Obbligazione Nederlandse Gemeentebank 2.5% ( XS0576210289 ) in USD

Nederlandse Gemeentebank

100 USD ▼

Paesi Bassi

XS0576210289 ( in USD )

2.5% per anno ( pagato 2 volte l'anno)

11/01/2016 - Obbligazione è scaduto

Prospetto opuscolo dell'obbligazione Bank Nederlandse Gemeenten XS0576210289 in USD 2.5%, scaduta

2 000 USD

1 500 000 000 USD

Bank Nederlandse Gemeenten è una banca olandese che fornisce servizi finanziari a comuni e province olandesi, nonché ad altri enti pubblici e istituzioni internazionali.

The Obbligazione issued by Nederlandse Gemeentebank ( Netherlands ) , in USD, with the ISIN code XS0576210289, pays a coupon of 2.5% per year.
The coupons are paid 2 times per year and the Obbligazione maturity is 11/01/2016

BASE PROSPECTUS

N.V. Bank Nederlandse Gemeenten
(Incorporated in the Netherlands with limited liability and having its statutory domicile in The Hague)
Euro 80,000,000,000
Debt issuance programme
N.V. Bank Nederlandse Gemeenten (the "Issuer" or "BNG") may from time to time offer debt
instruments (the "Notes") pursuant to a programme of issuance established on 7 December 1993 (as
amended) (the "Programme"). The sum of the aggregate principal amount of Notes outstanding at any
time under the Programme will not exceed Euro 80,000,000,000 (or its equivalent in other currencies).
The Programme amount may be increased from time to time subject to the preparation of a supplemental
Base Prospectus which shall be subject to the prior approval of the Netherlands Authority for the
Financial Markets (Stichting Autoriteit Financiële Markten) (the "AFM").
The Programme has been rated AAA by Standard & Poor's Ratings Services, a division of the McGraw-
Hill Companies Inc., AAA by Fitch Ratings Limited and Aaa by Moody's Investors Service Limited.
Tranches of Notes issued under the Programme may be rated or unrated. Where a tranche of Notes is
rated, such rating will not necessarily be the same as the ratings assigned to the Programme. A security
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.
This base prospectus (the "Base Prospectus") has been approved by the AFM, which is the Netherlands
competent authority for the purpose of Directive 2003/71/EC (the "Prospectus Directive") and relevant
implementing measures in the Netherlands, as a base prospectus issued in compliance with the Prospectus
Directive, Commission Regulation EC No. 809/2004 (the "Prospectus Regulation") and relevant
implementing measures in the Netherlands for the purpose of giving information with regard to the issue
of Notes under the Programme during the period of twelve months after the date hereof. Application may
be made for Notes issued under the Programme to be listed on Euronext Amsterdam by NYSE Euronext,
the regulated market of Euronext Amsterdam N.V. ("Euronext Amsterdam").
The AFM has been requested by the Issuer to provide the Luxembourg Commission de Surveillance du
Secteur Financier (the "CSSF") with a certificate of approval attesting that the Base Prospectus has been
drawn up in accordance with the Prospectus Directive and the Prospectus Regulation so that the Notes
issued under the Programme may be listed on the regulated market of the Luxembourg Stock Exchange.
Application may be made for Notes issued under the Programme to be admitted to trading on the
regulated market of the Luxembourg Stock Exchange.
The AFM may be further requested by the Issuer to provide other competent authorities in the European
Economic Area with a certificate of approval attesting that the Base Prospectus has been drawn up in
accordance with the Prospectus Directive and the Prospectus Regulation so that application may be made
for Notes issued under the Programme to be admitted to trading on other regulated markets. The
Programme also permits Notes to be issued on the basis that they will not be admitted to listing, trading
and/or quotation by any listing authority, stock exchange and/or quotation system or to be admitted to
listing, trading and/or quotation by such other or further listing authorities, stock exchanges (including the
SIX Swiss Exchange) and/or quotation systems as may be agreed with the Issuer.
The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended
(the "Securities Act") or any U.S. state securities laws and the Notes may not be offered, sold or
delivered within the United States, or to or for the account or benefit of U.S. persons (as defined in
Regulation S ("Regulation S") under the Securities Act), except pursuant to an exemption from, or a
transaction not subject to, the registration requirements of the Securities Act and applicable United States
state securities laws, or pursuant to an effective registration statement. The Notes may be offered and sold
50084770 M 3726944 / 47

