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TABLE OF CONTENTS
INDEX TO FINANCIAL STATEMENTS

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    UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
   

 

(Mark One)    
o   REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR    
ý   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2011
OR    
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                        to                         
OR    
o   SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report

Commission file number 001-14960

EQNIKH TRAPEZA THS ELLADOS A.E.
(Exact name of Registrant as specified in its charter)

NATIONAL BANK OF GREECE S.A.
(Translation of Registrant's Name into English)

THE HELLENIC REPUBLIC
(Jurisdiction of incorporation or organization)

86 Eolou Street
10232 Athens, Greece
(Address of principal executive offices)

Gregory Papagrigoris—Investor Relations manager
Tel: +30 210 334 2310—Email:IR@NBG.gr
86 Eolou Street, 10232 Athens, Greece
(Name, Telephone, E-mail and/or Facsimile number and Address of company contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class
  Name of each exchange on which registered
American Depositary Shares each representing one Ordinary Share   New York Stock Exchange
Ordinary Shares   New York Stock Exchange*
American Depositary Shares each representing one Series A Non-cumulative Preference Share   New York Stock Exchange
Series A Non-cumulative Preference Shares   New York Stock Exchange*

* Not for trading but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Securities Exchange Act of 1934:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Securities Exchange Act of 1934:

None

Number of outstanding shares of each of the Registrant's classes of capital or common stock as at December 31, 2011, the close of the period covered by the annual report:

956,090,482 Ordinary Shares of nominal value EUR 5.00 per share

25,000,000 Series A Preference Shares of a nominal value of EUR 0.30 per share

270,000,000 Redeemable Preference Shares of a nominal value of EUR 5.00 per share issued to the Hellenic Republic

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ý        No o

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes o        No ý

Note—Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý        No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ý        No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý        Accelerated filer o        Non-accelerated filer o

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ý        International Financial Reporting Standards as issued by the International Accounting Standards Board o        Other o

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 o        Item 18 o

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o        No ý

   


Table of Contents


TABLE OF CONTENTS

 
   
  Page

Introduction

  4

PART I

  10

Item 1

 

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

 
10

Item 2

 

OFFER STATISTICS AND EXPECTED TIMETABLE

 
10

Item 3

 

KEY INFORMATION

 
10

A.

  Selected Financial Data (Restated)   10

B.

  Capitalization and Indebtedness   16

C.

  Reasons for the Offer and Use of Proceeds   16

D.

  Risk Factors   16

Item 4

 

INFORMATION ON THE COMPANY

 
41

A.

  History and Development of the Company   41

B.

  Business Overview   44

C.

  Organizational Structure   109

D.

  Property, Plant and Equipment   111

E.

  Selected Statistical Data   112

Item 4A

 

UNRESOLVED STAFF COMMENTS

 
150

Item 5

 

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

 
150

A.

  Operating Results (Restated)   170

B.

  Liquidity and Capital Resources   188

C.

  Research and Development, Patents and Licenses   208

D.

  Trend Information (Restated)   208

E.

  Off-balance Sheet Arrangements   210

F.

  Tabular Disclosure of Contractual Obligations   211

G.

  Safe Harbor   211

Item 6

 

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

 
212

A.

  Board of Directors and Senior Management   212

B.

  Compensation   229

C.

  Board Practices   229

D.

  Employees   238

E.

  Share Ownership   240

Item 7

 

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

 
241

A.

  Major Shareholders   241

B.

  Related Party Transactions   243

C.

  Interests of Experts and Counsel   243

Item 8

 

FINANCIAL INFORMATION (Restated)

 
243

A.

  Consolidated Statements and Other Financial Information (Restated)   243

B.

  Significant Changes   245

Item 9

 

THE OFFER AND LISTING

 
245

A.

  Offer and Listing Details   245

B.

  Plan of Distribution   248

C.

  Markets   248

D.

  Selling Shareholders   253

E.

  Dilution   253

F.

  Expenses of the Issue   253

Item 10

 

ADDITIONAL INFORMATION

 
253

A.

  Share Capital   253

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  Page

B.

  Memorandum and Articles of Association   253

C.

  Material Contracts   262

D.

  Exchange Controls   262

E.

  Taxation   263

F.

  Dividends and Paying Agents   267

G.

  Statements by Experts   267

H.

  Documents on Display   268

I.

  Subsidiary Information   268

J.

  Relationship with the Hellenic Republic   268

Item 11

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 
269

Item 12

 

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

 
279

PART II

 
281

Item 13

 

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

 
281

Item 14

 

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

 
281

A.

  General Effect of the Modifications on the Rights of Security Holders   281

Item 15

 

CONTROLS AND PROCEDURES

 
283

(a)

  Disclosure Controls and Procedures   283

(b)

  Management's Annual Report on Internal Control over Financial Reporting   284

(c)

  Report of Independent Registered Public Accounting Firm   286

(d)

  Changes in Internal Control over Financial Reporting   287

Item 16A

 

AUDIT COMMITTEE FINANCIAL EXPERT

 
287

Item 16B

 

CODE OF ETHICS

 
288

Item 16C

 

PRINCIPAL ACCOUNTANT FEES AND SERVICES

 
288

Item 16D

 

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

 
289

Item 16E

 

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

 
289

Item 16F

 

CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT

 
289

Item 16G

 

CORPORATE GOVERNANCE

 
289

PART III

 
291

Item 17

 

FINANCIAL STATEMENTS

 
291

Item 18

 

FINANCIAL STATEMENTS

 
291

Item 19

 

EXHIBITS

 
291

CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2010 (AS RESTATED) AND 2011 AND FOR THE YEARS ENDED DECEMBER 31, 2009, 2010 (BOTH AS RESTATED) AND 2011

 
F-1

INDEX TO FINANCIAL STATEMENTS

 
F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 
F-3

Consolidated Balance Sheets

 
F-4

Consolidated Statements of Income and Comprehensive Income

 
F-5

Consolidated Statements of Shareholders' Equity

 
F-7

Consolidated Statements of Cash Flows

 
F-9

Notes to Consolidated Financial Statements

 
F-11

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INTRODUCTION

Information Regarding National Bank of Greece S.A. and the National Bank of Greece Group

        Historically, Greek law prohibited banks from engaging directly in financial service activities outside their traditional deposit and loan functions. Therefore, specialized financial institutions were established in Greece, each for the provision of a particular type of financial service. A Greek bank that sought to provide multiple financial services to its customers would establish several subsidiaries, each a specialized institution within the bank's integrated group of diverse financial services companies. As a consequence of this historical practice, the Greek financial services sector today is characterized by a group of specialized companies established around a principal bank. National Bank of Greece S.A. is the principal bank, around which our consolidated financial services subsidiaries are organized.

        All references in this annual report on Form 20-F (the "Annual Report") to the "Bank" or "NBG" are to National Bank of Greece S.A. without its subsidiaries. The Bank and its consolidated subsidiaries, collectively, are referred to in this Annual Report as the "NBG Group" or the "Group". All references in this Annual Report to "we", "us" or "our" are, as the context requires, to the Bank or to the NBG Group as a whole. In addition, all references in this Annual Report to the "Greek State" or "Hellenic Republic" are to the Hellenic Republic.

Currency and Financial Statement Presentation

        The NBG Group operates in many countries and earns money and makes payments in many different currencies. All references to "$", "U.S. dollars", "USD" or "US$" are to United States dollars and all references to "€", "EUR" or to "euro" are to the lawful currency introduced at the start of the third stage of the European Economic and Monetary Union in accordance with the Treaty Establishing the European Community, as amended, which was adopted by the Hellenic Republic as of January 1, 2001. All references to the "eurozone" are to the member states of the European Union (the "EU") that have adopted the euro as their national currency in accordance with the Treaty on EU signed at Maastricht on February 7, 1992. All references to "BGN" are to Bulgarian leva, all references to "£" or "GBP" are to British pounds, all references to "RSD" are to Serbian dinars, all references to "JPY" are to Japanese yen, all references to "MKD" are to Macedonian dinars, all references to "RON" are to Romanian lei, all references to "TL" are to Turkish lira and all references to "ZAR" are to South African rand.

        Solely for convenience, this Annual Report contains translations of certain euro amounts into U.S. dollars at specified rates. These are simply convenience translations and you should not expect that a euro amount actually represents a stated U.S. dollar amount or that it could be converted into U.S. dollars at the rate suggested, or any other rate. In this Annual Report, the translations of euro amounts into U.S. dollars, where indicated, have been made at the noon buying rate for cable transfers of euro into U.S. dollars of US$1.00 = 0.7559, as certified for customs by the Federal Reserve Bank of New York (the "Noon Buying Rate") on April 30, 2012. The respective rates for the South African rand, Macedonian dinar, Bulgarian leva, Romanian lei, Serbian dinar and Turkish lira are: South African rand 7.7594 per US$1.00, Macedonian dinars 46.4475 per US$1.00, Bulgarian leva 1.4801 per US$1.00, Romanian lei 3.3370 per US$1.00, Serbian dinars 84.7635 per US$1.00 and Turkish lira 1.7583 per US$1.00. The table below sets out the highest and lowest exchange rate between the euro and the U.S. dollar, for each of the completed six months preceding the filing of this Annual Report:

 
  Euro  
Month
  High   Low  

November 2011

    0.7551     0.7245  

December 2011

    0.7736     0.7415  

January 2012

    0.7885     0.7580  

February 2012

    0.7641     0.7428  

March 2012

    0.7678     0.7499  

April 2012 (up to April 30, 2012)

    0.7655     0.7498  

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        The following table sets forth the average exchange rates between the euro and the U.S. dollar and the euro and the Turkish lira (TL) for each of the five years ended December 31, 2007, 2008, 2009, 2010 and 2011 and for the current annual period through April 30, 2012. The following exchange rates have been calculated using the average of the Noon Buying Rates for euro on the last day of each month during each of these periods.

Annual Period
  US$1.00=
Euro
  TL1.00=
Euro
 

2007

    0.7297     0.5598  

2008

    0.6790     0.5246  

2009

    0.7170     0.4623  

2010

    0.7540     0.5009  

2011

    0.7178     0.4278  

2012 (up to April 30, 2012)

    0.7616     0.4247  

        As further discussed in "Recent Developments" below, the financial statements prepared in accordance with United States Generally Accepted Accounting Principles ("U.S. GAAP") for the financial years ended December 31, 2007, 2008, 2009 and 2010 have been restated and/or reclassified.

Special Note Regarding Forward-Looking Statements

        This Annual Report includes forward-looking statements. Such items in this Annual Report include, but are not limited to, statements made under Item 3.D, "Risk Factors", Item 4.B, "Business Overview" and Item 5, "Operating and Financial Review and Prospects". Such statements can be generally identified by the use of terms such as "believes", "expects", "may", "will", "should", "would", "could", "plans", "anticipates" and comparable terms and the negatives of such terms. By their nature, forward-looking statements involve risk and uncertainty, and the factors described in the context of such forward-looking statements in this Annual Report, could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about the Group, including, among other things:

    political instability in Greece;

    current macroeconomic conditions in Greece;

    the effects of regulation (including the EUR 28 billion plan to strengthen the liquidity of the Greek banking sector and economy (the "Hellenic Republic Bank Support Plan") announced by the Hellenic Republic in October 2008 and augmented by EUR 15 billion and EUR 25 billion in 2010 and further increased by Greek Law 3965/2011 by EUR 30 billion in 2011 and the stabilization program in May 2010, jointly supported by the International Monetary Fund ("IMF"), the European Central Bank ("ECB") and the member states of the eurozone, the IMF/eurozone Stabilization and Recovery Program as replaced by a second economic adjustment program in March 2012 jointly supported by the IMF and the member states of the eurozone (the "Program") and prospective changes in regulation in Greece and other jurisdictions in which we operate;

    the final terms of the Greek banks recapitalization plan that is expected to be announced by the new government to be formed;

    our ability to meet bank capitalization targets set out in the Program;

    our ability to access the capital markets;

    the effects of regulatory stress tests;

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    further downgrades to our credit ratings or those of the Hellenic Republic;

    the effects of depressed asset valuations and difficulties determining fair values and estimates for assets;

    recent severe operating and trading conditions in certain of the financial markets in which we operate;

    deterioration in macroeconomic conditions, such as the lack of liquidity in the global financial and other assets markets and the lack of availability and rising cost of credit;

    the financial stability of other financial institutions and the Bank's counterparties and borrowers;

    the adequacy of our current allowances for loan losses, as well as future charges for impaired loans;

    our ability to generate taxable profits;

    our ability to reduce costs;

    the financial models we are using to determine the value of certain financial instruments may change over time or may not be accurate;

    our ability to successfully complete all elements of our capital plan;

    our ability to maintain our business;

    competition from other financial institutions in the countries and markets in which we operate;

    political, economic and social conditions in the countries outside Greece in which we operate, particularly in Southeastern Europe ("SEE") and Turkey;

    our ability to integrate new information technology systems into our operations and to use these new systems to enhance profitability;

    capital spending and financial resources;

    our future revenues; and

    other factors described under Item 3.D, "Risk Factors".

        We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Annual Report might not occur. Any statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future.

        Readers are cautioned not to place undue reliance on such forward-looking statements, which are based on facts known to us only as of the date of this Annual Report.


RECENT DEVELOPMENTS

Restatement and Reclassifications of Certain Financial Statements

        We have restated our financial statements prepared in accordance with U.S. GAAP for the financial years ended December 31, 2008, 2009 and 2010 as follows:

    1.
    We have restated our financial statements for the year ended December 31, 2010 to reverse all reclassifications of securities out of the trading category performed after the initial reclassification in 2010.

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    2.
    We have restated our financial statements for the years ended December 31, 2008, 2009 and 2010 to record the bilateral credit value adjustment following the revision of our assumptions and computation methodology relating to the impact on the Group of credit risk on derivatives (for both counterparty and own credit risk).

        In addition, we have also made certain reclassifications to prior year amounts in order to conform to current year presentation.

    We have reclassified, in our financial statements for the years ended December 31, 2007, 2008, 2009 and 2010 the money market investments as trading, available-for-sale ("AFS") or held-to-maturity ("HTM") according to their measurement category.

    We have reclassified, in our financial statements for the years ended December 31, 2007, 2008, 2009 and 2010 to present the other-than-temporary-impairment separately from net realized gains/(losses) on sales of available-for-sale securities in the statement of income and comprehensive income.

        The above restatements and reclassifications are described in detail in Note 43 to the U.S. GAAP Financial Statements.

        The tables below present the impact of the above restatements and reclassifications on the balance sheets as at December 31, 2007, 2008, 2009 and 2010 and on the statements of income and comprehensive income for the years ended December 31, 2007, 2008, 2009 and 2010.

 
  As of December 31, 2007   As of December 31, 2008  
 
  As reported   Restatements   Reclassifications   As restated   As reported   Restatements   Reclassifications   As restated  
 
  (EUR in thousands)
  (EUR in thousands)
 

ASSETS

                                                 

Money market investments

    254,034         (254,034 )       241,257         (241,257 )    

Trading assets

    6,678,634         62,341     6,740,975     2,056,589         131,254     2,187,843  

Available-for-sale securities

    4,550,227         191,693     4,741,920     12,250,841         110,003     12,360,844  

Held-to-maturity securities

                    130,548             130,548  

Summary other assets

    9,493,301             9,493,301     11,034,132     75,770         11,109,902  

Total assets

    90,960,648             90,960,648     101,849,175     75,770         101,924,945  

LIABILITIES AND SHAREHOLDERS' EQUITY

                                                 

Summary other liabilities

    7,447,771             7,447,771     8,190,739     13,581         8,204,320  

Total liabilities

    83,266,965             83,266,965     94,862,022     13,581         94,875,603  

PERMANENT EQUITY:

                                                 

NBG shareholders' equity

                                                 

Accumulated surplus

    1,419,743             1,419,743     2,015,971     62,189         2,078,160  

Accumulated other comprehensive income / (loss)

    271,060             271,060     (1,696,839 )           (1,696,839 )

Total NBG shareholders' equity

    6,544,113             6,544,113     5,932,396     62,189         5,994,585  

Non-controlling interest

    494,334             494,334     798,549             798,549  

Total permanent equity

    7,038,447             7,038,447     6,730,945     62,189         6,793,134  

Total liabilities and equity

    90,960,648             90,960,648     101,849,175     75,770         101,924,945  

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  As of December 31, 2009   As of December 31, 2010  
 
  As reported   Restatements   Reclassifications   As restated   As reported   Restatements   Reclassifications   As restated  
 
  (EUR in thousands)
  (EUR in thousands)
 

ASSETS

                                                 

Money market investments

    1,239,867         (1,239,867 )       1,180,274         (1,180,274 )    

Trading assets

    3,167,740         897,250     4,064,990     774,374     1,062,834     948,114     2,785,322  

Available-for-sale securities

    15,740,696         342,617     16,083,313     14,512,870     (1,042,680 )   218,320     13,688,510  

Held-to-maturity securities

    99,604             99,604     3,611,797     (27,352 )   13,840     3,598,285  

Summary other assets

    11,205,734     (69,279 )       11,136,455     11,929,898     (76,226 )       11,853,672  

Total assets

    113,184,158     (69,279 )       113,114,879     118,815,302     (83,424 )       118,731,878  

LIABILITIES AND SHAREHOLDERS' EQUITY

                                                 

Summary other liabilities

    8,141,160     4,529         8,145,689     8,757,402     (5,915 )       8,751,487  

Total liabilities

    103,818,065     4,529         103,822,594     109,997,122     (5,915 )       109,991,207  

PERMANENT EQUITY:

                                                 

NBG shareholders' equity

                                                 

Accumulated surplus

    2,523,833     (73,808 )       2,450,025     2,182,661     (160,519 )       2,022,142  

Accumulated other comprehensive income / (loss)

    (1,517,127 )           (1,517,127 )   (3,468,821 )   83,225         (3,385,596 )

Total NBG shareholders' equity

    8,266,867     (73,808 )       8,193,059     7,730,352     (77,294 )       7,653,058  

Non-controlling interest

    844,727             844,727     821,846     (215 )       821,631  

Total permanent equity

    9,111,594     (73,808 )       9,037,786     8,552,198     (77,509 )       8,474,689  

Total liabilities and equity

    113,184,158     (69,279 )       113,114,879     118,815,302     (83,424 )       118,731,878  

 

 
  Year ended December 31, 2007   Year ended December 31, 2008  
 
  As reported   Restatements   Reclassifications   As restated   As reported   Restatements   Reclassifications   As restated  
 
  (EUR in thousands)
  (EUR in thousands)
 

Total interest income

    5,606,240             5,606,240     6,695,077             6,695,077  

Net interest income before provision for loan losses

    2,986,356             2,986,356     3,405,136             3,405,136  

Net interest income after provision for loan losses

    2,795,601             2,795,601     2,979,599             2,979,599  

Net trading profit/ (loss)

    (97,693 )           (97,693 )   (329,550 )   82,919         (246,631 )

Total non-interest income / (loss) excluding gains / (losses) on investment securities

    2,018,064             2,018,064     1,536,151     82,919         1,619,070  

Net gains/(losses) on available-for-sale securities

    129,816         989     130,805     8,415         17,772     26,187  

OTTI of available-for-sale securities and held-to-maturity securities (of which nil was recognised through OCI)

            (989 )   (989 )           (17,772 )   (17,772 )

Net gains / (losses) on investment securities

    129,816             129,816     8,415             8,415  

Total non-interest income / (loss)

    2,147,880             2,147,880     1,544,566     82,919         1,627,485  

Income / (loss) before income tax

    1,695,289             1,695,289     1,145,169     82,919         1,228,088  

Income tax (expense) / benefit

    (311,491 )           (311,491 )   (242,081 )   (20,730 )       (262,811 )

Net income / (loss)

    1,383,798             1,383,798     903,088     62,189         965,277  

Less: Net income attributable to the non-controlling interest

    (65,007 )           (65,007 )   (81,664 )           (81,664 )

Net income / (loss) attributable to NBG shareholders

    1,318,791             1,318,791     821,424     62,189         883,613  

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  Year ended December 31, 2009   Year ended December 31, 2010  
 
  As reported   Restatements   Reclassifications   As restated   As reported   Restatements   Reclassifications   As restated  
 
  (EUR in thousands)
  (EUR in thousands)
 

Total interest income

    6,231,380             6,231,380     6,153,434     (4,598 )       6,148,836  

Net interest income before provision for loan losses

    3,786,265             3,786,265     4,088,199     (4,598 )       4,083,601  

Net interest income after provision for loan losses

    2,787,817             2,787,817     2,883,204     (4,598 )       2,878,606  

Net trading profit/ (loss)

    (87,096 )   (180,035 )       (267,131 )   (1,085,160 )   (160,162 )       (1,245,322 )

Total non-interest income / (loss) excluding gains / (losses) on investment securities

    1,727,899     (180,035 )       1,547,864     802,523     (160,162 )       642,361  

Net gains/(losses) on available-for-sale securities

    (8,399 )       358,328     349,929     (23,957 )   49,419     89,497     114,959  

OTTI of available-for-sale securities and held-to-maturity securities (of which nil was recognised through OCI)

            (358,328 )   (358,328 )           (89,497 )   (89,497 )

Net gains / (losses) on investment securities

    (8,399 )           (8,399 )   (23,957 )   49,419         25,462  

Total non-interest income / (loss)

    1,719,500     (180,035 )       1,539,465     778,566     (110,743 )       667,823  

Income / (loss) before income tax

    809,905     (180,035 )       629,870     (150,352 )   (115,341 )       (265,693 )

Income tax (expense) / benefit

    (220,624 )   44,038         (176,586 )   (61,634 )   19,323         (42,311 )

Net income / (loss)

    589,281     (135,997 )       453,284     (211,986 )   (96,018 )       (308,004 )

Less: Net income attributable to the non-controlling interest

    (62,232 )           (62,232 )   (56,075 )   9,307         (46,768 )

NET INCOME / (LOSS) attributable to NBG shareholders

    527,049     (135,997 )       391,052     (268,061 )   (86,711 )       (354,772 )

        All amounts for 2007, 2008, 2009 and 2010 referred to in this Annual Report reflect the relevant amounts on a restated and/or reclassified basis. The previously issued financial statements prepared in accordance with U.S. GAAP for the financial years ended December 31, 2008, 2009 and 2010 should no longer be relied upon. We do not intend to amend our annual reports on Form 20-F for the financial years ended December 31, 2007, 2008, 2009 and 2010.

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PART I

ITEM 1    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

        Not applicable.

ITEM 2    OFFER STATISTICS AND EXPECTED TIMETABLE

        Not applicable.

ITEM 3    KEY INFORMATION

        

A.    Selected Financial Data

        The following information as at, and for the years ended, December 31, 2007 through 2011 has been derived from the consolidated financial statements of the Group. These financial statements have been prepared in accordance with U.S. GAAP. The selected financial and operating data should be read in conjunction with Item 5, "Operating and Financial Review and Prospects", in this Annual Report and with the Group's audited U.S. GAAP financial statements and the notes thereto as at December 31, 2010 and 2011 and for the years ended December 31, 2009, 2010 and 2011 (the "U.S. GAAP Financial Statements") included elsewhere in this Annual Report.

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        As described in this Annual Report under the headings "Currency and Financial Statement Presentation" and "Recent Developments" Presentation of Financial Information", this Annual Report contains restated and/or reclassified financial statements and related financial information for the financial years ended December 31, 2007, 2008, 2009 and 2010.

 
  Year ended December 31,  
 
  2007
As restated(4)
  2008
As restated(4)
  2009
As restated(4)
  2010
As restated(4)
  2011   2011(1)  
 
  (EUR in thousands, except per share data)
  (USD in
thousands,
except per
share data)

 

CONSOLIDATED STATEMENT OF INCOME DATA

                                     

Continuing operations

                                     

Total interest income

    5,606,240     6,695,077     6,231,380     6,148,836     6,259,650     8,281,056  

Total interest expense

    (2,619,884 )   (3,289,941 )   (2,445,115 )   (2,065,235 )   (2,611,499 )   (3,454,820 )
                           

Net interest income before provision for loan losses

    2,986,356     3,405,136     3,786,265     4,083,601     3,648,151     4,826,236  

Provision for loan losses

    (190,755 )   (425,537 )   (998,448 )   (1,204,995 )   (3,703,269 )   (4,899,152 )
                           

Net interest income after provision for loan losses

    2,795,601     2,979,599     2,787,817     2,878,606     (55,118 )   (72,916 )
                           

Non-interest income / (loss)

                                     

Credit card fees

    209,105     243,048     200,939     188,771     198,411     262,483  

Service charges on deposit accounts

    43,121     50,546     49,005     52,722     78,342     103,641  

Other fees and commissions

    626,485     554,161     502,140     475,692     435,421     576,030  

Net trading profit loss

    (97,693 )   (246,631 )   (267,131 )   (1,245,322 )   (1,877,038 )   (2,483,183 )

Equity in earnings of investees and realized gains/(losses) on disposals

    159,536     (23,730 )   (27,879 )   9,245     8,661     11,458  

Income from insurance operations

    834,681     852,557     990,054     1,017,172     777,280     1,028,284  

Other income

    242,829     189,119     100,736     144,081     85,085     112,561  
                           

Total non-interest income / (loss) excluding gains / losses on investment securities

    2,018,064     1,619,070     1,547,864     642,361     (293,838 )   (388,726 )

Net gains/(losses) on available-for-sale securities

    130,805     26,187     349,929     114,959     (19,466 )   (25,752 )

OTTI of available-for-sale securities and held-to-maturity securities (of which NIL was recognised through AOCI)

    (989 )   (17,772 )   (358,328 )   (89,497 )   (9,173,713 )   (12,136,146 )
                           

Net gains / (losses) on investment securities

    129,816     8,415     (8,399 )   25,462     (9,193,179 )   (12,161,898 )

Total non-interest income / (loss)

    2,147,880     1,627,485     1,539,465     667,823     (9,487,017 )   (12,550,624 )

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  Year ended December 31,  
 
  2007(4)
As restated
  2008(4)
As restated
  2009(4)
As restated
  2010(4)
As restated
  2011   2011(1)  
 
  (EUR in thousands, except per share data)
  (USD in
thousands,
except per
share data)

 

Non-interest expense

                                     

Salaries, employee benefits and voluntary early retirement schemes

    (1,420,092 )   (1,439,415 )   (1,557,784 )   (1,511,875 )   (1,426,428 )   (1,887,059 )

Depreciation of premises and equipment

    (91,576 )   (104,405 )   (122,765 )   (129,310 )   (121,652 )   (160,937 )

Amortization of intangible assets

    (48,235 )   (58,073 )   (65,260 )   (79,906 )   (98,930 )   (130,877 )

Impairment of goodwill

    (11,224 )   (4,585 )       (6,320 )   (418,676 )   (553,877 )

Insurance claims, reserves movements, commissions and reinsurance premiums ceded

    (764,883 )   (741,565 )   (898,934 )   (941,589 )   (1,013,879 )   (1,341,287 )

Summary other(2)

    (912,182 )   (1,030,953 )   (1,052,669 )   (1,143,122 )   (1,426,434 )   (1,887,067 )
                           

Total non-interest expense

    (3,248,192 )   (3,378,996 )   (3,697,412 )   (3,812,122 )   (4,505,999 )   (5,961,104 )
                           

Income / (loss) from continuing operations before income tax

    1,695,289     1,228,088     629,870     (265,693 )   (14,048,134 )   (18,584,644 )

Income tax (expense) / benefit

    (311,491 )   (262,811 )   (176,586 )   (42,311 )   (459,345 )   (607,679 )
                           

Net income / (loss)

    1,383,798     965,277     453,284     (308,004 )   (14,507,479 )   (19,192,323 )

Less: Net income / (loss) attributable to the non-controlling interest

    (65,007 )   (81,664 )   (62,232 )   (46,768 )   (32,189 )   (42,584 )
                           

Net income / (loss) attributable to NBG shareholders

    1,318,791     883,613     391,052     (354,772 )   (14,539,668 )   (19,234,907 )
                           

Net income per share from continuing operations

                                     

Basic EPS—Net income / (loss)(3)

    2.10     1.35     0.53     (0.56 )   (15.22 )   (20.13 )

Diluted EPS—Net income / (loss)(3)

    2.09     1.35     0.53     (0.56 )   (15.22 )   (20.13 )

Cash dividends declared per share

    1.00     0.40                  

        The number of shares as adjusted to reflect changes in capital is presented in the following table:

 
  Weighted average number of shares outstanding
Year ended December 31,
 
 
  2007   2008   2009   2010   2011  

As reported / restated in previous year

    628,896,280     628,974,070     663,812,717     762,275,390      

As reported / restated in current year

    628,896,280     628,974,070     663,812,717     762,275,390     955,341,356  

(1)
Solely for the convenience of the reader, the translation of euro into U.S. dollars has been made at the Noon Buying Rate of US$1.00 = EUR 0.7559 on April 30, 2012. For information regarding the historical rates of exchange between the euro and the U.S. dollar, refer to "Introduction—Currency and Financial Statement Presentation" in this Annual Report.

(2)
"Summary other" comprises (i) occupancy expenses, (ii) equipment expenses, (iii) deposit insurance premium and (iv) other non-interest expenses, except insurance claims, reserves movement, commissions and reinsurance premia ceded.

(3)
The weighted average number of common shares takes into account the share capital increases due to the exercise of stock options in December 2007, May 2008 and December 2009, the bonus shares granted to employees in 2007, the stock dividend approved in 2008, the rights issue of two new shares for every nine shares held in June 2009 and the rights issue of one new share for every five shares held and three convertible bonds convertible to three common shares for every eight shares held in September 2010.

(4)
See Note 43 to the U.S. GAAP Financial Statements.

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  Year ended December 31,  
 
  2007
As restated(6)
  2008
As restated(6)
  2009
As restated(6)
  2010
As restated(6)
  2011   2011(1)  
 
  (EUR in thousands)
  (USD in thousands)
 

CONSOLIDATED BALANCE SHEET DATA

                                     

ASSETS

                                     

Cash and due from banks

    4,226,768     1,540,170     1,430,381     1,436,157     1,717,736     2,272,438  

Deposits with Central Bank

    2,372,145     2,882,480     2,921,346     2,961,828     2,898,998     3,835,161  

Securities purchased under agreements to resell

    1,415,688     657,070     532,111     146,302     673,187     890,577  

Interest bearing deposits with banks

    1,777,422     1,750,516     3,077,953     6,398,767     3,767,624     4,984,289  

Trading assets

    6,740,975     2,187,843     4,064,990     2,785,322     2,964,088     3,921,270  

Financial instruments marked to market through the profit and loss

    5,692,692                      

Available-for-sale securities

    4,741,920     12,360,844     16,083,313     13,688,510     8,571,724     11,339,759  

Held- to- maturity securities

        130,548     99,604     3,598,285     1,002,202     1,325,839  

Loans

    55,560,492     70,467,044     75,833,904     79,038,440     76,002,857     100,546,179  

Less: Allowance for loan losses

    (1,132,952 )   (1,232,626 )   (2,065,178 )   (3,175,405 )   (6,550,635 )   (8,666,007 )
                           

Net loans

    54,427,540     69,234,418     73,768,726     75,863,035     69,452,222     91,880,172  

Assets classified as held for sale(2)

    72,197     71,154                  

Summary other assets(3)

    9,493,301     11,109,902     11,136,455     11,853,672     12,419,454     16,430,023  
                           

Total assets

    90,960,648     101,924,945     113,114,879     118,731,878     103,467,235     136,879,528  
                           

LIABILITIES AND SHAREHOLDERS' EQUITY

                                     

Deposits excluding interbank deposits

    60,113,568     67,183,941     70,898,987     67,768,292     58,912,852     77,937,362  

Interbank deposits

    6,759,314     13,338,844     16,935,424     26,127,189     32,662,450     43,210,015  
                           

Total deposits

    66,872,882     80,522,785     87,834,411     93,895,481     91,575,302     121,147,377  

Securities sold under agreements to repurchase

    3,509,525     1,757,153     4,485,440     3,538,289     1,302,239     1,722,766  

Long-term debt

    5,425,319     4,385,023     3,357,054     3,805,950     2,937,371     3,885,925  

Liabilities classified as held for sale(4)

    11,468     6,322                  

Summary other liabilities(5)

    7,447,771     8,204,320     8,145,689     8,751,487     11,555,636     15,287,254  
                           

Total liabilities

    83,266,965     94,875,603     103,822,594     109,991,207     107,370,548     142,043,322  
                           

Redeemable non-controlling interest- Temporary equity

    655,236     256,208     254,499     265,982     283,368     374,875  

PERMANENT EQUITY

                                     

Preferred stock (25,000,000 shares of par value EUR 0.30 each at 2010 and 2011 and 70,000,000 and 270,000,000 shares of par value EUR 5.00 each at 2010 and 2011, respectively)

        7,500     357,500     357,500     1,357,500     1,795,872  

Common stock

    2,385,992     2,483,271     3,035,208     4,780,452     4,780,452     6,324,186  

Additional paid-in capital

    2,488,919     3,267,770     3,878,079     3,883,461     4,090,184     5,411,012  

Accumulated other comprehensive income/(loss)

    271,060     (1,696,839 )   (1,517,127 )   (3,385,596 )   (1,938,578 )   (2,564,595 )

Treasury stock, at cost

    (21,601 )   (145,277 )   (10,626 )   (4,901 )   (110 )   (146 )

Accumulated surplus / (deficit)

    1,419,743     2,078,160     2,450,025     2,022,142     (12,547,110 )   (16,598,901 )
                           

Total NBG shareholders' equity / (deficit)

    6,544,113     5,994,585     8,193,059     7,653,058     (4,257,662 )   (5,632,572 )
                           

Non-controlling interest

    494,334     798,549     844,727     821,631     70,981     93,903  
                           

Total liabilities and equity

    90,960,648     101,924,945     113,114,879     118,731,878     103,467,235     136,879,528  
                           

(1)
Solely for the convenience of the reader, the translation of euro into U.S. dollars has been made at the Noon Buying Rate of US$1.00 = EUR 0.7559 on April 30, 2012. For information regarding the historical rates of exchange between the euro and the U.S. dollar, refer to "Introduction—Currency and Financial Statement Presentation" in this Annual Report.

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(2)
"Assets classified as held for sale" in 2007 and 2008 comprise assets of the warehouse section of the Group from the point it took the binding decision to dispose of the warehouse section.

(3)
"Summary other assets" comprises (i) equity method investments, (ii) goodwill, (iii) software and other intangibles, net, (iv) premises and equipment, net, (v) accrued interest receivable, (vi) derivative assets, and (vii) other assets (see Note 16 to the U.S. GAAP Financial Statements).

(4)
"Liabilities classified as held for sale" in 2007 and 2008 comprise liabilities of the warehouse section of the Group, from the point it took the binding decision to dispose of the warehouse section.

(5)
"Summary other liabilities" comprises (i) other borrowed funds, (ii) accounts payable, accrued expenses and other liabilities, (iii) insurance reserves and (iv) derivative liabilities.

(6)
See Note 43 to the U.S. GAAP Financial Statements.

SELECTED FINANCIAL RATIOS

 
  Year ended December 31,  
 
  2007
As restated
  2008
As restated
  2009
As restated
  2010
As restated
  2011  
 
  (%)
 

Return on assets(1)

    1.66     0.97     0.41     (0.26 )   (12.27 )

Return on equity(2)

    22.04     13.68     5.51     (4.48 )    

Average equity to average assets(3)

    7.19     6.45     6.45     6.60     1.44  

(1)
Calculated by dividing net income by average total assets as shown in Item 4.E, "Selected Statistical Data—Average Balances and Interest Rates".

