Obbligazione Nederlandse Waterbank N.V. 2.15% ( XS1091210028 ) in EUR

Nederlandse Waterbank N.V.

100 EUR ⇌

Paesi Bassi

XS1091210028 ( in EUR )

2.15% per anno ( pagato 1 volta l'anno)

28/07/2034 - Obbligazione è scaduto

Prospetto opuscolo dell'obbligazione Nederlandse Waterschapsbank N.V XS1091210028 in EUR 2.15%, scaduta

La Nederlandse Waterschapsbank N.V. è una banca olandese specializzata nel finanziamento di progetti relativi alla gestione delle acque e all'infrastruttura idraulica.

The Obbligazione issued by Nederlandse Waterbank N.V. ( Netherlands ) , in EUR, with the ISIN code XS1091210028, pays a coupon of 2.15% per year.
The coupons are paid 1 time per year and the Obbligazione maturity is 28/07/2034

28 April 2014
NEDERLANDSE WATERSCHAPSBANK N.V.
(Incorporated in the Netherlands with its statutory seat in The Hague)
60,000,000,000 Debt Issuance Program
Under this 60,000,000,000 Debt Issuance Program (the `Program') Nederlandse Waterschapsbank N.V. (the
`Issuer' or `NWB Bank') may from time to time issue notes (the `Notes') denominated in any currency agreed
between the Issuer and the relevant Dealer (as defined below). As set out herein, the Notes will not be subject to any
maximum maturity but will have a minimum maturity of one month and the maximum aggregate principal amount
of all Notes from time to time outstanding will not exceed 60,000,000,000 (or its equivalent in any other currency
calculated as described herein).
The Notes will be issued on a continuing basis to one or more of the Dealers specified below and any additional
Dealer appointed under the Program from time to time, which appointment may be for a specific issue or on an
ongoing basis (each a `Dealer' and together the `Dealers'). The Dealer or Dealers with whom the Issuer agrees or
proposes to agree on the issue of any Notes is or are referred to as the `relevant Dealer' in respect of those Notes.
The Notes will be issued in series (each a `Series') each of which will comprise one or more tranches (each a
`Tranche').
This document constitutes a base prospectus dated 28 April 2014 (the `Base Prospectus') within the meaning of
Directive 2003/71/EC (the `Prospectus Directive' which term includes amendments thereto, including Directive
2010/73/EU (the `2010 PD Amending Directive') to the extent implemented in a relevant Member State of the
European Economic Area to which is referred) and is issued in replacement of a prospectus dated 28 May 2013.
This does not affect any notes issued prior to the date of this Base Prospectus.
This Base Prospectus has been approved by the Netherlands Authority for the Financial Markets (Stichting
Autoriteit Financiële Markten, the `AFM'), which is the Netherlands competent authority for the purpose of the
Prospectus Directive and relevant implementing measures in the Netherlands, as a Base Prospectus issued in
compliance with the Prospectus Directive and relevant implementing measures in the Netherlands for the purpose of
giving information with regard to the issue of Notes under the Program during the period of twelve months after the
date hereof.
Application may be made for Notes issued under the Program to be admitted to trading on NYSE Euronext in
Amsterdam (`Euronext Amsterdam'), the regulated market of Euronext Amsterdam N.V., the Official List of the
Luxembourg Stock Exchange (the 'Luxembourg Stock Exchange'), NYSE Euronext in Paris (`Euronext Paris'), the
regulated market of Euronext Paris S.A., Eurex Deutschland (`Eurex Deutschland'), the regulated market of Eurex
Frankfurt AG and the regulated market of London Stock Exchange plc (the `London Stock Exchange'). The
Program 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.
The AFM has been requested by the Issuer to provide the Luxembourg Commission de Surveillance du Secteur
Financier (the `CSSF'), the French Autorité des marchés financiers (the `AMF'), the German Bundesanstalt für

