Investor Presentaiton

Positive changes in Polish Covered Bonds Law Legal framework for Polish Covered Bonds • The Act on Covered Bonds and Mortgage Banks (Ustawa o listach zastawnych i bankach hipotecznych) of August 29, 1997 as amended The Bankruptcy Law (Prawo upadłościowe) of February 28, 2003, Bankruptcy proceedings for mortgage banks, Article 442-450a, as amended · Mortgage bank Specialised bank (mortgage bank) with the supervision of Polish Financial Supervision Authority (KNF) • Mortgage bank is a joint stock company with a legal personality (not a branch) with • several licences e.a.: banking licence and a consent to start operating activity, both granted by the KNF A covered bond issuer may issue mortgage or public covered bond Specific license for each covered bond type is required before the issuer may start to issue covered bonds Fundamental changes in 2016 revision of the Act on Covered Bonds and Mortgage Banks in line with the best market practices and with recommendations of the European Central Bank (ECB) and credit rating agencies Improvements: Increase of credibility and safety of covered bonds ✓ Extension of covered bond supply Extension of demand for covered bonds • • soft bullet / pass-through - maturity of the covered bonds obligations extended automatically by 12 months and if asset coverage or liquidity test were negative - pass through - in case of mortgage bank's insolvency (details on the next slide) mandatory liquidity reserve covering at least 6 months of interest due on the covered bonds outstanding minimum legal overcollateralization requirement (OC) – 10% increase refinancing limit for mortgage covered bonds for residential mortgage loans to 80% from 60% introduce investment limit for Pension Funds 5% of portfolio per issuer of covered bonds income from interest or discounts on the covered bonds earned by foreign investors is exempt from withholding tax (WHT) Regulatory status - Compliance with: CRR art 129 UCITS 52 (4) Covered Bonds Programme Domestic ✓ International ✓ ✓ ✓ Credit quality step 2 2 LCR Delegated Act (HQLA) × ECB Repo × BRRD NBP Repo CBPP/LTRO ✓ ☑ Expected category III × Covered Bonds Investor Presentation 49 44

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