NRW.Bank. Credit View. 3 May 2012 Credit Research

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1 NRW.Bank NRW.Bank (NRWBK; Aa1s/AA-s/AAAs) is the development bank of the German state of North Rhine-Westphalia (NRW; Aa1s/AA-s/AAAs) the largest German state in terms of economic size (GDP 2010: EUR 543bn), contributing 21.7% to German GDP, with a population of 18mn. The development bank is wholly-owned by NRW, is a prime issuer in the European agency universe, and has a direct guarantee from the state of NRW. It also benefits from a three-pillar support system. NRW.Bank is the third-largest development bank in Europe in terms of assets after KfW Bankengruppe and European Investment Bank. NRW.Bank operates on behalf of its owner and therefore fulfills the public policy mission to support NRW's economy and public policy projects by means of preferential financing. Its activities comprise the following core business segments: Housing & Living: Financing of municipally-owned social housing, residential housing, social infrastructure, and urban development. Development & Protection: Financing of climate innovations including energy efficiency, energy storage and networks and renewable energy. This segment also comprises the financing of environmental projects and education. Contents Profile of NRW.Bank 2 Support mechanism 3 Funding strategy 4 Financial performance 5 Overview of German Agencies 7 Rating Agencies' View 8 Ticker NRWBK Company web site Ratings of NRW.Bank L-T S-T Outlook Moody's Aa1 P-1 Stable S&P AA- A-1+ Stable Fitch AAA F1+ Stable Source: Rating agencies Ratings of North Rhine-Westphalia L-T S-T Outlook Moody's Aa1 P-1 Stable S&P AA- A-1+ Stable Fitch AAA F1+ Stable Source: Rating agencies Seed & Growth: Loans to SME's. This includes microloans, succession and restructuring, equity and debt solutions as well as foreign investments. Public Finance: Main contact for public authorities, debt management advisory services, budget and project financing, infrastructure and environmental financing, and project management. The agency receives strong support benefiting from three different support mechanisms: a direct and explicit guarantee from the state of NRW, a maintenance obligation ("Anstaltslast"), and a guarantee obligation ("Gewährträgerhaftung"). The guarantee is payable upon first demand and for an unlimited period. NRW.Bank has a diversified funding strategy. It regularly issues benchmark bonds in EUR and USD, as well as public and private placements in a large number of currencies (among others, EUR, USD, CHF, AUD, CAD, NOK, GBP, JPY). The development bank has a wellestablished EUR benchmark curve, and funding sources and the investor base are highly diversified. Thanks to the explicit guarantee by NRW, NRW.Bank has low funding costs. Furthermore, its access to the capital markets is excellent. Debt obligations are zero risk-weighted (Basel II - Standardized Approach) in Germany and several other countries in line with NRW's risk weighting. Author Amey Dyckmans (UniCredit Bank) anna-maria.dyckmans@unicreditgroup.de Bloomberg UCCR Internet UniCredit Research page 1 See last pages for disclaimer.

2 Profile of NRW.Bank NRW.Bank NRW.Bank (NRWBK; Aa1s/AA-s/AAAs) is the development bank of the German state of North Rhine-Westphalia (NRW; Aa1s/AA-s/AAAs) the largest German state in terms of economic size (GDP 2010: EUR 543bn) contributing 21.7% to German GDP, with a population of 18mn. The development bank is wholly-owned by NRW, is a prime issuer in the European agency universe, and has a direct guarantee from the state of NRW. It also benefits from a three-pillar support system (please refer to the section "Support mechanism" for details). NRW.Bank is the third-largest development bank in Europe in terms of assets after KfW Bankengruppe (KFW, Aaas/AAAs/AAAs) and European Investment Bank (EIB, Aaas/AAAn/AAAwn). NRW.BANK: SWOT-ANALYSIS Strengths/Opportunities Three-pillar support: Direct guarantee from the state of North Rhine- Westphalia, a maintenance obligation and a guarantee obligation. Public policy mission. Low risk profile due to mainly collateralized and public-sector lending. Sound financial fundamentals: good asset quality, sound capitalization and liquidity. Very good access to the capital markets. Weaknesses/Threats Modest profitability constrained by low-margin development business. This is mitigated by the fact that the focus of NRW.Bank is on its public mission rather than on profit maximization. Source: UniCredit Research History Business model NRW.Bank's roots date back to the former Westdeutsche Landesbank Girozentrale (WLG), which was divided into two legal entities to comply with the first agreement (from July 2001) between the European Commission and German authorities, concerning compatibility with EU rules on competition and state aid. On 1 August 2002, Landesbank Nordrhein- Westfalen (Landesbank NRW) was established as a public law institution with effect as of 1 January The guarantee providers of the former entity transferred their stakes to Landesbank NRW and WLG became a private law institution named WestLB AG, which took over commercial activities. In March 2004, Landesbank NRW changed its name to NRW.Bank, which became a fully licensed state development bank. WestLB, was whollyowned by NRW.Bank until October Owing to subsequent capital increases, ownership was reduced to the current 30.86%. Since 2005, in order to shield NRW.Bank from financial obligations towards WestLB, NRW.Bank's main owner, NRW, has granted an explicit guarantee, covering WestLB's book value of NRW.Bank's owners used to be NRW (98.62%) and the Regional Associations of the Rhineland and Westphalia-Lippe (0.69% each). However, in February 2011, both Regional Associations announced that they would exercise their contractual option to resign from NRW.Bank's group of owners as of 31 May Thus, since 1 June 2011, the state of NRW has been the sole owner. NRW.Bank operates on behalf of its owner and therefore fulfills the public policy mission to support NRW's economy and public policy projects by means of preferential financing. It works closely with the European development institutions, the European Investment Bank, the Council of Europe Development Bank, and German agencies, namely KfW Bankengruppe and Landwirtschaftliche Rentenbank. Its activities comprise the following core business segments: Housing & Living: Financing of municipally-owned social housing, residential housing, social infrastructure, and urban development. Development & Protection: Financing of climate innovations including energy efficiency, energy storage and networks and renewable energy. This segment also comprises the UniCredit Research page 2 See last pages for disclaimer.

