NOVO BANCO MARKET SALE PROCESS TERMS OF REFERENCE 22 APRIL 2016, AS AMENDED. 1. Scope

NOVO BANCO MARKET SALE PROCESS TERMS OF REFERENCE 22 APRIL 2016, AS AMENDED 1. Scope 1.1 Banco de Portugal, in its capacity as resolution authority, under the terms of the Legal Framework of Credit Institutions and Financial Companies (Regime Geral das Instituições de Crédito e Sociedades Financeiras), approved by Decree-Law no. 298/92, dated 31 December, as amended ( Banking Law ), is promoting the sale of Novo Banco, S.A. ( Novo Banco ), a bridge bank incorporated on 3 August 2014 and entirely owned by Fundo de Resolução ( Resolution Fund ) ( Novo Banco Sale Process ). 1.2 These Terms of Reference establish the general framework for the Novo Banco Market Sale Process, which includes the selection of cornerstone investors ( Process for the Selection of Cornerstone Investors ), i.e., the investors with whom the Resolution Fund shall enter into an agreement for the purchase and/or subscription of shares of Novo Banco S.A. (the Cornerstone Investors and Cornerstone Investment Agreement ), prior to an intended prospective initial offering and listing ( IPO ) of the shares of Novo Banco ( Market Sale Process ). 1.3 The launch of the Market Sale Process, in accordance with the decision of the Board of Banco de Portugal issued on 30 March 2016, is subject to the completion of the applicable legal and regulatory requirements. 1.4 Deutsche Bank AG, London Branch ( Deutsche Bank ) has been appointed as financial advisor of Banco de Portugal for the sale of Novo Banco including through the Market Sale Process, which may involve the selection of Cornerstone Investors. 1.5 Considering the market use of the participation of the issuing institution in a process with Cornerstone Investors,Novo Banco s financial advisor may also participate in the Market Sale Process, which includes the Process for the Selection of Cornerstone Investors, alongside Deutsche Bank, as appropriate. 1

1.6 During the Process for the Selection of Cornerstone Investors or the Market Sale Process, changes to the set of assets, liabilities, off-balance sheet items and assets under management of Novo Banco may occur by way of sale of assets, promoted by Banco de Portugal, or by Novo Banco, or by any other operation or transaction as promoted or authorised by Banco de Portugal or Novo Banco, under applicable law. 1.7 Any significant changes made in accordance with the preceding clause will be communicated in due course to the investors participating in the Process for the Selection of Cornerstone Investors or in the Market Sale Process at the relevant time. 2. General Principles of the Market Sale Process 2.1 The Market Sale Process, which includes the Process for the Selection of Cornerstone Investors, shall be conducted in an open, transparent, non-discriminatory and competitive manner and respecting the principles set out herein. 2.2 The sale of Novo Banco s shares to, or subscription thereof by, selected Cornerstone Investors, according to the Cornerstone Investment Agreement, will respect the following general principles: 2.2.1 The Cornerstone Investors commit to purchase and/or subscribe for a number of shares of Novo Banco S.A at an agreed purchase or subscription price agreed in the Cornerstone Investment Agreement; 2.2.2 The settlement will occur on a date agreed in the Cornerstone Investment Agreement which may fall prior to the settlement date for any institutional investor share placement in connection with the IPO, and the shares will be paid for as provided for in the Cornerstone Investment Agreement and related documents and/or the IPO documents; 2.2.3 In the event Cornerstone Investors commit to purchase and/or subscribe for a number of shares of Novo Banco S.A at the IPO, the commitments and the identity of the Cornerstone Investors shall be disclosed in the IPO documents. 3. Organisation of the Process for the Market Sale Process 3.1 The re-launch of the Novo Banco Sale Process was announced on 15 January 2016. 3.2 On 30 March 2016, Banco de Portugal determined that the Novo Banco Sale Process would follow two simultaneous tracks in its initial stage: (i) a Strategic Sale Process, a direct sale process by means of competitive bids for the sale of Novo Banco, targeted at strategic investors which are credit institutions or insurance companies and/or entities which have qualifying holdings, directly and indirectly (under management), in credit institutions or insurance 2

