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NATIONAL BANK OF GREECE SA 6-K 2009

Documents found in this filing:

  1. 6-K
  2. Graphic
  3. Graphic
  4. Graphic
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  6. Graphic

Table of Contents

 

 

 

FORM 6-K

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

Report of Foreign Private Issuer

 

Pursuant to rule 13a-16 or 15d-16 of

 

The Securities Exchange Act of 1934

 

For the month of March 2009

 

National Bank of Greece S.A.

(Translation of registrant’s name into English)

 

86 Eolou Street, 10232 Athens, Greece

(Address of principal executive offices)

 

[Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F)

 

Form 20-F            x

 

Form 40-F         o

 

[Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes             o

No            x

 

[If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-               ]

 

 

 



Table of Contents

 

National Bank of Greece S.A.

 

 

Group and Bank

Annual Financial Report

31 December 2008

 

March 2009

 



Table of Contents

 

Table of Contents

 

Certifications of the Board of Directors

4

 

 

Board of Directors’ report

5

 

 

Auditor’s Report

18

 

 

Income Statement

19

 

 

Balance Sheet

20

 

 

Statement of Changes in Equity-Group

21

 

 

Statement of Changes in Equity-Bank

22

 

 

Cash Flow Statement

23

 

 

NOTE 1: General Information

24

 

 

NOTE 2: Summary of significant accounting policies

25

 

 

2.1 Basis of Preparation

25

 

 

2.2 Adoption of International Financial Reporting Standards (IFRS).

25

 

 

2.3 Business combinations and consolidation

27

 

 

2.4 Foreign currency translation

28

 

 

2.5 Financial assets and liabilities at fair value through profit or loss

29

 

 

2.6 Derivative financial instruments and hedging

29

 

 

2.7 Investment Securities

30

 

 

2.8 Reclassification of financial instruments

31

 

 

2.9 Recognition of deferred Day 1 Profit or loss

31

 

 

2.10 Loans and advances

31

 

 

2.11 Impairment losses on loans and advances

32

 

 

2.12 Renegotiated loans

32

 

 

2.13 Derecognition

32

 

 

2.14 Sale and repurchase agreements

33

 

 

2.15 Securities borrowing and lending

33

 

 

2.16 Regular way purchases and sales

33

 

 

2.17 Offsetting

33

 

 

2.18 Interest income and expense

33

 

 

2.19 Fee and commission income

33

 

 

2.20 Property and equipment

33

 

 

2.21 Investment property

34

 

 

2.22 Goodwill, software and other intangible assets

34

 

 

2.23 Insurance Operations

34

 

 

2.24 Leases

35

 

 

2.25 Cash and cash equivalents

35

 

 

2.26 Provisions

36

 

 

2.27 Financial guarantee contracts

36

 

 

2.28 Employee benefits

36

 

 

2.29 Income taxes

36

 

 

2.30 Borrowings

37

 

 

2.31 Share capital, treasury shares and other equity items

37

 

 

2.32 Segment reporting

37

 

 

2.33 Assets and liabilities held for sale and discontinued operations

37

 

 

2.34 Government grants

37

 

 

2.35 Related party transactions

37

 

 

2.36 Fiduciary and trust activities

37

 

 

2.37 Earnings per share

37

 

 

NOTE 3: Critical judgments and estimates

38

 

 

NOTE 4: Financial Risk management

40

 

 

4.1 Risk Management Governance

40

 

 

4.2 Credit risk

40

 

 

4.3 Market Risk

47

 

 

4.4 Liquidity risk

55

 

 

4.5 Insurance risk

56

 

 

4.6 Capital adequacy and Credit ratings

60

 

 

4.7 Fair values of financial assets and liabilities

61

 

 

NOTE 5: Segment reporting

62

 

 

NOTE 6: Net interest income

66

 

 

NOTE 7: Net fee and commission income

66

 

 

NOTE 8: Earned premia net of claims and commissions

67

 

 

NOTE 9: Net trading income and results from investment securities

67

 

 

NOTE 10: Net other income

68

 

 

NOTE 11: Personnel expenses

68

 

 

NOTE 12: Retirement benefit obligations

70

 

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Table of Contents

 

NOTE 13: General, administrative & other operating expenses

73

 

 

NOTE 14: Impairment charge for credit losses

73

 

 

NOTE 15: Tax expense

74

 

 

NOTE 16: Earnings per share

74

 

 

NOTE 17: Cash and balances with central banks

75

 

 

NOTE 18: Due from banks

75

 

 

NOTE 19: Financial assets at fair value through Profit or Loss

76

 

 

NOTE 20: Derivative financial instruments

76

 

 

NOTE 21: Loans & advances to customers (net)

78

 

 

NOTE 22: Investment securities

80

 

 

NOTE 23: Investment property

81

 

 

NOTE 24: Investments in associates

82

 

 

NOTE 25: Goodwill, software & other intangibles

83

 

 

NOTE 26: Property & equipment- Group

84

 

 

NOTE 26: Property & equipment- Bank

85

 

 

NOTE 27: Deferred tax assets and liabilities

86

 

 

NOTE 28: Insurance related assets and receivables

87

 

 

NOTE 29: Other assets

87

 

 

NOTE 30: Assets and liabilities held for sale

88

 

 

NOTE 31: Due to banks

88

 

 

NOTE 32: Due to customers

89

 

 

NOTE 33: Debt securities in issue

89

 

 

NOTE 34: Other borrowed funds

90

 

 

NOTE 35: Insurance related reserves & liabilities

91

 

 

NOTE 36: Other liabilities

92

 

 

NOTE 37: Contingent liabilities and commitments

92

 

 

NOTE 38: Share capital, share premium and treasury shares

94

 

 

NOTE 39: Reserves & Retained Earnings

95

 

 

NOTE 40: Minority interest

95

 

 

NOTE 41: Preferred Securities

96

 

 

NOTE 42: Dividend per share

96

 

 

NOTE 43: Cash and cash equivalents

97

 

 

NOTE 44: Related party transactions

97

 

 

NOTE 45: Acquisitions, disposals & other capital transactions

98

 

 

NOTE 46: Group Companies

99

 

 

NOTE 47: Events after the balance sheet date

100

 

 

NOTE 48: Foreign exchange rates

101

 

 

NOTE 49: Reclassifications

102

 

 

Summary financial data

103

 

 

Information required by article 10 of Law 3401/2005

108

 

 

Availability of the Annual Financial Report

109

 

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Certification of the Board of Directors

 

CERTIFICATIONS

 

Certification of Chairman and Chief Executive Officer, Vice Chairman and Deputy Chief Executive Officer, and a member of the Board of Directors pursuant to Article 4 of Law 3556/07.

 

We, the members of the Board of Directors of National Bank of Greece S.A. certify that to the best of our knowledge:

 

(1)          The financial statements for the annual period ended 31 December 2008 have been prepared in accordance with International Financial Reporting Standards in force and present a true and fair view of the assets, liabilities equity and results of operation of National Bank of Greece and of the companies included in the consolidation.

 

(2)          The Board of Directors annual report fairly presents the evolution, the performance and the position of the Bank and the Group and of the companies included in the consolidation, including the description of the main risks and uncertainties they face.

 

Athens, 30 March 2009

 

THE CHAIRMAN

 

THE VICE CHAIRMAN
AND DEPUTY CHIEF

 

THE BoD MEMBER

 

 

 

 

 

AND CHIEF EXECUTIVE OFFICER

 

EXECUTIVE OFFICER

 

 

 

 

 

 

 

EFSTRATIOS-GEORGIOS
A. ARAPOGLOU

 

IOANNIS
G. PECHLIVANIDIS

 

STEFANOS
G. PANTZOPOULOS

 

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Board of Directors’ Report

 

Board of Directors’ report

on the consolidated financial statements of National Bank of Greece

for the financial year 2008

 

Financial environment

 

During 2008, global economic activity slowed considerably, to 3,2%, from 5,2% in 2007, following a period of exceptionally strong growth, on the back of the rapidly deteriorating global financial crisis.  The collapse of large US investment banks in September 2008, combined with liquidity shortages in the global financial system, triggered an abrupt halt in economic activity in the final quarter of 2008.  This resulted in the US economy enduring a recession throughout 2008, growing by 1,1%, down from 2,0% in 2007. Similarly, euro area economic growth slowed to 0,7% in 2008, from 2,6% in 2007, while the Japanese economy contracted by 0,7% in 2008, compared to growth of 2,4% in 2007. Emerging economies slowed also, albeit by less, growing by 6,3% in 2008, from 8,3% in 2007, with the Chinese economy expanding by 9,0% in 2008, from 13,0% in 2007.

 

As a result, most central banks eased monetary policies in the course of 2008, and additionally implemented various liquidity-promoting measures. Specifically, the US Fed cut its intervention rate by 425 bps, during 2008, from 4,25% to the lower limit of effectively 0%. On the contrary, the ECB moved more conservatively, and after raising its policy rate by 25 bps to 4,25% in July 2008, it finally cut short-term rates by 175 bps, to 2,5% by year-end.

 

The severe economic slowdown resulting from the international financial crisis is the Greek economy’s most severe challenge since EMU entry. The economy has lost steam, with GDP growth slowing to around 2,9% y-o-y in 2008, from 4,0% in 2007, although it remained considerably more resilient compared with most other euro area countries. Relatively solid growth in consumer spending (+2,3% y-o-y) and the positive contribution to GDP from shrinking imports were the main drivers of economic activity, counterbalancing the drag on growth from shrinking investment spending and decelerating export growth. Weakening demand prospects - especially from abroad - declining capacity utilization, and the effective tightening of credit conditions, in conjunction with the downward pressures on profit margins, started to scale back significantly  firms’ investment plans, whereas the adjustment of the housing market to the still large supply overhang continued for a second consecutive year.