3 financing of environmental projects and education. Seed & Growth: Loans to SMEs. This includes microloans, succession and restructuring, equity and debt solutions, as well as foreign investments. Public Finance: Main contact for public authorities, debt management advisory services, budget and project financing, infrastructure and environmental financing, and project management. Support mechanism Strong support mechanism NRW.Bank benefits from a three-pillar support system resting on: 1. A direct and explicit guarantee from the state of NRW, 2. A maintenance obligation ("Anstaltslast"), and 3. A guarantee obligation ("Gewährträgerhaftung"). Direct and explicit guarantee Maintenance obligation ("Anstaltslast") 1. A direct and explicit guarantee is the strongest possible form of support for an agency. It serves as the ultimate criteria for a zero-risk weighting under the Standardized Approach of Basel II. 2. A maintenance obligation is a legal principle imposing a legal obligation on the sponsors (owners) of the institution ("Anstaltsträger") to: Secure the economic basis of the institution, Ensure the institution functions for the duration of its existence, and Cover possible financial shortfalls by means of a subsidy or in any other appropriate form This implies that the sponsors are jointly and severally obliged to keep the institution viable, i.e. capable of meeting its obligations at all times and paying due debt. S&P notes that from a strictly legal point of view, the maintenance obligation only creates a liability in the internal relationship ("Innenverhältnis") between the institution and the sponsors. Thus, the creditors to the institution do not have direct recourse to the sponsors because the maintenance obligation is towards the institution. Bankruptcy of an institution benefiting from maintenance obligation is practically impossible. The concept of maintenance obligation has been scrutinized by the European Commission on competition grounds. While fundamental changes had to be applied to the guarantee mechanisms for German public banks, their legal implications remain unchallenged with regard to development banks. According to the agreement reached between the German government and the Commission in March 2002, German development banks continue to benefit from state guarantees for their development business. Guarantee obligation ("Gewährträgerhaftung") 3. The guarantee obligation is normally established by a specific law or statute setting up a public law institution. The law designates the respective guarantor ("Gewährträger") and specifies the terms: the guarantors have an unlimited, joint, and several liability to the creditors of the institution to meet any obligation the institution cannot meet out of its own resources. Thus, the creditor has direct recourse to the guarantor. UniCredit Research page 3 See last pages for disclaimer.

4 Funding strategy Diversified funding strategy NRW.Bank has a diversified funding strategy. It regularly issues benchmark bonds in EUR and USD, as well as public and private placements in a large number of currencies (among others, EUR, USD, CHF, AUD, CAD, NOK, GBP, JPY). The development bank has a well-established EUR benchmark curve, and funding sources and the investor base are highly diversified. Total outstanding bonds amount to EUR 89bn, according to Bloomberg data. NRW.Bank has several issuing programs. These include the EMTN Program and a Global Commercial Paper Program (EUR 20bn). In addition to benchmarks and smaller public transactions, the funding strategy comprises Schuldschein loans and registered bonds. Plain vanilla as well as structured products are offered, e.g. zeros, single and multi-callables. Funding target of EUR 10-13bn One of three issuers related to NRW The funding target for 2012 is EUR 10-13bn (2011: EUR 11bn), which compares to EUR 20-25bn for FMS Wertmanagement, EUR 10bn for L-Bank, EUR 10bn for Landwirtschaftliche Rentenbank, and EUR 80bn for KfW Bankengruppe. In the first quarter of this year, NRW.Bank issued the equivalent of EUR 8bn, which represents 59% of its annual funding need. With the emergence of Erste Abwicklungsanstalt (ERSTAA, Aa1s/AA-s/AAAs) as an issuer in the capital markets, there are now three issuers, whose credit quality is determined by the state of NRW: NRW itself, NRW.Bank, and ERSTAA. The state of NRW has a gross funding volume of EUR 21.72bn for ERSTAA has an average annual funding volume in the region of EUR 5-7bn, which was significantly higher in 2011 and is also higher ytd in 2012 (EUR 10bn). During the course of 2H12, ERSTAA will receive further asset and liability transfers from WestLB, which are expected to be in the area of EUR 100bn. This may well impact ERSTAA's funding needs and thus higher supply coming from NRW/NRWrelated issuers. NRW.BANK AND PEERS: CREDIT CURVES FUNDING BY CURRENCY bp NRWBK FMS 0 KFW LBANK -75 RENTEN mdur 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 10 0% EUR USD Other * *expected values. Source: NRW.Bank, UniCredit Research Zero Basel II risk weighting Thanks to the explicit guarantee by NRW, NRW.Bank has low funding costs. Access to the capital markets is excellent. The debt obligations are zero risk-weighted (Basel II - Standardized Approach) in Germany and several other countries in line with NRW's risk weighting. UniCredit Research page 4 See last pages for disclaimer.