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Finanzdienstleistungsaufsicht (the `BaFin') and the UK Financial Conduct Authority (the `FCA') with a certificate
of approval attesting that the Base Prospectus has been drawn up in accordance with Regulation 809/2004/EC (the
`Prospectus Regulation' which term includes amendments thereto, including Regulation 862/2012/EC and
Regulation 486/2012/EC).
The Program has been rated AA+ (in respect of Notes with a maturity of more than one year) and A-1+ (in
respect of Notes with a maturity of one year or less) by Standard & Poor's Credit Market Services Europe Limited
(`Standard & Poor's') and has been rated P-1 (in respect of short-term Notes) and Aaa (in respect of senior
unsecured medium-term Notes) by Moody's Investors Service Limited (`Moody's'). Tranches or Series of Notes
issued under the Program may be rated or unrated. Where a Tranche or Series of Notes is rated, such rating will not
necessarily be the same as the ratings assigned to the Program. 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. As of the date of this Base Prospectus, each of Standard & Poor's and Moody's is established in the
European Union and is registered under Regulation (EC) No 1060/2009 of 16 September 2009 on credit rating
agencies, as amended and supplemented (the `CRA Regulation').
The rating of a certain Series or Tranche of Notes to be issued under the Program, if applicable, will be
specified in the applicable Final Terms. Whether or not each credit rating applied for in relation to such Series or
Tranche of Notes will be issued by a credit rating agency established in the European Union and registered under the
CRA Regulation will be disclosed clearly and prominently in the Final Terms.
The Issuer may agree with any Dealer that Notes may be issued in a form not contemplated by the Terms and
Conditions of the Notes herein, in which case a supplemental base prospectus, a new base prospectus or a drawdown
prospectus, as appropriate, will be made available which will describe the effect of the agreement reached in relation
to such Notes and which will be subject to the prior approval of the AFM.
The Notes have not been and will not be registered under the United States 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 under the Securities Act
(`Regulation S')), except pursuant to an exemption from, or a transaction not subject to, the registration
requirements of the Securities Act, applicable U.S. state securities laws or pursuant to an effective registration
statement. The Notes may be offered and sold (a) in bearer form or registered form outside the United States to non-
U.S. persons in reliance on Regulation S and (b) in registered form within the United States, to persons who are
`qualified institutional buyers' (`QIBs') within the meaning of and in reliance on Rule 144A under the Securities Act
(`Rule 144A'). 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' below. Notes in bearer form are subject to U.S. tax law
requirements.
Prospective investors should have regard to the factors described under `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.nwbbank.com and may be obtained by contacting the Issuer by telephone (+31 70 416 62 66) or by
email: [email protected]), and in relation to any Tranche, this Base Prospectus should be read and construed
together with the applicable Final Terms.

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Joint-Arrangers
BofA Merrill Lynch
The Royal Bank of Scotland
Dealers
ABN AMRO
Barclays
BNP PARIBAS
BofA Merrill Lynch
Citigroup
Commerzbank Aktiengesellschaft
Credit Suisse
Daiwa Capital Markets Europe
Deutsche Bank
DZ BANK AG
Goldman Sachs International
HSBC
ING
J.P. Morgan
Landesbank Baden-Württemberg
Mizuho Securities
Morgan Stanley
Natixis
Nomura
Norddeutsche Landesbank Girozentrale
NWB Bank
Rabobank International
RBC Capital Markets
Shinkin International Ltd
SMBC Nikko
The Royal Bank of Scotland
TD Securities
Zürcher Kantonalbank

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TABLE OF CONTENTS

Page
Risk Factors ........................................................................................................................................................... 2
Overview of the Program and Key Characteristics of the Notes ............................................................................. 19
Important Notices ................................................................................................................................................. 31
Service of Process and Enforcement of Civil Liabilities ........................................................................................ 36
Presentation of Financial and Other Information ................................................................................................... 37
Cautionary Statement Regarding Forward-Looking Statements ............................................................................. 39
Documents Incorporated by Reference .................................................................................................................. 41
Form of the Notes ................................................................................................................................................. 42
Book-Entry Clearance Systems ............................................................................................................................. 46
Form of Final Terms ............................................................................................................................................. 50
Terms and Conditions of the Notes ....................................................................................................................... 73
Use of Proceeds .................................................................................................................................................. 113
Nederlandse Waterschapsbank N.V. ................................................................................................................... 114
Capitalization ..................................................................................................................................................... 130
Selected Financial Data ...................................................................................................................................... 131
Operating and Financial Review ......................................................................................................................... 132
Taxation ............................................................................................................................................................. 163
Benefit Plan Investor Considerations .................................................................................................................. 175
Plan of Distribution ............................................................................................................................................ 176
Transfer Restrictions .......................................................................................................................................... 181
General Information ........................................................................................................................................... 185