 

The Greek labor market remained resilient in 2008 with the unemployment rate declining to 7,8% from 8,3% in 2007 as healthy employment creation in retail trade and personal and business services counterbalanced the negative impact from declining employment in the construction and manufacturing sectors. Employment creation is expected to weaken in 2009, but the predominance of full-time employment, the high share of employment in the public sector (22%) and of self-employment (20,7%) are expected to confine the increase in the average unemployment rate to 8,7% in 2009.

 

The decrease in international oil prices, coupled with weakening domestic demand and the decline in the pricing power of Greek enterprises, resulted in a faster-than-initially expected  fading of headline inflationary pressures in H2:2008 - from July’s peak of 4,9% y-o-y - which slowly fed into a still high core inflation. The declining trend in inflation is expected to continue in 2009 with favorable base effects bringing average annual inflation to a 40-year low of 1,9% y-o-y from 4,2% in 2008.

 

The spread of Greek sovereign bond over German bonds widened since September 2008, reflecting a widespread reassessment of country risk by investors and rating agencies, especially for countries with more intransigent imbalances and deteriorating growth outlook.  The high level of scheduled sovereign issuance in the euro area during 2009 (circa €1.000 billion in total versus circa €50 billion for Greece), in conjunction with significant liquidity differentials among euro area sovereign debt markets, hampers the normalization of sovereign spreads against the Bund.

 

Expected development (risks and uncertainties)

 

Overall business activity will decline marginally in 2009 (in contrast to the euro area where a large contraction in economic activity is expected during the same year circa 3%) as the positive contribution from private consumption, accelerating public investment activity and dropping imports will broadly offset shrinking fixed capital formation and  declining exports. It is expected that favorable terms of trade effects due to declining energy and commodity prices and solid real wage increases in the private sector (by an estimated 3,3%) will keep  private consumption in positive territory in 2009, ameliorating the impact from deteriorating labor market prospects and the freezing of salary increases in the public sector.  Declining domestic, and especially foreign demand, and an ongoing correction in residential investment are expected to keep fixed investment growth in negative territory in 2009, bringing the investment-to-GDP ratio significantly below its 10-year average of 25% of GDP (to a still high 21% in 2009).  Net exports will continue to support activity as the continuing drop in the import bill (which is about 3-times higher than exports) will outweigh the contraction of export receipts resulting from the rapidly deteriorating outlook for the two major exporting industries of the Greek economy, tourism and shipping, which will feel the repercussions of the unfolding international economic crisis.  As a result, the current account deficit is expected to decrease by about four percentage points to 10,8% of GDP in 2009.

 

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Despite the significant deterioration in the international macroeconomic and financial environment, the Greek banking sector remains robust, with high profitability and capital adequacy levels. However, during the last quarter of 2008, the rapid change in liquidity conditions, as well as cost of funding, has led to a deceleration in the high credit expansion growth rates in comparison to recent years. On the other hand, the provisions of Law 3723/2008 for the reinforcement of liquidity in the Greek economy will contribute to the preservation of healthy credit expansion by strengthening the credit role of banks, so as to support Greek households and enterprises.

 

In 2009, the macroeconomic picture in Southeastern Europe 5 (“SEE-5”) (Albania, Bulgaria, FYROM, Romania, and Serbia) and Turkey is expected to deteriorate, in line with the synchronised global recession and the deepening of the financial crisis. In particular, the real GDP growth rate is expected to turn negative in SEE-5 and Turkey (around -2%) due to lower external demand, slowing domestic demand and the scarce and more expensive external financing.

 

The ongoing economic crisis is, however, expected to have a positive impact on these economies. The current account deficit, the “Achilles heel” of the SEE-5 and Turkey during previous years, will narrow significantly in 2009 on the back of the weakening domestic demand, the softening international oil and commodity prices and the curtailed credit to governments, banks and corporates (by about 40-50%). Specifically, the current account deficit is expected to be almost halved compared with the 2008 level in both the SEE-5 and Turkey (to 8.3 per cent of GDP and 2.7 per cent, respectively).

 

The bulk of the external gap should be covered by International Financial Institutions (IFIs). Romania and Serbia have just agreed new Stand-by agreements with the IMF, and Turkey is about to seal a new agreement with the IMF. The IMF-supported programmes should bolster investor confidence and promote macroeconomic stability.

 

More importantly, these countries should be able to meet IMF requirements in view of the strong political consensus for the need of IMF financing and the lack of upcoming elections.

 

NBG Group, with a robust capital base and satisfactory liquidity levels of more than €12 billion, is in an advantageous position to confront the repercussions of turbulence in international markets. The high profitability of 2008 allowed a further strengthening of the Group against the financial crisis. Efforts are focused on sustaining earning power, strong liquidity and capital, as well as applying conservative risk management.

 

In the months ahead we shall step up our efforts to enhance yet further our robust capital base, maintain satisfactory levels of liquidity and keep prudent credit criteria in place so as to sustain the first-class quality of the Group’s loan book in the event that the global situation takes a further downturn.

 

At the same time, we continue to supply a steady flow of financing to healthy businesses and households, while taking new initiatives to support specific segments of the economy, as well as the more vulnerable members of our community who have been hit hardest by the unfolding crisis.

 

Financial results

 

Group attributable profit in 2008 totaled €1.546 million, down 5% from the previous year.

 

This performance is the result of rational growth in banking business in Greece and the markets of Turkey and SE Europe, despite the adverse international climate. These positive results were achieved despite a highly adverse environment, particularly in the last quarter of the year, leading the Group to double the level of its quarterly provisions, thereby weighing correspondingly on Q4 profitability. In fact, in view of the deepening international crisis, the Group increased its provisions against credit risk by 60% to €513,3  million for the year as a whole, and €221,3  million for Q4 alone.

 

Despite the rapid deterioration in the economic outlook for the economies of the region, as well as the Group’s expansion of credit in 2008, the quality of the loan book remained strong. The Group’s conservative and consistent provisions policy throughout the growth phase of the economic cycle resulted in achieving a sufficient level of provisions, before taking into account the value of each type of collateral.

 

Moreover, the Group’s systematic risk management policy has resulted in a loan book that is concentrated on low-risk segments, such as mortgage loans and lending to large corporations and the wider public sector. At the same time, it was the Bank’s strategy to diversify its business lending widely across all segments of the economy.  As a result its corporate portfolio is not concentrated in sectors that may be adversely impacted by the global economic crisis, such as shipping, where the Group’s exposure is limited to €1,7 billion.

 

The Group’s profits before provisions and taxes, which in 2008 amounted to €2,5 billion, allow NBG to absorb a substantial level of provisions, if this is made necessary by any further deterioration of macroeconomic fundamentals, as the crisis feeds through to the real economy.

 

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Financing in Greece and the wider region continues at a steady pace

 

Total Group lending in 2008 amounted to €66,1 billion (compared with €56,3 billion in 2007), up approximately 18% y-o-y, confirming the Group’s support for the growth dynamic of Greece and the countries of the region in spite of the adverse impact of the credit crisis and the recessionary pressures in most of the area.  These amounts, as well as the ones analyzed below, do not include financial instruments of €8,6 billion, which were acquired or reclassified in 2008, after the IAS 39 Amendment of 13 October 2008.

 

It must be noted that even in Q4 2008 the Group managed to post 4% credit growth quarter-on-quarter in Greece, 3% in Turkey and 2% in SE Europe.

 

Greece: growth in financing to the Greek economy

 

Despite the global situation, the Bank has leveraged its strong liquidity and increased its rate of financing to Greek businesses and households. Total lending in Greece at the end of 2008 amounted to €46 billion, equivalent to annual growth of approximately 19% (+€7,2 billion compared to 2007, of which €1,8 billion derived from the last quarter).

 

This performance is considered quite positive in the light of the current climate, underscoring NBG’s commitment to uninterrupted financing of the Greek economy despite the dramatic downturn in credit markets since September of last year. A key component of these results was the growth of lending to the business sector (+26%), surpassing for the first time growth in retail banking (+15%), and reflecting NBG’s commanding position in the financing of Greek businesses.

 

Retail banking continued to post dynamic growth, even in the present circumstances. Retail lending in 2008 totalled €29,6 billion, up 15% y-o-y. Growth in the retail loan balance in the last quarter of the year was in the order of €967 million, up 3% q-o-q.

 

Specifically:

 

·                  Mortgages grew by 14% y-o-y to approximately €19 billion. Disbursements of new mortgages in 2008 amounted to €3,5 billion, thereby maintaining NBG’s supremacy in this segment of the domestic market.

 

·                  In Q4, new mortgages amounted to €800 million, corresponding to 1/3 of all new mortgages in Greece. This development is particularly significant given that in the past the corresponding share of the Bank was around 1/4.

 

·                  In 2008, outstanding consumer loan and credit card balances grew by 18% to €6,7 billion, while disbursements of new consumer loans surpassed €1,9 billion, up 10% y-o-y.

 

·                  Lending to professionals and SMEs grew by 13% to over €4 billion. In Q4 alone, NBG posted growth of 6% in this market segment.

