Bond FMS Vermögensverwaltung 0% ( XS1102016216 ) in GBP

FMS Vermögensverwaltung

100 % ⇌

Germany

XS1102016216 ( in GBP )

15/09/2015 - Bond has expired

Prospectus brochure of the bond FMS Wertmanagement XS1102016216 in GBP 0%, expired

100 000 GBP

150 000 000 GBP

FMS Wertmanagement is a German-based investment management firm specializing in real estate and infrastructure investments, offering a range of services including asset management, portfolio management, and investment advisory.

The Bond issued by FMS Vermögensverwaltung ( Germany ) , in GBP, with the ISIN code XS1102016216, pays a coupon of 0% per year.
The coupons are paid 1 time per year and the Bond maturity is 15/09/2015

Simplified Base Prospectus
30 June 2014

FMS Wertmanagement
(incorporated as a public law institution under the laws of the Federal Republic of Germany)
EUR 65,000,000,000
Debt Issuance Programme

Application has been made to the Luxembourg Stock Exchange for the admission of Notes issued under this Debt
Issuance Programme to listing on the official list and to trading on the regulated market "Bourse de Luxembourg"
(a regulated market within the meaning of Directive 2004/39/EC of the European Parliament and of the Council of
21 April 2004 on markets in financial instruments, as amended ("MiFID")) of the Luxembourg Stock Exchange.
Notes issued under this Debt Issuance Programme may also be listed on the regulated market of the Frankfurt
Stock Exchange or the Munich Stock Exchange (each a regulated market within the meaning of MiFID), or on
other or further stock exchanges or may not be listed at all.
Application has been made to the Luxembourg Stock Exchange in its capacity as the competent authority under
the Luxembourg Prospectus Law to provide a certificate of approval attesting that this Simplified Base Prospectus
has been drawn up in accordance with Chapter 2 of Part III of the Luxembourg Law on Prospectuses for Securi-
ties dated 10th July, 2005, as amended (Loi relative aux prospectus pour valeurs mobilières, the "Luxembourg
Prospectus Law") for purposes of admission of the Notes to trading on the regulated market of the Luxembourg
Stock Exchange. By approving a prospectus, the Luxembourg Stock Exchange shall give no undertaking as to the
economic and financial soundness of the transaction or the quality and solvency of the issuer.
The date of this Simplified Base Prospectus is 30 June 2014. The Simplified Base Prospectus is valid for one year
from such date.
Notes issued under the Programme will be sold and distributed to institutional investors only.

Arranger

Deutsche Bank

Dealers

Barclays
BNP PARIBAS
Citigroup
Commerzbank
Credit Suisse
Deutsche Bank
Goldman Sachs International
HSBC
J.P. Morgan
Morgan Stanley

UniCredit Bank
This Simplified Base Prospectus will be published in electronic form on the website of FMS Wertmanagement
(www.fms-wm.de).

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TABLE OF CONTENTS

Page
1.
THIS PROSPECTUS .................................................................................................................................... 3
2.
RESPONSIBILITY STATEMENT .................................................................................................................. 3
3.
NOTICE ........................................................................................................................................................ 3
4.
SUMMARY .................................................................................................................................................... 5
5.
RISK FACTORS ............................................................................................................................................ 9
6.
ISSUE PROCEDURES ............................................................................................................................... 13
7.
TERMS AND CONDITIONS OF THE NOTES ............................................................................................ 14
8.
FORM OF FINAL TERMS ........................................................................................................................... 40
9.
FMS WERTMANAGEMENT ....................................................................................................................... 52
10. TAXATION .................................................................................................................................................. 60
11. SELLING RESTRICTIONS ......................................................................................................................... 64
12. GENERAL INFORMATION ......................................................................................................................... 67
13. DOCUMENTS INCORPORATED BY REFERENCE .................................................................................. 68
14. INDEX OF DEFINED TERMS ..................................................................................................................... 69

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1. THIS PROSPECTUS
This prospectus (hereinafter, the "Prospectus" or the "Simplified Base Prospectus") has been drawn up
in order to permit the admission of Notes issued under this debt issuance programme (the "Programme") to
listing on the official list and to trading on the regulated market (within the meaning of MiFID) of the Luxem-
bourg Stock Exchange.