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RISK FACTORS
NWB Bank believes that the following factors may affect its ability to fulfill its obligations under the Notes
issued under the Program. Factors (although not exhaustive) which could be material for the purpose of assessing
the market risks associated with Notes issued under the Program are described below.
NWB Bank believes that the factors described below represent the principal risks inherent in investing in Notes
issued under the Program, but the inability of NWB Bank to pay interest, principal or other amounts on or in
connection with any Notes may occur for other reasons and NWB Bank does not represent that the statements below
regarding the risks of holding any Notes are exhaustive. The risks described below are not the only risks NWB Bank
faces. Additional risks and uncertainties not presently known to NWB Bank 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 Terms and Conditions of the Notes 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 NWB Bank's ability to fulfill its obligations under Notes issued under the Program
NWB Bank's business and results of operations may be negatively affected by actual or perceived local and
global economic and financial market conditions
NWB Bank's business and results of operations are affected by local and global economic conditions,
perceptions of those conditions and future economic prospects. More than five years after the beginning of the
global economic and financial crisis, the world economy is showing signs of recovery in 2014, but downward
revisions to growth forecasts in some economies highlight continued fragilities and downside risks. Risks to growth
and stability stem mainly from continued imbalances among and within countries and from uncertainty about
how economies will respond as the extraordinary monetary policy measures, including the quantative easing
programs, implemented during the global financial and economic crisis are unwound. The economy in the
Netherlands remains weak. Gross domestic product (`GDP') in the Netherlands decreased by 0.8% in 2013 and GDP
growth prospects remain modest.1 The unemployment rate in the Netherlands, which stood at 3.8% in 2008, is
expected to remain around 8% in 2014 and 2015.2 In line with the slow economic recovery, inflation fell below 2%
in 2013 and projections suggest it is set to remain low at approximately 1% in 2014.3
NWB Bank'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 and liquidity spreads,
exchange rates, consumer spending, business investment, real estate valuations, government spending, inflation, the
volatility and strength of the capital markets and other destabilizing forces such as geopolitical tensions or acts of
terrorism. Although the Dutch economy improved during 2013, volatility resulting from the factors noted above and
market disruption over the past several years have created a less favorable environment for NWB Bank's public
sector clientele. The continuing weak economic conditions in Europe and in particular the Netherlands, combined
with the resulting high unemployment rates, depressed property markets and pressure on disposable incomes, have
slowed investment and consumer spending, which in turn has had an adverse effect on the financing requirements of
NWB Bank's public sector clients.
These factors, together with volatility in the capital and credit markets during recent years, have had a material
impact on NWB Bank's core activities of funding and lending and NWB Bank believes that economic and market
conditions in the Netherlands and Western Europe in general will continue to affect NWB Bank's results of
operations. In particular, NWB Bank's ability to generate revenues and expand its loan portfolio in the future largely