 

Net growth in lending to medium-size and large corporations amounted to €3,4 billion (up €0,8 billion in Q4), representing annual expansion in the corporate portfolio of 26%.

 

The steady flow of finance to the Greek economy continues in 2009

 

Financing to Greek businesses and households continues to grow in line with our credit expansion target during the first months of 2009.

 

Specifically:

 

·                  Net growth in retail lending surpassed €400 million in the first two months of the year.  The business lending balance showed similar performance, amounting to €380 million.

 

·                  Despite the negative seasonality of the first two months of the year, this growth corresponds to annual growth in the order of 10%.

 

·                  New mortgage disbursements also showed resilience, exceeding €600 million.

 

·                  Disbursement of loans to SMEs via the Credit Guarantee Fund for Small Enterprises is progressing rapidly, and has already surpassed €550 million.

 

Deposit growth is funding credit expansion

 

Group deposits grew by 12% to €67,7 billion at the end of 2008. As a result, Group net lending as a whole is more than covered by deposits, with the loan-to-deposit ratio standing at 95% at the end of 2008.

 

The Bank’s strong liquidity and, above all, its stability comprise a substantial competitive advantage, particularly in the current environment, which limits the ability to raise liquidity from the global money and capital markets.

 

Customer deposits in Greece grew by 14% y-o-y to €55,3 billion. It is notable that NBG attracted €7,6 billion in new deposits and since December 2007 increased its market share in savings deposits by two percentage points to 34,1%, despite fierce competition. This performance underscores the confidence that Greek households have in NBG.

 

The strong deposit base of the Group, combined with the Bank’s reserves of liquidity amounting to €12 billion, as well as the low level of refinancing of obligations that mature in 2009 (€1,8 billion), will allow the Group to maintain a steady flow of funding in 2009, so as to

 

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support healthy entrepreneurship, finance the housing and consumer needs of households, and thereby help the community to overcome the adverse impact of the international economic crisis.

 

Rational growth mitigates the impact of shrinking margins

 

Group interest income stood at €3,6 billion, up 17% compared to 2007 in line with the growth in the loan portfolio.  This strong result was achieved despite the adverse impact of the global credit crunch, and reflects the rational growth of the loan book in Greece and abroad, coupled with efficient management of the cost of raising capital.

 

Despite the increase of interbank interest rates worldwide, particularly in Q4 2008, the fierce competition in attracting deposits that had a negative effect on deposit margins and the cost of money in general , the Bank adhered to a prudent pricing policy for its deposit products, thereby keeping Group net interest margin unchanged at 4,25%.

 

Efforts to contain costs continue unabated

 

Growth in the Group’s operating costs was contained at +4%, despite the growth in the branch network in SE Europe and Turkey in 2008 (+137 branches or +13%) and investment in the operational integration of the Group’s international subsidiaries.

 

This performance is particularly positive if one takes into consideration the inflationary pressures in the wider region during 2008; and it is the result of the Group’s efforts to keep costs under control. Accordingly, the cost/income ratio improved yet further to 48,5% (compared with 50,2% in 2007).

 

Fully aware of the particularly adverse conditions in which the banking sector has entered, the NBG Group continues its cost cutting policy unabated, aiming at a radical restructuring of its cost profile.

 

Finansbank: maintaining profit despite the adverse economic environment

 

The profit before tax of Finansbank was €530 million (TRY 1 billion) in 2008, remaining at the same level with 2007 (TRY980 million), despite the adverse financial environment.

 

This performance reflects a 32% increase in profit before provisions compared with 2007. In particular, net interest income grew by 25% to €874 million (TRY1.656 million). Commissions income also grew by 25% to €292 million (TRY553 million).

 

At the end of 2008, Finansbank’s lending after provisions totalled TRY22,3 billion (€10,4 billion), up 27% on an annual basis.

 

The slower growth rate of the Turkish economy in Q4 2008 led to a deceleration in the dynamic growth curve of Finansbank’s lending (just 3% in Q4). This slowdown reflects the general adjustment in the pricing of credit risk and credit criteria applied by the Group in Turkey.

 

Retail lending remained at the spearhead of Finansbank’s growth trajectory and has continued to grow at an impressive 41%. In 2008, retail loans totalled TRY10,0 billion (€4,7 billion), while mortgage and consumer lending also presented a strong dynamic, growing 35% and 46% respectively y-o-y.

 

Business lending grew by 17% on an annual basis to TRY12,8 billion (€5,9 billion).

 

The adverse economic climate that prevailed during the last quarter impacted the quality of the loan book, which remains better than the average for the Turkish market.

 

Finansbank’s deposits outstanding posted positive performance, growing 23% y-o-y as a result of the Bank’s strategy to broaden its deposit base, particularly in the local currency, which at the end of the year totalled TRY10,5 billion (€4,9 billion) compared with TRY6,2 billion (€2,9 billion) in 2007, up 70%.

 

Growth in Finansbank’s deposit base in local currency led the loan-to-deposit ratio to reach 140%, a positive development considering the fact that the excess lending level is financed by medium-term borrowing from international markets (non-Group) with maturities extending up to 2013.

 

The combination of customer deposits and medium-term borrowing has made Finansbank virtually self-financing, meaning that its cross-border borrowing from the Group remained unchanged throughout the course of the year. It is notable that in Q4, Finansbank refinanced in the global markets a $470 million syndicated loan, attracting the participation of 20 international banks.

 

The scheduled expansion of Finansbank’s branch network was completed, with the addition of 48 new branches over the course of the past 12 months. Accordingly, Finansbank now has a network of 458 branches located throughout Turkey.

 

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SE Europe: disciplined growth generates profitability in a period of crisis

 

Profit before tax from operations in SE Europe grew by a 16% y-o-y to €220 million. All the countries of the region posted strong profitability, underscoring the effectiveness of our strategy for disciplined organic growth and control of costs, while the cost/income ratio is around 50%.

 

Total lending in SE Europe stood at €9,4 billion (including €1 billion from Cypriot operations), up 38% y-o-y and 2% q-o-q. Retail loans grew by 33% to €3,6 billion y-o-y while business credit grew by 42% to €5,7 billion. These figures include €700 million to Greek and West European businesses operating in the region.

 

The quality of the loan book in SE Europe remains particularly satisfactory, while 80% of total lending in the region is secured with collateral.  With the addition of 89 new units in 2008, the planned expansion of the Group’s network in SE Europe has reached completion, as it now includes over 746 branches and 9.596 employees (+12% on the previous year).

 

NBG supports Greek businesses and households

 

Via a host of initiatives and actions, NBG has demonstrated in practice its ongoing commitment to work responsibly and constructively within the community in which it conducts business. In recent months NBG has announced, and set in motion, a full package of measures aiming at providing relief for more vulnerable social groups, with special provisions for their obligations vis-à-vis the Bank.

 

For instance:

 

·                  NBG has frozen for 6 months all foreclosure proceedings on loans up to €300.000 relating to customers’ primary residences,

 

·                  For those who are unemployed, we have postponed for 12 months payment on mortgage loans, and provided the opportunity for interest-free settlement of outstanding dues on credit cards within 24 months.

 

·                  For SMEs, we have increased credit limits by up to 25%, a move that benefits 20.000 business customers, and have set up a special financing programme for new firms totalling €100 million. Within 2009, we have already made three successive cuts in interest rates.

 

·                  In the context of its participation in the Credit Guarantee Fund for Small Enterprises, NBG has approved and forwarded to the Fund almost 6.000 applications for a total of €765 million, amounting to 35% share in the Fund (just before the end of the first quarter of 2009).

 

·                  In order to further support Small Enterprises operations, NBG launched a new open credit facility, based on the terms of which, the principal repayment is at the discretion of the borrower, who is obliged to regular repayments of interest only.

 

·                  NBG launched a countrywide employment program, for unemployed University degree holders, up to 30 years old. Under the program’s terms, there will be 6-month time intervals where 300 persons will be employed by the Bank at each interval, receiving full compensation. The Bank intends to run this program for at least 1 year and as long as the current financial crisis prevails.

 

Significant events for the year 2008

 

1.               Following the resolution of Bank’s Annual General Meeting of the Shareholders held on 15 May 2008, cash dividend of €0,40 was approved, as well as a share capital increase by €95,3 million , through the issue of 19.067.838 new shares with a nominal value of €5 per share to existing shareholders without payment, instead of an additional €1 dividend for the year 2007, at a ratio of four new shares for every one hundred shares owned.

 

2.               Following the resolution of Bank’s Annual General Meeting of the Shareholders held on 15 May 2008, the issue of redeemable preference shares of up to €1,5 billion was approved.  Following the above resolution, on 6 June 2008, the Board of Directors of the Bank issued 25.000.000 Non-cumulative Non-voting Redeemable Preference Shares, which were offered in the form of American Depositary Shares in the United States, at a price of USD 25 per preference share (equivalent to €16,11).  The total proceeds of the offering amounted to USD 625 million or €402,7 million.  The annual dividend rate is set to USD 2,25 per Preference Share.  The American Depositary Shares are evidenced by American Depositary Receipts and are listed on the New York Stock Exchange. These funds were exclusively used to enhance the capital adequacy of the Bank and its Group.

 

3.               On 26 June 2008, the Board of Directors of the Bank approved the share capital increase by €1,9 million through the issue of 387.970 ordinary shares derived from the exercise of stock options under Program B.