This Simplified Base Prospectus fulfils the requirements for a simplified base prospectus pursuant to Chap-
ter 2 of Part III of the Luxembourg Prospectus Law. It does not constitute a prospectus for the purposes of
Directive 2003/71/EC, as amended (the "Prospectus Directive") nor does it constitute a prospectus pursu-
ant to Part II of the Luxembourg Prospectus Law transforming the Prospectus Directive into law in Luxem-
bourg, because the Prospectus Directive and Part II of the Luxembourg Prospectus Law do not apply to se-
curities unconditionally and irrevocably guaranteed by a member state of the European Economic Area
(each, a "Member State"). Accordingly, this Simplified Base Prospectus does not purport to meet the format
and the disclosure requirements of the Prospectus Directive and Commission Regulation (EC) No
809/2004, as amended, implementing the Prospectus Directive, and it has not been, and will not be, submit-
ted for approval to any competent authority within the meaning of the Prospectus Directive. Notes issued
under the Programme will therefore not qualify for the benefit of the single European passport pursuant to
the Prospectus Directive.

If so agreed between FMS Wertmanagement ("FMS" or the "Issuer") and the relevant Dealer(s), the Issuer
will procure the admission of Notes issued under the Programme for trading on the regulated market (regu-
lierter Markt) of the Frankfurter Wertpapierbörse (the "Frankfurt Stock Exchange") or the Munich Stock
Exchange, each a regulated market within the meaning of MiFID, or for trading on any other alternative
stock exchange in accordance with the applicable national laws and applicable rules and regulations of the
relevant stock exchange.
2. RESPONSIBILITY STATEMENT
FMS Wertmanagement assumes sole responsibility for the content of this Simplified Base Prospectus and,
in respect of each Tranche of Notes, the applicable Final Terms for such Tranche of Notes and, having tak-
en all reasonable care to ensure that such is the case, confirms that the information contained in this Simpli-
fied Base Prospectus is, to the best of its knowledge, in accordance with the facts and contains no omis-
sions likely to affect its import.
3. NOTICE
This Simplified Base Prospectus should be read and understood in conjunction with any supplement hereto
(and with any document incorporated by reference, if any). Full information on the Issuer and any tranche of
Notes is only available on the basis of the combination of this Simplified Base Prospectus and the Final
Terms.

The Issuer has undertaken with the dealers set forth on the cover page and any additional dealer appointed
from time to time under the Programme (each a "Dealer" and together the "Dealers") that on or before each
anniversary of the date of this Prospectus it wil update the Prospectus by the publication of a new prospec-
tus. In case that any material facts may occur before the anniversary of the date of the Prospectus, the Is-
suer will amend the Prospectus by the publication of a supplement thereto.

No person has been authorised to give any information or to make any representations, other than those
contained in this Prospectus, in connection with the issue and sale of the Notes and, if given or made, such
information or representations must not be relied upon as having been authorised by the Issuer, the Ar-
ranger or any Dealer. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that the information herein is correct as of any time subsequent to the
date hereof.

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This Prospectus is valid for one year following its date and it and any supplement thereto as well as any Fi-
nal Terms reflect the status as of their respective dates. The offering, sale or delivery of any Notes may not
be taken as an implication that the information contained in such documents is accurate and complete sub-
sequent to their respective dates of issue or that there has been no adverse change in the financial condi-
tion of the Issuer since such date or that any other information supplied in connection with the Programme
is correct 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 Issuer has given an undertaking in connection with the listing of the Notes issued under the Pro-
gramme on the official list of the Luxembourg Stock Exchange that, so long as any Note remains outstand-
ing and listed on such exchange, in the event of any adverse change in the financial condition of the Issuer
which is material in the context of the Programme and which is not reflected in the Prospectus, the Issuer
will prepare a further supplement to the Prospectus or publish a new prospectus for use in connection with
any subsequent issue of Notes to be listed on the Luxembourg Stock Exchange. If the terms of the Pro-
gramme are modified or amended in a manner which would make the Prospectus, as supplemented, inac-
curate or misleading, a new prospectus wil be prepared.