1 CPB Netherlands Bureau for Economic Policy Analysis (Centraal Planbureau).
2 Ibidem.
3 Ibidem.
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depends on the prospect and speed of economic and market recovery within the Netherlands and Western Europe.
Long-term lending volumes have not returned to pre-global economic and financial crisis levels and investment
levels of NWB Bank's public sector clients remain under pressure. During 2013, NWB Bank's new lending to
housing associations, its largest client base, declined to 1.6 billion (2012: 3.9 billion) in part due to the lower level
of investments by housing corporations caused by a slump in the housing market and cuts in construction spending.
The healthcare sector continues to experience low financing requirements, mainly due to the reform of the Dutch
healthcare system, which incorporates de-institutionalization (keeping patients outside healthcare institutions) and
strong cost-cutting incentives for healthcare institutions. The insecurity caused by a large number of policy changes
has made healthcare institutions hesitant to enter into long-term commitments. Mainly due to the higher financial
risks in the healthcare sector, the Healthcare Sector Guarantee Fund (Waarborgfonds voor de Zorgsector, `WFZ')
has become more restrictive in respect of providing guarantees, thereby limiting access to the guaranteed funding
structure for NWB Bank's clients. There are a number of factors which are likely to result in subdued lending to
municipalities and other parts of the public sector in 2014. In addition to weak demand generally, local and regional
authorities' obligation to engage in treasury banking with the Dutch central government effective January 1, 2014
(as described in more detail below) is expected to reduce the need for long-term loans, as excess cash on deposit will
be lent between municipalities and/or provinces. Furthermore, the Dutch Sustainability of Public Finances Act (Wet
houdbare overheidsfinanciën) that took effect in December 2013 is expected to depress finance requirements of the
Dutch public sector as it imposes budgetary rules for local and regional authorities that fit in the broader policy of
lowering European Monetary Union (`EMU') debt. This act places a macro-level cap on the local and regional
authorities' EMU deficit, thereby limiting their scope for investments and thus financing needs.
NWB Bank's business and results of operations are also affected by financial market conditions. Although
capital and credit markets around the world were reasonably stable during 2013, a number of European Union
(`EU') countries had their credit ratings downgraded in 2013 (including the Netherlands in November by Standard
& Poor's) and yields on the sovereign debt of many EU Member States have remained well above pre-global
economic and financial crisis levels. The lingering risk of a sovereign default continues to pose a threat to financial
markets. During the next few years, a combination of anticipated recovery in private sector demand and a reduced
pace of fiscal austerity in Europe and the United States is likely to result in a return by central banks towards more
conventional monetary policies, following the recent period that has been characterized by highly accommodative
policies, which have helped to support demand at a time of very pronounced fiscal tightening and balance sheet
repair. The possibility of a withdrawal of such programs or slowing of monetary stimulus by one or more
governments could lead to generally weaker than expected growth, or even contracting GDP, reduced business
confidence, higher levels of unemployment, adverse changes to levels of inflation, potentially higher interest rates
and falling property prices, and consequently to an increase in delinquency rates and default rates among customers.
Any further slowing of monetary stimulus and the actions and commercial soundness of other financial institutions
have the potential to impact market liquidity. The adverse impact on the credit quality of NWB Bank's customers
and counterparties, coupled with a decline in collateral values, could lead to a reduction in recoverability and value
of NWB Bank's assets and higher levels of impairment allowances, which could have an adverse effect on NWB
Bank's prospects, financial condition and results of operation.
In addition, volatility in financial markets could increase as central banks start and/or accelerate the process of
tightening or unwinding historically unprecedented loose monetary policy or extraordinary measures. For example,
in response to actions of central banks, in particular the U.S. Federal Reserve's actions with respect to tapering of its
debt purchase program, there have been short periods of rapid movements in interest rates and significant sharp falls
in equity markets. Further market volatility may occur as tapering continues or in response to actions taken by the
European Central Bank (`ECB'). The resulting uncertainty in financial markets combined with challenging financial
conditions create a difficult operating environment for financial institutions, including NWB Bank, as they place
strain on funding needs and may continue to cause significant volatility to funding costs.
NWB Bank's results of operations have been adversely impacted by these conditions over the past several
years. Should volatility return to the financial markets, or global economic recovery stagnate, NWB Bank may
experience further reductions in business activity, increased funding costs and funding pressures, decreased asset
values and/or lower profitability. As a result of changing market conditions and the influence of financial, economic
and/or other cycles, NWB Bank's results of operations are subject to volatility that may be outside the control of
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NWB Bank. NWB Bank's financial condition and results of operations may, therefore, vary significantly from year
to year depending on market and general economic conditions.
A weakening of the nascent economic recovery in Europe may adversely affect NWB Bank's business and
results of operations
In Europe, countries such as Greece, Italy, Ireland, Portugal and Spain (`GIIPS') have been particularly affected
by the macroeconomic and financial conditions since 2008. Although the risk of sovereign default continued to
decline in 2013 due to the continuing actions of the ECB and the EU and improving economic conditions, the risk of
default and the possibility that the contagion effect spreads to other EU Member States remains. The impact a
sovereign default could have on the Eurozone countries, including the potential that some countries (albeit those
with a relatively small GDP could leave the Eurozone (either voluntarily or involuntarily), continues to raise
concerns about the ongoing viability of the euro currency and the EMU.
The effects on the Dutch, European and global economies of an exit of one or more EU Member States from the
EMU, a potential dissolution of the EMU and a consequent re-introduction of individual currencies in one or more
EMU Member States, are impossible to predict. However, if any such event were to occur it would likely:

result in significant market dislocation;

heighten counterparty risk;

result in downgrades of credit ratings for European borrowers, giving rise to increases in credit spreads and
decreases in security values;

disrupt and adversely affect the economic activity of the Dutch and other European markets; and

