PIRAEUS BANK ANNUAL REPORT 2010 In 2010, a critical year for the Greek economy and society, Piraeus Bank... Continued, in a difficult economic conjuncture, to support its customers, the majority of whom are medium and small-sized businesses and private individuals; Took responsible action, shielding its balance sheet with a €807 mn capital increase, completed in early 2011, which places Piraeus Bank among the banks with the highest Equity Tier I ratio both in Greece and in Europe, despite further increased provisions by 22% annually; Supported liquidity needs, maintaining total net loans unchanged and significantly strengthening deposits in its international activities, thus offsetting the reduction in Greek deposits that resulted from the economic conditions. At the same time, Piraeus Bank applied the combined Greek State and European Central Bank liquidity support measures; Reduced its operating costs for a 2nd consecutive year while it has set a new target for cost contain- ment in 2011, thus strengthening even further the Bank’s efficiency; Maintained its operating profitability despite the adverse conditions by strengthening the Group’s net interest income and with resilient recurring sources of income; Maintained the lowest non-performing loans ratio in Greece, thus confirming the Bank’s correctness and consistency over time in risk management and in customer selection; Continued shaping new policies, developing new ideas, being innovative, differentiating itself from its competitors in products and quality of services provided, in response to the trust of its customers in all 10 countries where Piraeus Bank is present. At the same time, Piraeus Bank is once again a step ahead of its competitors, as it was in the 1990’s when it pioneered in supporting systematically and in an organised manner middle-sized Greek busi- nesses, and in 2000 when it promoted the integrated electronic banking system and green banking in Greece. The 2010 Annual Report and Corporate Responsibility Report are dedicated to these initiatives, which are incorporated in the wider strategic direction and vision of Piraeus Bank to contribute decisively to the reconstruction of the Greek economy. 3 ANNUAL REPORT 2010 TIMELINE Historic Overview Establishment of Piraeus Bank Agreement on the acquisi- Establishment of Piraeus tion of Pater Credit Bank in Leasing SA, Piraeus Mutual Romania (integrated into Funds SA and Piraeus Insur- the Group in April 2000 ance Agency SA and was renamed to Pi- Beginning of operations in raeus Bank Romania SA) Bulgaria (now Piraeus Bank Bulgaria) Establishment of Tirana Bank I.B.C. in Albania 1996-1999 Establishment of ‘critical mass’ 1916 1918 1963 1975 1991 1992 1993 1996 1997 1998 Year of restructuring, reform and growth Absorption of assets and Piraeus Bank was liabilities of Chase Manhat- integrated into tan Bank in Athens the Emporiki Bank Acquisition of Sigma Securities SA Group in Greece Privatisation of Piraeus Bank Piraeus Bank came under Acquisition of Macedonia- state control within the Thrace Bank and Credit Emporiki Bank Group Lyonnais Hellas Agreement on the acquisi- tion of a majority stake of Xiosbank (completion at the beginning of 1999) The shares of Piraeus Bank were listed Agreement on the ac- in the Athens Stock Exchange quisition of a 56% stake in Marathon National Bank of New York (completion in mid 1999) 4 Acquisition of the operating leasing Setting up of the London company AVIS Hellas SA in Greece, Branch International Commerce Bank in Ukraine (now Piraeus Bank ICB) and purchase Acquisition of Interbank agreement for the local branch net- NY by the Group’s subsidi- work of Arab Bank in Cyprus ary Marathon Banking Cor- Renew of exclusive agreement with poration in New York and ING in the field of life bancassurance merger by absorption by for 10 years Marathon Bank Merger by absorption of Strategic partnership with BNP Devletoglou Securities SA Wealth Management in wealth by Sigma Securities SA management (now Piraeus Securities SA) Agreement with Victoria General Insurance Company SA - subsidiary of Ergo International in Greece and Acquisition of 58% of ETBAbank member of the German insurance Strategic partnership with ING on Group Munich Re - for the imple- activities in the field of bancassur- mentation of a 10-year exclusive ance cooperation in the general insur- ance field 2000-2003 2004-2008 2009-2011 Processes and IT Strong Domestic Franchise, Economic Crisis: Harmonization International Expansion Safegarding Balance Sheet, Capital Strengthening 1999 2000 2002 2003 2004 2005 2007 2008 2009 2010 2011 Launching of winbank Direct, Merger by absorption of ETBAbank the first online bank in Greece by Piraeus Bank and ΕΤΒΑ Leasing by Piraeus Leasing Merger by absorption