Obligation Caixa Geral Depósitos 5.75% ( PTCGDKOM0037 ) en EUR

Caixa Geral Depósitos

100 % ▼

Portugal

PTCGDKOM0037 ( en EUR )

5.75% par an ( paiement annuel )

28/06/2028

Prospectus brochure de l'obligation Caixa Geral de Depositos PTCGDKOM0037 en EUR 5.75%, échéance 28/06/2028

100 000 EUR

500 000 000 EUR

28/06/2026 ( Dans 359 jours )

La Caixa Geral de Depósitos est une banque publique portugaise, la plus grande du pays, offrant une large gamme de services financiers aux particuliers et aux entreprises.

L'Obligation émise par Caixa Geral Depósitos ( Portugal ) , en EUR, avec le code ISIN PTCGDKOM0037, paye un coupon de 5.75% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 28/06/2028

CAIXA GERAL DE DEPÓSITOS, S.A.
(incorporated with limited liability in Portugal)
acting through its France branch
CAIXA GERAL DE DEPÓSITOS, S.A.
(incorporated with limited liability in Portugal)
15,000,000,000 Euro Medium Term Note Programme
This document (the "Prospectus") is issued by Caixa Geral de Depósitos, S.A., acting through its France branch ("CGDFB") and Caixa Geral de Depósitos, S.A. ("CGD"). Each of
CGD and CGDFB is, in relation to Notes issued by it, an "Issuer" and, together, the "Issuers".
Under the Euro Medium Term Note Programme described in this Prospectus (the "Programme"), subject to compliance with all relevant laws, regulations and directives, each of the
Issuers may from time to time issue Euro Medium Term Notes (the "Notes"). The aggregate nominal amount of Notes outstanding will not at any time exceed 15,000,000,000 (or the equivalent
in other currencies).
Application has been made to the Commission de Surveillance du Secteur Financier (the "CSSF") in its capacity as competent authority under the Luxembourg Act dated 10 July 2005
relating to prospectuses for securities, for the approval of this Prospectus as a base prospectus for the purposes of Article 5.4 of Directive 2003/71/EC, and any amendments to such Directive,
including Directive 2010/73/EU (the "Prospectus Directive"). The CSSF assumes no responsibility as to economic and financial soundness of, or to the quality or solvency of, any Issuer.
Application has also been made to the Luxembourg Stock Exchange for the Notes issued under the Programme to be admitted to the official list of the Luxembourg Stock Exchange (the "Official
List") and to be admitted to trading on the Luxembourg Stock Exchange's regulated market (the "Market"). References in this Prospectus to Notes being "listed" (and all related references) shall
mean that such Notes have been admitted to the Official List and admitted to trading on the Luxembourg Stock Exchange's regulated market. The Market is a regulated market for the purposes of
Directive 2014/65/EU of the European Parliament and of the Council on markets in financial instruments. However, unlisted Notes may be issued pursuant to the Programme. The relevant Final
Terms (as defined in "General Description of the Programme") in respect of the issue of any Notes will specify whether or not such Notes will be listed on the Official List and admitted to
trading on the Market (or any other stock exchange).
Each Series (as defined in "General Description of the Programme") of Notes in bearer form will be represented on issue by a temporary global note in bearer form (each a
"Temporary Global Note") or a permanent global note in bearer form (each a "Permanent Global Note" and, together with the Temporary Global Note, "Global Notes"). Interests in a Temporary
Global Note will be exchangeable, in whole or in part, for interests in a Permanent Global Note on or after the date 40 days after the later of the commencement of an offering and the relevant
issue date (the "Exchange Date"), upon certification of non-U.S. beneficial ownership. Notes in registered form will be represented by registered certificates (each a "Certificate"), one Certificate
being issued in respect of each Noteholder's entire holding of Registered Notes of one Series. If the Global Notes are stated in the applicable Final Terms to be issued in new global note ("New
Global Note" or "NGN") form, the Global Notes will be delivered on or prior to the original issue date of the relevant Tranche to a common safekeeper (the "Common Safekeeper") for Euroclear
Bank SA/NV ("Euroclear") and Clearstream Banking S.A. ("Clearstream, Luxembourg"). Global Notes which are not issued in NGN form ("Classic Global Notes" or "CGNs") and Certificates
will be deposited on the issue date of the relevant Tranche with a common depositary on behalf of Euroclear and Clearstream, Luxembourg (the "Common Depositary"). The provisions
governing the exchange of interests in Global Notes for other Global Notes or definitive Notes are described in "Summary of Provisions Relating to the Notes while in Global Form". In addition,
CGD may issue Notes represented in book entry form (forma escritural) and registered (nominativas) that will be integrated in and held through Interbolsa Sociedade Gestora de Sistemas de
Liquidação e de Sistemas Centralizados de Valores Mobiliários, S.A., as management entity of the Portuguese Centralised System, Central de Valores Mobiliários ("Interbolsa") ("Book Entry
Notes").
Notes of each Tranche of each Series to be issued in registered form ("Registered Notes" comprising a "Registered Series") and which are sold in an "offshore transaction" within the
meaning of Regulation S under the U.S. Securities Act of 1933 as amended (the "Securities Act"), will initially be represented by interests in a definitive global unrestricted Registered Certificate
(each an "Unrestricted Global Certificate"), without interest coupons, which will be deposited with a nominee for, and registered in the name of the Common Depositary on its issue date.
Beneficial interests in an Unrestricted Global Certificate will be shown on, and transfers thereof will be effected only through records maintained by, Euroclear or Clearstream, Luxembourg.
Notes of each Tranche of each Registered Series sold in the United States to a qualified institutional buyer within the meaning of Rule 144A under the Securities Act ("Rule 144A"), as referred to
in, and subject to the transfer restrictions described in "Subscription and Sale" and "Transfer Restrictions", will initially be represented by a definitive global restricted Registered Certificate
(each a "Restricted Global Certificate" and together with any Unrestricted Global Certificates, the "Global Certificates"), without interest coupons, which will be deposited with a custodian for,
and registered in the name of a nominee of, The Depository Trust Company ("DTC") on its issue date. Beneficial interests in an Unrestricted Global Certificate and a Restricted Global Certificate
will be shown on, and transfers thereof will be effected only through, records maintained by DTC and its participants, including depositaries for Clearstream, Luxembourg and Euroclear. See
"Clearing and Settlement". Individual definitive Registered Notes will only be available in certain limited circumstances as described herein.
Tranches of Notes (as defined in "General Description of the Programme") issued under the Programme may be rated or unrated. Where a Tranche of Notes is rated, such ratings will
be indicated in the applicable Final Terms and such ratings will not necessarily be the same as the ratings assigned to the Notes already issued. Whether or not a rating in relation to any Tranche
of Notes will be treated as having been issued by a credit rating agency established in the European Union and registered under Regulation (EC) No 1060/2009 on credit rating agencies (the
"CRA Regulation") will be disclosed in the relevant Final Terms. In general, European regulated investors are restricted from using a rating for regulatory purposes if such rating is not issued by
a credit rating agency established in the European Union and registered under the CRA Regulation. A rating is not a recommendation to buy, sell or hold securities and may be subject to
suspension, reduction or withdrawal at any time by the assigning rating agency.
Prospective investors should have regard to the factors described under the section headed "Risk Factors" in this Prospectus. This Prospectus does not describe all of the risks of an
investment in the Notes.
Arranger
BofA Merrill Lynch
Dealers
BayernLB
BNP PARIBAS
BofA Merrill Lynch
Caixa Banco de Investimento, S.A.
Caixa Geral de Depósitos, S.A.
Commerzbank
Deutsche Bank
HSBC
J.P. Morgan
Mediobanca
Mizuho Securities
Morgan Stanley
MUFG
NATIXIS
Nomura
Société Générale Corporate & Investment Banking
NatWest Markets
UBS Investment Bank
UniCredit Bank
The date of this Prospectus is 23 February 2018