(a) in bearer form or registered form outside the United States to non-U.S. persons in reliance on
Regulation S under the Securities Act and (b) in registered form within the United States to persons who
are "qualified institutional buyers" ("QIBs") in reliance on Rule 144A ("Rule 144A") under the
Securities Act. Prospective purchasers who are QIBs are hereby notified that sellers of the Notes may be
relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A.
For a description of these and certain further restrictions on offers, sales and transfers of Notes and
distribution of this Base Prospectus, see "Plan of Distribution" and "Transfer Restrictions". The Notes in
bearer form are subject to United States tax law requirements.
PROSPECTIVE INVESTORS SHOULD HAVE REGARD TO THE FACTORS DESCRIBED
UNDER THE SECTION HEADED "RISK FACTORS" IN THIS BASE PROSPECTUS.
This Base Prospectus must be read and construed together with any amendments or supplements hereto
and with any documents incorporated by reference herein (which can be found on the website of the
Issuer, http://www.bng.nl/smartsite.shtml?id=51607), and in relation to any Tranche (as defined herein)
of Notes, this Base Prospectus should be read and construed together with the relevant Final Terms.
Arranger
UBS Investment Bank

Principal Dealers
Bank Nederlandse Gemeenten
Barclays
Capital
BNP
PARIBAS
BofA
Merrill
Lynch
Citi
Commerzbank
Credit
Suisse
Deutsche
Bank
Goldman Sachs International
ING
Commercial
Banking
J.P.
Morgan
Mizuho
International
plc
Nomura Rabobank
International

RBC
Capital
Markets
The Royal Bank of Scotland
TD
Securities
UBS
Investment
Bank

The date of this Base Prospectus is 12 August 2010 and it replaces the Base Prospectus dated 29 July
2009.
50084770 M 3726944 / 47
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TABLE OF CONTENTS

SUMMARY OF THE BASE PROSPECTUS..............................................................................................4
RISK FACTORS..........................................................................................................................................9
IMPORTANT NOTICES...........................................................................................................................19
ENFORCEMENT OF FOREIGN JUDGMENTS......................................................................................22
FORWARD LOOKING STATEMENTS ..................................................................................................23
DOCUMENTS INCORPORATED BY REFERENCE .............................................................................24
KEY FEATURES OF THE PROGRAMME .............................................................................................25
FORMS OF NOTES ..................................................................................................................................32
TERMS AND CONDITIONS OF THE NOTES .......................................................................................38
USE OF PROCEEDS.................................................................................................................................62
FORM OF FINAL TERMS........................................................................................................................63
N.V. BANK NEDERLANDSE GEMEENTEN.........................................................................................81
OPERATING AND FINANCIAL REVIEW.............................................................................................96
EXTRACT OF THE ARTICLES OF ASSOCIATION ...........................................................................126
TAXATION .............................................................................................................................................130
CERTAIN ERISA AND OTHER CONSIDERATIONS.........................................................................138
PLAN OF DISTRIBUTION.....................................................................................................................139
TRANSFER RESTRICTIONS ................................................................................................................145
GENERAL INFORMATION ..................................................................................................................149

