debt. Also, an additional federal Cooperative Credit to provide the CDIC with greater participate in its liquidity facilities Since the underlying mortgages 10% percent of Tier 1 capital Associations Act, and (iii) on the flexibility to enhance its ability to and has expanded the types of already carry guarantees may be composed of qualifying approval of the Minister of safeguard financial stability in collateral it accepts backed by the Canadian preferred shares (the former Finance, provincially regulated Canada including the following: Government, there is no maximum of 30% has been central cooperative credit incremental risk to the federal increased to 40%). societies. This insurance will ▪ allowing the CDIC to establish Government in the purchase of cover principal and interest a bridge institution to preserve these securities. The Canadian Government payments on eligible debt critical functions and help partnered with the governments instruments for up to three years support financial stability in the The purchases are being of Ontario, Alberta and Quebec from the date of issue. event a CDIC member is no undertaken through a series of to provide a senior funding longer viable; competitive auctions. facility to support the January The facility will charge premiums Approximately C$50 billion of 21, 2009 closing of the C$32 that are intended to approximate ▪ increasing the CDIC’s mortgage-backed securities billion restructuring of non-bank commercial terms. The facility borrowing limit from C$6 billion have been purchased to date. sponsored asset-backed will charge a base annualized to C$15 billion to reflect the commercial paper. Media premium of 110 basis points (the growth of insured deposits; and reports indicate that the size of previously announced premium the senior funding facility was in of 135 basis points was reduced ▪ granting the Minister of the range of C$3.5 - C$4.5 in an effort to make the program Finance the power to direct the billion. more competitive with similar CDIC to take specific action to foreign programs), with prevent adverse effects on The 2009 Federal Budget surcharges depending on the financial stability. contained a number of other credit rating of the issuing measures designed to improve institution and an additional access to financing, strengthen surcharge for debt that is not Canada’s financial system and denominated in Canadian stimulate the economy including

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES dollars (on November 13, 2008, the following: the Canadian Government announced a temporary waiver ▪ committing C$13 billion in of the surcharge). The additional financing by Canadian Government has increasing the capacities of extended the period for issuing certain financial Crown guaranteed instruments from corporations including Export April 30, 2009 as originally Development Canada and the announced to December 31, Business Development Bank of 2009. There is a limit on the Canada; amount of insurance available to each institution, based on the ▪ creating the C$12 billion amount of wholesale debt of the Canadian Secured Credit institution maturing in the next Facility to support financing of six months, and on the amount equipment and vehicles by of deposits held by the businesses and consumers; institution. ▪ establishing the Canadian Life The Ministry of Finance has Insurers Assurance Facility to indicated that the facility was guarantee wholesale term introduced in order to ensure borrowings by life insurers by that Canadian institutions are way of a model similar to the not disadvantaged in global Canadian Lenders Assurance capital markets relative to banks Facility; in other jurisdictions that have access to a government ▪ providing approximately C$8 guarantee. billion to stimulate housing construction and C$12 billion in new infrastructure funding over a period of two years; and

▪ tax cuts totalling C$20 billion over the next six years.

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DENMARK SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Bank Aid Package I: Almost all Danish banks are On October 24, 2008, the Bank Aid Package I: The social pension fund (Den On December 6, 2008 the participating, including Danske, Danish Central Bank Sociale Pensionsfond) has been president of the Danish Central The Bank Aid Package I is Nordea, Jyske and Sydbank (the unexpectedly raised the The Danish Government will set given a mandate to purchase up Bank, Nils Bernstein, spoke at designed to guarantee creditors four largest banks by market benchmark lending rate by half a up a new liquidation company to DKK 22 billion one-year the annual meeting of the and depositors in distressed capitalisation in Denmark). percentage point to an eight- that will benefit from a State property mortgage bonds at the Danish Bankers’ Association on banks. The package is regulated Foreign branches of Danish year high of 5.50%, showing that guarantee which will take on December 2008 auction. the topic of economic initiatives through the Financial Stability banks may be covered if local policymakers will defend the defaulted obligations of a in the banking sector. Act which requires banks to be banks are subject to a similar Krone even as the economy participating bank. The rationale was that the state- members of the DPB in order to scheme. risks entering a recession. guaranteed mortgage bonds for In the short term, there are talks participate in the newly The purpose of the liquidation social housing were expiring, about a new financial aid established guarantee scheme. Denmark has guaranteed all The Danish Central Bank is company is to ensure the and as the State bears the package to banks since even bank deposits of members of the issuing up to DKK 60 billion in covering of all claims by interest rate risk on social banks that are fundamentally Det Private Beredskab: DPB, so that all claims by Danish treasury bonds with a “depositors and other ordinary housing, the Social Pension healthy are struggling to obtain “depositors and other ordinary 4.5% coupon aimed at a creditors” where the distressed Fund might as well take part in liquidity. Mr. Bernstein claimed DPB (Det Private Beredskab) is creditors” are covered. balanced, low-risk investment bank is a member of the DPB. It the auction. that if such a package is not a private banking association for Danish pension funds. will then found a subsidiary agreed upon, banks will be whose purpose is to help wind Some niche banks have chosen whose task will be to wind down This had an immediate effect forced to reduce activities and down distressed banks, savings not to participate in the DPB and On November 7, 2008, the the company by transferring its and the interest rate of the one- thereby reduce their balances in banks and co-operative banks, the guarantee scheme. These Danish Central Bank followed assets and liabilities to a buyer. year property mortgage bond order to fulfil the solvency as an alternative to bankruptcy. are: the ECB and cut the benchmark If the DPB receives funds in the fell. Many private homeowners demand. The reason for this The association is non-profit. lending rate by 50 basis points. form of liquidation proceeds, etc. enjoyed a spin-off benefit from rationale, he explained, is that ▪ DnB Nord Bank A/S when winding down a bank, it this measure. since 2007, Danish banks have According to Danish law, an On December 5, 2008, the must repay the DPB members increased their debt ratio from 7 association becomes a legal ▪ Dansk Autoriseret Danish Central Bank followed proportionately to their Roskilde Bank: to 9. In order to bring the debt entity after the founding general Markedsplads A/S the ECB and cut the benchmark respective contribution ratio back to 7, banks would assembly has been held. The lending rate by 75 basis points, commitment. When a bankruptcy of the have to reduce loans by 25%. ▪ Ekspresbank A/S legal relationship between its bringing the current rate down to Roskilde Bank was threatening, Many countries have carried out members is defined in the 4.25%. Members of the DPB will the Danish Central Bank and the ▪ Lægernes Pensionsbank A/S such recapitalization measures articles of the association. contribute DKK 7.5 billion DPB decided to take over the and have increased the core On December 19, 2008 the (c.€1 billion) per annum, payable bank. Only the healthy parts of capital from 9% to 11%. The The top authority of the DPB is ▪ Leasing Fyn og Factoring Danish Central Bank cut the monthly as a fee for the the bank’s activities were Danish Central Bank therefore the board of representatives Bankaktieselskab benchmark lending rate by 50 guarantee. acquired, in order to be sold in believes that a temporary which decides if the DPB is to basis points due to pieces later on. provision of core capital to participate in the winding down In addition, some small savings strengthening of the Krone. Additionally, DPB will initially Danish banks will be necessary. of a distressed bank. This is banks and many small co- Nordea Bank, Spar Nord Bank provide DKK 10 billion to the Mr. Bernstein recommends that normally done with a marginal operative banks have equally On January 15, 2009 the Danish and Arbejdernes Landsbank, liquidation company and is also such a scheme be implemented majority. The board of chosen not to participate. Central Bank followed the ECB respectively acquired nine, subject to a further over the next year, but with representatives is the same as and cut the benchmark lending seven and five branches. With the exception of Swedish DKK 10 billion to meet losses, careful reflection as to its terms that of the Danish Banker’s rate by 50 basis points plus an Handelsbanken and Icelandic providing for a maximum of and conditions. Association (Finansrådet). The additional 25 basis points, The remaining part of the Straumur-Burdaras Investment DKK 35 billion loss to the DPB DPB is generally managed by thereby bringing the rate to the original bank has been declared Bank, all other foreign banks over the two-year term. Mr. Bernstein also addressed the executive committee. The current 3.00%. bankrupt. with branches in Denmark have the correlation between the general assembly is held Any losses in excess of the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES annually. opted not to participate. Over a 3 month time period the funds provided by DPB will be Bank Trelleborg: already existing guarantee Danish Central Bank has met by the State. scheme and the potential of a In order to be eligible for lowered the benchmark lending Sydbank took over Bank new financial aid package. Such participation in the guarantee rate from 5.50% to 3.30%, which Bank Aid Package II: Trelleborg. This takeover is an aid package would lower the scheme, banks must have a indicates a will to stimulate the subject to a multi-party lawsuit risk of the State and the DPB banking license and be a growth and to follow the lead of The purpose of the package is launched by a group of and will limit the damage for member of the DPB. the ECB. to ensure that financial stockholders that demanded a which the State and the DPB are institutions have access to higher share price. liable. Members of the DPB are liable The strengthening of the Krone enough liquidity. Such measures for their contribution, which is gave the Danish Central Bank are needed in order to cope with Ringkjoebing The suggestion has been the fixed by reference to each room for this interest rate cut but the financial markets. The Bank/Bonusbanken: inspiration for new legislation, bank’s core capital. If existing an interest rate differential of package is regulated by the Act commonly known as Bank Aid members are to withdraw from 1.00% continues to exist of State Capital Injection to Vestjysk Bank took over Package II. Please see the the DPB, they are still liable until between Denmark and the Credit Institutions. Bonusbanken, which had lost all column “recapitalization the end of a five-year notice EURO-countries, mainly due to of its equity capital. The same measures” for more information. period. The liability can be the Danish fixed exchange rate The Danish act regarding day, Vestjysk Bank merged with collected by the executive policy in order to protect the financial institutions requires Ringkjoebing Bank, with the committee if the board of Krone. compliance with the stated former being the continuing representatives has decided to solvency demand, with which company. take over a distressed company. some financial institutions were Such liabilities are earmarked to having difficulties with Forstædernes Bank: help distressed banks. Members complying. cannot be liable for more than Nykredit Realkredit took over their contribution commitment. This recent aid package gives Forstædernes Bank. the Danish State authority to Up until October 13, 2008, inject DKK 100 billion (c.€ 13 Spar Mors: current DPB members could billion) in troubled financial Morsø Bank took over the elect not to be part of the institutions; DKK 75 billion (c.€ Saving Bank, Spar Mors. scheme and other banks, 10 billion) to the banking sector and DKK 25 billion (c.€ 3 billion) including Danish branches of Lokalbanken: foreign banks, could join the to the mortgage credit sector. DPB and thus the guarantee Those figures are based upon Handelsbanken took over scheme. There is a five-year the participation of all financial Lokalbanken. notice if an existing member institutions that are in need of wishes to withdraw from the capital. EBH Bank: DPB. The capital is provided as hybrid The DPB took over EBH Bank The guarantee will cover core capital, which is defined as since it was no longer capable of creditors of the participating a loan provided by the State. fulfilling the solvency demands banks including holders of The State requires an average set by the Danish FSA. Assets senior unsecured debt. interest rate on return of 10%. and liabilities of the distressed Legislation, which has now been The individual interest rate is bank were transferred to the passed, has confirmed that both calculated individually with the DPB, who will wind down the subordinated debt (Tier 1 and rating of the financial institution

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Tier 2) and covered bonds are as a factor. bank and its activities. excluded from the guarantee scheme. Financial institutions that apply Fionia Bank: for capital injections must have a Banks participating in the core capital percentage of 12% Fionia Bank and the State have guarantee scheme may not for afterwards. This obligation is to entered into a framework the duration of scheme (until ensure a healthy financial agreement regarding the December 31, 2010 with a sturdiness in order to withstand transfer of the banking activities possibility of prolongation): losses in the years to come and in their present form to the to maintain a reasonable loan company “Financial Stability a. pay dividends; portfolio. A/S”. This company will be founded and owned by Fionia b. set up new share buy-back Bank but controlled by the State. programs; The shareholders will remain in Fionia Bank. c. establish new share option programs or extend or renew The Managing Director of Fionia existing share option programs; Bank explained that the or operation is not part of liquidation, but a strengthening d. give notice to wave the of the bank’s activities. scheme. Fionia Bank realized that the Furthermore, participating banks solvency requirement would be must sign a statement too great if the bank continued in authorising the scheme to sell its original form. By transferring banking activities to a buyer the banking activities and designated by the scheme. receiving a capital injection of DKK 1 billion (c.€ 130 million), For this reason, some Danish the new bank is able to continue branches of foreign banks have its operations. elected not to participate.

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ESTONIA SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES The Government more than doubled its bank deposit guarantee to €50,000 (US$ 68,000) in line with other European Union member states and introduced an investment pay-out guarantee up to 90% of the investment to be paid out, but not more than €20,000 per investor in one investment company.

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

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

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

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

Various Financial Supporting Measures:

On November 18, 2008, the Government proposed a corporate finance supporting package, including various measures to improve financing options especially for small- and medium-sized enterprises (“SME”). The proposal will increase financial resources for export companies by introducing a new refinancing model, where Finnish Export Credit Ltd in cooperation with domestic or international banks would grant long-term credit to Finnish exporters. The arrangement will

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES be temporary, valid until the end of 2010 and worth €1.2 billion. In addition, the maximum liability for export securities granted by the State will be raised from €7.9 billion to €10 billion and the maximum amount of interest equalization agreements and offers will be increased from €5 to €6 billion. The tasks of the State’s specialized financing company, Finnvera plc, will be increased by granting it a right to gather assets for export finance where the maximum amount of unpaid debts contracted by Finnvera would be increased from €1.2 billion to €3.1 billion. Finnvera’s powers to grant new loans and guarantees will be increased to 600 million as the amount of unpaid debts will be €3.2 billion. The amendments to the acts regarding these safeguarding measures were passed on December 30, 2008.

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

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

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES inject liquidity into the inter-bank green light for a second tranche December 2009. debt market and financial of French capitalization institutions to refinance measures. This second tranche The French state will ensure themselves. will amount to €11 billion worth these undertakings are kept and of preference shares or hybrid will make public, on a monthly Moreover, on an exceptional securities. basis, the amount of outstanding basis and in particular in loans of the participating banks. emergency cases, the French Beyond the global follow-up of State may directly guarantee the commitment undertaken by securities issued by financial the banks, the French state shall institutions, provided that the oversee that the measures that French State is assured are adopted are then properly sufficient collateral. implemented in the field, in particular at the level of the The State guarantee will be corporations. made available at commercial rates for debt securities issued The French President has by the SFEF or, in emergency appointed a “credit mediator” cases, by financial institutions in with the minister of economy, distress, before December 31, industry and employment. 2009, and with maturities of up to five years. A corporation that is facing a financing or cash problem and All the guarantees made that cannot find a solution may available by the new law refer the matter to the mediator. (including the recapitalization The mediator has already measures and the Dexia Group received 1,200 corporation guarantee program) shall not requests, 600 of which are exceed €360 billion. According already under investigation with to the French Ministry of a possibility of mediation. Finance, €320 billion will benefit the SFEF and Dexia. Regional commissions for the financing of the economy On October 23, 2008 and on (commissions départementales October 30, 2008, the French de financement de l’économie) Government guaranteed the have been set up by the prefects securities issued or those to be (préfets) and ensure the follow- issued by the SFEF for a up of the financing of the maximum amount of €5 billion economy in the field, with the and €25 billion, respectively. On local economic organisations. November 12, 2008, the SFEF announced the completion of the first tranche of its issuance program for €5 billion (coupon of

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES 3.5%, redeemable in 2011) and on December 2, 2008, the issuance of its second tranche for €6 billion (coupon of 3.11%, redeemable in 2010).

The SFEF is planning to raise €25 billion worth of securities during the first quarter of 2009 and the same amount during the second quarter. In 2009, €70 billion worth of securities could be issued, including securities denominated in foreign currencies (Source: AGEFI, December 2, 2008).

On January 14, 2009, the French Government granted its guarantee in relation with US dollar-denominated securities to be issued by the SFEF before April 30, 2009, in an amount of US$ 10 billion.

On January 22, 2009, the SFEF issued US-dollar denominated securities in an amount of US$ 6 billion.

On February 3, 2009, the SFEF raised €6 billion with an interest rate of 2.305% (i.e., 9 points abover the average swap rate) and, on February 18, 2009, it raised €5.5 billion with an interest rate of 2.082% (i.e., 45 points above the average swap rate).

A total of €33.1 billion has been raised by the SFEF since its incorporation.

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES On February 6, 2009, the French State issued a first demand guarantee to the SFEF for the issuance of up to €30 billion and $20 billion worth of debt securities.