5 Financial performance NRW.Bank has good financial fundamentals. NRW.Bank's business model is based on its public mandate rather than on profit maximization, which is reflected in the profitability measures as a result of the low-margin development activities. Despite this, the bank strives to be efficient enough to sustain its financial health and to ensure funding of the development program through own funds, rather than via funding from public budgets. Net profit of EUR 62.1mn in 2011 In 2011, the agency generated a net profit of EUR 62.1mn, which compares to EUR 95.4mn in The volume of new promotional business remained high at EUR 8.1bn (FY10: EUR 8.6bn). Total assets amounted to EUR 152.5bn and the business volume was EUR 184.2bn at end FY11: CORE BUSINESS CREDIT PORTFOLIO (BASED ON INTERNAL RATINGS) Non-EU public finance 5% Other 9% Housing & Living 20% BBB (Social housing) 11% Other 4% EU public finance 17% Development & Protection 6% Seed & Growth 7% A 23% AAA 44% Domestic public finance 36% AA 18% Source: NRW.Bank, UniCredit Research Stable and sound asset quality Asset quality remained stable and sound: Public sector and development business amounts to roughly 90% of the balance sheet. 45% of total assets are rated AAA based on NRW.Bank's internal rating scale. The core capital ratio was 12.5% and the total capital ratio 18.3% at end Please refer to the tables below for more details. UniCredit Research page 5 See last pages for disclaimer.

6 NRW.BANK: BALANCE SHEET HIGHLIGHTS Year ending (EUR mn) 31-Dec Dec Dec-09 Business volume 184, ,095 n.a. Total assets 152, , ,014 Total customer loans 64,336 65,718 61,954 Receivables from banks 33,276 32,229 32,771 Bonds and other interest-bearing sec. 47,867 50,958 59,899 Liabilities to banks 38,842 48,642 48,642 Securitized liabilities 68,074 63,280 63,280 Contingent liabilities 23,057 23,183 23,183 Capital with participation rights Fund for general banking risks Equity capital 17,737 17,688 19,929 Core capital ratio % Overall capital ratio % Equity/total assets % Source: NRW.Bank, UniCredit Research NRW.BANK: P&L HIGHLIGHTS Year ending (EUR mn) 31-Dec Dec Dec-09 Net interest income Net commission income Operating income Risk provisions/revaluation adjustments Net income Source: NRW.Bank, UniCredit Research UniCredit Research page 6 See last pages for disclaimer.

7 Overview of German Agencies OVERVIEW OF CAPITAL MARKET RELEVANT GERMAN AGENCIES Bayerische Landesbodenkreditanstalt Erste Abwicklungsanstalt FMS Wertmanagement Investitionsbank Berlin KfW Bankengruppe Landwirtschaftliche Rentenbank L-Bank LfA Förderbank NRW.Bank Ticker BYLABO ERSTAA FMSWER IBB KFW RENTEN LBANK BAYLAN NRWBK Supporting state Profile Legal status Ownership Support mechanism Bavaria North Rhine-Westphalia Germany (via SoFFin) Development bank with focus on housing policy Legally dependent institution under public law; organizationally and financially independent Legally dependent part of BayernLB; indirect owners are 94.03% State of Bavaria, 5.97% Savings Banks Bavaria Direct guarantee by State of Bavaria Guarantee Obligation Deconsolidated entity of WestLB AG Financially independent public law entity with partial legal capacity State of North Rhine-Westphalia: 48.2% Regional Associations of Savings Banks Westphalia and Rhineland: 25% each Regional Associations of Rhineland and Westphalia: 0.9% each "Verlustausgleichspflicht" - Loss compensation duty Deconsolidated entity of Hypo Real Estate Group Financially independent public law entity with partial legal capacity SoFFin 100%, which is owned by the Financial Market Stabilization Agency, thus the federal government "Verlustausgleichspflicht" - Loss compensation duty Berlin Germany Germany Baden-Württemberg Bavaria North-Rhine Westphalia Development bank for Berlin Federal development bank Promotes agriculture and forestry Development bank for Baden-Württemberg Development Bank for Bavaria Development Bank for North-Rhine Westphalia Public law institution Public law institution Public law institution Public law institution Public-law institution Public-law institution State of Berlin: 100% Direct guarantee by State of Berlin Maintenance Obligation Federal government: 80% German states: 20% Direct guarantee by federal government Maintenance Obligation Guarantee Obligation Federal government: 100% Maintenance Obligation State of Baden- Württemberg: 100% Direct guarantee by State of Baden- Württemberg Maintenance Obligation Guarantee Obligation State of Bavaria: 100% Direct guarantee by State of Bavaria Maintenance Obligation Guarantee Obligation State of North-Rhine Westphalia: 100% Direct guarantee by State of North-Rhine Westphalia Maintenance Obligation Guarantee Obligation Rating --/AAAs/-- Aa1s/AA-s/AAAs Aaas/AAAs/AAAs --/--/-- Aaas/AAAs/AAAs Aaas/AAAs/AAAs Aaas/AAAs/AAAs Aaas/--/-- Aa1s/AA-s/AAAs Rating of Aaas/AAAs/-- Aa1s/AA-s/AAAs Aaas/AAAs/AAAs Aa1s/--/AAAs Aaas/AAAs/AAAs Aaas/AAAs/AAAs Aaas/AAAs/-- Aaas/AAAs/-- Aa1s/AA-s/AAAs supporting state Risk weight 0% 0% 0% 0% 0% 0% 0% 0% 0% Source: Rating agencies, UniCredit Research UniCredit Research page 7 See last pages for disclaimer.