In respect of each Issuer, this Prospectus comprises a base prospectus for the purposes of Article 5.4 of
Directive 2003/71/EC (the "Prospectus Directive") and for the purpose of giving information with regard to
the Issuers and their subsidiaries and affiliates taken as a whole (each a "Subsidiary" and together with the
Issuers, the "CGD Group" or the "Group") and the Notes which, according to the particular nature of each
Issuer and the Notes, is necessary to enable investors to make an informed assessment of the assets and
liabilities, financial position, profit and losses and prospects of the relevant Issuer.
Each of the Issuers accepts responsibility for the information contained in this Prospectus and in the
relevant Final Terms. To the best of the knowledge of each Issuer (each having taken all reasonable care to
ensure that such is the case), the information contained in this Prospectus is in accordance with the facts and
does not omit anything likely to affect the import of such information.
This Prospectus has been prepared on the basis that, except to the extent the above paragraph applies
or sub-paragraph (ii) below may apply, any offer of Notes in any Member State of the European Economic
Area which has implemented the Prospectus Directive (each a "Relevant Member State") will be made
pursuant to an exemption under the Prospectus Directive, as implemented in that Relevant Member State,
from the requirement to publish a prospectus for offers of Notes. Accordingly, any person making or intending
to make an offer in that Relevant Member State of Notes which are the subject of an offering contemplated in
this Prospectus as completed by the relevant final terms in relation to the offer of those Notes may only do so
(i) in circumstances in which no obligation arises for each Issuer or any Dealer to publish a prospectus
pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the
Prospectus Directive, in each case in relation to such offer, or (ii) if a prospectus for such offer has been
approved by the competent authority in that Relevant Member State or, where appropriate, approved in
another Relevant Member State and notified to the competent authority in that Relevant Member State and (in
either case) published, all in accordance with the Prospectus Directive, provided that any such prospectus has
subsequently been completed by final terms which specify that offers may be made other than pursuant to
Article 3(2) of the Prospectus Directive in that Relevant Member State and such offer is made in the period
beginning and ending on the dates specified for such purpose in such prospectus or final terms, as applicable.
Except to the extent sub-paragraph (ii) above or the above paragraph may apply, neither each Issuer nor any
Dealer have authorised, nor do they authorise, the making of any offer of Notes in circumstances in which an
obligation arises for each Issuer or any Dealer to publish or supplement a prospectus for such offer.
This Prospectus is to be read in conjunction with all documents which are incorporated herein by
reference (see "Documents Incorporated by Reference").
No person has been authorised to give any information or to make any representation other than
those contained in this Prospectus in connection with the issue or sale of the Notes, and, if given or
made, such information or representation must not be relied upon as having been authorised by any
Issuer, the Arranger (as defined in "General Description of the Programme") or any of the Dealers.
Neither the delivery of this Prospectus nor any sale made in connection herewith shall, under any
circumstances, create any implication that there has been no change in the affairs of any Issuer since
the date hereof or the date upon which this Prospectus has been most recently supplemented or that
there has been no adverse change in the financial position of any Issuer since the date hereof or the date
upon which this Prospectus has been most recently supplemented or that any other information
supplied in connection with the Programme is correct as at any time subsequent to the date on which it
is supplied or, if different, the date indicated in the document containing the same.
The distribution of this Prospectus and the offering or sale of the Notes in certain jurisdictions
may be restricted by law. Persons into whose possession this Prospectus comes are required by each
Issuer, the Arranger and the Dealers to inform themselves about and to observe any such restriction.
This Prospectus does not constitute an offer of, or an invitation by or on behalf of any Issuer, the
Arranger or the Dealers to subscribe for, or purchase, any Notes.
To the fullest extent permitted by law, neither the Arranger nor any of the Dealers accepts any
responsibility for the contents of this Prospectus or for any other statement made or purported to be
made by the Arranger or a Dealer or on its behalf in connection with any Issuer or the issue and
offering of the Notes. The Arranger and each Dealer accordingly disclaim all and any liability, whether
arising in tort or contract or otherwise (save as referred to above), which it might otherwise have in
respect of this Prospectus or any such statement. Neither this Prospectus nor any other financial
statements are intended to provide the basis of any credit or other evaluation and should not be
2