companies and meet the eligibility criteria approved by Banco de Portugal; and (ii) a Market Sale Process which is subject to the legal and regulatory requirements and may be an institutional offer of Novo Banco s shares targeted at institutional investors and/or an offering and listing of those shares. This second track can involve one or more Cornerstone Investors, which will, prior to the Market Sale Process, enter into an agreement to purchase and /or subscribe for a certain number of shares in connection with the Market Sale Process and meet the eligibility criteria set out in Appendix I to these Terms of Reference (Appendix I). 3.3 On 30 March 2016, Banco de Portugal also determined that it will not be possible for strategic investors who participate in the Strategic Sale Process to participate in the Market Sale Process either as Cornerstone Investor or as institutional investors. Any investor participating in the Market Sale Process shall comply with the laws and regulations applicable thereto. 3.4 In the context of the Market Sale Process, which includes the Process for the Selection of Cornerstone Investors, Deutsche Bank, on behalf of Banco de Portugal, will organise customary market soundings in order to identify prospective Cornerstone Investors and will provide Banco de Portugal with detailed information thereafter. 3.5 For the purpose of demonstrating full compliance with the eligibility criteria described in Appendix I, and without prejudice to the right of Banco de Portugal to require additional clarifications, Prospective Cornerstone Investors will have to submit exclusively to the email address nb.cornerstoneprocess@bportugal.pt, a binding declaration, signed by (a) duly authorised person(s) of the entity in question, in which they confirm full compliance with the eligibility criteria, in accordance with the form set out in Appendix II hereto ( Appendix II ). 3.6 In case it is necessary to limit the number of Cornerstone Investors, including (without limitation) to ensure the smooth running of the Novo Banco Sale Process, Banco de Portugal may proceed with the selection of certain Cornerstone Investors based on its assessment and evaluation of their compliance with the criteria set out in Appendix I. 3.7 Following the customary market soundings referred to in clause 3.4. and the analysis of the forms submitted in accordance with clause 3.5 (Appendix II), Deutsche Bank, on behalf of Banco de Portugal, will prepare a report assessing if the contacted investors have demonstrated their interest to participate in the Market Sale Process as Cornerstone Investors, comply with the eligibility criteria and are able to be selected in accordance with the evaluation criteria both criteria approved by Banco de Portugal by its decision of 30 March 2016 (Appendix I). 3.8 Banco de Portugal shall approve or reject the pre-selected investors provided by Deutsche Bank, pursuant to its report issued in accordance with the preceding clause, and shall then invite a 3

certain number of Prospective Cornerstone Investors to submit binding offers ( Binding Offers ), alongside those investors that have expressed their interest to participate in the Process for the Selection of Cornerstone Investors and the Market Sale Process, that comply with the eligibility criteria and that were selected following the assessment of such investors in accordance with the evaluation criteria set out in Appendix I, if applicable ( Prospective Cornerstone Investors ). 3.9 Should Banco de Portugal intend to reject a certain investor or adopt a decision not to select a certain investor as Prospective Cornerstone Investor, in accordance with clauses 3.6 and 3.8 above, Banco de Portugal shall communicate said preliminary decision to the relevant investor for the purposes of holding a prior hearing within 3 business days. 3.10 Taking into consideration the need to maintain the confidentiality of the Expressions of Interest received, namely for competition reasons, during the prior hearing period mentioned in the preceding clause, the investors at stake will only have access to the section of the preliminary decision containing the justification of their own rejection or non-selection as Prospective Cornerstone Investor and not to other Expressions of Interest. 3.11 Further to the signature of the form set out in Appendix II, the execution of the Non-Disclosure Agreement ( NDA ), approved by Banco de Portugal, the written acceptance of the applicable access rules and full compliance with other restrictions that may be imposed by the applicable law or required by Banco de Portugal, investors may be granted access to data rooms. 3.12 In due course, Prospective Cornerstone Investors will also be provided with a draft version of the Cornerstone Investment Agreement. 3.13 Banco de Portugal shall define at a later stage of the Market Sale Process, which includes the Process for the Selection of Cornerstone Investors, at its sole discretion, but in any event before the deadline for the submission of Binding Offers by Prospective Cornerstone Investors, which specific rules shall apply to the submission and assessment of Binding Offers, including, amongst other things, the deadline for the submission and the elements that shall be included therein. 3.14 Banco de Portugal reserves the right, in its sole discretion, to, at any time, modify the rules of the Market Sale Process, which includes the Process for the Selection of Cornerstone Investors, or to cancel it, including (without limitation) the determination of Banco de Portugal to follow another sale process in order to maximize the sale value of Novo Banco. Prospective Cornerstone Investors, as well as any other prospective investors that participate in the Market Sale Process, shall not be entitled to any compensation or indemnity whatsoever. 4