8 Rating Agencies' View NRW.BANK: RATING PROFILE Long-term Short-term Outlook Moody s Aa1 P-1 Stable S&P AA- A-1+ Stable Fitch AAA F1+ Stable Source: Rating agencies, UniCredit Research RATING AGENCIES' COMMENTS ON NRW.BANK Agency Moody's 22 December 2011 Comment Rationale: In accordance with Moody's GRI rating methodology, the Aa1/Prime-1 ratings assigned to NRW.BANK reflect the combination of the following inputs (i) a BCA of 13 (on a scale of 1 to 21, where 1 represents the lowest credit risk), (ii) the Aa1 rating of the State of North Rhine-Westphalia (NRW); (iii) a very high degree of dependence on NRW; and (iv) very high support from NRW. The BCA is based on NRW.BANK's standalone profile and incorporates the institution's unique market position as the region's sole development bank, the low business risk of its core promotional activities and its weak financial profile. The assessment particularly takes into account the bank's modest earnings power, which remains constrained by its public-service mission, as well as increased market risk in combination with its developing capital position and only moderate loss absorption capacity on the basis of its regulatory capital. NRW.BANK's Aa1/Prime-1 longterm and short-term ratings are based on the following three pillars: 1. The financial strength of the bank's guarantor, which is NRW, is the most important source of support, if required. 2. The legal support mechanisms of Anstaltslast (maintenance obligation) and Gewährträgerhaftung (guarantee obligation) borne by NRW, agreed with the European Commission and enshrined in the specific law governing NRW.BANK. These are equivalent to a guarantee and should ensure that the bank will be able to fulfil its financial obligations. 3. Since 2004, NRW.BANK has benefitted from an enduring, explicit guarantee (Refinanzierungsgarantie) that is issued by NRW and is payable upon first demand (ensuring timeliness of payment). Credit Strengths: Strong, reliable, three-pillar support including an unconditional, irrevocable guarantee from the Federal State of NRW and a low-risk profile in its core business. Credit Challenges: Earnings power and the potential for diversification is moderate and constrained by the bank's public-service mission. Its vulnerability to basis risk and elevated market risk on the back of sovereign spread volatility and rising default risk (due to active credit-protection selling), developing capital position with significant book equity, due to the earlier special status of reserves of its social housing promotion business unit, but only moderate loss absorption capacity on the basis of the bank's regulatory capital and its short dated funding profile reflects short- and medium-term fundraising in current low interest rate environment. Outlook: The outlook on the NRW.BANK's long-term and short-term debt ratings is stable and mirrors the outlook on the State of NRW. What Could Change the Rating Up: Positive rating actions on the State of NRW could result in upward pressure on the bank's long-term debt ratings. What Could Change the Rating - Down: Negative rating actions on the State of NRW could exert downward pressure on the bank's long-term debt ratings. UniCredit Research page 8

9 RATING AGENCIES' COMMENTS ON NRW.BANK (CONTINUED) S&P's 16 April 2012 Fitch 31 May 2011 & 20 April 2012 Rationale: S&P's ratings on NRW.BANK are equalized with the ratings on the bank's owner, NRW. This reflects S&P's opinion that there is an "almost certain" likelihood that NRW would provide timely and sufficient extraordinary support to NRW.BANK in the event of financial distress. However, S&P does not classify a stand-alone credit profile for NRW.BANK because of the bank's close link to NRW and the specifics of its developmental business model, which hinges on the state guarantees. NRW.BANK was established in 2004 under German public law and its sole owner is the state of NRW, Germany's largest federal state. NRW has held a majority stake since the bank's inception and acquired full ownership on June 1, NRW.BANK is the largest of Germany's regional state-owned development banks, and its reported assets amounted to 153 billion at year-end NRW.BANK's business model is based on its public policy mandate rather than on profit maximization. The regional focus of the bank's promotional activities is the state of NRW. The bank's main activities include financing social housing and lending to small and midsize enterprises. Promotional lending is generally channeled through commercial banks, which carry all or part of the risk related to end borrowers. Social housing financing is provided directly to the end borrower. NRW.BANK also engages in infrastructure and public finance. Promotional activities are carried out in the form of subsidized loans and grants, which are generally determined by state subsidies and contributions from the bank's own profits. NRW.BANK's profits fund most of its activities, reflecting the federal state's tight budget. Low revenue margins on developmental activities don't allow for income generation. The bank therefore relies on profits from its substantial securities portfolio to finance its developmental business activities. As of year-end 2011, NRW.BANK had 48 billion in fixed-income securities and 22 billion in nominal protection sold via a credit derivative contract. Investments in securities weigh heavily on the bank's risk profile and, consequently on the federal state's contingent liabilities. In its first few years as a separate legal entity, NRW.BANK relied on its former subsidiary WestLB AG for several banking and information technology functions, but now has complete operational independence. As such, S&P doesn't expect the upcoming restructuring of WestLB AG to affect NRW.BANK's operations. NRW.BANK's remaining 2.2 billion equity stake in WestLB remains a legacy exposure in its asset portfolio, but does not represent a risk because it is fully guaranteed by NRW. NRW.BANK does not have customer deposits and depends on wholesale funding markets. But due to the state guarantees and its ownership structure, NRW.BANK has a comfortable funding and liquidity position, which in S&P's view, is key to its profit generation capability. External support: S&P regards NRW.BANK as a GRE. In accordance with S&P's criteria for GREs, S&P's view of an "almost certain" likelihood of extraordinary government support is based on S&P's assessment of NRW.BANK's: "Critical" role for the government of NRW, as the state's only development bank, and its support of regional economic and social objectives and "Integral" link with the government. NRW.BANK essentially acts as an arm of the state and benefits from the following guarantees: a maintenance obligation (Anstaltslast), statutory guarantee on its liabilities (Gewaehrtraegerhaftung), and an explicit guarantee for all of its