of Mace- Establishment of donia-Thrace Bank and XiosBank Piraeus Bank (Cyprus) Ltd with Piraeus Bank Creation of the integrated e- Completion of the €807 mn banking platform, winbank share capital increase Acquisition of a) Eurobank in Bulgaria (absorbed into Piraeus Bank Bulgaria), b) Atlas Banka in Serbia (renamed Absorption of assets Piraeus Bank Beograd) and Egyptian and liabilities of National Commercial Bank in Egypt (now Pi- Westminster Bank in raeus Bank Egypt) Greece 5 Piraeus Bank Group Profile The Group consists of companies in the financial sector established both in Greece and the broader region. Founded in 1916, Piraeus Bank’s contemporary history begins with its privatization in 1991. Through organic growth and a series of successful acquisitions, Piraeus Bank has managed to become the 4th largest financial institution in Greece with a loan and deposit market share of 11% at the end of 2010. A the same time, it has gradually built its presence in south-east Europe and the eastern Medi- terranean, initially following the development of Greek businessmen and then serving the local banking needs of its customers. Although the Bank offers the entire range of financial services in almost all market segments, it has a clear orientation towards servicing enterprises, especially medium and small-sized, and individuals, while at the same time aims for constant development along with progress and prosperity of its customers. In addition to providing traditional banking services, Piraeus Bank has taken the lead in developing fields, such as electronic and green banking, foreseeing their potential and dynamics in the following years. Vision - Targets The vision of Piraeus Bank Group is to be a prominent regional financial institution with Greece as its base and to become a prime bank for serving medium and small-sized enterprises as well as individuals, with dedicated and skilled personnel, and offering high returns to its shareholders. Specifically, the Group’s main objectives are: At Group level: to ensure the necessary liquidity, maintain the quality of the loan portfolio, explore syner- gies for cost savings and maintain a satisfactory level of capital adequacy. In Greece: to capitalise its experience in medium and small-sized enterprises as well as retail banking by deploying its young branch network and intensifying cross-selling. In International Operations: to establish an efficient presence in the countries where it operates so that international banking activities may bring a substantial contribution to the Group results. Key Financial Data 20 years of solid growth, mainly organic, but also through selective M&A in Greece and abroad. Operations in Greece (4th place in the market) and in 9 other countries, 4 of which are EU members. 882 branches, of which 360 are in Greece and the remaining 522 abroad. Almost half of these branches are with less than 5 years of operation. 13,320 employees: of a young age (average age 36), IT familiar, well-trained and easily adaptable to new methods and practices and cross-border collaboration. Recognized leadership in promoting green entrepreneurship. Pioneering in electronic banking through the integrated e-banking platform winbank, which is environ- ment and user-friendly. 3.4 mn customers in Greece and in the other countries where the Bank operates. Steadily ranked among the first banks in Greece in customer satisfaction and loyalty. Significant contribution to society, the environment and culture, through systematic actions and initiatives. 7 ANNUAL REPORT 2010 2010 KEY FINANCIAL FIGURES Assets ( bn) Profitability Evolution ( mn) 57.7 54.9 54.3 46.4 30.9 766 668 23.5 600 611 465 622 279 435 315 264 236 4 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 Net Profit Pre-Tax & Provision Profit excluding Trading *net profit 2009-2010 excluding one-off tax 34 mn and 24mn respectively Branch Network (#) Human Resources (#) 14,255 895 13,417 13,320 872 882 12,357 7,366 744 537 6,757 6,950 513 522 5,757 424 9,253 536 8,151 449 3,479 235 2,648 176 358 5,503 5,774 6,600 6,889 6,660 6,370 320 359 360 273 301 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 International Operations International Operations Greece Greece Shareholders’ structure (15.02.11) Customer Satisfaction Rate in Greece (%) 8.0% 94% 95% 95% 95% 95% Greek Institutional Investors 40% 42% 35% 41% 33% 33.8% Individual Investors 30.3% 60% Foreign Institutional Investors 54% 53% 54% 62% 2006 2007 2008 2009 2010 Generally Satisfied Totally Satisfied 1.3% Greek State 26.6% Companies Note: Shareholder structure based upon the outstanding total of ordina common shares following the completion the rights issue in Jan.11 (1,143,326,564 shares). The new shares commenced trading in the Athens Stock