3.15 Any additional rule regarding the Market Sale Process, which includes the Process for the Selection of Cornerstone Investors, approved by Banco de Portugal will be disclosed in due course to the investors participating in the Process for the Selection of Cornerstone Investors or in the Market Sale Process at the relevant time. 4. Communications and Language of the Process for the Selection of Cornerstone Investors Documents submitted by Prospective Cornerstone Investors shall be in Portuguese or English, at their sole discretion and if submitted in both languages, the Portuguese version shall prevail in case of any inconsistencies. In case of documentation provided in another language, a translation into Portuguese or English is mandatory and in case of any inconsistencies, the Portuguese or English version shall prevail. 5. Selection of the Offers submitted by Prospective Cornerstone Investors 5.1 Binding Offers submitted by Prospective Cornerstone Investors will be evaluated taking into account the following criteria: 5.1.1 the attractiveness of the financial proposal contained in the offer; 5.1.2 the ability of the Prospective Cornerstone Investor to execute the transaction documents and to complete the transaction; 5.1.3 the mark-up of the draft Cornerstone Investment Agreement and/ or any related documents provided by Banco de Portugal; and 5.1.4 the reputation and experience of the Prospective Cornerstone Investors and its potential contribution to the strategy and development plans for Novo Banco and the financial system in Portugal. 5.2 Deutsche Bank, on behalf of Banco de Portugal, will prepare a report on the attractiveness of the Binding Offers received against the criteria set out in clause 5.1. 5.3 Banco de Portugal, taking into consideration the report prepared by Deutsche Bank, in accordance with clause 5.2, and the need to ensure the success of the IPO and of the Market Sale Process, will, in its sole discretion, take the final decisions of the Process for the Selection of Cornerstone Investors. 5.4 Should Banco de Portugal intend to reject a certain Binding Offer or to adopt a decision not to select or not to accept a certain Binding Offer submitted by a Prospective Cornerstone Investor, based on the assessment and evaluation of such offer, Banco de Portugal shall communicate said preliminary decision to the relevant Prospective Cornerstone Investor for the purposes of holding a prior hearing within 3 business days. 5.5 Taking into consideration the need to maintain the confidentiality of the Binding Offers received, namely for competition reasons, during the prior hearing period mentioned in the 5

preceding clause, Prospective Cornerstone Investors will only have access to the section of the preliminary decision containing the justification of the rejection, non-selection or nonacceptance of their own offer and not to other Binding Offers. 6. Legal and Regulatory interactions and requirements 6.1 During the Market Sale Process, which includes the Process for the Selection of Cornerstone Investors, Banco de Portugal will interact with the European Commission, the European Central Bank and with the relevant regulatory and supervisory authorities, as appropriate. 6.2 The final decision on the Process for the Selection of Cornerstone Investors shall be taken without prejudice to all applicable legal and regulatory requirements and approvals, including but not limited to fit and proper criteria set out in the Banking Law and in applicable laws and regulations, including State Aid and Merger Control rules, which may in any event lead to the rejection or exclusion of Cornerstone Investors or of their offers from the Process for the Selection of Cornerstone Investors and of the Market Sale Process. 6.3 Nothing in the Market Sale Process or in the Process for the Selection of Cornerstone Investors shall affect the powers of Banco de Portugal as national central bank, resolution (where applicable) and supervisory authority of credit institutions and financial companies. 6.4 Nothing in the Market Sale Process or in the Process for the Selection of Cornerstone Investors shall affect the powers of the European Central Bank as supervisory authority of Novo Banco. 7. State Aid 7.1 During the Market Sale Process, which includes the Process for the Selection of Cornerstone Investors, any offer received may be communicated to the European Commission further to the Commission s Decision of 3 August 2014 in case SA 39250 (2014-N) Portugal, as amended by the Commission s Decision of December 2015 in case SA 43976 (2015-N) Portugal and as may be further amended from time to time and in the 2013 Banking Communication from the European Commission. 7.2 If the European Commission requires the adoption of measures to limit the distortions of competition or to ensure the viability of the entity resulting from the sale, a negotiation stage with the Prospective Cornerstone Investor(s) may be initiated in order to define the commitments to be undertaken by the Prospective Cornerstone Investor(s) in order to address any concerns expressed by the European Commission. 8. Merger Control 8.1 The acquisition of control over Novo Banco or the whole or part of its assets may be subject to 6