considered as a recommendation by any of the Issuers, the Arranger or the Dealers that any recipient of
this Prospectus or any other financial statements should purchase the Notes. Each potential purchaser
of Notes should determine for itself the relevance of the information contained in this Prospectus and its
purchase of Notes should be based upon such investigation as it deems necessary. Neither the Arranger
nor any of the Dealers undertakes to review the financial condition or affairs of any Issuer during the
life of the arrangements contemplated by this Prospectus or to advise any investor or potential investor
in the Notes of any information coming to the attention of the Arranger or any of the Dealers.
In connection with the issue of any Tranche (as defined in "General Description of the
Programme"), the Dealer or Dealers (if any) appointed as the stabilising manager(s) (the "Stabilising
Manager(s)") (or any person acting on behalf of any Stabilising Manager(s)) may over-allot Notes or
effect transactions with a view to supporting the market price of the Notes at a level higher than that
which might otherwise prevail. However, there is no assurance that the Stabilising Manager(s) (or
persons acting on behalf of a Stabilising Manager) will undertake stabilisation action. Any stabilisation
action may begin on or after the date on which adequate public disclosure of the final terms of the offer
of the relevant Tranche is made and, if begun, may be ended at any time, but it must end no later than
the earlier of 30 days after the issue date of the relevant Tranche and 60 days after the date of the
allotment of the relevant Tranche. Any stabilisation action or over-allotment must be conducted by the
relevant Stabilising Manager(s) (or any person acting on behalf of any Stabilising Manager(s)) in
accordance with all applicable laws and rules.
MIFID II product governance / target market The Final Terms in respect of any Notes will
include a legend entitled "MiFID II Product Governance" which will outline the target market
assessment in respect of the Notes and which channels for distribution of the Notes are appropriate.
Any person subsequently offering, selling or recommending the Notes (a "distributor") should take into
consideration the target market assessment; however, a distributor subject to Directive 2014/65/EU (as
amended, "MiFID II") is responsible for undertaking its own target market assessment in respect of the
Notes (by either adopting or refining the target market assessment) and determining appropriate
distribution channels.
A determination will be made in relation to each issue about whether, for the purpose of the
MiFID Product Governance rules under EU Delegated Directive 2017/593 (the "MiFID Product
Governance Rules"), any Dealer subscribing for any Notes is a manufacturer in respect of such Notes,
but otherwise neither the Arranger nor the Dealers nor any of their respective affiliates will be a
manufacturer for the purpose of the MIFID Product Governance Rules.
Prohibition of sales to EEA Retail Investors If the Final Terms in respect of any Notes includes
a legend entitled "Prohibition of Sales to EEA Retail Investors", the Notes are not intended to be
offered, sold or otherwise made available to any retail investor in the European Economic Area
("EEA"). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client
as defined in point (11) of Article 4(1) of Directive of MiFID II; (ii) a customer within the meaning of
Directive 2002/92/EC (as amended, the "IMD"), where that customer would not qualify as a
professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as
defined in the Directive 2003/71/EC (as amended, the "Prospectus Directive"). Consequently no key
information document required by Regulation (EU) No 1286/2014 (as amended, the "PRIIPs
Regulation") for offering or selling the Notes or otherwise making them available to retail investors in
the EEA has been prepared and therefore offering or selling the Notes or otherwise making them
available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
Amounts payable under the Notes may be calculated by reference to the Euro Interbank Offered
Rate ("EURIBOR") or the London Interbank Offered Rate ("LIBOR") which are provided by the
European Money Markets Institute ("EMMI") and the ICE Benchmark Administration Limited
("ICE"), respectively. As at the date of this Prospectus, EMMI and ICE do not appear on the register of
administrators and benchmarks established and maintained by the European Securities and Markets
Authority ("ESMA") pursuant to Article 36 of the Benchmark Regulation (Regulation (EU) 2016/1011)
(the "BMR").
As far as each Issuer is aware, the transitional provisions in Article 51 of the BMR apply such
that EMMI and ICE are not currently required to obtain authorization or registration.
3

THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE
OR OTHER JURISDICTION OF THE UNITED STATES, AND THE NOTES MAY INCLUDE
BEARER NOTES THAT ARE SUBJECT TO U.S. TAX LAW REQUIREMENTS. SUBJECT TO
CERTAIN EXCEPTIONS, THE NOTES MAY NOT BE OFFERED OR SOLD OR, IN THE CASE OF
BEARER NOTES, DELIVERED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT ("REGULATION S")).
THE NOTES ARE BEING OFFERED AND SOLD OUTSIDE THE UNITED STATES TO
NON-U.S. PERSONS IN RELIANCE ON REGULATION S AND WITHIN THE UNITED STATES
TO "QUALIFIED INSTITUTIONAL BUYERS" IN RELIANCE ON RULE 144A. FOR A
DESCRIPTION OF THESE AND CERTAIN FURTHER RESTRICTIONS ON OFFERS, SALES AND
TRANSFERS OF NOTES AND DISTRIBUTION OF THIS PROSPECTUS SEE "SUBSCRIPTION
AND SALE" AND "TRANSFER RESTRICTIONS". THIS PROSPECTUS HAS BEEN PREPARED
BY THE ISSUERS FOR USE IN CONNECTION WITH THE OFFER AND SALE OF THE NOTES
AND FOR THE LISTING OF NOTES ON THE LUXEMBOURG STOCK EXCHANGE.
THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE U.S.
SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION IN
THE UNITED STATES OR ANY OTHER U.S. REGULATORY AUTHORITY, NOR HAVE ANY OF
THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE
OFFERING OF NOTES OR THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES.
In this Prospectus, unless otherwise specified or the context otherwise requires, references to "",
"EUR", "Euro" and "euro" are to the lawful currency of the member states of the European Union that
adopt the single currency introduced in accordance with the Treaty establishing the European
Community, as amended, to "U.S.$", "$" and "U.S. dollars" are to United States dollars, to "£",
"sterling" and "pounds sterling" are to the lawful currency of the United Kingdom, to "ZAR" are to
the lawful currency of South Africa, to "MZM" and "metical" are to the lawful currency of
Mozambique, to "pataca" are to the lawful currency of the Macau Special Administrative Region in the
People's Republic of China and to "CVE" are to the lawful currency of Cape Verde.
Any websites included in this Prospectus are for information purposes only and do not form part
of this Prospectus.
4

TABLE OF CONTENTS
Page
RISK FACTORS ................................................................................................................................................ 6
DOCUMENTS INCORPORATED BY REFERENCE .....................................................................................42
GENERAL DESCRIPTION OF THE PROGRAMME ....................................................................................47
TERMS AND CONDITIONS OF THE NOTES ..............................................................................................55
OVERVIEW OF PROVISIONS RELATING TO THE NOTES CLEARED THROUGH EUROCLEAR OR
CLEARSTREAM WHILE IN GLOBAL FORM .....................................................................................86
BOOK ENTRY NOTES HELD THROUGH INTERBOLSA ..........................................................................91
USE OF PROCEEDS ........................................................................................................................................93
DESCRIPTION OF THE CGD GROUP ..........................................................................................................94
DESCRIPTION OF CAIXA GERAL DE DEPÓSITOS, FRANCE BRANCH ..............................................146
TAXATION .....................................................................................................................................................147
CLEARING AND SETTLEMENT .................................................................................................................164
SUBSCRIPTION AND SALE ........................................................................................................................168
TRANSFER RESTRICTIONS .......................................................................................................................172
FORM OF FINAL TERMS .............................................................................................................................173
GENERAL INFORMATION ..........................................................................................................................181
ANNEX ALTERNATIVE PERFORMANCE MEASURES ........................................................................183
5