liabilities. S&P expects the bank to continue to play a prominent public policy role as the state's development bank. Accordingly, S&P doesn't expect the ownership status or guarantee mechanism to change in the medium to long term. S&P rates NRW.BANK's nondeferrable senior subordinated debt 'AA-', the same level as the bank's senior unsecured debt. This reflects S&P's assessment of an "almost certain" likelihood of government support for these bank debts, owing to NRW.BANK's GRE status. Strengths: Almost certain likelihood of support from the sole owner, the State of North Rhine-Westphalia (NRW). It has the Role as the state's only development bank and benefits from a threefold state guarantee. It has Stable legal framework for operations and a comfortable liquidity and funding due to its quasisubsovereign risk status. Weaknesses: The NRW.Bank constraints on the business model, owning to its public policy role. Its low lending margins in the core business, reflect its mission as a development bank. Its reliance on profits from investment activities to build a buffer for promotional lending. Outlook: Standard & Poor's Ratings Services' stable outlook on German development bank NRW.BANK reflects the outlook on the long-term rating of the bank's 100% owner, the State of North Rhine-Westphalia (NRW; AA-/Stable/A-1+). Any rating action on NRW will be reflected in a similar rating action on NRW.BANK. S&P believes that the state's guarantees and NRW.BANK's status as a government-related entity (GRE) will be maintained in the foreseeable future, since the bank will likely remain an integral part of the state's economic development objectives. This assessment is consistent with the March 2002 agreement between Germany and the European Commission on future state support for German development banks. A material weakening of NRW.BANK's role for, or link to, the state, including changes to the guarantee or ownership structure, could have negative rating implications for NRW.BANK. However, S&P currently considers such a scenario unlikely. Rating Rationale: The Long Term and Short Term IDRs and the Support Rating of NRW.BANK are based on the extremely high probability of support, if needed, from its majority owner, the State of North Rhine Westphalia (NRW; AAA /Stable). This is manifested in its owners maintenance obligation ( Anstaltslast ) and deficiency guarantee ( Gewaehrtraegerhaftung ), as well as in NRW s explicit, unlimited and unconditional guarantee for NRW.BANK s liabilities. NRW.BANK is a development bank with a public mandate to promote NRW and its municipalities. In line with the agreement between the German government and the European Commission from 2002, German development banks have retained their state support for development business. The bank s operating profitability is weak, reflecting the low margin nature of its development business, and is likely to decline further, due to the bank s management decision to reduce its treasury activities. Public sector and promotional lending business represent the bulk of the bank s loan book. Promotional lending is generally channeled through commercial banks, which carry in full or in part the end borrower risk. Social housing financing is provided directly to the end borrower, thus creating a higher risk. To generate profit to support its promotional business activities as well as for liquidity and hedging purposes, NRW.BANK has a large securities portfolio, including exposure to structured credit products and credit derivatives (end 2010: EUR54bn). NRW.BANK s risk profile has been traditionally low, but Fitch expects that the sovereign and banking crisis will result in a structural increase. At the same time, the gradual shrinking of the bank s investment portfolio will be beneficial for its risk profile. The bank s shareholding in WestLB AG (book value of EUR2.2bn) is guaranteed by NRW. Due to constraints of its business model, NRW.BANK is reliant on wholesale funding. Funding costs and liquidity benefit from the bank s prominent position due to state guarantees. The bank s economic capitalisation is strong. Support: NRW.BANK is 98.62% owned by NRW. Landschaftsverband Rheinland and Landschaftsverband Westfalen Lippe hold the remaining shares in the bank (0.69% each). The owners act as its joint and several liable public entities and guarantors ( Anstalts und Gewaehrtraeger ). From 1 June 2011 NRW will take over 100% ownership. Key Rating Drivers: NRW.BANK s IDR is at the same level as NRW s. The Outlook mirrors that of NRW, as Fitch does not expect any changes to NRW.BANK s public role or to the potential support from NRW. On 20 April 2012, NRW.Bank's AAA rating with stable outlook was affirmed. Source: Rating agencies, UniCredit Research UniCredit Research page 9

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Regulatory authority: Sermaye Piyasası Kurulu Capital Markets Board of Turkey, Eskişehir Yolu 8.Km No:156, Ankara, Turkey e) UniCredit CAIB Securities Romania (UniCredit Romania), Str. Nicolae Caramfil nr. 25, Etaj 5, Sector 1, Bucharest, Romania. Regulatory authority: CNVM, Romanian National Securities Commission, Foisurului street, no. 2, sector 3, Bucharest, Romania f) Zagrebačka banka, Paromlinska 2, HR Zagreb, Croatia. Regulatory authority: Croatian Agency for Supervision of Financial Services, Miramarska 24B, Zagreb, Croatia g) UniCredit Bulbank, Sveta Nedelya Sq. 7, BG-1000 Sofia, Bulgaria. Regulatory authority: Financial Supervision Commission (FSC), 33 Shar Planina str.,1303 Sofia, Bulgaria This report may contain excerpts sourced from UniCredit Bank Russia, UniCredit Tiriac Bank, Bank Pekao or Yapi Kredi all members of the UniCredit group. If so, the pieces and the contents have not been materially altered. POTENTIAL CONFLICTS OF INTERESTS Company Key KfW 2 NRW.Bank 2, 3 Landwirtschaftliche Rentenbank 2 Bayerische Landesbodenkreditanstalt 3 European Investment Bank 2, 3 L-Bank 2, 3 Erste Abwicklungsanstalt 2, 3 FMS Wertmanagement 2, 3 NRW 2, 3 Key 1a: UniCredit Bank AG, UniCredit Bank AG London Branch, CJSC UniCredit Securities Russia, UniCredit Menkul Değerler A.Ş., Zagrebačka banka, UniCredit CAIB Securities Romania S.A., UniCredit Bulbank, UniCredit Bank Czech Republic, UniCredit Bank Slovakia, UniCredit CAIB Romania and/or a company affiliated with it (pursuant to relevant domestic law) owns at least 2% of the capital stock of the company. Key 1b: The analyzed company owns at least 2% of the capital stock of UniCredit Bank AG, UniCredit Bank AG London Branch, CJSC UniCredit Securities Russia, UniCredit Menkul Değerler A.Ş., Zagrebačka banka, UniCredit CAIB Securities Romania S.A., UniCredit Bulbank, UniCredit Bank Czech Republic, UniCredit Bank Slovakia and UniCredit CAIB Romania and/or a company affiliated with it (pursuant to relevant domestic law). Key 2: UniCredit Bank AG, UniCredit Bank AG London Branch, CJSC UniCredit Securities Russia, UniCredit Menkul Değerler A.