(2)
Calculated by dividing net income attributable to NBG shareholders by average total NBG shareholders equity. Average total NBG shareholders equity is equal to the arithmetical average of total NBG shareholders equity at the beginning and at the end of the period, these being the only dates for which the Group has calculated net equity according to U.S. GAAP.

(3)
Calculated by dividing average total NBG shareholders equity by average total assets as shown in Item 4.E, "Selected Statistical Data—Average Balances and Interest Rates".

        For exchange rate information, see "Introduction—Currency and Financial Statement Presentation".

Non GAAP measures

        This Annual Report contains references to certain measures which are not defined by U.S. GAAP, namely "adjusted net loans" and "deposits excluding interbank deposits".

        The Group defines "adjusted net loans" as "net loans" excluding an amortizing loan to the Hellenic Republic expiring in September 2037, of EUR 4,760.2 million (see Item 4.E, "Selected Statistical Data—Assets—Loan Portfolio").

        The Group defines "deposits excluding interbank deposits" as "Total deposits" deducting "Interbank deposits" amounting to:

    EUR 32,024.5 million as at December 31, 2011, EUR 24,873.3 million as at December 31, 2010 and EUR 13,019.4 million as at December 31, 2009 for banking activities in Greece;

    EUR 104.1 million as at December 31, 2011, EUR 288.1 million as at December 31, 2010 and EUR 2,887.1 million as at December 31, 2009 for international operations;

    EUR 533.8 million as at December 31, 2011, EUR 965.8 million as at December 31, 2010 and EUR 1,028.9 million as at December 31, 2009 for Turkish operations; and

    EUR 32,662.5 million as at December 31, 2011, EUR 26,127.2 million as at December 31, 2010 and EUR 16,935.4 million as at December 31, 2009 for the Group.

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        The Group uses the measures "adjusted net loans" to distinguish loans originated by the Group from the loan provided to the Hellenic Republic and the loans exchanged in the PSI. Furthermore, the Group uses the measure "deposits excluding interbank deposits" in order to enhance the comparability of its financial performance between reporting periods, particularly in light of increased funding from ECB resulting from the pressure experienced by the Hellenic Republic in its public finances. "Adjusted net loans" and "deposits excluding interbank deposits" are not financial measures determined in accordance with U.S. GAAP and, accordingly, should not be considered as an alternative to other measures derived in accordance with U.S.GAAP.

Dividends

        On May 25, 2007, at the Bank's general meeting of ordinary shareholders ("General Meeting"), the Bank's ordinary shareholders approved the distribution of a cash dividend in the amount of EUR 1.00 per share with respect to the year ended December 31, 2006.

        On April 17, 2008, at the Bank's General Meeting, the Bank's ordinary shareholders approved the distribution of a dividend in the amount of EUR 1.40 per share with respect to the year ended December 31, 2007. All ordinary shareholders received EUR 0.40 in cash. The remaining EUR 1.00 was received in the form of shares at a rate of 4 to 100, as approved at the Bank's repeat General Meeting held on May 15, 2008.

        On June 2, 2009, the Bank's General Meeting approved the non-payment of dividends to ordinary shareholders as a result of the Bank's participation in the Hellenic Republic Bank Support Plan and the payment of dividends to preferred shareholders as follows:

    the payment of the interim dividends in the amount of EUR 32.7 million (USD 42.2 million) to the holders of our non-cumulative non-voting redeemable preference shares for the financial year ended December 31, 2008, which was authorized for payment by the Board of Directors on November 17, 2008;

    the distribution of dividends to the holders of our non-cumulative non-voting redeemable preference shares of EUR 42.2 million (USD 56.25 million), pursuant to the terms of our non-cumulative non-voting redeemable preference shares.

        On May 21, 2010, the Bank's General Meeting approved the non-payment of dividends to ordinary shareholders as a result of the Bank's participation in the Hellenic Republic Bank Support Plan and the payment of dividends to preferred shareholders as follows:

    the distribution of dividends to the holders of our non-cumulative non-voting redeemable preference shares of EUR 42.2 million (USD 56.25 million) after withholding taxes; and

    the distribution of dividends to the Hellenic Republic, as sole holder of the 70 million preference shares issued as part of the Bank's participation in the Hellenic Republic Bank Support Plan, of EUR 35 million, in accordance with the Hellenic Republic Bank Support Plan and the Bank's Articles of Association.

        On June 23, 2011, the Bank's General Meeting approved the non-payment of dividends to ordinary shareholders as a result of the Bank's participation in the Hellenic Republic Bank Support Plan, as well as the non-payment of dividends to holders of our non-cumulative non-voting redeemable preference shares and to the Hellenic Republic, as sole holder of the 70 million preference shares issued as part of our participation in the Hellenic Republic Bank Support Plan, in accordance with the Bank's Articles of Association, the Greek Law 3965/2011 and the provisions of article 44a in combination with articles 42c and 43 of the Greek Companies Act, which prohibit the payment of dividends in the absence of sufficient distributable funds.

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Table of Contents

        The following tables set forth the actual dividends per ordinary share paid by the Bank for the years ended December 31, 2007, 2008, 2009, 2010 and 2011 in respect of ordinary shareholders. For more information on how dividends are distributed see Item 8.A, "Consolidated Statements and Other Financial Information—Policy on Dividend Distributions".

Year Ended December 31,
  Year of
declaration and
payment of
dividends
  Amount of
dividends per
share, in EUR
  Amount of
dividends per
share, in USD(1)
  Number of
shares entitled
to dividend(2)
  Dividend
payout
ratio(3)
 

2007

  2008     0.40 (4)   0.53     476,695,961     12,43 %

2008

  2009             496,151,765      

2009

  2010             607,041,577      

2010

  2011             956,090,482      

2011

  2012 (through May 15, 2012)             956,090,482      

(1)
Solely for the convenience of the reader, the translation of euro into U.S. dollars has been made at the Noon Buying Rate of US$1.00 = EUR 0.7559 on April 30, 2012.

(2)
The number of outstanding ordinary shares subject to dividends includes treasury shares owned by the Bank at the ex-dividend date.

(3)
Dividend payout ratio is the percentage of net profit attributable to ordinary shareholders as cash dividends during a given period. It is computed by dividing dividends declared per share by net profit attributable to NBG ordinary shareholders per share.

(4)
The dividend for the year ended 2007 was EUR 1.40 per share, of which EUR 0.40 was paid in cash and the remaining EUR 1.00 was in the form of 4 additional shares for every 100 shares held.

        For a description of the Bank's dividend policy please refer to Item 8, "Financial Information".

B.    Capitalization and Indebtedness

        Not applicable.

C.    Reasons for the Offer and Use of Proceeds

        Not applicable.

D.    Risk Factors

        If you are considering purchasing our ordinary shares, preference shares or American Depositary Receipts ("ADRs"), you should carefully read and think about all the information contained in this document, including the risk factors set out below, prior to making any investment decision. If any of the events described below actually occur, our business, results of operations and financial condition could be materially adversely affected, and the value and trading price of our ordinary shares, preference shares or ADRs may decline, resulting in a loss of all or a part of any investment in our ordinary shares, preference shares or ADRs. Furthermore, the risks described below are not the only risks we face. Additional risk factors which are not currently known or are currently believed to be immaterial may also have a material adverse effect on our business, results of operations and financial condition.

Risks Relating to the Hellenic Republic Economic Crisis

Uncertainty resulting from the Hellenic Republic's economic crisis is having and is likely to continue to have a significant adverse impact on our business, results of operations and financial condition.

        For the financial year ended December 31, 2011, 58.3% of the Group's net interest income before provision for loan losses and as of December 31, 2011, 70.0% of our loans, were derived from our

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operations in the Hellenic Republic. In addition, our holdings of EUR 7.1 billion in Greek government bonds and Greek treasury bills represented 6.8% of our total assets after the impairment due to the Hellenic Republic's debt restructuring ("PSI"), and 59.0% of our trading and investment fixed income portfolio (amounting to EUR 12.0 billion) as of December 31, 2011. Accordingly, the quality of our assets, our financial condition and our results of operations are heavily dependent on macroeconomic and political conditions prevailing in Greece.

        The completion of the PSI in April 2012, in conjunction with the Program for the period 2012 - 2015 (see also Item 4.B, "Business Overview—The Macroeconomic Environment in Greece" and Item 4.B, "Business Overview—Regulation and Supervision of Banks in Greece") is expected to provide more time for economic policy to implement fiscal adjustment efforts and growth-enhancing structural reforms. At the same time, the PSI implies a significant decline of the Greek debt burden by approximately 50% of GDP, as well as a sharp reduction in debt servicing needs through low interest rates and a substantial extension of the average debt maturity. The Program also includes a comprehensive strategy for recapitalization of the banking system following PSI-related losses and the detrimental impact of a prolonged recession on bank loan quality. However, there can be no assurance that the completion of the PSI and the implementation of the Program in accordance with its terms will obtain its stated objectives or have the anticipated effects.

        The Greek economy has faced and continues to face unprecedented macroeconomic headwinds originating from the still sizeable fiscal imbalances and compounded by other deep-rooted structural vulnerabilities, making the achievement of the targets posed by the Program a challenge. More specifically:

    The Greek economy continues to face unprecedented macroeconomic challenges in 2012, and uncertainty remains high in the face of concerns over the Hellenic Republic's potential exit from the eurozone if the targets of the Program are not met. Poor market valuations for new Greek government bonds, aside from very limited market liquidity, reflect an embedded eurozone exit-risk premium for the country, which could take some time to subside.

    The need to impose additional austerity measures to offset potential slippages in the implementation of the 2012 fiscal budget is likely to amplify recessionary pressures, reiterating the vicious cycle of weakening economic sentiment, declining liquidity and reduced private spending and the need for additional fiscal measures, which characterized the period 2010-2011.

    According to the IMF, Greece has little, if any, margin to absorb additional adverse shocks or slippages in the implementation of the Program. In the event that policy implementation takes longer than expected or falls short of expectations, the economy takes longer than expected to respond to labor market and other structural competitiveness-enhancing reforms, or the fiscal impact of recession is higher than estimated, the likely result would be a higher debt trajectory than that suggested by the post-PSI analysis underlying the Program.

    Failure to successfully implement the Program may lead to termination of the financial support by the IMF and the EU, which would create the conditions for a new credit event with respect to the Hellenic Republic debt or lead to a default by the Hellenic Republic on its debt which would include both marketable instruments and official EU loans.

    Even if the Hellenic Republic successfully implements the Program, government debt as a percentage of GDP is projected to rise to approximately 160% of GDP in 2013 and it remains uncertain whether the Greek economy will grow sufficiently to ease the financing constraints of the Hellenic Republic. These developments may result in a credit event with respect to the Hellenic Republic debt occurring prior to the completion of the Program.

    The commitment by member states of the eurozone to provide long-term support to Greece on adequate terms is subject to significant risks related not only to Greece's ability to avoid any

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      additional slippages in the implementation of the Program but also to increasing discontent of public opinion in these countries regarding support to Greece.

    The large losses experienced by private creditors from the PSI exchange in conjunction with the still high level of Greek sovereign debt post-PSI (above 120% of GDP until 2019) render an improvement of market sentiment and a significant upward revision of sovereign ratings of the country highly unlikely for the short to medium term. In this respect, valuations of Greek state assets (and thus privatization revenue budgeted in the Program) remain subject to substantial uncertainty.

    A funding gap will emerge in the period 2015-2020, and thus the final test of the success of the Program will be whether Greece can regain market access at reasonable terms at that time. Nonetheless, in the statement of the Council of the EU ("Eurogroup") of February 21, 2012, the Eurogroup reiterated its commitment to provide adequate support to Greece during the life of the Program and beyond, until it has regained market access, provided that Greece fully complies with the requirements and objectives of the Program.

        For more information about the main elements of each reform and the substantial risks to the Program, see Item 4.B, "Business Overview—The Macroeconomic Environment in Greece—The Hellenic Republic's Economic Crisis".

        The uncertainty relating to the implementation of the Program and the sovereign debt reduction have directly affected the capital levels, liquidity and profitability of the financial system in the Hellenic Republic:

    PSI-related losses have resulted in recapitalization needs of Greek banks, which are intended to be satisfied out of resources to be made available under the Program;

    limited liquidity in the Greek banking system, reflecting an effective closing of market financing since April 2010 and a sizeable contraction of the domestic deposit base since 2010 (about 35.0% cumulatively, according to Bank of Greece data) and a heavy reliance on Eurosystem funding; and

    increased competition for, and thus cost of, customer deposits.

        A failure of the Program to result in a marked improvement in the Greek economy would have significant adverse consequences on the Bank. After the completion of PSI, our holdings of Greek government bonds amount to EUR 4.8 billion, and we have additional exposure to Greek treasury bills of EUR 2.3 billion and other Greek government debt of EUR 8.8 billion. If another credit event with respect to the Greek government debt or an additional restructuring of Greek government debt were to occur, our regulatory capital would be severely affected due to our direct exposure to Hellenic Republic debt, requiring the Bank to raise additional capital and thus diluting existing shareholders significantly. Furthermore, there would be no assurance that the Bank could raise all of the required additional capital on acceptable terms.

        Similar developments could be triggered by any further significant deterioration of global economic conditions, including the credit profile of other EU countries such as Ireland, Portugal or Spain or the creditworthiness of Greek or international banks. Any of these events may give rise to concerns regarding the ability of the Hellenic Republic to meet its funding needs. These developments could:

    further directly impact the carrying amount of our portfolio of Greek government debt;

    severely affect our ability to raise capital and meet minimum regulatory capital requirements; and

    severely limit our ability to access liquidity.

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Political risks linked to the result of the parliamentary elections of May 6, 2012 create additional uncertainty about policy implementation.

        Political risks linked to the result of the parliamentary elections of May 6, 2012 create additional uncertainty about policy implementation (the trio of the European Commission, the IMF and the ECB (the "Troika") has already sought political assurances from large political parties to ensure continuity in policy implementation. PASOK and New Democracy—the two largest political parties in Greece for the past 30 years, and coalition partners in the government that was in power from November 2011 to the May 6, 2012 election, under prime minister Lucas Papademos, have made public commitments to the Program objectives and key policy measures on behalf of their parties, throughout and beyond any election period. Nonetheless, potential delays in the formation of a new government post election, as well as a weak parliamentary majority of the parties supporting the Program over others that are opposed to IMF/EU support could pose significant risks to the implementation of the Program.

Recessionary pressures in Greece stemming from the Program have had and may continue to have an adverse effect on our business, results of operations and financial condition.

        Our business activities are dependent on the level of banking, finance and financial products and services we offer, as well as our customers' capacity to repay their liabilities. In particular, their levels of savings and credit demand are heavily dependent on customer confidence, employment trends and the availability and cost of funding.

        Following a cumulative output decline of 14% during the period 2009-2011, the cumulative decline in economic activity in 2012 and 2013 is likely to exceed 5.0%, according to Program estimates, taking a heavy toll on disposable income, spending and debt repayment capacity of the Greek private sector.

        The worsening macroeconomic conditions in the Hellenic Republic are materially adversely affecting the liquidity, businesses and/or financial conditions of our borrowers, which in turn leads to further increases in our non-accruing loan ratios, impairments on our loans and other financial assets and decreased demand for borrowings in general and increasing deposit outflows.

        Adding to the negative impact of a sharp drop in consumer and business confidence resulting from the economic crisis and ongoing sizeable macroeconomic imbalances, the additional fiscal adjustment agreed under the Program is likely to have a significant negative effect on economic activity in the Hellenic Republic.

        Loans to businesses and households are expected to decline in Greece as the sizeable downward pressure on household disposable incomes and firms' profitability from the austerity measures, as well as the resulting deterioration in the business environment against a backdrop of tighter credit criteria and stressed liquidity conditions, are likely to impair further demand for loans. In addition, the need to reduce our dependency on Eurosystem funding will also increase the likelihood of deleveraging. Moreover, our customers may further significantly decrease their risk tolerance to non-deposit investments such as stocks, bonds and mutual funds, which would adversely affect our fee and commission income.

        In the context of continued market turmoil, worsening macroeconomic conditions and increasing unemployment, coupled with declining consumer spending and business investment and the worsening credit profile of our corporate and retail borrowers, the value of assets collateralizing our secured loans, including houses and other real estate, could decline significantly. Such a decline could result in impairment of the value of our loan assets or an increase in the level of non-accruing loans, either of which may have a material adverse effect on our business, results of operations and financial condition.

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        Finally, if the Program is not implemented successfully—especially with respect to the ambitious structural reform agenda—or if additional austerity measures beyond those agreed to in the Program are required to counterbalance potential deviations from the Program's targets, economic activity may register a sharper than expected drop in 2012, as it did in 2011, resulting in a further delayed recovery and a further adverse effect on our business, results of operations and financial condition.

There are risks associated with the Bank's need for additional capital and liquidity, most notably from greater-than-anticipated asset impairment, as well as a higher-than-expected deterioration in asset quality.

        The Bank is required by regulators in the Hellenic Republic and other countries in which it undertakes regulated activities to maintain adequate capital. Where it undertakes regulated activities elsewhere in the European Economic Area (the "EEA"), it will remain subject to the minimum capital requirements prescribed by regulators in the Hellenic Republic, except in jurisdictions where it has regulated subsidiaries, which will be subject to the capital requirements prescribed by local regulators. In jurisdictions where it has branches, including within the EEA, the Bank may also be subject to capital and liquidity requirements. The Bank and its regulated subsidiaries are, and its branches may be, subject to the risk of having insufficient capital resources to meet the minimum regulatory capital and/or liquidity requirements. In addition, those minimum regulatory capital requirements are likely to increase in the future, the methods of calculating capital resources may change. Likewise, liquidity requirements may come under heightened scrutiny, and may place additional stress on the Bank's liquidity demands in the jurisdictions in which it operates.

        The Bank participated in the PSI and as a result, the Group recognized impairment on its Greek government bond portfolio and loans of EUR 10.1 billion. Furthermore, as a result of economic conditions in Greece, the Bank also impaired its non-PSI exposure to the Hellenic Republic, in an amount of EUR 0.7 billion. These impairments had an adverse effect on the Bank's capital position, resulting in losses of EUR 14.5 billion. As a result, the Group's capital adequacy ratio decreased below the minimum threshold of 8% (negative 2.6%) and requested access to the Hellenic Financial Stability Fund ("HFSF"), initially receiving a commitment from the HFSF on April 19, 2012 to participate in the Group's share capital increase for EUR 6.9 billion, which raised its total capital ratio as at December 31, 2011 to 8.3% on a pro-forma basis. The Bank will need to raise its Core Tier I capital ratio (according to the European Banking Authority (the "EBA") definition) to at least 9% from September 30, 2012, and to 10% from June 30, 2013 according to the new minimum targets set by the Bank of Greece.

        The initial IMF/eurozone Stabilization and Recovery Program introduced measures in the form of the HFSF whose role was to maintain the stability of the Greek banking system by providing capital support in the form of ordinary shares or contingent convertible securities, if a significant decline in capital buffers occurs. Under the Program, the role of the HFSF was enhanced, providing it with greater oversight capacities. The HFSF has been established under Greek Law 3864/2010 and modified by Greek Laws 3870/2010, 4021/2011, 4051/2012, 4056/2012, 4063/2012 and legislative acts dated April 19, 2012 (published in the Government Gazette Issue 94/19.04.2012) and April 30, 2012 (published in the Government Gazette Issue 103/30.04.2012).

        As a result of funds to be provided by the HFSF to the Bank, the HFSF may exercise significant control over the operations of the Bank and could have a material adverse effect on its profitability, capital management and financial condition. Furthermore, according to EU state aid rules and the European Commission practices, the Bank will have to develop a detailed restructuring plan or amend any such plan already submitted to the European Commission.

        The terms of the new capital injected by the HFSF have not yet been fully determined. However, if the Bank does not succeed in raising at least 10%, as further specified by a Ministerial Act, of its capital shortfall from the private sector, the HFSF-sourced capital will be in the form of common equity with full voting rights, resulting in the heavy dilution of existing shareholders. If the Bank

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succeeds in raising the requisite private sector funds, the recapitalization will occur through common equity with restricted voting rights, which will allow the HFSF to exercise its voting rights in the general meeting of shareholders of the Bank only for resolutions regarding modifications of its Articles of Association, including: an increase or reduction of the share capital of the Bank or provision of relevant authorization to the Board of Directors of the Bank; merger, division, conversion, revival, extension of duration or dissolution of the Bank; material asset transfers, including sale of subsidiaries; or any other matters that require an increased majority, as explicitly provided in Greek Law 2190/1920 regulating Greek sociétés anonymes. Thus, if the Bank succeeds in raising the requisite private sector funds, HFSF's shares will only be taken into account for the calculation of quorum and majority percentages for the aforementioned resolutions.

        In addition, the terms and processes of the recapitalization expected to be announced by the new government to be formed, will determine the incentives of the private sector to participate in the capital raising of the Bank and thus may result in the Bank being capitalized through common equity shares, effectively resulting in its nationalization. As of the date of this annual report, the new government has not been formed, and therefore, no announcement has been made in respect of the recapitalization program.

        The Bank may need to request a further capital injection from the HFSF beyond those already identified on April 19, 2012. Such a request depends on the finalization of the estimates of the recapitalization needs, which may be reduced by the capital raising plans that the Bank has submitted to the Bank of Greece.

        The main risks to the Bank's recapitalization needs are: (a) the unfavorable conditions in the capital markets, which may result in lower-than-envisaged proceeds from the capital plan; (b) the poor economic environment in Greece, which may result in a sharper deterioration in asset quality than the one projected by the BlackRock loan diagnostic and weaker pre-provision profits in the domestic market; and (c) a weaker international environment, which may lead to lower-than-projected profits from our international subsidiaries. Even if the Bank initially meets the minimum capital ratio requirements, there are no assurances that the above risks will not result in subsequent shortfalls, requiring additional capital requests from the HFSF at more onerous terms.

We are currently severely restricted in our ability to obtain funding in the capital markets and are heavily dependent on the ECB and central banks for funding, which may be affected by changes in ECB and central banks rules relating to the eligibility of collateral such as Greek government bonds and guarantees.

        Concerns relating to the impact of the ongoing economic crisis may adversely affect the Bank's credit risk profile, delay its return to the markets for funding, increase the cost of such funding and/or trigger additional collateral requirements in repo contracts and other secured funding arrangements, including with the ECB and central banks.

        The severity of pressure experienced by the Hellenic Republic in its public finances has restricted the access of the Bank to the capital markets for funding because of concerns by counterparty banks and other lenders, particularly for unsecured funding and funding from the short-term inter-bank market. These markets have been effectively closed to all Greek banks since the end of 2009. As a result, maturing inter-bank liabilities have not been renewed, or have been renewed only at higher costs. In addition, deposit outflows beginning in late 2009, and subsequently persisting, continue to put pressure on the liquidity position of many Greek banks.

        Reflecting the loss of access to market funding as well as the sharp decline in deposits, our net ECB funding and funding from other central banks has increased considerably since the start of the crisis. As at December 31, 2011, our ECB funding and funding from central banks amounted to EUR 31.3 billion (see Note 18 to the U.S. GAAP Financial Statements for the analysis of instruments pledged).

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        Access to ECB funding collateralized by Greek government bonds has been maintained following changes in the ECB rules. In May 2010, the ECB announced that it would suspend certain minimum credit rating requirements for Greek government bonds and would accept Greek government bonds as collateral, irrespective of their credit rating. The ECB has not yet determined the length of the period of suspension of the rating requirement. In addition, the ECB has also permitted the use of bank issued bonds, benefiting from Greek government guarantees, as eligible collateral for liquidity purposes, a rule change applying to all member countries.

        The liquidity we receive from the ECB may be affected by changes in ECB rules. The amount of funding available from the ECB is tied to the value of the collateral we provide, including the market value of our holdings of Greek government bonds, which itself may decline. If the value of our assets declines, then the amount of funding we can obtain from the ECB will be correspondingly limited. In addition, if the ECB were to revise its collateral standards or increase the rating requirements for collateral securities such that these instruments were not eligible to serve as collateral with the ECB, the Group's funding costs could increase and its access to liquidity could be limited. The ECB could also place time limitations on the use of government guaranteed securities as eligible collateral, and may set conditions for the continued use of liquidity under exceptional terms. Furthermore, it is unclear how long the ECB will offer unlimited access to short-term repos. In the event that these exceptional terms are terminated, or the terms on which such access is offered change in a way which materially prejudices the Bank, our access to liquidity and funding costs could be adversely affected.

        In addition, we use our covered bonds as collateral with the ECB. Our covered bonds may also become ineligible for use as collateral as a result of further credit ratings downgrades or changes in ECB rules currently permitting this collateral. A further downgrade or withdrawal of Greek sovereign ratings would likely have a material adverse effect on our ability to continue to access current levels of funding from the ECB or from any other source.

        A continued loss of deposits and the concomitant need for additional Eurosystem funding may result in the exhaustion of collateral eligible for funding from the Eurosystem.

An accelerated outflow of funds from customer deposits could cause an increase in our costs of funding and have a material adverse effect on our operating results, financial condition and liquidity prospects.

        Historically, one of our principal sources of funds has been customer deposits. Since we rely on customer deposits for the majority of our funding, if our depositors withdraw their funds at a rate faster than the rate at which borrowers repay their loans, or if we are unable to obtain the necessary liquidity by other means, we may be unable to maintain our current levels of funding without incurring significantly higher funding costs or having to liquidate certain of our assets, or without increasing access to the ECB under its exceptional terms. As at December 31, 2011, the Group's domestic deposits excluding interbank deposits were 17.7% lower compared to December 31, 2010 and 27.1% lower compared to December 31, 2009 due to the outflow of customer deposits during 2010 and 2011. The trend of outflowing domestic deposits has continued in 2012, in line with market outflows as reported by the Bank of Greece, for the two months period to February 2012.

        The ongoing availability of customer deposits to fund the Bank's loan portfolio is subject to potential changes in certain factors outside the Bank's control, such as depositors' concerns relating to the economy in general, the financial services industry or the Bank specifically, significant further deterioration in economic conditions in Greece and the availability and extent of deposit guarantees. Any of these factors on their own or in combination could lead to a sustained reduction in the Bank's ability to access customer deposit funding on appropriate terms in the future, which would impact on the Bank's ability to fund its operation and meet its minimum liquidity requirements and have an adverse effect on the Group's results, financial condition and prospects. Unusually high levels of withdrawals could have the result that the Bank or another member of the Group may not be in a position to continue to operate without additional funding support, which it may be unable to secure.

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        Funding from the ECB and central banks was limited to EUR 31.3 billion as of December 31, 2011, out of which, funding needs covered through funding from the Bank of Greece, which has less strict collateral rules, are through its Emergency Liquidity Assistance ("ELA") facility.

There is doubt about Bank's ability to continue as a "going concern".

        Our independent auditors have added an explanatory paragraph to their audit opinion issued in connection with the financial statements for the years ended December 31, 2010 and 2011, respectively, with respect to their doubt about our ability to continue as a going concern, as a result of the uncertainty surrounding the completion of the recapitalization from the HFSF mainly due to political and macroeconomic developments in Greece. The going concern basis of the Bank is dependent on raising sufficient funds to restore the Group's and the Bank's financial position and maintain adequate levels of capital, as well as the Bank's continued ability to rely on liquidity facilities provided by the ECB and the Bank of Greece (collectively referred to as the "Eurosystem liquidity facilities").

Negative results in the Bank's stress testing may lead to further capital increases or loss of public confidence in the Bank.

        Stress tests analyzing the European banking sector recently have been, and we anticipate that they will continue to be, published by national and supranational regulatory authorities. At present, it is not clear how the EBA stress tests will be aligned with the requirements of the Program. In the event, a loss of confidence in the banking sector following the announcement of stress tests regarding a bank or the Greek banking system as a whole, or a market perception that any such tests are not rigorous enough also could have a negative effect on the Bank's cost of funding and may thus have a material adverse effect on its results of operations and financial condition.

        Greek banks may be required in the future to meet more stringent capital requirements regarding their Core Tier I capital ratios. If the Bank were to fail to meet any such new requirements by accessing the capital markets, we would be required to receive additional capital from the HFSF. As a result the HFSF could exercise significant control over our operations, which could have a material adverse effect on our business, profitability, capital management and financial performance.

Our wholesale borrowing costs and access to liquidity and capital have been negatively affected by a series of downgrades of the Hellenic Republic's credit rating.

        Since 2009, the Hellenic Republic has undergone a series of credit rating downgrades and in 2010 moved to below investment grade. The credit rating of the Hellenic Republic was lowered by all three credit rating agencies to levels just above default status following the activation of collective action clauses in Greek government bonds subject to Greek law in late February 2012. Specifically, Standard & Poor's lowered the Hellenic Republic's credit rating to Selective Default-SD (February 27, 2012), Fitch lowered the Hellenic Republic's credit rating to Restricted Default-RD (March 9, 2012), and Moody's lowered the Hellenic Republic's credit rating to C (March 2, 2012). Following the conclusion of the exchange of Greek government bonds under Greek law, Fitch raised its rating to B- and Standard & Poor's raised its rating to CCC.

        A further downgrade of the Hellenic Republic's rating may occur in the event of a failure to implement the Program or if the Program fails to produce sufficient results. Accordingly, the cost of risk for the Hellenic Republic would increase further, with negative effects on the cost of risk for Greek banks and thereby on their results. Further downgrades of the Hellenic Republic could result in a corresponding downgrade in the Bank's credit rating.

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Deteriorating asset valuations resulting from poor market conditions may adversely affect our future earnings through a negative impact on our trading income as well as the recovery value of collateral.

        An increase in financial market volatility or adverse changes in the liquidity of our assets could impair our ability to value certain of our assets and exposures. The value ultimately realized by us will depend on their fair value determined at that time and may be materially different from their current value. Any decrease in the value of such assets and exposures could require us to realize additional impairment charges, which could adversely affect our financial condition and results of operations, as well as our capital.

        The global economic slowdown and economic crisis in Greece from 2009 to 2012 have resulted in an increase in non-accruing loans and significant changes in the fair values of our credit exposures. A substantial portion of our loans to corporate and individual borrowers are secured by collateral such as real estate, securities, vessels, term deposits and receivables. In particular, as mortgage loans are one of our principal assets, we are currently highly exposed to developments in real estate markets, especially in Greece. From 2002 to 2007, demand for housing and mortgage financing in Greece increased, significantly driven by, among other things, economic growth, declining unemployment rates, demographic and social trends, the desirability of Greece as a vacation destination and historically low interest rates in the eurozone. During late 2007, the housing market began to adjust in Greece as a result of excess supply and higher interest rates. In 2008 economic growth came to a halt and since 2009 economic activity has contracted at an accelerating pace. As a result, home prices began to decline, with home prices in March 2012 approximately 20% below their third quarter 2008 peak. The sharp increase in unemployment during the economic crisis, which in early 2012 exceeded 21% (compared with 7.2% in September 2008), aggravated the situation, with mortgage delinquencies increasing.

        A continued decline in the Greek economy, or a deterioration of economic conditions in any industries in which our borrowers operate or in any other markets in which the collateral is located, may result in the value of collateral securing the loans falling to below the outstanding principal balance on some loans, particularly those disbursed in the few years prior to the crisis. A decline in the value of collateral securing these loans, or our inability to obtain additional collateral, may require us to establish additional allowance for loan losses. In addition, our failure to recover the expected value of collateral in the case of foreclosure, or our inability to initiate foreclosure proceedings due to domestic legislation, may expose us to losses which could have a material adverse effect on our business, results of operations and financial condition. Specifically, since July 1, 2010, Greek legislation forbids auctions initiated by credit institutions for satisfaction of claims not exceeding EUR 200,000. Greek Law 4047/2012 currently prohibits an auction process for such claims until December 31, 2012, and this period could be further extended. As at December 31, 2011, outstanding balances that could be subject to this law were EUR 365.7 million.

The Bank does not currently pay dividends to its shareholders.

        Under Greek Law 3723/2008, in conjunction with Greek Laws 4063/2012, 3965/2011, 3844/2010 and 3756/2009, we will not pay any cash dividends to our ordinary shareholders in 2012 in respect of the 2011 financial year, and did not do so in 2011 in respect of the 2010 financial year or in 2010 in respect of the 2009 financial year. In general, as a result of our participation in the Hellenic Republic Bank Support Plan, our dividends are subject to a maximum of 35% of the Bank's distributable profits (on an unconsolidated basis) for as long as the Bank participates in the Hellenic Republic Bank Support Plan, and any decisions regarding distribution of dividends and remuneration can be vetoed by the Hellenic Republic representative who sits on our Board of Directors.

        In June 2008, we issued 25 million non-cumulative, non-voting redeemable preference shares at an issue price of USD 625 million. If the Bank has sufficient distributable funds, each preference share is

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entitled to USD 2.25 per share dividend per annum paid in cash. We have not paid any dividends on our preference shares since March 2011.

        Similarly, in the case of an issuance of capital from the HFSF, the HFSF's representative (who would sit on our Board of Directors) would have the power to veto any distribution of dividends, and our dividends would also be subject to a maximum of 35% of the Bank's distributable profits, according to Greek Law 3864/2010, as currently in force.

        Our participation in Pillar I of the Hellenic Republic Bank Support Plan has also resulted in the issuance of fixed return preference shares to the Hellenic Republic (EUR 350 million in January 2009 and EUR 1,000 million in December 2011).

        Payments of dividends on the aforementioned redeemable preference shares and payments of the fixed return for the preference shares issued pursuant to the Hellenic Republic Bank Support Plan take preference over distributable profits otherwise available to our ordinary shareholders. No dividend will be paid to holders of U.S. preferred securities or to the Hellenic Republic as holder of preference shares in 2012 for the 2011 financial year in accordance with the Bank's Articles of Association, Greek Law 4063/2012 and the provisions of article 44a in combination with articles 42c and 43 of the Greek Companies Act, which prohibit the payment of dividends in the absence of sufficient distributable funds (see Item 8.A, "Consolidated Statements and Other Financial Information—Policy on Dividend Distributions").

Risks Relating to Volatility in the Global Financial Markets

We are vulnerable to the ongoing disruptions and volatility in the global financial markets.

        Global economic growth maintains a steady, albeit weaker than normal, pace. Nonetheless, most of the economies with which Greece has strong export links, including a number of euro area economies, continue to face significant economic headwinds. Activity remains dependent on highly accommodative macroeconomic policies and is subject to downside risks, as room for countercyclical policy measures has sharply diminished and fiscal fragilities have come to the fore. Policymakers in many advanced economies have publicly acknowledged the need to urgently adopt credible strategies to contain public debt and excessive fiscal deficits and later bring them down to more sustainable levels. The implementation of these policies may restrict economic recovery, with a corresponding negative impact on our business, results of operations and financial condition.

        In financial markets, concerns surfaced in a progressive widening of intra-eurozone government bond and sovereign credit default swap ("CDS") spreads for several eurozone issuers with large fiscal imbalances. Against a background of increasing unease over the macrofinancial implications of sizeable fiscal imbalances, investors have reduced their investment in these countries. Continued reduction in investment flows may retard economic recovery, with a corresponding negative impact on our business, results of operations and financial condition, including our ability to fund our operations.

        Results of operations, both in Greece and our international operations, in the past have been, and in the future may continue to be, materially affected by many factors of a global nature, including: political and regulatory risks and the condition of public finances; the availability and cost of capital; the liquidity of global markets; the level and volatility of equity prices, commodity prices and interest rates; currency values; the availability and cost of credit; inflation, the stability and solvency of financial institutions and other companies; investor sentiment and confidence in the financial markets; or a combination of these factors.