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SUMMARY OF THE BASE PROSPECTUS
This summary must be read as an introduction to this Base Prospectus and any decision to invest in the
Notes should be based on a consideration of the Base Prospectus as a whole, including any amendment
and supplement thereto and the documents incorporated by reference. Following the implementation of
the relevant provisions of the Prospectus Directive in each relevant Member State of the European
Economic Area, civil liability attaches to the Issuer, being the person who has tabled the summary, and
applied for its notification, but only if the summary is misleading, inaccurate or inconsistent when read
together with the other parts of the Base Prospectus. Where a claim relating to the information contained
in this Base Prospectus is brought before a court, the plaintiff investor might, under the national
legislation of the relevant Member States, have to bear the costs of translating the Base Prospectus
before the legal proceedings are initiated.
The Issuer
BNG is the fifth largest bank in the Netherlands based on total assets as at 31 December 2009. BNG is a
specialised lender to local and regional authorities as well as to public-sector institutions such as utilities,
housing, healthcare, welfare and educational institutions, and is the largest public-sector lender in the
Netherlands and the principal bank for the Dutch public sector in terms of loans, advances and inter-
governmental money transfers. Recently, BNG has also begun limited lending to public-private
partnerships.
In addition to its financing activities, BNG offers advisory and consultancy services, such as assisting
public authorities in the design of their treasury, portfolio and asset and liability management functions.
BNG also offers investment funds, which are managed through a wholly-owned subsidiary, BNG
Vermogensbeheer B.V. Investment in the funds are mainly marketed to municipalities with budgetary
surpluses. Furthermore, BNG provides electronic fund transfer and payment services to its public sector
customers.
As of and for the year ended 31 December 2009, BNG had total assets of 104.5 billion, total equity of
2.3 billion and net profit of 278 million.
BNG was incorporated in 1914 as a `naamloze vennootschap' (a public company with limited liability)
under the laws of the Netherlands and is a statutory limited company under Dutch law
('structuurvennootschap'). The duration of BNG is unlimited. It is registered in the Commercial Register
of the Delft The Hague Chamber of Commerce and Industry ('Kamer van Koophandel') under No.
27008387. BNG's ownership is restricted to the Dutch public sector and its shareholders are exclusively
Dutch public authorities. The Dutch state's shareholding is 50%, and has been unchanged since 1921,
with the remainder held by more than 95% of Dutch municipalities, 11 of the 12 Dutch provinces, and
one water board. BNG is established in The Hague and has no branches. BNG's registered office is at
Koninginnegracht 2, 2514 AA The Hague, the Netherlands. Its telephone number is +31 70 - 3750750.
The Issuer is authorised by the Dutch Central Bank (`De Nederlandsche Bank N.V.' or "DNB") to pursue
the business of a bank in the Netherlands and is consequently supervised by DNB. In addition the Issuer
is supervised by the Netherlands Authority for the Financial Markets (`Stichting Autoriteit Financiële
Markten') for the purpose of market conduct supervision.
The executive board
The executive board of the Issuer consists of the president C. van Eykelenburg and the members J.J.A.
Leenaars and J.C. Reichardt. The supervisory board of the Issuer currently consists of ten members, who
are listed in the section "N.V. Bank Nederlandse Gemeenten".
Funding of the Issuer
The Issuer's need for funding generally varies between 13 billion to 15 billion equivalent per annum.
In order to raise funds on the international capital markets the Issuer established this Programme of 80
billion as well as several other funding programmes allowing it to raise funds in various markets. The
Issuer can raise funds under the above mentioned programmes as well as on a stand-alone basis. The
notes issued under these programmes are mainly issued in Euros, US Dollars, Swiss Francs, Canadian
Dollars and British Pounds.
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Financial information relating to the Issuer
The Issuer's balance sheet and profit and loss account as of and for the year ended 31 December 2009 are
set out in this Base Prospectus. The financial information included herein is compared with the financial
information included in the balance sheet and profit and loss account both as of 31 December 2008. The
financial statements of the Issuer set out, or incorporated by reference, in this Base Prospectus have been
audited for the three financial years preceding the date of this Base Prospectus by Ernst & Young
Accountants. The Issuer's capitalisation was 89,432,000,000 as at 31 December 2009. The indebtedness
of the Issuer as at 31 December 2009 was 92,794,000,000.
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SELECTED FINANCIAL DATA 2009-2005