Ş., Zagrebačka banka, UniCredit CAIB Securities Romania S.A., UniCredit Bulbank, UniCredit Bank Czech Republic, UniCredit Bank Slovakia and UniCredit CAIB Romania and/or a company affiliated with it (pursuant to relevant domestic law) belonged to a syndicate that has acquired securities or any related derivatives of the analyzed company within the twelve months preceding publication, in connection with any publicly disclosed offer of securities of the analyzed company, or in any related derivatives. Key 3: UniCredit Bank AG, UniCredit Bank AG London Branch, CJSC UniCredit Securities Russia, UniCredit Menkul Değerler A.Ş., Zagrebačka banka, UniCredit CAIB Securities Romania S.A., UniCredit Bulbank, UniCredit Bank Czech Republic, UniCredit Bank Slovakia and UniCredit CAIB Romania and/or a company affiliated (pursuant to relevant domestic law) administers the securities issued by the analyzed company on the stock exchange or on the market by quoting bid and ask prices (i.e. acts as a market maker or liquidity provider in the securities of the analyzed company or in any related derivatives). Key 4: The analyzed company and UniCredit Bank AG, UniCredit Bank AG London Branch, CJSC UniCredit Securities Russia, UniCredit Menkul Değerler A.Ş., Zagrebačka banka, UniCredit CAIB Securities Romania S.A., UniCredit Bulbank, UniCredit Bank Czech Republic, UniCredit Bank Slovakia and UniCredit CAIB Romania and/or a company affiliated (pursuant to relevant domestic law) concluded an agreement on services in connection with investment banking transactions in the last 12 months, in return for which the Bank received a consideration or promise of consideration. Key 5: The analyzed company and UniCredit Bank AG, UniCredit Bank AG London Branch, CJSC UniCredit Securities Russia, UniCredit Menkul Değerler A.Ş., Zagrebačka banka, UniCredit CAIB Securities Romania S.A., UniCredit Bulbank, UniCredit Bank Czech Republic, UniCredit Bank Slovakia, UniCredit CAIB Romania and/or a company affiliated (pursuant to relevant domestic law) have concluded an agreement on the preparation of analyses. Key 6a: Employees of UniCredit Bank AG Milan Branch and/or members of the Board of Directors of UniCredit (pursuant to relevant domestic law) are members of the Board of Directors of the Issuer. Members of the Board of Directors of the Issuer hold office in the Board of Directors of UniCredit (pursuant to relevant domestic law). Key 6b: The analyst is on the supervisory/management board of the company they cover. Key 7: UniCredit Bank AG Milan Branch and/or other Italian banks belonging to the UniCredit Group (pursuant to relevant domestic law) extended significant amounts of credit facilities to the Issuer. UniCredit Research page 10

11 RECOMMENDATIONS, RATINGS AND EVALUATION METHODOLOGY Company Date Rating Currency Target price Overview of our ratings You will find the history of rating regarding recommendation changes as well as an overview of the breakdown in absolute and relative terms of our investment ratings on our websites and under the heading Disclaimer. Note on what the evaluation of equities is based: We currently use a three-tier recommendation system for the stocks in our formal coverage: Buy, Hold, or Sell (see definitions below): A Buy is applied when the expected total return over the next twelve months is higher than the stock's cost of equity. A Hold is applied when the expected total return over the next twelve months is lower than its cost of equity but higher than zero. A Sell is applied when the stock's expected total return over the next twelve months is negative. We employ three further categorizations for stocks in our coverage: Restricted: A rating and/or financial forecasts and/or target price is not disclosed owing to compliance or other regulatory considerations such as blackout period or conflict of interest. Coverage in transition: Due to changes in the research team, the disclosure of a stock's rating and/or target price and/or financial information are temporarily suspended. The stock remains in the research universe and disclosures of relevant information will be resumed in due course. Not rated: Suspension of coverage. Company valuations are based on the following valuation methods: Multiple-based models (P/E, P/cash flow, EV/sales, EV/EBIT, EV/EBITA, EV/EBITDA), peer-group comparisons, historical valuation approaches, discount models (DCF, DVMA, DDM), break-up value approaches or asset-based evaluation methods. Furthermore, recommendations are also based on the Economic profit approach. Valuation models are dependent on macroeconomic factors, such as interest rates, exchange rates, raw materials, and on assumptions about the economy. Furthermore, market sentiment affects the valuation of companies. The valuation is also based on expectations that might change rapidly and without notice, depending on developments specific to individual industries. Our recommendations and target prices derived from the models might therefore change accordingly. The investment ratings generally relate to a 12-month horizon. They are, however, also subject to market conditions and can only represent a snapshot. The ratings may in fact be achieved more quickly or slowly than expected, or need to be revised upward or downward. Note on the bases of evaluation for interest-bearing securities: Our investment ratings are in principle judgments relative to an index as a benchmark. Issuer level: Marketweight: We recommend having the same portfolio exposure in the name as the respective reference index (the iboxx index universe for high-grade names and the ML EUR HY index for sub-investment grade names). Overweight: We recommend having a higher portfolio exposure in the name as the respective reference index (the iboxx index universe for high-grade names and the ML EUR HY index for sub-investment grade names). Underweight: We recommend having a lower portfolio exposure in the name as the respective reference index (the iboxx index universe for high-grade names and the ML EUR HY index for sub-investment grade names). Instrument level: Core hold: We recommend holding the respective instrument for investors who already have exposure. Sell: We recommend selling the respective instrument for investors who already have exposure. Buy: We recommend buying the respective instrument for investors who already have exposure. Trading recommendations for fixed-interest securities mostly focus on the credit spread (yield difference between the fixed-interest security and the relevant government bond or swap rate) and on the rating views and methodologies of recognized agencies (S&P, Moody s, Fitch). Depending on the type of investor, investment ratings may refer to a short period or to a 6 to 9-month horizon. Please note that the provision of securities services