To the extent permitted by the laws of any relevant jurisdiction, neither the Arranger nor any Dealer accept
any responsibility neither for the accuracy and completeness of the information contained in this Prospectus
or any supplement thereof nor for the information contained in any Final Terms.

The distribution of this Prospectus or any part hereof and any Final Terms and the offer, sale and delivery of
any of the Notes may be restricted by law in certain jurisdictions. Persons into whose possession this Pro-
spectus or any Final Terms comes are required to inform themselves about and to observe any such re-
strictions. For more information, see "Selling Restrictions".

Notes will be issued in such denominations as may be agreed between the Issuer and the relevant Deal-
er(s) and as indicated in the Final Terms save that the minimum denomination of the Notes wil be, if in eu-
ro, EUR 100,000, and, if in any currency other than euro, an amount in such other currency equivalent to
EUR 100,000 at the time of the issue of the Notes.

Unless otherwise permitted by then current laws and regulations, Notes in respect of which the issue pro-
ceeds are to be accepted by the Issuer in the United Kingdom will have a minimum denomination of
£ 100,000 (or its equivalent in other currencies), unless such Notes may not be redeemed until on or after
the first anniversary of their date of issue.

This Prospectus and any Final Terms may not be used for the purpose of an offer or solicitation by
and to anyone in any jurisdiction in which such offer or solicitation is not authorised or to any per-
son to whom it is unlawful to make such an offer or solicitation.

This Prospectus and any Final Terms do not constitute an offer or invitation by or on behalf of the
Issuer or the Dealers to any person to subscribe for or to purchase any Notes.

In connection with the issue of any tranche of Notes, the Dealer or Dealers (if any) named as the
stabilising manager(s) (or persons acting on behalf of any stabilising manager(s)) in the applicable
Final Terms may over-allot Notes or effect transactions with a view to supporting the 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 sta-
bilisation action. Any stabilisation action may begin on or after the date on which adequate public
disclosure of the terms of the offer of the relevant tranche of Notes 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 and 60
days after the date of the allotment of the relevant tranche of Notes. Any stabilisation action or over-
allotment must be conducted by the relevant stabilising manager(s) (or person(s) acting on behalf of
any stabilising manager(s)) in accordance with all applicable laws and rules.

THIS PROSPECTUS IS PREPARED FOR THE USE OF THE EUROPEAN CENTRAL BANK, ANY OTHER
CENTRAL BANK OR INSTITUTIONAL INVESTORS SUCH AS BANKS, INSURERS OR OTHER
FINANCIAL INSTITUTIONS OR SIMILAR ENTITIES OR PERSONS WHICH ARE REGULARLY
ENGAGED IN OR ESTABLISHED FOR THE PURPOSE OF MAKING, PURCHASING OR INVESTING IN
LOANS, SECURITIES OR OTHER FINANCIAL ASSETS. THIS PROSPECTUS IS NOT PREPARED FOR
ANY NON-INSTITUTIONAL INVESTORS.

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4. SUMMARY
The following summary does not purport to be a complete description of the provisions applicable to the
Programme or a particular Tranche of Notes issued thereunder and is qualified in its entirety by the remain-
der of this Simplified Base Prospectus, including the documents incorporated by reference, and, in relation
to any particular Tranche of Notes, the relevant Final Terms.