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

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SPECIAL CENTRAL BANK ASSISTANCE RECAPITALIZATION ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES MEASURES MEASURES INSTITUTIONS OTHER MEASURES Guarantees: repealed. scheme was approved by the agreement with SoFFin according to sector companies and its European Commission on which SoFFin will provide subsidiaries, and receivables or The SoFFin may guarantee debt October 27, 2008, as modified Commerzbank with capital in the form financial instruments owned by instruments and liabilities, each by a communication from the of silent participation instruments (Tier financial sector companies and with a maturity of up to 36 months, Commission on December 5, 1 eligible) of €8.2 billion (increasing its subsidiaries. An issued by financial sector 2008. With respect to the Commerzbank’s core capital ratio (Tier expropriation shall only be companies after October 17, 2008 consideration, the European 1) to 11.2%) and guarantees for the permissible as ultima ratio and before December 31, 2009. Commission established an issuance of debt instruments of up to measure to preserve the indicative corridor for interest €15 billion. On December 13, 2008, stability of financial markets Guarantees shall expire no later rates of 7% on preferred the European Commission confirmed and against payment of an than December 31, 2012. An shares with features similar to that the terms of the Commerzbank adequate compensation as aggregate amount of €400 billion those of subordinated debt and recapitalization are in line with the further defined in the Rescue is available for such guarantees. an average rate of return of Commission’s requirements for an Takeover Act. The right to 9.3% on ordinary shares for adequate compensation. initiate expropriation measures Guarantees shall generally be the recapitalization of shall expire on June 30, 2009. issued in the form of guarantees fundamentally sound banks. on first demand (Garantie auf Commerzbank has agreed to pay to Economic Stimulus Package erstes Anfordern) and shall Proposed New Legislation: SoFFin a coupon of 9% p.a. on the II: generally only be granted if the silent participation, plus a step-up in On February 20, 2009, a concerned financial sector On February 18, 2009, the years in which Commerzbank pays a number of various economic company is equipped with German Government adopted dividend. The silent participation is stimulus measures known as adequate funds (angemessene the proposed bill of the expected to qualify as Tier 1 capital. Economic Stimulus Package II Eigenmittelausstattung). Supplementary Financial For the guarantee Commerzbank has (Konjunkturpaket II) have been According to SoFFin, a core Markets Stabilization Act to pay a commitment fee of 0.1% p.a. adopted by the German capital ratio of 8% is considered (Finanzmarktstabilisierungs- on the undrawn facilities. A fee of Parliament. Part of such adequate. ergänzungsgesetz). The 0.5% p.a. will be charged on package is a loan and Supplementary Financial guaranteed interest-bearing debt guarantee program in an SoFFin shall receive adequate Markets Stabilization Act will securities issued with a maturity of up aggregate volume of €100 consideration for the granting of amend, among others, the to 12 months. Maturities over one year billion mainly targeted to guarantees, which will generally Stabilization Act, and further will be subject to a fee of companies outside of the consist of a certain percentage of modifies German corporate approximately 0.95% p.a. financial sector. The program the maximum guarantee amount and takeover law to facilitate supplements a prior program reflecting the default risk plus a recapitalization measures. known as Economic Stimulus margin.4 On January 8, 2009, Commerzbank announced that SoFFin intends to Package I consisting of 15 provide additional equity totalling €10 different elements and a The scheme does not provide volume of €32 billion. German banks with a blanket billion. By means of a capital increase, guarantee, but rather permits Commerzbank will issue approx. 295 SoFFin to issue guarantees on a million ordinary shares to SoFFin at a case-by-case basis. price of €6 per share . After closing of the transaction, SoFFin will hold 25% plus one share in Commerzbank. In addition, SoFFin will provide additional

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SPECIAL CENTRAL BANK ASSISTANCE RECAPITALIZATION ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES MEASURES MEASURES INSTITUTIONS OTHER MEASURES Proposed New Legislation: capital to Commerzbank in the form of a second silent participation of €8.2 On February 18, 2009, the billion. The terms of the silent German Government presented participation will be similar to those the proposed bill of a offered in December 2008. Supplementary Financial Markets Stabilization Act (Finanzmarktstabilisierungs- On January 9, 2008, Commerzbank ergänzungsgesetz) amending, placed the first government- among others, the Stabilization guaranteed bond in Germany. The Act and making several benchmark bond has a volume of €5 adjustments, clarifications and billion. The bond has a maturity of 3 simplifications to the current years and a coupon of 2.75% p.a. framework of assistance measures. Hypo Real Estate: Among others, with respect to For information on the special guarantees of bank debt, the emergency liquidity support package, maximum term of guarantees see “Other Measures”. provided by SoFFin shall be extended from 36 months to 60 On October 29, 2008, Hypo Real months. Estate announced that it plans to submit an application to SoFFin for additional comprehensive support, including potential recapitalization measures. Such announcement was repeated on December 9, 2008.

On November 21, 2008, SoFFin granted to Hypo Real Estate Group a framework guarantee in an amount of €20 billion to cover the issuance of debt securities maturing by January 15, 2009. On December 9, 2008, this guarantee framework was increased by €10 billion to an aggregate amount of up to €30 billion. On January 12, 2009, SoFFin extended its framework guarantee in the total amount of €30 billion until April 15, 2008. The pro-rata commitment fee remains unchanged,

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SPECIAL CENTRAL BANK ASSISTANCE RECAPITALIZATION ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES MEASURES MEASURES INSTITUTIONS OTHER MEASURES and the fee for guarantees drawn will be 0.5% p.a. On January 20, 2009, SoFFin extended its framework guarantee to Hypo Real Estate by an additional €12 billion to the aggregate guarantee amount of €42 billion. Hypo Real Estate can use the additional guarantees to cover the issuance of debt securities maturing by June 12, 2009. The Group will pay to SoFFin a pro-rata commitment fee of 0.1% of the undrawn portion of the framework guarantee. The fee for guarantees drawn will be 0.5% p.a.

HSH Nordbank:

On November 21, 2008, HSH Nordbank and SoFFin entered into an agreement according to which SoFFin will provide HSH Nordbank with liquidity guarantees of up to €30 billion. On January 12, 2009, the bank placed a government-guaranteed bond with a volume of €3 billion. The bond has a maturity of 3 years and a coupon of 2.75% p.a.

According to press articles, the SoFFin rejected to provide HSH Nordbank with additional assistance measures. According to such press articles, HSH Nordbank has not fulfilled SoFFin's requirement for assistance measures including a core capital ratio of 7% and did not provide a satisfactory business plan for its future strategy. On February 24, 2009, the City of Hamburg and the Government of Schleswig-Holstein agreed to provide HSH Nordbank with €3 billion of fresh capital and guarantees amounting to

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SPECIAL CENTRAL BANK ASSISTANCE RECAPITALIZATION ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES MEASURES MEASURES INSTITUTIONS OTHER MEASURES up to €10 billion.

Hypo Real Estate:

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

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

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

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

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

IKB Deutsche Industriebank AG:

On December 22, 2008, SoFFin authorized guarantees to IKB in an amount of up to €5 billion to guarantee the repayment of bonds to be issued by IKB. On January 19, 2009, the bank placed a government-guaranteed bond with a volume of €2 billion. The bond has a maturity of 3 years and a coupon of 2.875% p.a.

LBBW:

LBBW is looking into a guarantee framework of between €15 20 billion to be provided by SoFFin or the owners as a funding reserve.

Nord/LB:

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

Sicherungseinrichtungsgesellschaft deutscher Banken:

SoFFin guaranteed a bond in the volume of €6.7 billion issued by the

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SPECIAL CENTRAL BANK ASSISTANCE RECAPITALIZATION ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES MEASURES MEASURES INSTITUTIONS OTHER MEASURES Sicherungseinrichtungs-gesellschaft deutscher Banken mbH (protection company of German banks, “SdB“). The SdB was set-up by German private banks to provide the German deposit insurance and investors protection schemes with a loan to compensate customers of the German banking subsidiary of insolvent Lehman Brothers.

VW-Bank:

According to press articles, VW Bank GmbH, the banking subsidiary of German car maker Volkswagen AG, will receive guarantees by SoFFin of up to €2 billion. VW Bank GmbH is the first banking subsidiary of car producers in Germany to receive SoFFin support.

WestLB:

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

Other Institutions:

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

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1 On October 17, 2008, the Stabilization Act was published in the Federal Law Gazette (Bundesgesetzblatt) (BGBl. I, p. 1981). The main purpose of the Stabilization Act is to restore and sustain confidence and liquidity in the German financial market. The details and terms of conditions of such stabilization measures are set out in the Regulation regarding the Implementation of the Financial Markets Stabilization Fund Act (Finanzmarktstabilisierungsfonds-Verordnung; “Stabilization Fund Regulation”), which was released by the Federal Government under the Stabilization Act on October 20, 2008, and which came into force as of the same date. 2 The SoFFin is set up as a special fund (Sondervermögen) of the German Federal State without its own legal personality (nicht rechtsfähig). The German Federal State is directly liable for the liabilities of the SoFFin. The Ministry of Finance will be given a broad spectrum of powers to determine the eligibility of institutions (who should be deemed to be integral to the financial system) to participate in the scheme. 3 In addition, there are ongoing discussions as to whether the German Government should set up a "Bad Bank" in order to purchase toxic assets from banks and other financial institutions. 4 The German authorities have given a commitment to the European Commission that they will require a provision premium of 0.5%, plus, in all cases of debt instruments and other liabilities with a term of more than one year, a risk premium corresponding to the individual financial institution’s credit default swap spread, being not less than the median of the financial institution’s five-year credit default swap spread between January 1, 2007 and August 31, 2008 and which is not less than the amount specified in the recommendations of the European Central Bank of October 20, 2008, i.e. 0.5% plus the credit default swap spread.

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

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

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

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

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

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

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

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HONG KONG1 SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES On October 14, 2008, following Hong Kong joined the growing On October 14, 2008, the On September 30, 2008, the a run on the Bank of East Asia, number of countries easing their financial secretary pledged that HKMA announced five the first bank run in more than a monetary policy, when on HKMA would establish a temporary measures for decade, the Hong Kong October 9, October 30 and Contingent Bank Capital Facility providing liquidity assistance to Monetary Authority (“HKMA”) December 17, 2008, the HKMA for the purpose of making licensed banks in Hong Kong. announced it will use the cut its base rate (“Base Rate”), available additional capital to With effect from October 2, 2008 Exchange Fund2 to guarantee which now stands at 0.5%. locally incorporated licensed until the end of March 2009, the the repayment of all customer banks, should this become HKMA will provide liquidity deposits held with all Authorised On December 8, 2008, the Hong necessary. This measure will assistance, on request from Institutions3 in Hong Kong Kong Government announced remain in force until the end of licensed banks through the following the principles of the that it would provide up to 2010. following five measures: existing Deposit Protection HK$100 billion in loan Scheme, but including guarantees for small and (1) the eligible securities, for Restricted-Licence Banks and medium enterprises (“SMEs”). access by individual licensed Deposit-Taking Companies as banks to liquidity assistance well as Licensed Banks.4 The maximum loan amount for through the Discount Window,7 each enterprise will be will be expanded to include US The guarantee applies to both HK$6 million, with HK$3 million dollar assets of credit quality Hong Kong-dollar and foreign- being revolving credit. The loan acceptable to the HKMA. currency deposits with can be used for a wide range of Authorised Institutions in Hong purposes6 and all firms, except (2) the duration of liquidity Kong, including those held with listed companies, can apply for assistance provided to individual Hong Kong branches of such guarantee. The loan licensed banks through the overseas institutions, until the guarantee period is up to a Discount Window will be end of 2010. It will cover the maximum of five years from the extended, at the request of amount of deposits in excess of first drawdown date of the loan. individual licensed banks and on that protected under the Deposit a case-by-case basis, from Protection Scheme. 5 overnight money only to maturities of up to three months.

(3) the 50% threshold for the use of Exchange Fund paper as collateral for borrowing through the Discount Window at the Base Rate will be raised to 100%. In other words, the 5% premium over the Base Rate for the use of Exchange Fund paper beyond the 50% threshold, as collateral for borrowing through the Discount Window, will be

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

(4) the HKMA will, in response to requests from individual licensed banks and when it considers necessary, conduct foreign exchange swaps (between the US dollar and HK dollar) of various durations with licensed banks.

(5) the HKMA will, in response to requests from individual licensed banks and when it considers necessary, lend term money of up to one month to individual licensed banks against collateral of credit quality acceptable to the HKMA.

On November 6, 2008, the HKMA announced two refinements to the fifth of the five measures introduced on September 30, 2008. The two refinements are as follows:

(1) the maximum tenor of the collateralised term lending will be extended from one month to three months.

(2) while the interest rate for the collateralised term lending continues to be determined with reference to market interest rates, the HKMA will take into account the fact that such lending is secured by collateral in determining the applicable interest rate.

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1 Hong Kong, according to the latest press release by HKMA on February 9, 2009, had approximately US$ 181.7 billion in foreign reserves as of the end of January 2009. 2 A fund established in 1935 by the Exchange Fund Ordinance (Cap 66) (originally enacted as the Currency Ordinance) as a reserve to back the issue of Hong Kong’s banknotes. 3 An institution authorized under the Banking Ordinance (Cap 155) to carry on the business of taking deposits. 4 The guarantee covers all protected deposits as defined in the Deposit Protection Scheme Ordinance (Cap 581), were the Ordinance to apply to all authorized institutions. 5 Previously, Hong Kong depositors had stood to receive compensation limited to HK$100,000 (US$ 12,800). 6 The guarantee can be used by SMEs to secure loans for the purpose of acquiring business installations and equipment (e.g., machinery, tools, computer software and hardware, office equipment, transport facilities, furniture, fixtures, etc.) or to meet the working capital needs of general business uses, or a combination of both. 6 The facility through which banks can borrow Hong Kong dollar funds overnight from the HKMA through repurchase agreements using eligible securities as collateral.

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

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

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES distribution, and must undertake banks in financing purchases of and the Government will have a National Strategic Reference limitations on management public debt securities by put option to sell the shares to Framework for the period 2007- compensation. introducing a six-month loan the bank. 2013. tender at variable interest rates; In case of a forced Fiscal measures: (iii) two-week loan tenders at recapitalization, the Government fixed interest rates; may acquire the right to exercise Measures have been taken to all shareholders’ rights in ensure a more prudent fiscal (iv) Central Bank deposit rate respect of the general meeting policy. The Government has cut: the Central Bank has of the bank, including decisions submitted to parliament a decreased the interest rate on on recapitalization, if (i) the bank revised 2009 budget aiming at overnight Central Bank loans needs access to the special a 2009 deficit of 2.6% of GDP, and deposits to + / - 50 basis liquidity loan of the Central Bank and on November 17, 2008, points around the relevant of Hungary for more than 20 legislation was passed to limit asset’s interest rate; days in excess of a specific government spending in 2009 amount, (ii) if the bank fails to to 2008 levels, and permitting (v) the Central Bank has satisfy prudent capital an increase in spending in widened the scope of requirements, (iii) if the 2010 to 50% of GDP growth. acceptable collateral for Central Government is forced to make a Bank financing (municipal bonds payment to the bank’s creditors To help achieve deficit targets and certain mortgage securities under the debt guarantee and stimulate growth, the have become acceptable scheme, or (iv) if the insolvency Government has proposed new security), and reduced the of the bank would seriously tax legislation which would minimum rating criteria from A to harm the system of financial become effective from the BBB; intermediaries in Hungary. The middle of 2009. Most notably, Government must declare the the package includes an (vi) easing of reserve satisfaction of these increase of VAT from 20% to requirements of banks relating circumstances in a government 23% to increase Government to certain types of liabilities from decree. Existing shareholders revenues and a decrease of 5% to 2%. of the bank will have a right to taxes levied on employee sell their shares to the compensation by approx. 6% to FX liquidity measures: The Government within 120 days stimulate growth and facilitate Central Bank has introduced the after the entry into effect of the job retention. Pension following FX liquidity measures: government decree, at a price to payments to the elderly would be determined on the basis of decrease (discontinuation of (i) two-way overnight FX swap the shareholder’s stake in the 13th month’s pension), and the tenders with the Central Bank bank and the value of the bank’s terms of eligibility to several playing the role of intermediary equity as per the interim balance social payments would be by matching excess forint and sheet of the bank to be prepared revised. euro funds offered by the banks; as of the date preceding the entry into effect of the Stimulus measures: (ii) an overnight FX swap facility government decree. for domestic banks, facilitated by The Government has an agreement between the Despite threats from rating announced a 1,400 billion forint

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Central Bank and the ECB; agencies to downgrade west (€4.6 billion) two-year European banks with Hungarian economic stimulus package to (iii) EUR/CHF swaps on the subsidiaries, and the associated promote growth and provide basis of a cooperation risk of such banks abandoning funding for small- and medium- agreement between the Central their Hungarian operations, sized businesses, as well as a Bank and the Swiss National neither the voluntary nor the HUF 1,800 billion (€6 billion) Bank, signed on January 28, forced recapitalization scheme investment stimulus package 2009 (local banks need CHF to has been used until now as the aimed primarily at the support finance their large CHF loan more detailed legislation on the of the construction industry. portfolios); implementation of the bailout program has not yet been HUF 1,400 billion (€4.6 (iv) six-month EUR/HUF FX promulgated. billion) economic stimulus swap: a euro liquidity FX swap package: The HUF 1,400 tender funded with €5 billion has billion stimulus package will not been introduced for banks which involve new spending, instead undertake to keep their lending it will regroup existing funds in to corporates in 2009 at 2008 the budget. The biggest part of year-end levels and which agree the package, 680 billion forints not to withdraw funds from (€2.2 billion), will be spent on Hungary. providing lending guarantees primarily to SMEs, while Verbal intervention: On another 260 billion forints February 23, 2009, the Central (€0.9 billion) will be used to Bank, simultaneously with the provide liquidity for lending Czech, Polish and Romanian through commercial banks. central banks, announced that The Government also plans to they will undertake whatever provide 300 billion forints (€1 measures are required to billion) in interest rate subsidies prevent fluctuations in the value for corporate lending, and of their national currencies if another 140 billion forints fluctuations could lead to market (€0.5 billion) for direct loans to disturbances. All four currencies micro firms and SMEs. strengthened somewhat after the announcements, but more Concrete measures that have importantly the step indicates so far been introduced as part that the central banks have of the 1,400 billion forint recognized the need for stimulus package include: coordinated action in the region to protect national currencies (i) an increase of 450 billion outside the eurozone. forints in the amount of government guarantees offered by Garantiqa Hitelgarancia Zrt., a company jointly owned by the Government, commercial

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES banks and business associations, to SMEs to facilitate their borrowing;

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

In addition, in the case of EU tenders, the amount of automatic advance payments will be increased up to 40% of the total amount of the support, which will be transferred to applicants within 15 days after the signature of the financing contract. HUF 100 billion (€330 million) is expected to be made available to applicants by March 2009.

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

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES in a database run by the National Development Agency.

Workplace Retention Measures:

The Social and Labour Ministry has introduced several measures to facilitate workplace retention programs at troubled employers. These measures consist primarily of making funds available in the aggregate amount of HUF 107.4 billion (€358 million) to employers which announced mass redundancies or which otherwise are struggling to keep their employees. The funds can be used generally to supplement employee compensation where reduced working hours would bring about pay reductions, to support part-time working arrangements and training, and to support the relocation of terminated employees. The availability of a portion of the funds (HUF 20 billion or €65 million) is still pending Government approval.

