Introduction to NORWAY

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3 Introduction to NORWAY As a result of North Sea oil and gas, Norway has become one of the richest countries in Europe in terms of income per capita. The revenues from the petroleum industry have allowed the country to build up substantial reserves for the Government Pension Fund Global. It now holds assets worth over two and a half times the Norwegian GDP. The fund is integrated into the government budget. One fundamental principle of Norwegian fiscal policy is the so-called budgetary rule, which says that over the course of a business cycle, the government may spend only the expected real return on the fund, estimated at 3% per year, roughly equivalent to around 8% of GDP. Some dark clouds have appeared with the decline in oil prices and the oil industry. Drilling in the Norwegian arctic region has been held up both as a result of environmental concerns and also for commercial reasons. The mainland economy has also suffered following this significant shock to the terms-of-trade, growing by just 1.0% in 2016 compared with 1.4% in However, the depreciation of the krone, a consequence of the decline in oil prices and the accommodative monetary policy, has underpinned non-oil exports at the beginning of However, inflation, which has slowed as the baseline effects due to the past depreciation of krone has faded, is projected to reach the 2.5% target of the Norges Bank only over the medium term. The Norges Bank is therefore likely to keep the key policy rate unchanged at 0.5% in 2017 and Summary BNP Paribas presence BNP Paribas has been present in Norway for 25 years and is one of only two non-nordic banks to have direct local clearing system access. This facilitates more competitive cut-off times and pricing. In addition, BNP Paribas is the only non-nordic bank to provide a pan-regional capability, with direct local clearing system access across Norway, Sweden and Denmark. BNP Paribas' trade centre for the Nordics provides a single entry point to its extensive branch network and local trade finance expertise in more than 60 countries around the world. Working with BNP Paribas Companies of all sizes are attracted to BNP Paribas' depth of local presence and capability in Norway combined with its international reach. The bank provides local language capabilities, on the ground presence and local expertise, but this is closely aligned with its pan-european expertise and offerings. Local accounts can be linked into pan-european cash pools to provide fully integrated cash management solutions, providing a holistic approach to local and international cash management. While many of BNP Paribas' clients in Norway are multinationals headquartered in other parts of Europe, the bank also has a strong and growing client base of Norwegian companies with international cash management and trade finance requirements. Currency Currency Norway uses the Norwegian krone (NOK).

4 Bank accounts Resident / non-resident status A company is generally considered resident in Norway if it has a registered office there. Bank accounts for resident entities Inside Norway Outside Norway Local Currency Foreign Currency Bank accounts for non-resident entities Inside Norway Outside Norway Local Currency Foreign Currency Not applicable Payments & Collections Credit transfers Credit transfers are used by companies to pay salaries and suppliers, and to make tax and treasury payments. High-value and urgent interbank credit transfers can be cleared and settled in real time via the NBO. High-value and urgent domestic credit transfers can also be cleared via NICS and settled in real time via the NBO. High-value and urgent cross-border credit transfers can also be settled via the Euro Banking Association's EURO1 system. Two banks in Norway participate directly in EURO1. High-value, cross-border credit transfers in domestic and other currencies can be processed via SWIFT, correspondent banking and bank branch networks. Low-value (equal to or below NOK 25 million) and non-urgent credit transfers are cleared via NICS Netto and settled via the NBO. Credit transfers with a value equal to or below NOK 500,000 can be made with real-time settlement (Straksbetalinger).

5 SEPA credit transfers can be settled via STEP1 or STEP2 or via correspondent banking networks. Approximately 110 banks in Norway participate in the SEPA credit transfer scheme. Direct debits Direct debits are mainly used for regular payments, such as utility payments. There are two types of direct debit in Norway: direct debits for intercompany payments (AutoGiro); and direct debits for individuals and companies (AvtaleGiro). All direct debits are cleared via NICS on a same-day basis. SEPA direct debit schemes are available in Norway. Liquidity management Domestic: notional pooling Domestic notional cash pools are available but not widely used because of the restrictions on banks offsetting credit and debit balances. Resident and non-resident bank accounts can participate in the same notional pool structure, as can different legal entities. Interest-rate enhancement is offered as an alternative. Domestic: cash concentration Domestic cash concentration structures are widely available. Resident and non-resident bank accounts can participate in the same cash concentration structure, as can different legal entities. Central bank reporting applies. Commonly used structures include zero balancing and single legal account pooling. Central bank reporting applies. Cross-border notional pooling Cross-border notional cash pools are available but not widely practised because of the restrictions on banks offsetting credit and debit balances. Resident and non-resident bank accounts can participate in the same cross-border notional pool structure, as can different legal entities. Cross-border cash concentration Cross-border cash concentration structures are available but are typically on a regional (Nordic) basis. Central bank reporting applies. Restrictions apply to structures involving non-resident entities. International trade General trade rules Norway s trade finance regulations and practices are broadly aligned with the EU customs code and its

6 associated regulations and commercial policies. Norway is a member of the European Free Trade Association (EFTA) alongside Iceland, Liechtenstein and Switzerland. Trade with EFTA member states is exempt from tariffs and other controls. As a member of the European Economic Area (EEA), Norway has unrestricted trade with EEA members. Imports / exports Imports Machinery and equipment Chemicals Metals Foodstuffs Primary Import sources Sweden (12%) Germany (11.8%) China (10.9 %) UK (6.7%) USA (6.6%) Denmark (6%) Exports Petroleum and petroleum products Machinery and equipment Metals Chemicals Ships Fish Export markets UK (22.2 %) Germany (17.9%) Netherlands (10.2%) France (6.6%) Sweden (6.1%) Belgium (5%) Import / export volumes Exports Imports , , , ,386 88,882 - services USD m 46,430 48,632 49,358 40,452 - goods USD m 87,799 91,600 90,887 75,347 - services USD m 52,457 56,350 56,171 45, goods USD m Current account as % GDP Sources: IMF, International Financial Statistics and Statistics Norway, September Market data updated as of ,947 73,622 47, USA (4.5%)

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