 

4.               On 19 August 2008, the Bank accepted the proposal of FIBA Holdings AS (the sellers) to acquire the remaining shares of Finansbank held by the sellers (9,68%), as provided for in the shareholders agreement between the Bank and the sellers.  The exercise price was determined in accordance with the agreement and amounted to USD 697 million.  On 26 September 2008, the NBG Finance (Dollar) Plc acquired the above shares from FIBA Holdings A.S.

 

5.               On 21 April 2008 onwards, the Bank acquired 8.604.000 shares in the Greek Postal Savings Bank (PSB) via the Athens Exchange (“ATHEX”). Together with the 816.000 PSB shares already owned by NBG, NBG’s total shareholding in PSB amounts to 6,62%.

 

6.               Following the restructuring of its business activities, the Bank disposed of its 30% associate, Siemens Enterprise Communications S.A. and its 20,23% associate, Hellenic Countryside S.A., while it started consolidating special purpose entities, used for funding and investment activities.

 

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Post Balance sheet significant events

 

The Bank’s Board of Directors decided and the Extraordinary General Meeting of the Shareholders approved on 22 January 2009, the Bank’s participation in the Support plan for the strengthening of the liquidity of the Greek economy. The Bank will proceed with a €350 million share capital increase, through the issue of 70 million redeemable preference shares of a par value of €5 each, to be covered by the Greek State. Furthermore, the Bank will issue a €500 million bond guaranteed by the Greek State. Finally, on 27 February 2009, the Greek State appointed Mr. Alexandros Makridis, economist, to represent it as an additional member of the Bank’s Board of Directors.

 

Risk management

 

The Group operates in a fast growing and changing environment and acknowledges its exposure to banking risks as well as the need for effective risk management.  Risk management and control form an integral part of the Group’s commitment to providing continuous and high quality returns to its shareholders.

 

To this effect, the risk management function was enhanced in 2007, and the Group risk governance rules were reformed.  As a result, smooth communication and the consistent management of risk issues across all Group activities are now achieved.

 

Since January 1st, 2008, National Bank of Greece is following the Internal Ratings Approach for the calculation of capital charges arising from credit risk in its corporate and mortgage portfolios, which make up more than 71% of its total loan portfolio.  At the same time, the implementation of the “Basel II” programme at Group level progresses steadily, targeting both the gradual compliance with the new capital adequacy regulatory requirements and the further enhancement of risk and capital management capacity.  The largest part of current “Basel II” projects concern NBG financial sector subsidiaries, and is being implemented without material deviation from the relevant time-schedule.

 

Credit risk

 

The Group pays particular attention to implementing the highest standards of credit risk management and control.  Credit risk arises from an obligor’s (or group of obligors) failure to meet the terms of any contract established with NBG or an NBG subsidiary.  The Group employs for all facilities credit risk rating and measurement systems, specifically designed to meet the particular characteristics of its various loan exposures (e.g. NBG Corporate Risk Rating Model for the corporate portfolio, internally developed application and behavioural scorecards for the retail portfolio, etc.).  The objective of such credit risk rating systems is to appropriately classify an obligor to a particular credit rating class and estimate the parameters of expected and unexpected loss, with the ultimate goal of protecting the profitability and the capital base of the Group.  Active credit risk management is achieved through:

 

·                  The application of appropriate limits for exposures to a particular obligor, a group of associated obligors, obligors that belong in the same economic sector, etc.;

 

·                  The use of credit risk mitigation techniques (such as collateral and guarantees);

 

·                  The risk adjusted pricing of products and services;

 

·                  The participation of Risk Management in the credit decision process.

 

Market risk

 

To effectively measure market risk, the risk of loss attributed to adverse changes in market driven factors such as foreign exchange rates, interest rates, equity prices and prices of derivative products, the Group applies Value at Risk (VaR) models to all Trading and Available For Sale (AFS) positions in all currencies.  The Group established a framework of VaR limits in order to control and efficiently manage the assumed market risks, capturing both individual risk factors (interest rates, foreign exchange rates, equity price risk) and the total level of market risk exposure.

 

To assess the robustness of its internal market risk models, the Group applies appropriate back-testing techniques while, in order to measure the impact of exceptional market events, the Group implements a stress testing programme on a weekly and monthly basis.

 

Operational risk

 

During 2008 the Bank implemented the second cycle of its operational risk management framework, in accordance with the established policies and methodologies and within the scheduled time frame.  Additionally, the Bank implemented the operational risk management framework to five major subsidiary financial institutions abroad, as well as to the three most significant Greek subsidiaries.

 

The Group level operational risk management framework comprises of:

 

·                  The alignment of the Operational Risk Strategy as well as the Operational Risk Policy & Methodologies

 

·                  The Risk and Control Self Assessment process, through which the inherent operational risks in each activity were identified and assessed by the competent risk owners

 

·                  The determination of Action Plans aiming at the mitigation of the major operational risks identified

 

·                  The Loss Data Collection due to operational risk events throughout Group activities and the update of the respective database.

 

The Group wide expansion of the operational risk framework is aiming at:

 

·                  The integration of the management of operational risk throughout Group activities

 

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·                  The gradual adoption of the Standardised Approach for the operational risk capital calculation at Group level, in accordance with the relevant regulatory requirements

 

·                  The selection of a number of Key Risk Indicators aiming at the prompt determination of potential operational risk events

 

·                  The generation of an Operational Risk reporting framework, aiming to facilitate the operational risk management decision-making process at all Group hierarchy levels.

 

Interest rate risk in the banking book and liquidity risk

 

The Group systematically measures and manages the interest rate risk arising from its banking book items as well as liquidity risk, through:

 

·                  The analysis of repricing and liquidity gaps arising from its balance sheet structure;

 

·                  The measurement of economic value of equity and net interest income sensitivity under normal and exceptional changes in interest rates;

 

·                  The broadening and diversification of its liquidity sources;

 

·                  The maintenance of adequate stock of liquid assets;

 

·                  The establishment of relevant limits.

 

In order to strengthen its liquidity, the Group issued in 2008, asset backed securities based on Corporate bond loans and Credit Card and Consumer loans, at a total amount of approximately €3,6 billion.

 

Furthermore, the Bank has created a program for the issuance of covered bonds based on residential mortgage loans at a total amount of €10 billion, out of which an amount of €2 billion has already been issued.

 

Financial instruments

 

In order to provide a hedge for the fixed interest rate exposure arising from our position in fixed rate Greek government bonds, we enter into future contracts relating to short, medium and long-term German government bonds.

 

Furthermore, we also engage in hedging certain designated fixed rate loans on a portfolio basis with the use of pay fixed receive floating interest rate swaps.

 

Capital adequacy

 

Despite continued expansion in credit in Q4 2008 and depreciation in the value of the currencies of the countries where we operate, the Tier I capital adequacy ratio was estimated at 10% and the Total capital adequacy ratio at 10,3%. Thanks to our strong profitability and measures taken by the Group (such as the issue of $625 million preference shares in June 2008), our regulatory capital indices remains at healthy levels despite the significant increase of weighted assets by 18%.

 

If the €350 million in new funds deriving from NBG’s participation in the liquidity support programme for the Greek economy are taken into account, the Tier I capital adequacy ratio stands at around 10,6% and the Total capital adequacy ratio at 10,9%.

 

The combination of high liquidity and a strong capital base provides the Group with the foundations on which to build further its growth in Greece and abroad even against the headwinds of a worsening economic environment.

 

Own Shares

 

The Bank’s Annual General Meeting of the Shareholders held on 17 April 2008, approved an own shares buy-back program, providing for the purchase, by the Bank, of up to 10% of its total shares outstanding from 25 May 2008 through 24 May 2009, at a minimum price of €5 and a maximum of €60 per share.

 

During 2008, the Bank and its subsidiaries acquired 11.756.276 Bank’s Shares at the amount of €279,2 million and sold 5.802.272 Bank’s Shares at the amount of €155,6 million. On 31 December 2008, the Bank held 6.456.504 own shares at an acquisition cost of €145,3 million, representing 1,3% of the issued share capital. No Group company holds any of the Bank’s shares.

 

Following the Bank’s decision to participate in the support plan for the strengthening of the liquidity of the Greek economy and pursuant to the provisions of Law 3723/2008 and article 28 of Law “Dematerialized Securities System, provisions on Capital Markets, taxation issues and other provisions”, the Bank is not allowed to repurchase its own shares, for as long as it participates in this program.

 

Related party transactions

 

Based on the existing regulatory framework, we must include any transaction between the Group and the Bank with all related parties as defined in IAS 24, which took place during the fiscal year and substantially affected the Bank’s financial performance. Management’s total compensation, receivables and payables must be reported separately.  All related party transactions with the Bank and the Group companies are conducted within usual business practice at arm’s length and are approved by the authorized Bank members.

 

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Group and Bank transactions with Board of Directors members and Management for 2008

 

(€ ‘000)

 

Group

 

Bank

 

Total compensation

 

33.077

 

14.680

 

Loans and advances

 

29.384

 

13.111

 

Deposits

 

138.547

 

52.415

 

Other Payables

 

413

 

 

Letters of Guarantee

 

18.922

 

 

 

Intercompany transactions as of 31.12.2008  - Bank (amounts in  € ‘000)

 

Associates and Other Investments (>10%)

 

Assets

 

Liabilities

 

Income

 

Expenses

 

Off Balance
sheet (net)

 

GECA CABLES

 

7.033

 

1.006

 

767

 

7

 

 

INTERBANKING SYSTEMS S.A . (“DIAS”)

 

 

3.560

 

740

 

1.056

 

 

Planet A.E.

