Scotiabank Risk Overview

Canadian Legislative Covered Bonds CMHC Registered Issuance Framework . Canadian Registered Covered Bond Programs' Legal Framework (Canadian National Housing Act) Canadian Registered Covered Bond Programs Guide issued by Canada Mortgage and Housing Corporation (CMHC) Eligible Assets Mortgage LTV Limits • Uninsured loans secured by residential property in Canada LTV limit of 80% Basis for Valuation of Mortgage Collateral . Substitute Assets • Substitute Assets Limitation Cash Restriction Issuers are required to index the value of the property underlying mortgage loans in the covered pool while performing various tests Securities issued by the Government of Canada Repos of Government of Canada securities having terms acceptable to CMHC 10% of the aggregate value of (a) the loans (b) any Substitute Assets and (c) all cash held by the Guarantor The cash assets of the Guarantor cannot exceed the Guarantor's payment obligations for the immediately succeeding six months Asset coverage Test Amortization Test Overcollateralization Coverage Test • Credit Enhancement • Reserve Fund . Swaps Covered bond swap, forward starting Interest rate swap, forward starting Valuation calculation Market Risk Reporting Covered Bond Supervisory Body Requirement to Register Issuer and Program Registry Disclosure Requirements • Mandatory property value indexation • CMHC • Yes; prior to first issuance of the covered bond program Yes Monthly investor report with prescribed disclosure requirements set out by CMHC Investor reports must be posted on the program website 80

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