2009
2008
2007
2006 2005

( millions, except percentages, per share and employee data)
Total Assets
104,496
101,365
92,602
90,098
91,671
Loans and Advances
79,305
75,699
66,037
64,994 64,166
of which Granted to or guaranteed
by Public Authorities
67,164
64,782
60,219
60,059 58,287
of which reclassified out of the
financial assets available for sale
item
4,226
4,569
-
-
-
Equity1, 2
2,253
1,979
2,053
2,576
3,145
of which Unrealized Revaluation
49
(29)
104
220
354
Equity per share (in Euros)1, 2 39.58
36.06
35.00
42.31
50.09
Equity as a % of Total Assets1, 2 2.1%
2.0%
2.1%
2.6%
3.0%
BIS-Ratio core capital (tier 1)1, 3 19%
18%
18%
24%
32%
BIS-Ratio total capital 1, 4 20%
20%
20%
26%
33%
Profit before tax
350
182
238
255
276
Net Profit

278
158
195
199
311
Profit per Share (in Euros)
4.98
2.84
3.50
3.57
5.58
Dividend (in Cash)
139
79
97
99
134
Dividend as a % of Consolidated
Net Profit

50%
50%
50%
50%
43%
Dividend per Share (in Euros)
2.49
1.42
1.75
1.78
2.40
Additional Payment
500
500
Additional Payment per Share
(in Euros)

8.98
8.98
Employees (in FTEs) at Year-End
287
280
278
381
409
- of which Subsidiaries
58
51
52
42
38