notification to the European Commission under merger control rules in accordance with Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings, or to the Portuguese Competition Authority in accordance with Law Nr. 19/2012, of 8 May, or to the national competition authority of another EU Member State, or to the competition authority of another State outside the EU. 8.2 If no clearance decision is issued by the competent competition authorities pursuant to the preceding clause, Banco de Portugal may decide to award the sale to the next best overall offer, in accordance with the criteria set out in clause 5.1, in which case the notification to the European Commission under merger control rules shall be repeated, or to suspend or cancel the Process for the Selection of Cornerstone Investors and/or the Market Sale Process. 9. Misrepresentations, breach of the Market Sale Process obligations and unlawful practices Misrepresentations, false or inaccurate information, breach of obligations of the Market Sale Process and of the Process for the Selection of Cornerstone Investors (including breach of confidentiality obligations), or evidence of acts, agreements, practices or information capable of defrauding applicable rules may result in the rejection or exclusion from the Process for the Selection of Cornerstone Investors and from the Market Sale Process and, in such event, Banco de Portugal shall have no responsibility for any damages resulting therefrom. 10. No Liability 10.1 Prospective Cornerstone Investors shall in no event be entitled to any compensation or indemnity for decisions made by Banco de Portugal during the Market Sale Process, which includes the Process for the Selection of Cornerstone Investors. 10.2 Banco de Portugal reserves the right not to accept any offer or to cancel the Process for the Selection of Cornerstone Investors, the Market Sale Process or the Novo Banco Sale Process and investors shall not be entitled to any compensation or indemnity whatsoever. 10.3 In case of amendment, variation, suspension or termination of the Process for the Selection of Cornerstone Investors, the Market Sale Process or of the Novo Banco Sale Process, investors shall not be entitled to any compensation or indemnity whatsoever. 11. Governing law 11.1 The Market Sale Process, which includes the Process for the Selection of Cornerstone Investors, is launched and governed in accordance with the laws and regulations of the Portuguese Republic. Prospective Cornerstone Investors are presumed to be aware of and to accept such applicable laws and regulations. 7

11.2 Any disputes arising in connection with the Market Sale Process, which includes the Process for the Selection of Cornerstone Investors, shall be submitted to the Portuguese competent courts. 12. Disclaimer 12.1 Banco de Portugal and the Resolution Fund do not give any guarantee, either implicit or explicit, concerning the completeness, relevance or interpretation of the information that may be given to the parties in these Terms of Reference or any other information that may be given to the parties as part of the Market Sale Process, or of the Process for the Selection of Cornerstone Investors. Banco de Portugal and the Resolution Fund have no liability, of whatever nature, for any damage or loss that a Prospective Cornerstone Investor may suffer as a consequence of: (i) the use of any documentation of the Market Sale Process or of the Process for the Selection of Cornerstone Investors, changes thereto, or information incorporated therein; (ii) the fact that the Prospective Cornerstone Investor relied on this information; or (iii) the lack of, the irrelevance of, or the interpretation of certain information in this document. Prospective Cornerstone Investors must take this risk into account in their decision to participate in the Market Sale Process, which includes the Process for the Selection of Cornerstone Investors. By participating in the Market Sale Process, which includes the Process for the Selection of Cornerstone Investors, investors accept the disclaimer contained in this clause. 12.2 These Terms of Reference are available in both Portuguese and English. In case of any inconsistencies, the Portuguese version shall prevail. 8