We are exposed to risks potentially faced by other financial institutions.

        We routinely transact with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, and other institutional clients. Sovereign credit pressures may weigh on Greek financial institutions, limiting their funding operations

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and weakening their capital adequacy by reducing the market value of their sovereign and other fixed income holdings. These liquidity concerns have negatively impacted, and may continue to negatively impact, inter-institutional financial transactions in general. Many of the routine transactions we enter into expose us to significant credit risk in the event of default by one of our significant counterparties. In addition, our credit risk may be exacerbated when the collateral we hold cannot be realized upon or is liquidated at prices not sufficient for us to recover the full amount of the loan or derivative exposure. A default by a significant financial counterparty, or liquidity problems in the financial services industry in general, could have a material adverse effect on our business, results of operations, financial condition and capital position.

Our auditor, like other independent registered public accounting firms operating in the Hellenic Republic is not permitted to be subject to inspection by Public Company Accounting Oversight Board, and as such, investors may be deprived of the benefits of such inspection.

        Our independent registered public accounting firm that issues the audit reports included in our annual reports filed with the SEC, as an auditor of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB"), is required by the laws of the United States to undergo regular inspections by PCAOB to assess its compliance with the laws of the United States and professional standards. Because our auditor is located in the Hellenic Republic, a jurisdiction where PCAOB is currently unable to conduct inspections without the approval of the Greek authorities, our auditor, like other independent registered public accounting firms operating in the Hellenic Republic, is currently not inspected by PCAOB. Inspections of other firms that PCAOB has conducted outside of the Hellenic Republic have identified deficiencies in those firms" audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The inability of PCAOB to conduct inspections of independent registered public accounting firms operating in the Hellenic Republic makes it more difficult to evaluate the effectiveness of our auditor's audit procedures or quality control procedures. As a result, investors may be deprived of the benefits of PCAOB inspections.

Risks Relating to Our Operations Outside of the Hellenic Republic

Our Turkish operations make a significant contribution to our net profit, and operating in Turkey carries certain macroeconomic and political risks.

        Turkish operations through Finansbank, our Turkish subsidiary, represented 19.4% of our gross loans as at December 31, 2011 compared to 18.9% as at December 31, 2010 and accounted for 30.3% net interest income before provisions for loan losses for the year ended December 31, 2011 compared to 31.9% for the year ended December 31, 2010. As a result, the Group is subject to operating risks in Turkey, including the following:

    Turkey is a parliamentary democracy and, although stable, it is not free from political instability and domestic terrorist acts.

    Military operations in the Middle East and elsewhere have increased the political and economic risks in the region. The current security situation in the Middle East may contribute to further tension. These risks may have an impact on the Turkish economy and consequently, on the Group's operations in Turkey.

    Since the early 1980s, the Turkish economy has undergone a transformation from a highly protected state-directed system to a more free market economy, experiencing a general growth trend from 1992 to 2007. However, the Turkish economy has experienced a succession of financial crises, most notably in 2000 and 2001, as well as macroeconomic imbalances, including substantial budget deficits, significant balance of payments deficits, high inflation rates and high real interest rates. Turkey's economy is exposed to the effects of the continuing global credit

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      difficulties, having experienced four successive quarters of deep recession between the fourth quarter of 2008 and the third quarter of 2009 before Turkey's GDP subsequently grew again, by 9.2% in 2010, and 8.5% in 2011. Nevertheless, Turkey may face more financial crises, which could have an adverse effect on Finansbank's business and could adversely affect the Group's business, results of operations and financial condition.

    Turkey remains dependent on external financing, and its economy is highly exposed to a turnaround in global activity and investor sentiment. Turkey's current account deficit is expected by the IMF to ease to 7.4% of GDP in 2012, mainly due to a marked slowdown in domestic demand. This much-needed adjustment is, however, at risk in view of the ongoing rise in oil prices. In view of the fact that the bulk of the current account deficit continues to hinge on large portfolio inflows and a drawdown of bank and non-bank residents' assets abroad, Turkish assets will continue to be vulnerable to sudden shifts in global investor sentiment. As a result, there can be no assurance that Turkey will not experience volatility in domestic financial markets, and the likelihood of such volatility would increase with disruptions in global market activity and investor sentiment. Any such volatility would have a negative impact on Finansbank's business and could adversely affect the Group's business, results of operations and financial condition.

    Historically, the Turkish currency has been subject to significant volatility against the euro and other currencies. For example, the TL depreciated by 16.7% against the euro and by 18.9% against the U.S. dollar between December 31, 2010 and December 31, 2011. Since the acquisition of Finansbank by the Group on August 18, 2006 until December 31, 2011, the TL depreciated by 25.1% against the euro and by 24.9% against the U.S. dollar. The TL appreciated by 6.1% against the euro and by 8.7% against the U.S. dollar between December 31, 2011 and April 30, 2012. Such fluctuations could have an adverse effect on the value of the Bank's investment in Finansbank and on the Group's overall profitability. The Group has taken steps in the past to reduce its exposure to TL exchange rate fluctuations and intends to continue implementing such initiatives; however, such protection may not be available on as favorable terms as have been available in the past or at all and may not provide a sufficient hedge against such fluctuations.

    The Group believes the general level of macroeconomic and political risk to be higher in Turkey than in a number of countries whose economies and banking markets are more developed and that are already members of the EU, but the risk levels are converging. While the Group believes there is potential for substantial growth in the Turkish banking market, growth may not occur, or Finansbank may be unable to benefit from that growth. Adverse macroeconomic and political events, that limit economic growth in Turkey or restrict the growth of the banking market may adversely affect Finansbank's business and could adversely affect the Group's business, results of operations and financial condition. For example, various new laws and regulations have been adopted or proposed in Turkey, that affect the Group's business in Turkey. In 2011, the Turkish central bank continued its policy of non-remuneration for reserve requirements and increased the weighted average required reserve ratio for TL denominated to 13.5% within the course of the year, before lowering it to 11%. The Turkish central bank also allowed the banking sector to hold up to 40% of TL denominated required reserves in foreign currencies and up to 10% of TL denominated required reserves in gold accounts. Any failure by Finansbank to adopt adequate responses to these or other future changes in the regulatory framework could adversely affect the Group's business, results of operations and financial condition.

        At the time of our share capital increase in September 2010, we announced plans to dispose of a minority interest in Finansbank through an offering that may comprise both primary and secondary shares. We currently intend to complete this offering when market conditions are favorable; however, our decision to proceed with the offering and its timing are subject to various considerations, including

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market conditions, offer size and structure and obtaining all necessary regulatory and other approvals. A reduction in our level of ownership in Finansbank would result in a reduction in the level of Finansbank's contribution to the Group's net income/loss going forward.

Any loss in consumer confidence in Finansbank's banking operations may lead to an accelerated outflow of funds from customer deposits and could cause an increase in our costs of funding.

        Historically, Finansbank's principal sources of funds have included individual deposits. All of Finansbank's individual deposits are effectively short-term deposits (the average maturity of individual deposits in 2011 was approximately 59 days), which could expose Finansbank to liquidity risks if retail customers were to withdraw large amounts of their deposits or do not roll over their term deposits upon maturity. Although customer deposits have increased rapidly in 2011 (23.4% year-on-year in TL terms), any loss in consumer confidence in Finansbank's banking operations could significantly increase the amount of individual deposit withdrawals in a short space of time or result in higher interest rates on individual deposits, which could significantly increase Finansbank's cost of funding. Finansbank also relies heavily upon other types of short-term liabilities in addition to individual deposits for its funding. As at December 31, 2011, 96% of Finansbank's other borrowed funds and long-term debt had maturity of less than one year. Given such reliance upon short-term liquidity, there can be no assurance that, in the event of a sudden or unexpected shortage of funds in the banking system or otherwise, Finansbank will be able to maintain its levels of funding and at commercially reasonable terms.

A deterioration of the credit quality of Finansbank's loans could have a material adverse effect on Finansbank's and the Group's business, results of operations and financial condition.

        The 2009 economic downturn had an adverse effect on the financial condition of some of Finansbank's corporate and retail customers and, in some instances, ultimately affected their ability to service and repay their obligations. This has led to an increase in Finansbank's impaired loans that are more than 90 days past due ("dpd"), accompanied by increased allowance for loan losses. During 2010 and 2011, with output growing strongly, credit quality and recoveries improved markedly. However, over time, Finansbank has increased its exposure to retail customers, whose loans generally yield higher interest income but also tend to have higher levels of default than loans of corporate customers. There can be no assurance that continued weakness in consumer spending, high unemployment, decreased profitability of corporate businesses, increasing numbers of insolvencies and/or deterioration of the credit quality of corporate customers will not result in continued increases in the levels of Finansbank's impaired loans in the future, which could have a material adverse effect on Finansbank's and the Group's business, results of operations and financial condition.

A reduction in Finansbank's current long-term credit ratings may increase Finansbank's funding costs.

        Finansbank engages in limited international capital market transactions for funding purposes. Although no specific trigger exists relating to a credit rating downgrade in any one of the outstanding agreements, a reduction in the current long-term credit ratings of Finansbank or any of its principal subsidiaries may increase Finansbank's or that subsidiary's funding costs, limit access to the capital markets and trigger additional collateral requirements in secured funding arrangements when they are renewed. In addition, any further deterioration in NBG's credit rating or any decrease in Turkey's sovereign credit rating could affect Finansbank's ability to obtain financing in international capital markets. Any reduction or deterioration in Finansbank's credit ratings could have a material adverse effect on Finansbank's and the Group's business, results of operations and financial condition.

Changes in the competitive environment in Turkey may adversely affect Finansbank's business.

        The Turkish banking sector is highly competitive and has in recent years undergone a period of consolidation. As at December 31, 2011, there were a total of 44 banks (excluding the Turkish central bank and four "participation banks" (i.e. interest-free banking institutions)) licensed to operate in

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Turkey. A small number of these banks have a significant presence in the industry. The intense competition may increase the pressure for Finansbank to expand the range and sophistication of its products and services it offers, as well as to reduce its margins. Increased pricing competition in the Turkish banking markets may also impact customer behavior patterns and loyalty. In addition, state-owned banks in Turkey historically have had access to inexpensive funding in the form of significant Turkish government deposits, which has provided a competitive advantage over private banks. Any failure to maintain customer loyalty or to offer customers a wide range of competitive products could have a material adverse effect on Finansbank's and the Group's business, results of operations and financial condition.

We conduct significant international activities in SEE operations, which carries certain political, governmental or macroeconomic risks.

        Apart from our operations in the Hellenic Republic and Turkey, we have built up substantial operations in Bulgaria, Romania, Former Yugoslavian Republic of Macedonia ("FYROM"), Serbia and other developing economies. The Group's SEE operations accounted for 10.4% of our gross loans as at December 31, 2011 compared to 10.7% as at December 31, 2010 and 11.1% of our net interest income before provisions for loan losses at and for the year ended December 31, 2011 compared to 11.4% for the year ended December 31, 2010. Our SEE operations are exposed to the risk of adverse political, governmental or economic developments in the countries in which we operate. In addition, most of the countries outside the Hellenic Republic in which we operate are emerging markets in which we face particular operating risks. These factors could have a material adverse effect on our business, results of operations and financial condition.

        Our SEE operations also expose us to foreign currency risk. A decline in the value of the currencies in which our SEE subsidiaries receive their income or hold their assets relative to the value of the Euro may have an adverse effect on our results of operations and financial condition.

        The economic crisis in Greece may:

    materially adversely affect the operations of our SEE subsidiaries and Turkey;

    increase depositors' concerns in these countries regarding the creditworthiness of the Hellenic Republic and the Bank, which may, in turn, affect their willingness to continue to do business with our international subsidiaries; and

    result in local governmental intervention.

Risks Relating to Our Business

We have incurred and may continue to incur significant losses on our trading and investment activities due to market fluctuations and volatility.

        We maintain trading and investment positions in debt, currency, equity and other markets. These positions could be adversely affected by continuing volatility in financial and other markets and the Greek sovereign debt crisis, creating a risk of substantial losses. Significant decline in perceived or actual values of the Group's assets has resulted from previous market events. Continuing volatility and further dislocation affecting certain financial markets and asset classes could further impact the Group's results of operations, financial condition and prospects. In the future these factors could have an impact on the mark-to-market valuations of assets in the Group's AFS, trading portfolios and financial assets and liabilities for which the fair value option has been elected. In addition, any further deterioration in the performance of the assets in the Group's AFS and HTM portfolios could lead to additional other-than-temporary impairment losses, including on holdings of Greek government bonds. The AFS and HTM portfolios accounted for 9.3% of the Group's total assets as at December 31, 2011. Volatility can also lead to losses relating to a broad range of other trading securities and derivatives held, including swaps, futures, options and structured products. For further information on market risk exposures in those portfolios, you should refer to Item 11, "Quantitative and qualitative disclosures about Market Risk—Market Risk".

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The increase of non-accruing loans may have a negative impact on our operations in the future.

        Non-accruing loans represented 15.1% of our loan portfolio as of December 31, 2011 (compared to 8.1% as at December 31, 2010), while the same ratio for our Greek operations was 16.7% (see Item 4.E, "Selected Statistical Data—Credit Quality—Non-accruing Loans, Allowance for Loan Losses, and Loan Loss Experience" and Item 5, "Operating and Financial Review and Prospects—Key Factors Affecting our Results of Operations—Non-accruing Loans and Write-offs"). The effect of the economic crisis in Greece and adverse macroeconomic conditions in the countries in which we operate may result in further adverse effects on the credit quality of our borrowers, with increasing delinquencies and defaults. In accordance with Greek Law 3869/2010, debtors that are individuals and cannot be declared bankrupt and who are in a state of permanent inability to pay their debts not attributable to willful misconduct, have the ability to adjust their debts and may be released from a portion of such debts through filing of an application to the competent court (see Item 4.B, "Business Overview—Regulation and Supervision of Banks in Greece"). In order for an individual to apply to the courts under this law, the applicant is required to follow a lengthy procedure, which we believe is the principal reason why, as at December 31, 2010, no customer had applied to the courts under this law, and as at December 31, 2011, 5,930 customers, with combined outstanding balances of EUR 286 million, had applied to the court under the provisions of Greek Law 3869/2010. In addition, collateral collections are more difficult in a period of economic recession and in view of existing legislation relating to the valuation of collateral in enforcement proceedings. Moreover, as a result of the financial crisis, and for the protection of the weaker debtors, auctions have been suspended until December 31, 2012, in cases where the outstanding balance does not exceed EUR 200,000 (pursuant to legislative act dated December 12, 2011, having been ratified by Greek Law 3949/2011 (See "—Applicable bankruptcy laws and other laws and regulations governing creditors' rights in Greece and various SEE countries may limit the Group's ability to obtain payments on defaulted credit—"). As at December 31, 2010 and 2011, outstanding balances that could be subject to the abovementioned Act were EUR 121.4 million and EUR 365.7 million, respectively. Future provisions for non-accruing loans could have a materially adverse effect on our profitability.

Volatility in interest rates may negatively affect our net interest income and have other adverse consequences.

        Interest rates are highly sensitive to many factors beyond our control, including monetary policies and domestic and international economic and political conditions. There can be no assurance that further events will not alter the interest rate environment in Greece and the other markets in which the Group operates. Cost of funding is especially at risk for the Bank in view of increased Eurosystem funding and the tight liquidity conditions in the domestic deposit market.

        As with any bank, changes in market interest rates affect the interest rates we charge on our interest-earning assets differently than the interest rates we pay on our interest-bearing liabilities. This difference could reduce our net interest income before provisions for loan losses. Since the majority of our loan portfolio effectively re-prices within a year, rising interest rates may also result in an increase in our allowance for loan losses if customers cannot refinance in a higher interest rate environment. Further, an increase in interest rates may reduce our clients' capacity to repay in the current economic circumstances.

We face significant competition from Greek and foreign banks.

        The general scarcity of wholesale funding since the onset of the economic crisis has led to a significant increase in competition for retail deposits in Greece. We also face competition from foreign banks, some of which may have resources greater than our own. We may not be able to continue to compete successfully with domestic and international banks in the future. These competitive pressures on the Group may have an adverse effect on our business, results of operations and financial condition.

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Applicable bankruptcy laws and other laws and regulations governing creditors' rights in Greece and various SEE countries may limit the Group's ability to obtain payments on defaulted credits.

        Bankruptcy laws (Greek Law 3869/2010) and other laws and regulations governing creditors' rights vary significantly within the region that the Group operates in. In some countries, the laws offer significantly less protection for creditors than the bankruptcy regimes in Western Europe and the United States. If the current economic downturn persists or worsens, bankruptcies could intensify, or applicable bankruptcy protection laws and regulations may change to limit the impact of the recession on corporate and retail borrowers. Such changes may have an adverse effect on the Group's business, results of operations and financial condition.

Changes in consumer protection laws might limit the fees that the Group may charge in certain banking transactions.

        Changes in consumer protection laws in Greece, Turkey and/or other jurisdictions where the Group has operations could limit the fees that banks may charge for certain products and services such as mortgages, unsecured loans and credit cards. If introduced, such laws could reduce the Group's net income, though the amount of any such reduction cannot be estimated at this time. There can be no assurance that such effects will not have an adverse effect on our business, results of operations and financial condition.

Our business is subject to increasingly complex regulation which may increase our regulatory and capital requirements.

        The Group is subject to financial services laws, regulations, administrative actions and policies in each jurisdiction in which it operates. All of these regulatory requirements are subject to change, particularly in the current market environment, where there have been unprecedented levels of government intervention and changes to the regulations governing financial institutions. In response to the global financial crisis, national governments as well as supranational groups, such as the EU, have been considering significant changes to current regulatory frameworks, including those pertaining to capital adequacy, liquidity and scope of banks' operations. As a result of these and other ongoing and possible future changes in the financial services regulatory landscape (including requirements imposed by virtue of our participation in any government or regulator-led initiatives, such as the Hellenic Republic Bank Support Plan), we may face greater regulation in the Hellenic Republic, Turkey and SEE. Current and future regulatory requirements may be different across each of these locations and even requirements with EEA-wide application may be implemented or applied differently in different jurisdictions.

        Compliance with these new requirements may increase our regulatory capital and liquidity requirements and costs, heighten disclosure requirements, restrict certain types of transactions, affect our strategy and limit or require the modification of rates or fees that we charge on certain loan and other products, any of which could lower the return on the Group's investments, assets and equity. We may also face increased compliance costs and limitations on our ability to pursue certain business opportunities. The new regulatory framework may have significant scope and may have unintended consequences for the global financial system, the Greek financial system or our business, including reducing competition, increasing general uncertainty in the markets or favoring or disfavoring certain lines of business. We cannot predict the effect of any such changes on our business, financial condition, cash flows or future prospects.

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        Regulation of the banking industry in the Hellenic Republic has changed in recent years largely as a result of Greece's implementation of applicable EU directives and in response to the economic crisis in the Hellenic Republic. In this context:

    On February 29, 2012, the Bank of Greece issued Governor's Act 2654 regarding capital adequacy. The Act is in line with the Program as amended on February 9, 2012 and sets a Core Tier I minimum target of 9% beginning on September 30, 2012 and a 10% Core Tier I minimum target beginning on June 30, 2013, under the EBA definition of core capital which includes preference shares issued under the Hellenic Republic Bank Support Plan.

    In December 2010, the Basel Committee on Banking Supervision (the "Basel Committee"), issued two prudential framework documents ("Basel III: A global regulatory framework for more resilient banks and banking systems", December 2010 and "Basel III: International framework for liquidity risk measurement, standards and monitoring", December 2010) which contain the capital and liquidity reform package ("Basel III"). The so called Basel III documents were revised in June 2011. The main elements of Basel III are summarized as follows:

    revision of the regulatory capital definition and its components, setting higher minimum levels for the Common Equity Tier I and Tier I capital adequacy ratios;

    introduction of capital conservation buffer of 2.5% in addition to the minimum Common Equity Tier I and Tier I capital adequacy ratios with certain limitations on dividends, distributions on capital instruments and compensation;

    enhancement of risk coverage of the capital requirements framework especially regarding derivatives and other off balance sheet items (counterparty credit risk), the exposures to central counterparties (CCPs) and the values of the risk parameters under stress conditions (market, credit and counterparty credit risk);

    supplementation of risk based capital requirements with a leverage ratio;

    promotion of stronger provisioning practices mainly by moving towards a forward looking (Expected Loss) provisioning approach; and

    introduction of global common liquidity measurement standards subject banks to minimum quantitative requirements for liquidity and increased risk weightings for "illiquid" assets.

        The Basel III proposals have been assessed at EU level. The European Commission has published several consultation and other policy documents indicating its intention to implement the Basel III standards throughout the EEA by way of further changes to the Directives 2006/48/EC and 2006/49/EC and/or additional regulations. The final legislative proposals were published on July 20, 2011 (CRD 4). Commission's aim is to create for the first time a single set of harmonized prudential rules which Banks throughout the EU must respect. Commission's proposal follows the timelines as agreed in the Basel Committee: entry into force of the mew legislation on January 1, 2013 and full implementation on January 1, 2019.

        The Solvency II Directive (Directive 2009/138/EC), adopted by the European Parliament on April 22, 2009 and endorsed by the Council of Ministers on May 5, 2009, is a fundamental review of the capital adequacy regime for the European insurance industry. When implemented (expected to be on January 1, 2014) the capital structure and overall governance of the Group's life assurance business will change significantly, and this may have an impact on the capital structure of the Group.

        Finansbank is subject to a number of banking and other regulations in Turkey, in particular those of the Banking Regulation and Supervision Agency of Turkey ("BRSA"). Banking regulations in Turkey are evolving in parallel to the global changes and international regulatory environment. The Turkish regulator has announced a roadmap for Basel II implementation starting from June 2011. Banks in

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Turkey report their results according to both Basel I and Basel II, and after June 2012 only Basel II will be used.

The loss of senior management may adversely affect our ability to implement our strategy.

        Our current senior management team includes a number of executives that we believe contribute significant experience and expertise to our management in the banking sectors in which we operate. The continued success of our business and our ability to execute our business strategy will depend, in large part, on the efforts of our senior management. For instance, a change of government in the Hellenic Republic could lead to the departure of certain senior managers. If a substantial portion of our senior management leaves us, our business may be materially adversely affected.

We may be unable to recruit or retain experienced and/or qualified personnel.

        Our competitive position depends, in part, on our ability to continue to attract, retain and motivate qualified and experienced banking and management personnel. Competition in the Greek and other SEE banking industries for personnel with relevant expertise is intense due to the relatively limited availability of qualified individuals. To recruit qualified and experienced employees and to minimize the possibility of their departure, we provide compensation packages consistent with evolving standards in the relevant labor markets. Under the terms of the Hellenic Republic Bank Support Plan, as currently applicable, the Bank is prohibited from paying bonuses to the members of the Board of Directors, the Chief Executive Officer and any general managers or their substitutes. Furthermore, as a result of the economic crisis and regulatory restrictions on bonus payments, we are limiting or restricting the bonuses we pay our personnel, which may inhibit the retention and recruitment of qualified and experienced personnel. However, inability to recruit and retain qualified and experienced personnel in the Hellenic Republic, Turkey and SEE, or manage our current personnel successfully, could have a material adverse effect on our business, results of operations, financial condition and prospects. This risk has increased in view of the current economic situation in Greece.

We could be exposed to significant future pension and post-employment benefit liabilities.

        Like other large companies in the Hellenic Republic that are, or were, in the public sector, the employees of the Bank and certain of our subsidiaries participate in employee-managed pension schemes. The Bank and certain of our subsidiaries make significant contributions to these schemes. In addition, the Bank and several of our subsidiaries offer other post-employment benefit plans, including medical benefit plans. Our consolidated net liability under these plans as of December 31, 2011 was EUR 224.7 million, determined by reference to a number of critical assumptions. These include assumptions about movements in interest rates which may not be realized. Such variation may cause us to incur significantly increased liability in respect of these obligations. For more information on our current obligations under pension plans and the assumptions by reference to which they are determined, please refer to Note 38 to the U.S. GAAP Financial Statements.

        In accordance with Greek Law 3655/2008, applicable from April 2008, the Bank's main pension plan and the main pension branch of Ethniki Hellenic General Insurance S.A.'s ("EH") post-employment and health plan, both of which are defined-contribution plans, have been incorporated into the main pension branch of the state-sponsored social security fund ("IKA - ETAM"). Pursuant to this legislation, the Bank will contribute into IKA - ETAM EUR 25.5 million per year for 15 years starting from December 2009.

        In addition, in 2005 and 2006, the Hellenic Republic passed legislation permitting bank employee auxiliary pension schemes to merge with the new Insurance Fund of Bank Employees ("ETAT"). The relevant legislation provides that, in connection with the merger of auxiliary schemes with ETAT, the relevant employer shall make a payment to ETAT solely in an amount to be determined by an

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independent financial report commissioned by the Ministry of Finance pursuant to this legislation. Subsequently, in April 2006 the Bank applied under Greek Law 3371/2005, as amended, to merge its Auxiliary Pension Fund into ETAT. Consequently, the Bank may have to contribute a significant amount to ETAT in relation to this merger.

        In addition, Greek Law 3863/2010 amended substantially the structure and operation of the Greek pensions system. These developments, as well as future interpretations of existing laws and any future legislation regarding pensions and pension liabilities or other post-employment benefit obligations, including those under the Program may increase the liability of the Bank or its subsidiaries with respect to pension and other post-employment benefit plan contributions to cover actuarial or operating deficits of those plans.

The Greek banking sector is subject to strikes which may adversely affect the Group's operations.

        Most of the Bank's employees belong to a union and the Greek banking industry has been subject to strikes over the issues of pensions and wages. Bank employees throughout the Hellenic Republic went on strike for 14 days in 2011. In 2012, Bank employees have gone on strike four days (through April 30, 2012), largely to express their opposition to the new austerity measures implemented in light of the Program. Greek bank unions in general participate in general strikes which have increased. Prolonged labor unrest could have a material adverse effect on the Bank's operations in the Hellenic Republic, either directly or indirectly, for example on the willingness or ability of the government to pass the reforms necessary to successfully implement the Program.

The value of certain financial instruments recorded at fair value is determined using financial models incorporating assumptions, judgments and estimates that may change over time or may not be accurate.

        In establishing the fair value of certain financial instruments, the Group relies on quoted market prices or, where the market for a financial instrument is not sufficiently active, internal valuation models that utilize observable financial market data. In certain circumstances, the data for individual financial instruments or classes of financial instruments utilized by such valuation models may not be available or may become unavailable due to changes in financial market conditions. In such circumstances, the Group's internal valuation models require the Group to make assumptions, judgments and estimates to establish fair value. In common with other financial institutions, these internal valuation models are complex, and the assumptions, judgments and estimates the Group is required to make often relate to matters that are inherently uncertain, such as expected cash flows. Such assumptions, judgments and estimates may need to be updated to reflect changing facts, trends and market conditions. The resulting change in the fair values of the financial instruments could have a material adverse effect on the Group's earnings and financial condition. Also, recent market volatility and illiquidity has challenged the factual bases of certain underlying assumptions and has made it difficult to value certain of the Group's financial instruments. Valuations in future periods, reflecting prevailing market conditions, may result in changes in the fair values of these instruments, which could have a material adverse effect on the Group's results, financial condition and prospects.

We are exposed to credit risk, market risk, liquidity risk, operational risk and insurance risk.

        As a result of our activities, we are exposed to a variety of risks. Among the most significant of these risks are credit risk, market risk, liquidity risk, operational risk and insurance risk. Failure to control these risks could result in material adverse effects on our financial performance and reputation.

        Credit Risk.    Credit risk is the risk of financial loss relating to the failure of a borrower to honor its contractual obligations. It arises in lending activities as well as in various other activities where we are exposed to the risk of counterparty default, such as our trading, capital markets and settlement

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activities. The risk of counterparty default is the largest single risk we face. Credit risk has increased significantly since September 2007.

        Market Risk.    Market risk is due to the uncertainty arising out of volatility in market prices and rates (including interest rates, equity and bond prices and foreign exchange rates). Changes in interest rate levels, yield curves and spreads may affect our net interest margin. Changes in currency exchange rates affect the value of assets and liabilities denominated in foreign currencies and may affect income from foreign exchange dealing. The performance of financial markets or financial conditions generally may cause changes in the value of our investment and trading portfolios. We have implemented risk management methods to mitigate and control these and other market risks to which our portfolios are also exposed (see Item 11 "Quantitative and Qualitative Disclosures about Market Risk"). However, it is difficult to predict with accuracy changes in economic or market conditions and to anticipate the effects that such changes could have on our financial performance and business operations.

        Liquidity Risk.    Liquidity risk is defined as the current or prospective risk to earnings and capital arising from the an entity's inability to meet its liabilities when they come due without incurring unacceptable losses. It reflects the potential mismatch of payment obligations to incoming payments, taking into account unexpected delays in repayments (term liquidity risk) or unexpectedly high payment outflows (withdrawal/call risk). Liquidity risk involves both the risk of unexpected increases in the cost of funding a portfolio of assets at appropriate maturities and rates, and the risk of being unable to liquidate a position in a timely manner on reasonable terms. The severity of pressure experienced by the Hellenic Republic in its public finances has restricted the access to markets for the Bank, which currently relies almost entirely on the ECB and central banks (see "—Risks Relating to the Hellenic Republic Economic Crisis—We are currently severely restricted in our ability to obtain funding in the capital markets and are heavily dependent on the ECB and central banks for funding and liquidity, which may be affected by changes in ECB and central banks rules relating to the eligibility of collateral such as Greek government bonds and guarantees", Item 5.B "Liquidity and Capital Resources" and Item 11"Quantitative and Qualitative Disclosures about Market Risk").

        Operational Risk.    Operational risk corresponds to the risk of loss due to inadequate or failed internal processes, or due to external events, whether deliberate, accidental or natural occurrences. Internal events include, but are not limited to, fraud by employees, clerical and record keeping errors and information systems malfunctions or manipulations. External events include floods, fires, earthquakes, riots or terrorist attacks, fraud by outsiders and equipment failures. Finally, we may also fail to comply with regulatory requirements or conduct of business rules.

        Insurance Risk.    The principal risk that the Group may face under its insurance policies is that the actual claims and benefit payments, or the timing thereof, differ from expectations. This could occur because the frequency or severity of claims is greater than estimated. Depending on the insurance product, this risk is influenced by macroeconomic changes, changes in customer behavior, changes in public health, pandemics and catastrophic events such as earthquakes, industrial disasters, fires, riots or terrorism.

        Although the Bank believes that its risk management and risk mitigation policies are adequate, our risk management processes may not prevent all instances of fraud. In addition, continuing volatility as a result of market forces out of our control could cause the Bank's liquidity position to deteriorate. Such deterioration would increase funding costs and limit the Bank's capacity to increase its credit portfolio and the total amount of its assets, which could have a material adverse effect on the Bank's business, results of operations and financial condition.

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We may not successfully complete all elements of our capital plan.

        We plan to limit our dependence on official support through the implementation of a capital plan already submitted to the Bank of Greece, for their approval. This capital plan includes a disposal of a minority stake in our subsidiary Finansbank, of which we own 94.81%, through an offering that may comprise both primary and secondary shares. We currently intend to complete this offering when market conditions are favorable; however, our decision to proceed with the offering and its timing are subject to various considerations, including market conditions, offer size and structure and obtaining all necessary regulatory and other approvals. NBG intends to retain a majority equity stake in Finansbank of at least 75%.

        In addition, we are considering the sale of a minority stake in a new subsidiary, currently in the process of being formed, to which we will transfer our SEE banking subsidiaries. Our decision to proceed with these offerings, as well as their related timing, are subject to various considerations, including market conditions, offer size and structure and our obtaining all necessary regulatory and other approvals. Further capital could be raised from the sale of non-core assets, which may include the Astir Palace Hotel, the bancassurance business in Turkey, as well as further initiatives in the area of asset and liability management.

        The successful implementation of these transactions is subject to market conditions. Should market unfavorable market conditions prevail, the completion of the capital plan could be delayed, may fail to achieve its objectives or may not be consummated.

Our economic hedging may not prevent losses.

        If any of the variety of instruments and strategies that we use to economically hedge our exposure to market risk is not effective, we may incur losses. Many of our strategies are based on historical trading patterns and correlations. Unexpected market developments therefore may adversely affect the effectiveness of our hedging strategies. Moreover, we do not economically hedge all of our risk exposure in all market environments or against all types of risk. For example, we are exposed to TL fluctuations and do not always economically hedge this exposure. Finally, the methodology by which certain risks are economically hedged may not qualify for hedge accounting, which may result in additional volatility in the Group's income statement. We have not hedged the sovereign credit risk of the Hellenic Republic.

The Bank's operational systems and networks have been, and will continue to be, vulnerable to an increasing risk of continually evolving cybersecurity or other technological risks which could result in the disclosure of confidential client or customer information, damage to the Bank's reputation, additional costs to the Bank, regulatory penalties and financial losses.

        A significant portion of the Bank's operations relies heavily on the secure processing, storage and transmission of confidential and other information as well as the monitoring of a large number of complex transactions on a minute-by-minute basis. The Bank stores an extensive amount of personal and client-specific information for its retail, corporate and governmental customers and clients and must accurately record and reflect their extensive account transactions. These activities have been, and will continue to be, subject to an increasing risk of cyber attacks, the nature of which is continually evolving.

        The Bank's computer systems, software and networks have been and will continue to be vulnerable to unauthorized access, loss or destruction of data (including confidential client information), account takeovers, unavailability of service, computer viruses or other malicious code, cyber attacks and other events. These threats may derive from human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure. If one or more of these events occurs, it could result in the disclosure of confidential client information, damage to the Bank's reputation with

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its clients and the market, additional costs to the Bank (such as repairing systems or adding new personnel or protection technologies), regulatory penalties and financial losses, to both the Bank and its clients and customers. Such events could also cause interruptions or malfunctions in the operations of Bank (such as the lack of availability of the Bank's online banking system), as well as the operations of its clients, customers or other third parties. Given the volume of transactions at the Bank, certain errors or actions may be repeated or compounded before they are discovered and rectified, which would further increase these costs and consequences.

        In addition, third parties with which the Bank does business under stringent contractual agreements, may also be sources of cyber security or other technological risks. The Bank outsources a limited number of supporting functions, such as printing of customer credit card statements, which results in the storage and processing of customer information. Although the Bank adopts a range of actions to eliminate the exposure resulting from outsourcing, such as not allowing third-party access to the production systems and operating a highly controlled IT environment, unauthorized access, loss or destruction of data or other cyber incidents could occur, resulting in similar costs and consequences to the Bank as those discussed above.

        While the Bank maintains insurance coverage that may, subject to policy terms and conditions, cover certain aspects of cyber risks such as fraud and financial crime, such insurance coverage may be insufficient to cover all losses.

The Hellenic Republic and state-related entities may have an important influence on the Bank.

        In 2008, the Greek Parliament approved the Hellenic Republic Bank Support Plan, in response to the difficult funding conditions in 2008. The Greek Parliament originally approved for EUR 28 billion in 2008 and augmented the Hellenic Republic Bank Support Plan by EUR 40 billion in 2010 and another EUR 30 billion in 2011. The Hellenic Republic Bank Support Plan, as amended, comprised three tranches or pillars:

    Pillar I: up to EUR 5 billion in preference share capital designed to increase Tier I ratios of participating banks, see Item 5.B, "Liquidity and Capital Resources—Financing Under the Hellenic Republic Bank Support Plan";

    Pillar II: up to EUR 85 billion in Hellenic Republic guarantees for short-term borrowings of participating banks (originally only EUR 15 billion); and

    Pillar III: up to EUR 8 billion in short-term debt floating rate notes issued to the participating banks by the Public Debt Management Agency.