Issuer

FMS Wertmanagement

Statutory Guarantee

Under section 8a (4) no. 1b of the German Financial Market Stabilisation Fund Act (Finanzmarktstabilisier-
ungsfondsgesetz - "FMStFG"), the Fund guarantees the repayment or redemption of all loans, debt securi-
ties, fixed forward transactions, options and other credits extended to the Issuer as well as credits extended
to third parties to the extent they are expressly guaranteed by a winding-up agency, such as the Issuer,
which such winding-up agency has borrowed, issued, entered into, incurred or which have been transferred
to the winding-up agency during the time period for which SoFFin is the sole obligor of the loss compensa-
tion obligation (alleiniger Verlustausgleichspflichtiger).

Loss Compensation Obligation of the SoFFin

The charter (Statut) (the "Charter") of the Issuer (§ 7(1)) expressly provides for an obligation of SoFFin vis-
à-vis the Issuer and the Financial Market Stabilisation Authority (Bundesanstalt für Finanzmarktstabilisier-
ung - "FMSA") (i) to pay, on first demand by the Executive Board (Vorstand) of FMS Wertmanagement, all
amounts required in the Executive Board's due assessment for ensuring that the Issuer can pay all its liabili-
ties (including the Notes) at any time when due and in full and (ii) to cover all losses of FMS Wertmanage-
ment. Losses in this sense comprise all amounts that are payable to FMS Wertmanagement so that it can
discharge its liabilities as set out above and that need not be repaid to SoFFin under the conditions set
out in § 7 (2) of the Charter. However, holders of Notes have no direct recourse against SoFFin.

Arranger

Deutsche Bank Aktiengesellschaft

Dealers

Barclays Bank PLC, BNP PARIBAS, Citigroup Global Markets Limited, Commerzbank Aktiengesellschaft,
Credit Suisse (Europe) Limited, Deutsche Bank Aktiengesellschaft, Goldman Sachs International, HSBC
Bank plc, J.P. Morgan Securities plc, Morgan Stanley & Co. International plc and UniCredit Bank AG

Fiscal Agent and Paying Agent

Deutsche Bank Aktiengesellschaft

Specified Currencies

Subject to any applicable legal or regulatory restrictions and requirements of relevant central banks, Notes
may be issued in euro or any other currency or currency unit agreed by the Issuer and the relevant Dealer.

Maturities

Such maturities as may be agreed between the Issuer and the relevant Dealer(s) and as indicated in the
relevant Final Terms, subject to such minimum or maximum maturities as may be allowed or required from
time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the
Issuer or the relevant specified currency.

The maximum maturity of all Notes will not exceed 30 years or such longer period as may be agreed be-
tween the Issuer and the relevant Dealer(s), subject in relation to specific currencies to compliance with all
applicable legal and/or regulatory and/or central bank requirements.

Any Notes, the proceeds of which are to be accepted by the Issuer in the United Kingdom, which must be
redeemed before the first anniversary of the date of their issue, shall (a) have a redemption value of not

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less than £ 100,000 (or an amount of equivalent value denominated wholly or partly in a currency other than
Sterling), and (b) provide that no part of any such Note may be transferred unless the redemption value of
that part is not less than £ 100,000 (or such an equivalent amount).

Form of Notes

Notes may be issued in bearer form only.

Denominations of Notes

Notes will be issued in such denominations as may be agreed between the Issuer and the relevant Deal-
er(s) and as indicated in the relevant Final Terms save that the minimum denomination of the Notes will be,
if in euro, EUR 100,000, and, if in any currency other than euro, an amount in such other currency equiva-
lent to EUR 100,000 at the time of the issue of the Notes.

Fixed Rate Notes

Fixed Rate Notes will bear a fixed interest income throughout the entire term of the Notes. Fixed interest wil
be payable on such basis as may be agreed between the Issuer and the relevant Dealer(s) (as specified in
the relevant Final Terms).