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

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

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

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

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

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

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

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

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

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

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

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

Non Banking Financial (ii) Indian corporates were Companies (“NBFCs”): subject to certain restrictions on

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES The Government of India has rate of interest, other fees and opened up various fund raising expenses in foreign currency options for NBFCs. (referred to as “all-in-cost”). Prior to January 2, 2009, the all-in- (i) On October 29, 2008, cost ceilings (over six months systematically important non- LIBOR) for ECBs both under the deposit taking NBFCs (i.e., non- automatic and the approval deposit taking Non-Banking route) were as follows: (i) for Financial Companies having an loans with an average maturity asset size of Rs.1 billion or period of 3-5 years- 300 basis more) were allowed to augment points and (ii) for loans with an their capital funds by issue of average maturity period of 5 Perpetual Debt Instruments years or more- 500 basis points. (“PDI”) in the form of bonds and This requirement of all-in-cost debentures with a minimum ceilings on ECBs has now been investment of Rs. 500,000 per dispensed with until June 30, issue by an investor. 2009. Consequently, borrowers are now allowed to approach the (ii) On November 1, 2008, RBI under the approval route for systematically important non- permission to avail ECBs where deposit taking NBFCs were the all-in-costs ceilings are in further allowed to raise short- excess of those provided in this term foreign currency paragraph .This relaxation of all- borrowings under the approval in-cost ceiling will be reviewed in route up to 50% of the net June 2009. owned funds or US$ 10 million, whichever is higher. (iii) The requirement of minimum average maturity period of (iii) On February 18, 2009, the seven years for ECBs in excess Government of India approved a of US$ 100 million for rupee scheme for providing liquidity expenditure for borrowers in support to eligible non-deposit infrastructure sector has been taking systemically important dispensed with. NBFCs through a special purpose vehicle for meeting (iv) Borrowers have been temporary liquidity mismatches permitted to park their ECB in the operations. Such NBFCs proceeds with Indian Banks are required to meet certain pending their utilization for specific criteria to be eligible for permissible end-uses under the such liquidity support. This automatic route. includes: (i) having a capital to risk asset ratio of 12% by March (v) Corporates engaged in the 31, 2009; (ii) a net profit in the ‘development of integrated preceding two years; and (iii) the townships’ which were not

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

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES bps (for the respective currency At the time of considering of borrowing or applicable applications made in relation to benchmark), and the borrowings the above, the RBI will take into should be fully swapped into account the aggregate rupees for the entire maturity. commitment of the lenders directly to infrastructure projects (ii) In order to boost lending to in India. Further, the direct the housing sector, from lending portfolio of the above December 8, 2008 onwards, lenders vis-à-vis their total ECB loans granted by banks to HFCs lending to NBFCs, must be for on-lending to individuals for maintained at a minimum of 3:1 purchase/construction of at any point in time and dwelling units will be classified certification indicating the same under priority sector, provided must be obtained by the that the housing loans granted authorized dealers from the by HFCs are not in excess of eligible lenders. This facility will Rs. 20 lakh per dwelling unit per be reviewed in June 2009. family. This facility will apply to all such loans granted by banks (vii) Earlier, entities operating in to HFCs up to March 31, 2010. the services sector namely However, the eligibility under hotels, hospitals and software this measure will be restricted to industries were allowed to use 5% of the individual bank’s total ECBs up to US$100 million per priority sector lending. financial year for import of capital goods under the approval (iii) In order to provide further route. As per a Press Release of liquidity support to the housing GOI dated January 2, 2009, the sector, particularly to the HFCs, aforementioned entities have on December 11, 2008 the now been permitted to avail of Reserve Bank of India decided ECBs up to US$100 million per to provide a refinance facility of year for both foreign currency Rs. 4,000 crore to the NHB until and/or rupee capital expenditure March 31, 2010 against NHB’s for permissible end use, other loans and advances to HFCs. than for land acquisition, under This facility will be available at the automatic route. the current repo rate of 6.5% for 90 days, during which the Foreign Currency Convertible amount can be flexibly drawn Bonds (“FCCBs”): and repaid and, at the end of which, the amount can also be On November 15, 2008, Indian rolled over. companies were permitted to prematurely buyback their Export-Import Bank of India FCCBs subject to prior approval from the RBI. Such buy back is

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES (“EXIM Bank”): required to be financed by the company’s foreign currency On December 11, 2008, the resources held in India or Reserve Bank of India, decided abroad and/or out of fresh ECB to provide a refinance facility of raised in conformity with the Rs. 5,000 crore to the EXIM current norms for ECBs. Bank until March 31, 2010, as a result of which EXIM Bank will From December 8, 2008 be in a position to disburse onwards, the Authorised Dealer foreign currency lines of credit to Category-I banks are permitted exporters. This facility will be to consider applications for available at the current repo rate premature buyback of FCCBs by of 6.5% for 90 days, during Indian companies in situations which the amount can be flexibly where: (i) the buyback value of drawn and repaid and, at the the FCCB is at a minimum end of which, the drawal can discount of 15% on the book also be rolled over. value; (ii) the source of funds for the buyback is out of existing Micro and Small Scale foreign currency funds held in Enterprises (“MSE”): India or abroad and/or (iii) fresh ECB raised in conformity with On December 6, 2008, the the current norms for ECBs; and Reserve Bank of India decided (iv) where the fresh ECB is co- to provide refinancing of an terminus with the outstanding amount of Rs. 7,000 crore to the maturity of the original FCCB Small Industries Development and is for less than three years. Bank of India (“SIDBI”) so that credit delivery to the employment-intensive MSE sector could be enhanced. This The RBI is permitted to consider refinancing will be available applications for buyback of against: (i) the SIDBI’s FCCBs by Indian companies incremental direct lending to under the approval route, MSE; and (ii) the SIDBI’s loans subject to the following: (i) the to banks, NBFCs and State buyback value of the FCCB is at Financial Corporations against a minimum discount of 25% on the latter’s incremental loans the book value; (ii) the amount and advances to MSEs. of the buyback is limited to US$ 50 million of the redemption In addition, this facility will be value per company; and (iii) the available until March 31, 2010 at resources for buyback are the current repo rate of 6.5% for drawn out of internal accruals of 90 days, during which the the company as certified by the amount can be drawn and statutory auditor and designated

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES repaid and, at the end of which, bank’s certificate. the amount can also be rolled over. FCNR(B) Accounts: Extension of Exceptional Concessional Treatment: Foreign Currency Non-Resident As per the Reserve Bank of (Bank) accounts are accounts India’s decision on December 6, opened by non-resident Indians 2008, the exceptional regulatory with an authorized dealer in treatment of retaining the asset India. classification of the restructured The rate of interest for FCNR(B) standard accounts in standard accounts have been increased category will apply to with effect from November 15, commercial real estate sector 2008. The interest has to be exposures that are restructured paid within the ceiling rate of up to June 30, 2009. Such LIBOR / SWAP rates plus 100 exceptional regulatory treatment basis points for the respective will also apply to second currency / corresponding restructuring by banks of maturities (as against LIBOR / exposures up to June 30, 2009. SWAP rates plus 25 basis points However, second restructuring effective from the close of by banks of exposures to business on October 15, 2008). commercial real estate, capital market exposures and personal/ On floating rate deposits, consumer loans will not be interest has to be paid within the eligible for the above mentioned ceiling of SWAP rates for the exceptional regulatory respective currency / maturities treatment. However, vide its plus 100 basis points. notification dated January 2, 2009, RBI had allowed banks to For floating rate deposits, the apply the special regulatory interest reset period is six treatment for accounts which months. were standard on September 1, 2008 and taken up for NRE Accounts restructuring up to January 31, 2009, even if these had turned Non-Resident External accounts non-performing during this are accounts opened by Non- period, provided the resident Indians and Overseas restructuring package was put in Corporate Bodies with place within a period of 120 authorized dealers and banks days from the date of taking up authorized by the RBI to the restructuring package. maintain such accounts.

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Given that the banks have not The interest rates for NRE been able to adhere to the deposits maintained by banks January 31, 2009 time schedule have been increased with effect due to increased workload, this from November 15, 2008. time schedule for taking up restructuring has been extended Presently, the interest rates on until March 31, 2009 vide RBI fresh NRE Term Deposits for press release dated February 5, one to three years maturity as 2009. well as above three years maturity, should not exceed the Extension of period of credit LIBOR / SWAP rates plus 175 for rupee export credit basis points, as on the last interest rates: working day of the previous month, for US dollars of In order to alleviate the corresponding maturities (as difficulties faced by exporters against LIBOR / SWAP rates due to weakening of external plus 100 basis points effective demand, the Reserve Bank of from the close of business on India has decided that, from October 15, 2008). November 28, 2008 onwards, the interest rate on Post- These interest rates will also Shipment Rupee Export Credit apply to NRE deposits renewed up to 180 days will not exceed after their present maturity BPLR minus 2.5 percentage period. points. Market Stabilization Scheme On December 6, 2008, it was (MSS) further decided that the above mentioned interest rate of BPLR In pursuance of an agreement minus 2.5 percentage points between the RBI and the may also be extended to Government of India, the RBI overdue bills up to 180 days issues instruments in the nature from the date of advance. of treasury bills and dated securities, by way of auction, on On December 16, 2008, it was behalf of the Government of further decided that banks may India. The money so raised is charge interest rates not impounded in a separate exceeding BPLR minus 4.5% on account with the RBI and is pre-shipment credit up to 270 appropriated only for the days and post-shipment credit purpose of redemption and/or up to 180 days on the buy-back of the treasury bills outstanding amount for the and/or dated securities issued period from December 1, 2008 under the MSS. to March 31, 2009 to the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES exporters in the sectors of As a measure of infusing textiles (including handloom), liquidity into the system, the RBI handicrafts, carpets, leather, has put in a mechanism to buy gems and jewellery, marine back dated securities issued products, and small and medium under the MSS. The securities enterprises. However, the total proposed to be bought back and subvention will be subject to the the timing and modalities of condition that the interest rate, these operations are notified after subvention, will not fall from time to time. below 7%, which is the rate applicable to the agriculture Fiscal Stimulus Package: sector under priority sector lending. Interest Subvention of To contain the impact of the 2% with effect from December 1, global financial meltdown on the 2008 until March 31, 2009 on Indian economy, the pre- and post-shipment rupee Government of India unveiled export credit has also been fiscal stimulus packages on extended to the above December 7, 2008, January 2, mentioned exporters. As per the 2009 and February 24, 2009. interim budget released on February 16, 2009, it has been Highlights of the fiscal stimulus proposed to extend the above package announced on mentioned facility beyond March December 7, 2008 include the 31, 2009 until September 30, following: 2009 as this is expected to (i) In order to provide a stimulus involve an additional financial via planned expenditure, the outgo of Rs. 500 crore during Government will seek financial year 2009-10. authorization for additional Reduction of Interest Rates: planned expenditure of up to Rs. 20,000 crore in the current year In order to boost the housing sector by making home loans (ii) An across- the-board cut of available at cheaper rates, 4% in the ad valorem central public sector banks from value added tax for the December 16, 2008, onwards remaining part of the ongoing have decided to charge a financial year on all products, concessional rate of 9.25% for except petroleum. Therefore, the loans below Rs. 20 lakh and three major rate slabs of central 8.5% for loans less than Rs. 5 excise duty of 14%, 12% and lakh. Furthermore, the interest 8% have been reduced to 10%, rates for micro industries and 8% and 4%, respectively. small and micro enterprises (iii) Interest subvention of 2% up have also been reduced by 100

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES and 50 basis points, to March 2009 has been respectively. implemented for pre- and post- shipment export credit for Extension of time line for labour-intensive exports like forex swap facility: textiles, leather, marine products and SME. The concession is Vide its press release dated subject to a minimum rate of November 7, 2008, RBI had interest of 7% per annum. extended a forex swap facility for tenors up to three months to (iv) An additional Rs. 1,100 public and private sector banks crore for full refund of terminal having overseas operations in excise duty/CST and another Rs order to provide them flexibility 350 crore for export incentive in managing their short term schemes and a back-up funding requirements at their guarantee of Rs. 350 crore to overseas offices. This facility Export Credit Guarantee was available until June 30, Corporation (“ECGC”) for 2009. In view of the continuing providing guarantee for exports uncertain credit conditions to difficult markets and products globally, the availability of this will be provided. facility has now been extended until March 31, 2010 vide RBI (v) Exporters will be given a press release dated February 5, refund of service tax on foreign 2009. agent commissions up to 10% of FOB value of exports. They will Increase in interest rate also be given a refund of service ceiling on export credit in tax on output services while foreign currency: availing of benefits under Duty Drawback Scheme. Due to increase in the banks' costs of raising funds abroad, (vi) The lock-in period for loans they were finding it difficult to to small firms under the existing extend credit within ceiling on credit guarantee scheme will be export credit in foreign currency, reduced from 24 to 18 months to i.e. LIBOR + 100 basis points. encourage banks to cover more Therefore, RBI vide its press loans under the guarantee release dated February 5, 2009, scheme. increased the ceiling on export credit in foreign currency from (vii) The Government will issue LIBOR + 100 basis points to an advisory to Central Public LIBOR + 350 basis points with Sector Enterprises and request immediate effect. This increase State Public Sector Enterprises is, however, subject to the to ensure prompt payment of condition that the banks will not bills of medium, small and micro

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES levy any other charges, i.e., enterprises (“MSMEs”). Easing service charge, management of credit conditions is expected charge, etc. except for recovery to help PSUs to make such towards out-of-pocket expenses payments on schedule. incurred. Similarly, the ceiling interest rate on the lines of credit (viii) India Infrastructure Finance with overseas banks has also Co. is allowed to raise been increased on February 5, Rs.10,000 crores through tax- 2009 from six months LIBOR/ free bonds by March 31, 2009 EURO LIBOR/ EURIBOR + 75 as part of the exercise to basis points to six months support the Rs. 100,000-crore LIBOR/ EURO LIBOR/ highways development EURIBOR + 150 basis points, programme. with immediate effect. (ix) Public Sector Banks will soon announce a package for borrowers of home loans in two categories: (1) up to Rs. 5 lakhs and (2) Rs. 5 lakh to Rs. 20 lakh.

(x) Government departments will be allowed to replace government vehicles within the allowed budget, in relaxation of extant economy instructions.

(xi) The export duty on iron ore fines has been eliminated and on lumps for steel industry, has been reduced from 15% to 5%, respectively.

Highlights of the fiscal stimulus package announced on January 2, 2009 are as follows:

(i) An SPV will be designated to provide liquidity support against investment grade paper to NBFCs fulfilling certain conditions. The scale of liquidity potentially available through this mechanism will be Rs.25,000

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

(ii) An arrangement will be worked out with leading public sector banks to provide a line of credit to NBFCs specifically for the purchase of commercial vehicles.

(iii) Credit targets of public sector banks are being revised upward to reflect the needs of the economy. The Government will closely monitor, on a fortnightly basis, the provision of sectoral credit by public sector banks.

(iv) Special monthly meetings of State Level Bankers’ Committees will be held to oversee the resolution of credit issues of MSME by banks. The Department of MSME and the Department of Financial Services will jointly set up a Cell to monitor progress on this front. Matters of MSMEs remaining unresolved with the Banks- SME Helpline for more than a fortnight may be brought to the notice of this Cell.

(v) In the fiscal stimulus package announced on December 7, 2008, the guarantee cover under the Credit Guarantee Scheme for micro and small enterprises on loans was extended from Rs.50 lakh to Rs.1 crore with a guarantee cover of 50%. In order to enhance the flow of credit to micro enterprises, it was decided on January 2, 2009

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES to increase the guarantee cover extended by the Credit Guarantee Fund Trust to 85% for credit facility up to Rs.5 lakh. This will benefit about 84 % of the total number of accounts accorded guarantee cover.

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

(vii) To ensure that infrastructure projects are not starved of funds, India Infrastructure Finance Company (“IIFCL”) has been authorized to raise an additional Rs.30,000 crores by way of tax free bonds so as to enable it to fund additional projects of about Rs.75,000 crore at competitive rates over the next 18 months. However, these funds can be raised only once the funds raised in the current year are effectively utilized since IIFCL has already been authorized to raise Rs.10,000 crores through tax free bonds by March 31, 2009 for refinancing bank lending of longer maturity to eligible infrastructure bid based Public Private Partnership (“PPP”) projects.

(viii) Given that the rupee has

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES appreciated nearly 4 % against the dollar since November 2008, it has been decided to restore Duty Entitlement Passbook Scheme (“DEPB”) rates to those prevailing prior to November 2008. The objective of DEPB is to neutralize the incidence of Customs duty on the import content of the export product. The neutralization will be provided by way of grant of duty credit against the export product. In addition, in order to provide predictability and stability of regime in the short term for future contracts, the DEPB Scheme will be extended till December 31,2009.

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

(x) Accelerated depreciation of 50% will be provided for commercial vehicles to be purchased on or after January 1, 2009 until March 31, 2009.

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

(xii) States, as a one time measure until June 30, 2009, will be provided with assistance

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES under the Jawaharlal Nehru National Urban Renewal Mission (“JNNURM”) for the purchase of buses for their urban transport systems. A scheme towards this end will be announced shortly.

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

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

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

(i) The general reduction in excise duty rates by 4% points which was made by virtue of the first fiscal stimulus package, i.e. with effect from December 7, 2008 has been extended beyond March 31, 2009.

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

(iii) The rate of central excise duty on goods currently

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES attracting ad valorem rates of 8% and 4% respectively will be retained.

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

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

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

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

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES required, in the coming months.

Custom duty exemption for newsprint:

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

Foreign Investment:

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

The salient features of these guidelines are:

(i) All investment directly by a non-resident entity into the Indian company would be counted towards foreign investment.

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

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES resident Indian citizens and Indian companies which are ‘owned and controlled’ ultimately by resident Indian citizens.

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

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

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

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES (subject to certain restrictions), preference shares, calculated on to the Minster. An Assessor will regard to international but excluding any intra-group a post dilution basis. Bank of be appointed by the Minister to developments and ongoing work borrowing and any debt due to Ireland and Allied Irish Banks determine the compensation, if being undertaken by the ECB the ECB arising from will be able to redeem the any, payable to Anglo Irish Bank and the EU Commission. Eurosystem monetary preference shares within five shareholders. operations. years at the issue price, or after five years at 125% of the issue Under the Scheme, the Irish price. Financial Regulator, in consultation with the Minister for The recapitalization program Finance, will impose conditions remains subject to: (a) that regulate the commercial regulatory approval; (b) EU state conduct and competitive aid approval; and (c) approval of behaviour of covered the ordinary shareholders of institutions. The conditions are Bank of Ireland and Allied Irish described in detail in the Banks respectively. Scheme. At the same time, the Financial In conducting its six month Regulator has published review of the Scheme, the statutory codes of practice on Government has announced (a) business lending to small that it will examine how the and medium enterprises; and (b) Scheme can be revised in ways mortgage arrears for principal that include supporting longer primary residences. Bank of term bond issuances by the Ireland and Allied Irish Banks covered institutions. This is in have agreed not to commence line with EU trends, where the legal action for repossession of average term of state cover for a principal private residence bond issues extends beyond until after 12 months of arrears 2010. Amendments to the appearing, where the customer Scheme will be subject to EU continues to co-operate state aid approval. reasonably and honestly.