APPENDIX I Annex II Cornerstone Investors Eligibility and Selection Criteria for the Market Sale Process 1. Cornerstone Investors will only be admitted to Novo Banco s Market Sale Process if they are a legal entity with a reputable standing in domestic or international financial markets and they comply with the following cumulative eligibility criteria. 1.1. Each Cornerstone Investor shall fulfil at least one of the following criteria: a) In the aggregate (considering all entities in the same group), own or invest on a discretionary basis at least 100 million in securities (or 10 million for a broker-dealer ); b) Be a credit institution or insurance company, or a legal entity that has under management (directly or indirectly through one or more investment funds) credit institutions or insurance companies, which, in addition to fulfilling the criterion 1.1.a), has a net worth of at least 25 million; c) Be a broker-dealer acting as a riskless principal for an identified investor which meets criteria 1.1.a) or 1.1.b); d) Be a legal entity which is controlled by another legal entity which fulfils any of the above criteria or which controls in the same group of legal entities a third entity that fulfils any of the above criteria. 1.2. Each Cornerstone Investor must comply with the following cumulative eligibility criteria: a) Shall not have any pending administrative or judicial litigation challenging the resolution measure to Banco Espírito Santo ( BES ), the incorporation of Novo Banco, the transfer of assets, liabilities, off-balance sheet items and assets under management from BES to Novo Banco or any other decisions of Banco de Portugal regarding Novo Banco; b) Shall comply with all the criteria established in the commitments undertaken by the Portuguese Republic before the European Commission; c) Shall not have been found guilty for breach of any provisions of Law 25/2008, 9

of 5 June 2008; d) Shall not be directly or indirectly subject to financial sanctions or restrictive measures imposed under Articles 75 and/or 215 of the Treaty on the Functioning of the European Union; e) Shall not be a "designated person" under the UK Terrorist Freezing Act 2010; f) Shall not be the direct or indirect target of any sanctions adopted, administered and/or enforced by the Office of Foreign Assets Control of the U.S. Treasury Department; g) Shall not be directly or indirectly subject to any sanctions or measures similar to the above adopted, administered and/or enforced by any authority, agency or body within any Member State of the European Union; h) Shall not be domiciled in high risk or non-cooperative jurisdictions identified by the Financial Action Task Force (FATF) for anti-money laundering and combating the financing of terrorism. 2. For the purpose of demonstrating full compliance with the eligibility criteria stipulated in 1.2. above, and without prejudice to the right of Banco de Portugal to require additional clarifications, Cornerstone Investors will have to submit a binding declaration, signed by (a) duly authorised person(s) of the entity in question, in which they confirm full compliance with the eligibility criteria. 3. In case it is necessary to limit the number of Cornerstone Investors for any reason related namely to the need to ensure the smooth running of the process, Banco de Portugal may proceed to the selection of certain Cornerstone Investors based on its assessment and evaluation of the following criteria in a decreasing order of relevance: a) Ability to enter into a binding commitment in respect of the offering of Novo Banco s shares (Transaction) and to complete that Transaction in a timely manner; b) Financial capacity to purchase in the Market Sale Process a number of shares which is significant in relation to the total number of shares expected to be sold in the Market Sale Process; c) Experience of participating as potential or actual Cornerstone Investor in similar transactions. 10

APPENDIX II FORM FOR THE EXPRESSION OF INTEREST AND DECLARATION OF COMPLIANCE WITH THE ELIGIBILITY CRITERIA APPROVED FOR THE SELECTION OF CORNERSTONE INVESTORS [Form to be sent to the following email address: nb.cornerstoneprocess@bportugal.pt] 1. ORGANISATION AND CONTACT DETAILS 1. Full name of the Prospective Cornerstone Investor 2. Please specify if the Prospective Cornerstone Investor is participating in a group or individually, and if participating in a group, please indicate the leading member ORGANISATION DETAILS [Please provide organisational details of the Prospective Cornerstone Investor] 3. Registered office address 4. Company number 5. VAT registration number 6. Ownership structure of the Prospective Cornerstone Investor CONTACT DETAILS 7. Contact details for enquiries about this Expression of Interest (a) Name (b) Address (c) Country 11