 

759

 

3

 

70

 

 

 

2.167

 

Social Securities Funds Management S.A.

 

 

3.438

 

 

159

 

 

Larko S.A.

 

 

 

379

 

896

 

10

 

1.726

 

Cosmo One Hellas Market Site A.E.

 

 

35

 

 

 

 

Phosphoric Fertilizers Industry S.A.

 

26.804

 

2.513

 

3.123

 

56

 

1.517

 

Eviop Tempo S.A.

 

 

1.202

 

 

 

 

Teiresias S.A.

 

26

 

1.879

 

46

 

1.532

 

 

Total intercompany transactions with associates

 

34.622

 

14.015

 

5.642

 

2.820

 

5.410

 

 

Subsidiaries

 

Assets

 

Liabilities

 

Income

 

Expenses

 

Off Balance
sheet (net)

 

National P&K Securities S.A.

 

190

 

109.863

 

4.604

 

1.235

 

31.351

 

Ethniki Kefalaiou S.A.

 

0

 

341.230

 

198

 

17.458

 

42.979

 

NBG Asset Management Mutual Funds S.A.

 

18.309

 

2.009

 

2.288

 

33.742

 

430

 

Ethniki Leasing S.A.

 

758.759

 

13.332

 

34.384

 

81

 

542

 

NBG Property Services S.A.

 

 

645

 

 

17

 

 

Pronomiouhos S.A. Genikon Apothikon Hellados

 

860

 

15.406

 

1.211

 

1.473

 

 

NBG Greek Fund Ltd

 

 

4.302

 

 

163

 

 

NBG Bancassurance S.A.

 

 

98

 

88

 

271

 

296

 

The South African Bank of Athens Ltd (S.A.B.A.)

 

15.893

 

1.607

 

228

 

 

 

National Bank of Greece (Cyprus) Ltd

 

346.753

 

326.044

 

7.708

 

12.706

 

373

 

Stopanska Banka A.D.-Skopje (*)

 

45.345

 

87

 

1.493

 

1

 

 

United Bulgarian Bank A.D. - Sofia (UBB)

 

1.247.149

 

586

 

57.728

 

 

 

NBG International Ltd

 

13

 

2.174

 

144

 

69

 

 

NBG Finance Plc

 

 

2.927.471

 

 

156.747

 

 

Interlease E.A.D., Sofia

 

596.189

 

1.024

 

25.722

 

 

 

ETEBA Romania S.A.

 

 

33

 

 

65

 

 

Innovative Ventures S.A. (I-Ven)

 

 

1.995

 

 

63

 

 

NBG Funding Ltd

 

1

 

183

 

 

1

 

 

Banca Romaneasca S.A. (*)

 

1.118.189

 

7.915

 

61.639

 

104

 

 

Ethniki Hellenic General Insurance S.A.

 

129

 

346.074

 

9.330

 

31.107

 

 

ASTIR Palace Vouliagmenis S.A.

 

13.709

 

9.490

 

5.497

 

95

 

2.853

 

Grand Hotel Summer Palace S.A.

 

4.050

 

2.110

 

169

 

45

 

 

NBG Training Center S.A.

 

1.046

 

740

 

196

 

104

 

 

Ethnodata S.A.

 

170

 

5.744

 

218

 

6.347

 

390

 

KADMOS S.A.

 

 

2

 

 

 

 

DIONYSOS S.A.

 

 

63

 

 

 

 

EKTENEPOL Construction Company S.A.

 

63

 

1.303

 

45

 

96

 

645

 

Mortgage, Touristic PROTYPOS S.A.

 

 

919

 

 

 

 

Hellenic Touristic Constructions S.A.

 

 

10

 

 

 

 

Ethnoplan S.A.

 

1

 

1.959

 

21

 

2.797

 

74

 

Ethniki Ktimatikis Ekmetalefsis S.A.

 

3.973

 

63

 

287

 

 

 

NBGI Private Equity Funds

 

79.083

 

8.217

 

223

 

75

 

 

NBG International Holdings B.V.

 

 

986

 

 

41

 

 

NBG Leasing IFN S.A.

 

279.945

 

423

 

13.008

 

 

 

Finansbank A.S.(*)

 

1.597.608

 

1.042

 

42.042

 

69

 

 

Vojvodjanska Banka a.d. Novi Sad

 

47.845

 

711

 

3.370

 

5.374

 

 

NBG Leasing d.o.o. Belgrade

 

51.560

 

158

 

1.992

 

 

 

CPT Investments Ltd

 

 

19.352

 

 

5.221

 

 

NBG Finance (Dollar) Plc

 

 

136.863

 

 

4.751

 

 

NBG Finance (Sterling) Plc

 

 

419.227

 

 

26.101

 

 

Eterika Plc (Special Purpose Entity)

 

54.501

 

79.908

 

 

25.920

 

 

Revolver APC Limited (Special Purpose Entity)

 

37.122

 

 

119

 

 

 

Total intercompany transactions with subsidiaries

 

6.318.455

 

4.791.368

 

273.952

 

332.339

 

79.933

 

Total intercompany transactions

 

6.353.077

 

4.805.383

 

279.594

 

335.159

 

85.343

 

 

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NBG uses NBG Finance Plc, NBG Finance (Dollar) Plc and NBG Finance (Sterling) Plc for financing activities (€3,5 billion). The Bank offers liquidity to its subsidiaries in the Southeastern Europe and Turkey of approximately €5 billion.

 

The Auditors

 

The Board of Directors’ Audit Committee reviews the appointment of the external auditors, as well as their relationship with the Group, including monitoring the Group’s use of the auditors for non-audit services and the balance of audit and non-audit fees paid to the auditors.

 

Corporate social responsibility

 

NBG views Corporate Social Responsibility (“CRS”), in its wider social context, as a core value and abiding principles throughout its history. NBG’s “Responsibility” Corporate Social Action programme embodies the key CSR principles, both in its business plan and in its everyday modus operandi, lending real and generous support to a wide range of cultural, educational and humanitarian initiatives, as well as to the community at large.

 

NBG’s commitment to environmental protection is reflected through its Environmental Policy Statement.  To this effect, NBG developed and has applied since 2004 an Environmental Management System in accordance with the ISO 14001 requirements.

 

In particular NBG has supported the areas destroyed by the wildfires of summer 2007 with the amount of approximately €35 million during 2007 — 2008.

 

Corporate governance

 

NBG has adopted a corporate governance framework that satisfies international and Greek legal, institutional and compliance requirements at the Board of Directors level and has established Audit, Human Resources and Remuneration, Corporate Governance and Nomination, and Risk Management Committees which operate according to their charters approved by the Board of Directors. In early 2008, the Group’s compliance with the Sarbanes-Oxley Act for 2007 was attested to, as required by the Securities and Exchange Commission (“SEC”) of the United States and all necessary actions have been taken for compliance in fiscal year 2008 as well.

 

Dividend policy

 

The parent Bank’s net profit for 2008 was €480,3  million.

 

The Bank has distributed the amount of €32,7 million as interim dividend for the 25.000.000 Non-cumulative Non-voting Redeemable Preference Shares according to the terms of those shares and a Board of Directors resolution in November 2008. The General Assembly of the Bank’s Shareholders will be asked to approve the above mentioned interim dividend and the distribution of a $2,25 dividend for the 25.000.000 Preference Shares in the current year.

 

The Bank will not distribute any cash dividend for ordinary shares for year 2008, following its participation in the support plan for the strengthening of the liquidity of the Greek economy and the provisions of Law 3723/2008 and art.28 of Law «Dematerialized Securities System, provisions on Capital Markets, taxation issues and other provisions”.

 

For the Bank’s Board of Directors

 

Takis Arapoglou

Chairman and CEO

 

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Supplementary Report

To the Annual General Meeting of Shareholders

Of National Bank of Greece

pursuant to article 4 of Law 3556/2007

 

Pursuant to article 4 of Law 3556/2007, listed companies must submit a supplementary report to the General Meeting of Shareholders providing detailed information on specific issues. This Board of Directors’ supplementary report to the General Meeting of Shareholders contains the required additional information.

 

A) Share capital structure

 

NBG’s share capital amounts to €2.490.771.345 divided into (a) 496.654.269 ordinary registered shares with voting rights, of a par value of €5,00 (b) into 25.000.000 Non-cumulative Non-voting Redeemable Preference Shares as stated at point (xlvii) of par. 2 of article 4 of the Bank’s Articles of Association, of a par value of €0,30.

 

The Bank will increase its share capital through the issue of 70.000.000 redeemable preferred shares pursuant to Law 3723/2008, of a par value of €5,00, following its participation in the Program for the liquidity increase of the Greek economy.

 

NBG ordinary shares are listed for trading on the Athens Exchange (“ATHEX”).