        As at April 27, 2012, the Hellenic Republic directly owns all 270 million non transferable redeemable preference shares issued by NBG under the capital facility of the Hellenic Republic Bank Support Plan. This direct stake in NBG provides the Hellenic Republic with voting rights at the general meeting of preferred shareholders and requires the participation on the Board of Directors of NBG of a Government appointed representative, who attends the General Meeting. In certain circumstances, this representative has the ability to veto actions relating to strategic issues or decisions for which the General Meeting is otherwise competent, such as the distribution of dividends and the remuneration of NBG's directors and senior management. By its letter dated October 11, 2010 regarding NBG's rights offering initiated by the September 10, 2010 decision of its Board of Directors, the Hellenic Republic exercised in full its pre-emptive right arising from its holding of preference shares to subscribe for new shares and convertible equity notes that would not be subscribed for by holders of rights and their transferees, equal to approximately 10.3%. Consequently, the Hellenic Republic directly holds 1.23% of the Bank's ordinary shares. (see Item 4.B, "Information on the Company—Business Overview—Regulation and Supervision of Banks in Greece—The Hellenic Republic Bank Support Plan"). NBG also participates in the Pillar II and Pillar III of the Hellenic Republic Bank Support Plan.

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        In addition, the Hellenic Republic may exercise a degree of indirect influence on us, through certain state-related entities (primarily pension funds, most of whose boards of directors are appointed by the Hellenic Republic). As of December 31, 2011, various domestic pension funds owned approximately 16.4% of our share capital, and other domestic public sector related legal entities and the Church of Greece owned approximately 7.5% of our share capital. If there is not a full voting participation by all of our other shareholders at a given shareholders' meeting, these state-related entities, despite holding a non-controlling level of our total shares, may have a voting majority at such meeting (see Item 7.A, "—Major Shareholders—State Interests").

        There is a risk that the Hellenic Republic might seek to exert influence over the Group and may disagree with certain decisions of the Bank and the Group relating to dividend distributions, benefits policies and other commercial and management decisions which may ultimately limit the operational flexibility of the Group.

        If economic conditions do not improve or continue to deteriorate, or if the financial position of the Group deteriorates, further government or inter-governmental intervention may take place in addition to the amounts already contemplated through the HFSF. Any further government or inter-governmental intervention, including through the HFSF, may have a material adverse effect on the interests of other holders of our securities, results of operations and financial condition. Capital shares issued under the HFSF will provide it with significant management powers (see Item 4.B, "Business Overview—Regulation and Supervision of Banks in Greece").

        Furthermore, the Hellenic Republic also has interests in other Greek financial institutions and an interest in the health of the Greek banking industry and other industries generally, and those interests may not always be aligned with the commercial interests of the Group or its shareholders. An action supported by the Hellenic Republic may not be in the best interests of the Group or its shareholders generally.

Our loan portfolio may continue to contract.

        In the current economic environment, our Greek loan portfolio may continue to decline, and our foreign loan portfolio may not grow at historic rates or may even decline. Furthermore, there are a limited number of high credit quality customers to whom banking services may be provided in our target markets. Developments in our loan portfolio will be affected by, among other factors, the health of the Greek economy in light of the economic crisis and the Program. The continuing decline in our loan portfolio, in combination with non-performing loans, may limit our net interest income, and this could have a material adverse effect on our business, results of operations and financial condition.

We could be subject to additional taxes.

        Due to the uncertainty regarding the success of the Program, new taxes may be imposed on the Group, such as the "one-off" taxation on profitable companies, and existing taxes may be increased. In 2010, the Group was subject to a EUR 79.1 million windfall tax, which comprised of a tax on 2009 earnings of EUR 26.1 million and a reversal of a tax credit from withholding tax of EUR 53.0 million relating to interest income from bonds. In addition, at the European Council Summit held on June 17, 2010, representatives agreed that member states should introduce a system of levies and taxes on financial institutions to promote an equitable distribution of the costs of the global financial crisis. Any additional taxes imposed on us in the future may have a material adverse effect on our business, results of operations and financial condition.

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Risks Relating to the Restatement

In connection with the restatement of our previously reported financial statements, we may be subject to the risk of litigation or regulatory proceedings or actions.

        We have restated our previously reported financial statements for the years ended December 31, 2007, 2008, 2009 and 2010 as described in detail in Note 43 to the U.S. GAAP Financial Statements. Consequently, we may be subject to class action lawsuits or regulatory proceedings or actions relating to the restatement of our financial statements. We may incur substantial legal and accounting expenses in connection with the restatement. In addition, should any litigation or regulatory actions occur, it may be time consuming and distract certain management personnel from performing their daily operational duties.

Material weakness in our disclosure controls and procedures could negatively affect shareholder and customer confidence towards our financial reporting and other aspects of our business.

        As described above, we have restated our previously reported financial statements for the years ended December 31, 2007, 2008, 2009 and 2010, as described in detail in Note 43 to the U.S. GAAP Financial Statements.

        The Public Company Accounting Oversight Board's Auditing Standard No. 5—"An Audit of Internal Control Over Financial Reporting that is integrated with An Audit of Financial Statements" specifies that the restatement of previously reported financial statements to reflect the correction of a misstatement should be regarded as at least a significant deficiency and as a strong indicator that a material weakness in internal control over financial reporting exists. We considered this guidance, applied our judgment in assessing the reason why a restatement was necessary, taking into account the high uncertainty created by the rapidly evolving economic crisis in Greece and concluded that a material weakness in our internal control over financial reporting existed with regards to the credit value adjustment following the revision of our assumption methodology relating to the impact on the Group of credit risk on derivatives (for both counterparty and own risk) and that, as a result, our disclosure controls and procedures were not effective as of December 31, 2011. See Item 15 "Controls and Procedures—Management's Annual Report on Internal Control over Financial Reporting".

        The existence of that material weakness could negatively affect shareholder and customer confidence towards our financial reporting and other aspects of our business. Furthermore, further and continued determinations that there are material weaknesses in the effectiveness of our material controls would also reduce our ability to obtain financing or could increase the cost of any financing we obtain and require additional expenditures of both money and management's time to comply with applicable requirements. We have initiated remedial steps to address this material weakness in our internal control over financial reporting.

Risks Relating to the Markets

Exchange rate fluctuations could have a significant impact on the value of our shares.

        The market price of our shares traded on the ATHEX is denominated in euros. Fluctuations in the exchange rate between the euro and other currencies may affect the value of the Bank's shares in the local currency of investors in the United States and other countries that have not adopted the euro as their currency. Additionally, any cash dividends on our ordinary shares are paid in euros and, therefore, are subject to exchange rate fluctuations when converted to an investor's local currency, including U.S. dollars.

The ATHEX is less liquid than other major exchanges.

        The principal trading market for our ordinary shares is the ATHEX. The ATHEX is less liquid than other major stock markets in Western Europe and the United States. As a result, shareholders

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may have difficulty assessing the past performance of the ordinary shares based on our prior trading record on the ATHEX. In 2011, the average daily trading value on the ATHEX was approximately EUR 82.4 million, while in the first four months of 2012 it was approximately EUR 54.1 million. In comparison, the average daily trading value on the London Stock Exchange was approximately GBP 3.7 billion in 2011.

        As at December 30, 2011, the aggregate market value of all shares listed on the ATHEX was approximately EUR 27.5 billion, while as at April 30, 2012 it was approximately EUR 27.5 billion. The market value of our ordinary shares listed on the ATHEX on December 30, 2011 and April 30, 2012, was EUR 1.5 billion and EUR 1.6 billion, representing approximately 5.6% and 5.8%, respectively, of the capitalization of all companies listed on the ATHEX. We cannot make assurances about the future liquidity of the market for our shares.

Our share price has been, and may continue to be, volatile.

        The market price of our shares has been subject to significant volatility in the past, and could be subject to wide fluctuations in response to numerous factors, many of which are beyond our control. These factors include the following:

    the overall condition of the Greek economy and budget deficit;

    the perceived stability of the European Monetary Union;

    the condition of the Turkish and other economies in which we do business;

    actual or anticipated fluctuations in our operating results;

    results of operations of our competitors;

    potential changes in banking regulatory regimes;

    potential or actual sales of large amounts of the Bank's shares into the market;

    changes in financial estimates by securities analysts;

    conditions and trends in the banking sector in Greece and elsewhere in Europe; and

    the general state of the securities markets (with particular emphasis on the Greek, Turkish, other SEE and financial services sectors).

        For the annual high and low market prices of the Bank's shares on the ATHEX for the five most recent financial years see Item 9.A, "Offer and Listing Details".

The exercise of pre-emptive rights may not be available to U.S. holders of the Bank's ordinary shares and American Depositary Receipts.

        Under Greek law and our Articles of Association, prior to the issuance of any new ordinary shares, we must offer holders of our existing ordinary shares pre-emptive rights to subscribe and pay for a sufficient number of ordinary shares to maintain their existing ownership percentages. These pre-emptive rights are generally transferable during the rights trading period for the related offering and may be traded on the ATHEX.

        Holders in the United States of the Bank's ordinary shares and American Depositary Shares evidenced by ADRs may not be able to exercise pre-emptive rights for any such offering of shares unless a registration statement under the U.S. Securities Act of 1933, as amended ("Securities Act"), is effective with respect to such rights or an exemption from the registration requirements of the Securities Act is available. Our decision to file a registration statement with respect to any future offering will depend on the costs and potential liabilities associated with any such registration statement, as well as the perceived benefits of enabling U.S. holders of ordinary shares and ADRs to exercise their pre-emptive rights and any other factors we may consider appropriate at the time.

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        If holders in the United States of the Bank's ordinary shares and ADRs are not able to exercise pre-emptive rights granted in respect of their shares in any rights offering by us, they might not receive the economic benefit of such rights. In addition, their proportional ownership interests in the Bank will be diluted.

ITEM 4    INFORMATION ON THE COMPANY

        

A.    History and Development of the Company

History and Development of the NBG Group

        National Bank of Greece S.A. was founded in 1841 and incorporated as a société anonyme pursuant to Greek law. Our current corporate form will expire on February 27, 2053, but may be further extended by a shareholder resolution passed at the General Meeting. The Bank's headquarters and our registered office are located at 86 Eolou Street, 10232 Athens, Greece. The telephone number of the Bank is (+30) 210 334 1000. The Bank's agent for service of process in the United States is Corporation Service Company, 1180 Avenue of the Americas, Suite 210, New York, NY 10036.

        The Bank has operated a commercial banking business for 171 years. Since our founding, our business has expanded to become a large, diversified financial services group. As part of our diversification, the Bank founded EH in 1891. Until the establishment of the Bank of Greece as the central bank of Greece in 1928, the Bank, in addition to commercial banking activities, was responsible for issuing currency in Greece.

Acquisitions, Capital Expenditures and Divestitures

        In 2006, we undertook our largest international acquisition to date. On August 18, 2006, we acquired 46% of the ordinary shares and 100% of the founder shares in Finansbank, a commercial and retail bank in Turkey, from Fiba Holding A.S., Fina Holding A.S., Girisim Factoring A.S. and Fiba Factoring Hizmetleri A.S. (together, the "Fiba Sellers") for a consideration of US$2,323 million and US$451 million for ordinary shares and founder shares, respectively. In order to finance our acquisition of Finansbank, we increased our share capital through a rights issue in July 2006 by payment in cash with pre-emptive rights to our existing shareholders at a ratio of four new shares for every ten shares. The Fiba Sellers retained a residual stake of 9.68% in the ordinary share capital of Finansbank, which was subject to a call option exercisable by us, and a put option (to us) exercisable by the Fiba Sellers for a period of two years commencing on the second anniversary of the initial acquisition. As a result of Turkish capital markets legislation, the Bank made a mandatory offer to the minority shareholders of Finansbank. During the mandatory tender offer period between January 8 and January 29, 2007, the Bank acquired a further 43.44% of Finansbank's outstanding ordinary shares, for a consideration of EUR 1,733 million, through the Istanbul Stock Exchange ("ISE"). On April 5, 2007, we disposed of 5% of Finansbank's share capital to the International Finance Corporation ("IFC"). This shareholding remains subject to a call option exercisable by us, and a put option (to us) exercisable by the IFC within seven years (See Item 10.C, "Material Contracts"). Following the completion of the mandatory tender offer and the sale of shares to the IFC, we have proceeded to acquire further outstanding ordinary shares in Finansbank. On August 19, 2008, we accepted the proposal of Fiba Holding to acquire the remaining shares of Finansbank held by the Fiba Sellers (9.68%). The exercise price was determined in accordance with the agreement and amounted to US$697 million. Currently we hold 94.81% of Finansbank's outstanding share capital (a 5% stake held is by the IFC and subject to the put and call options). Non-controlling interests ("NCI") that are subject to put options held by third parties are accounted for as described in Note 3 to the U.S. GAAP Financial Statements.

        Since March 2009, the Bank consolidates Titlos Plc, a variable interest entity established in the UK, for the purpose of the securitization of Greek State loans and receivables, in which the Bank has a beneficial interest;

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        On May 19, 2009, the Bank established Ethniki Factors S.A., a wholly owned subsidiary.

        On June 8, 2009, Finansbank established Finans Faktoring Hizmetleri A.S., (Finans Factoring) a wholly owned subsidiary.

        In June 2009, the Bank participated in the one-for-one share capital increase in the Hellenic Postal Savings Bank (PSB), thus acquiring 9,420,000 new shares in PSB. Furthermore, during 2009 the Bank acquired additional 200,000 shares, via the ATHEX, raising its total shareholding to 6.69%.

        On July 31, 2009, the Bank and TOMI S.A. of ELLAKTOR Group entered into a private agreement to acquire joint control of AKTOR FM, through the Bank's acquisition of a non-controlling interest in AKTOR FM. On January 18, 2010, the Bank acquired 53,846 new ordinary registered shares at their nominal value of EUR 3.0 per share, paying a consideration of EUR 161.5 thousand each in cash and currently owns 35% of the share capital.

        In September 2009 the Bank established NBG Pangaea Real Estate Investment Company ("NBG Pangaea"), a newly formed real estate investment company wholly owned by the Bank. NBG contributed to NBG Pangaea 241 properties, in lieu of cash for share capital. The net book value of these properties as at December 31, 2009 was EUR 164.8 million.

        On September 15, 2009, the Group disposed of its investment in Phosphoric Fertilizers Industry S.A. for a consideration of EUR 18.9 million, of which EUR 2.6 million has been deposited in an escrow account up to September 15, 2011, to set off contingent liabilities. Up to September 15, 2011, no contingent liability had arisen and the escrow account was subsequently released. The loss on sale for the Group was EUR 10 million.

        On October 14, 2009, the Bank partially participated in the share capital increase of its associate Larco S.A. The Bank's contribution amounted to EUR 20.5 million and after the completion of the share capital increase, the Bank's participation was reduced from 36.43% to 33.36%.

        On October 16, 2009, United Bulgarian Bank (UBB) established UBB Factoring EOOD, a wholly owned subsidiary of UBB.

        On January 14, 2010, an extraordinary General Meeting of the Bank approved the contribution of real estate property of the Bank with a carrying amount of EUR 168.4 million to NBG Pangaea.

        On August 17, 2010, the Bank acquired 21.6% of Stopanska Banka AD—Skopje, from European Bank for Reconstruction and Development ("EBRD") and IFC, possessing 10.8% shareholding each, through put and call arrangements as provided for in the 2001 shareholders agreement, between the Bank and EBRD and IFC, for the acquisition of Stopanska Banka AD—Skopje. The total consideration paid amounted to EUR 35.2 million.

        On September 3, 2010, Banca Romaneasca S.A. established NBG Factoring Romania IFN S.A. Banca Romaneasca S.A. owns 99% and NBG Leasing IFN S.A. owns 1% of the new company.

        On November 4, 2010, following a decision of Finansbank's Board of Directors on August 2, 2010, the share capital of the Finansbank was increased by TL 551.3 million (TL 547.1 million in cash and TL 4.1 million by capitalization of reserves). The cash contribution by the Group amounted to TL 518.7 million and covered by the proceeds from repayment by Finansbank of subordinated debt amounting to TL 495.8 million (USD 325 million) and cash payments by the reinvestment of the dividend received TL 22.9 million.

        During December 2010, Finans Invest acquired 5.11% of Finans Finansal Kiralama A.S. (Finans Leasing), a listed subsidiary company in ISE, from the market with a cost of TL 20.5 million. Prior to this, on August 13, 2010, the Bank had increased its shareholding in Finans Leasing, through a public offer, pursuant to which the Bank acquired 27.3% of the share capital for EUR 42.3 million (TL 81.7 million). After these acquisitions the NBG Group owns 90.9% of Finans Leasing.

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        On June 29, 2011, the Bank acquired 49.9% of CPT Investments Ltd from Credit Suisse A.G. The total consideration amounted to EUR 587.8 million of which amount of EUR 42.9 million was paid in cash. The remaining amount of EUR 544.9 million related to waiver of debt from Credit Suisse A.G.

        On September 19, 2011 the Bank established the variable interest entity SPITI PLC in the UK, for the securitization of mortgage loans in which the Bank has a beneficial interest.

        On September 22, 2011 the Bank established the variable interest entity AGORAZO PLC in the UK, for the securitization of consumer loans in which the Bank has a beneficial interest.

        On September 22, 2011 the Bank established the variable interest entity AUTOKINITO PLC in the UK, for the securitization of car loans in which the Bank has a beneficial interest.

        On December 12, 2011, following a decision of Finansbank's Board of Directors of August 4, 2011, the share capital of the Finansbank was increased by TL 120.0 million (TL 116.3 million in cash and TL 3.7 million by capitalization of reserves). The cash contribution by the Group amounted to TL 110.3 million and was covered by the reinvestment of the dividend received.

        During 2011 Finansbank disposed of 20.88% of its participation in Finans Yatirim Ortakligi A.S. (Finans Investment Trust) for TL 5.0 million. Prior to this, in April 2010, Finansbank had disposed of 10.73% of its participation in Finans Investment Trust for TL 2.7 million. After these transactions the Group owns 52.1% of the entity.

        The table below sets out the Group's principal items of capital expenditure for 2009, 2010 and 2011.

 
  Year ended December 31,  
Type of Capital Expenditure
  2009   2010   2011  
 
  (EUR in millions)
 

Interests in other companies

    19.6 (1)   133.3 (2)   104.8 (3)

Information technology and other electronic equipment

    70.8     86.9     60.7  

Land and buildings

    41.1     60.2     96.5  

Leasehold improvements

    27.5     21.1     25.3  

Furniture, fixtures, machinery and vehicles(4)

    144.3     100.2     101.0  
               

Total

    303.3     401.7     388.3  
               

(1)
Principally representing the participation in the share capital increase of NBG Finance (Sterling) Plc and NBG Finance (Dollar) Plc.

(2)
Principally representing the acquisition of 21.6% of Stopanska Banka AD—Skopje, from EBRD and from IFC, the acquisition of 27.3% of Finans Finansal Kiralama A.S. (Finans Leasing) and the participation in the capital increases of NBG Finance (Sterling) Plc and NBG Finance (Dollar) Plc.

(3)
Principally representing the participation in the capital increases of NBG Finance (Sterling) Plc and NBG Finance Plc.

(4)
"Furniture, fixtures, machinery and vehicles" domestically and abroad also include other capital expenditures that mainly relate to assets under construction and assets under operating leasing.

        Also, as part of our strategy to streamline our operations, we continue to divest, if market conditions are favorable, non-core equity investments and real estate assets that are unrelated to our principal financial services business and to commit these released resources to more profitable activities.

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        The table below sets out the Group's principal divestitures for 2009, 2010 and 2011.

 
  Year ended December 31,  
Type of Divestiture
  2009   2010   2011  
 
  (EUR in millions)
 

Investments(1)

    17.9     0.1      

Real estate(2)

    21.0     6.8     15.5  

(1)
During 2009, the Group disposed of 20% of its participation in Social Securities Funds Management S.A., reducing its participation from 40% to 20% for EUR 1.3 million and disposed of its investment in Phosphoric Fertilizers Industry S.A. for EUR 18.9 million, EUR 2.6 million of which has been deposited in an escrow account to set off contingent liabilities. During 2010, the Group disposed of a percentage of 2.01% of its indirect participation in Europa Insurance Co for EUR 0.1 million.

(2)
Represents disposals of real property that was acquired by the Group primarily through foreclosure proceedings, as well as real estate previously used by Group companies. These properties were primarily located in Greece.

B.    Business Overview

Introduction

        We are the largest financial institution in Greece by market capitalization, holding a significant position in Greece's retail banking sector, with more than 11 million deposit accounts, more than three million lending accounts, 539 branches and 1,398 ATMs as at December 31, 2011. Our core focus outside of Greece is in Turkey and SEE, where we currently operate in Bulgaria, Serbia, Romania, Albania, Cyprus and FYROM. We offer our customers a wide range of integrated financial services, including:

    corporate and investment banking;

    retail banking (including mortgage lending);

    leasing and factoring;

    stock brokerage, asset management and venture capital;

    insurance; and

    real estate, hotel and consulting services.

        The Bank is our principal operating company, representing 67.5% of our total assets as at December 31, 2011. The Bank's liabilities represent 76.4% of our total liabilities as at December 31, 2011. While the Bank conducts most of our banking activities, it is supported by eight non-Greek banking subsidiaries: Finansbank A.S. ("Finansbank"), United Bulgarian Bank AD—Sofia ("UBB"), Vojvodjanska Banka A.D. Novi Sad ("Vojvodjanska"), Banca Romaneasca S.A. ("Banca Romaneasca"), Stopanska Banka A.D.—Skopje ("Stopanska Banka"), the National Bank of Greece (Cyprus) Ltd. ("NBG Cyprus"), South African Bank of Athens Ltd. ("SABA") and NBG Bank (Malta) Ltd. ("NBG Malta"). We intend to continue to expand our operations in SEE and the Southeastern Mediterranean region when conditions permits it.

        We hold leading positions in many financial services products in Greece. As at December 31, 2011, we had the largest market share of deposits and mortgage loans in Greece, with 30.8% in core deposits and 25.1% in mortgage lending, respectively, according to our internal analysis of published information of the Bank of Greece and other Greek banks. We are also strongly positioned in consumer and credit card lending, where, according to our internal analysis of information published by the Bank of Greece, we are first with a market share of 19.2% as at December 31, 2011. We are also second in mutual fund management with a market share of 17.4% as at the same date according to Hellenic Fund and Asset Management Association.

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        For a breakdown of our total revenues by category of activity and geographic market, see Item 5.A, "Operating Results—Segment Information".

Banking Activities in Greece

        Most of our banking business is domestic and includes retail, corporate and investment banking. The Group's Greek banking operations account for 69.9% of our total lending activities as at December 31, 2011 the ("Greek Banking Loans" and "Greek Banking Deposits"). Banking activities in Greece includes the Bank's domestic operations, Ethniki Leasing S.A. ("Ethniki Leasing") and Ethniki Factors S.A. ("Ethniki Factors"). In this section, "—Banking Activities in Greece", financial information pertaining to the Bank relates to banking activities in Greece.

        The following table sets forth details of the Greek Banking loans and deposits as at December 31, 2011:

 
  Loans   Deposits  
 
  Amount   Amount  
 
  (EUR in millions)
 

Commercial and Retail(1)

    44,415     39,151  

Public Sector

    8,711     2,094  

(1)
Retail loans include consumer loans, personal loans, mortgages, automobile financing and credit cards.

        We believe that the Bank has a significant advantage in attracting domestic deposits from retail and corporate clients due to the:

    wide coverage of the Bank's domestic branch network;

    respected status of the Bank's brand name among a large segment of the population; and

    broad range of services and products offered by the Bank.

        The chart below indicates the fluctuations in Greek Banking loans and Greek Banking deposits excluding interbank deposits attributable to the Bank from December 31, 2009 through December 31, 2011.


Greek Banking Loans and Deposits

GRAPHIC

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Greek Banking Distribution Channels

        As at December 31, 2011, we operated in Greece through 539 branches, one private banking unit, one unit for financial institutions and seven specialized banking units that deal exclusively with troubled and non-performing loans. As at December 31, 2011, we had 1,398 ATMs, of which at least 573 were situated in key locations such as supermarkets, metro stations, shopping centers, hospitals and airports (42% of our ATMs are equipped with cash deposit devices). During 2011, the total number of ATM transactions reached approximately 101 million with a total value of approximately EUR 18 billion. In addition, we have developed alternative distribution channels, such as an e-banking platform targeted at both corporate and retail clients. During 2011, the total number of phone and internet banking users increased by 13%, reaching approximately 574 thousand, out of which 364 thousand were also phone banking users. The total number of electronic transactions during 2011 was approximately 44.7 million with a total value of approximately EUR 17 billion. We operate a contact center, through which the Bank provides information and transaction services through the use of a voice portal and a manned help desk, which began operation in 2007. In 2011, we launched three new "i-bank" stores (two in Athens and one in Thessaloniki) which offer all i-bank services (internet, mobile and phone banking, ATM and APS) and where we also host entertainment and educational events. In their first year of operation, "i-bank" stores accepted over 400,000 visitors.

        The Bank's branches are located in almost every major city and town in Greece. Approximately 42% of the Bank's branches are located in Attica and Thessaloniki prefectures, the major population centers in Greece. The Bank is engaged in a continuous process of rationalizing the organization of its branch network in order to reduce costs, primarily by centralizing back-office functions to free more employees to work on sales activities directly with customers. In addition, the Bank is continuing to consolidate redundant branches in order to maintain equivalent geographic coverage at a lower cost. As at December 31, 2011, the Bank operated 232 full banking branches and 307 retail banking branches.

        We participate in DIAS Interbanking Systems S.A., which currently has 41 banks as shareholder-participants, including the Bank. DIAS Interbanking Systems provides interbank services such as check clearing, ATM networking, fund transfers and payroll and pension services for the benefit of customers of shareholder-participants.

        We use a variety of marketing channels to maintain and enhance our market position, including telemarketing (particularly for credit card sales and consumer loans), radio, television, press and internet advertising and distributing promotional information brochures in our branches. As part of our marketing strategy, we seek to capitalize on our existing relationships with individual customers through cross-selling efforts aimed at increasing such customers' awareness of other products that are offered by Group companies. For instance, our mortgage customers are informed of our insurance products, through which they may insure against damage to their property and against events and circumstances that might cause them to default on their mortgage loans. Our marketing strategy also includes indirect marketing, pursuant to which we have entered into agency agreements with retailers, such as automobile dealers and electronics chain stores, who agree to offer our consumer loan products to their customers in connection with purchases of consumer goods.

        In addition, we employ various alternative distribution methods, such as cooperation with real estate agents and construction businesses in the sale of mortgage loans and with accountants and consultants in the sale of small business loans. We have also entered into contractual arrangements with mobile telephone service providers in Greece that enable us to offer to our customers certain banking services, such as balance inquiries, through their mobile telephones. We provide certain banking services over the internet, including the transfer of funds between accounts, balance inquiries, bill payments, stock brokerage services and subscriptions to initial public offerings on the ATHEX.

        We have also introduced "i-bank", a web-based portal which allows our clients to select the ideal place and method to transact with the Bank in order to achieve immediate and reliable service at low cost. Our "i-bank" is being implemented at Group level in all countries in which we operate, which will create convergence across our distribution channels through the utilization of a common platform for trans-border products and services.

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Savings and Investment Products

        Savings and investment products of the Bank are offered both in euro and in other currencies. In response to customer demand, the Bank offers investment products with high yields. These products include repurchase agreements between the Bank and our clients (backed by Greek government bonds), Greek government bonds from the Bank's proprietary portfolio, capital guaranteed principal products and a wide range of mutual funds and unit trust products provided by NBG Asset Management Mutual Funds S.A. ("NBG Asset Management"), which is 100% owned by Group companies. See Item 4.B, "Business Overview—Banking Activities in Greece—Global Markets & Asset Management".

Payment Services

        We offer payment services to our clients participating in all local interbank payment channels. We are also a direct member of the euro interbank channels of TARGET, TARGET2, EBA for Euro 1, Step 1 and Step 2. As a member of Step 2, the Bank is the main Greek entry point for eurozone payments. For payments, especially outside the eurozone, the Bank maintains a global network of correspondent banks. The Bank has completed the centralization of its payment operations. Our Cash Management product offering in Greece leverages extensively the Bank's branch network in providing our customers with on-line transaction processing particularly as regards electronic collection services.

Retail Banking

        All of our retail banking activities in Greece are conducted by the Bank. The Bank offers retail customers a number of different types of deposit and investment products, as well as a wide range of traditional services and products.

        As a result of the economic crisis, we have adopted a more conservative approach to new consumer lending, with a greater emphasis on risk-averse lending criteria. As a result, we experienced a reduction in balances in 2011, and we also expect slower credit expansions across each of our products in 2012, also in line with the current market conditions.

        The following table illustrates our estimated market share in Greece for certain categories of retail banking activities as at the dates indicated:

 
  As at
December 31,
 
 
  2010   2011  

Mortgage lending (balances)

    25.4 %   25.1 %

Consumer loans and credit cards (balances)

    19.6 %   19.2 %

Core deposits(1)

    29.5 %   30.8 %

(1)
Core deposits consist of sight deposits and savings accounts and exclude repos and time deposits.

        We believe our strong corporate image and name recognition in Greece, our large customer base and our extensive network of branches and ATMs are advantages that will facilitate the Bank's access to the largest and most diverse depositor base in Greece, providing the Bank with a large, stable and low-cost source of funding.

Consumer Lending Products

        The Bank's objective for 2011 was to continue supporting customers experiencing difficulties in the smooth repayment of their obligations, through the improvement of solutions for debt restructuring, depending on each customer's needs and repayment ability. At the same time and despite the economic crisis, the Bank maintained its strong position in consumer retail banking by offering a wide range of consumer finance solutions to financially healthy customers. The Bank is among the most active credit

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card issuers in Greece, having circulated approximately 735 thousand cards and managing a total credit card portfolio of EUR 1.5 billion as at December 31, 2011.

        During 2011, the Bank focused on restructuring consumer loans and deleveraging the portfolio, targeting financially healthy customers for new loans and simplifying as well as strengthening credit processing. In particular, the Bank focused on implementing more stringent credit criteria as well as a more effective and targeted portfolio management. The Bank has also modified the way in which it grants loans and takes on new customers by targeting customers that plan to invest rather than consume. The offer of green loan products was enhanced through the accomplishment and extension of various agreements with retail companies specialized in providing innovative technology solutions for energy saving. In addition, the Bank participated in major exhibitions about Environmental Technologies, Energy Saving and Renewable Energy Sources in order to communicate the Bank's series of green products. The Bank continues participating successfully in the "Energy Saving at Home" program managed by Institute of Financing Small & Very Small Sized Enterprises ("ETEAN S.A. former TEMPE S.A.), supporting the goal for energy efficiency and use of renewable energy sources.

        Consumer and credit card portfolio restructuring products are addressed mainly to customers with at least one consumer loan or credit card in delinquency for at least 90 days. Under the restructuring all consumer loan and credit card debt is consolidated into a single fixed-term consumer loan, even if certain of the consumer loans and/or credit cards have less than 90 days delinquency. The standard terms of these products include (i) a grace period of 18 months, during which the customer pays only interest, (ii) a reduction of up to 50% of the interest accrued off-balance sheet since a loan or credit card was placed in non-accrual status and (iii) a down payment by the customer equal to one installment. The interest rate on the new loan may be reduced and/or the duration may be extended if the borrowers are willing and able to secure their consumer loan and credit card debt with real property or provide an additional down payment. The maturity of these restructured products varies from 10 to 20 years.

        Currently the average duration of the restructured fixed-term consumer loan portfolio is approximately 10 years, while their average interest rate is 9.7% as at December 31, 2011. In 2011, more sophisticated products with a reduced installment amount have also been introduced making the service of all kinds of distress possible.

        The Group classifies modified consumer loans and credit cards as Troubled Debt Restructurings ("TDRs") when, for economic or legal reasons related to the debtor's financial difficulties, the Group grants a concession to the debtor that it would not otherwise consider. In relation to the above restructuring products, the Group considers that the reduction of off-balance sheet interest represents a concession because it causes a direct economic loss for the Group that it would not otherwise consider. By contrast, the lower interest rate and extended maturity is offered only to customers that provide real property as collateral and/or additional down payment, thus mitigating our risk exposure, and for this reason these modifications are not deemed concessions. Consequently, typically the Group classifies as TDRs consumer and credit card balances that have been non-accruing, at the time of the restructuring and, as a result, off-balance sheet interest is waived.

        Our basic goal for 2012 is to strengthen the conditions that help keep its loan book robust under the particularly adverse macroeconomic conditions currently prevailing.

Mortgage Lending

        The year 2011 was a year of deep recession in the Greek economy, marked by low personal incomes, high unemployment, heavier taxation especially in the real estate sector and particularly low construction activity. In this difficult environment, the number of housing transactions declined by 44% and house prices by 5.3% (Source: Bank of Greece_Bulletin of Conjunctural Indicators), following prior falls in house prices by 4.4% in 2010 and 4.3% in 2009. Notwithstanding the above, the housing

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market is not considered to be overpriced, since the decline in house prices over the last three years was rather moderate and gradual, a trend that is expected to continue in the near future.

        Since the beginning of 2009, apartment prices in Greece have declined. In 2011, apartment prices decreased by 5.1% on an average annual basis compared to a 4.7% decrease in 2010 and a 3.7% decrease in 2009. The new index of apartment prices (Index 2007=100) has declined to 85.5 at the end of 2011, compared to 90.9 at the end of 2010, 97.7 at the end of 2009 and 101.8 at the end of 2008 (source: Bank of Greece, Real Estate Market Analysis department report, Table II.6. New Index of apartment prices by age). It should be noted that the real estate market in Greece is considered to have long-term investment-type characteristics since the property is transferred from one generation to another, in order to meet housing needs. In addition, the high costs of property transactions, including fees and taxes, has an adverse effect in housing activity, thus limiting volatility in house prices.

        During 2011, mortgage lending in Greece declined faster compared to 2010, at an annual rate of around 3%. The Bank balances followed the same trend, reaching EUR 18.7 billion at the end of 2011, compared to EUR 19.5 billion as at December 31, 2010, posting a decrease of 4.0% and constituting 35.3% of its total lending to enterprises and households in Greece. Nevertheless, the Bank managed to maintain leadership in the market, with a share of 25.1%. In Greece, 10.6% of our mortgage portfolio carries an interest rate subsidy, either by the State or the Social Housing Organization (O.E.K.), and another 7.5% is fully guaranteed by the Hellenic Republic. Most of these programs, with the exception of mortgages subsidized by the State, were inactive or discontinued, even before 2010. The volume of new mortgage loan disbursements amounted to EUR 298 million in 2011, compared to EUR 1.4 billion in 2010.

        During 2011, new mortgage lending was limited to EUR 298 million, and was subject to more stringent lending criteria. The average Loan-to-Value ("LTV") fell to less than 64% and Payment-to-Income ("PTI") fell to 25%, compared to a maximum limit of 40% set by the Bank of Greece. The Bank followed conservative selection criteria, with an approval rate at 35%, compared to 49% in 2010. The vast majority of these loans were granted through the Bank's branch network, with very limited participation of third parties, reflecting the Bank's new policy. Pricing became more expensive as in 2011 average spread rose to 341 basis points, from 259 bps in 2010 and 224 bps in 2009. Around 46% of new production was of a fixed interest rate type and 54% floating, with maximum duration 30 years. For further information regarding the underwriting criteria of the mortgage loan products, see Item 4.E, "Information on the Company—Selected Statistical Data—Credit Quality—Risk Management—Loan Approval Process—Retail Banking—Mortgage Loans".