Floating Rate Notes

Floating Rate Notes will bear interest at a rate determined (and as adjusted for any applicable margin):

- on the same basis as the floating rate under a notional interest rate swap transaction in the relevant
specified currency governed by an agreement incorporating either the 2000 ISDA Definitions or the 2006
ISDA Definitions (each published by the International Swaps and Derivatives Association, Inc., and as
amended and updated as at the date on which the first tranche of the Notes of the relevant Series is is-
sued),

- on the basis of a reference rate appearing on the agreed screen page of a commercial quotation service,
or

- on such other basis as indicated in the relevant Final Terms.

The margin (if any) relating to such floating rate wil be indicated in the Final Terms for each Series of Float-
ing Rate Notes.

Interest periods for Floating Rate Notes wil be one, two, three, six or twelve months or such other period(s)
as may be agreed between the Issuer and the relevant Dealer(s), as specified in the relevant Final Terms.

Other Provisions in Relation to Floating Rate Notes

Floating Rate Notes may also have a maximum interest rate, a minimum interest rate or both.

Interest on Floating Rate Notes in respect of each Interest Period, as selected prior to issue by the Issuer
and the relevant Dealer(s), will be payable on such Interest Payment Dates specified in, or determined pur-
suant to, the relevant Final Terms and will be calculated as specified in the relevant Final Terms.

Zero Coupon Notes

Zero Coupon Notes will be offered and sold at a discount to their principal amount and will not bear interest
other than in the case of late payment.

Redemption

The relevant Final Terms will indicate either that the Notes cannot be redeemed prior to their stated maturity
(except for taxation reasons or upon the occurrence of an event of default) or that such Notes wil be re-
deemable at the option of the Issuer and/or the holders of the Notes upon giving notice within the notice pe-
riod (if any) indicated in the relevant Final Terms to the holders or the Issuer, as the case may be, on a date
or dates specified prior to such stated maturity and at a price or prices and on such terms as indicated in
the relevant Final Terms.

- 7 -

Unless otherwise permitted by then current laws and regulations, Notes (including Notes denominated in
Sterling) in respect of which the issue proceeds are to be accepted by the Issuer in the United Kingdom
must have a minimum redemption amount of £ 100,000 (or its equivalent in other currencies), unless such
Notes may not be redeemed until on or after the first anniversary of their date of issue.

Taxation

All amounts payable in respect of the Notes will be made without withholding or deduction for or on account
of any present or future taxes or duties of whatever nature imposed or levied by way of withholding or de-
duction at source (Quellensteuer) by or on behalf of the Federal Republic of Germany or any political subdi-
vision or any authority thereof or therein having power to tax unless such withholding or deduction is re-
quired by law. In such event, the Issuer wil , subject to customary exceptions, pay such additional amounts
as shall be necessary in order that the net amounts received by the holders of the Notes after such with-
holding or deduction shall equal the respective amounts which would otherwise have been receivable in re-
spect of the Notes in the absence of such withholding or deduction.

Early Redemption for Taxation Reasons

Early redemption of the Notes for taxation reasons will be permitted, if as a result of any amendment to, or
change in, the laws or regulations (including any amendment to, or change in, an official interpretation or
application of such laws or regulations) of the Federal Republic of Germany, or any political subdivision or
taxing authority thereof, the Issuer is required to pay additional amounts on the Notes.

Status of the Notes

The Notes will constitute unsecured and unsubordinated obligations of the Issuer ranking pari passu among
themselves and pari passu with all other unsecured and unsubordinated obligations of the Issuer.

Negative Pledge

The Notes will not contain a negative pledge provision.

Events of Default and Cross Default

The Notes will provide for events of default entitling holders to demand immediate redemption of the Notes.

The Notes will not provide for a cross-default provision.

Rating

Notes issued pursuant to the Programme may be rated or unrated. The applicable rating for the Notes wil
be specified in the relevant Final Terms.

Distribution

The Notes may be distributed on a syndicated or non-syndicated basis. The method of distribution of each
Tranche will be stated in the relevant Final Terms.