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

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES issued on October 30, 2008, (“Law No. 2/2009”), approving anticipated that the Government Law Decree No. 185 of is expected to establish a November 28, 2008, which, special fund (with €15-20 billion among other measures to available) to subscribe for sustain the economy, authorizes subordinated convertible the Ministry of the Economy, to securities issued by Italian subscribe for financial banks. Such securities would instruments issued by Italian have the benefit of being listed banks (or by the parent included for the purposes of company of Italian listed banking capital adequacy requirements groups), upon their request. as Tier 1 capital, without This program is set to expire entailing an immediate direct and cease every effect after 10 State participation in the share years from the approval of Law capital. The press article also No. 2/2009. A draft of the indicated that conversion rights decree of the Ministry of would be granted only to the Economy (the “Draft Ministerial issuing bank. As of the date of Decree”) that sets forth the this client publication, no specific terms and conditions for concrete action has been taken the subscription of the financial in this respect. instruments has been published on Italian financial newspaper Il Sole 24 Ore on February 25, 2009. The instruments issuable pursuant to Law No. 2/2009 must be without voting rights and otherwise qualify as regulatory capital instruments. These instruments may be convertible into ordinary shares at the option of the issuer. Early repayment or redemption at the option of the issuer may also be provided for, provided that the Bank of Italy attests that the proposed early repayment or redemption will not adversely affect the financial condition of the issuer or its solvency. Their yield may be subject, in whole or in part, to the availability of distributable

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES profits. The subscription by the Ministry of the Economy is conditioned upon the following conditions: a) the transaction as a whole must be (i) economically sound (“economica”) according to the criteria set forth hereinafter, (ii) effected after due consideration is given to market terms, and (iii) aimed at ensuring an improved flow of financing to the real economy and appropriate capital adequacy levels in the banking system. b) the issuer must undertake to ensure adequate levels and conditions of financing to small and medium businesses and families and adequate liquidity levels for creditors of public administrations; c) the issuer must undertake to adopt dividend policies consistent with the need to maintain appropriate levels of capital; and d) the issuer must adopt a code of conduct regulating, inter alia, executive compensation policies (including “golden parachutes”) and traders compensation. The transaction is economically sound (“economica”) if effected in accordance with the terms set forth in an annex to the Draft Ministerial Decree, which has not been made public. Furthermore, the transaction may also be considered

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES economically sound (“economica”) if the financial instruments are subscribed for by private persons for at least 30% of the aggregate size of the issuance (of which at least 20% is subscribed for by persons other than shareholders holding more than 2% of the share capital of the issuer). The amount available for each bank cannot exceed 2% of the total assets of the relevant banking group weighted by the risk and it must be limited to the minimum amount necessary to reach the purposes of Law 2/09. The Draft Ministerial Decree also states that the banks that participate in this program must carry out their activities in a way that does not represent an abuse of the assistance received and without pursuing aggressive expansion strategies. Furthermore, the Draft Ministerial Decree indicates that the subscription by the Ministry of Economy is made upon request of a bank. The application must be filed with the Bank of Italy and the Ministry of Economy at least 30 days prior to the expected subscription date.

1 On October 9, 2008, the Italian Government had issued Law Decree No. 155 and on October 13, 2008, Law Decree No. 157. 2 Law No. 190/2008 requires further ministerial decrees to be implemented. The law provides for a 60-day term for the issuance of the ministerial decrees running from October 9, 2008; in the absence of the ministerial decrees, no concrete action can be taken under the program. Thus far, the only measure that has been used is the Bank of Italy’s temporary exchange program between government securities held by the Bank of Italy and assets held by Italian banks.

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2 Law Decree No. 185/2008 is currently in force pending its approval by the Italian Parliament which must take place by no later than January 28, 2009. In addition, Law Decree No. 185/2008 requires a further ministerial decree before it can be implemented, which was supposed to be adopted before December 29, 2008. No such decree has been approved to date. In the absence of the relevant ministerial decree no concrete action can be undertaken by the Ministry of the Economy under this law decree.

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

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

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

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

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

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

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

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

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

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

On December 19, 2008, the BoJ

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES also decided the terms and conditions of the new operation utilizing corporate debt, of which introduction had been decided at the Monetary Policy Meeting held on December 2, 2008.

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

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

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

On February 3, 2009, the BoJ announced that it will resume the purchase of stocks held by financial institutions so that the financial institutions may offload some of their stocks and reduce market risks. The total purchase amount is for 1 trillion yen.

The BoJ has also decided to purchase up to 1 trillion yen of corporate bonds rated single A or higher and have a remaining

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES term of one year or less from the last date of the month in which the Bank of Japan will make such a purchase. The limit per issuer of the corporate bonds is 50 billion yen.

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

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

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

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

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

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

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

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

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

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

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

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NEW ZEALAND GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED (WHOLESALE FACILITY) (RETAIL SCHEME) ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES A Wholesale Funding Guarantee The New Zealand Government On October 23, 2008, spurred None as at February 25, 2009. None as at February 25, 2009. Additional liquidity facilities have Facility (the “Wholesale Facility”) has guaranteed all deposits in by fears of a recession, New been provided by the Reserve has been established to facilitate institutions that ‘opt-in’ to the Zealand’s central bank cut its Bank of New Zealand to access to global financial Retail Scheme to a limit of benchmark interest rate by a registered banks. markets by registered banks. NZ$1 million per depositor per record full percentage point to guaranteed institution. 6.5%, warning that financial The Wholesale Facility is market turmoil will further available to financial institutions Institutions with total deposits at constrain the economy. that have a rating of BBB- or more than NZ$5 billion will be better and have substantial New charged a 10 bps p.a. fee for Further cuts of 150 basis points Zealand borrowing and lending guaranteed deposits in excess were made on December 4, operations. It is not available to of NZ$5 billion. A further fee will 2008 and January 29, 2009. The institutions that are primarily be charged on the growth of official cash rate is now at 3.5% financing a parent or related deposits held by guaranteed as at February 25, 2009 and is company, non-financial issuers institutions that have a total at its lowest level since being (e.g., corporate or local authority deposit value of less than introduced as the key official issuers) or collective investment NZ$5 billion.1 interest rate in 1999. schemes. The Retail Scheme extends All newly issued senior beyond registered banks to non- unsecured negotiable or bank deposit takers (finance transferable debt securities by companies, building societies eligible financial institutions in all and credit unions) and to major currencies are eligible for collective investment schemes coverage. The Wholesale (such as unit trusts).2 Facility covers any paper issued until the earlier of its maturity or The opt-in scheme takes the for up to five years. form of a bilateral contractual agreement between the Eligible institutions are required Government and the individual to “opt-in” to the Wholesale institutions which take up the Facility and must then apply for guarantee. The Treasury has an eligible instrument to be discretion to decline applications covered. A fee of between 70 to participate in the Retail bps p.a. and 200 bps p.a. will be Scheme.3 charged on each issue differentiated upon the Participating institutions in the “riskiness” of the issue and the Retail Deposit Guarantee term of the security. As part of Scheme are exempted from the “opt-in” process institutions certain provisions of the will enter into a guarantee facility Securities Act 1978 and the with the Crown and then the Securities Regulations 1983,

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

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

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

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

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

Two major New Zealand banks have had guarantees issued in their favour as at January 23, 2009. However, no approvals of individual debt instruments have been granted at this stage.

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

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

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

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

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

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

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

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

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES rates by 0.27%, respectively. facilities for export of US goods The interest rates of loans and and services to emerging deposits with other maturities markets.) were adjusted accordingly. On December 25, 2008, the PBOC lowered the deposit reserve ratio by 0.5%.

On February 24, 2009, the PBOC issued buyback notes to the public market in the value of RMB 80 billion (approximately US$ 11.7 billion).

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

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

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

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES measure will have a relevant benefit from this aid will have of directors. The regulator also Conversely, the same legislation impact in the calculation of certain obligations imposed on decided on the same date that imposes additional duties on solvency ratios of certain them, such as financing the BPP will be discharged for a investment funds and their Portuguese banking institutions. economy, including families and period of 3 months from respective managers, SMEs, the implementation of obligations arising from its depositaries or marketing good corporate governance portfolios management activity. entities in exceptional situations practices and a pay and including turmoil in the financial dividends policy as well as instruments market. increased contributions to the Deposit Guarantee Fund Review of the financial sector (conditions to be set by order of penalty regime: the Ministry of Finance). A legislative bill has been The reaction from credit presented to Parliament by the institutions to this measure was Government with a view to favourable. enhancing the penalty regime for the financial sector in criminal and administrative offence matters, modernising - and bringing into line - the punitive framework and the amounts of the fines to the size and characteristics of the current financial sector.

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REPUBLIC OF KOREA SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES On October 19, 2008, the On November 6, 2008, the Foreign currency liquidity Recapitalization of State-run Purchase of Troubled Project Bond Market Stabilization Korean Government announced Korean Government published provision: Banks: Financing Loans of Savings Fund: that it will guarantee the foreign- its proposal regarding Bank: currency debt of local banks amendments to the enforcement On October 6, 2008, the Korean On November 3, 2008, the On November 13, 2008, the borrowed up to June 30, 2009. decree for the Depositor Government provided US dollar Korean Government announced On December 3, 2008, the Korean Government announced Protection Act so that foreign- liquidity in the amount of plans to inject funds into Korean Government announced plans to set up a KRW 10 trillion On October 30, 2008, the currency deposits would be US$ 15 billion by utilizing the state-run banks and other plans to arrange for the Korea bond market stabilization fund National Assembly approved the covered by deposit insurance. foreign equalization fund. financial institutions to strength Asset Management Corporation that will mainly invest in bonds Korean Government’s bank debt This proposal was confirmed their credit extension capacity. (KAMCO) to purchase KRW 1.3 issued by corporations and guarantee program up to a limit and promulgated on On October 19, 2008, the trillion worth of troubled project financial companies. of US$ 100 billion. Each bank November 26, 2008. Korean Government announced The actual amounts of such fund financing loans from mutual participating in this program will plans to provide loans of injections in respect of the savings banks. On November 24, 2008, the be subject to a 1% per annum US$ 20 billion to local banks by relevant financial institutions Bank of Korea announced its guarantee fee. utilizing the foreign equalization reflected in the annual In accordance with such plan, plans to provide liquidity up to fund and the Bank of Korea government budget for 2009 that on December 30, 2009, KAMCO KRW 5.0 trillion to banks and On November 14, 2008, 18 local announced plans to provide was approved by the National made its first purchase of KRW other financial companies banks executed a memorandum US$ 10 billion to local banks Assembly on December 15, 500 billion of troubled project through the purchase of of understanding pertaining to through swap transactions. 2008 are as follows: financing loans from 30 mutual government bonds and other the Korean Government’s bank savings banks. low-risk securities held by such debt guarantee program and the On November 13, 2008, the - The Korea Development Bank: banks and financial companies, banks’ plans for efficient Bank of Korea announced plans KRW 900 billion Corporate Restructuring the proceeds of which will be management with the Financial to provide US$ 10 billion to local Fund: used to finance their investment Supervisory Service. banks for export financing of - Industrial Bank of Korea: in the BMSF. small and medium businesses. KRW 500 billion On February 19, 2009, the On February 18, 2009, the Korean Government announced On December 9, 2008, the Korean Government lowered the Since December 2, 2008, the - The Export-Import Bank of its plan to establish the BMSF task force1 formed the guarantee fee rate of the bank Bank of Korea has provided Korea: KRW 300 billion Corporate Restructuring Fund BMSF as a non-redeemable debt guarantee program from US$ 16.5 billion to local banks, under KAMCO to purchase private equity fund with a term of 1% to 0.70% per annum. utilizing its US$ 30 billion - Credit Guarantee Fund and troubled assets from financial three years. The BMSF will be currency swap line with the Kibo Technology Fund: institutions. This Fund will be set up as a fund of funds, with As of February 24, 2009 no local Federal Reserve of the United KRW 1.1 trillion financed by the issuance of each underlying fund focusing bank has applied for the States. government-guaranteed bonds. its investment on a particular - Korea Housing Finance government guarantee on its type of bond (e.g., bank bond, Corporation: KRW 200 billion foreign currency debt based on KRW liquidity provision: corporate bond, etc.). the bank debt guarantee - Korea Asset Management program. On September 18, 2008, the On December 17, 2008, the first Corporation: KRW 400 billion Bank of Korea provided BMSF (KRW 5 trillion) was set KRW 6.5 trillion to the financial up and commenced operations. market through repo transactions, etc. On December 15, 2008, the Korean Government announced On October 23, 2008, the Bank that it had made investments-in-

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES of Korea increased the credit kind of KRW 1.65 trillion in the line for support of small and aggregate to the following three medium businesses from state-run banks: KRW 6.5 trillion to KRW 9.0 trillion. - The Korea Development Bank: KRW 500 billion On October 24, 2008, the Bank of Korea provided KRW - Industrial Bank of Korea: KRW 2.0 trillion to non-bank financial 500 billion institutions indirectly through repo transactions with Korea - The Export-Import Bank of Securities Finance Corp. Korea: KRW 650 billion

On October 27, 2008, the Bank Recapitalization of of Korea included bank bonds commercial banks: as securities eligible for repo transactions and announced that On December 18, 2008, the it would purchase KRW 5 trillion Korean Government announced to 10 trillion of bank bonds plans to set up a KRW 20 trillion through repo transactions to of Bank Capital Expansion Fund provide liquidity to the banking to support banks to strengthen sector. their financial stability.

On January 13, 2009, the Bank of Korea provided KRW 1.5 trillion of liquidity to the financial market through repo transactions.

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

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RUSSIA SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES In December 2008 the Russian With effect from October 17, With effect from September 18, As of November 19, 2008, the There have been reports that On November 20, 2008, the Government discussed a 2008, the Central Bank of 2008, the CBR, aiming to Russian Government had Russia will acquire up to US$ 20 Russian Government programme for issuing Russia (the “CBR”) increased stabilise the situation in the allocated approximately RUB billion of equity in various announced its proposed government guarantees on the maximum amount, which in Russian financial markets and to 5.7 trillion (approximately US$ Russian companies in order to measures aimed to support bonds issued by strategically accordance with the support liquidity in the Russian 211 billion) to stabilise the support the stock market. A Russia’s real economy sector, important companies (notably requirements and procedures banking sector, decreased situation in the Russian markets. number of transactions were which provide, amongst other, VEB, Sberbank, VTB and established by Russian interest rates on loans from the Of this, the Russian Government recently announced relating to for certain tax advantages for Gazprom) - this may involve a legislation, is payable by the CBR secured by the pledge of spent RUB 175 billion (US$ 6.5 the purchase by entities businesses. In particular, with 50% government guarantee on CBR to an individual depositor promissory notes, receivables or billion) on highly-rated and liquid allocated with the Russian effect from January 1, 2009, Eurobonds. The Russian having a claim against an suretyships provided by credit Russian shares and bonds to Government of shares in various profit tax will be decreased from Government has yet to take a insolvent Russian bank, from organisations as follows: from support liquidity in the Russian Russian companies and banks. 24% to 20%, which will leave decision on this. RUB 400,000 to RUB 700,000. 8% to 7.5% per annum for stock market. RUB 450 billion For example, the Russian RUB 400 billion with Russian rouble loans with a term of up to (US$ 16.6 billion) was Federal Agency for companies. Tax for small On December 12, 2008, RIA On December 2, 2008, 90 calendar days; and from 9% earmarked to provide long-term Management of Federal business is expected to be Novosti reported that the state- Kommersant released a to 8.5% per annum for rouble subordinated loans to Russian Property purchased 3.3% of the decreased in Russia’s regions owned Agency for Housing statement by the Deposit loans with a term of 91 to 180 banks on favourable terms, RUB shares in a large diamond- from 15% to 5%. According to Mortgage Lending (AHML) Insurance Agency ("DIA") calendar days. 200 billion (US$ 7.4 billion) was mining company “ALROSA” and the estimates of the Russian announced that it is ready to stating that it may raise the allocated to VTB to provide is now holding a controlling Ministry of Finance, the offer Russian banks RUB 500 guarantee limit to RUB 1 million. At the same time, the CBR loans to Russian enterprises to stake in the company (50.9%). announced package of tax billion worth of guarantees for raised the adjustment coefficient support the real economy sector A controlling stake in Svyaz- measures will cost RUB 556.6 mortgage bonds. This will to calculate the value of security and RUB 25 billion (US$ 925 Bank was bought by billion. involve repackaging senior on the loans provided by the million) was provided to Vnesheconombank (the RMBS with guarantees, that will CBR, which is calculated based Rosselkhozbank (a transaction was announced on RUB 50 billion will be provided then make them eligible on potential fluctuations or Government-owned bank active September 23, 2008). In by the Russian Government to collateral for repo lending from changes in price of securities, in the agricultural sector) to addition, on October 27, 2008 prevent the insolvency of the CBR. Only financial and which is intended to support its lending program. In Vnesheconombank’s board of Russian military industrial institutions with mortgage pools decrease the CBR’s risks addition, the Russian directors approved the purchase enterprises, to increase funding of at least RUB 3 billion will be related to the potential Government contributed RUB 60 of 99% of the shares in Globex of interest rates and to invest in eligible for the scheme. (2-3 depreciation of the security. billion (US$ 2.2 billion) to the Bank for the purposes of further such enterprises’ capital. portfolios expected to be charter capital of Agency for stabilization of the Russian exchanged by March 2009). With effect from September 18, Housing Mortgage Lending banking sector. A controlling On December 4, 2008, Russian 2008, the CBR decreased the thereby significantly increasing stake in KIT-Finance was prime minister Putin suggested interest rate on collateral loans its capacity to refinance the bought by Russian Railways that the DIA provide Russian with a term of one day from 9% mortgage portfolios of Russian (the transaction was announced banks with Government to 8%. banks. on October 8, 2008); Sobinbank guarantees in respect of was bought by mortgages of individuals who In order to further improve On October 13, 2008, Russia Gazenergoprombank (the lose their employment as a market liquidity, in October adopted the Federal Law transaction was announced on result of the financial crisis. 2008, the CBR took the No.173-FZ “On Additional October 15, 2008); Yarsotsbank Consequently, the Russian following measures: Measures Regarding Support of was bought by Promsvyazbank Government approved a the Russian Financial System”, (in October 2008); Russian programme of Government (i) with effect from October 15, pursuant to which the CBR Capital Bank was bought by the support for mortgage borrowers.