 

The rights of the shareholders of NBG, arising from each share, are proportional to the percentage of the share capital to which the paid-in share value corresponds. Each share carries the rights stipulated by law and the Articles of Associations, and in particular:

 

Related to ordinary shares (consisting 99,7% of the Bank’s capital)

 

·                  The right to participate in and vote at the General Meeting of Shareholders;

 

·                  The right to a dividend from the Bank’s profit for the year ended, or from liquidation, which amounts to 35% of the net profit following allocation of statutory reserves and profits from sale of shares which have been held for at least ten years and represent a shareholding larger than 20% of the paid up share capital of a subsidiary company of the Bank, since the said distributable part of profits is larger than that resulting from implementation of Companies’ Act 2190/1920, art. 25, par. 2(b) currently in force.  In addition to the above, the net profit remaining from measurement of financial instruments at their fair value after deducting any losses resulting from such measurement is not taken into account for the calculation of the statutory dividend which is required by legislation currently in force.  This is annually distributed to shareholders as a statutory dividend, whereas the distribution of a supplementary dividend is subject to General Meeting resolution. Shareholders entitled to a dividend are those whose names appear in the Register of NBG’s Shareholders on the date the dividend beneficiaries are determined, and a dividend on each share owned by them is paid within 2 months of the date of the General Meeting of Shareholders that approved the Bank’s annual financial statements. The dividend payment method and place are announced in the press. After the lapse of five (5) years from the end of the year in which the General Meeting approved the dividend, the right to collect the dividend expires and the corresponding amount is forfeited in favor of the Greek state;

 

·                  The pre-emptive right to each share capital increase in cash and issue of new shares;

 

·                  The right to receive a copy of the Bank’s financial statements and of the certified public accountants’ report and the Board of Directors’ report;

 

·                  The General Meeting of Shareholders maintains all of its rights during liquidation proceedings (pursuant to Article 38 of the Bank’s Articles of Association);

 

·                  Pursuant to Law 3723/2008 and article 28 of the Law “Dematerialized Securities System, provisions on Capital Markets, taxation issues and other provisions”, for the period the bank is participating in the Program for the liquidity increase of the Greek economy, only stock dividend is allowed. These shares cannot be repurchased ones. Dividend to preferred shares issued abroad, are excluded from this regulation.

 

Related to preferred shares (consisting 0,30% of the Bank’s capital)

 

·                  The privileges of the Preference Shares are (i) the right to collect, before the ordinary securities and, if existing, other classes of preference shares of the Bank ranking or expressed to rank junior to the Preference Shares, a euro denominated annual dividend (which may be expressed as being equal to a USD amount) that may be payable by the Bank in USD, (the Preferred Dividend); in particular for the financial year 1.1.2008 to 31.12.2008 the aggregate amount of the Preferred Dividend may be increased by up to 3/4; (ii) the right to collect the Preferred Dividend also from the payment of dividend amounts described under article 45 par. 2b of the Companies Act and until full exhaustion of such amounts; and (iii) the right to collect before the ordinary securities and other Junior Obligations of the Bank an amount denominated in Euro equal to the sum of the nominal value and any premium paid, which may be determined by reference to a fixed US dollar amount, which may be payable in US dollars by the Bank, from the liquidation proceeds of the Bank, including above par reserves formed after the issuance of the Preference Shares (Liquidation Preference).

 

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·                  The Preference Shares do not entitle their holders to cumulative dividends and are not convertible into common shares. The Preference Shares are issued without voting rights, subject to those cases where voting rights exist by operation of mandatory provisions of law.

 

·                  The approval of the payment of Preferred Dividends on the Preference Shares, in accordance with par. 5 hereof, will be declared on an annual basis at the absolute discretion of the Annual General Meeting of the Bank out of Distributable Funds under 44a of the Companies Act. Subject to the provisions relating to paragraphs 8 to 9 of point (xlvii) of paragraph 2 of article 4 of the Bank’s Articles of Association, the Bank will not be permitted to pay any Preferred Dividend on the Preference Shares if such Preferred Dividend together with any dividends previously paid and/or approved for payment in respect of Preferred Dividend Parity Obligations in the then current financial year would exceed the Distributable Funds under 44a or if the Bank of Greece has requested in writing the non-payment of dividend (including the amounts of dividend distributed under article 45 par. 2b of the Companies Act to the common and preferred shareholders of the Bank.

 

·                  The Preference Shares will be redeemable by the Bank in accordance with the provisions of article 17b of the Companies Act. The Bank is entitled to redemption at the First Call Date, as well as on any date thereafter following an invitation to all the Preferred Shareholders. The redemption is effected by payment to each Preferred Shareholder of an amount equal to the Redemption Amount. Such redemption will be subject to the prior consent of the Bank of Greece.

 

The non-cumulative non-voting Redeemable Preference Shares were offered in the form of American Depositary Shares in the United States. The American Depositary Shares are evidenced by American Depositary Receipts and are listed in the New York Stock Exchange.

 

B) Restrictions on transfers of shares

 

Transfers of the Bank’s shares are carried out as prescribed by law and are not subject to any restrictions pursuant to the Bank’s Articles of Association.

 

C) Significant direct and indirect holdings as per Law 3556/2007

 

There are no significant direct or indirect holdings as per Law 3556/2007, i.e. of a direct or indirect participation percentage higher than 5% of the aggregate number of the Bank’s shares.

 

D) Shares with special control rights

 

There are no shares with special control rights.

 

Following the Bank’s participation in the support plan for the strengthening of the liquidity of the Greek economy in 2009, the issuance of shares pursuant to Law 3723/2008 and the appointment of an additional member to the Bank’s Board of Directors by the Greek state, the latter through its representative has the right to veto any decision related to dividend distribution and to the compensation of the President, the Managing Director and the other Board of Directors members and the general managers and the deputy general managers.

 

E) Restrictions to voting rights

 

There are no restrictions on voting rights issuing from the ordinary shares pursuant to the Bank’s Articles of Association.

 

Pursuant to the Bank’s Articles of Association, the holders of preference shares have no voting rights, except for the cases where this is strictly provided by the Law.

 

F) NBG Shareholders’ agreements

 

To the Bank’s knowledge there are no shareholders’ agreements pursuant to which restrictions apply to transfers of, or to the exercise of voting rights issuing from, the Bank’s shares.

 

G) Rules regarding the appointment and replacement of Board members and amendments to Articles of Association

 

The provisions of the Bank’s Articles of Association regarding the appointment and replacement of members of the Board of Directors and amendments to the Articles of Association are the same as the corresponding provisions of the Companies’ Act 2190/1920.

 

Following the Bank’s participation in the support plan for the strengthening of the liquidity of the Greek economy, the Greek State appoints an additional member to the Bank’s Board of Directors, as its representative, for the whole period the Bank participates into this plan.

 

H) Board of Directors’ authority for the issue of new shares or the purchase of own shares

 

1) Pursuant to the provisions of Companies’ Act 2190/1920 Article 13 par. 1, by General Meeting resolution, subject to the publication requirements provided for under Companies’ Act 2190/1920 Article 7b, the Board of Directors can increase the Bank’s share capital through the issue of new shares by resolution adopted on a two-third-majority basis. In that case, pursuant to Article 5 of the Bank’s Articles of Association the Bank’s share capital may increase up to the amount of capital paid up as at the date the Board of Directors’ is authorized to do so by the General Meeting. The said authorization may be renewed, each time for a period of up to 5 years.

 

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Table of Contents

 

On 15 May 2008, the 2nd Repeat General Meeting authorized the Board of Directors to increase the Bank’s share capital up to the amount that corresponds to 50% of the paid up share capital (which amounted to €2.385.992.305 at that date) instead of 100% as provided by the Company Law.  The increase shall take place within a three year period as of the date of the said General Meeting (instead of the five year period provided by the Company Law).  The capital increase will be effected through the issuance of common shares with preemptive rights to the existing shareholders. Pursuant to par. 1, article 13 of Law 2190/1920, the Board of Directors will determine the terms and conditions of the capital increase.

 

It is noted that in case the Board of Directors proceed with the said share capital increase, the Board of Directors will duly submit a report pursuant to Law 3016/2002.  The report shall include in details the terms of the increase, the number and type of shares issued, the par value of the share, the subscription price per share and the duration of the share capital increase.  In case the issue is not fully covered, the Board of Directors will accordingly amend the Articles of Association of the Bank so as to reflect the paid up capital following this increase.

 

2) In accordance with Companies’ Act 2190/1920 Article 13 par. 13, pursuant to a General Meeting resolution a Stock Options Program may be launched for the management and the staff in the form of options to acquire shares of the Bank as per the terms of the resolution. The General Meeting resolution determines the maximum number of shares to be issued if the beneficiaries’ stock options are exercised, which by law cannot exceed 1/10 of the Bank’s existing shares, as well as the purchase price and the terms of allocation of the shares to the beneficiaries.

 

Other details not provided for otherwise under the General Meeting resolution are determined by resolution of the Board of Directors, which provides for the issue of the stock option certificates, in December of each year issues the shares to the beneficiaries who have exercised their options, increasing the Bank’s share capital accordingly and certifying the said increase.

 

Pursuant to Law 3723/2008 and article 28 of Law «Dematerialized Securities System, provisions on Capital Markets, taxation issues and other provisions”, the Bank cannot buy its own shares, for the whole period it participates into the Program for the liquidity increase of the Greek economy.

 

On 22 June 2005, at the repeat General Meeting of the Shareholders, a stock options program (the Program A) was approved for the executive members of the Board of Directors (BoD), management and staff of the Group.  The Program shall last for five years and expires in 2010.  The Bank’s BoD may decide to grant the options one-off or in parts at any time at its discretion.  The maximum number of shares to issue under the Program shall be 3,5 million.  The strike price shall be within the range of €5 per share to 70% of the average market price thereof within the time period from 1 January of the year the options are granted until the date they can be exercised.