1 In December 2007 and December 2006, an additional payment of 500 million was made to shareholders (8.98 per share). The
payment was charged to the reserves.
2 Excluding the revaluation reserve.
3 Core (Tier 1) capital as a percentage of risk-weighted amounts.
4 Total capital as a percentage of risk-weighted amounts
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Essential characteristics of the Notes and the Programme
The Issuer may, subject to compliance with all relevant laws, regulations and directives, from time to time
issue Notes under the Programme denominated in any currency (including Euro) agreed between the
Issuer and the relevant dealer. The aggregate principal amount of the Notes outstanding will not at any
time exceed 80 billion, subject to any duly authorised increase. Notes may be denominated in any
currency or currencies, subject to compliance with all applicable legal and/or regulatory and/or central
bank requirements. The aggregate principal amount, any interest rate or interest calculation, the issue
price and any other terms and conditions not contained herein with respect to each Series (as defined
below) of Notes will be determined at the time of issuance and set forth in the applicable final terms. The
Notes may be offered for sale (a) in bearer form or registered form outside the United States to non-U.S.
persons in reliance on and in accordance with Regulation S and (b) in registered form within the United
States to QIBs in reliance on and in accordance with Rule 144A and, in each case, in accordance with all
other applicable laws and regulations. The Notes in bearer form are subject to United States tax law
requirements.
Application may be made for the Notes issued under the Programme to be admitted to trading on the
regulated market of the Luxembourg Stock Exchange and Euronext Amsterdam, as the case may be.
However, Notes may also be issued under the Programme on an unlisted basis, or admitted to listing,
trading and/or quotations as may be agreed between the Issuer and the relevant dealer. The final terms
applicable to a Series of Notes will specify whether or not such Series of Notes have been admitted to
trading on the regulated market of the Luxembourg Stock Exchange and/or Euronext Amsterdam, as the
case may be.
Notes will be issued in series (each a "Series") each of which will comprise of one or more tranches (each
a "Tranche"). The Notes of each Series will all be subject to identical terms, except that the issue date,
issue price and the date of the first payment of interest may be different in respect of different Tranches.
The Notes of each Tranche will all be subject to identical terms in all respects save that a Tranche may
comprise Notes of different denominations.
Notes may be issued in bearer form ("Bearer Notes") or in registered form ("Registered Notes"). The
Notes are expected to be available for delivery through the facilities of The Depository Trust Company
("DTC") and its direct and indirect participants, Euroclear Bank SA/NV ("Euroclear") and Clearstream
Banking, société anonyme ("Clearstream, Luxembourg") and/or any other agreed clearing system..
Bearer Notes will be sold outside the United States in "offshore transactions" within the meaning of
Regulation S. Unless otherwise specified in the relevant Final Terms, Bearer Notes will be represented on
issue by a temporary global note in bearer form, without interest coupons (each, a "Temporary Global
Note"), and interests in Temporary Global Notes will be exchangeable for interests in permanent global
notes in bearer form (each, a "Permanent Global Note", and together with the Temporary Global Notes,
the "Global Notes") or, if so stated in the applicable Final Terms, definitive notes in bearer form (each, a
"Definitive Note"), after the date falling 40 days after the date of issue of the Temporary Global Note
upon certification as to non-U.S. beneficial ownership. Interests in Permanent Global Notes will be
exchangeable for Definitive Bearer Notes in whole but not in part upon the occurrence of certain events
described in paragraph "Forms of Notes". Each Global Note will be deposited with a common depositary
or, as the case may be, a common safekeeper on behalf of Euroclear and Clearstream Luxembourg and/or
any other agreed clearing system. See "Forms of Notes".
Registered Notes may be sold (i) outside the United States in "offshore transactions" within the meaning
of Regulation S ("Regulation S Notes") and/or (ii) in the United States to QIBs within the meaning of
Rule 144A ("Rule 144A Notes"). In general, (i) Regulation S Notes will be represented on issue by a
permanent global note certificate in registered form, without interest coupons (each, an "Unrestricted
Global Note Certificate"), and (ii) Rule 144A Notes will be represented on issue by a permanent global
note certificate in registered form, without interest coupons (each, a Restricted Global Note Certificate"
and, together with each Unrestricted Global Note Certificate, the "Global Note Certificates"). The
provisions governing the exchange of interests in the Global Note Certificates for individual note
certificates in registered form (each, an "Individual Note Certificate" and together with the Global Note
Certificates, the "Note Certificates") in certain limited circumstances are described in "Forms of Notes -
Registered Notes". On the relevant issue date, Global Note Certificates of each Series will be (i)
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registered in the name of, and deposited with, a common depositary or, as the case may be, a common
safekeeper on behalf of Euroclear and Clearstream, Luxembourg; and/or (ii) registered in the name of
Cede & Co. as nominee for, and deposited with a custodian for, DTC; and/or (iii) registered and deposited
with any other agreed clearing system, as specified in the applicable Final Terms. Registered Notes are
subject to certain restrictions on transfer. See "Plan of Distribution" and "Transfer Restrictions".
The Notes will constitute direct and unsecured obligations of the Issuer and rank pari passu without any
preference among themselves and with all other present and future unsecured and unsubordinated
obligations of the Issuer and will have the benefit of a negative pledge and the events of default set out in
the section entitled "Terms and Conditions of the Notes" (the "Conditions"). Notes may be redeemable at
their Final Redemption Amount as may be specified in the Final Terms. Early redemption will be
permitted for taxations reasons as set out in the Conditions but will otherwise be permitted only to the
extent set out in the Final Terms.
Risk Factors
Investing in Notes issued under the Programme involves certain risks. The risk factors that may affect the
ability of the Issuer to fulfil its obligations under the Notes are set out under "Risk Factors" on page 9-
12 below and include:
·
factors which may affect the Issuer's ability to fulfil its obligations under the Notes such as general
economic and financial market conditions, liquidity risk, interest rate volatility, market risk, credit
risk, operational risk, regulatory risk, ICT risk, reputational risk and outsourcing risk;
·
general risks related to the market generally for the Notes such as liquidity risk, exchange rate risk,
interest rate risk and credit rating risks;
·
risks affecting an investor's ability to make an informed assessment of the risks associated with
Notes issued under the Programme such as lack of sufficient knowledge and experience to make a
meaningful evaluation of the Notes and the merits of investing in them;
·
risks related to the structure of certain Notes issued under the Programme (including but not
limited to Index Linked Notes, Inflation Linked Notes, Fund Linked Notes and Dual Currency
Notes) which can only be meaningfully evaluated by an investor having sufficient expertise; and
·
certain risks related to the Notes generally.