        Since 2010, the Bank's attention has been mainly focused on proactively dealing with customers who currently face financial difficulty in serving their mortgage in accordance with contractual terms. For loans in delinquency for over 90 days, a number of modification programs was applied, offering, in addition to maturity extension (i) a 24 month interest-only period and (ii) a reduction of up to 30% of the interest accrued off-balance sheet for loans placed in non-accrual status (over 180 days past due). In certain cases, a down payment on behalf of the borrower was required. Non TDRs mortgage loans modified within 2011 amounted to EUR 0.6 billion compared to EUR 0.5 billion in 2010.

        In relation to the above products for mortgage loans, the Group assessed whether in certain circumstances these modifications were for the purpose of maximizing the collection of the amounts due, and thus constituting a concession. The Group concluded that in relation to the above options the reduction of off-balance sheet interest represents a concession because it causes a direct economic loss for the Group. Remaining options that allow for modification in interest rate or extension in maturity are not considered to be concessions as these products would be offered to borrowers of equal credit quality, similar circumstances and similar standing. As at December 31, 2011 and 2010, modified loans that were concluded to be TDRs amounted to EUR 1.2 billion and EUR 0.5 billion, respectively.

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        Modified mortgages have an average duration of 31.3 years, almost 6 years longer than prior to modification. Of all modifications, 47% covers the vintage period 2006-2008. Post modification almost all mortgages became of a floating interest rate type, indexed to 3-month euribor plus a spread, whereas, before modification, fixed and floating rate mortgages were almost equally divided (43% fixed and 57% floating). On average, the spread of floating rate mortgage loans has increased by 30 bps after modification.

        In mid-2011, as a result of the prolonged economic crisis, the Bank offered to customers still experiencing problems in servicing their restructured mortgage, the opportunity to become current in their payments, by offering a new product of "fractional payment", where the customer pays for a 3-year period a proportion of the installment due (40% in the first year, 60% in the second year and 80% in the third year). In this case, the minimum interest margin charged was set at 250 bps over 3-month euribor. This new product represents a concession for the Bank and is accounted for as TDR since it would not be considered by the Bank if the customer was not in financial difficulty.

        In addition to fire and earthquake property insurance, we offer an optional life insurance plan together with mortgages. This option has been successful, with 97.6% of new mortgages in 2010 and 2011 carrying a life insurance plan. In July 2009, the Bank's range of insurance products was further enriched with the introduction of a mortgage payment insurance plan that guarantees up to 18 monthly loan installments in case of a borrower's involuntary unemployment or temporary disability due to illness or accident. This new insurance product is complementary to life insurance plans and further improves the safety of mortgage payments. Almost all new mortgages in 2010 and 2011 carried the payment insurance plan. For further information, see "—Insurance" below. Offering optional life insurance plans together with mortgages has improved the quality of our mortgage credit as credit risk due to death, permanent disability or temporary unemployment at the Bank level is mitigated.

        More specifically, life insurance as well as payment protection insurance improve the quality of our mortgage portfolio because when the event occurs (i.e. death, disability, unemployment etc.), the Bank receives either the outstanding loan amount or monthly payments corresponding to the loan installments, instead of waiting for the temporarily disabled or unemployed borrower to resume payments or in case of death or permanent disability for the loan to go into foreclosure. In 2010 and 2011, claims incurred under such policies amounted to EUR 23.5 million and EUR 29.7 million, respectively.

        The insurance risk arising from these policies is assumed at the level of our insurance subsidiary EH and has historically been covered by the premium revenue earned on these insurance policies; therefore the total exposure to these borrowers is not diminished at consolidated level. For substantially all mortgage loans originated by the Bank and insured for life, disability and payment protection, the insurance policies have been underwritten by the Bank's subsidiary EH and a corresponding provision for the insurance risk is recognized. The insurance risk provision associated with the insurance policies sold together with our mortgage products is estimated based on historical trends and the indemnification amounts like any other life insurance policy. For the purposes of estimating the allowance for loan losses, the Bank ignores these insurance policies when estimating losses incurred in the portfolio.

        As 2012 is expected to be another recessionary year, new mortgage production will be kept at low levels, similar to those experienced in 2011. The Bank's main effort will continue to focus on managing effectively its portfolio. The current environment exerts downward pressure on house prices, which are expected to continue declining similarly to 2011.

    Real estate market in Turkey and SEE

        The year 2011 can be characterized as a year in which we have witnessed stabilization of the housing sector. The commencement of new housing construction projects and house sales slowed down in comparison to previous years. The Turkish House Prices Index has increased from 88 at the end of

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2008, to 91.1 at the end of 2009, reaching 93.5 at the end of 2010. The upward trend continued in 2011 and reached 100.8 at the end of 2011.

        Due to high competition in the mortgage loan market, we have observed a contraction in the mortgage loan spreads which led some banks to slow down their mortgage loan sales due to profitability concerns. Finansbank took a decision to pull back from mortgage loan origination in May 2011 and shifted our sales force efforts to more profitable products such as personal need loans and overdrafts. Finansbank had 8.3% market share by the end of 2011 in mortgage loans compared to 10.5% in 2010 according to statistics published by the BRSA.

        In SEE and particularly in Romania and Bulgaria, the decrease in real estate prices continues, albeit at a slower pace.

        In Romania, the correction in real estate prices appears to have come to a halt, with the real estate price index (Residential Advisors index: average asking price of residential space in Bucharest (in EUR terms)) falling only by 0.1% in 2011, following a drop of 8% in 2010, keeping prices at their end-2007 levels, 16.8% below their 2008 peak. The relatively better performance of the real estate market in Romania could be attributed to the mild recovery for real estate demand, in line with the rebound in economic growth to 2.5% from -1.7% in 2010 as well as from the buoyant mortgage lending activity, supported by guarantees from the Romanian government for families, which do not own a home or dwelling of 50 square meters or less, to buy a house, leading to mortgage lending growth of 15.3%.

        In Bulgaria, the real estate price index (National Statistical Service index: average price of second-hand dwellings in district centers (in BGN terms)) continued on its downward trend, at a slower pace, falling by 6.1% in 2011, following a drop of 10.1% in 2010, leading prices back to end-2006 levels, 33% down from their 2008 peak. In Bulgaria, economic growth improved only slightly to 1.7% from 0.4% in 2010. Mortgage lending posted an anemic growth of 1.1% in 2011, reflecting mainly bank liquidity pressures and asset quality concerns.

        Furthermore, an indicator of the real estate activity is also reflected on the relatively small stock of foreign investments in the real estate sector. Indeed, balance of payments data shows that over the period 2004-2008, total foreign investments channeled to the Romanian real estate sector amounted to 4.4% of 2008 GDP, against 15.8% in Bulgaria. For information on real estate prices in Turkey, see "Banking Activities outside of Greece—Turkish Operations—Retail Banking" below.

Small Business Lending Unit

        The Small Business Lending Unit ("SBL Unit") in Greece manages the extension of credit to small businesses with annual turnover of up to EUR 2.5 million and total exposure up to EUR 1.0 million.

        The SBL Unit offers lending solutions as outlined below, which cover a full range of business credit needs:

    (a)
    "Open Business Plan", a revolving credit facility limited at up to 100% of total annual turnover (depending on the creditworthiness and industry performance of the borrower);

    (b)
    "Business Multiloan—Development", a medium-or long-term loan either for the purchase of tangible and intangible assets such as real property, mechanical equipment and vehicles or for the enhancement of business liquidity. Since 2007, this product has also been offered to businesses that invest in real estate; and

    (c)
    "Debt Settlement—Rithmisis", a medium- or long-term debt-restructuring facility that is focused on businesses that are finding it increasingly difficult to finance their loan obligations as a result of the current financial crisis.

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        The portfolio size of our SBL Unit was negatively affected by the limited demand for funds as a result of the crisis, and also partly by the repayment of loans (mainly those guaranteed by ETEAN S.A.). Total portfolio as at December 31, 2011 was EUR 3,782.7 million compared to EUR 4,115.4 million in 2010.

        The Bank has adopted new procedures that govern its active participation in the ETEAN S.A.. They involve the financing of enterprises by issuing state guarantees for loans, covering up to 80% of principal. In 2011, the SBL Unit's participating in ETEAN S.A. evaluated approximately 273 applications resulting in over EUR 7.5 million in disbursements.

        The Bank continued to support Small and Medium Sized Enterprises ("SME") financing, both towards healthy companies troubled by the domestic economic crisis by providing the necessary liquidity and towards those experiencing difficulties in servicing their debt obligations, by setting favorable terms and conditions for the management of their debts.

        More specifically, the Bank supported SMEs by providing an amount of EUR 290.0 million in new disbursements in 2011, compared with EUR 535.0 million in 2010.

        In addition to customized financing products targeted at certain categories of businesses and professionals such as trade unions, technical chamber of commerce of Greece and car dealers, the SBL Unit offers term loans geared towards medium and long-term working capital needs for the financing of asset purchases.

        The Bank, in an effort to boost competitiveness of SMEs within the context of the financial distress in Greece, has ensured participation in two projects regarding co-funded risk sharing products. More specifically:

    The JEREMIE programs. The first program involves a EUR 60 million initiative in the context of European Community for the financing of all micro and small enterprises for the expansion of their operations. The second involves another EUR 60 million initiative to finance either enterprises of the Information and Communication Technologies sector or other investments in information and communication technologies of other industries (launched in February 2012). Regarding the first JEREMIE product, approximately EUR 12.5 million have already been approved to 400 newly established businesses. Recently, the terms and conditions of this product were amended in order to include all businesses, independently on the duration of operations, with larger tickets that were increased from EUR 100 thousand to EUR 250 thousand.

    Youth entrepreneurship program. It involves the finance of development activities that aim to enforce the entrepreneurship in Greece, consisting of an initiative in cooperation with the State Funded ETEAN S.A. with a budget of EUR 90 million.

        In 2012, the SBL will focus on these development initiatives and the active management of the existing portfolio.

        Already the Bank, in cooperation with the State Funded ETEAN S.A., participates in a EUR 150 million budget initiative to finance business projects related to thematic tourism, renewable energy and implementation of technologies that help conserve natural resources and environmental protection.

        In addition, the Bank is proposing to its customer modification programs. Corporate and SBL portfolio modification products in Greece are addressed to borrowers with at least one account in delinquency of at least 90 days. These products are divided into two categories, those that fall under Greek Law 3816/2010 (see Item 4.B, "Business Overview—Settlement of Business and Corporate Debts") and those that are specially designed by the Bank in order to supplement the limited specifications of the requirements of such law. The restructuring product under Greek Law 3816/2010 was offered for a limited period and addressed only the overdue amounts, while the product designed by the Bank allows the restructuring of the total debt and is still offered.

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        The modification product offered by the Bank includes: i) the granting of a grace period of up to 24 months during which the borrower pays only interest, ii) the prolongation of the maturity of the loan up to 10 years while applying the same interest rate, iii) the option to the borrower to make a down payment, which, if the loan is repaid in accordance with the renegotiated terms, is returned as a discount. This discount is limited to the lower of 10% of the restructured debt or maximum EUR 100,000.

        The Group considers as TDRs the above products for SBL and corporate loans given that they represent a concession that would not be otherwise considered by the Group if the customer was not in financial difficulty.. Therefore, typically the Group classifies as TDRs, SBL and Corporate loans that have been non-accruing, that is at least 90 dpd, at the time of the restructuring and, as a result, off-balance sheet interest is waived.

        Furthermore, the Bank has also launched a new product for restructuring-on-restructuring ("R-O-R") in August 2011 in order to further assist customers having difficulty in servicing their obligations, despite the settlement of their debts, as a result of the prolonged economic crisis. The product which is accounted for as TDR, offers the recalibration of the debt under the following framework: Eligible clients for this R-O-R product are those with balance in delay for more than 60 days, outstanding balances fully secured or when new collateral is obtained to fully cover the new debt, when at least 50% of the accrued interest of the previous restructured debt is paid and when there is no new negative information in relation to the customer. In 2011, the SBL Unit sponsored a total of 653 customers with this R-O-R product of EUR 117.3 million.

Corporate and Investment Banking

        The Bank's commercial loan portfolio in Greece comprises approximately 58 thousand corporate clients, including SMEs, and most of the largest corporate groups in Greece. As a Group, we are able to offer corporate clients a wide range of products and services, including financial and investment advisory services, deposit accounts, loans denominated in euro and other currencies, foreign exchange services, insurance products, custody arrangements and trade finance services.

        As a result of the ongoing economic crisis in Greece, the Bank has adopted a more conservative approach to new commercial lending, with a greater focus on larger corporate borrowers that it perceives to be lower-risk. As a result, substantial deleverage took place in relation to the SME balances during 2011 partially offset by increased financing to Large Corporate borrowers for energy sector projects. The Bank expects an additional deleverage of 3% in its lending portfolio during 2012 compared to 2011.

        The Bank lends to all sectors of the economy. As at December 31, 2011, domestic commercial lending (including loans to the public sector) amounted to EUR 27.9 billion and represented 52.5% of the total domestic loan portfolio of the Bank. Its lending exposure to the ten largest performing loans to non-affiliated enterprises amounted to EUR 3.4 billion as at December 31, 2011, representing 6.4% of its domestic loan portfolio.

        The Bank offers:

    corporate accounts with overdraft facilities;

    foreign currency loans;

    variable rate loans; and

    currency swaps and options (mostly euro-related) for corporate customers.

        The Bank lends primarily in the form of credit lines, which are generally at variable rates of interest with payment terms of up to 12 months. In addition, the Bank provides letters of credit and guarantees for its clients. At December 31, 2011, the Bank had standby letters of credit and financial

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guarantees amounting to EUR 3.2 billion. Most loans are collateralized to a certain degree, although Greek law imposes significant delays to foreclosing on collateral.

        The table below sets forth certain key nominal interest rates charged by the Bank:

 
  As at  
Interest rate on:
  June 20,
2011
  June 30,
2011
  August 8,
2011
  September 30,
2011
 

Prime lending rate for working capital

    7.50 %   7.50 %   7.50 %   7.50 %

Prime lending rate for fixed assets

    7.75 %   7.75 %   7.75 %   7.75 %

Personal loans

    12.67 %   12.98 %   12.98 %   12.99 %

Open revolving credit facility

    9.35-14.20 %   9.35-14.20 %   9.60-14.45 %   9.60-14.45 %

 

 
  As at  
Interest rate on:
  December 30,
2011
  January 20,
2012
  March 30,
2012
 

Prime lending rate for working capital

    7.50 %   7.50 %   7.50 %

Prime lending rate for fixed assets

    7.75 %   7.75 %   7.75 %

Personal loans

    12.84 %   12.84 %   12.24 %

Open revolving credit facility

    9.60-14.45 %   9.10-13.95 %   9.10-13.95 %

Shipping Finance

        Greece is a maritime nation with a long tradition in ship-owning and is one of the world's largest ship-owning and ship-flagging nations. Shipping remains one of the most important sectors of the Greek economy and the Bank is one of the most active participants in the local market, as well as one of the strongest competitors to foreign banks involved in shipping finance in Greece. The Bank's shipping finance activities are carried out almost exclusively through its Piraeus-based operation.

        The Bank has traditionally provided financing for many of the largest Greek shipping companies. As at December 31, 2011, outstanding shipping loans (mainly concerning bulk shipping) were EUR 2.3 billion, representing 4.3% of the Bank's total domestic loan portfolio compared to EUR 2.2 billion or 4.0% of the Bank's total domestic loan portfolio, as at December 31, 2010. Of the Bank's shipping finance portfolio as of December 31, 2011, 4% concerned the financing of new vessels (new buildings), with the remainder relating to financing purchases of second hand vessels.

        The Bank's conventional shipping finance and syndicated loan portfolio consists of first-tier shipping groups involved in diversified shipping activities (e.g., dry bulk, wet bulk, liner business) in a continuous effort towards maintaining quality, spreading risk and enhancing the profitability of its shipping loan portfolio. Nearly all of the Bank's shipping loans are secured by vessels.

        The shipping industry is highly cyclical, experiencing volatility in revenues and cash flows resulting from changes in the demand and supply of vessel capacity. The demand for vessels is influenced by, among other factors, global and regional economic conditions, developments in international trade and changes in seaborne and other transportation patterns that are not within the Bank's control. During 2011, freight rates in main shipping segments dry, wet and liner shipping have in broad terms significantly decreased. For 2012, the shipping markets are expected to remain at lower-than-average historical levels, (with variations between dry and wet sub-markets) due to increased tonnage supply (new-building vessel deliveries) and modest demand for shipping services, as a consequence of macroeconomic conditions.

        The Bank's goal for 2012 remains to closely monitor existing shipping facilities while at the same time supporting existing clientele. The Bank's management believes that this effort will result in maintaining a high quality portfolio and its solid presence in this sector in the years to come.

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Project Finance

        The Bank's project finance loan portfolio includes loans to large infrastructure projects both in Greece and abroad (Western Europe, U.K., U.S.A.). The overall size of this portfolio was EUR 454.2 million as at December 31, 2011, decreased by 20.8% since 2010. The decrease was a result of a deleveraging effort undertaken by the Bank during 2011. Only EUR 23.2 million of new loans were advanced in 2011 for projects outside Greece. The domestic loan portfolio remained stable as all but one of the large motorway infrastructure projects stagnated during 2011 due to problems encountered in their implementation and the overall deterioration of the country's financial standing, which resulted in an effective draw-stop of the disbursements under the corresponding loans. The Greek government has undertaken concerted efforts to support these projects so that construction may resume during the current year. If these projects are restarted, the progress of construction of these projects during the next three to four years would lead to a significant increase of the Bank's domestic loan portfolio, since the total commitment of the Bank amounts to EUR 310.0 million, compared to EUR 71.0 million disbursed until December 31, 2011. Through an operational agreement signed in December 2011, the Bank, acting as an Urban Development Fund (UDF), has been awarded management of EU Structural Funds under the JESSICA (Joint European Support for Sustainable Investment in City Areas) initiative for three Lots (out of ten Lots in total for Greece) amounting to EUR 83.3 million (30.0% total Jessica Funds for Greece). The Lots correspond to Attica, Western Greece and Ionian Islands Regions and the operational Program "Environment and Sustainable Development". Jessica funds, along with the Bank's and other private funds are intended to be used during the period 2012- 2015 to make repayable investments in the respective regions.

        Advisory activity in 2011 to the public and private sector developed at a considerably lower pace compared with that of previous years, as the execution of certain projects was postponed by the Greek government in the context of the current economic environment. However, the Bank as head of an international team of advisors, continues to provide financial advisory services to government bodies for two projects, namely "22 schools complexes in Attica" and "Thrace Democritus University Student Accommodation". Preferred bidders for the first project have been selected while an international tender for the implementation of the second project is currently under way. The Bank also leads a group of domestic and international firms in providing financial advisory services to the Public Real Estate Co, an entity in charge of the development of a portfolio of national properties, selected by their value.

        In January 2012, the Bank has been appointed by the Greek government, together with Guggenheim Capital LLC, as a joint financial advisor for the ambitious large scale renewable energy sources project HELIOS, to provide advisory services related to the structuring, development, implementation and financing of the project and related infrastructure.

Leasing

        We began leasing activities in 1990 through our subsidiary, Ethniki Leasing. Ethniki Leasing leases land and buildings, machinery, transport equipment, furniture and appliances, computers and communications equipment. As at December 31, 2011, 59% of the finance lease receivables of Ethniki Leasing were to the trading and services sector, 17% to industry and mining, 22% to construction and real estate and 2% to other sectors. As at and for the year ended December 31, 2011, Ethniki Leasing had total assets of EUR 699.4 million and interest income of EUR 32.6 million, before elimination of intercompany transactions and balances, compared to EUR 750.2 million and EUR 29.6 million, respectively in 2010.

Factoring

        We have been active in the provision of factoring services since 1994. In May 2009, Ethniki Factors was established as a wholly-owned factoring subsidiary of the Bank, as part of the strategic decision to

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expand our factoring operations in Greece. The company is a specialist factoring agency offering a comprehensive range of factoring services including prepayment (discounting), management and collection of receivables, credit control, and protection for credit risk. Ethniki Factors provides both domestic and international factoring services. During 2011 the company focused mainly on broadening its portfolio by offering wide range of services to NBG Group corporate customers and developing synergies with the Bank which resulted in establishing robust portfolio, enhancing market share and sustaining profitability.

Investment Banking

        In 2011, the Bank's Investment Banking Division focused on providing advisory services in privatizations, mergers and acquisitions and equity capital markets transactions.

        The Bank was appointed as financial advisor to the Hellenic Republic in the privatizations of Athens International Airport, Public Power Corporation and OPAP (Greek gaming company), as well as co-ordinator of the extensive real estate development program. The Bank acted as advisor to ATEbank and to KORRES S.A. - Natural Products in their respective capital raising, acting as underwriter for the former. The Bank also provided a fairness opinion to the Board of Directors of RILKEN S.A. in the tender offer launched by HENKEL HELLAS S.A. In January 2012, the Bank's Investment Banking was appointed as financial advisor to the Hellenic Republic for the large-scale solar renewable energy project "Helios".

Global Markets & Asset Management

Treasury

        The Bank and each of our banking subsidiaries carry out their own treasury activities within the prescribed position and counterparty limits. These activities include:

    Greek and other sovereign securities trading;

    foreign exchange trading;

    interbank lending and borrowing in euro and other currency placements/ deposits;

    forward rate agreement trading;

    repurchase agreements;

    corporate bonds; and

    derivative products, such as options and interest rate and currency swaps.

        The Group's Treasury is active across a broad spectrum of capital market products and operations, including bonds and securities, interbank placements in the international money and foreign exchange markets and market-traded and over-the-counter financial derivatives. It supplies the branch network with value-added deposit products, and its client base includes institutions, large corporations, insurance funds and large private-sector investors. In general, the Bank and our subsidiaries enter into derivatives transactions for economic hedging purposes or in response to specific customer requirements. In recent years, the Bank's treasury-related activities have represented a significant source of revenues. In 2011, total turnover for foreign exchange trading and money market transactions by the Bank's central dealing room in Athens was approximately EUR 150 billion and EUR 924 billion respectively (compared to approximately EUR 206 billion and EUR 1,107 billion, respectively, in 2010).

        The Bank is active in the primary and secondary trading of Greek government securities, as well as in the international Eurobond market. The Bank is a founding member of the Group of Greek Government Securities Primary Dealers which was established by the Bank of Greece in early 1998.

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Private Banking

        The Bank launched its private banking operations ("Private Banking") in 2003 and is dedicated to serving a high net worth clientele, by offering first-class services that maximize clients' personal aspirations. Our team of investment experts provides customers with continuous support and direct access to the major international financial centers and Private Banking services of a global reach.

        Each Private Banking client is unique, with specific financial needs and goals. The understanding of clients' personal investment profile is the essence of Private Banking. To that end, a personal and long-standing relationship between the Bank and the client is established, based on trust, confidence and discretion, such that the client's requirements can be efficiently and effectively addressed.

        As the Private Banking team provides services on execution basis only, advisory and discretionary asset management services are provided by NBG Asset Management, adding important solutions to the Bank's investment services. For information related to NBG Asset Management, see below "—Asset Management".

        NBG Private Banking received the Euromoney Private Banking Award "Best Private Banking in Greece" for 2008 and 2010.

Custodian Services

        The Bank offers custody services to foreign and domestic institutional clients investing in the Greek and Cypriot markets, as well as clearing services to remote members of the ATHEX. The range of services the Bank offers includes trade settlement, together with clearing services as a General Clearing Member on the ATHEX, safekeeping of securities, corporate action processing, income collection, proxy voting, tax reclamation, customized reporting and regular market flashes. The Bank also acts as global custodian for its domestic clients who invest in international markets using, where possible, its subsidiaries in SE Europe.

        As at December 31, 2011, the Bank serviced 55 domestic institutional clients (three mutual funds, 12 insurance companies, 29 pension funds, two asset management companies, four brokerage companies, one investment company and four other companies) and 33 foreign institutional clients, including several leading global custodians. The Bank also offers custody services to approximately 284 thousand private Greek investors.

        In recognition of the quality custody services offered, the Bank has been awarded "Top Rated" status and highest ranking positions in both Cross Border/Non-Affiliated and Domestic categories for the years 2009-2011, and ranked first in the Leading Clients category for the year 2011, in the Agent Banks in Major Markets Survey of Global Custodian.

Asset Management

        Our domestic fund management business is operated by NBG Asset Management, which is wholly owned by the Group. NBG Asset Management manages funds that are made available to customers through the Bank's extensive branch network.

        As of December 31, 2011, NBG Asset Management's total assets under management, in mutual funds, were EUR 1.1 billion compared to EUR 1.4 billion as of December 31, 2010. Its market share in Greece was 17.4% as of December 31, 2011, compared to 17.3% as of December 31, 2010. (Source: Hellenic Fund and Asset Management Association—report of December 31, 2011).

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        The total value of mutual funds managed since 2007 is set forth in the table below:

 
  As at December 31,  
 
  2007   2008   2009   2010   2011  
 
  (EUR in billions, except for percentages)
 

Funds under management

    7.6     2.8     1.9     1.4     1.1  

Market share

    31.1 %   26.6 %   17.8 %   17.3 %   17.4 %

        NBG Asset Management offers 23 investment funds under the brand name Delos, two under the NBGAM brand name and eight under the NBG International SICAV and NBG Synesis SICAV brand names, which are registered in Luxemburg. NBG Asset Management offers a wide range of investment products that provide to institutional and private investors access to significant markets in stocks, bonds and money market products, in Greece and internationally.

        Additionally, NBG Asset Management offers a more integrated range of contemporary investment services such as:

    portfolio management for institutional and private investors; and

    consultancy investment services for institutional and private investors.

        As of December 31, 2011, NBG Asset Management had approximately 70 institutional and over 52,000 private investors, totaling EUR 1.3 billion assets under management (asset management and mutual fund operations combined).

Stock Brokerage

        National P&K Securities S.A., renamed to National Securities S.A. on May 20, 2010, is the Bank's brokerage arm and was founded in 2007 following the merger of the Bank's former subsidiary companies National Securities S.A. and P&K Securities S.A. National Securities S.A. offers a spectrum of investment services to both individual and institutional customers.

        As at December 31, 2011, National Securities S.A. had a market share of 11.7% of trades brokered by total trading volume on the ATHEX, ranking third in terms of total trading volume, according to ATHEX data.

        The provision of capital markets and advisory services in Greece has become increasingly competitive, with a number of banks and brokerage houses participating actively in this area.

Private Equity and Venture Capital

        With offices in London, Athens, Paris, Istanbul and Bucharest, NBGI Private Equity Limited ("NBGI Private Equity"), a subsidiary of NBGI International Ltd, manages the private equity funds described below. In 2011, NBGI Private Equity had invested amounts of approximately

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EUR 366.5 million as at December 31, 2011, compared to approximately EUR 268.8 million at December 31, 2010.

Fund
  Closing Date   Invested
amounts
  Geographic Focus
 
   
  (in millions)
   

NBG Private Equity Fund LP

  August 2000   GBP 61   UK

NBGI Private Equity Fund II LP

  June 2007   GBP 43   UK

NBG South Eastern Europe Fund LP

  March 2006   EUR 24   SEE

NBGI SEE Development Capital Fund LP

  March 2007   EUR 36   SEE

NBGI SEE Real Estate Fund LP

  October 2009   EUR 72   SE and Central Europe

NBGI SEE Energy Fund LP

  October 2008   EUR 8   Predominantly Central & Eastern Europe, and selectively Western Europe

NBGI Private Equity France Fund LP

  December 2009   EUR 11   France and other French speaking countries

NBGI Turkish Private Equity Fund LP

  October 2008   EUR 18   Turkey

NBG Technology LP

  October 2001   EUR 29   Predominantly Europe

NBGI Technology Fund II LP

  October 2009   EUR 44   Predominantly Europe & US

        NBG is the sole investor in the funds, with the exception of NBGI Private Equity Fund II LP and NBG Technology LP where external investors also participate.

Main Financial Highlights

        NBG Private Equity Fund LP ("UK Fund I") has an established track record, having exited ten of its thirteen investments to realize an overall gross 35.9% internal rate of return and a money multiple of 3.39.

        During 2011 the UK Fund I partially exited one investment realizing a money multiple of 1.64, with the remaining holding in this investment currently valued at a money multiple of 6.59.

        In total, during 2011, NBGI Private Equity's funds, invested in 11 new investments including five Real Estate deals, and made 13 follow-on investments. An additional an amount of EUR 42 million has been invested into the Real Estate Fund in 2011, including follow-on investments.

Banking Activities outside of Greece

        We operate, as a Group, in 11 countries outside Greece. As at December 31, 2011, our international network comprised 1,194 branches (including foreign subsidiaries and Bank branches in the United Kingdom, Albania, Egypt and Cyprus) and branches of subsidiaries, which offer traditional banking services and financial products and services. The Bank has seven commercial banking subsidiaries in Turkey, Bulgaria, Romania, FYROM, Serbia, Cyprus and South Africa. Furthermore, the Group has a presence in Malta through its subsidiary, NBG Bank (Malta) Ltd. Our policy, since the early 1990s, has been to focus on the Bank's regional strength in SEE by strengthening our existing network and expanding into growing markets that present low banking penetration and greater profit margins and also to withdraw from mature markets where growth prospects are limited. In particular, we seek to develop our wholesale banking business by targeting major financial centers to which we can offer Greek and Balkan lending exposure. Our retail banking presence in some geographical areas may only be justified by our success in niche markets in which we have the ability to exploit significant advantages.

        Since 2000, the Bank has expanded its presence in SEE through acquisitions and green field start-ups. The Bank's regional strategy aims at diversifying our operations and enlarging our footprint to cover a region with attractive economic prospects. The Bank offers commercial banking services to customers in the region through our branches and subsidiaries in Turkey, Bulgaria, Serbia, Romania, FYROM and Albania.

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Turkish Operations

        Our Turkish operations include the Finansbank group of companies (except for Finans Pension, which the Group classifies under Group insurance operations) and NBG Malta, which holds a portfolio of Turkish business.

        In 2011, Turkish operations contributed EUR 375.9 million of net income to the Group, compared to EUR 454.5 million in 2010. Turkish operations' income before income tax expense was EUR 481.2 million as at December 31, 2011 and EUR 553.5 million as at December 31, 2010. As at December 31, 2011, total gross lending was EUR 14,710.5 million while total deposits (excluding interbank deposits) reached EUR 11,926.3 million, compared to EUR 14,944.6 million and EUR 11,545.2 million, respectively, as at December 31, 2010. Total assets of Turkish operations as at December 31, 2011 were EUR 20.7 billion, accounting for 20.0% of our total assets compared to EUR 20.7 billion and 17.4% as at December 31, 2010.

        Retail loans of Turkish operations amounted to TL 18.9 billion as at December 31, 2011, compared to TL 16.7 billion as at December 31, 2010 whereas retail sector deposits amounted to TL 19.8 billion compared to TL 14.0 billion for the same dates.

        Corporate and commercial loans of Turkish operations amounted to TL 17.3 billion as at December 31, 2011, compared to TL 14.4 billion as at December 31, 2010, whereas corporate and public sector deposits amounted to TL 7.6 billion compared to TL 8.3 billion for the same dates.

        On September 7, 2010, NBG announced, as part of its capital plan, its decision to dispose of a minority interest in Finansbank, through an offering that may comprise both primary and secondary shares. We currently intend to complete this offering when market conditions are favorable; however, our decision to proceed with the offering and its timing are subject to various considerations, including market conditions, offer size and structure and obtaining all necessary regulatory and other approvals. Although a reduction in our level of ownership in Finansbank, it would result in a reduction in the level of Finansbank's contribution to the Group's earnings going forward, it would expand its franchise in the attractive Turkish banking market, grow its balance sheet and improve its independent access to the capital markets.

Finansbank Group

        Finansbank's group of companies includes Finans Invest, Finans Leasing, Finans Portfolio Management, Finans Investment Trust, Finans Factoring, IBTech, Finans Pension, and Finans Consumer Finance. Finansbank was the fifth largest private bank in Turkey in terms of total assets, loans and deposits as at September 30, 2011, according to data from the Banks Association of Turkey and it offers a wide range of retail, commercial, corporate, private banking and international trade finance services. In addition, Finansbank's subsidiaries provide financial leasing, capital market, corporate finance, portfolio management, brokerage and insurance services. As at December 31, 2011, Finansbank operated through a network of 522 branches in 62 cities, making it the sixth largest private bank in Turkey by size of branch network according to statistics published by the BRSA. As at December 31, 2011, Finansbank and its subsidiaries had 12,015 employees.

Turkish Banking Distribution Channels

        As at December 31, 2011, Finansbank maintained a branch network of 522 branches, consisting of 468 full service branches, 14 corporate and commercial branches, two retail only branches, 36 satellite and Easy Credit branches and one branch at the Atatürk International Airport Free Trade Zone in Istanbul, as well as one branch in Bahrain. While all Finansbank's corporate banking branches include a retail banking unit, certain branches are now dedicated only to retail customers and are located primarily in upper-middle income residential areas. Finansbank expects the reach of its branches to

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become even broader in connection with the significant ongoing expansion of its branch network, which includes a plan to open a total of 30 new branches in 2012.

        As at December 31, 2011, 73.0% of Finansbank's customer transactions were made through alternative distribution channels (internet, phone banking, ATM and IVR). The number of online banking customers exceeded 1.8 million, an increase of 30.7% compared to December 2010. The total number of transactions through Finansbank's internet banking services increased by 28.2% in 2011. Finansbank's ATM network grew by 16.0% in 2011 as the number of ATMs reached 1,826 compared with 1,574 at December 31, 2010.

Retail Banking

        Finansbank's retail banking activities consist primarily of mortgages, consumer lending, credit and debit card services, deposits and investment management, and insurance products. Income from Finansbank's retail banking activities includes net interest income from loans and advances to retail customers and deposits collected from individuals, as well as fee and commission income received from loan underwriting, asset management services, life insurance and property and casualty insurance products, credit and debit card-related services, settlements and cash-related transactions with or for individuals. Retail banking has been one of the principal drivers of Finansbank's growth during the past three years.

        As at December 31, 2011, Finansbank had approximately 9.5 million retail banking customers, compared to approximately 8.5 million retail banking customers as at December 31, 2010. The continuous expansion of the retail branch network has allowed Finansbank to organically grow its customer base. Retail deposits increased by 41.0% during the same period from TL 14.0 billion at the end of 2010 to TL 19.8 billion at the end of 2011. Finansbank's market share in time deposits was 4.4% as at December 31, 2011, according to statistics published by the BRSA.

        Finansbank retail loan portfolio increased by 13.8% from TL 16.6 billion as at December 31, 2010 to TL 18.9 billion as at December 31, 2011. Finansbank mortgage portfolio decreased by 4.5% from TL 6.2 billion as at December 31, 2010 to TL 5.9 billion at the end of 2011.

        Finansbank's retail products and services include retail loans, which comprise mortgage loans, credit card loans, personal loans, auto loans and overdraft and other loans, retail time and demand deposits as well as investment products such as mutual funds and insurance products.

        Finansbank's retail banking operations are divided into three main sub-groups: private banking, affluent segment and mass. Private banking serves customers with assets under management exceeding TL 500,000 who are served through dedicated relationship managers in branches and private banking centers and provides investment advisory services, advanced investment products, and fully customized services. Affluent banking, branded as "Xclusive Banking," was launched at the beginning of 2009, and serves customers with assets under management between TL 50,000 and TL 500,000. The services offered to affluent banking customers are based on dedicated relationship managers in branches supported by dedicated agents at the call center, offering a diverse set of banking and non-banking benefits. The mass segment is served through more standardized product and packaged offerings.