RISK FACTORS
The Issuers believe that the following factors may affect their ability to fulfil their obligations under
the Notes issued under the Programme. All these factors are contingencies which may or may not occur and
the Issuers are not in a position to express a view on the likelihood of any such contingency occurring.
Factors which the Issuers believe may be material for the purposes of assessing the market risks
associated with the Notes issued under the Programme are also described below.
The Issuers believe that the factors described below represent the principal risks inherent in investing
in Notes issued under the Programme, but the Issuers may be unable to pay interest, principal or other
amounts on or in connection with the Notes for other reasons and the Issuers do not represent that the
statements below regarding the risks of holding the Notes are exhaustive. Prospective investors should also
read the detailed information set out elsewhere in this Prospectus or incorporated by reference herein and
reach their own views prior to making any investment decision.
The Risk Factors are specific to the CGD Group, as a whole, of which the Issuers are a part. The
Issuers believe that there are no risk factors specific to an individual Issuer.
Risk Factors Relating to the CGD Group's Business
State ownership and State Aid may impact the business and performance of CGD
2017 Recapitalisation Plan
CGD posted losses after 2012, mostly due to the subdued growth of the Portuguese economy which
affected credit concession by banks, but also due to the impact of provisions and impairments related to non-
performing loans ("NPLs").
In order to be able to continue its activities and also to comply with increasing capital requirements,
the Portuguese State, as CGD's sole shareholder, and the European Commission's Directorate General for
Competition ("DG Comp") approved a recapitalisation plan (the "2017 Recapitalisation Plan"). For further
information see Description of the CGD Group Recapitalisation Plan.
After completion of the 2017 Recapitalisation Plan, any further capital injections by the Portuguese
State may not be possible or may be subject to State Aid rules under European Union regulations. This may
result in obligations, restrictions and limitations which may adversely impact CGD's activity in comparison
with other credit institutions not subject to State Aid procedures including, but not limited to, the application
of non-viability loss absorption measures or a "burden sharing" requirement amongst holders of hybrid capital
securities, such as the AT1 instruments. Any such loss absorption or burden-sharing could have an adverse
impact on the value of the Notes. Furthermore, the implementation of the 2017 Recapitalisation Plan may also
have an adverse effect on the CGD Group's activity, business, results and prospects.
CGD's Strategic Plan includes targets that may not be achieved
The 2017 Recapitalisation Plan includes a Strategic Plan to be implemented between 2017 and 2020.
This was one of the conditions imposed by DG Comp to avoid CGD's recapitalisation being considered State
Aid. The Strategic Plan builds upon four strategic pillars and includes a set of targets. These targets relate to
each of the four pillars and are described in more detail in the section "Description of CGD Strategic Plan".
The Strategic Plan's feasibility, including the targets proposed by CGD, was validated by DG Comp. CGD
will work to achieve the proposed targets by implementing a set of initiatives described under each pillar. The
targets are based on certain assumptions with respect to revenues and costs associated with those initiatives.
However, there are no assurances that these assumptions are correct or that CGD will be able to achieve the
proposed targets within the proposed timeframe, including for reasons beyond CGD's control, which would
potentially result in non-compliance by CGD of the Strategic Plan. CGD will ensure that the full and correct
implementation of the Strategic Plan is continually monitored by an independent auditing institution and,
CGD will provide to DG Comp, on a quarterly basis, a report covering the financial and operational drivers of
the Strategic Plan, as well as an overview of the CGD Group's performance compared with the targets. If any
of the targets are not met, CGD will consequently seek to take additional measures (including, but not limited
to, pricing adjustments, further cost cutting or divestment of additional foreign assets) with a view to ensuring
that those targets are in fact achieved, which could have an adverse effect on CGD's activity, business, results
and prospects.
6