Supplemental information
For so long as any Notes are outstanding, copies and, where appropriate, English translations of the
following documents may be inspected to the extent available at the website of the Issuer
(http://www.bng.com) or alternatively during normal business hours at the specified office of the Paying
Agent in Breda, London and Luxembourg, and be obtained free of charge: (a) the deed of incorporation
and the Articles of Association (`statuten') of the Issuer; (b) the Issuing and Paying Agency Agreement;
(c) the audited financial statements for the preceding financial year and the latest audited financial
statements and unaudited semi-annual financial statements of the Issuer; (d) a copy of this Base
Prospectus and any further prospectus or prospectus supplement prepared by the Issuer for the purpose of
updating or amending any information contained herein or therein; and (e) each final terms in relation to
listed issues of Notes.
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RISK FACTORS
Prospective investors should read the entire Base Prospectus.
The Issuer believes that the factors described below represent the principal risks inherent in investing in
Notes issued under the Programme, but the inability of the Issuer to pay interest, principal or other
amounts on or in connection with any Notes may occur for other reasons. The risks described below are
not the only risks the Issuer faces. Additional risks and uncertainties not presently known to the Issuer or
that it currently believes to be immaterial could also have a material impact on its business operations.
Prospective investors should also read the detailed information set out elsewhere in this Base Prospectus
and reach their own views prior to making any investment decision.
Words and expressions defined in the Conditions or elsewhere in this Base Prospectus have the same
meanings in this section, unless otherwise stated. Prospective investors should consider, among other
things, the following.
Factors that may affect the Issuer's ability to fulfil its obligations under the Notes
BNG's business and results of operations are affected by conditions in the global financial markets and
by global economic conditions, particularly in the Netherlands. The recent turbulence and volatility in
these markets has adversely affected, and could continue to adversely affect, BNG's business and results
of operations.
There was extreme volatility and disruption in global capital and credit markets beginning in late 2007,
reaching unprecedented levels in the second half of 2008 and early 2009, particularly following the
bankruptcy filing by Lehman Brothers in September 2008. This extreme volatility and disruption led to
severe dislocation of financial markets around the world, unprecedented reduced liquidity and increased
credit risk premiums for many market participants. These conditions also resulted in a material reduction
in the availability of financing, both for financial institutions and their customers, compelling many
financial institutions to rely on central banks and governments to provide liquidity and, in some cases,
additional capital during this period. Governments around the world, including in the Netherlands, took
actions to stabilize financial markets and prevent the failure of financial institutions. BNG's results of
operations were adversely impacted by these conditions during 2008 and through the first half of 2009.
BNG's business is impacted generally by the business and economic environment in which it operates,
which itself is impacted by factors such as changes in interest rates, securities prices, credit (including
liquidity) spreads, exchange rates, consumer spending, business investment, real estate valuations,
government spending, inflation, the volatility and strength of the capital markets, and terrorism. Recent
market disruption and volatility in these factors created a less favorable environment for BNG's public
sector clientele. For example, during financial years 2008 and 2009, BNG experienced a decrease in its
lending activities, as its primary clients, the public municipalities, provinces and housing corporations in
the Netherlands, reduced investment in their programs and projects in response to economic uncertainty.
If these levels of market disruption and volatility continue or recur, BNG may experience further
reductions in business activity, increased funding costs and funding pressures, decreased asset values and
lower profitability. As a result of changing market conditions and the influence of financial and industry
cycles, BNG's results of operations are subject to volatility that may be outside the control of BNG.
BNG's results of operations may, therefore, vary significantly from year to year depending on market
conditions.
BNG is subject to liquidity risks and adverse capital and credit market conditions may impact BNG's
ability to access liquidity as well as the cost of credit.
Liquidity risk is the risk that BNG, although solvent, is at any given moment unable to meet its payment
obligations due to insufficient financial resources or can only secure such financial resources at excessive
cost. BNG requires liquidity in its day-to-day business activities primarily to pay its operating expenses
and interest on its debt and replace certain of its maturing liabilities. The principal source of liquidity for