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES 2008, the CBR reduced its provided Vnesheconombank National Reserve Bank (the As part of the programme, in reserve requirements as follows: (VEB) with US$ 50 billion (from transaction was announced on December 2008 the DIA on liabilities to individuals (in the CBR’s gold and currency October 23, 2008); VEB’s board approved "Rules for roubles) from 1.5% to 0.5%; on reserves). VEB was given a of directors approved the Restructuring of Mortgage credit institutions’ liabilities to mandate to refinance Russian purchase of 99% of the shares Residential Loans for Certain non-resident banks (in roubles major companies’ debt to foreign in Globex Bank on October 27, Categories of Borrowers in and foreign currency) from 4.5% banks, which arose before 2008. 2009" and published "Standards to 0.5%; and on credit September 25, 2008. VEB’s for Restructuring of Mortgage institutions’ other liabilities (in public criteria are to extend According to official Loans for Certain Categories of roubles and foreign currency) loans of between US$ 100 announcements, these Borrowers" which provide for the from 2.0% to 0.5%. This new million and US$ 2.5 billion for transactions were made to following restructuring schemes: legislation brings the CBR one year at a minimum of 500 support the banks which had reserve ratios to unprecedented basis points above LIBOR. As become technically insolvent (i) the mortgage lender and the low levels. These new reserve of October 29, 2008, VEB had and could no longer perform DIA will provide funds to the requirements are valid until April approved loans in the amount of their obligations to the mortgage borrower; or 30, 2009. approximately US$ 10 billion depositors and creditors. (out of applications for loans (ii) the DIA will provide a On May 1, 2009, the CBR exceeding US$ 100 billion, On November 28, 2008, VTB "stabilization loan" to the expects to raise the reserve approximately US$ 70 billion Group announced that it will mortgage borrower. requirements on all credit from Russian banks and lend Alrosa US$ 1.6 billion to institutions’ obligations to 1.5%, approximately US$ 30 billion help the state-owned diamond According to the DIA, option (i) then again on June 1, 2009, to from Russian corporates). mining monopoly refinance its above is likely to be the main 2.5%; debt. scenario for the time being. On December 1, 2008, VEB (ii) the interest rate on loans announced that, of the loans On December 3, 2008, the There have been significant from the CBR secured by the approved for banks and Government announced that it changes to the Russian pledge of promissory notes, corporates, $7.5 billion had was drafting legislation to buy insolvency framework with the receivables or suretyships already been transferred. out mortgages from Russian introduction of two new laws on provided by credit organisations private banks in order to reduce December 30, 2009, namely was decreased by 0.25% to Under this programme VEB banks' risk exposure (under the dealing with insolvency and 8.25% per annum for rouble announced further tranches of current threat of wide-scale pledge enforcement. loans having terms of between subordinated loans on mortgage defaults) and secure 91 and 180 calendar days; November 11, 2008 - of RUB more favourable terms for The pledge enforcement law 200 billion - and on December borrowers. provides for new methods of (iii) the term for secured loans 10, 2008 - of RUB 17.1 billion (of enforcing pledges over assets was raised from 30 to 90 which RUB 10.2 billion was On December 17, 2008, it was (in addition to enforcement calendar days; and allocated to Alfa Bank, RUB 4.9 announced that Ukraine's through auction which was the billion to Nomos Bank and RUB Prominvestbank, which has only option until the introduction (iv) the CBR was granted the 2 billion to Khanty-Mansiysk been in receivership since of this new law). right to provide rouble loans to Bank. October, had signed a Russian banks with no collateral memorandum with Russia's VEB The Russian Government has for a term of up to six months. According to a Reuters report on to help restore its financial raised custom duties on February 4, 2009, in 2009 VEB position. It was reported that the imported cars from 25% to 30- On October 3, 2008, the CBR had already lent $11 billion to sum needed to recapitalize the 35% with effect from January

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES expanded the list of the assets, companies and banks to bank would be announced soon 12, 2009 until October 2009. which can be provided as refinance foreign debt. and submitted to the The aim of this measure is to security on the loans granted by Government for consideration. support the Russian car industry the CBR. In addition to the The CBR provided Government- during the economic crisis. assets accepted by the CBR owned Sberbank, which suffered On February 12, 2009 the previously as security (such as an unprecedented withdrawal of Moscow Times reported that the On January 16, 2009, the promissory notes or retail deposits in October 2008 Russian Government had Russian State Duma receivables), the CBR allowed (approximately RUR 80 billion refused to consider taking toxic (parliament) approved issues of bonds to be provided (US$ 2.9 billion), representing assets off banks' balance amendments to the Fiscal Code as security on its loans as well, 2.5% of its retail deposits base, sheets. that allow the Russian provided that such bonds meet with a RUB 300 billion (US$ Government to directly provide the following criteria established 11.1 billion) subordinated loan in subsidies to Russian regions in by the CBR: addition to the RUB 150 million order to support them during the (US$ 5.5 billion) subordinated economic crisis. The amount (i) the relevant issue of bonds is loan. and specific purpose of the included into a list of issues of subsidies is to be determined by bonds (published in “Vestnik of In September 2008, the Russian the Government without the the CBR”), which can be Ministry of Finance, with the prior approval of the Duma. It is accepted by the CBR as security CBR’s approval, relaxed the likely that primarily RUB 43,7 in accordance with the decision requirements for Russian banks million will go towards the of the CBR’s board of directors; to participate in state auctions stabilization of the employment with a view to placing budgetary market, according to the (ii) the bonds are registered on funds with banks more Russian Ministry of Finance. the securities (depo) account efficiently, which allowed opened with a depository; Russian banks to attract more On March 2, 2009, the funds from the Russian Ministry Government will discuss the (iii) the bonds are owned by the of Finance. In particular, 25 establishment of a new non- borrowing bank, these are not more banks (in addition to profit Government body, the charged by any other obligations Sberbank, VTB and Russian Finance Agency of the bank and there are no Gazprombank) were allowed to ("RFA"). It is proposed that the disputes and/or submitted participate in state auctions. RFA will oversee the National claims in respect of the bonds; The following requirements were Reserve Fund that is currently applied to such banks: general under the control of the CBR, as (iv) the bonds have to be repaid banking licence issued by the well as other financial activities not earlier than six days after the CBR; own funds of not less than as seen fit by the Government. repayment date under the CBR 5 billion roubles; no budgetary These could be the reserve fund loan; and funds-related indebtedness; (RUB 4 billion), pension savings obligatory participation in the (RUB 350 million) as well as the (v) the borrowing bank is not the deposit insurance system; and national and foreign debt of the issuer of the bonds to be long-term solvency rating not Russian Federation. The RFA provided as security. less than “BB-” by Fitch and will be run by a supervisory Standard & Poor’s and “Ba3” by board. It is expected that initially, On October 23, 2008, the Moody’s. In October 2008, the the RFA will not control the Federal Law “On Additional Russian Ministry of Finance money itself, but will appoint

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Measures Aimed to Strengthen further relaxed these Russian and foreign experts to Stability of the Banking System requirements to allow provide advice prior to investing for the Period until December participation in state auctions by the funds. 31, 2011” was adopted, with banks having long-term effect from October 28, 2008, solvency rate “BBB-” and “BB+”. giving the state-run Bank for Development and Foreign In addition, the Russian Ministry Economic Activities of Finance increased the (Vnesheconombank) 1.3 trillion amount of temporarily available roubles (US$ 50 billion) to pay budgetary funds from RUB 668 off or service Russian legal billion (US$ 24.7 billion) to RUB entities’ foreign loans obtained 1.514 trillion (US$ 56 billion) to before September 25, 2008. It support the liquidity of the came after President Dmitry Russian banking sector. Medvedev announced RUB 950 billion (US$ 36.4 billion) of long- The DIA has started to apply the term help for banks at an RUB 200 billion (US$ 7.4 billion) emergency Kremlin meeting on provided to it by the Russian October 7, 2008. Government to prevent the insolvency of Russian banks. Further, this legislation provides The DIA has the authority to that in order to strengthen prevent the insolvency of stability of the Russian banking Russian banks, by taking system and to protect creditors’ measures, that include providing interests, if a Russian bank financial assistance to the shows any signs of financial persons that acquire shares instability threatening the legal (participation interest), assets or interests of its depositors and liabilities (or their part) of a bank; creditors, the CBR and the DIA, providing financial assistance to are allowed to take measures to the bank (provided that the DIA prevent such bank’s insolvency. or investors will be purchasing In particular, the DIA and the shares (participation interest) of CBR can, amongst other things, the bank in the amount, that provide loans; acquire shares or would allow them to make participatory interests in such decisions within the competence bank’s charter capital in such of the bank’s shareholders (or amounts as to allow them to participants). For example, on make decisions within the November 14, 2008, the DIA competence of the bank’s entered into an agreement for shareholders or participants; Probusinessbank to acquire perform functions of temporary Gazenergobank. Under the administration on the basis of agreement, Probusinessbank as the relevant CBR decision; and investor will acquire arrange auctions for the bank’s Gazenergobank’s shares and

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES assets representing collateral in will elaborate a plan for the respect of the bank’s financial rehabilitation of obligations. Gazenergobank with the aim of settling Gazenergobank’s For the purposes of the above- creditors’ claims by March 1, mentioned law, on November 1, 2009. The DIA, in turn, 2008, the CBR approved the undertakes to provide financial model form of the agreement assistance to Probusinessbank between the CBR and credit to assist it to fulfil its obligations. organizations, which provides Under the agreement, on for compensation by the CBR of January 22, 2009, part of the losses or expenses Probusinessbank increased its incurred by the credit shareholding in Gazenergobank organization as a result of its from 19.79% to 99.99203%. transaction(s) made with other credit organizations (if their On October 14, 2008, to support banking licences have been the liquidity of the Russian revoked) on or after October 14, banking system, the CBR 2008 until December 31, 2008 increased fixed interest rates on (inclusive). As of November 20, operations with deposits, with 2008, the CBR concluded such effect from October 15, 2008, agreements with MDM Bank, which is aimed at encouraging Raiffeisenbank and Sberbank. companies and individuals to The CBR also offered the same make deposits. possibilities to other major Russian banks. These To decrease the outflow of measures are aimed at capital from Russia and to stabilizing the situation in the restrain inflation, with effect from Russian interbank market. November 12, 2008, the CBR increased the refinancing rate On November 14, 2008, the (i.e., an interest rate applied by CBR announced that it had the CBR to credit organisations taken away the banking licence and depositary institutions that of mid-sized Lefco and put the borrow funds from the CBR, that DIA in charge of Electronica influences interbank market bank. rates and deposit interest rates) by 1% to 12%. This measure is On November 27, 2008, the intended to increase the return CBR announced that it had on borrowed assets. withdrawn the operating licence of Integro bank, citing a lack of The specific mechanisms of capital; and withdrawn the government support have not operating licence of Kurganprom been disclosed and there are bank because of an inability to reports that the situation in

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES meet creditors' demands. Russia may be exacerbated by Depositors of Integro and geo-political tensions. Kurganprombank will have to apply to the DIA to get their The CBR has been carrying out money back. regular loan auctions, with varying terms and interest rates, On November 27, 2008, the to 136 eligible banks since CBR announced that a third of October 2008. The CBR all Russian banks posted a loss announced on November 21, last month, amid the country's 2008, that it would reduce worst financial crisis in a requirements for banks to take decade. A total of 288 banks part in collateral-free money were unprofitable in October auctions, to include banks rated 2008, with combined losses of by Russian rating agencies (less RUB 69 billion (US$ 2.52 than 12% of Russia's banks are billion). rated by international agencies).

On November 27, 2008, the On November 28, 2008, the CBR urged banks not to Government announced that it increase their foreign currency intends to provide RUB 10 billion longs in December 2008. The (US$ 365 million) in subsidies CBR advised organizations with for grain exports. The subsidies a net short position in foreign and accelerated refunds of currency not to build longs in the value-added tax would allow 10 final month of 2008, stating that million tons of grain to be the monthly average net long exported without providing a balance positions in each timeframe. currency should not be higher than for the October 25, 2008 to On December 12, 2008, Prime November 25, 2008 period. Minister Vladmir Putin announced that the Government On December 1, 2008, the CBR had reserved around RUB 9 announced that it would reduce trillion (US$ 323 billion) to the rating requirements for support Russia's banking banks eligible to be system. Of this approximately compensated for their inter-bank RUB 4 trillion (US$ 144 billion) lending losses to BB-/Ba3. This has already been spent. follows an announcement made on October 1, 2008 that the On February 5, 2009, Russian CBR will offer compensation in Prime Minister Vladimir Putin respect of inter-bank lending announced that the Russian losses to eight banks with Government will offer RUB 500 ratings of BB/Ba1 or above. billion ($14 billion) to banks in the next few months. This

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES On December 5, 2008, the followed an announcement the Government announced that it previous day that the Russian would provide RUB 200 billion Government had earmarked (US$ 7.2 billion) to support the another $40 billion for domestic mortgage market. This would be banks. distributed among banks that issue mortgages, while any VTB will receive RUB 200 billion mortgage-backed bonds issued in Tier 1 capital, while VEB will by banks would be guaranteed receive RUB 100 billion in Tier 1 by the Agency for Housing capital, and possibly another Mortgage Lending and RUB 100 billion in Tier 2 capital refinanced by the CBR. or subordinated loans.

On December 16, 2008, the The scheme will allocate an CBR announced that it would additional RUB 100 billion to be increase the term of unsecured given in subordinated loans to loans to banks to one year. private banks. This will, Prime Minister Putin said however, come with the legislation regulating the CBR condition that shareholders of must be amended to extend the those banks match the state term. The CBR has also cut support on an equal rouble limits on collateral-free loans for basis. 34 out of the 136 banks eligible to take part in CBR money The funds were aimed at auctions. This measure comes increasing lending in the after repeated warnings from the banking sector, and the Russian CBR and the Government that Government instructed banks that use state aid to buy recipients of the funds to foreign currency will be increase the amount they lend punished. by 2% per month.

According to RIA Novosti, on The CBR holds regular repo February 3, 2009, Prime auctions, lending to commercial Minister Vladimir Putin warned banks at low rates. On January Russian banks against using 12, 2009, the CBR held an state funds for currency unsecured loan auction on the speculation, reminding bankers Russian Trading System (RTS, that state assistance to the one of Russia's two major stock financial system was not charity: exchanges) providing "Funds are given to banks on participating banks with the basis they will be returned, unsecured loans amounting to and they should be spent not on RUB 64.6 billion at 13.25% p.a. financial speculations but go to Another auction was held on the real sector in the form of

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES January 19, 2009, with loans to enterprises". unsecured loans amounting to RUB 22.7 billion at the annual While Sberbank announced on rate of 13.41% being provided February 18, 2009, that it did not by the CBR. require additional financing, it is rumoured that Sberbank was offered a RUB 500 billion On January 27, 2009, the CBR subordinated loan. According to issued 77.43 billion roubles in Reuters, the CBR has promised five-week collateral-free loans, it a capital injection if its out of 80 billion roubles on offer. exposure to bad loans The average rate was 16.77%, increases. while the cut-off rate stood at 15.55%.

On February 10, 2009, the CBR injected 94.47 billion roubles ($2.62 billion) of seven-day funds into the banking system at a rate of 11.63%. A maximum of 100 billion roubles had been on offer. The week before the CBR injected RUB 82.5 billion of seven-day funds at 10.51%.

On February 16, 2009, the CBR auctioned RUB 19.31 billion in three-month collateral-free loans to commercial banks, out of 25 billion roubles on offer. The cut- off rate at the auction was 17.54%.

On February 19, 2009, Alexei Ulyukaev, the CBR's First Deputy Chairman, announced that the CBR has been cutting limits on collateral-free loans.

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

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

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES financial aid to the State on lower availability of loan Housing Development Fund. capital from commercial banks These measures are expected in the recent period due to the to be submitted to the global capital crises. parliament in March. Investment Measures

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

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

Tax and Employment Measures

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

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

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

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

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

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

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

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

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

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

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

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

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES For state guarantees up to one Slovenia’s claim towards the year, the fee is 50 basis points beneficiary – debt-to-equity (bps) irrespective of the rating. swap). The beneficiaries may also be required to meet certain Liquidity Guarantee Program: requirements on corporate governance. The Liquidity Guarantee Program (the “Program”) State guarantees to the real provides € 1 billion of state sector economy under the guarantees for the banks with Liquidity Guarantee Program intention to finance the real (see first column): sector economy. The state guarantees to the The Slovenian Government will companies can be approved guarantee 80% of each loan until December 2010. The granted to a company under the maximum total amount of the Program. Program conditions guarantees is € 500 million. are: by granting a loan, each General guarantee fees shall be bank undertakes 20% of the reduced by 15 to 25%. Only credit risk; loan maturity ranges 50% of a loan amount is entitled from six months up to five years; to be covered by such a state loan is properly secured; only guarantee. Other conditions are: new loans are eligible, a debtor only loans for investments and has A or B ranking according to working capital are eligible; the rules of the Central Bank of maximum loan amount is Slovenia.2 calculated for each company (taking into account the annual State guarantee to SID banka amount of company’s wages). d.d. Fiscal Measures: State guarantee to SID banka d.d. is planned to be granted in Wage Related Subsidies: an amount of € 500 million, of which € 300 million is envisaged Employers who reduce the to be financed by the EIB. number of hours of work from 40 to 36 (weekly) are entitled to State guarantee to NLB banka monthly € 60 subsidies for each d.d. employee. If employers reduce the number of hours of work to State guarantee to NLB d.d. is 32 (weekly), they are entitled to planned to be granted in an monthly € 120 subsidies for amount of € 1 billion. each employee. The employees are in such cases considered as full time employees in all

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES respects. 5

Income tax:

Income tax general rate of taxation will gradually decreased. The general rate of taxation will be 20 % of the tax base for year 2008, 19 % of the tax base for year 2009 and 18 % for year 2010 and the subsequent years.

The amount of the prepayment of the income tax has been reduced for one percent, and is therefore fixed at 21 % for year 2009. 6

The amount of the tax relief for investments has been increased to 30 % of the invested amount (but cannot exceed the amount of the tax base). The tax relief can be exercised in the year of the investment.

The amount of the general tax relief for research and development has been increased from 20% to 40 % of the invested amount.7

Personal Income Tax:

The amount of the tax relief for investments (for sole proprietors, farmers, etc.) has increased to 30 % of the invested amount (but cannot exceed the amount of the tax base) and the limitation in absolute amount of €10.00 has been abolished.8

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES Special tax relief has been granted to sole proprietors for the years 2008, 2009 and 2010; they are entitled to lower tax base for the amount of the investments in cargo vehicles (EURO V) and buses (Euro IV).9

Loans to the industrial sector:

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

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

1 The Regulation on the Measures and Conditions for Guarantee Issue Pursuant to the Article 86.a of the Public Finance Act (OG of the RS no. 115/08). 2 The Liquidity Guarantee Program has been adopted by the Government on 19 February 2009. The Program has to be adopted by the parliament in a form of an act. 3 Before the respective amendment, the amount of the guaranteed deposit was limited to €22,000. 4 The Regulation on the Measures and Conditions for Granting Loans Pursuant to the Article 81.a of the Public Finance Act (OG of the RS no. 119/08). 5 The Act on Subsidies for Full Time Employment was adopted by the Parliament but has not been published in the OG of the RS yet. 6 The Amendment of the Tax Procedure Act (OG of the RS, no. 125/2008). 7 The Amendment of the Income Tax Act was adopted by the Parliament but has not been published in the OG of the RS yet. 8 The Amendment of the Personal Income Tax (OG of the RS, no. 125/2008). 9 The Amendment of the Personal Income Tax (adopted by the Government on 19 February 2009, not yet adopted by the Parliament). 10 The decision on such Program has been adopted by the Government on 19 February 2009 and has to be approved by the European Commission.