may be subject to restrictions in certain jurisdictions. You are required to acquaint yourself with local laws and restrictions on the usage and the availability of any services described herein. The information is not intended for distribution to or use by any person or entity in any jurisdiction where such distribution would be contrary to the applicable law or provisions. The prices used in the analysis are the closing prices of the appropriate local trading system or the closing prices on the relevant local stock exchanges available on the day after the mentioned date at 2:00 GMT, unless otherwise specified. In the case of unlisted stocks, the average market prices based on various major broker sources (OTC market) on the day after the mentioned date at 2:00 GMT, are used, unless otherwise specified. The exact closing time depends where the stock is traded: Bulgaria 13:00 GMT, Croatia 14:00 GMT, Czech Republic 14:00 GMT, Hungary 15:10 GMT, Kazakhstan 11:00 GMT, Poland 15:35 GMT, Romania 13:30 GMT, Russia 15:45 GMT, Serbia 11:00 GMT, Slovenia 11:00 GMT, Turkey 12:30 GMT, Ukraine 15:35 GMT, United Kingdom 16:30 GMT and United States 20:00 GMT. The MSCI sourced information is the exclusive property of Morgan Stanley Capital International Inc. (MSCI). Without prior written permission of MSCI, this information and any other MSCI intellectual property may not be reproduced, redisseminated or used to create any financial products, including any indices. This information is provided on an as is basis. The user assumes the entire risk of any use made of this information. MSCI, its affiliates and any third party involved in, or related to, computing or compiling the information hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind. MSCI, Morgan Stanley Capital International and the MSCI indexes are services marks of MSCI and its affiliates. The Global Industry Classification Standard (GICS) was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor s. GICS is a service mark of MSCI and S&P and has been licensed for use by UniCredit Bank AG. Coverage Policy A list of the companies covered by UniCredit Bank, UniCredit Bank London, UniCredit Securities, UniCredit Menkul, UniCredit Romania, Zagrebačka banka and UniCredit Bulbank is available upon request. Frequency of reports and updates It is intended that each of these companies be covered at least once a year, in the event of key operations and/or changes in the recommendation. SIGNIFICANT FINANCIAL INTEREST: UniCredit Bank, UniCredit Bank London, UniCredit Securities, UniCredit Menkul, UniCredit Romania, Zagrebačka banka and UniCredit Bulbank and/or a company affiliated (pursuant to relevant national German, Italian, Austrian, UK, Russian and Turkish law) with them regularly trade shares of the analyzed company. UniCredit Bank, UniCredit Bank London, UniCredit Securities, UniCredit Menkul, UniCredit Romania, Zagrebačka banka and UniCredit Bulbank may hold significant open derivative positions on the stocks of the company which are not delta-neutral. Analyses may refer to one or several companies and to the securities issued by them. In some cases, the analyzed issuers have actively supplied information for this analysis. ANALYST DECLARATION The author s remuneration has not been, and will not be, geared to the recommendations or views expressed in this study, neither directly nor indirectly. ORGANIZATIONAL AND ADMINISTRATIVE ARRANGEMENTS TO AVOID AND PREVENT CONFLICTS OF INTEREST To prevent or remedy conflicts of interest, UniCredit Bank, UniCredit Bank London, UniCredit Securities, UniCredit Menkul, UniCredit Romania, Zagrebačka banka and UniCredit Bulbank have established the organizational arrangements required from a legal and supervisory aspect, adherence to which is monitored by its compliance department. Conflicts of interest arising are managed by legal and physical and non-physical barriers (collectively referred to as Chinese Walls ) designed to restrict the flow of information between one area/department of UniCredit Bank, UniCredit Bank London, UniCredit Securities, UniCredit Menkul, UniCredit Romania, Zagrebačka banka and UniCredit Bulbank and another. In particular, Investment Banking units, including corporate finance, capital market activities, financial advisory and other capital raising activities, are segregated by physical and non-physical boundaries from Markets Units, as well as the research department. Disclosure of publicly available conflicts of interest and other material interests is made in the research. Analysts are supervised and managed on a day-to-day basis by line managers who do not have responsibility for Investment Banking activities, including corporate finance activities, or other activities other than the sale of securities to clients. UniCredit Research page 11

12 ADDITIONAL REQUIRED DISCLOSURES UNDER THE LAWS AND REGULATIONS OF JURISDICTIONS INDICATED Notice to Australian investors This publication is intended for wholesale clients in Australia subject to the following: UniCredit Bank AG and its branches do not hold an Australian Financial Services licence but are exempt from the requirement to hold a licence under the Act in respect of the financial services to wholesale clients. UniCredit Bank AG and its branches are regulated by BaFin under German laws, which differ from Australian laws. This document is only for distribution to wholesale clients as defined in Section 761G of the Corporations Act. UniCredit Bank AG and its branches are not Authorised Deposit Taking Institutions under the Banking Act 1959 and are not authorised to conduct a banking business in Australia. Notice to Austrian investors This document does not constitute or form part of any offer for sale or subscription of or solicitation of any offer to buy or subscribe for any securities and neither this document nor any part of it shall form the basis of, or be relied on in connection with or act as an inducement to enter into, any contract or commitment whatsoever. This document is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on to any other person or published, in whole or part, for any purpose. Notice to Czech investors This report is intended for clients of UniCredit Bank, UniCredit Bank London, UniCredit Securities, UniCredit Menkul, UniCredit Romania, Zagrebačka banka and UniCredit Bulbank in the Czech Republic and may not be used or relied upon by any other person for any purpose. Notice to Italian investors This document is not for distribution to retail clients as defined in article 26, paragraph 1(e) of Regulation n approved by CONSOB on 29 October In the case of a short note, we invite the investors to read the related company report that can be found on UniCredit Research website Notice to Japanese investors This document does not constitute or form part of any offer for sale or subscription for or