BNG is the wholesale lending markets, although further liquidity is available through deposits and
entrusted funds and cash flow from its investment portfolio and assets, consisting mainly of cash or assets
that are readily convertible into cash, including through lending from the European Central Bank against
collateral.
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Credit markets worldwide experienced a severe reduction in liquidity and term-funding during the credit
crisis. Continuing disruption, particularly in Europe, has resulted in liquidity and term funding remaining
difficult to obtain and terms for certain borrowers have become less favorable. Perception of counterparty
risk between banks also increased significantly during the credit crisis, and has continued, leading to
further reductions in access to traditional sources of liquidity, such as the debt capital markets. BNG's
access to the debt capital markets, its principal source of liquidity has been, and could in the future be,
restricted or available only at a higher cost.
The availability and cost of financing depends on a variety of factors such as the market conditions
referred to above, as well as the general availability of credit, the volume of trading activities, the overall
availability of credit to the financial services industry, an issuer's credit ratings and credit capacity, as
well as the possibility that customers or lenders could develop a negative perception of an issuer's long-
or short-term financial prospects. BNG's access to funds and the cost of such funds is significantly
influenced by views of rating agencies. If BNG's access to the capital markets or the cost of accessing
such markets should increase significantly or if BNG is unable to attract other sources of financing, it
could have an adverse effect on BNG's financial condition and results of operations and could, in turn,
impair BNG's access to liquidity.
Volatility in interest rates and credit spreads may adversely affect BNG's business.
Changes in prevailing interest rates and/or widening of credit spreads may negatively affect BNG's
business by decreasing its interest result or decreasing demand for loans. In a period of changing interest
rates (and volatile credit spreads), interest expense may increase at different rates than the interest earned
on assets. Accordingly, changes in interest rates could decrease interest result, BNG's primary source of
revenue. Changes in interest rates may negatively affect the value of BNG's assets and its ability to
realise gains or avoid losses from the sale of those assets, all of which also ultimately affect profit.
Changes in interest rates may also result in unrealised losses which may be required to be recognized in
the income statement or in equity on the balance sheet. In addition, an increase in interest rates (or credit
spreads) may decrease the demand for loans.
Ratings are important to BNG's business for a number of reasons. Among these reasons are the issuance
of debt instruments and the risk weighting of bank assets. Downgrades could have an adverse impact on
BNG's operations and financial condition.
BNG has credit ratings from Standard & Poor's Ratings Services ("Standard & Poor's"), a division of
the McGraw-Hill Companies, Inc., Moody's Investors Service Limited ("Moody's") and Fitch Ratings
Ltd. ("Fitch"). Each of the rating agencies reviews its ratings and rating methodologies on a recurring
basis and may decide on a downgrade at any time. In the event of a downgrade, BNG's cost of issuing
debt instruments will increase, having an adverse effect on net profit and potentially impacting BNG's
competitive position with its clients in the public sector.
BNG may be unable to manage its risks successfully through derivatives.
BNG employs various economic hedging strategies with the objective of mitigating the market risks that
are inherent in its business and operations. These risks include currency fluctuations, changes in the fair
value of its investments and the impact of interest rate and credit spread changes. BNG seeks to control
these risks by, among other things, entering into a number of derivative instruments, such as swaps,
options, futures and forward contracts including, from time to time, portfolio hedges for parts of its
business.
Developing an effective strategy for dealing with these risks is complex, and no strategy can completely
insulate BNG from risks associated with those fluctuations. BNG's hedging strategies also rely on
assumptions and projections regarding its assets, general market factors and the credit worthiness of its
counterparties that may prove to be incorrect or prove to be inadequate. Accordingly, BNG's hedging
activities may not have the desired beneficial impact on its financial condition or results of operations.
Poorly designed strategies or improperly executed transactions could actually increase BNG's risks and
losses. If BNG terminates a hedging arrangement, it may also be required to pay additional costs, such as
transaction fees or breakage costs. BNG's hedging strategies and the derivatives that it uses and may use
may not adequately mitigate or offset the risk of interest rate and currency volatility, and BNG's hedging
transactions may result in losses.
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