These targets have been established as part of the agreement reached by the Portuguese State with DG
Comp in respect of CGD. They have not been set for the purpose of the offering of any Notes and are not, and
should not be regarded by potential investors as, a forecast of future performance by CGD or the CGD Group.
The economic activity in Portugal may impact the business and performance of CGD
The business activities of the CGD Group are dependent on the level of banking, finance and financial
services required by its customers. In particular, levels of borrowing are heavily dependent on customer
confidence, employment trends, the state of the economy and market interest rates.
Given that the CGD Group currently conducts the majority of its business in Portugal, its performance
is influenced by the level and cyclical nature of business activity in Portugal, which is in turn affected by both
domestic and international economic and political events. During 2016, the Portuguese economy continued to
be affected by a reduction of the net borrowing requirements of diverse sectors of the economy, as well as
adjustments to banks' balance sheets based on higher solvency ratios and a reduction of loans-to-deposits
ratios. Some additional information regarding the Portuguese economy is therefore included below.
According to the Quarterly National Accounts published by the Portuguese National Statistics Office
("INE") on 31 August 2017, in the second quarter of 2017, the gross domestic product ("GDP") recorded a
year-on-year growth rate of 2.9 per cent. in real terms (2.8 per cent. in the previous quarter). Net external
demand maintained a slightly positive contribution to the year-on-year GDP growth rate, with a deceleration
in the volume of Exports of Goods and Services of the same magnitude as that observed in Imports of Goods
and Services. The positive contribution of domestic demand remained significantly higher than in the
previous quarter, driven by the acceleration of investment. Public consumption registered a year-on-year
change rate of -0.9 per cent. (-0.4 per cent. in the first quarter of 2017). Public consumption behaviour since
the second half of 2016 was influenced by the reduction in the number of weekly hours worked in the public
sector, from 40 to 35 hours, with the consequent rise in the deflator component of employee compensation
and a negative effect in volume.
Private consumption registered a year-on-year improvement of 2.1 per cent. in the second quarter of
2017 in real terms, which compares with the growth rate of 2.3 per cent. registered in the first quarter of 2017.
Investment, in volume, increased by 9.3 per cent. in the second quarter of 2017 (7.7 per cent. in the
previous quarter), compared with the same period last year.
The External Balance of Goods and Services in nominal terms increased from 0.8 per cent. of GDP in
the first quarter of 2017 (0.9 per cent. of GDP in the second quarter of 2016), to 1.1 per cent. of GDP in the
second quarter of 2017.
In August 2017, the consumer confidence and economic sentiment indicators increased in the euro
area. In Portugal, the economic activity indicator, available until July 2017, stabilised, while the economic
climate indicator for August decreased.
In July 2017, the unemployment rate was 8.9 per cent., the lowest recorded value since November
2008.
Several challenges persist as fiscal consolidation is still unfolding, and private and public debt levels
remain high and it is still unclear whether the Portuguese economy will begin to recover in a sustainable way,
particularly through an increase in investment. In the event of negative developments in the financial markets,
CGD's ability to access the capital markets and obtain the necessary funding to support CGD's business
activities on acceptable terms may be adversely affected. A lack of ability to refinance assets on the balance
sheet or maintain appropriate levels of capital to protect against deteriorations in their value could force CGD
to liquidate assets at depressed prices or on unfavourable terms.
The current economic environment is still a source of challenge for the CGD Group, and may
adversely affect its business, financial condition and results of operations. The adverse macroeconomic
conditions in Portugal have significantly affected, and are expected to continue to adversely affect, the
behaviour and the financial situation of the CGD Group's clients, and consequently, the supply and demand of
the products and services that the CGD Group has to offer. In particular, limited growth in customer loans is
expected in the coming years, which will make it difficult for the CGD Group to generate enough interest
income to maintain its net interest margin. Additionally, an environment of extremely low or even negative
interest rates is expected to continue, which limits CGD's ability to increase net interest margin and
profitability, given that the majority of CGD's credit portfolio is composed of variable interest rate loans.
7