solicitation of any offer to buy or subscribe for any securities and neither this document nor any part of it shall form the basis of, or be relied on in connection with or act as an inducement to enter into, any contract or commitment whatsoever. Notice to Polish investors This document is intended solely for professional clients as defined in Art. 3 39b of the Trading in Financial Instruments Act of 29 July The publisher and distributor of the recommendation certifies that it has acted with due care and diligence in preparing the recommendation, however, assumes no liability for its completeness and accuracy. Notice to Russian investors As far as we are aware, not all of the financial instruments referred to in this analysis have been registered under the federal law of the Russian Federation "On the Securities Market" dated 22 April 1996, as amended (the "Law"), and are not being offered, sold, delivered or advertised in the Russian Federation. This analysis is intended for qualified investors, as defined by the Law, and shall not be distributed or disseminated to a general public and to any person, who is not a qualified investor. Notice to Turkish investors Investment information, comments and recommendations stated herein are not within the scope of investment advisory activities. Investment advisory services are provided in accordance with a contract of engagement on investment advisory services concluded with brokerage houses, portfolio management companies, non-deposit banks and the clients. Comments and recommendations stated herein rely on the individual opinions of the ones providing these comments and recommendations. These opinions may not suit your financial status, risk and return preferences. For this reason, to make an investment decision by relying solely on the information stated here may not result in consequences that meet your expectations. Notice to UK investors This communication is directed only at clients of UniCredit Bank, UniCredit Bank London, UniCredit Securities, UniCredit Menkul, UniCredit Romania, Zagrebačka banka and UniCredit Bulbank who (i) have professional experience in matters relating to investments or (ii) are persons falling within Article 49(2)(a) to (d) ( high net worth companies, unincorporated associations, etc. ) of the United Kingdom Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or (iii) to whom it may otherwise lawfully be communicated (all such persons together being referred to as relevant persons ). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons. Notice to U.S. investors This report is being furnished to U.S. recipients in reliance on Rule 15a-6 ("Rule 15a-6") under the U.S. Securities Exchange Act of 1934, as amended. Each U.S. recipient of this report represents and agrees, by virtue of its acceptance thereof, that it is such a "major U.S. institutional investor" (as such term is defined in Rule 15a-6) and that it understands the risks involved in executing transactions in such securities. Any U.S. recipient of this report that wishes to discuss or receive additional information regarding any security or issuer mentioned herein, or engage in any transaction to purchase or sell or solicit or offer the purchase or sale of such securities, should contact a registered representative of UniCredit Capital Markets, LLC. Any transaction by U.S. persons (other than a registered U.S. broker-dealer or bank acting in a broker-dealer capacity) must be effected with or through UniCredit Capital Markets. The securities referred to in this report may not be registered under the U.S. Securities Act of 1933, as amended, and the issuer of such securities may not be subject to U.S. reporting and/or other requirements. Available information regarding the issuers of such securities may be limited, and such issuers may not be subject to the same auditing and reporting standards as U.S. issuers. The information contained in this report is intended solely for certain "major U.S. institutional investors" and may not be used or relied upon by any other person for any purpose. Such information is provided for informational purposes only and does not constitute a solicitation to buy or an offer to sell any securities under the Securities Act of 1933, as amended, or under any other U.S. federal or state securities laws, rules or regulations. The investment opportunities discussed in this report may be unsuitable for certain investors depending on their specific investment objectives, risk tolerance and financial position. In jurisdictions where UniCredit Capital Markets is not registered or licensed to trade in securities, commodities or other financial products, transactions may be executed only in accordance with applicable law and legislation, which may vary from jurisdiction to jurisdiction and which may require that a transaction be made in accordance with applicable exemptions from registration or licensing requirements. The information in this publication is based on carefully selected sources believed to be reliable, but UniCredit Capital Markets does not make any representation with respect to its completeness or accuracy. All opinions expressed herein reflect the author s judgment at the original time of publication, without regard to the date on which you may receive such information, and are subject to change without notice. UniCredit Capital Markets may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. These publications reflect the different assumptions, views and analytical methods of the analysts who prepared them. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is provided in relation to future performance. UniCredit Capital Markets and any company affiliated with it may, with respect to any securities discussed herein: (a) take a long or short position and buy or sell such securities; (b) act as investment and/or commercial bankers for issuers of such securities; (c) act as market makers for such securities; (d) serve on the board of any issuer of such securities; and (e) act as paid consultant or advisor to any issuer. The information contained herein may include forward-looking statements within the meaning of U.S. federal securities laws that are subject to risks and uncertainties. Factors that could cause a company s actual results and financial condition to differ from expectations include, without limitation: political uncertainty, changes in general economic conditions that adversely affect the level of demand for the company s products or services, changes in foreign exchange markets, changes in international and domestic financial markets and in the competitive environment, and other factors relating to the foregoing. All forward-looking statements contained in this report are qualified in their entirety by this cautionary statement. This document may not be distributed in Canada. UniCredit Research page 12