Listing

Application will be made to list and trade Notes to be issued under the Programme if agreed between the
relevant Dealer and the Issuer on the regulated market (regulierter Markt) of the Frankfurt Stock Exchange,
the Munich Stock Exchange and/or any other German stock exchange, as may be agreed between the
Issuer and the relevant Dealer(s). The Programme provides that Notes may also be listed on the
Luxembourg Stock Exchange (Regulated Market "Bourse de Luxembourg") or any other or further stock
exchanges (including stock exchanges in other Member States within the European Economic Area) or may
not be listed at all.

Governing Law

German law.

- 8 -

Jurisdiction

Non-exclusive place of jurisdiction for any legal proceedings arising under the Notes is Frankfurt am Main.

Use of Proceeds

The net proceeds of the issue of each Tranche of Notes will be applied by the Issuer to meet part of its
general financing requirements. If in respect of any particular issue there is a particular identified use of
proceeds, this will be stated in the applicable Final Terms.

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5. RISK FACTORS
5.1. Risk Factors regarding FMS Wertmanagement
The following is a summary of certain aspects of the business of FMS Wertmanagement of which prospec-
tive investors should be aware. This summary is not intended to be exhaustive and prospective investors
should carefully consider the following information in conjunction with the other information contained in this
Prospectus.

The Prospectus contains all known risks which the Issuer deems material. However, the risks described be-
low may turn out to be incomplete and therefore may not be the only risks to which FMS is exposed. Addi-
tional risks and uncertainties could have a material adverse effect on the business and financial condition of
FMS. The order of presentation of the risk factors below does not indicate the likelihood of their occurrence
or the extent or the significance of the individual risks.

Credit Exposure and Increased Loss Provisions

While the Issuer's business consists almost entirely in administering distressed and non-strategic financial
assets acquired from Hypo Real Estate Holding AG ("HRE") and HRE's subsidiaries with a view to releasing
HRE and HRE's subsidiaries from the credit risk attributable to such financial assets, it is subject to the risk
that debtors of such assets and other contractual partners may become unable to meet their obligations to
the Issuer. Defaults may arise from events or circumstances that are difficult to foresee or detect or have
not yet been foreseen or detected. In addition, the Issuer may find that any collateral position is insufficient
to cover the respective credit exposure due to, for example, market developments reducing the value of
such collateral. Any default by a major borrower of the Issuer could have a material adverse effect on the
Issuer's business, results of operations or financial condition.

The Issuer may have to increase its loss provisions in the future as a result of a rise in the number or
amount of non-performing financial assets in its portfolio. Any such increases in loss provisions in excess of
existing provisions could have a material adverse effect on the Issuer's business, results of operations and
financial conditions.

Interest Rate and Exchange Rate Market Risk

There will be risks associated with changes in interest rates and foreign exchange rates. The Issuer has
implemented risk management methods to mitigate and control these and other market risks to which the
Issuer is exposed, and exposures are constantly measured and monitored. However, it is difficult to predict
changes in economic or market conditions and to anticipate the effects that such changes could have on
the Issuer's financial performance and business operations.

Issuer's Credit Ratings, Financial Conditions and Results

Ratings of the Notes issued under the Programme are not a recommendation to buy, hold or sell the Notes.
The ratings of the Notes may be lowered or withdrawn entirely at any time by the relevant rating agency.
Actual or anticipated changes in the Issuer's credit ratings, financial condition or results may affect the mar-
ket value of the Notes.

Soundness of other Financial Institutions

The Issuer's exposure to counterparties in the financial services industry in the normal course of its busi-
ness is particularly significant. This exposure can arise through trading, lending, clearance and settlement
and many other activities and relationships. These counterparties include brokers and dealers, commercial
banks, investment banks and other institutional clients. Many of these relationships expose the Issuer to
credit risk in the event of default of a counterparty or client. The insolvency of these counterparties may im-
pair the effectiveness of the Issuer's hedging and other risk management strategies.