        Finansbank seeks both to broaden its customer base and to improve profitability per customer with a view to continuing to grow retail banking operations. Finansbank targets a balanced retail lending business mix with higher exposure to higher margin operations such as consumer lending and credit cards and a more limited presence in less profitable, highly competitive businesses such as car loans.

Credit Cards

        Finansbank earns interest income on outstanding credit balances, transaction commissions from merchants, cash withdrawal fees, annual membership fees from cardholders and other service based

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fees such as insurance fees and payment fees from its credit card business. As at December 31, 2011, the number of credit cards issued by Finansbank exceeded 4.7 million, representing 9.1% of the total Turkish credit card market, according to statistics published by the BRSA, and the number of member merchants was 141,448. Within the Turkish credit card market, Finansbank was the second largest Visa card issuer in terms of the number of cards issued, according to statistics published by the BRSA. The number of CardFinans commercial credit cards in issue was approximately 139,000 as at December 31, 2011, representing 9.7% of the total Turkish commercial credit card market, according to statistics published by the BRSA. The number of POS terminals of CardFinans reached 170,187 as at December 31, 2011, representing a 7.0% market share, according to statistics published by the BRSA.

        Finansbank Group's total credit card loan portfolio was TL 8.8 billion as at December 31, 2011 compared to TL 6.9 billion as at December 31, 2010.

        The CardFinans SME Business Card addresses the particular needs of SMEs by offering an installment credit facility and a post-installment feature. Finansbank had issued 130,000 credit cards to SMEs as at December 31, 2011. Finansbank Group's net fees and commissions from credit card operations amounted to TL 319.0 million in 2011 compared to TL 230.7 million in 2010.

Corporate Banking

        Since its foundation, Finansbank's focus on Corporate Banking continues to serve its customers with the approach of being a solution partner.

        Finansbank's corporate banking activities aiming to establish long-term relationships with customers continue to develop tailor made solutions to its customers. Finansbank serves its corporate customers via four branches located in Istanbul and Ankara, all employing expert staff at customers' service. Large-sized groups and multinational companies in Turkey get service under the roof of corporate banking.

        Within corporate banking, foreign trade volume is aimed to increase in the diversity of the foreign trade products in corporate companies.

        Corporate Banking, focusing on relationship banking and value added approach has contributed to creating a stable customer profile.

Structured Finance and Syndication Group

        Finansbank has played an active role in the project finance, acquisition finance, privatization and infrastructure finance deals in recent years. Thanks to its qualified service approach as well as extensive knowledge and experience in the sector, it serves its local and multinational clients in all segments, particularly the Corporate segment, whose investments meet project finance criteria under Structured Finance and Syndications Group. In 2011, Finansbank supported green field investments and acquisitions realized in leading sectors which have contributed to the development of Turkey's economy in such sectors as energy, construction, real estate, transportation and infrastructure.

        In 2012, Finansbank continues to lead the developments in the sector by analyzing its customers' needs and by giving support to their investments as a Lead Arranger through its know-how and innovative financing approach. Finansbank aims to provide qualified, rapid and diversified solutions to its clients parallel to their needs by closely following up the current projects in construction, infrastructure, real estate and energy sectors and Public-Private Partnership Projects.

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Commercial Banking

        In 2011, Finansbank Commercial Banking was able to realize its main goal of maintaining sustainable growth and has increased its total balances by 13%, its demand deposits by 18% and its time deposits by 25%.

        Turnover criterion for Commercial Banking service was over TL 10 million before devolving of Medium Sized Enterprises; the criterion has determined between TL 2 million to TL 100 million afterwards.

        A new organizational framework has been established "Network Project" in order to provide a holistic approach to the banking industry and the customers, aiming to improve relationship banking, increase opportunities to cross-sell and expand the existing trade network. Under this framework, the business line has been structured to operate under 4 main groups in order to serve its present and prospective clients:

    Large Commercial Banking Sales and Strategic Management

    Commercial Banking Sales

    Commercial Marketing

    Cash Management

        As of July 2011, the Commercial Marketing Insurance Product and Sales Management unit was established under the Commercial Marketing Group to meet the insurance needs of Corporate, Commercial and SME banking customers.

        The Commercial Marketing Group focuses on increasing income from loans and customer penetration. The promotion of Bank Assurance and subsidiary transactions have been transferred to Commercial Marketing Group. In the year 2011, the Group has worked on "Network Project" offering customer-designed products and POS and cash management tools with special prices for Corporate, Commercial and Retail Banking customers and their dealers/suppliers.

        Cash Management Department is concentrating not only on attracting new customers but also increasing the loyalty of existing customers via technology-based applications which also reduced transaction costs significantly. In this period, the number of customers using Electronic Banking Product has increased by 62%. Throughout 2011, activities enhancing effective use of the Bank's client network ensured circulation of customers' cash flow within the bank and helped increase synergy between business units, cross-selling ratio and the attraction of new customers. The technical infrastructure regarding the Direct Debit System (DDS) has been completely revised. Upon the completion of the third phase of the project, Finansbank now offers far more technologically renewed, competitive DDS to its customers. In 2011, the number of active firm has increased by 43%, while the number of dealer has increased by 183%.

        In charge of development and marketing of trade finance products, the Trade Finance Unit has made major contributions to the overall foreign trade volume and profitability of Finansbank in 2011. In this period, annual foreign trade volume of Finansbank increased by 17%.

        With its twelve Regional Offices established for understanding and managing regional needs, Medium Sized Enterprise and Commercial Banking portfolios; Commercial Banking's branch network which was increased from 84 to 255 service points and 520 Portfolio Managers with mixed branch structure passing to a more effective sales and customer management model.

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SME Banking

        Finansbank was one of the first banks in Turkey to focus on SME banking. Finansbank started its SME banking operations at the beginning of 2003 to support small business enterprises, which Finansbank defines as small- and medium-scale enterprises with an annual turnover of up to TL 2.0 million. As at December 31, 2011, Finansbank had 516,541 SME customers with at least one product. In addition to traditional banking products and services, Finansbank offers an extensive range of products and services to create financial resources for SMEs' specific needs.

Investment Banking

        Finansbank Investment Banking consists of Project Finance, Corporate Finance and Technical Consulting. Investment Banking acts as a client relations specialist while providing medium- to long-term loans and other products.

Private Banking

        Finansbank's Private Banking department helps customers build and preserve their financial wealth through tailored investment strategies and offers its customers time deposits, mutual funds, emerging market bonds, domestic and international equities, government bonds, corporate bonds, currency exchange, forward contracts, futures, options and structured products. The Private Banking department also creates and implements medium—to long-term asset allocation within the context of each customer's particular risk tolerance. The Private Banking department serves investors with assets of more than TL 500,000 or the TL equivalent in one or more foreign currencies. The Private Banking department supports all of Finansbank's business lines (Retail, SME, Commercial and Corporate) in Finansbank within a matrix structure and cooperates within Finans Portfolio Asset Management and Finans Invest to execute and advise clients transactions.

        As at December 31, 2011, Finansbank Private Banking provided investment products and asset management services through seven private banking centers and 14 private banking corners located in Finansbank's branches in all major cities throughout Turkey. As at December 31, 2011, Finansbank Private Banking had approximately 6.000 active clients and TL 9,596.5 million in assets under management compare to TL 6,352.2 million in 2010.

Finansbank Subsidiaries

        The most significant subsidiaries of Finansbank include the following:

    Finans Invest

        Finans Invest was established in December 1996 and began operations in January 1997. The company provides a wide range of financial services to both individual and institutional investors, including investment counseling and brokerage services, portfolio management, fund investment services, corporate finance and international investment services. According to a monthly report on the ISE website titled "Breakdown Of Stock Market Transactions By Members (YTD)"), the company ranks fourth by volume of stocks traded on the ISE. According to a breakdown of stock market transactions by ISE members in 2011,the company had a 3.76% market share. Finans Invest's client portfolio amounted to EUR 5,034 million as at December 31, 2011. Total assets as at December 31, 2011 amounted to EUR 161.8 million and its net income was TL 15.3 million in 2011, compare to TL 203.1 million in TL 15.5 million, respectively.

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    Finans Leasing

        Finans Leasing was established in March 1990. As at December 31, 2011 Finans Leasing ranked eighth in the leasing sector in Turkey, with a total business volume representing a market share of 4.9%, according to the Turkish Leasing Association. Finans Leasing's target customer segment is SMEs, and it was one of the first leasing companies in Turkey to identify the investment needs of SMEs, targeting them as a distinct market segment. Finans Leasing has a lease portfolio that is diversified across several industries, with the proportion of finance lease receivables as at December 31, 2011 of: textile 19.4%, building and construction 16.3%, manufacturing 12.8%, health and social activities 10.2%, metal 8.7%, printing 7.4%, mining and quarrying 5.6% and agriculture, hunting and forestry 4.0%. As at December 31, 2011, total assets of Finans Leasing reached TL 1,302.6 million and its net income was TL 39.1 million compared to TL 1,607.4 million and TL 37.0 million respectively, in 2010.

    Finans Portfolio Management

        Finans Portfolio Management, was established in September 2000, currently manages seven ETFs, ten mutual funds, five principal protected funds, three absolute return fund, seven pension funds, two funds of funds. Finans Portfolio Management also manages discretionary portfolios for high net worth individuals and select institutional clients. As of December 31, 2011 total assets of Finans Portfolio Management amounted to TL 18.3 million and net income (including ETFs) was TL 6.4 million. In 2011, Finansbank and Finans Portfolio Management introduced four principal protected funds. The market share stood at 3.41% as of December 31, 2011. As of December 31, 2011 the company's assets under management exceeded TL 1 billion.

    Finans Investment Trust

        Finans Investment Trust, established in 1995, is a closed-end investment company, managing portfolios composed of capital and money market instruments. Its shares have been traded on the ISE since 1996. Finans Investment Trust's total assets amounted to TL 18.3 million as at December 31, 2011, and its net loss as of December 31, 2011 was TL 2.1 million.

    Finans Factoring

        Finans Factoring was established in 2009. As at December 31, 2011, the total assets of Finans Factoring amounted to TL 281.4 million and its net income for 2011 was TL 3.1 million, compare to TL 265.4 million and TL 2.5 million in 2010, respectively. As at December 31, 2011, total factoring receivables for Finans Factoring amounted to TL 255.8 million compared to TL 221.1 million as at December 31, 2010. The distribution of factoring receivables by industry as at December 31, 2011 was as follows: building and construction 17.6%, textile 15.1%, tourism 7.6%, chemical 6.2% and food 4.9%.

    Finans Consumer Finance

        Finans Consumer Finance was established in 2008. As at December 31, 2011, the total assets of Finans Consumer Finance amounted to TL 1.9 million. Finans Consumer Finance's primary focus is to provide loans to consumers at the point of sale. Finans Consumer Finance received its BRSA audit approval in October 2009, and in September 2010 originated its first loan to activate its operation license in the Turkish market among 10 other consumer finance companies. Finans Consumer Finance aims to provide market share support to the Finansbank Group with lower risk customer loans where only the actual purchase of services or goods can be financed at the points of sale with partnership agreements.

    Finans Pension

        For information on Finans Pension see "—Insurance" below.

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    Ibtech

        Ibtech was established in 2005 and is located in Istanbul. As at December 31, 2011, the total assets of Ibtech amounted to TL 22.7 million and the net loss for the year was TL 2.3 million. Ibtech's focus is to design and enhance software such as Core Banking (Core Finans), credit cards, internet banking and to develop applications for the use of Finansbank.

    NBG Malta

        Finansbank (Malta) Ltd was established on June 30, 2005. Subsequent to its disposal from Finansbank to NBG (Malta) Holdings Ltd in 2009, Finansbank (Malta) Ltd was renamed to NBG Bank Malta Ltd effective on March 18, 2010.

        NBG Malta has attracted significant business volumes from Turkish corporates. During the third quarter of 2011, NBG Malta received the Investment Services License from the Maltese Financial Services Authority that will enable the bank to provide a full range of financial products and services to meet the constantly changing needs of corporate customers and private individuals.

        Selected financial information with respect to NBG Malta as at December 31, 2011 is provided in the table below:

 
  EUR   USD(1)  
 
  (in millions)
  (in millions)
 

Total Assets

    726     961  

Net Loans

    615     813  

Total Deposits

    474     627  

Net Loss

    (3 )   (4 )

(1)
Solely for the convenience of the reader, the translation of euro into U.S. dollars has been made at the Noon Buying Rate of US$1.00 = EUR 0.7559 as at April 30, 2012.

International

        The Bank's international operations include the Bank's branches in Albania, Egypt and Cyprus as well as banking subsidiaries in six countries. United Bulgarian Bank A.D. in Bulgaria, Banca Romaneasca S.A. in Romania, Stopanska Banka A.D. in FYROM, Vojvodjanska Banka A.D. Novi Sad in Serbia, National Bank of Greece (Cyprus) Ltd in Cyprus and the South African Bank of Athens Ltd in South Africa, along with other subsidiaries, primarily in the leasing sector. Our international operations contributed EUR 416.8 million or 11.4% of net interest income before provisions for loan losses of the Group and accounted for EUR 10.2 billion or 9.9% of the Group's total assets as at and for the year ended December 31, 2011. Total gross loans were EUR 8.1 billion at December 31, 2011, a decrease of 6.8% from EUR 8.7 billion at December 31, 2010, whereas deposits (excluding interbank deposits) were EUR 5.7 billion at December 31, 2011, a decrease of 5.9% from EUR 6.1 billion at December 31, 2010.

        Our international network is described below. In the analysis that follows, all amounts are before elimination of intercompany transactions and balances.

National Bank of Greece S.A.: Foreign Branches

        As at December 31, 2011, the Bank had foreign branches in four countries, including one in the United Kingdom, 27 in Albania, one in Cyprus and 18 in Egypt. At December 31, 2011, net loans of the Bank's Albania, Cyprus and Egypt operations were EUR 201.9 million, EUR 280.8 million and

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EUR 86.4 million, respectively. The table below provides selected financial information of the Bank's foreign branches as at and for the year ended December 31, 2011:

 
  EUR   USD(1)  
 
  (in millions)
  (in millions)
 

Total Assets

    846     1,119  

Net Loans

    569     753  

Total Deposits

    585     774  

Net Loss

    (3 )   (4 )

(1)
Solely for the convenience of the reader, the translation of euro into U.S. dollars has been made at the Noon Buying Rate of US$1.00 = EUR 0.7559 as at April 30, 2012.

        The table above relates solely to the business of the Bank's foreign branches with the exception of the United Kingdom branch, which is considered part of domestic operations and is not included with the branches of the Bank's non-Greek subsidiaries.

UBB

        UBB is a commercial bank with headquarters in Sofia, which provides retail and corporate finance services in Bulgaria. It was acquired in 2000 and as at December 31, 2011 the Bank held a 99.9% interest in UBB. At December 31, 2011, UBB's distribution network included 222 units: 126 "Type 1" (retail business), 46 "Type 2" (retail and micro business), 18 "Type 3" (retail, micro and SME business), nine "Type 4" (SME business) and 23 offices and operated over 780 ATMs and over 10,000 POS terminals in Bulgaria.

        Selected financial information with respect to UBB as at and for the year ended December 31, 2011, is provided in the table below:

 
  EUR   USD(1)  
 
  (in millions)
  (in millions)
 

Total Assets

    3,434     4,543  

Net Loans

    2,499     3,306  

Total Deposits

    2,569     3,398  

Net Income

    7     9  

(1)
Solely for the convenience of the reader, the translation of euro into U.S. dollars has been made at the Noon Buying Rate of US$1.00 = EUR 0.7559 as at April 30, 2012.

Banca Romaneasca

        Banca Romaneasca is a commercial bank with headquarters in Bucharest, providing a range of retail, SME and corporate banking services in Romania through its head office and through 134 units in Bucharest and other cities in Romania. The Bank acquired Banca Romaneasca in October 2003 and as at December 31, 2011 held 89.07% of its share capital. EBRD was the second largest shareholder of Banca Romaneasca, with 10.2% of its share capital. On January 31, 2012, the Bank acquired the remaining 10.2% of Banca Romaneasca from EBRD through put and call arrangements as provided for in the 2005 shareholders agreement, between the Bank and EBRD. The total consideration paid amounted to EUR 26.1 million (for information on the accounting treatment of EBRD's holding, see Note 3 to the U.S. GAAP Financial Statements).

        In order to further enhance the financial services offered by the Group in Romania, a new company, NBG Factoring Romania IFN S.A. has been established during 2010, with Banca Romaneasca holding 99.3% of its share capital.

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        Selected financial information with respect to Banca Romaneasca as at and for the year ended December 31, 2011, is provided in the table below:

 
  EUR   USD(1)  
 
  (in millions)
  (in millions)
 

Total Assets

    2,354     3,114  

Net Loans

    1,724     2,281  

Total Deposits

    1,420     1,879  

Net Income

    4     5  

(1)
Solely for the convenience of the reader, the translation of euro into U.S. dollars has been made at the Noon Buying Rate of US$1.00 = EUR 0.7559 as at April 30, 2012.

Stopanska Banka

        Stopanska Banka is a commercial bank registered in FYROM and headquartered in Skopje. It provides payment transfers, brokerage, credit and deposit-taking services in FYROM and abroad. The Bank acquired Stopanska Banka in 2000 and as at December 31, 2011, held a 94.6% stake in it, while the remaining 5.4%, is held by other minority shareholders. On August 17, 2010, the Bank increased its shareholding in Stopanska Banka by 21.6%, acquiring the related shareholdings from EBRD and IFC (10.8% each) through the exercise of existing put and call arrangements.

        Stopanska Banka operates the largest branch network in FYROM, with a dense nationwide network of ATMs and POS terminals. As at December 31, 2011, the bank had 64 branches which are transforming into modern sales outlets and is also a leader in e-banking within FYROM, promoting internet banking and offering its clients electronic payment facilities. Stopanska Banka aims to continue improving its loan portfolio by targeting high quality customers, in the SME and large company segments.

        Selected financial information with respect to Stopanska Banka as at and for the year ended December 31, 2011, is provided in the table below:

 
  EUR   USD(1)  
 
  (in millions)
  (in millions)
 

Total Assets

    1,140     1,508  

Net Loans

    727     962  

Total Deposits

    924     1,223  

Net Income

    13     17  

(1)
Solely for the convenience of the reader, the translation of euro into U.S. dollars has been made at the rate of US$1.00 = EUR 0.7559 as at April 30, 2012.

Vojvodjanska

        In December 2006, we acquired a 99.4% stake in Vojvodjanska and in October 2007, we became the sole shareholder. In February 2007, the NBG's branch network in Serbia with 24 branches became a subsidiary, NBG Beograd. Following relevant decisions of the shareholders' general assemblies of Vojvodjanska and NBG Beograd, dated January 3, 2008, the latter was absorbed by the former and the merger was completed on February 14, 2008.

        As of December 31, 2011, Vojvodjanska's 119 branches served over one million private accounts and 95 thousand company accounts and is ranked ninth in the Serbian market in terms of total assets and fourth in terms of branch network according to data from the National Bank of Serbia.

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        Selected financial information with respect to Vojvodjanska as at December 31, 2011, is provided in the table below:

 
  EUR   USD(1)  
 
  (in millions)
  (in millions)
 

Total Assets

    1,008     1,333  

Net Loans

    583     771  

Total Deposits

    625     827  

Net Loss

    (10 )   (13 )

(1)
Solely for the convenience of the reader, the translation of euro into U.S. dollars has been made at the Noon Buying Rate of US$1.00 = EUR 0.7559 as at April 30, 2012.

NBG Cyprus

        NBG Cyprus, headquartered in Nicosia, had 14 branches, one satellite branch and one foreign exchange bureau as at December 31, 2011, and in 2010 established a representative office in Moscow. It provides a range of commercial and retail banking services. In 2011, NBG Cyprus enforced its risk management policies and processes, focusing in maintaining good asset quality, along with sufficient regulatory reserves and strong capital base. It also updated its framework of corporate governance, in alignment with regulatory requirements and Group guidelines.

        Selected financial information with respect to NBG Cyprus as of and for the year ended December 31, 2011, is provided in the table below:

 
  EUR   USD(1)  
 
  (in millions)
  (in millions)
 

Total Assets

    1,791     2,369  

Net Loans

    1,163     1,539  

Total Deposits

    2,704     3,578  

Net Loss

    (0.3 )   (0.4 )

(1)
Solely for convenience of the reader the translation of euro into U.S. dollars has been made at the Noon Buying Rate of US$1.00 = EUR 0.7559 as at April 30, 2012.

SABA

        SABA, which the Bank founded in 1947, has eight branches, primarily in urban centers, across South Africa. It generally offers traditional commercial and retail banking services, with particular emphasis however, on commercial banking services for the SME market in South Africa.

        Selected financial information with respect to SABA as at and for the year ended December 31, 2011, is provided in the table below:

 
  EUR   USD(1)  
 
  (in millions)
  (in millions)
 

Total Assets

    158     209  

Net Loans

    135     179  

Total Deposits

    133     176  

Net Loss

    (0 )   (0 )

(1)
Solely for the convenience of the reader, the translation of euro into U.S. dollars has been made at the Noon Buying Rate of US$1.00 = EUR 0.7559 as at April 30, 2012.

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Leasing Services

        As part of its International operations, the Group offers leasing services through certain of its foreign subsidiaries.

Insurance

        We provide insurance services primarily to individuals and companies through our wholly owned subsidiary EH and Finans Pension.

Ethniki Insurance Group

        EH offers a full range of products such as life, accident and health insurance for individuals and groups, fire, catastrophe, motor, marine hull and cargo insurance, and general third party liability. Through the expertise of its personnel and the professionalism of its sales force, EH provides advanced insurance solutions that can meet the demands of the increasingly competitive Greek insurance market.

        EH operates through a network of 4,200 tied agents and 1,830 independent insurance brokers, in addition to selling bancassurance products through the Bank's network.

        Gross written premiums decreased to EUR 0.7 billion in 2011, from EUR 1.0 billion in 2010. In particular EH's property and casualty insurance businesses gross written premiums reached EUR 471.7 million for the year ended December 31, 2011, compared to EUR 597.9 million in 2010; and life insurance gross written premiums at an EH Group level reached EUR 263.5 million for the year ended December 31, 2011 compared to EUR 386.6 million in 2010. Bancassurance premiums for life and fire insurance amounted to EUR 89.9 million and EUR 36.9 million, respectively, in 2011 compared to EUR 161.8 million and EUR 36.2 million respectively for 2010. For more information on our bancassurance business, see "—Bancassurance" below.

        With a view towards expansion in SEE, EH operates two Cypriot subsidiaries in collaboration with NBG Cyprus which are active in life and non-life insurance. EH also operates in Romania, where it holds a 94.96% share in Societate Comerciala Asigurari Garanta S.A. ("Garanta"). Garanta offers consumer credit insurance and personal accident products through the network of four banks, namely Pireaus Bank Romania, Romextera, ATE Bank and Credit Europe.

        In Bulgaria, EH operates two insurance companies jointly with UBB and ALICO: UBB ALICO Life Insurance Company AD and UBB Chartis Insurance Company AD, for life and non-life insurance, respectively. These companies promote bancassurance products in the Bulgarian market. Additionally in partnership with UBB, EH operates UBB Insurance Broker AD holding 20% of the share capital.

        National Insurance Brokerage S.A., a Greek insurance broker acquired in 2005 by EH, contributes to the further expansion of services provided in the maritime and aviation insurance markets.

Bancassurance

        EH provides bancassurance products through our insurance brokerage subsidiary NBG Bancassurance S.A. ("NBGB"), which assumes no insurance underwriting risk, and the Bank's extensive network in Greece.

        NBGB provides products in three categories:

    Investment-saving-retirement insurance products, such as "Prostheto+" and "Frontizo", which are either lump sum or monthly installment policies. The customer selects the amount of the guaranteed pension as well as the age at which he wishes to receive such pension. "Frontizo" is targeted to customers who wish to secure a lump sum payment for their children when they reach a specific age.

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    Life and Health protection insurance products, such as "Prolamvano plus" and "Prostatevo", which provide a wide range of medical services.

    Insurance products bundled with banking products, which reduce risk for Bank customers. These products are:

    real estate insurance on properties for which a mortgage loan has been granted by the Bank;

    payment protection insurance for consumer loan customers of the Bank;

    life and disability insurance for mortgage loan customers of the Bank; and

    life and disability insurance for small business loan customers.

        More specifically, the types of insurance products offered to mortgage loan customers of the Bank are the following:

    "Life and permanent disability": Under this policy, the outstanding balance of the mortgage is reimbursed in the event of death or permanent disability of the borrower and/or guarantor.

    "Payments protection": Under this policy, a predefined amount that corresponds to the monthly mortgage payment is paid in the event of temporary disability or involuntary unemployment of the borrower and/or guarantor.

Finans Pension

        Finans Pension was established in 2007. Finans Pension's operations include providing life insurance and retirement income services to groups and individuals, establishing pension mutual funds and conducting private pensions and annuity insurance businesses. Finans Pension started operating in the life and accident insurance market in 2007 and in the private pension market in 2008. As at December 31, 2011 Finans Pension had established seven pension mutual funds. As at December 31, 2011, the total assets of Finans Pension reached TL 156.6 million and its net income for the year in 2011 was TL 9.6 million, compared to TL 109.1 million and TL 9.5 million in 2010, respectively.

Other

Real Estate Management

        The Bank engages in real estate management activities, including warehousing and third-party property management. As at December 31, 2011, the Bank owned 1,408 real estate units, 930 of which were buildings and 418 were land that the Bank acquired through seizure of collateral on loan foreclosures. The remaining 60 units were acquired for its own business purposes. As at December 31, 2011, the carrying value of the 1,348 units that were acquired through foreclosure was EUR 61.5 million (2010: EUR 61.0 million). The Group reports these items in other assets, under the line "Assets acquired through foreclosure proceedings" and is currently actively marketing these properties for sale.

        The Bank has established guidelines and procedures relating to the disposal of properties, including properties acquired through foreclosure, in order to ensure the reliability, transparency and accountability in transactions and the completion of the process on a timely basis. The ability to dispose of properties acquired through foreclosure has been affected by the recent adverse economic conditions in Greece, as the demand for properties has stalled, resulting in a significant decrease in sales of foreclosed properties. Furthermore, the limited liquidity from the Greek banks, limited credits for mortgage loans and the increasing uncertainty further weakened the demand for properties.

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        NBG Pangaea, NBG's real estate investment company wholly owned by the Bank, owned 242 properties with a net book value of EUR 167.0 million as at December 31, 2011. The commercial value of the properties contributed was EUR 822.3 million at December 31, 2011. The majority of the properties are currently being leased to the Bank under long term leases.

        In addition, Ethniki Kefalaiou S.A., a wholly owned subsidiary of the Bank that is engaged in asset and liability management, including asset liquidation, managed 44 properties with an aggregate book value of EUR 12.9 million as at December 31, 2011. Most of these properties have been bought from the Bank, which acquired them on realization of collateral under foreclosure procedures. In line with our strategy of streamlining our activities, we intend to continue to dispose of certain non-core real estate holdings through Ethniki Kefalaiou S.A. For the year ended December 31, 2011, proceeds from the disposal of land and buildings by the Bank and by Ethniki Kefalaiou S.A. amounted to EUR 13.2 million and EUR nil respectively compared to EUR 2.5 million and EUR nil respectively for the year ended December 31, 2010.

        National Real Estate performed warehousing functions and held real estate property as a subsidiary. On March 31, 2006, the Bank absorbed National Real Estate and, on March 17, 2008, completed the spin-off of the general warehouses branch to its wholly owned subsidiary, Pronomiouhos S.A. Genikon Apothikon Hellados. See Item 4.D, "Property, Plant and Equipment" below for general information regarding our real estate holdings and Item 4.A, "History and Development of the Company—History and Development of the NBG Group" above for information regarding our principal real estate divestitures in recent years. The Bank intends to continue to divest real estate holdings as part of its non-core asset divestment strategy.

Consulting and Professional Training

        Ethnodata S.A., provide consulting and development in the area of information systems and software to other companies in the Group and to third parties. In addition, the Bank runs a training center through its subsidiary NBG Training Center S.A. for its employees as well as for other banks and companies in Greece and abroad. The Bank's training center offers training courses and advisory services.

        We also engage in business consultancy services through Planet S.A., a business consultancy firm based in Athens in which the Bank held a 33.30% stake, as at December 31, 2011.

Hotel Management

        Our presence in the tourism sector is through the Bank's subsidiary, Astir Palace, owner of the Astir Palace Hotel Complex, which is currently under the management of Starwood Hotels & Resorts Worldwide Inc.

        In December 2011, Astir Palace announced the successful bidder of the international competition for the 40 year long lease of the Tourist Port of Vouliagmeni, offering an amount of EUR 43.0 million. Under this long-term lease agreement, Astir Palace will establish a subsidiary company to take over the lease agreement and the management of the Tourist Port of Vouliagmeni including its upgrade and renovation.

        In 2011, Astir Palace invested more than EUR 1.6 million (compared to EUR 3.1 million in 2010) in renovations and facility improvement projects. Astir Palace is currently engaged in the following projects:

    renovating the Aphrodite Hotel; and

    developing a 3,000 square meter conference centre.

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Exposure to European countries with significant economic and fiscal strains

        The tables below present the Group's exposure at December 31, 2011 to European countries (other than Greece) that are those receiving financial support from the eurozone countries and/or the IMF, as well as those that have initiated severe austerity measures in an attempt to improve their fiscal budgets. The countries included in the tables are Portugal, Ireland, Italy, Spain and Hungary.

Funded exposure
  Portugal   Italy   Spain   Hungary   Total  
 
  (EUR in thousands)
 

Interest bearing deposits with banks(1)

    14,416     20,445     9,334         44,195  

Loans(1)

            2,186     21,388     23,574  
                       

Total

    14,416     20,445     11,520     21,388     67,769  
                       

(1)
Carrying amount


 
  Ireland   Italy   Hungary   Total  
 
  Amortized
cost
  Fair
value
  Amortized
cost
  Fair
value
  Amortized
cost
  Fair
value
  Amortized
cost
  Fair
value
 
 
  (EUR in thousands)
 

Trading assets—Debt securities issued by other governments and public sector entities

    24,842     20,049                     24,842     20,049  

Available-for-sale investment securities—Debt securities issued by other governments and public sector entities

            3,364     2,864     6,482     5,673     9,846     8,537  

Available-for-sale investment securities—Corporate debt securities issued by companies incorporated outside Greece

    23,049     34,543                     23,049     34,543  
                                   

Total

    47,891     54,592     3,364     2,864     6,482     5,673     57,737     63,129  
                                   

 

Total exposure(1)
  Portugal   Ireland   Italy   Spain   Hungary   Total  
 
  (EUR in thousands)
 

Total funded exposure

    14,416     54,592     23,309     11,520     27,061     130,898  

Unfunded exposure to corporate and financial institutions

    2,836     20     12,647     15,701         31,204  
                           

Total

    17,252     54,612     35,956     27,221     27,061     162,102  
                           

(1)
Carrying amount

        As at December 31, 2011, the Group has recognized a EUR 17.0 million impairment with respect to the AFS investment securities issued by Ireland. No impairment has been recognized with respect to the remaining exposures shown above.

        As at December 31, 2011, we did not have any derivatives bought or sold related to the sovereign risk of these countries.

Significant Equity Method Participations

        Our equity method investment portfolio includes participations in Greek corporations.

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        The following table sets out equity participations in which we hold an equity interest in excess of 20% but less than 50%, or in which we do not have control as at December 31, 2011:

 
   
  December 31, 2011  
 
 
Name
  Country of
incorporation
  (%) Interest
held by
Group
  Reported book value(1)  
 
   
   
   
  (EUR in
thousands)

  (USD in
thousands)(2)

 

1.

 

Planet S.A. 

  Greece     33.30 %   1,519     2,010  

2.

 

UBB ALICO Life Insurance Company

  Bulgaria     59.97 %   4,892     6,472  

3.

 

Eviop Tempo S.A. 

  Greece     21.21 %   2,682     3,548  

4.

 

UBB Chartis Insurance Company AD

  Bulgaria     59.97 %   3,020     3,995  

5.

 

Social Securities Funds Management S.A. 

  Greece     20.00 %   956     1,265  

6.

 

Drujestvo za Kasova Deinost A.D. 

  Bulgaria     19.98 %   1,204     1,593  

7.

 

Teiresias S.A. 

  Greece     39.34 %   708     937  

8.

 

Hellenic Spining Mills of Pella S.A. 

  Greece     20.89 %        

9.

 

Pyrrichos Real Estate S.A. 

  Greece     21.83 %   396     524  

10.

 

AKTOR Facility Management S.A. 

  Greece     35.00 %   284     376  

11.

 

Bantas A.S. 

  Turkey     31.60 %   1,304     1,725  

12.

 

NBG Funding Ltd. 

  U.K.     100.00 %   17,466     23,106  

(1)
As reflected in the U.S. GAAP Financial Statements of the Group as at December 31, 2011, under the equity method of accounting.

(2)
Solely for the convenience of the reader, the translation of euro into U.S. dollars has been made at the Noon Buying Rate of US$1.00 = EUR 0.7559 as at April 30, 2012.

        Equity participations in which the percentage of ownership interest held by the Group is less than 20% are accounted as portfolio investments in accordance with ASC 320 "Investments—Debt and Equity Securities", as the Group does not have the ability to influence the operations of the investees. Equity participations in which:

    the percentage of ownership interest held by the Group is greater than 20% but less than 50%,

    are jointly controlled by the Group and other entities; and

    the Group is not the primary beneficiary (participations in Variable Interest Entities ("VIE"));

        are accounted for using the equity method because the Group can influence the operations of the investees.

        Based on the terms of the Joint Venture Agreements signed by group companies UBB and EH and companies of the Metlife and Chartis Groups, UBB ALICO Life Insurance Company AD and UBB Chartis Insurance Company AD are jointly controlled. The terms of these Joint Venture Agreements require, for the taking of certain actions, the affirmative vote of all shareholders and the unanimous agreement by the Board of Directors of all parties. Based on the above neither party has unilateral control, therefore, the Group does not consolidate these entities and accounts for them using the equity method.

        NBG Funding Ltd:    The Bank is the only equity investor in this entity. As the equity contribution was a nominal amount and the purpose of NBG Funding Ltd is to finance NBG Group, NBG Funding Ltd has issued debt instruments to third parties, the proceeds of which were lent to the Group. The only assets of NBG Funding Ltd are loans to and deposits with the Bank, and as a result the Bank does not have exposure to expected losses or returns in NBG Funding Ltd. Therefore, the Group is not the primary beneficiary of and does not consolidate NBG Funding Ltd.

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Intellectual Property, Contracts and Manufacturing Processes

        Our business and profitability are not materially dependent on patents or licenses, industrial, commercial or financial contracts or new manufacturing processes.

Competition

        The following table shows a breakdown of gross loans to customers and customer deposits in the universal banking sector for the Bank and its three main competitors in Greece as at December 31, 2011. We have compiled these figures based on publicly available information (stand-alone financial statements of the banks shown prepared in accordance with IFRS):

 
  As at December 31, 2011  
Banks
  Loans to customers   Customer deposits  
 
  (EUR millions)
 

1. National Bank of Greece

    58,660     44,025  

2. EFG Eurobank Ergasias

    38,831     26,864  

3. Alpha Bank

    40,337     23,749  

4. Piraeus Bank

    30,896     18,334  

The macroeconomic environment in Greece—The Hellenic Republic's economic crisis, the successful sovereign debt restructuring (PSI) and the agreement on the Program for Greece

        The Greek economy continued to face unprecedented macroeconomic headwinds in 2011, as mounting uncertainty about the sustainability of Greek debt and the imposition of additional austerity measures to ameliorate slippages in the 2011 budget implementation amplified recessionary pressures, creating a self-reinforcing cycle of weakening economic sentiment, declining liquidity and reduced private spending. This situation posed additional challenges to the fiscal adjustment effort by eroding the tax base and by increasing social spending needs.