 

On 1 June 2006, at the repeat General Meeting of the Shareholders, a second stock options program (the Program B) was approved for the executive members of the BoD, management and staff of the Group.  The program shall last for five years and expires in 2011.  The maximum number of shares to issue under this Program shall be 3,5 million.  The strike price shall be within a range of €5 per share to 70% of the average market price thereof within the time period from the date following the date of the General Meeting (i.e. June 1, 2006) until the date the options can be exercised.

 

On 28 June 2007, at the repeat General Meeting of the Shareholders, a third stock options program (the Program C) was approved for the executive members of the BoD, management and staff of the Group.  The Program shall last for eight years and expires in 2015.  The maximum number of shares to be issued under this Program is 12 million.  The strike price shall be within a range of €5 per share to 85% of the average market price thereof from 1 January until 31 October of the year the options are granted.  The options are to be granted until 2010, and the maximum number of options that may be granted each year to the beneficiaries as a whole cannot exceed 1% of the total number of the Bank’s ordinary shares.

 

On 29 November 2006, the BoD approved the issue of 2.992.620 share options under the Program A.  The exercise price was set at €23,80 per share.  The vesting conditions were as follows:  15% of the options vested immediately, 35% of the options vested in 2007 and 50% of the options vested in 2008.  During the third option exercise period (1-10 December 2008), no options were exercised.

 

On 1 November 2007, the BoD of the Bank approved the issue of a further 496.500 shares under Program A with the same vesting conditions and the same exercise price.  During the second option exercise period (1-10 December 2008), no options were exercised.

 

On 1 November 2007, the BoD of the Bank also approved the issue of 3.014.100 shares under Program B.  The exercise price was set at €23,00 per share. The vesting conditions were as follows:  15% of the options vested immediately, 15% of the options vested in 2008, 30% of the options vest after 1,5 years subject to achievement of minimum target EPS for the year 2008 or after 2,5 years subject to achievement of minimum target EPS for the year 2009 and the remaining 40% vest after 2,5 years subject to achievement of minimum target EPS for the year 2009.   During the second option exercise period (1-10 June 2008), 387.970 options were exercised and the aggregate amount paid was €8,6 million.

 

During 2008, 229.850 stock options were cancelled.

 

16



Table of Contents

 

3) In accordance Companies’ Act 2190/1920 Article 16 par. 5-9, pursuant to a General Meeting resolution, companies listed on the ATHEX may purchase up to 10% of their own shares (“treasury shares”) via ASE.  On 17 April 2008, the Annual General Meeting of the Bank’s shareholders, utilizing the said option afforded by law, approved a scheme to purchase up to 10% of the Bank’s own shares, from 25 May 2008 until 24 May 2009, at a purchase price of between €5 and €60.

 

During the year ended 31.12.2008, the Bank and its subsidiaries  purchased as part of their investment activity 11.756.276 shares of the Bank of a nominal value of €279,2 million representing 2,37% of the issued share capital and sold 5.802.272 shares of the Bank of a nominal value of €155,6 million representing 1,17% of the issued share capital.  As at 31.12.2008 the Bank held 6.456.504 own shares of a nominal value of €145,3 million representing 1,3% of its share capital. As of the same date, no other entity of the Group holds any Bank’s shares.

 

I) Significant agreements that come into effect, are modified or terminated in the event of a change in control following a public offering

 

There are no agreements that shall come into effect, be modified or terminated in the event of a change in control of the Bank following a public offering.

 

J) Agreements with Board members or officers of the Bank

 

In the case of the executive members of the Board of Directors and the highly ranked officers, the Bank reserves the right for groundless termination of their employment contracts by paying specific levels of compensation. The compensation may reflect the entitled salaries for the remaining period of the contract.

 

For the Bank’s Board of Directors

 

Takis Arapoglou

Chairman and CEO

 

17



Table of Contents

 

Auditor’s Report

 

 

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of NATIONAL BANK OF GREECE S.A.

 

Report on the Financial Statements

 

We have audited the accompanying financial statements of “NATIONAL BANK OF GREECE S.A.” (“the Bank”) and the consolidated financial statements of the Bank and its subsidiaries (“the Group”), which comprise the stand alone and the consolidated balance sheet as of 31 December 2008, and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.

 

Management’s Responsibility for the Financial Statements

 

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards as these were adopted by the European Union. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

 

Auditor’s Responsibility

 

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Greek Auditing Standards which are harmonised with the International Standards on Auditing. Those standards require that we comply with ethical standards and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making this risk assessment, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

Opinion

 

In our opinion, the accompanying stand alone and consolidated financial statements present fairly, in all material respects, the financial position of the Bank and that of the Group as of 31 December 2008, and  its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as these were adopted by the European Union.

 

Report on Other Legal Requirements

 

We have agreed and confirmed the content and consistency of the Board of Directors’ Report to the accompanying Financial Statements according to the provisions of the article 43a, 107 and 37 of the Greek Company Law 2190/1920.

 

Athens, 30 March 2009

The Certified Public Accountant

 

Nikolaos C. Sofianos

RN SOEL: 12231

 

Hadjipavlou Sofianos & Cambanis S.A.

Assurance & Advisory Services

250-254 Kifissias Avenue

GR 152 31 Halandri

Reg. No. SOEL: E120

 

18



Table of Contents

 

Income Statement

 

 

 

 

 

Group

 

Bank

 

 

 

 

 

12 month period ended

 

12 month period ended

 

€ 000’s

 

Note

 

31.12.2008

 

31.12.2007

 

31.12.2008

 

31.12.2007

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest & similar income

 

 

 

6.941.418

 

5.736.887

 

4.065.836

 

3.440.294

 

Interest expense & similar charges

 

 

 

(3.361.884

)

(2.685.770

)

(2.018.256

)

(1.629.558

)

Net interest income

 

6

 

3.579.534

 

3.051.117

 

2.047.580

 

1.810.736

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee and commission income

 

 

 

841.252

 

859.255

 

307.689

 

341.326

 

Fee and commission expense

 

 

 

(69.183

)

(86.730

)

(28.402

)

(23.408

)

Net fee and commission income

 

7

 

772.069

 

772.525

 

279.287

 

317.918

 

 

 

 

 

 

 

 

 

 

 

 

 

Earned premia net of reinsurance

 

 

 

713.441

 

721.473

 

 

 

Net claims incurred

 

 

 

(590.561

)

(628.322

)

 

 

Earned premia net of claims and commissions

 

8

 

122.880

 

93.151

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net trading income and results from investment securities

 

9

 

409.517

 

479.901

 

(61.636

)

309.401

 

Net other income

 

10

 

24.059

 

162.516

 

1.795

 

108.224

 

Total income

 

 

 

4.908.059

 

4.559.210

 

2.267.026

 

2.546.279

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel expenses

 

11&12

 

(1.447.667

)

(1.423.558

)

(885.102

)

(880.008

)

General, administrative & other operating expenses

 

13

 

(771.742

)

(718.511

)

(338.656

)

(299.756

)

Depreciation, amortisation & impairment charges of fixed assets

 

 

 

(163.499

)

(147.253

)

(75.957

)

(63.755

)

Amortisation of intangible assets recognised on business combinations

 

 

 

(27.406

)

(29.027

)

 

 

Finance charge on put options of minority interests

 

 

 

(11.940

)

(24.945

)

(11.940

)

(24.945

)

Impairment charge for credit losses

 

14

 

(519.859

)

(330.197

)

(322.197

)

(245.960

)

Share of profit/(losses) of associates

 

24

 

(28.932

)

17.210

 

 

 

Profit before tax

 

 

 

1.937.014

 

1.902.929

 

633.174

 

1.031.855

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax expense

 

15

 

(352.071

)

(258.808

)

(152.868

)

(117.263

)

Profit for the period

 

 

 

1.584.943

 

1.644.121

 

480.306

 

914.592

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

 

Minority interests

 

40

 

38.931

 

18.806

 

 

 

NBG equity shareholders

 

 

 

1.546.012

 

1.625.315

 

480.306

 

914.592

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share- Basic

 

16

 

2,93

 

3,10

 

0,91

 

1,85

 

Earnings per share- Diluted

 

16

 

2,93

 

3,10

 

0,91

 

1,85

 

 

Athens, 30 March 2009

 

THE CHAIRMAN

 

THE VICE CHAIRMAN
AND DEPUTY CHIEF

 

THE CHIEF FINANCIAL

 

THE CHIEF ACCOUNTANT

AND CHIEF EXECUTIVE OFFICER

 

EXECUTIVE OFFICER

 

AND CHIEF OPERATING OFFICER

 

 

 

 

 

 

 

 

 

EFSTRATIOS-GEORGIOS
A. ARAPOGLOU

 

IOANNIS G. PECHLIVANIDIS

 

ANTHIMOS C. THOMOPOULOS

 

IOANNIS P. KYRIAKOPOULOS

 

The Notes on pages 24 to 102 form an integral part of these financial statements

 

19



Table of Contents

 

Balance Sheet

 

 

 

 

 

Group

 

Bank

 

€ 000’s

 

Note

 

31.12.2008

 

31.12.2007

 

31.12.2008

 

31.12.2007

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Cash and balances with central banks

 

17

 

4.145.395

 

6.109.648

 

1.959.249

 

4.135.632

 

Due from banks (net)

 

18

 

2.490.064

 

3.689.849

 

5.202.048

 

4.318.696

 

Financial assets at fair value through Profit or Loss

 

19

 

2.190.604

 