Risks relating to the Global Financial Crisis and the Euro-zone Debt Crisis

As a result of the global financial crisis, the international capital markets continue to be volatile and market
conditions may further deteriorate. This may impact the Issuer's ability to raise debt in a similar manner, and
at a similar cost, to the funding raised in the past. Challenging market conditions may result in greater vola-
tility but also in reduced liquidity, widening of credit spreads and lack of price transparency in credit mar-
kets. Changes in investment markets, including changes in interest rates, exchange rates and returns from

- 10 -

equity, property and other investments, may affect the financial performance of the Issuer. In addition, the
financial performance of the Issuer could be adversely affected by a worsening of general economic condi-
tions in the markets in which it operates.

While financial markets generally stabilised and performed well in 2013, there are continued concerns about
credit risk (including that of sovereigns) and the Euro-zone crisis. The large sovereign debts and/or fiscal
deficits of a number of European countries and the United States have raised concerns regarding the finan-
cial condition of financial institutions, insurers and other corporates (i) located in these countries, (i ) that
have direct or indirect exposure to these countries, and/or (iii) whose banks, counterparties, custodians,
customers, service providers, sources of funding and/or suppliers have direct or indirect exposure to these
countries. The default, or a significant decline in the credit rating, of one or more sovereigns or financial in-
stitutions could cause severe stress in the financial system generally, could be detrimental to the Issuer and
could adversely affect its business, operations and profitability and the ability of the Issuer to meet its obli-
gations under the Notes and under its debt obligations more generally.

The Issuer has direct and indirect exposure to European sovereigns and to financial institutions, govern-
mental entities, counterparties, custodians, customers and service providers within the European Union.
These exposures may, in the future, be affected by restructuring of their terms, principal, interest and ma-
turity. As a consequence, this may impact on the ability of the Issuer to access the funding it needs, or may
increase the cost of such funding, which may cause it to suffer liquidity stress.

Transfer of Assets to the Issuer

The assets of the Issuer have been transferred to it from various branches and subsidiaries of HRE world-
wide. Some of such transfers have not transferred legal title but an economic interest in the relevant assets
only. As a consequence, the Issuer may be exposed to the insolvency risk of transferees, particularly, but
not exclusively, outside the European Union.

The transfer of assets to the Issuer has not been accompanied by a detailed asset-by-asset due diligence
due to the material number of assets transferred. As a result, the Issuer's assets may be subject to addi-
tional taxes or regulatory restrictions that are difficult to foresee or detect or have not yet been foreseen or
detected.

Regulatory Risk

The Issuer is not a bank or otherwise licensed financial institution and must not provide or conduct regulat-
ed business activities requiring a licence pursuant to EU Directive 2006/48/EC of 14 June 2006. It is, how-
ever, subject to the limited supervision by the Federal Financial Supervisory Authority (Bundesanstalt für
Finanzdienstleistungsaufsicht) ("BaFin") but is not supervised in a way credit institutions are supervised by
BaFin. The Issuer is not licensed or supervised in any jurisdiction outside Germany. This may influence the
Issuer's approach to administer its assets outside Germany and may affect its financial performance. The
take over of DEPFA BANK plc as a regulated entity, which is currently under way, may have an impact on
the Issuer's financial performance.
5.2. Risk Factors regarding the Notes
Neither the Issuer, the Dealers nor any of their respective affiliates has or assumes responsibility for the
lawfulness of the acquisition of the Notes by a prospective purchaser of the Notes, whether under the laws
of the jurisdiction of its incorporation or the jurisdiction in which it operates (if different) or for compliance by
that prospective purchaser with any laws, regulation or regulatory policy applicable to it. A prospective pur-
chaser may not rely on the Issuer, the Dealers or any of their respective affiliates in connection with its de-
termination as to the legality of its acquisition of the Notes.

Notes may not be a suitable investment for all investors

Each potential investor in Notes must determine the suitability of that investment in light of its own circum-
stances. In particular, each potential investor should:

(i) have sufficient knowledge and experience to make a meaningful evaluation of the relevant Notes, the
merits and risks of investing in the relevant Notes and the information contained in this Prospectus or
any applicable supplement;

(ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particu-