        As a result, the fiscal consolidation process has slowed, with the 2011 Greek government deficit declining by about 1.5% to the vicinity of 9% of GDP, following a fiscal adjustment of 5.0% in 2010. The revenue side has underperformed, due to the deepening recession, as well as to implementation shortfalls (especially regarding the timely completion of a comprehensive strategy against tax evasion).

        Greece also achieved mixed results regarding progress towards the other ambitious objectives of the original adjustment program, especially regarding structural reforms, against a backdrop of high uncertainty—amplified by a severe recession, and poor results in terms of economic and policy implementation. Other related factors such as limited administrative capacity and social tensions have also hampered implementation. Slippages from 2011 fiscal targets led to the adoption of additional consolidation measures in the second half of 2011, which deepened the recession. Nevertheless, Greece achieved a substantial reduction in the general government deficit, from 15.75% of GDP in 2009 to about 9% in 2011, which is much larger than most other fiscal consolidation episodes in Organization for Economic Cooperation and Development ("OECD") countries observed in the past. Moreover, this fiscal consolidation was achieved over a period in which economic activity contracted by more than 14%, in real terms.

        The pension reform and the agreed privatization plan are important institutional changes, which are expected to result in positive changes over the medium term. Labor market flexibility increased substantially and wage adjustment in the public sector was significant (exceeding 12% in the 2010-2011 period), while private sector wages declined by approximately 10% during the same period. Nevertheless, unemployment increased to an unprecedented 20.7% in the fourth quarter of 2011. However, insufficient progress was made in modernizing revenue administration and expenditure control, and steps taken in the fight against tax evasion and the prompt settlement of payments to suppliers have remained weak. Moreover, achievements in other growth-enhancing structural reforms

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were not commensurate with the pressing need to accelerate productivity growth and restore competitiveness.

        In 2012, Greece proceeded with the first sovereign debt restructuring process in the euro area, following the agreement by a very high portion of investors (96.9%) to participate voluntarily in the debt restructuring under PSI—following an agreement by EU leaders on October 26, 2011 and pursuant to the offer launched on February 24, 2012. This exercise imposed deep haircuts on private debt holders (53.5% of the nominal value), with the residual 46.5% replaced by short-dated EFSF paper (one and two year notes) for 15% of the original nominal value for which the Program had set aside EUR 30 billion, and the remaining 31.5% of the nominal value by the issuance of new long-term Greek bonds (with an average maturity of 20 years). The high level of participation (EUR 177 billion out of an offer for EUR 205.5 billion) reflected the fact that the Greek government introduced collective action clauses into eligible Greek law-governed bonds of the Hellenic Republic.

        The Offer also contained detachable GDP-linked warrants, providing for higher returns if actual output in Greece exceeded that set out in the IMF's medium-term debt sustainability scenario as well as the payment of accrued interest on the exchanged bonds, also in the form of short-term EFSF notes. Holders of the new bonds will also be entitled to the benefit of a cofinancing agreement with the EFSF, linking the new bonds to the Hellenic Republic loans from the EFSF up to EUR 30 billion. The exchange was launched on February 24, 2012 (and for bonds issued by state enterprises and guaranteed by the Hellenic Republic on April 4, 2012) and completed by the bonds issued under Greek law on March 12, 2012, while the offer was extended until April 25, 2012 for bonds issued under foreign law to accommodate the specific terms regarding the holding of bondholder meetings.

        The new Greek bonds have a term of 30 years (final maturity is in 2042) and an amortization period starting on the eleventh anniversary of the issue date. They bear a coupon of 2.0% p.a. until 2015, 3.0% p.a. until 2020, 3.65% p.a. until 2021 and 4.3% p.a. thereafter. Greece's debt service capacity will also be improved by the fact that official creditors lowered spreads on EU loans to Greece disbursed under the original program to 150 bps over Euribor and pushed maturities out beyond 2020. The second loan facility will be funded through the EFSF at cost, with loans amortizing over 25 years (with grace periods of 10 years) and interest paid annually while the IMF contribution will be financed through the lower-cost extended financing facility (EFF). Furthermore, governments of member states whose central banks currently hold Greek government bonds in their investment portfolio (which was excluded from the exchange) commit to pass on to Greece amounts equal to any future income accruing to their national central bank stemming from this portfolio until 2020 (estimated benefit of 1.8% of GDP).

        The successful completion of the PSI implies a significant decline of the Greek debt burden, as well as a sharp reduction in debt servicing needs through low interest rates on the new bonds and a substantial extension of the average debt maturity. The PSI achieves nominal debt relief on EUR 199 billion of eligible bonds, directly reducing Greece's debt burden by approximately 50% of GDP from a level of 165% of GDP at the end of 2011. Interest service costs are reduced as the effective average cost of Greek debt servicing is brought down to approximately 3.3% in the 2012-2014 period, from about 5% in 2011. Finally, amortization payments are minimal until 2020 due to the long grace periods on the PSI bonds and a large part of the official financing.

        Overall, the completion of debt exchange is expected to result in a sustainable reduction of Greek debt to below 120% of GDP by 2020, and below 90% by 2030 (from 165% in 2011), with the expected debt trajectory being relatively more robust even under more adverse macroeconomic conditions or outcomes of the Program's measures compared with the baseline projections of the Program. Nevertheless, due to the large disbursements under the Program in 2012, the debt stock is expected to revert to 163% of GDP at the end of 2012, before declining gradually towards 120% by 2020. Due to the significant debt and debt service reduction, the required primary surplus target for the 2014-2019

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period was scaled back from an ambitious 6.5% of GDP under the original program to 4.5% of GDP for the 2014-2020 period.

        During the debt exchange process, the Hellenic Republic's long-term sovereign credit rating was lowered to the lowest rating available (corresponding to selective default state) by all rating agencies. The downgrade was triggered after Greece retroactively inserted collective action clauses in the documentation of certain sovereign debt series governed by Greek law. The credit rating of the Hellenic Republic has been subsequently upgraded after the completion of the exchange of Greek government bonds subject to Greek law (corresponding to approximately 94% of all eligible bonds in the exchange) by Fitch to B- and by Standard & Poor's to CCC, while Moody's has retained its rating at C.

        In March 2012, the Greek government agreed to the Program, a second economic adjustment program, the term of which extends through 2015 and is jointly supported by the IMF and eurozone member states. This Program will replace the original program of EUR 110 billion, agreed in May 2010, for the period 2010-2013 and had the form of a cooperative package of IMF and eurozone member states funding. The international assistance loans disbursed under the original program amounted to EUR 73 billion. Of this amount, EUR 52.9 billion has been sourced from eurozone member states, and EUR 19.9 billion from the IMF. In the Program, for the years 2012-2015, eurozone member states through the EFSF and the IMF commit the undisbursed amounts from the first program, plus an additional EUR 130 billion, covering Greece's expected funding needs fully for the four-year period. During this period, the EFSF could provide an overall amount of EUR 144.7 billion, while the IMF will contribute EUR 28 billion during four years under its extended fund facility (EFF mechanism). The Program will be heavily front-loaded, especially regarding financing from eurozone member states—disbursements of about EUR 75 billion is expected to occur in the first half of 2012— to fund EUR 35.7 billion of PSI debt enhancements and accrued interest and EUR 25 billion to recapitalize Greek banks through the HFSF. The IMF contribution of EUR 28 billion will be disbursed in 17 equal tranches over a four-year period ending 2015.

        The disbursements of financial assistance to Greece are conditional on quarterly reviews for the duration of the arrangement. The release of the tranches by the lenders will be based on observance of quantitative performance criteria and a positive evaluation of progress made with respect to policy criteria set by the Memorandum of Economic and Financial Policies (MEFP) and the Memorandum underlying the Program and committed to by the Greek government. Moreover, in April 2012, the Greek parliament passed new legislation prioritizing government debt service obligations to private and official holders of Greek debt over any other fiscal use of Program funding, and the same is committed to occur with primary budget surpluses which are expected to be achieved from 2013 onwards.

        The Program also sets forth a blueprint for the stabilization of public finances and the economy of Greece and safeguarding financial stability in Greece. Overall, the implementation of the growth-enhancing structural reforms gains prominence in the overall implementation of the Program, while the debt restructuring and higher official financing allows a more realistic pace of fiscal adjustment and a more gradual privatization process. Specifically, the strategy is primarily based on expenditure reduction—so as to achieve a primary surplus of 1.8% of GDP in 2013, and 4.5% of GDP for the period 2014-2020—and the timely and decisive implementation of growth enhancing structural reforms. The Program also foresees more aggressive nominal wage adjustments and benefit cuts, to reduce costs and thus improve price competitiveness, and permit Greece's transition to a more investment and export-led growth model.

        The main elements of the Program are as follows:

    Direct measures to improve Greek competitiveness through an internal devaluation comprising: i) making collective bargaining more effective; ii) reducing the minimum wage by 22%; iii) lowering non-wage labor costs; and iv) liberalizing services and professions.

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    Gradual fiscal adjustment built on structural expenditure reforms and improvements in tax collection.

    Fiscal adjustment will be back-loaded to 2013-2014 in view of the short-term deflationary impact in 2012 from the internal devaluation. New permanent expenditure measures equivalent to 5.5% of GDP, necessary to reach the 2014 primary surplus of 4.5% of GDP, will be identified as a condition for completing the first program review (in late May or early June 2012).

    Measures to restore financial sector stability. Significant resources—on the order of EUR 50 billion—will be set aside in the Program to help banks cope with the impact of the recession and of restructuring of government debt. Through the terms of the bank's recapitalization, which have yet to be determined, the desire for private sector management and effective control of the banking sector will be balanced with the need to safeguard the taxpayers' significant capital injection. In addition, the framework for bank resolution and recapitalization and for financial sector oversight will also be strengthened, to ensure effective stewardship of bank recapitalization funds.

        The adjustment process will be also based on a successful completion of an ambitious privatization agenda, which has been adapted to the current conjuncture and the impact of recession on asset valuations. Similarly, the ambitious structural reform agenda includes measures to increase fiscal efficiency, strengthen Greece's institutional capacity and improve efficiency of the labor market and product and service markets.

        At the same time, Greece is receiving an unprecedented level of technical assistance—with a view to enhancing the government's capacity to implement policies—coordinated by the EU Commission's taskforce under the guidance of the European Commission, Member States, and the IMF. The assistance concerns several areas which are crucial for the success of the Program, such as tax administration and the fight against tax evasion, public financial management, public administration and business environment reforms.

        Against this background, the Greek economy continues to face significant short-term challenges. Economic activity is expected to continue on a downward trend in 2012, declining by around 5.0% year-on-year (according to the latest IMF, EU program forecasts), hampered by additional fiscal policy tightening and further reductions in private and public sector wages and pensions, continuing high uncertainty and high international oil prices. Consequently, labor market conditions will deteriorate further, likely increasing social fatigue and social tensions. At the same time, the support from the export sector, and especially tourism, will be lower compared with 2011, mainly due to the weaker outlook of eurozone economies.

        Although the beneficial impact from the activation of the new Program may support an improvement in the economic environment by late-2012, the turning point for economic activity in Greece is expected to be delayed to 2013 according to latest EU/IMF forecasts.

        For more detail on the risks and uncertainties relating to a failure to successfully implement the Program, see Item 3.D, "Risk Factors—Risks Relating to the Hellenic Republic Economic Crisis".

    BlackRock

        In August 2011, the Bank of Greece mandated BlackRock Financial Management Inc. ("BlackRock"), a U.S.-based investment, advisory and risk management company to conduct an independent diagnostic exercise of the domestic loan portfolio of the largest Greek banks, including the Bank. This was in accordance with the commitment undertaken by the Bank of Greece under the Program in the context of ensuring that the Greek banks are adequately capitalized. The exercise has been completed and its findings have been communicated to the individual banks. These losses are offset by the existing provisions (allowance for loan losses) as at the end of December 2011 (EUR 5.4 billion of which EUR 1.7 billion relates to loan to the Hellenic Republic and loans exchanged

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in PSI) as well as future pre-provision earnings in Greece for the period 2012-2014 and the earnings from the Bank's international subsidiaries. The earnings estimates provided by the Bank based on the macroeconomic guidance provided by the Bank of Greece were vetted by the Bank of Greece with the assistance of an external consultant, Bain Capital.

        We estimate that the Bank's future earnings and current level of allowance for loan losses are sufficient to cover the estimated loan losses in both the baseline and adverse scenario, implying no additional capital needs for the Bank arising from the BlackRock loan diagnostic.

    Recapitalization Framework

        The Program also contains measures to protect the stability of the banking system by providing capital support. The HFSF, funded by the government out of the resources available from the IMF and EU under the Program, was established under Greek Law 3864/2010 with a view to ensuring adequate capitalization of the banking system. If supervisory assessments conclude that a bank's capital buffer might fall below adequate levels, the shareholders will be invited to immediately bring additional capital or take capital support from the HFSF. The minimum capital ratios have been set at 9% core capital by the end of September 2012 (calculated in accordance with the EBA definition, which includes preference shares issued by the Bank and purchased exclusively by the Greek government under pillar I of the Hellenic Republic Bank Support Plan increasing to 10% by the end of June 2013).

        A prior action for the approval of the Program was the approval of Greek Law 4051/2012, which modified the governance structure of the HFSF and altered the Greek bank recapitalization framework. Pursuant to this law, the decision-making bodies of the HFSF will henceforth be the General Council and the Executive Committee. The General Council consists of five members, and the Executive Committee consists of three members. A representative of the Ministry of Finance and an appointee of the Bank of Greece sit on the General Council, while an appointee of the Bank of Greece sits on the Executive Committee. Save for these persons, the other members of the General Council and the Executive Committee are selected from a special committee that consists of an equal number of representatives of the Ministry of Finance and the Bank of Greece. Representatives of the EC and ECB may participate in this committee. The appointment of the members of the General Council and Executive Committee, save for those appointed by the Bank of Greece and the Ministry of Finance, requires the consent of Euro Working Group.

        The HFSF, a fully-owned entity of the Greek government, will have an initial duration of seven years. Any shares remaining in the HFSF at the time it ceases its activities will be transferred to the Hellenic Republic. The amount of funds earmarked for the HFSF out of the Program is resources to date is about EUR 50 billion.

        As stipulated in its founding law 3864/2010, the HFSF will manage its participations in the banks with a view to safeguarding the value of its holdings, minimizing the risks for the Greek public and ensuring adequate competition in the Greek banking system.

        More specifically, the recapitalization of each credit institution will occur through common equity shares with restricted voting rights if the individual credit institution succeeds in raising at least 10%, as further specified by a Ministerial Act, of its capital shortfall compared with the above-stated minimum core capital targets. Otherwise, a bank would be recapitalized by standard common equity to be held by the HFSF. In the former case, the recapitalization will occur through common equity with voting rights only for resolutions regarding modifications of its Articles of Association, including increase or reduction of the share capital of the Bank or provision of relevant authorization to the Board of Directors of the Bank, merger, division, conversion, revival, extension of duration or dissolution of the Bank, material asset transfers, including the sale of subsidiaries, or any other matters that require an increased majority, as explicitly provided in Greek Law 2190/1920). The HFSF will decide on the procedure for disposing its shares at a time it deems appropriate, and in any case within five years of its participation in the credit institution's share capital increase. If a bank is unable to raise at least

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10% of its capital shortfall from the private sector, the HFSF shall dispose of its shares in the credit institution within two years from its participation in the credit institution's share capital increase, which may be extended for two further years by decision of the Minister of Finance. A Ministerial Act is required to define the conditions for the conversion of these securities and other terms of the recapitalization framework, and this is expected to occur soon after the formation of the new government.

        In view of the delay in completing the recapitalization framework, pursuant to Greek Law 3864/2010 as amended by legislative act dated April 19, 2012, the HFSF, following a decision by the Bank of Greece, would issue to credit institutions which have been deemed viable by the Bank of Greece and have submitted a request for recapitalization to the HFSF, a certificate by which the HFSF would commit to participate in the share capital increase of such credit institutions for an amount determined by the Bank of Greece, provided that: (i) the business plan of the credit institution has been assessed by the Bank of Greece as viable and credible, (ii) the above request has been approved by the Bank of Greece and notified to the EC, and (iii) the Bank of Greece considers the issuance of the certificate necessary for the smooth continuation of the credit institution's operation as a going concern and the attainment of the capital requirements in accordance with the decisions of the Bank of Greece, as well as for the maintenance of the stability of the Greek banking system.

        On April 4, 2012, the Bank of Greece sent a letter to the Bank, by which it informed the Bank that its capital adequacy ratio was below the acceptable level and therefore suggested that the Bank should submit to the HFSF a request for capital support, along with a three-year business plan. Following receipt of this letter, the Bank submitted the necessary documents, and the HFSF provided the Bank with the relevant certificate, by which it committed to participate in the Bank's share capital increase. In an effort to safeguard the participation of Greek credit institutions in the Eurosystem's liquidity operations, a capital injection by the HFSF may be granted before the completion of the share capital increase of credit institutions. More specifically, pursuant to article 6 of Greek Law 3864/2010, as recently amended by legislative act dated April 30, 2012, following a decision by the Bank of Greece, and upon consent of the EC, the ECB and the EFSF, the HFSF may advance its contribution to the share capital increase of a credit institution, or part thereof, up to the amount to be determined by the Bank of Greece, provided that: (a) the credit institution has submitted a recapitalization request, along with a business plan and a detailed timetable for the implementation of the measures provided for in the business plan; (b) the recapitalization request has been approved by the Bank of Greece and notified to the EC, and the credit institution's business plan has been assessed by the Bank of Greece as viable and reliable; (c) the Bank of Greece deems that the advance payment of the contribution is necessary for the attainment by the credit institution of the capital adequacy requirements according to the decisions of the Bank of Greece, for the maintenance of the access of the credit institution to the monetary policy operation of the Eurosystem and for the stability of the Greek banking sector; and (d) the credit institution has executed a pre-subscription agreement with the HFSF regarding the share capital increase of the credit institution. In this case, the HFSF shall have the right to appoint up to two representatives in the credit institution's board of directors and may request from the credit institution any data and information it deems necessary in order to fulfill its purpose, carry out due diligence and generally exercise its rights. The advance amount shall be deposited in an account held by the credit institution at the Bank of Greece exclusively for the purpose of HFSF's participation in the above share capital increase, and shall be released upon certification of payment of the share capital according to par. 2 of article 11of Greek Law 2190/1920. Until its release, the HFSF's contribution shall be used by the credit institution only to ensure its liquidity through sale and repurchase transactions with market counterparties or in the Eurosystem though the ECB or the Bank of Greece. On May 3, 2012, by Act of Ministerial Cabinet, the minimum terms that must be included in the pre-subscription agreement to be concluded between the HFSF, the credit institution and the EFSF were determined.

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        The representatives of the HFSF in a credit institution's board of directors shall have the right:

    (a)
    to call the general meeting of shareholders;

    (b)
    to veto any decision of the credit institution's board of directors:

    i.
    regarding the distribution of dividends and the bonus policy concerning the Chairman, the Managing Director and the other members of the board of directors, as well as the general managers and their deputies; or

    ii.
    where the decision in question could seriously compromise the interests of depositors, or impair the credit institution's liquidity or solvency or its overall sound and smooth operation (including business strategy, and asset/liability management);

    (c)
    to request an adjournment of any meeting of the credit institution's Board of Directors for three (3) business days in order to get instructions from the HFSF's Executive Committee, following consultation with the Bank of Greece;

    (d)
    to request the convocation of the Board of Directors of the credit institution; and

    (e)
    to approve the Chief Financial Office of the credit institution.

        For more information on the HFSF please see below "Regulation and Supervision of Banks in Greece".

Risk of Implementing the Stabilization Program

        The implementation of Program measures is subject to a range of substantial risks including:

    recessionary pressures are far more intense and prolonged than initially projected taking a heavy toll on the fiscal adjustment effort, both on the revenue and expenditure sides, while the deterioration in labor market conditions is unprecedented (unemployment rate of 20.7% in the fourth quarter of 2011);

    the process of internal devaluation and the restoration of competiveness could be more prolonged than currently projected by the Program, investor sentiment could remain poor despite the reform efforts, or bank deleveraging could proceed at a more rapid-than envisioned speed undermining corporate investment and private sector sentiment;

    implementation of the Program requires strong political will and public support in following years, which will be greatly challenged by already substantial social costs from austerity and prolonged recession, while the high probability of the formation of a coalition government is likely to amplify short-term stresses in policy making;

    market concerns regarding public debt sustainability may not dissipate despite the substantial debt relief and significant debt reprofiling;

    the Hellenic Republic may continue to experience difficulty accessing the private capital markets, even after the time period for which the Program provides full funding (2014);

    economy-wide liquidity conditions are likely to remain tight against a background of closed interbank and wholesale markets and an uncertainty and recession-driven decline in domestic bank deposits (by 32% between the third quarter of 2009 and the first quarter of 2012). To date, ECB liquidity has been sufficient to counterbalance the contraction of alternative liquidity sources through sufficient Eurosystem lending, while European Liquidity Assistance ("ELA") type facility has been activated by the Bank of Greece since the third quarter of 2011. The loss of deposits may be much larger-than-envisaged and terms under which liquidity support is provided from the Eurosystem may be tightened or terminated;

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    sizeable uncertainty surrounding short-term economic prospects in the eurozone and political commitment of eurozone member partners—including worries about eurozone member partners determinacy to support the Greek effort in following years. In this vein, the commitment of the IMF to participate in Program financing may be also be questioned;

        Accordingly, these are extremely uncertain times for the banking sector in the Hellenic Republic and the EU and it is difficult for us to predict or state with any degree of certainty whether the Program and any amendments thereto, will be implemented successfully and, if implemented successfully, whether it will have the effects intended, and how severe an impact on our results of operations and financial condition an implementation of the Program and any amendments thereto, successful or unsuccessful, might have. For more detail on the risks and uncertainties that we face regarding the failure to implement the stabilization plan and otherwise, see Item 3.D, "Risks Relating to the Hellenic Republic Economic Crisis".

The Banking Services Sector in Greece

        The Greek banking sector has expanded rapidly in recent years from the early 1990s, due to both deregulation and technological advances. This trend was reversed since the outbreak of the global financial crisis in 2008. As of January 2012, according to information from the Bank of Greece, there were 57 credit institutions in Greece (as compared to 62 a year ago): 17 Greek banks, 16 cooperative banks and 23 foreign banks, as well as one specialized credit institution. In March 2012, the Bank of Greece revoked the licenses of three cooperative banks, reducing the number of institutions operating in the country to 54, and the number of cooperative banks to 13.

Universal Banks

        Traditionally, commercial banks have dominated the Greek financial services market. However, specialized credit institutions have expanded into commercial banking thereby increasing competition in the market. The distinction between commercial and investment banks has ceased to formally exist and the Bank of Greece classifies all banks operating in Greece as "universal banks", with the exception of the Consignment Deposits and Loans Fund (which is a legal entity under public law, fully owned and controlled by the Hellenic Republic). Universal banks have been shielded to some degree from the deteriorating interbank lending conditions as they are able to access funding through deposits, compared with institutions that are unable to draw on such deposit bases.

        There are three banks that are controlled, directly or indirectly, by the Hellenic Republic: Bank of Attica, Hellenic Postbank, and ATE Bank (formerly the Agricultural Bank of Greece). Over the last ten years, the Hellenic Republic has proceeded with privatizing a large number of credit institutions. A majority stake of Geniki Bank was disposed of to Société Générale in early 2004, followed by the disposal of a majority stake of Emporiki Bank to Crédit Agricole in August 2006. In addition, the Hellenic Republic proceeded with the partial privatizations of the Hellenic Postbank and ATE Bank through the listing of their shares on the ATHEX.

        In the years 2000 to 2008, many of the major Greek banks have expanded internationally, establishing or enhancing their presence in SEE. In addition to the Bank's acquisition of controlling stakes in Finansbank and Vojvodjanska during 2006 and the first months of 2007, other Greek banks have proceeded with acquisitions of banks in the region. Eurobank EFG became the owner of 100% of the shares of Nacionalna Stedionica Banca in Serbia in March 2007 and took control of over 90% of DZI Bank in Bulgaria in December 2006. Also, in March 2007, Eurobank EFG concluded the purchase of a 99% stake of Universal Bank in Ukraine, and completed the acquisition of the majority of shares in Tekfenbank in Turkey. Piraeus Bank acquired a nearly 100% stake in International Commerce Bank JSC in the Ukraine in 2007, and Alpha Bank acquired the majority of shares of the Ukrainian OJSC Astra Bank in 2008. ATE Bank made its first expansion steps in SEE by acquiring a 20% stake in AIK

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Bank in Serbia and a stake of MindBank in Romania during the same year (source: banks' financial statements for 2006 and 2007).

        The economic downturn of the recent years has led the Greek financial institutions to plan or make divestments, in order to shield their balance sheet against the new adverse conditions. In 2011, Eurobank EFG announced its agreement with Raiffeisen Bank International AG in Poland ("RBPL") to dispose of 70% stake of its operations in the country (Polbank EFG) and exchange the remaining 30% stake for a 13% stake in the combined RBPL-Polbank EFG operations. In April 2012, Eurobank EFG signed an agreement with Kuwaiti Burgan Bank, to dispose of its 70% holding in its Turkish subsidiary Eurobank Tekfen.

Foreign Banks

        In January 2012, according to data published by the Bank of Greece, there were 23 foreign-owned or incorporated credit institutions that were established in the Greek banking market—4 credit institutions less than a year ago. These include Citibank, Bank of Cyprus and HSBC. The majority of foreign banks operating in Greece have little presence in retail banking services.

Specialized Credit Institutions

        The Consignment Deposits and Loans Fund, an autonomous financial institution organized as a public law legal entity under the supervision of the Ministry of Finance, is the only remaining specialized credit institution in Greece. Its activities include the acceptance of consignments in cash or in kind, the granting of housing loans to qualifying borrowers, primarily civil servants, and the support of regional development.

Non-Banking Institutions

        As of April 2002, Greek law allows non-banking institutions that are licensed by the Bank of Greece to extend consumer credit or loan facilities. These institutions are in direct competition with universal banks in the consumer credit sector.

The Macroeconomic Environment and the Banking Services Sector in SEE and Turkey(1)

        In 2011, the macroeconomic picture in South Eastern Europe-6 ("SEE-6", comprising Albania, Bulgaria, Cyprus, FYROM, Romania and Serbia) and Turkey was mixed.

        In SEE-6, growth recovered only slightly, inflation moderated, and external imbalances receded further; however, the banking sector performance weakened. Economic activity recovered moderately, due to subdued domestic demand, reflecting, inter alia, tight incomes and fiscal policy, and weak credit activity. Real GDP growth rate in SEE-6 is estimated to have rebounded to 2.1% in 2011 after two consecutive years of negative growth. Inflation decelerated to 3.5% year-on-year in December 2011 from 6.9% in December 2010, reflecting subsiding domestic demand, favorable food prices, and strong base effects (e.g., an increase in the value-added tax in Romania in 2010). On another positive note, the current account deficit remained at the 2010 level of 4.9% of GDP, down from 6.4% in 2009 and 15.1% in 2008, while the quality of its financing improved. In fact, non debt-generating foreign direct investments covered 63.2% of the current account deficit in 2011 against 47.6% in 2010.

        Despite this relatively improved operating environment, activity remained sluggish due to limited financing of the majority foreign-owned banking sector by parent banks as well as tight credit standards by banks due to deteriorating asset quality. Indeed, in SEE-6, financial intermediation embarked on a downward trend. Loans and deposits recorded low growth rates of 6.2% year-on-year and 7.1% year-on-year, respectively, in 2011 while the corresponding penetration rates stood at 66.9% and 61.6%.

   


(1)
Source: Published data from the Central Banks and the National Statistical Agencies of the related countries and processed by NBG. The SEE-6 weighted averages are based on NBG estimates of nominal EUR GDP in each country

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Lending to corporations was the main driver of credit activity in SEE-6 as a whole, growing by 9.3% year-on-year in December 2011 and bringing the loans to corporates-to-GDP ratio to 38.1%.

        As a result, the profitability of the banking sector in SEE-6 remained weak, and in Cyprus the profitability was negative. Overall, due to the participation of Cypriot banks in the PSI (with the three largest banks—Bank of Cyprus, Marfin Bank, and Hellenic Bank posting losses of EUR 3.6 billion in 2011). Profitability was also hampered, but to a smaller extent, by an environment of scarce and more expensive external financing, which led, in some countries, to a "deposit war", and subdued credit activity, reflecting bank efforts to contain the deteriorating asset quality (with the non-accruing loans standing around 16%).

        By contrast, in Turkey, growth remained strong and the banking sector performance remained robust. Real GDP growth remained high at 8.5%, following a rebound to 9.2% in 2010 from negative of 4.8% in 2009. Economic activity maintained momentum, on the back of buoyant domestic demand. Domestic demand growth remained strong, supported by increasing capital inflows, in line with the easing of the global financial crisis, and strong credit activity. However, inflation soared to 10.5% year-on-year in December 2011 from a historical low of 6.4% in December 2010, despite tighter fiscal stance and a more prudent monetary policy, on the back of unfavorable domestic food prices, strong domestic demand, and a sharp 12.7% depreciation of the TL in 2011 against the basket of 50% EUR and 50% USD. On another negative note, the current account deficit widened markedly to the high level of 10.0% of GDP in 2011 from 6.4% in 2010 and 2.3% in 2009. Non debt-generating foreign direct investments remained weak, covering only 17.4% of the current account deficit in 2011 against 16.2% in 2010.

        In this environment of strong growth, the profitability of the Turkish banking sector remained impressive, with the full-year Return on Average Equity standing at 15.5%, benefiting from very strong credit activity, despite the authorities efforts to contain it at 20%-25%, and improving bank asset quality, with the non-accruing loan ratio reaching an all-time low of 2.7% in December 2011. Loans and deposits rose by 31.4% year-on-year and 12.5% year-on-year, respectively, in 2011, while their corresponding penetration rates stood at 49.1% and 50.7% of GDP.

        Turkey remains dependent on external financing, and its economy is highly exposed to a turnaround in global activity and investor sentiment. Turkey's current account deficit is expected by the IMF to ease markedly in 2012. In the event and provided that the bulk of the current account deficit continues to hinge on large portfolio inflows and a drawdown of bank and non-bank residents' assets abroad, as was the case in the past two years, Turkey will continue to be vulnerable to sudden shifts in global investor sentiment. As a result, there can be no assurance that Turkey will not experience volatility in domestic financial markets. Such likelihood would increase if international market turbulence continues and would have a negative impact on Finansbank's business and could adversely affect the Group's business, results of operations and financial condition.

Regulation and Supervision of Banks in Greece

        NBG Group is subject to financial services laws, regulations, administrative actions and policies in each location where the Group operates. The Bank of Greece is the central bank in Greece. It is responsible for the licensing and supervision of credit institutions in Greece, in accordance with Greek Law 3601/2007 on licensing, operation, supervision and control of credit institutions, Greek Law 3746/2009 on the Greek deposit and investment guarantee fund, Greek Law 3691/2008 on anti-money laundering provisions, Greek Law 3862/2010 on payment services and credit institutions and other relevant laws of Greece, each as amended and in force. Also, in accordance with Greek Law 1266/1982 on organizations exercising monetary, credit and currency policy, the Bank of Greece has regulatory and supervisory powers relating to the operation of credit institutions in Greece.

        Regulation of the banking industry in Greece has changed in recent years as Greek law has changed largely to comply with applicable EU directives. In August 2007, the EU directives

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(2006/48/EC and 2006/49/EC) regarding the adoption of the revised Basel Capital Accord, known as Basel II, were incorporated into Greek law relating to the business of credit institutions and to the capital adequacy of investment firms and credit institutions. Following this, on August 20, 2007, the Bank of Greece issued ten Governor's Acts specifying the details for the implementation of Basel II, which took effect from January 1, 2008. These Acts were amended during 2010, in order to adopt the respective amendments of the EU directives as regards risk management, own funds, capital adequacy and large exposures.

        Recently, the Greek government has revised the terms of the Hellenic Republic Bank Support Plan to strengthen Greek banks' capital and liquidity positions. For more information concerning our participation in this plan, see "—The Hellenic Republic's Bank Support Plan" below. In addition, in response to the unprecedented economic downturn in the Hellenic Republic, in early May 2010, the Greek government agreed to the IMF/eurozone Stabilization and Recovery Program, replaced by the Program, a second economic adjustment program, in March 2012. This program was amended on February 9, 2012.

The regulatory framework

        Credit institutions operating in Greece are obliged to:

    observe the liquidity ratios prescribed by the Bank of Greece (Act No. 2614/2009 of the Governor of the Bank of Greece, which abolished Act No. 2560/2005 and took effect on July 1, 2009, as amended by Decision No. 285/2009 of the Banking and Credit Committee and Act No. 2626/2010 of the Governor of the Bank of Greece);

    maintain efficient internal audit, compliance and risk management systems and procedures (Act No. 2438/1998 and No. 2577/2006 of the Governor of the Bank of Greece, as amended by Act No. 2597/2007 of the Governor of the Bank of Greece and Decision No. 242/2007 of the Banking and Credit Committee of the Bank of Greece);

    submit to the Bank of Greece periodic reports and statements (Act No. 2651/2012 of the Governor of the Bank of Greece, which replaced Act No. 2640/2011 of the Governor of the Bank of Greece);

    provide the Bank of Greece with such further information as it may require; and

    make (in connection with certain operations or activities) notifications to or request the prior approval of (as the case may be) the Bank of Greece, in each case in accordance with the applicable laws of Greece and the relevant Acts, Decisions and Circulars of the Bank of Greece (each as in force from time to time).

        Under Greek Law 3601/2007, the Bank of Greece Governor's Acts and other relevant laws of Greece, the Bank of Greece, in the exercise of its control over credit institutions, has the power to conduct audits and inspect the books and records of credit institutions. If a credit institution breaches any law or a regulation falling within the scope of the supervisory power attributed to the Bank of Greece, the Bank of Greece is empowered to:

    require the relevant credit institution to take appropriate measures to remedy the breach;

    impose fines (article 55A of the Articles of Association of the Bank of Greece as amended by Act No. 2602/2008 of the Governor of the Bank of Greece); and

    revoke the license of the credit institution where the breach cannot be remedied.

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        Greek Laws 4021/2011 and 4051/2012 have substantially amended the provisions of Greek Law 3601/2007 regarding supervision, resolution and liquidation of credit institutions. The new provisions of Greek Law 3601/2007, in general terms, (i) reinforce the supervisory powers of the Bank of Greece in addressing an actual or potential breach by credit institutions of Greek Law 3601/2007 and the relevant decisions of the Bank of Greece; (ii) extend the role and powers of a commissioner appointed by the Bank of Greece to manage troubled credit institutions and (iii) empower the Bank of Greece to take specific resolution measures vis-à-vis credit institutions. These provisions aim to enhance the framework for the supervision and control of credit institutions and to introduce resolution powers to the Bank of Greece in order to protect financial stability and public confidence in the Greek financial system.