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

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES credit entities provided that (a) assets eligible for purchase. half their mortgage payments they have a share of at least (maximum € 500/month) for up 0.1% of the aggregate The selection of assets to be to three years4 (beginning March outstanding amount of loans and purchased by the FAAF is made 1, 2009 to February 28, 2011) credits to Spanish residents, and by auctions, where the bids provided they meet certain (b) have issued in the previous submitted may be competitive or requirements, including: (i) that five years securities of like not-competitive. The assets in mortgage loan is made prior to nature to those for which the which the FAAF may invest by September 1, 2008 (maximum State guarantee is sought. way of firm and definitive eligible mortgage is €170,000); purchases include mortgage- (ii) that there is a prior (iii) The financing transactions backed bonds and asset-backed agreement between the that may be guaranteed, which securitization bonds, and by way appellant and the lending credit; comprise issuances of of sale and repurchase (repo) and (iii) that the debtor is not in unsecured and unsubordinated transactions the FAAF may arrears in its payment commercial paper, bonds and invest in mortgage-backed obligations; and notes in Spain with a maturity of bonds, asset-backed between three months and three securitization bonds and - extending, on an extraordinary years (securities with a longer mortgage-backed securitization and temporary basis, the tax maturity, up to five years, are bonds (backed by loans granted benefits enjoyed by owners of eligible for guarantee subject to to individuals, companies and housing savings accounts and a report by the Bank of Spain) non-financial entities) provided owners of houses who are and which meet other they meet certain requirements bearing mortgages or who have conditions, including the regarding: (i) the date of purchased a new house and requirement of a minimum issuance, (ii) admission to have not yet been able to issuance amount of €10 million.2 trading on a regulated market, dispose of its primary residence. (iii) credit rating, and (iv) (iv) The basis for calculation of maturity date or estimated In addition, tax legislation has the fees to be charged by the average maturity. been amended in order to permit State for the granting of the monthly VAT reimbursement guarantee. The results of the auctions are upon taxpayers’ request. published on the website of the (v) The maximum amount of FAAF within a maximum period guarantees to be granted to of three business days, including each individual entity and the the following details: (i) the procedures to be followed for aggregate amount of the bids the granting of the guarantees. received, (ii) the amount effectively allocated to the bids, The State will guarantee only (iii) the total number of bids, (iv) the principal of the loan and the the number of allocated bids, (v) ordinary interests. In the event the marginal rate of the auction, that the issuances are and (vi) the weighted average denominated in foreign rate of the auction. currencies, the guarantee will also cover the exchange risk.3 The first auction was held on

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES In consideration the issuer must November 20, 2008, and the provide collateral in the form of acquisitions of assets were Spanish debt securities to the made by way of sale and General Directorate of the repurchase (repo) transactions. Treasury and Financial Policy. The FAAF acquired assets The amount of collateral will be worth €2,115 million of the reassessed monthly. The €5,000 million available. The General Directorate of the remainder €2,885 million Treasury and Financial Policy increased the €5,000 million set will be entitled to enforce such aside for the following auction, collateral on the date of the which was held on December enforcement of the guarantee to 11, 2008, where the FAAF recover the damages resulting acquired €7,224 million by way from exchange rate fluctuations, of firm and definitive purchases if any. of assets.

Finally, in the event of In the third auction, which was enforcement of the guarantee, held on January 21, 2009, the the Government shall notify the FAAF acquired assets worth Bank of Spain so that it can €4,000 million, by way of repo analyze if the requirements for transactions. intervention of the guaranteed entity are met. Lastly, in the fourth auction, held on January 30, 2009, the FAAF So far € 8,000 million of State- acquired, by way of firm and guaranteed medium term notes definitive purchases, assets with maturity on February 2012 worth €6,002 million. have been issued by five different entities, and further issues are expected in the next few weeks.

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

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SWEDEN1 SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES A guarantee scheme was Effective as of October 6, 2008, The Swedish Government will Kaupthing Bank hf.: On October 30, 2008, the Act introduced the last days of Sweden has amended the Act provide a fund to recapitalize (2008:814) on State Support to October 2008 in order to secure (1995:1571) on Deposit banks if required as well as Riksbank will loan as much as Credit Institutions came into the medium term financing Guarantees such that the providing banks with liquidity (a SEK5 billion (US$ 700 million) to force. needs of Swedish banks. The government guarantee for capital injection will likely be in the Swedish unit of Kaupthing total amount which may be deposits was increased from the form of preference shares). Bank hf., after the subsidiary Pursuant to the provisions of the guaranteed under the program SEK250,000 up to a maximum failed to meet payment Act, state support in the form of is SEK1,500 billion; hereof amount of SEK500,000. The Swedish Financial obligations and was put up for guarantees, capital contributions 500 billion may be allocated to Supervisory Authority has, as of sale. or otherwise may be provided to covered bonds with terms of December 12, 2008, amended Swedish banks and credit Swedbank: three to five years. The program its Regulations (FFFS 2008:27) institutions (credit market pertaining to Capital Adequacy companies) if deemed is open until April 30, 2009, but On November 4, 2008, to the effect that Tier 1 capital necessary to prevent serious may be extended until Swedbank (the country’s largest contributions may now represent disruption to the Swedish December 31, 2009. savings bank) became the first a maximum of 30% a firm’s financial system. If the support Swedish bank to seek state help Eligible under the guarantee original own funds, whereas takes the form of a capital to lower its funding costs by scheme are Swedish banks, previously the limit was 15%. contribution to the affected signing up for the Government’s savings banks and credit market The purpose of this change is to institution this will be against SEK1,500 billion guarantee companies that have a increase the Swedish banks’ preference shares with higher program. Swedish banks had considerable share of their lending capacity. On December voting rights than existing suffered little direct impact to the lending secured by real estate 18, 2008, the responsible shares. The State can also credit crisis because they had pledges. Moreover, it is Minister stated that the Swedish provide support by underwriting little subprime exposure, but are required that an applying bank state may make Tier 1 capital (and guaranteeing) a new share now suffering from short-term or credit market company contributions to Swedish banks issue. liquidity pressures and longer- satisfies certain requirements in order to help increase their term concerns over the regarding capital adequacy, i.e., lending capacity. On February The Act provides that any state slowdown in the Nordic and in respect of the Tier 1 capital 3, 2009 the Government support must be commercially Baltic economies. ratio and the capital base, and if announced that the National sound and not distort considered sufficiently Debt Office may provide capital Carnegie Investment Bank: competition. Moreover, the capitalized it will be eligible. to solvent banks, either within terms and conditions of any the context of new share issues On October 26, 2008, the state support must be drafted Guarantee undertakings which or by making Tier 1 capital Swedish Riksbank granted a such that the existing are issued to an individual bank contributions. The National Debt credit of SEK1 billion to shareholders of the institution may not from time to time Office has been authorised to Carnegie Investment Bank in bear any losses incurred by the exceed the higher of (i) the provide capital as aforesaid up order to avoid a possible default institution. aggregate of maturing debt to a total amount of SEK 50 situation for the bank. On instruments issued by the bank billion (SFS 2009:46). One October 28, 2008, the credit was The Act also gives the State the and (ii) 20% of bank’s deposits condition for Tier 1 capital increased to a maximum of right to redeem the shares of a on account from the public as at contributions is that the SEK5 billion. As security for the credit institution under certain September 1, 2008. receiving bank accepts credit, the parent holding circumstances – i.e., if the restrictions as to compensation company D Carnegie & Co AB, institution or its shareholders schemes for the top five pledged i.e. all of its shares in have refused to accept the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES The National Debt Office (the executives. Carnegie Investment Bank and terms for state support; provided “Debt Office”) will request Max Matthiesen (insurance that the Settlement Board (for applying banks to enter into a (See other columns.) brokers and pension settlement of disputes Guarantee Agreement with the consultants). The credit was concerning support provided Debt Office. Under the terms of subsequently assigned to the under the Act) has declared the the Guarantee Agreement, the Debt Office. On November 10, terms of the proposed support banks have to restrict 2008, the Swedish FSA not to be unreasonable. compensation levels to the top withdrew Carnegie’s banking five executives, such that their licence (for violations of banking The Act provides for the salaries must not be increased regulations, i.e. the large establishment of a stabilization and bonuses or stock options exposures provisions). fund. The fund will be financed not granted as long as the Following the withdrawal of the through fees collected from the Guarantee Agreement is in banking licence, the Debt Office, banks and credit institutions. It force. There is also a under the pledge agreement, is expected that the fund will commitment not to increase the took over the title to the shares reach SEK150 billion within a remuneration to Board directors. in the banking company and the period of 15 years. The fund will Moreover, the terms of the insurance brokers. As a result be administered by the National Guarantee Agreement further of the takeover, the FSA Debt Office. provide that the relevant bank reconsidered its decision and in Iceland: may not refer to the government view of the new ownership, guarantee when marketing revoked its withdrawal decision On November 5, 2008, officials credit and the bank will also and instead issued a warning to from the central banks and have to undertake not to the bank. finance ministries of Norway, significantly expand its activities, Sweden, Finland and Denmark if the expansion would not have held a meeting in Stockholm to taken place in the absence of discuss their contributions to a the government guarantee. $6 billion rescue package for Iceland. The four Nordic nations The government guarantee may have said that they are willing to be issued in respect of bonds support Iceland, but only after it and other instruments subject to agreed to design and implement trading on the capital market. an economic stabilisation plan in The relevant bank’s debt association with the IMF. The instrument must have a term of loans would also require more than 90 days but less than approval from the respective 3 years, except for covered countries’ parliaments. bonds which may have a term of up to 5 years. Home Owner Protection: BKN, the National Housing A guarantee issued by the Credit Guarantee Board, a Swedish State (the Kingdom of national government agency Sweden) through the Debt under the Ministry of Finance, Office, will be irrevocable and administers Government credit unconditional (subject to the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES terms of the guarantee). There guarantee programs for housing is no requirement to exhaust any development. Government credit remedies against the bank guarantees can be provided for issuer prior to making a demand loans advanced by financial under the guarantee. institutions operating in Sweden. On December 16, 2008, the Banks availing themselves of responsible Minister instructed the state guarantee will have to BKN to draft a program, the pay a fee, based on the purpose of which was to protect Recommendations on house owners against significant Government Guarantees on falls in value of their housing bank debt issued by the properties, causing a lending European Central Bank bank to call its loan, because the October 20, 2008. The fee value of the bank’s security has payable is based on market depreciated. As this program is benchmarks and will take into presently understood, the account institution-specific risk Government would guarantee (median spread for credit default the loans vis-a-vis the bank. It swaps or credit rating) plus a has been emphasized by the mark-up of typically 50 basis Minister that only house owners points. capable of servicing their debts on an on-going basis will be The Swedish Government eligible under the program. guarantee scheme has been notified and approved by the European Commission (State Aid No. 533/2008).

At this point in time only one major Swedish commercial bank and an automotive financing company has joined the scheme, whereas the three other major Swedish banks have indicated a reluctance to join. It is believed that the banks have issues with: (i) the fee and (ii) the restriction imposed on any expansion by the banks. In view hereof, the National Debt office has waived the restriction on expansion and has lowered the fees slightly in order to make the scheme more attractive to

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

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

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

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES2 MEASURES FINANCIAL ASSETS OTHER MEASURES scheme. 7 the NBP to offer banks in its on the basis of its emergency ordinary expenditure covered by jurisdiction Swiss Francs against powers, will subscribe a the budget. The Federal Council Certain financial institutions, e.g. Polish Zlotys. CHF 6 billion mandatory expressly mentioned that it some cantonal banks and Post convertible note with would examine and, if Finance, benefit from a statutory two-and-half-year term and necessary, present further guarantee from their canton or, paying 12.5% p.a. measures in 2009. in the case of Post Finance, the Federal Government. Second, UBS AG will transfer up Second, it accelerated its to US$ 60 billion in illiquid decision to allow firms to use securities and other assets of its their crisis reserves, an balance sheet to a special institution which provided tax purpose vehicle SNB StabFund. incentives to firms to set aside a On December 19, 2008, SNB share of their profits for a crisis. StabFund acquired the first This mechanism was due to be tranche of assets from UBS in abolished by 2012. Now, the an amount equivalent to USD Federal Council decided to 16.4 billion.10 accelerate this decision to January 1, 2009.9 This will allow This transaction will be financed the 650 firms that put aside CHF by a US$ 6 billion equity 500 million to use these funds at payment by UBS and a their discretion as of the US$ 54 billion non-recourse beginning of next year. 12-year loan from the Swiss National Bank. The loan will Other Conjuncture Measures: bear LIBOR plus 250 basis points. On February 11, 2009 the Federal Council launched a The entity will be controlled by second step to its conjunctural the Swiss National Bank, which programme including an upon repayment of the loan in investment of CHF 1 billion in principal and interest, will be various projects, ranging from entitled to an equity kicker investments in rail and road amounting to US$ 1 billion and infrastructure, increased 50% of any remaining equity.6 subsidies for applied sciences, encouragement for The Swiss Federal Assembly environmental protection and (the Swiss parliament) has sustainable energy, renovation approved the principle of the of buildings of the ETH and CHF 6 billion mandatory armasuisse, and the marketing convertible bond subscribed by of tourism. It also reduced the the Swiss Government. financing fees for the export guarantee scheme, extended Glarner Kantonalbank: benefits for the renovation of More anecdotally, on subsidised housing, and

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

1 See http://www.credit-suisse.com/news/en/media_release.jsp?ns=40924. 2 See generally http://www.snb.ch/en/ifor/media/id/media_releases. 3 See http://www.credit-suisse.com/news/en/media_release.jsp?ns=40924. 4 See http://www.ubs.com/1/e/about/news/archive/archive10?newsId=133686. 5 See http://www.ubs.com/1/e/about/news/archive/archive10?newsId=143689. 6 See http://www.snb.ch/en/mmr/reference/pre_20081016_1/source/pre_20081016_1.en.pdf; See also http://www.efd.admin.ch/aktuell/medieninformation/00462/index.html?lang=en&msg-id=22019. See also http://www.ubs.com/1/e/about/news.html?newsId=154213; and See also http://www.ebk.admin.ch/e/publik/medienmit/20081016/mm-massnahmenpaket-20081016-e.pdf. 7 http://www.efd.admin.ch/00468/index.html?lang=fr&msg-id=22499. 8 http://www.seco.admin.ch/aktuell/00277/01164/01980/index.html?lang=fr&msg-id=22775. 9 http://www.evd.admin.ch/aktuell/00120/index.html?lang=fr&msg-id=24000. 10 http://www.snb.ch/en/mmr/reference/pre_20081219_1/source/pre_20081219_1.en.pdf.

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

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

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

The National Bank has The Law On Concessions on approved special procedure to construction and operation of render credit to local banks that highways, adopted in new need liquidity support version on January 31, 2009, is (December 25, 2008, No. 459). aimed at stimulating investments in the sector and developing the On January 14, 2009 the economy. Government together with the National Bank of Ukraine have adopted a procedure for commercial banks refinancing.

The National Bank of Ukraine

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES has introduced an additional requirement for commercial banks refinancing dated February 9, 2009, No. 57.

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

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

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

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

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

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

On December 24, 2008, the UAE Central Bank introduced

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

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

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES drawdown window, eligible loans and asset-backed 2008, the HM Treasury stated exceed a “first loss” amount to institutions can issue new securities created in viable that institutions requesting be borne by the institution. The guaranteed debt. After the securitization structures. government recapitalization will, Treasury protection will cover closure of the drawdown inter alia, need to: (i) limit 90% of the credit losses which window, those institutions can The assets will be purchased by remuneration of senior exceed this “first loss” amount, continue rolling over any a wholly owned subsidiary of the executives both for 2008 (no with each participating institution outstanding guaranteed debt (all BoE, called “Bank of England cash bonus for board), and, for retaining a further residual of it until April 13, 2012, and up Asset Purchase Facility Fund remuneration policy going exposure of 10% of any credit to one-third of the total until April Limited”. The purchases will forward, limit bonuses to reduce losses exceeding this amount. 9, 2014). initially be financed by the “moral hazard” activities; (ii) issuance of Treasury Bills by the agree to modify dividend (ii) Eligible Institutions are: UK The fee for the guarantee will be UK Government. The BoE’s policies; and (iii) maintain, over incorporated authorised deposit- based on 100% of the Monetary Policy Committee has the next three years, the takers (including UK subsidiaries institution’s median five-year unanimously voted to ask the availability and active marketing of foreign institutions) with more CDS spread during July 2007 to Governor of the BoE to write to of competitive credit to than £25 billion of eligible July 2008, as determined by HM the Chancellor of the Exchequer homeowners and small assets. HM Treasury will Treasury, plus 50 basis points. seeking authorisation to businesses at 2007 levels. consider extending the Scheme Prior to December 15, 2008, the purchase private sector assets to other authorised deposit fee was based on the median using newly created reserves RBS: takers in the future. Eligible five-year CDS spread for the (i.e. quantitative easing). institutions may request to preceding 12 months to October On October 13, 2008, RBS participate in the Scheme until Initially, there will be two March 31, 2009. 7, 2008. It is expected that this schemes under the APF: announced the U.K. Treasury change will result in a lower fee would underwrite £15 billion of (iii) Participants will be required being payable by institutions for (i) Commercial Paper Facility: ordinary shares (common stock) to enter into legally binding the guarantee. This facility, which became and purchase £5 billion of commitments to increase operational on February 13, preference shares (preferred lending to creditworthy As the changes announced on 2009, enables the BoE to stock). The U.K. Government borrowers, comply with December 15, 2008 and purchase investment grade would have representatives on remuneration policy consistent January 19, 2009, vary the sterling commercial paper the bank’s board. The bank has with the FSA’s Code of Practice Scheme, the Government is issued by UK corporates, both at announced that it has agreed to on remuneration policy (see seeking the approval of the issuance and in the secondary maintain the availability of SME below) and meet the highest European Commission to the market, subject to a minimum and mortgage lending at 2007 international standards of public revised Scheme (the spread. There will be purchases levels. disclosure in relation to their Commission had approved the during a defined period each assets. previous version of the Scheme day. Eligible issuers will be On January 19, 2009, the on October 13, 2008). companies, including their Government decided to convert (iv) Eligible Assets are: finance subsidiaries, that make its preference shares in RBS • Corporate and leveraged loans The scheme is open to a material contribution to into ordinary shares. It also U.K.-incorporated banks economic activity in the UK. UK agreed a number of lending • Commercial and residential (including U.K. subsidiaries of incorporated companies, commitments with RBS, property loans foreign institutions) that have a including those with foreign- including a new commitment to substantial business in the U.K. incorporated parents, of increase lending by £6 billion in • Structured credit assets, and U.K. building societies. Any sufficient size to sustain a the next 12 months. including RMBS, CMBS, CLOs other U.K.-incorporated bank commercial paper program and and CDOS

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

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES markets and with a genuine Government assisted or remuneration policy and the business in the UK, would acquired banks are based on other on capital treatment of normally be regarded as “maximizing long-term value and assets protected by the meeting this requirement. Bonds restricting the potential for Scheme: issued by non-bank financial rewarding failure”. However, the companies would in principle be assisted or acquired companies (i) A new Code of Practice for eligible, subject to satisfying the will continue to have their own remuneration policy. The BoE that the issuer makes a independent boards and principles in this Code are material contribution to management teams, relevant to all FSA-regulated corporate financing in the UK. determining their own firms. The aim of the Code is to Paper issued by leveraged commercial strategies. ensure that firms have investment vehicles would not remuneration policies which are be eligible. consistent with sound risk management, and which do not Initially, only listed sterling- expose them to excessive risk. It denominated bonds would be is not concerned with levels or eligible. There are many other quantum of remuneration. The requirements (relating to principles embodied in the Code maturity and credit rating) that include: apply in determining whether a bond is eligible. Convertible or • The bonus pool calculation exchangeable bonds are not should include an eligible. The BoE is finalising the adjustment for current and rules of this scheme and is future risk, and take into currently seeking feedback on it. account the cost of capital employed and liquidity The BoE is also currently required. consulting with market participants on the precise • Firms should not assess details of the planned CGS performance solely on the Facility (to purchase CGS- results of the current backed paper) and on planned financial year. purchases of syndicated loans • Non-financial performance and asset-backed securities. It metrics, including adherence may also decide to extend the to effective risk management APF to non-sterling and compliance with denominated instruments. regulations, should form a Discount Window Facility significant part of the (“DWF”): performance assessment process. The DWF is intended to provide liquidity insurance, not to tide • The measurement of over firms facing fundamental performance for long term solvency problems. Under the incentive plans, including those based on the