12.211.840

 

1.717.902

 

11.048.630

 

Derivative financial instruments

 

20

 

1.590.320

 

394.904

 

1.303.708

 

331.206

 

Loans and advances to customers (net)

 

21

 

73.076.469

 

54.693.204

 

55.798.270

 

39.568.570

 

Investment securities

 

22

 

9.730.709

 

4.781.996

 

7.708.371

 

2.537.345

 

Investment property

 

23

 

148.073

 

153.628

 

 

 

Investments in subsidiaries

 

45

 

 

 

7.149.862

 

6.434.777

 

Investments in associates

 

24

 

55.683

 

73.586

 

6.921

 

21.492

 

Goodwill, software & other intangible assets

 

25

 

2.473.994

 

2.933.103

 

111.285

 

80.200

 

Property & equipment

 

26

 

1.982.768

 

1.936.815

 

986.405

 

955.732

 

Deferred tax assets

 

27

 

774.205

 

288.330

 

640.171

 

156.486

 

Insurance related assets and receivables

 

28

 

707.721

 

789.932

 

 

 

Current income tax advance

 

 

 

113.903

 

115.986

 

113.903

 

115.986

 

Other assets

 

29

 

2.241.827

 

2.097.474

 

1.587.984

 

1.354.198

 

Non current assets held for sale

 

30

 

116.893

 

115.279

 

 

 

Total assets

 

 

 

101.838.628

 

90.385.574

 

84.286.079

 

71.058.950

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

Due to banks

 

31

 

14.840.030

 

10.373.844

 

13.801.415

 

8.935.585

 

Derivative financial instruments

 

20

 

1.567.815

 

1.071.806

 

1.426.951

 

580.062

 

Due to customers

 

32

 

67.656.948

 

60.530.411

 

56.291.053

 

49.259.670

 

Debt securities in issue

 

33

 

1.813.678

 

2.289.735

 

 

 

Other borrowed funds

 

34

 

1.922.873

 

1.723.046

 

3.874.881

 

3.482.135

 

Insurance related reserves and liabilities

 

35

 

2.266.256

 

2.167.621

 

 

 

Deferred tax liabilities

 

27

 

619.829

 

247.473

 

466.224

 

133.731

 

Retirement benefit obligations

 

12

 

230.747

 

239.382

 

108.057

 

110.540

 

Current income tax liabilities

 

 

 

12.428

 

37.029

 

 

 

Other liabilities

 

36

 

2.632.114

 

3.156.757

 

1.883.712

 

2.021.306

 

Liabilities held for sale

 

30

 

8.856

 

6.535

 

 

 

Total liabilities

 

 

 

93.571.574

 

81.843.639

 

77.852.293

 

64.523.029

 

 

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Share capital

 

38

 

2.490.771

 

2.385.992

 

2.490.771

 

2.385.992

 

Share premium account

 

38

 

2.682.050

 

2.292.753

 

2.682.050

 

2.292.753

 

Less: treasury shares

 

38

 

(145.277

)

(21.601

)

(145.277

)

(21.601

)

Reserves and retained earnings

 

39

 

944.063

 

1.813.276

 

1.406.242

 

1.878.777

 

Equity attributable to NBG shareholders

 

 

 

5.971.607

 

6.470.420

 

6.433.786

 

6.535.921

 

 

 

 

 

 

 

 

 

 

 

 

 

Minority Interest

 

40

 

842.408

 

507.889

 

 

 

Preferred securities

 

41

 

1.453.039

 

1.563.626

 

 

 

Total equity

 

 

 

8.267.054

 

8.541.935

 

6.433.786

 

6.535.921

 

 

 

 

 

 

 

 

 

 

 

 

 

Total equity and liabilities

 

 

 

101.838.628

 

90.385.574

 

84.286.079

 

71.058.950

 

 

Athens, 30 March 2009

 

THE CHAIRMAN

 

THE VICE CHAIRMAN
AND DEPUTY CHIEF

 

THE CHIEF FINANCIAL

 

THE CHIEF ACCOUNTANT

AND CHIEF EXECUTIVE OFFICER

 

EXECUTIVE OFFICER

 

AND CHIEF OPERATING OFFICER

 

 

 

 

 

 

 

 

 

EFSTRATIOS-GEORGIOS
A. ARAPOGLOU

 

IOANNIS G. PECHLIVANIDIS

 

ANTHIMOS C. THOMOPOULOS

 

IOANNIS P. KYRIAKOPOULOS

 

The Notes on pages 24 to 102 form an integral part of these financial statements

 

20



Table of Contents

 

Statement of Changes in Equity-Group

 

 

 

Attributable to equity holders of the parent company

 

 

 

Share capital

 

Share premium

 

 

 

Reserves &

 

 

 

Minority
Interest &

 

 

 

€ 000’s

 

Ordinary
shares

 

Preference
shares

 

Ordinary
shares

 

Preference
shares

 

Treasury
shares

 

Retained
earnings

 

Total

 

Preferred
securities

 

Total

 

At 1 January 2007

 

2.376.436

 

 

2.263.725

 

 

(26.826

)

1.983.890

 

6.597.225

 

2.235.679

 

8.832.904

 

Available for sale securities reserve, net of tax

 

 

 

 

 

 

(46.677

)

(46.677

)

(7.730

)

(54.407

)

Currency translation differences

 

 

 

 

 

 

267.347

 

267.347

 

(56.104

)

211.243

 

Net investment hedge, net of tax

 

 

 

 

 

 

(23.239

)

(23.239

)

 

(23.239

)

Profit/(loss) recognised directly in equity

 

 

 

 

 

 

197.431

 

197.431

 

(63.834

)

133.597

 

Net profit/(loss) for the period

 

 

 

 

 

 

1.625.315

 

1.625.315

 

18.806

 

1.644.121

 

Total

 

 

 

 

 

 

 

1.822.746

 

1.822.746

 

(45.028

)

1.777.718

 

Share capital increase

 

1.750

 

 

 

 

 

(1.750

)

 

 

 

Stock options exercised

 

7.806

 

 

29.028

 

 

 

 

36.834

 

 

36.834

 

Dividends to preferred securities

 

 

 

 

 

 

(91.655

)

(91.655

)

 

(91.655

)

Dividends to ordinary shareholders

 

 

 

 

 

 

(474.608

)

(474.608

)

 

(474.608

)

Share based payments

 

 

 

 

 

 

33.793

 

33.793

 

 

33.793

 

Acquisitions, disposals & share capital increase of subsidiaries/associates

 

 

 

 

 

(202

)

(1.473.600

)

(1.473.802

)

(119.136

)

(1.592.938

)

(Purchases)/ disposals of treasury shares & preferred securities

 

 

 

 

 

5.427

 

14.460

 

19.887

 

 

19.887

 

Balance at 31 December 2007 and At 1 January 2008

 

2.385.992

 

 

2.292.753

 

 

(21.601

)

1.813.276

 

6.470.420

 

2.071.515

 

8.541.935

 

Available for sale securities reserve, net of tax

 

 

 

 

 

 

(814.608

)

(814.608

)

(38

)

(814.646

)

Currency translation differences

 

 

 

 

 

 

(988.807

)

(988.807

)

(126.684

)

(1.115.491

)

Net investment hedge, net of tax

 

 

 

 

 

 

(148.607

)

(148.607

)

 

(148.607

)

Profit/(loss) recognised directly in equity

 

 

 

 

 

 

(1.952.022

)

(1.952.022

)

(126.722

)

(2.078.744

)

Net profit/(loss) for the period

 

 

 

 

 

 

1.546.012

 

1.546.012

 

38.931

 

1.584.943

 

Total

 

 

 

 

 

 

(406.010

)

(406.010

)

(87.791

)

(493.801

)

Mergers with subsidiary companies

 

 

 

41

 

 

 

(582

)

(541

)

 

(541

)

Share capital increase

 

95.339

 

7.500

 

 

395.138

 

 

(95.339

)

402.638

 

 

402.638

 

Share capital issue costs, net of tax

 

 

 

(161

)

(12.363

)

 

 

(12.524

)

 

(12.524

)

Stock options exercised

 

1.940

 

 

6.642

 

 

 

 

8.582

 

 

8.582

 

Dividends to preferred securities

 

 

 

 

 

 

(66.824

)

(66.824

)

 

(66.824

)

Dividends to ordinary and preference shareholders

 

 

 

 

 

 

(223.336

)

(223.336

)

 

(223.336

)

Share based payments

 

 

 

 

 

 

10.503

 

10.503

 

 

10.503

 

Acquisitions, disposals & share capital increase of subsidiaries/associates

 

 

 

 

 

 

(26.925

)

(26.925

)

311.723

 

284.798

 

(Purchases)/ disposals of treasury shares & preferred securities

 

 

 

 

 

(123.676

)

(60.700

)

(184.376

)

 

(184.376

)

Balance at 31 December 2008

 

2.483.271

 

7.500

 

2.299.275

 

382.775

 

(145.277

)

944.063

 

5.971.607

 

2.295.447

 

8.267.054

 

 

Detailed analysis of the changes in equity is presented in Notes 38 to 41 of these financial statements.

 

The Notes on pages 24 to 102 form an integral part of these financial statements

 

21



Table of Contents

 

Statement of Changes in Equity-Bank

 

 

 

Share capital

 

Share premium

 

 

 

Reserves &

 

 

 

€ 000’s

 

Ordinary
shares

 

Preference
shares