        Pursuant to the amended provisions of Greek Law 3601/2007, the Bank of Greece has the following additional powers:

    (i)
    To require any credit institution actually or probably failing to comply with the requirements set out by this law and/or the relevant decisions of the Bank of Greece to take the necessary actions or corrective measures at an early stage to address any possible defects or weaknesses. In this context and, in addition to other measures already provided for in Greek Law 3601/2007 (such as prohibitions or restrictions on dividends), the Bank of Greece may itself prepare a resolution plan for a credit institution or require a credit institution to prepare a recovery plan or to proceed to a share capital increase or to seek the prior approval of the Bank of Greece for certain transactions that the Bank of Greece considers detrimental to the solvency of the credit institution.

    (ii)
    To appoint a commissioner to a credit institution for a period of up to 12 months. This period may be extended by 6 months following a decision of the Bank of Greece. The commissioner will assess the credit institution's situation and take the necessary action for its recovery, preparing it for any of the resolution measures under the new law or putting it into special liquidation. The commissioner will be subject to the oversight and report of the Bank of Greece.

    (iii)
    To extend by up to 20 days the period for the fulfillment of part or all of the credit institution's obligations, following the appointment of a commissioner, if the credit institution's liquidity is significantly reduced and it is likely that its own funds are inadequate. The 20-day period may be further extended by 10 days following a relevant decision of the Bank of Greece.

    (iv)
    To trigger certain resolution measures to ensure financial stability and to strengthen public confidence in the Greek financial system. In particular, it may: (a) instruct the commissioner to decide on a share capital increase within a specified time limit, to the exclusion of the pre-emption rights of the existing shareholders; (b) oblige a credit institution to transfer certain assets and liabilities to another credit institution or entity, against consideration and within a specified time limit; (c) recommend that the Greek Minister for Finance establish on grounds of public interest a transitional credit institution (the "TCI") to which all or part of the assets and liabilities of the credit institution will be transferred. The share capital of the TCI will be fully paid by the HFSF, and the TCI will be subject to the control of the HFSF pursuant to the provisions of Greek Law 3864/2010 and, if the HFSF ceases to exist, the control of the Greek State. The TCI may operate for a maximum period of two years, unless it is extended for two more years by a decision of the Minister of Finance, following a recommendation by the Bank of Greece.

    (v)
    To appoint a special liquidator to manage the credit institution, where a credit institution's license is withdrawn. The Credit and Insurance Committee of the Bank of Greece issued a regulation for the special liquidation of credit institutions (Government Gazette Issue

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      2498/4.11.2011), which contains special provisions regarding the liquidation of a credit institution.

        The circumstances in which the Bank of Greece may take resolution measures under Greek Law 3601/2007, as amended by Greek Laws 4021/2011 and 4051/2012, include, inter alia, the following:

    (i)
    when the credit institution fails or refuses to increase its Tier I capital or impedes in any way the control of the Bank of Greece;

    (ii)
    when the credit institution commits serious or repetitive violations of Greek Law 4021/2011 or Bank of Greece decisions, or when there are doubts with respect to its sound and prudent management, such that the solvency of the credit institution, the interests of depositors, the overall financial stability or the public confidence in the Greek financial system are put at risk;

    (iii)
    when the credit institution has inadequate Tier I capital or is unable to service its obligations and particularly to secure depositors' and creditors' funds;

    (iv)
    institution or prevention of financial instability risk;

    (v)
    when necessary for the protection of public confidence, particularly of depositors, in the stability and proper operation of the Greek financial system; and

    (vi)
    when necessary for the prevention of systemic risk or situations destabilizing the Greek financial system, taking into account the prevailing bank and interbank market conditions.

        Whenever the Bank of Greece decides that a credit institution fulfills any of the above circumstances, it must notify the HFSF and provide the HFSF with information about the financial situation of such credit institution, as well as any other information that the HFSF may need in order to apply the resolution or the recapitalization measures. The Bank of Greece and the HFSF will execute a memorandum of understanding, which shall provide the information that must be exchanged between them and the details of their cooperation with respect to such credit institutions.

        The shareholders or the creditors of the credit institution who believe that their financial position has deteriorated following the implementation of the resolution measures on the credit institution may request compensation from the Greek State in an amount that would restore them to the financial position they would have had if a special liquidation had instead taken place.

        The regulatory framework has been effected by the new recapitalization framework and the creation of the HFSF (see Item 4.B, "Business Overview—The Macroeconomic Environment in Greece—The Hellenic Republic's economic crisis, the successful sovereign debt restructuring (PSI) and the agreement on the Program for Greece-Recapitalization Framework").

The Hellenic Republic Bank Support Plan

        In November 2008, the Greek Parliament passed Greek Law 3723/2008 setting forth the Hellenic Republic Bank Support Plan initially at the amount of EUR 28 billion and following increases thereof, at the amount of EUR 98 billion. The law was passed with the goal of strengthening Greek banks' capital and liquidity positions in an effort to safeguard the Greek economy from the adverse effects of the international financial crisis. Moreover, the Hellenic Republic Bank Support Plan was revised by Greek Laws 3844/2010, 3845/2010, 3872/2010, 3956/2011, 3965/2011, 4063/2012 and ministerial decisions no. 132624/B.527/2010, 29850/B.1465/2010, 59181/B.2585/24.12.2010, 29264/B.1377/2011, 57376/B.2355/29.12.2011, 57863/B.2535/29.12.2011, and 5209/B.237/2012, which rendered preference shares of Pillar I referred to below not mandatorily redeemable, increased the return on the preference shares of Pillar I, amended the payment of dividends prohibition, increased the total amount that can be provided by the Hellenic Republic under Pillar II referred to below, extended the veto power of the State's representative on the decisions of the Board of Directors, extended the duration of the period for participation in the Plan until June 30 2012, and increased the commission paid to the Hellenic

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Republic for Hellenic Republic guarantees provided for under Pillar II from July 1, 2010 onwards. In May 2011, the Hellenic Republic, in accordance with Greek Law 3965/2011, approved an additional disbursement of EUR 30 billion in the form of Greek government guaranteed bonds, thereby increasing Pillar II of the Hellenic Republic Bank Support Plan to EUR 85 billion.

        The Hellenic Republic Bank Support Plan, as currently applicable, is comprised of the following three pillars.

        Pillar I: up to EUR 5 billion in capital designed to increase Tier I ratios.    The capital will take the form of non-transferable voting redeemable preference shares with a 10% fixed return. The shares are to be mandatorily redeemed at the subscription price either within five years after their issuance or earlier with the approval of the Bank of Greece. In accordance with Ministerial Decision 2/98029/0023A/17-01-2012, the redemption of the preference shares issued in favor to the Greek State, will, from December 31, 2011 onwards, be effected at the original par value of the preference shares through the exchange of Greek government bonds or treasury bills. At any redemption date the Greek government bonds or treasury bills to be exchanged should have the following characteristics:

    a)
    their nominal value should be of equal to the nominal value of the bonds issued as consideration for the preference shares issued by the Bank

    b)
    their maturity date should be the same or up to one month beyond the corresponding maturity date of the bonds issued as consideration for the preference shares issued by the Bank

    c)
    their market value as at the date of redemption should match their nominal value. If this is not applicable the difference will be settled between the parties in cash.

        However, if the preference shares are not redeemed within five years from their issuance and if the participating bank's general meeting of shareholders has not approved their redemption, the Greek Minister of Finance will impose, pursuant to a recommendation by the Bank of Greece, a gradual cumulative increase of 2% per year on the 10% fixed return provided for during the first five years from the issuance of the shares to the Hellenic Republic. The issue price of the preference shares will be the nominal value of the common shares of the last issue of each bank. Pursuant to decision No. 54201/B2884/2008 of the Minister of Finance, as currently in force, the banks will be required to convert the preference shares into common shares or another class of shares if the redemption of the preference shares as described above is impossible, because the Tier I capital of those banks after such redemption would be less than the level set by the Bank of Greece. The conversion ratio will only be determined at the time of conversion and the full dilutive effect of any such conversion will therefore only be known at that time.

        Pillar II: up to EUR 85 billion in Hellenic Republic guarantees in accordance with Greek Law 3965/2011.    These guarantees will guarantee new borrowings (excluding interbank deposits) to be concluded until June 30, 2012 (whether in the form of debt instruments or otherwise) and with a maturity of three months to three years. These guarantees will be granted to banks that meet the minimum capital adequacy requirements set by the Bank of Greece as well as criteria set forth in Decision No. 54201/B.2884 of the Minister of Finance, as currently in force, regarding capital adequacy, market share size and maturity of liabilities and share in the SME and mortgage lending market. The terms under which guarantees will be granted to financial institutions are included in Decision Nos. 2/5121/2009, 29850/B.1465/2010 and 5209/B.237/2012 of the Minister of Finance.

        On May 3, 2010, the Greek parliament passed Greek Law 3844/2010 amending Greek Law 3723/2008 to render preference shares not mandatorily redeemable. However, if the preference shares are not redeemed within five years from their issuance and if the participating bank's general meeting of shareholders has not approved their redemption, the Greek Minister of Finance will impose, pursuant to a recommendation by the Bank of Greece, a gradual cumulative increase of 2% per year

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on the 10% fixed return provided for during the first five years from the issuance of the shares to the Hellenic Republic.

        Pillar III: up to EUR 8 billion in debt instruments.    These debt instruments will have maturities of less than three years and will be issued by the Public Debt Management Agency by June 30, 2012 to participating banks meeting the minimum capital adequacy requirements set by the Bank of Greece. These debt instruments bear no interest, are issued at their nominal value in denominations of EUR 1,000,000 and are listed on the ATHEX. They are issued by virtue of bilateral agreements executed between each participating bank and the Hellenic Republic. The debt instruments must be repaid at the applicable termination date of the bilateral agreement (irrespective of the maturity date of the debt instruments) or at the date Greek Law 3723/2008 ceases to apply to a bank. The participating banks must use the debt instruments received only as collateral for refinancing, in connection with fixed facilities from the ECB or for interbank financing purposes. The proceeds of liquidation of such instruments must be used to finance mortgage loans and loans to SMEs at competitive terms.

        Participating banks that use either the capital or guarantee facility will have to accept a government-appointed member of the Board of Directors as State representative. Such representative will be in addition to the existing members of the Board of Directors and will have veto power on strategic decisions or decisions resulting to a significant change in legal or financial position of the Bank and for which the shareholders approval is required. The same veto power applies to corporate decisions relating to the dividend policy and the compensation of the Chairman, the Managing Director and the other members of the Board of Directors of the participating banks, as well as its General Directors and their deputies. However, the State appointed representative may only utilize its veto power following a decision of the Minister of Finance or if he considers that the relevant corporate decisions may jeopardize the interests of depositors or materially affect the solvency and effective operation of the participating bank. Moreover, the State appointed representative has full access to the bank's books, on reports for restructuring and viability, medium-term funding needs of the Bank as well as on reports for the level of financing of the Greek economy. In addition, participating banks will be required to limit maximum executive compensation to that of the Governor of the Bank of Greece, and must not pay bonuses to senior management as long as they participate in the Hellenic Republic Bank Support Plan. Also, during that period, dividend payouts for those banks will be limited to up to 35% of distributable profits of the participating bank (at the parent company level). According to the provisions of article 28 of Greek Law 3756/2009 and decision 20708/B/1175/23.4.2009 of the Minister of Economy and Finance, banks participating in the Hellenic Republic Bank Support Plan were allowed to distribute dividends to ordinary shareholders only in the form of shares, but excluding treasury shares, for the financial year ended on December 31, 2008. Also, pursuant to the provisions of article 39 of Greek Law 3844/2010, article 28 of Greek Law 3756/2009 was modified to provide that distributions to ordinary shareholders were restricted to share distributions (excluding treasury shares), for the financial years ended on December 31, 2008 and 2009. These provisions did not apply to the payments of dividends in respect of preference shares issued by credit institutions and traded on foreign organized markets. However, these cannot be treasury shares. See Item 8.A, "Consolidated Statements and Other Financial Information—Policy on Dividend Distributions". Pursuant to article 19 of Greek Law 3965/2011 and article 4 of Greek Law 4063/2012, the distribution of dividends for the financial years ended 2010 and 2011 is also restricted to share distributions.

        To monitor the implementation of the Plan, Greek Law 3723/2008 provided for the establishment of a supervisory council (the "Council"). The Council is chaired by the Minister of Finance. Members will include the Governor of the Bank of Greece, the Deputy Minister of Finance, who is responsible for the Greek General Accounting Office, and the state representative at each of the participating banks. The Council convenes on a monthly basis with a mandate to supervise the correct and effective implementation of the Plan and ensure that the resulting liquidity is used for the benefit of the depositors, the borrowers and the Greek economy overall. Participating banks which fail to comply with

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the terms of the Plan will be subject to certain sanctions, while the liquidity provided to them may be revoked in whole or in part.

        Towards the end of 2008, the Bank, together with Eurobank EFG, Alpha Bank, Piraeus Bank and ATE Bank, among others, announced that it would participate in the Plan. The deadline for inclusion in the Plan initially was February 1, 2009, but was subsequently extended to June 30, 2012.

        According to a resolution adopted by shareholders at an extraordinary General Meeting held on January 22, 2009, the Bank issued 70 million redeemable preference shares at a par value of EUR 5.00 each, with the cancellation of the preemptive rights of the existing shareholders in favor of the Hellenic Republic. Furthermore, on December 22, 2011, an extraordinary General Meeting approved a) the share capital increase by EUR 1,000 million through the issue of additional 200 million Redeemable Preference Shares at a nominal value of EUR 5.0 each with the cancellation of the pre-emptive rights of the existing shareholders in favor of the Hellenic Republic, and b) the revocation of the decision of an extraordinary General Meeting held on November 26, 2010 regarding the repurchase by the Bank of the 70 million Redeemable Preference Shares in favor of the Hellenic Republic. On December 30, 2011, following the above decision, the Bank issued the 200 million Redeemable Preference Shares at a nominal value of EUR 5.0 each. Both issues were fully subscribed by the Hellenic Republic, through the transfer by the latter to the Bank of an equivalent amount of Greek government bonds, in accordance with Greek Law 3723/2008. For more information concerning the effects of our participation in the Hellenic Republic Bank Support Plan, see Item 10.J, "Relationship with the Hellenic Republic—Hellenic Republic as Shareholder".

        Other Greek banks participating in the support plan accessed Pillar I of the Hellenic Republic Bank Support Plan, are as follows: Eurobank EFG by EUR 950 million, Alpha Bank by EUR 940 million, Piraeus Bank by EUR 750 million (in two tranches), ATE Bank by EUR 675 million, the Hellenic Postal Savings Bank by EUR 225 million and Attica Bank by EUR 100 million and Proton Bank by EUR 80 million. Emporiki Bank, a subsidiary of Credit Agricole S.A., has not utilized the facilities of the Hellenic Republic Bank Support Plan but has proceeded with a share capital increase of EUR 850 million in 2009.

Interest Rates

        Under Greek law, interest rates applicable to bank loans are not subject to a legal maximum, but they must comply with certain requirements intended to ensure clarity and transparency, including with regard to their readjustments.

        Limitations apply to the compounding of interest. In particular, the compounding of interest with respect to bank loans and credits only applies if the relevant agreement so provides and is subject to limitations that apply under article 30 of Greek Law 2789/2000 (as amended by article 42 of Greek Law 2912/2001 and article 47 of Greek Law 2873/2000) and article 39 of Greek Law 3259/2004 (as supplemented by article 8 of Greek Law 3723/2008).

Secured Lending

        Since 1992, Greek Law 2076/1992, as amended by Greek Law 3601/2007, has permitted banks to grant to customers loans and credit that are secured over real estate and movable assets of the debtor (including cash).

        Mortgage lending is extended mostly on the basis of mortgage pre-notations, which are less expensive and easier to record than mortgages and may be converted into full mortgages upon final non appealable court judgment.

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Restrictions on the Use of Capital

        The compulsory commitments framework of the Bank of Greece has been amended in line with Eurosystem regulations. Effective July 10, 2000, commitment ratios are determined by category of deposits to clients instead of a single ratio of 12% previously in force for commercial banks. The commitment ratio is 2% for all categories of deposits to clients comprising the commitment base, with the exception of the following categories to which a zero ratio applies:

    deposits with agreed maturity over two years;

    deposits redeemable at notice over two years;

    repos; and

    debt securities with agreed maturity over two years.

        This commitment ratio applies to all credit institutions.

Restrictions on Enforcement of Collateral

        According to Greek Law 3814/2010, the forced auctions initiated either by credit institutions or by companies providing credit or by their assignees to satisfy claims not exceeding EUR 200,000 were suspended until and including June 30, 2010. Pursuant to Greek Law 3858/2010, and specifically under article 40, the above suspension was initially extended until December 31, 2010. Moreover, pursuant to Greek Law 3949/2011 and specifically under article 1, the suspension was further extended until June 30, 2011. Relative legislation guaranteed the above mentioned extension initially until December 31, 2011 according to article 46 of Greek Law 3986/2011 and subsequent, pursuant to article 1 of Greek Law 4047/2012, until December 31, 2012. As at December 31, 2010 and 2011, outstanding balances that could be subject to this treatment were EUR 121.4 million and EUR 365.7 million, respectively.

        Furthermore, enforcement of collateral has been affected by Greek Law 3869/2010 regarding restructuring of individuals' debt through a court application. As at December 31, 2011, customers that had applied to the court under the provisions of Greek Law 3869/2010 had outstanding balances of EUR 286 million.

Amendments to the Law on Banking

        Greek Law on banking No 3601/2007 "Taking up and pursuit of the business of credit institutions, capital adequacy of credit institutions" transposed to Greek banking legislation the provisions of Directives of the European Parliament and of the Council Nos. 2006/48/EC relating to the taking up and pursuit of the business of credit institutions and 2006/49/EC on the capital adequacy of investment firms and credit institutions. The provisions of this law were amended several times during last year. Firstly, Greek Law 4002/2011 added new provisions concerning governance arrangements and internal control systems of credit institutions. Specifically credit institutions should on the one hand implement remuneration policies and practices that promote sound and efficient risk management and on the other hand provide proper information to Bank of Greece about remuneration of the staff, according to its instructions, as explicitly stipulated in new Governor's Act No 2650/19.1.2012 which incorporated the provisions of 2009/111/EC Directive for remunerations.

        In addition to the above, Greek Law 4021/2011 transposed to Greek banking legislation the provisions of 2009/111/EC of the European Parliament and of the Council of September 16, 2009 amending Directives 2006/48/EC, 2006/49/EC and 2007/64/EC as regards banks affiliated to central institutions, certain own funds items, large exposures, supervisory arrangements, and crisis management. As a result, Greek Law 3601/2007 was amended accordingly at the following (amongst others) points: (i) the level of supervisory convergence and cooperation at the EU level was enhanced by the implementation of colleges of Supervisors for the first time implemented into Greek banking legislation

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for the purpose of reaching agreement on key supervisory tasks, (ii) Bank of Greece is obliged to properly adopt Standards and Recommendations developed by EBA, or provide with appropriate explanations otherwise, and (iii) with respect to financial crises and systemic risk mitigation, notion of significant branches of credit institutions in other countries was defined.

        Moreover, Greek Law 3601/2007 was amended in order to enhance the framework for the supervision and control of credit institutions and to introduce resolution powers to protect financial stability and public confidence in the Greek financial system. For this purpose Greek Laws 4021/2011 and 4051/2012 were enacted. Specifically, the new provisions of Greek Law 4021/2011: (i) reinforced the Bank of Greece's supervisory powers in addressing an actual or potential breach by credit institutions and take all the necessary actions or corrective measures at an early stage, (ii) extended the role and powers of the Commissioner appointed to manage troubled credit institutions, and (iii) empowered Bank of Greece to take specific resolution measures vis-à-vis credit institutions. On the other hand, the amendments to the Law on Banking by Greek Law 4051/2012 aimed to clarify the procedures and allocation of tasks for valuing assets and liabilities and thus, for the opening balance sheets of the transitional credit institutions established in accordance with Article 63E of the Law on Banking.

        Lastly, according to new provisions of article 27 of Greek Law 3601/2007, as amended by Greek Law 4051/2012, Bank of Greece has the ability to determine by a generally applicable decision the percentage of the total of the risk-weighted assets that must be covered by items of credit institution's own funds. Subsequently, Bank of Greece Governor's Act No 2654/29.2.2012 was issued according to which the relevant percentage of original own funds, for credit institution seated in Greece, was determined to be at least a) 9%, from September 30, 2012 and b) 10%, from June 30, 2013.

Guidelines for Capital Requirements

        In June 2004 the Basel Committee issued a revised capital adequacy framework and, in November 2005, the Basel Committee issued its final proposals on capital standards, known as "Basel II". Basel II promotes the adoption of certain enhanced risk management practices. It introduces counterparty-risk sensitive, conceptually sound approaches for the calculation of capital requirements that take into account the sophistication of risk management systems and methodologies applied by banks.

        The revised framework retains key elements of the 1988 capital adequacy framework, including the general requirement for banks to hold an 8% own funds to risk-weighted asset ratio, the basic structure of the 1996 Amendment regarding the treatment of market risk and the definition of assets eligible for own capital purposes.

        A significant innovation of the revised framework is the greater use of assessments of risk provided by banks' internal systems as inputs to capital calculations. In taking this step, the framework also puts forward a detailed set of minimum requirements designed to ensure the integrity of these internal risk assessments. The revised framework introduces capital requirements for operational risk and directs banks to establish an internal capital adequacy assessment process. This process takes into account market, credit and operational risks as well as other risks, including, but not limited to, liquidity risk, concentration risk, interest rate risk in the bank's investment portfolio, business risk and strategic risk.

        The revised framework provides a range of options of escalated sophistication for the determination of the capital requirements for credit and operational risk. Various options allow banks and supervisors to select those approaches that are most appropriate for their own operations and the structure of their capital market. Furthermore, Basel II significantly enhances the requirements for market disclosures on both quantitative and qualitative aspects of risk management practices and capital adequacy.

        The Basel II framework was implemented in the EU in June 2006 by means of EU Directives 2006/48 and 2006/49 ("CRD 1"). These EU directives were transposed in Greece in August

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2007 by means of Greek Law 3601/2007. Following the adoption of Greek Law 3601/2007 on August 20, 2007, the Governor of the Bank of Greece issued ten Governor's Acts relating to the implementation of Basel II. These Governor's Acts took effect on January 1, 2008.

        On November 9, 2007, the Bank applied to the Bank of Greece requesting authorization to implement the Basel II capital adequacy framework. Specifically, the Bank of Greece's approval was sought for permission to use:

    the Foundation Internal Ratings-Based Approach ("FIRB") with respect to its exposures to corporate customers, including specialized lending exposures; and

    the Internal Ratings-Based Approach ("IRB") with respect to its mortgage loan portfolio, i.e., "receivables from individual customers, fully covered with real estate", as defined in Bank of Greece Governor's Act 2589/2007, Section B, §9a.

        Approval was granted by the relevant Bank of Greece authority in charge of bank supervision.

        The Bank is in compliance with the Basel II regulations and consistently applies all relevant rules and guidelines at a Bank and Group level. The Bank uses both the option for gradual implementation of IRB in its portfolios and the option for permanent exemption of certain categories of exposures from the application of IRB.

        The Bank has developed a comprehensive and well-documented roll-out plan that should enable the Group to gradually implement IRB with respect to the aggregate loan exposures included in the banking book (except those permanently exempted).

        In 2008, the European Commission submitted a Proposal for a Directive of the European Parliament and the European Council amending Directives 2006/48/EC and 2006/49/EC regarding banks affiliated with central institutions, certain own funds items, large exposures, supervisory arrangements and crisis management which led to the adoption of Directive 2009/111/EC of the European Parliament and of the Council, and Directives 2009/27/EC and 2009/83/EC ("CRD 2") as regards technical provisions concerning risk management. Greece adopted the new measures as from December 31, 2010.

        On November 24, 2010, EU Directive 2010/76/EC ("CRD 3") was issued amending Directives 2006/48/EC and 2006/49/EC as regards capital requirements for the trading book and for re-securitizations, and the supervisory review of remuneration policies. This Directive introduces a number of changes in response to the recent and current market conditions, such as:

    increase of capital requirements for market risk in the trading book under the use of Internal Models taking into account potential losses from adverse market movements in stressed conditions;

    increase of capital requirements under the Standardized Approach for specific market risk of positions in equities held in the trading book;

    imposition of higher capital requirements for positions in re-securitizations; and

    restriction on the remuneration payable to individuals fulfilling roles with potential impact on a bank's risk profile.

        The changes relating to remuneration have already come into force and the changes relating to the trading book and re-securitization positions will come into force on December 31, 2011.

        In December 2010, the Basel Committee issued two prudential framework documents ("Basel III: A global regulatory framework for more resilient banks and banking systems", December 2010 and "Basel III: International framework for liquidity risk measurement, standards and monitoring", December 2010) which contain the Basel III capital and liquidity reform package. The so called Basel III documents were revised in June 2011. According to the documents the proposed changes shall

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be implemented gradually ("phase-in arrangements") within the period from 2013 to 2019. Some major points of Basel III include:

    Quality and Quantity of Capital.  The Basel Committee revised the definition of regulatory capital and its components at each level. It also proposed a minimum Common Equity Tier I Ratio of 4.5% and Tier I Ratio of 6%, and introduced a requirement for non-Core Tier I and Tier II capital instruments to have a mechanism that requires them to be written off on the occurrence of a bailout of the institution, which would apply to internationally active banks;

    Capital Conservation Buffer.  In addition to the minimum Common Equity Tier I Ratio and Tier I Ratio, banks will be required to hold an additional buffer of 2.5% of common equity as capital conservation buffer. Depletion of the capital conservation buffer will trigger limitations on dividends, distributions on capital instruments and compensation and it is designed to incentivize banks to operate above their minimum requirements;

    Deductions from Common Equity Tier I.  The Committee revises the definition of items that should be deducted from regulatory capital. In addition, most of the items that are now required to be deducted from regulatory capital will be deducted in whole from the Common Equity Tier I component;

    A Grandfathering Period for existing non-common Equity Tier I and Tier II equal to the Shorter of 10 years or the Step-up Date. Capital instruments that no longer qualify as non-common equity Tier I capital or Tier II capital will be phased out over a 10-year horizon beginning January 1, 2013. The regulatory recognition of existing capital instruments will be reduced by 10% in each subsequent year. Step-up instruments will be phased out at their effective maturity date (i.e., their call and step up date) if the instruments do not meet the new criteria for inclusion in Tier I or Tier II. Existing public sector capital injections will be grandfathered until January 1, 2018;

    No Grandfathering for Instruments issued after September 12, 2010.  Only those instruments issued before September 12, 2010, will likely qualify for the transition arrangements discussed above;

    Countercyclical Buffer.  To protect the banking sector from excess aggregate credit growth the Basel Committee proposes an additional buffer of 0%-2.5% of Common Equity Tier I, to be imposed during periods of excess credit growth according to national circumstances. The countercyclical buffer, when in effect, will be introduced as an extension of the conservation buffer range;

    Forward-looking provisioning.  The Committee is promoting stronger provisioning practices through three related initiatives. First, it is advocating a change in the accounting standards towards an expected loss (EL) approach. Second, it is updating its supervisory guidance to be consistent with the move to such an EL approach. Third, it is addressing incentives to stronger provisioning in the regulatory capital framework;

    Central counterparties.  To address the systemic risk arising from the interconnectedness of banks and other financial institutions through the derivatives markets, the Basel Committee is supporting the efforts of the Committee on Payments and Settlement Systems (CPSS) and International Organization of Securities Commissions (IOSCO) to establish strong standards for financial market infrastructures, including central counterparties (CCPs). A 2% risk-weight factor is also introduced to certain trade exposures to qualifying CCPs (replacing the current 0% risk-weighting). The capitalization of bank exposures to CCPs will be based in part on the compliance of the CCP with the IOSCO standards (since non-compliant CCPs will be treated as bilateral exposures and will not receive the preferential capital treatment referred to above), and are expected to be finalized by September 2011. As mentioned above, a bank's collateral and mark-to-market exposures to CCPs meeting these enhanced principles will be subject to 2% risk-weight, and default fund exposures to CCPs will be capitalized based on a risk-sensitive waterfall approach;

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    Downturn Probability of Default.  The Committee has reviewed a number of additional measures that supervisors could take to achieve a better balance between risk sensitivity and the stability of capital requirements, should this be viewed as necessary. In particular, the range of possible measures includes an approach by the EBA to use the Pillar II process to adjust for the compression of probability of default ("PD") estimates in internal ratings-based capital requirements during benign credit conditions by using the probability of default estimates for a bank's portfolios in downturn conditions;

    Asset value correlation multiplier for large financial institutions.  A multiplier of 1.25 is proposed to be applied to the correlation parameter of all exposures to financial institutions meeting particular criteria that specified by the Committee;

    Counterparty Credit Risk.  The Committee is raising counterparty credit risk management standards in a number of areas, including for the treatment of so-called wrong-way risk, i.e., cases where the exposure increases when the credit quality of the counterparty deteriorates. For example, the proposal includes a capital charge for potential mark-to-market losses (i.e., credit valuation adjustment "CVA" risk) associated with a deterioration in the credit worthiness of a counterparty and the calculation of Expected Positive Exposure by taking into account stressed parameters;

    Leverage Ratio.  The Basel Committee confirmed its previously declared commitment to an unweighted Tier I leverage ratio of 3% that will apply for all banks as part of the Pillar II framework from January 1, 2013 with a view towards migrating the ratio to a Pillar I minimum requirement by 2018 (subject to any final adjustments);

    Systemically Important Banks.  Systemically important banks should have loss absorbing capacity beyond the minimum standards and the work on this issue is ongoing. The Basel Committee and the Financial Stability Board are developing a well integrated approach to systemically important financial institutions which could include combinations of capital surcharges, contingent capital and bail-in debt; and

    Liquidity Requirements.  The Basel Committee confirmed its previously declared commitment to introduce a liquidity coverage ratio (which is an amount of unencumbered, high quality liquid assets that must be held by a bank to offset estimated net cash outflows over a 30 day stress scenario) from January 1, 2015 and a net stable funding ratio (which is the amount of longer-term, stable funding that must be held by a bank over a one year timeframe based on liquidity risk factors assigned to assets and off-balance sheet liquidity exposures) from January 1, 2018.

        The Basel III proposals have been assessed at EU level. The European Commission has published several consultation and other policy documents indicating its intention to implement the Basel III standards throughout the EEA by way of further changes to the Directives 2006/48/EC and 2006/49/EC and/or additional regulations. The final legislative proposals were published on July 20, 2011 (CRD 4). Commission's aim is to create for the first time a single set of harmonized prudential rules which Banks throughout the EU must respect. Commission's proposal follows the timelines as agreed in the Basel Committee: entry into force of the new legislation on January 1, 2013 and full implementation on January 1, 2019.

        The Solvency II Directive (Directive 2009/138/EC), adopted by the European Parliament on April 22, 2009 and endorsed by the Council of Ministers on May 5, 2009 is a fundamental review of the capital adequacy regime for the European insurance industry. When implemented (required by October 31, 2012) the capital structure and overall governance of the Group's life assurance business will alter significantly and this may have an impact on the capital structure of the Group.

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Other regulatory changes which may have potential impact on the business of NBG

        In Europe, the U.S. and elsewhere, there is increased political and regulatory pressure to introduce recovery and/or resolution planning requirements for banks and other financial institutions as a solution to the issues raised by financial institutions that are considered "Too Big To Fail". In 2011, the European Commission consulted on Technical Details of a Possible EU Framework for Bank Recovery and Resolution Proposal. The EU Recovery and Resolution Proposal establishes a series of "resolution tools" which may be applied by the relevant authorities in seeking to ensure that the institution in question is able to continue as a going concern. Such tools include business sales, use of a bridge bank, asset separation of powers and possibly a form of "bail-in". If this proposal is implemented, it could have a material adverse effect on NBG and the cost and availability of funding for NBG.

Reporting Requirements

        Following the adoption of Basel II guidelines, the Governor of the Bank of Greece issued Act No. 2606/2008 determining the new reporting requirements for credit institutions in Greece. This Act was recently replaced by Act 2651/20.01.2012 applicable from December 31, 2011. The requirements include the following reports:

    capital structure, special participations, persons who have a special affiliation with the credit institution and loans or other types of credit that have been provided to these persons by the credit institution;

    own funds and capital adequacy ratios;

    capital requirements for credit risk and counterparty credit risk;

    capital requirements for market risk of the trading portfolio (including foreign exchange risk);

    information on the underlying elements of the trading portfolio;

    capital requirements for operational risk;

    large exposures and concentration risk;

    liquidity risk;

    financial statements and other financial information;

    covered bonds;

    suppression of money laundering and terrorist financing;

    information technology systems; and

    other information.

        The Bank submits to the Bank of Greece a full set of regulatory reports both at Bank level and at Group level, on a quarterly basis. Some of the above references are submitted on a monthly basis at Bank level.

    Capital Requirements in Our Foreign Markets

        Banking regulations in Turkey are evolving in parallel to the global changes and international regulatory environment. Turkish regulator has announced the roadmap for Basel II and stated that starting from June 2011, the banks in Turkey have started to report their results according to both Basel I and Basel II; and after June 2012 only Basel II will be used. Also, Serbia is obliged to fully adopt the Basel II framework from January 1, 2012. Romania, Bulgaria and Cyprus, in their capacity as EU members, have already adopted the Basel II framework".

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Deposit and Investment Guarantee Fund

        Pursuant to Greek Law 3746/2009, which replaced Greek Law 2832/2000, the Hellenic Deposit and Investment Guarantee Fund (the "HDIGF") was established for the purposes of providing compensation (1) to persons who have deposited funds in bank accounts with credit institutions in the Hellenic Republic, and (2) to clients regarding the provision of investment services by such credit institutions, when the credit institutions cannot fulfill their obligations to the clients. Greek Law 4021/2011 amended Greek Law 3746/2003 extending its scope to the provision of financial assistance to credit institutions for the purposes of resolution measures. In addition to the existing Depositors' Coverage Branch and the Investors' Coverage Branch, a new separate resolution branch would be created within the HDIGF and financed by contributions paid by credit institutions. All credit institutions established in the Hellenic Republic are obliged to participate in the compensation scheme available by virtue of the HDIGF. The HDIGF, which is a private entity, is administered jointly by the Bank of Greece, the Hellenic Bank Association, the Ministry of Finance and the Association of Greek Cooperative Banks.

        The HDIGF is funded by annual contributions of participating credit institutions and cooperative banks. The level of each participant's annual contribution is generally determined according to certain percentages applied to the total amount of eligible deposits, as regards the deposit compensation scheme. If accumulated funds are not sufficient to cover the claimants, participants may be required to pay an additional contribution. However, this additional contribution may not exceed an amount equal to 300% of a bank's last annual contribution and is set off against the annual contributions of subsequent years. Moreover, pursuant to Greek Law 4051/2012 the HDIGF shall increase the amount of contributions if its funds fall below a certain level of coverage of insured deposits, taking due account developments in the financial system.

        Following adverse market developments, and based on the resolutions of the meeting of the Economic and Financial Affairs Council of the EU on October 7, 2008, the coverage level was set to maximum EUR 100,000 until December 31, 2011, in accordance with Greek Law 3714/2008. The deadline may be extended by decision of the Minister of Finance. Subsequently, pursuant to Ministerial Decision No 23384/2011 the deadline was further extended until December 31, 2015. Annual contributions of participating credit institutions and cooperative banks were accordingly increased by a factor of five. The proposed level of coverage extended to credit institution clients relating to the provision of investment services was set at maximum EUR 30,000.

Settlement of business and corporate debts