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES DWF, BoE will swap the performance of shares, Government securities on its should also be risk-adjusted. balance sheet for high quality eligible collateral from banks • The major part of any and building societies. In bonus which is a significant exceptional circumstances, BoE proportion of the fixed may lend cash, rather than gilts, component should be against eligible collateral under deferred, with a minimum the DWF. The transactions will vesting period. normally be for 30-day (ii) A statement of capital maturities. Gilts borrowed may treatment of assets insured not be used as collateral for under the Asset Protection Operational Standing Lending Scheme. The FSA expects the Facility borrowings but may be Scheme to protect against credit used as collateral in open losses experienced in respect of market operations. On January assets in the Banking Book, 19, 2009, the BoE announced although participants can that it would permit drawings request HM Treasury to provide from the DWF with a term of 364 cover for assets in the Trading days, in addition to the standard Book. The Scheme will be option to draw for 30 days. considered the equivalent of There would be an additional 25 eligible unfunded credit basis points fee for any protection under the Prudential drawings with initial maturity Sourcebook for Banks, Building beyond 30 days. The BoE has Societies and Investment Firms now published a Market Notice (BIPRU). The “first loss amount” on the DWF. This sets out of an asset will not qualify for details of how the facility will any special capital treatment. operate, securities eligible for The FSA expects firms to deduct exchange, institutions eligible to the First Loss tranche from join the facility and the fees capital resources (although charged. Instruments eligible as impairments already taken at the collateral will be classified into commencement of the Scheme four levels, each attracting will reduce the extent of different fees upon exchange: deduction). The Senior Tranche (i) Level A: high-quality debt (i.e. where losses are securities that are routinely reimbursed by the Treasury) is eligible as collateral in the BoE’s subject to the risk weight of the short-term repo open market protection provided, which would operations; typically be 0% and would therefore attract no capital (ii) Level B: third party debt charge.. securities trading in liquid

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES markets; Capital Regulation: (iii) Level C: other third party On January 19, 2009, the FSA debt securities including those issued a statement clarifying its that are not trading in liquid approach to regulatory capital, markets; following the recapitalization of the UK banking sector (iv) Level D: own-name announced on October 8, 2008. securitizations and own-name The FSA stated that the purpose covered bonds. of the recapitalization scheme Instruments may be deemed was to ensure that bank capital ineligible for the DWF if the BoE ratios were sufficiently high to judges that they were created provide a buffer to allow the for the express purpose of banks both to withstand the obtaining funding from the BoE. challenging economic conditions and to continue lending on Term Auctions: normal commercial criteria. It In September 2007, BoE was not intended to create new announced that it would conduct statutory capital requirements. four auctions to provide funds at The FSA also endorsed the view three months maturity against a expressed by the Basel wider range of collateral Committee in a statement of (including U.K. residential January 16, 2009, that the mortgages) than that used in its capital regime should weekly open market operations. incorporate counter-cyclical Banks and building societies measures which ensure that with reserve accounts with BoE banks build up capital buffers in or with access to the BoE’s good years which they can draw standing facilities were eligible down during economic to participate. On October 8, downturns. 2008, the U.K. government announced that the BoE would The FSA confirmed that each of continue to conduct auctions the participating banks are against extended collateral, expected to have a minimum reviewing the size and core tier 1 of 4%. At the time of frequency of the operations as the recapitalization in October necessary. 2008, the FSA used a tier 1 ratio of 8%. The FSA estimates 6 – Special Liquidity Scheme: 7% to be a comparable post- The Scheme, launched in April stress tier 1 number to the core 2008, enabled banks and tier 1 number of 4%. This building societies with access to approach is intended to be a the BoE’s standing facilities to supervisory framework, and not temporarily exchange their high

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES quality mortgage-backed and a new set of rules. other securities for U.K. Government securities. The The FSA also intends to ensure drawdown period of the Scheme that the application of the Basel was initially six months, due to Accord (implemented through end on October 21, 2008. This the Capital Requirements period was then been extended Directive) does not create any to January 30, 2009. On unnecessary or unintended pro- January 19, 2009, the cyclical effects. In particular, the Government announced that the FSA is amending the variable window for swapping illiquid scalar method of converting assets for Treasury Bills in the internal credit risk models from Special Liquidity Scheme would point in time to through the close on January 30, 2009. The cycle. These changes will scheme will continue to provide significantly reduce the liquidity support for a further requirement for additional capital three years from that point. resulting from the procyclical effect. Extension of Eligible Collateral: Banking Act 2009: On October 3, 2008, the BoE The Banking Act was passed on extended the collateral eligible February 12, 2009. The Act is for use in its weekly sterling designed to strengthen the three-month repo operations to existing U.K. framework for include AAA rated asset-backed financial stability and depositor securities based on some protection. Most of the corporate and consumer loans, provisions of the Act came into and approved highly-rated, force on February 21, 2009. asset-backed commercial paper Part 1 of the Act introduces a programs, where the underlying permanent special resolution assets would be eligible if regime (“SRR”) for dealing with securitized. The collateral is banks that get into financial subject to haircuts as set out in difficulties. HM Treasury, the the market notice of October 13, Financial Services Authority and 2008. the Bank of England (the “BoE”) On November 14, 2008, the BoE all play a role. The BoE will have announced that it would the power to transfer a failing continue to hold extended- bank’s business or its shares to collateral three-month repo open a “bridge bank” (i.e., a company market operations twice-monthly wholly owned by the BoE), with up to and including the a view to restructuring it for scheduled long-term repo onward sale to the private sector. It can also carry out a

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES operation on January 20, 2009. direct transfer to a private sector purchaser. The U.K. Treasury is given the power to nationalize a failing bank. The BoE has the power to make partial transfers, i.e., to transfer healthy assets out of a failing bank and into a bridge bank. This may result in prejudice to those creditors whose claims are not transferred to the bridge bank. One of the objectives of the special resolution regime is to “protect depositors”. Part 2 establishes a new bank insolvency procedure (“BIP”), based largely on existing liquidation provisions of the Insolvency Act 1986 as amended by the Enterprise Act 2002. The BIP provides for the orderly winding up of a failed bank, including prompt payments from the Financial Services Compensation Scheme (“FSCS”) to eligible depositors. There are powers to extend the BIP to building societies and credit unions. Part 3 establishes a new bank administration procedure, based largely on existing administration provisions of the Insolvency Act 1986, as amended by the Enterprise Act 2002. This procedure is to be used where there has been a transfer of part of a failing bank’s business, assets or liabilities to a bridge bank or a private sector purchaser under the SRR, leaving an insolvent residual

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SPECIAL CENTRAL BANK RECAPITALIZATION PURCHASES OF TROUBLED GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES FINANCIAL ASSETS OTHER MEASURES entity. It is designed to ensure that essential services and facilities that cannot be immediately transferred to the bridge bank or private purchaser continue to be provided for a period of time. The Government has also enacted regulations that provide safeguards in the event of a “partial property transfer”. These include safeguards for set-off and netting arrangements where partial transfers are made so that contracts covered by set-off or netting agreements are protected from disruption in a partial transfer subject to express carve-outs. Furthermore, security-holders will also be given explicit protection (including holders of floating charges). There are also third-party compensation safeguards to ensure creditors remaining in the residual bank may not be left worse off than they would have been had the bank been subjected to ordinary insolvency procedures. EC Competition Laws: The U.K. Government has advised the European Commission of its planned support of the U.K. financial sector in relation to the Government scheme for consideration under EC competition laws.

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UNITED STATES OF AMERICA OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS Temporary Liquidity FDIC Insurance Program: Financial Stability Plan On October 14, 2008, the U.S. Mortgage-Backed Securities U.S. Government Loan to the Guarantee Program (“TLGP”): Congress announced the Purchase Program: Auto Industry: The FDIC will expand deposit On February 10, 2009, the Troubled Assets Relief Program On October 14, 2008 the FDIC insurance for non-interest- Treasury, Federal Reserve, (“TARP”) Capital Purchase The U.S. Treasury Department In late September 2008, the announced its temporary bearing transaction accounts. FDIC, Comptroller of the will be authorized to purchase U.S. Congress approved a more 1 Program providing for direct Liquidity Guarantee Program The maximum coverage under Currency (“OCC”), and Office of equity investments in certain up to US$ 700 billion of than US$ 630 billion spending issuing guarantees of newly the FDIC deposit insurance Thrift Supervision (“OTS”) financial institutions under the distressed mortgage-backed bill, which included a measure issued senior unsecured debt of program will temporarily be announced a new Capital Economic Emergency securities and other assets and for US$ 25 billion in loans to the certain banks, thrifts and holding increased from US$ 100,000 to Assistance Program to help Stabilization Act (“EESA”). then resell the mortgages to auto industry. These low- companies. The FDIC revised US$ 250,000.3 ensure that U.S. banking investors under the Economic interest loans are intended to aid the regulations on November 21, institutions have sufficient capital The EESA authorized the U.S. Emergency Stabilization Act the industry in its push to build 16 2008. Under the new program, the to withstand any new challenges, Treasury to use US$ 250 billion (“EESA”). more fuel-efficient, FDIC will provide full insurance paired with a supervisory without further action. Another environmentally-friendly The FDIC will fully guarantee all coverage for non-interest- process to produce a more US$ 100 billion can be obtained On November 12, 2008 vehicles. U.S. auto giants senior unsecured debt issued by bearing accounts until the end of consistent and forward-looking upon the President notifying Treasury Secretary, Henry General Motors, Ford and FDIC-insured institutions, next year. Banks will pay a new assessment of the risks on Congress. Finally, the Paulson, stated “Over these Chrysler will be the primary subject to the limitations premium to cover the expense banks' balance sheets and their remaining US$ 350 billion of the past weeks we have continued beneficiaries. 27 discussed below, and their of the program. potential capital needs. total US$ 700 billion can be to examine the relative benefits parent companies up to obtained by giving notice to of purchasing illiquid mortgage- Automotive Industry June 30, 2009, with any For non-interest-bearing They announced the following: Congress, who then have related assets. Our assessment Financing Program (AIFP): guarantee ceasing on June 30, transaction deposit accounts 30 days to deny funding if they at this time is that this is not the AIFP is to prevent a significant 2012. (including accounts swept from • A new Treasury and wish. most effective way to use TARP a non-interest bearing Federal Reserve initiative to funds, but we will continue to disruption of the American Assessment rates under the transaction account into an non- dramatically expand – up to The EESA has two definitions of examine whether targeted forms automotive industry, which Debt Guarantee Program are as interest bearing savings deposit US$1 trillion – the Term Asset- “troubled assets”, one being of asset purchase can play a would pose a systemic risk to follows: account), a 10 basis point Backed Securities Lending mortgage-related assets and the useful role, relative to other financial market stability and annual rate surcharge will be Facility (“TALF”) in order to other being assets on which the potential uses of TARP have a negative effect on the for debt with a maturity of applied to non-interest-bearing reduce credit spreads and Treasury believes it should resources, in helping to economy of the United States. 180 days or less (excluding transaction deposit amounts restart the securitized credit spend money. It is the second strengthen our financial system The program requires overnight debt), 50 basis points; over US$ 250,000. markets that in recent years definition that Treasury is using and support lending. But other participating institutions to strategies I will outline will help implement plans that will for debt of 181-364 days, supported a substantial portion to buy stock in banks, and it has of lending to households, chosen to spend US$ 250 billion to alleviate the pressure of achieve long-term viability. 75 basis points; and Every institution, regardless of 17 students, small businesses, and on bank securities; the first illiquid assets.” risk category, will be charged its Participating institutions must others. US$ 125 billion of which went to for debt of 365 days or greater, normal quarterly risk-based also adhere to rigorous nine banks.14 100 basis points. deposit insurance assessment. executive compensation That assessment will equal its • An extension of the FDIC's standards and other measures The rates set forth above will be As of February 17, 2009, over assessment rate times its Temporary Liquidity Guarantee to protect the taxpayer’s increased by 10 basis points for 400 banks have received funds assessment base (which is Program to October 31, 2009. interests, including limits on the senior unsecured debt issued by for a total of US$ almost equal to total domestic institution’s expenditures and a holding company or another 195,995,843,000.15 other corporate governance non-insured depository • A new framework of

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS institution affiliate that becomes deposits). governance and oversight to Financial institutions had until requirements.23 an eligible and participating help ensure that banks receiving mid-November to elect into this entity, where, as of In addition to this assessment, funds are held responsible for Government recapitalization JPMorgan Chase & Co.: September 30, 2008, or as of appropriate use of those funds scheme which will be in the form an institution that has not opted The Federal Reserve Bank of the date of eligibility, the assets through stronger conditions on of non-voting preferred shares out of the deposit guarantee New York provided a of the holding company’s lending, dividends and executive which are redeemable by the portion of the TLGP will pay US$ 29 billion credit line to combined insured depository compensation along with issuing bank after three years. 10 basis points on non-interest JPMorgan Chase & Co. for its institution subsidiaries constitute enhanced reporting to the The preferred shares will pay an bearing transaction account purchase of Bear Stearns for less than 50% of consolidated public. annual dividend of 5% during balances in excess of US$ 236 million or US$ 2 per holding company assets. the first five years and will step- US$ 250,000. share, subsequently raised to up to 9%. Under the Final Rule, an eligible • A limit on senior executive US$ 10 per share, to ensure the Several banks have opted out of compensation to those entity that chooses to opt out of Warrants were issued to the sale could move forward. the general guarantee program institutions that take under the the TLGP by December 5, 2008, Government based on 15% of JPMorgan agreed to guarantee and the transaction-account TARP to US$500,000 in total will not be assessed a fee for its the face value of preferred Bear Stearns’s trading program.22 compensation plus restricted participation in the program. shares on issue with this halved obligations. stock payable. However, if an eligible entity if the preference shares are American International Group chooses to remain in the redeemed prior to the December (“AIG”): program after December 5, Capital Assistance Program 31, 2009. 2008, the entity will be subject to (“CAP”): The Federal Reserve Bank of assessments retroactive to New York intervened after AIG November 13, 2008 on all senior Banking supervisory agencies was unable to secure a private- secured debt, other than will “stress test” each major U.S. sector loan, and granted a overnight debt instruments, banking institution to determine two-year revolving credit facility issued on or after October 14, whether the institution could of US$ 85 billion in return for an 2008 and on or before withstand economic conditions option to acquire an 80% stake December 5, 2008, that is still even more adverse than those in the insurance giant. outstanding on December 5, anticipated. If additional capital 2008. is needed, the Treasury will On October 8, the Federal make available a new capital Reserve Board authorized the Beginning on December 6, facility. The expectation is that Federal Reserve Bank of New 2008, assessments accrue on the capital will be in the form of York to lend up to all senior unsecured debt with a convertible preferred shares, US$ 37.8 billion by purchasing maturity of greater than 30 days with a dividend rate to be investment-grade, fixed-income issued by it on or after specified and a conversion price securities from certain regulated December 6, 2008.2 set at a modest discount from U.S. insurance subsidiaries of In the final rule, the FDIC Board the institution's stock price up to AIG. voted to include NOW accounts February. 9, 2009. This security with interest rates of 0.5% or would serve as a source of Fannie Mae and Freddie Mac: “contingent” common equity, less and IOLTAs (lawyer trust The U.S. government seized convertible solely at the option accounts) in the transaction control of Fannie Mae and of the issuer for an extended Freddie Mac and made a period of time. In addition, with

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS account program. supervisory approval, banks will commitment to provide up to be allowed to exchange existing US$ 100 billion to each On January 16, 2009, the FDIC Capital Purchase Program company to ensure they would board announced that it will preferred stock (that of the first not fall into bankruptcy. soon propose rule changes to its TARP tranche) for the new CAP Together, the two companies Temporary Liquidity Guarantee instrument. Participation in the own or guarantee nearly half the Program to extend the maturity stress test is mandatory for U.S. US$ 12 trillion mortgage market, of the guarantee from three to banking institutions with over and by July 2008 operated at up to 10 years where the debt is US$ 100 billion of assets on a leverage ratios of approximately supported by collateral and the consolidated basis, but banks 50 to 1. issuance supports new not meeting that threshold may consumer lending. also apply for CAP capital. The seizure involved both Stress testing reportedly began companies being placed in a at some banks on February 25. government conservatorship (analogous to a bankruptcy Public-Private Investment reorganization) and also Fund (“PPIF”): replaced senior management. Dividends were eliminated and the U.S. Government took an The PPIF will be capitalized by option to acquire 80% of each both Treasury and private company’s common stock. capital, with financing supported However, the U.S. Government by the Federal Reserve and did not guarantee the FDIC. The PPIF will be sized up subordinated debt or preferred to US$ 500 billion, with the stock issued by these potential to expand up to $1 companies, which is held on the trillion. The PPIF will acquire balance sheets of many banks. real-estate related “legacy” The U.S. Federal Reserve will assets from financial institutions, also begin purchasing short- thereby cleaning up financial term debt obligations issued by institutions’ balance sheets with Fannie Mae, Freddie Mac and the goal of stabilizing those the Federal Home Loan Banks institutions, supporting new in the secondary market.18 lending, and improving overall market functioning. Fannie Mae, Freddie Mac and Ginnie Mae: Commercial Paper Funding On November 24, 2008, the Facility (“CPFF”): Federal Reserve Board The CPFF (announced announced that it will initiate a October 7, 2008) will purchase program to purchase the direct through a Special Purpose obligations of Fannie Mae, Vehicle three-month unsecured Freddie Mac, and the Federal