(d) Telephone (e) Email 2. DECLARATION OF COMPLIANCE WITH THE ELIGIBILITY CRITERIA The Prospective Cornerstone Investor named above confirms that it complies with at least one of the following eligibility criteria. Please specify which one(s): (a) (b) (c) (d) In the aggregate (considering all entities in the same group), own or invest on a discretionary basis at least 100 million in securities (or 10 million for a broker-dealer ); Be a credit institution or insurance company, or a legal entity that has under management (directly or indirectly through one or more investment funds) credit institutions or insurance companies, which, in addition to fulfilling the criterion (a), has a net worth of at least 25 million; Be a broker-dealer acting as a riskless principal for an identified investor which meets criteria (a) or (b) above; Be a legal entity which is controlled by another legal entity which fulfils any of the above criteria or which controls in the same group of legal entities a third entity that fulfils any of the above criteria. 3. DECLARATION OF COMPLIANCE WITH THE ELIGIBILITY CRITERIA The Prospective Cornerstone Investor named above confirms that it complies with the following cumulative eligibility criteria: i) Does not have any pending administrative or judicial litigation challenging the resolution measure to Banco Espírito Santo ( BES ), the incorporation of Novo Banco, the transfer of assets, liabilities, offbalance sheet items and assets under management from BES to Novo Banco or any other decisions of 12

Banco de Portugal regarding Novo Banco; j) Complies with all the criteria established in the commitments undertaken by the Portuguese Republic before the European Commission; k) Has not been found guilty of breaching any of the provisions of Law 25/2008, of 5 June 2008; l) Is not directly or indirectly subject to financial sanctions or restrictive measures imposed under Articles 75 and/or 215 of the Treaty on the Functioning of the European Union; m) Is not a "designated person" under the UK Terrorist Freezing Act 2010; n) Is not the direct or indirect target of any sanctions adopted, administered and/or enforced by the Office of Foreign Assets Control of the U.S. Treasury Department; o) Is not, directly or indirectly, subject to any sanctions or measures similar to the ones mentioned above, adopted, administered and/or enforced by any authority, agency or body within any Member State of the European Union; and p) Is not domiciled in high risk or non-cooperative jurisdictions identified by the Financial Action Task Force (FATF) for anti-money laundering and combating the financing of terrorism. 4. DISCLAMER The Prospective Cornerstone Investor named above acknowledges that: (a) (b) (c) Banco de Portugal and the Resolution Fund do not give any guarantee, either implicit or explicit, concerning the completeness, relevance or interpretation of the information that may be given to the parties as part of the Process for the Selection of Cornerstone Investors; Banco de Portugal and the Resolution Fund have no liability, of whatever nature, for any damage or loss that a Prospective Cornerstone Investor may suffer as a consequence of: (i) the use of any documentation, changes thereto, or information incorporated therein; (ii) the fact that the Prospective Cornerstone Investor relied on this information; or (iii) the lack of, the irrelevance of, or the interpretation of certain information in this document; and Prospective Cornerstone Investors take their decision to participate in the Selection Process entirely at their own risk. 5. DECLARATION The Prospective Cornerstone Investor named above expresses its interest in participating in the Market Sale Process, as a Cornerstone Investor, and declares that the answers contained herein are true and correct. The Prospective Cornerstone Investor named above acknowledges that the information provided in this form will be used in the Process for the Selection of Cornerstone Investors to assess its suitability to be invited to submit a bid in the proposed offering. The Prospective Cornerstone Investor named above understands that Banco de Portugal may require further evidence of compliance with the eligibility criteria referred to above, as well as any evidence of the Prospective 13

Cornerstone Investor s (i) ability to enter into a binding commitment in respect of the offering of Novo Banco s shares (the Transaction ) and to complete that Transaction in a timely manner; (ii) financial capacity to purchase in the Market Sale Process a number of shares which is significant in relation to the total number of shares expected to be sold in the Market Sale Process; and (iii) experience of participating as potential or actual Cornerstone Investor in similar transactions, in case it is necessary to limit the number of Cornerstone Investors for any reason, including (without limitation) the need to ensure the smooth running of the process. The Prospective Cornerstone Investor named above also understands that Banco de Portugal reserves the right to reject this Expression of Interest if there is a failure to answer all relevant questions fully, if it is considered as being providing any false or misleading information, if it is considered not compliant with the eligibility criteria mentioned above or if this Expression of Interest is not selected in accordance with any of the other criteria mentioned above. FORM COMPLETED BY Name: Date: Signature: Documents to be annexed to the Expression of Interest: (1) Evidence that the signatory can validly represent the Prospective Cornerstone Investor 14