Furthermore, the maintenance of high unemployment rates, the reduction in the profitability of
enterprises and the increase in company and personal insolvencies have had, and are expected to continue to
have, a negative influence on the ability of the CGD Group's clients to pay back loans, and, consequently,
could cause an increase in the ratio of overdue loans, which might exceed the standard historic average,
reflecting a deterioration of the CGD Group's quality of assets.
A negative development of any of the above factors may adversely affect the business and performance
of CGD.
Exposure to CGD's credit risk
CGD's short and long term ratings issued by the diverse international rating agencies were updated in
2017: on 21 December 2017, Fitch affirmed CGD's `BB-/B' long-term and short-term ratings, with a positive
outlook and on 22 March 2017, Moody's affirmed CGD's `B1' long term deposit and senior debt ratings, with
a stable outlook. Other issued securities and the baseline credit assessment were placed on `review with
direction uncertain'. On 1 June 2017, DBRS affirmed CGD's `BBB (low)/R-2 (middle)' long-term and short-
term ratings, with negative outlook. Any further downgrading of the ratings of CGD may adversely affect its
funding and therefore its financial performance.
The CGD Group's business may be affected by the volatility in interest rates and to changes in the
competitive environment affecting spreads on its lending and deposits
The CGD Group's business is sensitive to volatility in interest rates and to changes in the competitive
environment affecting spreads on its lending and deposits.
The CGD Group is subject to the risks typical of banking activities, including interest rate fluctuations.
Changes in interest rate levels, yield curves and spreads may affect the CGD Group's lending and deposit
spreads. The CGD Group is exposed to changes in the spread between the interest rates payable by it on
deposits or its wholesale funding costs, and the interest rates that it charges on loans to customers and other
banks. While both the interest rates payable by the CGD Group on deposits, as well as the interest rates that it
charges on loans to customers and credit institutions, are in each case mainly floating rates or swapped into
floating rates, there is a risk that the CGD Group will not be able to re-price its floating rate assets and
liabilities at the same time, giving rise to re-pricing gaps in the short or medium term. The CGD Group is also
subject to intense competition for customer deposits and the current low interest rate environment puts
pressure on the CGD Group's deposit spreads. The CGD Group may not be able to lower its funding costs,
whether relating to deposits or wholesale funding, in line with decreases in interest rates on its interest-
bearing assets.
Interest rates are sensitive to several factors that are out of the CGD Group's control, including fiscal
and monetary policies of governments and central banks, as well as domestic and international political
conditions. An increase in interest rates could reduce the demand for credit, as well as contribute to an
increase in defaults by the CGD Group's customers. Conversely, a reduction in the level of interest rates may
adversely affect the CGD Group through, among other things, a decrease in the demand for deposits and
increased competition in deposit-taking and lending to customers. As a result of these factors, significant
changes or volatility in the interest rates could have a material adverse impact on the business, financial
condition or results of operations of the CGD Group.
The CGD Group has implemented risk management methods aimed at mitigating these and other
market risks, and exposures are constantly measured and monitored. Although the CGD Group undertakes
hedging operations in order to reduce its exposure to interest rate risk, it does not hedge its entire risk
exposure and cannot ensure that its hedging strategies will be successful. If the CGD Group is unable to
adjust the interest rate payable on deposits in line with the changes in market interest rates receivable by it on
loans, or if the CGD Group's monitoring procedures are unable to adequately manage the interest rate risk, its
interest income could increase less or decline more than its interest expense, in which case the CGD Group's
results of operations and financial condition or prospects could be negatively affected.
CGD's short term liabilities to its customers may exceed its highly liquid assets
CGD's primary source of funds has traditionally been its retail deposit base (savings, current and term
deposits). During the global crisis that affected the financial system, CGD continued to benefit from the high
levels of trust from its individual customers and was able to maintain its retail deposits base stable. The lack
of other financing sources caused by the liquidity restrictions faced by Portuguese banks in international
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money markets and capital markets has led CGD (as well as the other Portuguese banks) to increase the
interest rates paid on deposits thus reinforcing the attractiveness of these products.
CGD's other funding sources include medium and long-term bond issues, commercial paper and
medium-term structured products. CGD has also borrowed money in the money markets. Since 2010,
however, when the sovereign debt crisis in Europe worsened, resulting in Greece and other countries
requesting financial support from the EC/IMF/ECB, Portuguese banks, including CGD, have increased their
funding with the ECB, given the tighter conditions in accessing the wholesale markets. As at 31 December
2016, CGD had a net exposure to ECB funding of around EUR 3.5 billion (as at 31 December 2015 the
corresponding value was below EUR 2.84 billion). As of 30 June 2017, the total amount of funding from the
ECB (TLTRO) of CGD and its subsidiaries was 3.5 billion.
CGD continued to comply with the conditions set out in Bank of Portugal's regulations in respect of
liquidity, which includes a detailed, permanent collection of information on credit institutions' liquidity levels,
including their forecast treasury plans over a one year timeframe. This trend may however revert with the
predictable further rise in deposits and fall in new loans granted inherent to the deleveraging process.
Since CGD relies on the aforementioned sources for funding, there is no assurance that, in the event of
a sudden or unexpected shortage of funds in the market in which CGD operates, CGD will be able to maintain
its levels of funding without incurring higher funding costs or the liquidation of certain assets. Additionally,
CGD is impacted by any changes that may occur in the requirements set by the ECB in its refinancing
operations, if CGD is unable to borrow sufficient funds to meet its obligations to its customers and other
investors, CGD's business activities, financial condition and results of operations will be materially adversely
affected. As of 30 June 2017, the amount of Loans and advances to customers was 65,366 million and
Customer resources and other loans totalled 69,915 million.
Portugal may be subject to further rating reviews by the rating agencies, with implications on the
funding of the economy and on CGD's activity
The rating agencies Standard & Poor's Credit Market Services Europe Limited ("S&P"), Moody's
Investors Services Ltd. ("Moody's"), Fitch Ratings Limited ("Fitch") and DBRS Ratings Limited ("DBRS")
have, over the last year, updated Portugal's long term rating or outlook. Current ratings are as follows: S&P:
BBB- as of 15 September 2017, with a stable outlook as of 15 September 2017; Moody's: Ba1 as of 27 July
2014, with a positive outlook as of 1 September 2017; Fitch: BBB as of 15 December 2017, with a stable
outlook as of 15 December 2017; and DBRS: BBB (low) as of 30 January 2012, with a stable outlook as of 21
April 2017. The rating downgrades over the last years were essentially due to the uncertainties and risks
arising from the budgetary consolidation process implemented under the Economic and Financial Assistance
Programme ("EFAP"), the low competitiveness of the Portuguese economy abroad, external funding
difficulties and the sustainability of public debt dynamics. There might be further downgrades of the long
term rating assigned to Portugal in the future, namely, in the case of, a deterioration of the public finance
situation arising from weaker economic performance, caused by the austerity measures adopted internally or
induced by contagion as a consequence of the slowdown in the economic activity of Portugal's main trading
partners, particularly Spain, or if the market perceives these measures as insufficient or as a result of the lack
of success of structural reforms, of the simplification of State administration and streamlining of the
Portuguese justice system. Under these circumstances, Portugal's perceived credit risk will increase, with
resulting negative effects on the credit risk of Portuguese banks (including CGD) and, consequently, on their
profit levels. The effect of the rating downgrades of Portugal on the funding of Portuguese banks has been
less stringent since the ECB relaxed the rules for the eligibility of assets to be used as collateral for discount
operations. However, any reduction in the rating of Portugal would mean increased haircuts and a reduction of
the value of the pool of assets eligible for discount operations with the ECB, in particular with respect to
securitisations and covered bonds. A downgrade of Portugal's rating could impact the sovereign debt portfolio
held by CGD and could have a potential detrimental effect on the finances of enterprises who are borrowers
of CGD. Furthermore, the Portuguese State is CGD's sole shareholder. Accordingly, any downgrading of the
ratings of Portugal could have an impact on CGD and adversely affect its business and therefore its financial
performance. See also the risk factor entitled "The CGD Group is subject to the risk that liquidity may not
always be readily available; this risk is exacerbated by current conditions in global financial markets" below.
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Adjustments to the financial system and to the European banking model may have an impact hard
to forecast
Several adjustments to the financial system and to the European banking model, including
amendments to the regulatory framework, are in force, but it is still difficult to anticipate with accuracy the
impact that the implementation of these measures will have on the banking sector.
Notwithstanding the efforts yet to be faced by Portuguese banks, many changes to business models
have already been implemented and, at the same time, capital has been strengthened and liquidity has become
more stable.
The forecast of limited economic growth for Europe is expected to keep interest rates low with
subsequent impact on financial margins and profitability. This is of particular significance for CGD,
considering that it has a significant portfolio of long-term mortgage loans indexed to Euribor.
CGD intends to maintain its lending policy based on a sound risk methodology of risk adjusted pricing
by financing Portuguese companies, especially producers of durable goods.
Further, CGD's on-going policy on impairments, which has had a negative effect on profitability, will
mitigate the effects of a deteriorating credit environment, which is expected to continue throughout the year.
Notwithstanding the problems noted in the money and capital markets since 2008, 2016 saw a growing
trend towards stabilising confidence levels in the financial system, providing CGD with a more favourable
financing environment in terms of its resource-taking policy. CGD endeavoured to guarantee a sustainable
financing structure for its activity. Finally, the decrease of ECB's dependence coupled with the stabilisation of
market conditions, will lead to a greater discipline and search for adequate funding conditions which is
expected to optimise costs and allow CGD to carry out a normal business activity.
The CGD Group is subject to compliance risk with existing and future regulations, the breach of
which can cause damages to CGD
The CGD Group operates in a highly regulated industry. The CGD Group's banking activities are
subject to extensive regulation by, among others, the ECB, the Bank of Portugal, the European Banking
Authority ("EBA"), the European and Securities Markets Authority ("ESMA") and the Portuguese Securities
Market Commission ("CMVM", Comissão do Mercado de Valores Mobiliários), as well as other supervisory
authorities from the EU and the countries in which the CGD Group conducts its activities. These regulations
relate to liquidity, capital adequacy and permitted investments, ethical issues, money laundering, privacy,
know your customer, securities (including debt instruments) issuance and offering/placement, financial
intermediation issues, record-keeping, marketing and selling practices.
These regulations include rules and regulations related to the prevention of money laundering, bribery
and terrorism financing. Compliance with anti-money laundering, anti-bribery and counter-terrorist financing
rules entails significant cost and effort. Non-compliance with these rules may have serious consequences,
including adverse legal and reputational consequences. Although the CGD Group believes that its current
anti-money laundering, anti-bribery and counter-terrorism financing policies and procedures are adequate to
ensure compliance with applicable legislation, the CGD Group cannot guarantee that it will comply, at all
times, with all applicable rules or that its regulations for fighting money laundering, bribery and terrorism
financing as extended to the whole CGD Group are applied by its employees under all circumstances. This
can lead to material adverse effects on the CGD Group's business, financial condition, results of operations
and prospects.
All the above regulations are complex and their fulfilment implies high costs in terms of time and
other resources. Additionally, non-compliance with the applicable regulations may cause damages to the CGD
Group's reputation, application of penalties and even loss of authorisation to carry out its activities.
Due to the persistence of the financial crisis and the subsequent government intervention, regulation in
the financial services sector has increased substantially and is expected to continue to do so, which may
include the imposition of higher capital requirements, more demanding duties of information and restrictions
on certain types of activity or transaction.
Also, new regulations may restrict or limit the type or volume of transactions in which CGD
participates, or cause a change in the fees or commissions that CGD charges on certain loans or other
products; consequently any changes in regulation, or supervision, particularly in Portugal, may have a
material adverse effect on the CGD Group's business, financial condition and results of operations.
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