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS and asset-backed commercial Home Loan Banks—and paper (“ABCP”) from eligible mortgage-backed securities issuers.4 (MBS) backed by Fannie Mae, Freddie Mac, and Ginnie All U.S. issuers of commercial Mae.19 paper are eligible. The maximum amount of a single Purchases of up to issuer’s commercial paper US$ 100 billion in GSE direct covered at any time will be the obligations under the program greatest amount of U.S. dollar- will be conducted with the denominated commercial paper Federal Reserve’s primary the issuer had outstanding on dealers through a series of any day between January 1 and competitive auctions and will August 31, 2008. begin next week. Purchases of up to US$ 500 billion in MBS will On January 26, 2009, the NY be conducted by asset Federal Reserve announced a managers selected via a change in eligibility competitive process with a goal requirements. The CPFF will of beginning these purchases not purchase ABCP from issuers before year-end. Purchases of that were inactive prior to the both direct obligations and MBS creation of the CPFF. An issuer are expected to take place over will be considered inactive if it several quarters. did not issue ABCP to institutions other than the sponsoring institution for any consecutive period of three Government Sponsored months or longer between Enterprise Credit Facility January 1 and August 31, 2008. (“GSECF”): Liquidity Fund: The lender of last resort for The Liquidity Fund, which began GSEs (Fannie Mae, Freddie on September 19, 2008 and Mac and FHLB) will ensure ends on October 30, 2009, will continued access to funding and lend funds to depository ensure market stability.20 institutions and bank holding companies in order for them to Citigroup: purchase eligible ABCPs from money market mutual funds On November 23, 2008, the (“MMMF”) under certain U.S. Treasury Department and conditions.5 the Federal Deposit Insurance Corporation announced that it Money Market Investor will provide protection against

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS Funding Facility (“MMIFF”): the possibility of unusually large losses on an asset pool of A special purpose vehicles approximately US$ 306 billion of established by the private sector loans and securities backed by (“PSPV”) will cease purchasing residential and commercial real assets and will enter the wind- estate and other such assets, down process on October 30, which will remain on Citigroup’s 2009, unless the Board extends 6 balance sheet. As a fee for this the MMIFF. Eligible assets arrangement, Citigroup will issue include U.S. dollar-denominated preferred shares to the Treasury certificates of deposit, bank and FDIC. Treasury will invest notes and commercial paper US$ 20 billion in Citigroup from issued by highly rated financial the Troubled Asset Relief institutions and having Program in exchange for remaining maturities of 90 days preferred stock with an 8% or less. dividend to the Treasury.21

On January 7, 2009, the Federal Targeted Investment Program Reserve Board expanded the (TIP): set of institutions eligible to participate in the MMIFF from TIP is designed to prevent a loss U.S. money market mutual of confidence in financial funds to also include a number institutions that could result in of other money market significant market disruptions, investors. The newly eligible threatening the financial strength participants include U.S.-based of similarly situated financial securities-lending cash-collateral institutions, impairing broader reinvestment funds, portfolios, financial markets, and and accounts (securities undermining the overall lenders); and U.S.-based economy. Institutions will be investment funds that operate in considered for this program on a a manner similar to money case-by-case basis.24 market mutual funds, such as certain local government On December 31, 2008, investment pools, common trust Citigroup received US$20 billion funds, and collective investment under this program. funds. Bank of America: The Federal Reserve Board also authorized the adjustment of On January 16, 2009, the U.S. several of the economic Treasury Department and the parameters of the MMIFF, Federal Deposit Insurance including the minimum yield on Corporation announced that

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS assets eligible to be sold to the they will provide protection MMIFF, to enable the program against the possibility of to remain a viable source of unusually large losses on an backup liquidity for money asset pool of approximately US$ market investors even at very 118 billion of loans, securities low levels of money market backed by residential and interest rates. commercial real estate loans, and other such assets, all of Primary Dealer Credit Facility which have been marked to (“PDCF”): current market value. The large majority of these assets were The PDCF, effective assumed by Bank of America as September 15, 2008, is an a result of its acquisition of overnight loan facility that will Merrill Lynch. The assets will provide funding to primary remain on Bank of America's dealers, who will participate balance sheet. In addition and if through their clearing banks, in necessary, the Federal Reserve exchange for tri-party eligible stands ready to backstop collateral. It is scheduled to residual risk in the asset pool expire October 30, 2009.7 through a non-recourse loan. Term Securities Lending Facility (“TSLF”): The U.S. Treasury will invest US$ 20 billion in Bank of The TSLF is a 28-day facility America from the Troubled that offers general Treasury Assets Relief Program in collateral, such as Treasury bills, exchange for preferred stock notes, bonds and inflation- with an 8 percent dividend to the indexed securities, to primary Treasury. Bank of America will dealers of the New York Federal comply with enhanced executive Reserve Bank in exchange for compensation restrictions and other eligible collateral. It is implement a mortgage loan scheduled to expire October 30, modification program.25 2009.8

Term Auction Facility (“TAF”): The TAF, established in December 2007, is a temporary credit facility that allows a depositary institution to place a bid for an advance from its local Federal Reserve Bank at an interest rate determined as a

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS result of the auction. The first auction took place on December 17, 2007.9 Federal Reserve intends to conduct bi-weekly TAF auctions as long as necessary. Only depository institutions are eligible.

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

Temporary 23A Exemption: The U.S. Federal Reserve temporarily exempt certain bank-to-affiliate financings from limits under section 23A of the Federal Reserve Act and the Fed’s regulation W.12

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

Under the TALF announced on November 25, 2008 the Federal Reserve Bank of New York (“FRBNY”) will lend up to

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS US$ 200 billion on a non- recourse basis to holders of certain AAA-rated Asset-Backed Securities (“ABS”) backed by newly and recently originated consumer and small business loans. The FRBNY will lend an amount equal to the market value of the ABS less a haircut and will be secured at all times by the ABS. The U.S. Treasury Department—under the Troubled Assets Relief Program (“TARP”) of the Emergency Economic Stabilization Act of 2008—will provide US$ 20 billion of credit protection to the FRBNY in connection with the TALF.13

On February 10, 2009, the Federal Reserve announced that it is prepared to undertake a substantial expansion of the TALF. The expansion could increase the size of the TALF to as much as $1 trillion and could broaden the eligible collateral to encompass other types of newly issued AAA-rated asset-backed securities, such as commercial mortgage-backed securities, private-label residential mortgage-backed securities, and other asset-backed securities. An expansion of the TALF would be supported by the provision by the Treasury of additional funds from the Troubled Asset Relief Program.26

Under the TALF, any entity controlled by a foreign

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OTHER ASSISTANCE TO THE SPECIAL CENTRAL BANK RECAPITALIZATION INTER-BANK MARKET OR TO ASSISTANCE TO INDIVIDUAL GUARANTEES OF BANK DEBT DEPOSIT GUARANTEES ASSISTANCE MEASURES MEASURES OTHER MONEY MARKETS INSTITUTIONS government or managed by an investment manager controlled by a foreign government may not be an eligible borrower. A foreign government is considered to control a company if, among other things, it owns, controls, or holds with power to vote 25 percent or more of a class of voting securities of the company.

1 Invoked through the systemic risk exception provisions of the FDIC Improvement Act of 1991. See the FAQ’s at http://www.fdic.gov/regulations/resources/TLGP/faq.html. 2 The FDIC’s TLGP final rules were issued on November 21, 2008. See http://www.fdic.gov/news/board/08BODtlgp.pdf. 3 The FDIC Insurance Program is effective from October 3, 2008 until December 31, 2009. See http://www.treas.gov/initiatives/eesa/. 4 Expires April 30, 2009. See http://www.newyorkfed.org/markets/cpff_terms_conditions.html. 5 Expires October 30, 2009. See http://www.frbdiscountwindow.org/mmmf.cfm?hdrID=14. 6 Expires October 30, 2009. See http://www.newyorkfed.org/markets/mmiff_terms.html. 7 Expires October 30, 2009. See http://www.newyorkfed.org/markets/pdcf.html. 8 Expires October 30, 2009. See http://www.newyorkfed.org/markets/tslf.html. 9 In September 2008 the U.S. Federal Reserve announced (1) an increase in the size of the 84-day maturity TAF auctions from US$ 25 billion to US$ 75 billion per auction beginning on October 6, 2008; (2) two forward TAF auctions amounting to US$ 150 billion and (3) an increase in swap authorization limits with foreign central banks. See http://www.federalreserve.gov/monetarypolicy/taffaq.htm. 10 The swap line amount with the ECB was increased from US$ 120 billion to US$ 240 billion. Other foreign country swap lines include: Australia, Canada, Denmark, England, Japan, New Zealand, Norway, Sweden, and Switzerland. See http://www.federalreserve.gov/newsevents/press/monetary/20081013a.htm, http://www.federalreserve.gov/newsevents/press/monetary/20080924a.htm, http://www.federalreserve.gov/newsevents/press/monetary/20081028a.htm, and http://www.federalreserve.gov/newsevents/press/monetary/20080918a.htm. 11 In August 2008 the ECB, in conjunction with the U.S. Federal Reserve, began operating 84-day operations in addition to its operations with a 28-day maturity. 12 The exemption is available from September 14, 2008 until January 30, 2009. See http://edocket.access.gpo.gov/2008/pdf/E8-22701.pdf. 13 Expires December 31, 2009. See http://www.federalreserve.gov/newsevents/press/monetary/monetary20081125a1.pdf. 14 The rescue package involves a plan to buy stakes of circa: US$ 25 billion each in Citigroup, JPMorgan and Wells Fargo; US$ 25 billion between Bank of America and Merrill, which agreed last month to be acquired by Bank of America; US$ 10 billion each in Goldman Sachs and Morgan Stanley; US$ 3 billion for Bank of New York Mellon; and US$ 2 billion for State Street. 15 The Treasury Department has listed all completed transactions on its website. See http://www.ustreas.gov/initiatives/eesa/docs/001-06-09-CPP-Report.pdf. 16 Expires December 31, 2009. See http://www.ustreas.gov/press/releases/reports/mbs_factsheet_090708hp1128.pdf. 17 Secretary Paulson’s full statement can be viewed at http://www.ustreas.gov/press/releases/hp1265.htm. 18 Expires December 31, 2009. See http://fpc.state.gov/documents/organization/110096.pdf.

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19 The Federal Reserve’s full press release can be viewed at http://www.federalreserve.gov/newsevents/press/monetary/20081125b.htm. 20 The Treasury Department’s full statement on the program can be viewed at http://www.ustreas.gov/press/releases/reports/gsecf_factsheet_090708.pdf. 21 The joint press release among the Treasury Department, FDIC, and Federal Reserve on Citigroup can be viewed at http://www.federalreserve.gov/newsevents/press/bcreg/20081123a.htm. 22 The lists of the banks are available at http://www.fdic.gov/regulations/resources/TLGP/optout.html. 23 Guidelines for the AIFP are published on Treasury’s website. See http://www.treasury.gov/initiatives/eesa/program-descriptions/aifp.shtml. 24 Program guidelines for the TIP were published on Treasury’s web site on January 2, 2009 as required by section 101(d) of the EESA. See http://www.treasury.gov/press/releases/hp1338.htm. 25 The term sheet for this deal can be viewed at http://www.fdic.gov/news/news/press/2009/pr09004a.pdf. 26 The Federal Reserve’s full press release can be viewed at http://www.federalreserve.gov/newsevents/press/monetary/20090210b.htm. 27 The Federal Reserve’s full press release can be viewed at http://www.ustreas.gov/press/releases/tg21.htm. See also http://financialstability.gov/.

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

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Shearman & Sterling LLP – SINGAPORE Shearman & Sterling LLP – SHANGHAI 6 Battery Road #25-03 11th Floor, Platinum Singapore, 049909 233 Tai Cang Road Singapore Shanghai, 200020, China

T: +65 6230 3800 T: +8621 6136 5000 F: +65 6230 3899 F: +8621 6136 5001

Bill McCormack Andrew Ruff Partner Partner T: +65 6230 3877 T: +8621 6136 5088 [email protected] [email protected]

Shearman & Sterling LLP – FRANKFURT Shearman & Sterling LLP – PARIS Gervinusstrasse 17 114, Avenue des Champs-Elysées D-60322 Frankfurt am Main 75008 Paris Germany France

T: +49 69 9711 1000 T: +33 1 53 89 70 00 F: +49 69 9711 1100 F: +33 1 53 89 70 70

Hans Diekmann Hervé Letréguilly Partner Partner T: +49 211 17888 818 T: +33 1 53 89 71 30 [email protected] [email protected]

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Shearman & Sterling LLP – ROME Via Borgognona, 47 00187 Roma Italy

T: +39 06 697 679 1 F: +39 06 697 679 300

Fabio Fauceglia Partner T: +39 06 697 679 208 [email protected]

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

ARGENTINA AUSTRALIA

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

Hugo Nicolas Bruzone, Partner Mark McFarlane, Partner [email protected] T: + 61 2 9296 2478 [email protected]

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AUSTRIA BELGIUM

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

BRAZIL BULGARIA

Veirano Advogados PI Partners Av. Das Nações Unidas, 12.995 - 18o andar Business Park Sofia Brooklin Building 10, Floor 2 São Paulo - S.P, Brasil Mladost 4 T: 04578-000 1766 Sofia, Bulgaria http://www.veirano.com T: +359 2 817 7300 www.pipartners.eu Roberto Rudzit, Partner [email protected] Anelia Dinova, Partner T: +359 2 817 7301 Guilherme Peres Potenza, Associate [email protected] [email protected]

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CANADA DENMARK

Stikeman Elliott LLP Accura Advokataktieselskab 5300 Commerce Court West Tuborg Boulevard 1 199 Bay Street DK-2900 Hellerup Toronto, ON M5L 1B9 Copenhagen, Denmark T: + 1 416 869 5500 T: +45 3945 2800 www.stikeman.com www.accura.dk

Peter Hamilton, Partner Claus Bennetsen, Partner T: + 1 416 869 5564 T: +45 3945 2828 [email protected] [email protected]

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

ESTONIA FINLAND

Raidla Lejins & Norcous Krogerus Attorneys Ltd Roosikrantsi 2 P.O. Box 533 (Jaakonkatu 3 A) 10119 Tallinn FI-00101 Helsinki, Finland Estonia T: +358 29 000 6200 T: +372 640 7170 http://www.krogerus.com http://www.rln.ee Mikko Mali, Partner Sven Papp, Partner T: +358 29 000 6219 [email protected] [email protected]

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

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GREECE HONG KONG

PI Partners Richards Butler in association with Reed Smith LLP 11th km National Rd Athens-Lamia 20F Alexandra House GR 144 51 Metamorphosi, Greece 16-20 Chater Road T: +30210 2886549-550 Central, Hong Kong http://www.pipartners.info/ T:+ 852 2810 8008 http://www.reedsmith.com/ George Bersis, Partner [email protected] C.J. Williams, Partner T: +852 2507 9738 [email protected]

HUNGARY ICELAND

Szabó Kelemen & Partners Attorneys Logos Legal Services Váci út 20 Efstaleiti 5 1132 Budapest, Hungary 103 Reykjavík, Iceland T: + 36 1 288 8200 T: 00 354 5 400 300 http://www.sz-k-t.hu http://www.logos.is/

Domonkos Kiss, Partner Gunnar Sturluson, Partner [email protected] [email protected]

Tamás Kárpáthegyi, Associate [email protected]

INDIA IRELAND

Amarchand & Mangaldas & Suresh A. Shroff & Co. Arthur Cox Peninsula Chambers Earlsfort Centre Peninsula Corporate Park Earlsfort Terrace Ganpatrao Kadam Marg, Lower Parel (W) Dublin 2, Ireland Mumbai – 400 013 T: 00 353 1 618 0000 T: +91(0)11 2692 0500 www.arthurcox.com

Vandana Shroff, Partner Robert Cain, Senior Associate T: +91 22 2496 4455/ 6660 4455 T: + 353 1 618 1146 [email protected] [email protected]

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KOREA LUXEMBOURG

Kim & Chang Arendt & Medernach 5th Floor, Seyang Bldg. 14, rue Erasme 223 Naeja-dong, Jongno-gu B.P. 39 Seoul 110-720, Korea L-2010 Luxembourg T: 822 3703 1114 T: (352) 40 78 78 1 http://www.kimchang.com/ http://www.arendt-medernach.com

Sang-Hwan Lee Philippe Dupont, Partner T: (822)-3703-1074 T: +352 40 78 78 205 [email protected] [email protected]

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

THE NETHERLANDS NEW ZEALAND

NautaDutilh N.V. Bell Gully P.O. Box 7113 Vero Centre 1007 JC 48 Shortland Street Amsterdam, The Netherlands Auckland, New Zealand T: +31 20 717 1000 T: +64 9 916 8800 http://www.nautadutilh.com http://www.bellgully.com/

Pim Rank, Partner Murray King, Partner T: +31 20 71 71 864 T: +64 9 916 8971 [email protected] [email protected]

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NORWAY PORTUGAL

Advokatfirmaet Haavind Vislie AS PLMJ - A. M. Pereira, Sáragga Leal, Bygdøy Allé 2 Oliveira Martins, Júdice e Associados P.B. 359 Sentrum Av. da Liberdade, 224 NO-0101 Oslo Edifício Eurolex T: +47 22 43 30 00 1250-148 Lisbon, Portugal www.haavind.no T: + 351 21 319 73 00 http://www.plmj.pt/en/index.php Peter L. Brechan, Partner [email protected] Maria Castelos T: +351213197409 [email protected]

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

RUSSIA SLOVAKIA

Lovells CIS Čechová & Partners 5th Floor Usadba Centre Bratislava Head Office 22 Voznesensky Pereulok Štúrova 4 125009 Moscow, Russia 811 02 Bratislava, Slovakia T: +7 495933 3000 T: +421-2 54 41 44 41 http://www.lovells.com http://www.cechova.sk

Michael Pugh, Partner Tomas Maretta [email protected] [email protected]

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SLOVENIA SPAIN

Jadek & Pensa Uría Menéndez Tavčarjeva 6 Príncipe de Vergara, 187 1000 Ljubljana 28002 Madrid, Spain Slovenija T: +34 915 860 400 T: +386 1 234 25 20 http://www.uria.com/eng/index.asp http://www.jadek-pensa.si Luis de Carlos, Partner Pavle Pensa T: +34 91 586 0374 [email protected] [email protected]

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

SWEDEN SWITZERLAND

Advokatfirman Lindahl Bäer & Karrer AG P.O. Box 1766 Brandschenkestrasse 90 SE-111 87 Stockholm, Sweden CH-8027 Zurich, Switzerland T: +46 8 463 39 00 T: +41 58 261 50 00 www.rydincarlsten.se or www.lindahl.se http://www.baerkarrer.ch

Erik Lind, Partner Eric Stupp, Managing Partner T: +46 8 463 39 08 [email protected] [email protected]

UKRAINE UNITED ARAB EMIRATES

Jurvneshservice Law Firm Trowers & Hamlins LLP 57/3 Krasnoarmeyskaya Str., Suite 229, BurJuman Business Tower Kyiv 03150, Ukraine Sheikh Khalifa bin Zayed Road T: +380 44 239 23 90 (Trade Centre Road) www.jvs.com.ua PO Box 23092 Dubai, United Arab Emirates Dr. Anna Tsirat, Partner T: +971 (0)4 3519201 [email protected] F: +971 (0)4 3519205 www.trowers.com

Jennifer Bibbings, Partner [email protected]

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UNITED ARAB EMIRATES

Afridi & Angell Emirates Towers - Level 35 Sheikh Zayed Road Dubai, United Arab Emirates T: +971 4 330 3900 http://www.afridi-angell.com

Charles Laubach, Partner [email protected]

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