adversely affect the management of market risk and in particular asset and liability management due, in
part, to the redenomination of financial assets and liabilities and the potential for mismatch.
The occurrence of any of these events could have a material adverse effect on NWB Bank's prospects, financial
condition and results of operations.
Changes in interest rates and or/widening of liquidity and credit spreads may negatively affect NWB Bank's
prospects, financial condition and results of operations
NWB Bank's exposure to fluctuations in interest rates arises from differences in interest rate and terms between
lending and borrowing. Changes in prevailing interest rates and/or widening of liquidity and credit spreads may
negatively affect NWB Bank's prospects, financial condition and results of operations by decreasing its interest
result or decreasing demand for loans. In a period of changing interest rates (and volatile spreads), interest expense
may increase at different rates than the interest earned on assets. Accordingly, changes in interest rates could
decrease interest result, NWB Bank's primary source of revenue. Changes in interest rates may negatively affect the
value of NWB Bank's assets and its ability to realize 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 unrealized losses that 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
spreads) may decrease the demand for loans.
NWB Bank's policy is to manage the interest rate risk bank-wide by using interest rate swaps and other
derivative instruments for both the asset and the liability side of the balance sheet, in which NWB Bank agrees to
exchange, at specified intervals, the difference between fixed and variable interest rates calculated by reference to an
agreed-upon notional principal amount. NWB Bank's hedging activities, however, may not have the desired
beneficial impact on its financial condition or results of operations.
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NWB Bank is subject to liquidity risks and adverse capital and credit market conditions may impact NWB
Bank's ability to access liquidity as well as the cost of credit
Liquidity risk is the risk that NWB Bank, 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.
NWB Bank requires liquidity in its day-to-day business activities primarily to pay its operating expenses and interest
or other payments on its debt or derivatives and replace certain of its maturing liabilities. The principal source of
liquidity for NWB Bank is the wholesale lending markets.
Credit markets worldwide, including interbank markets, have experienced severe reductions in the availability
of financing during prolonged periods in recent years. During 2011 and the first part of 2012, credit markets were
disrupted mainly due to the sovereign debt crises associated with, amongst others, GIIPS, which resulted in liquidity
and term funding being difficult to obtain and terms for certain borrowers being less favorable. Only the intervention
of the ECB and its long-term refinancing operations made available in December 2011 and February 2012 reduced
this liquidity problem that was adversely affecting banks across Europe and also had shut many European banks out
of the wholesale public markets. Although the efforts of the ECB with the support of central banks have had a
positive impact, if volatility were to return to the global credit markets it could have a material adverse impact on the
availability of funding and the cost of obtaining such funding.
In addition, the market perception of counterparty risk between banks has changed significantly as a result of
the global economic and financial crisis. Uncertainty regarding the perception of credit risk across financial
institutions has led to, and may continue to lead to, reductions in access to traditional sources of funding, such as the
wholesale lending markets, or increases in the costs of accessing such funding.
Although credit markets continued to improve during 2013, if any of the problems discussed above continue or
recur, NWB Bank's access to the wholesale lending markets, which is its principal source of liquidity, could 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 funds, the volume of trading activities, the overall availability of funds
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.
NWB Bank's access to funds and the cost of such funds is significantly influenced by the views of rating agencies.
If NWB Bank's access to the capital markets or the cost of accessing such markets should increase significantly or if
NWB Bank is unable to attract other sources of financing, these developments could have an adverse effect on NWB
Bank's financial condition and results of operations and could, in turn, impair NWB Bank's access to liquidity.
Credit and counterparty risk may negatively affect NWB Bank's financial condition and results of operations
NWB Bank is subject to general credit risks, including credit risks of borrowers. Third parties that owe NWB
Bank money, securities or other assets may not pay or perform under their obligations. These parties include
borrowers under loans made by NWB Bank, the issuers whose securities NWB Bank holds, customers, trading
counterparties, counterparties under swap and credit and other derivative contracts, clearing agents, exchanges,
clearing houses and other financial intermediaries. These parties may default on their obligations to NWB Bank due
to bankruptcy, lack of liquidity, downturns in the economy, operational failure or for other reasons. Any such
defaults could lead to losses for NWB Bank which could have a material adverse effect on NWB Bank's financial
condition and results of operations.
Ratings downgrades and other ratings actions could have an adverse impact on NWB Bank's operations and
financial condition
Ratings are important to NWB Bank's business for a number of reasons, including its continued access to the
capital markets and cost of funds. NWB Bank has credit ratings from Standard & Poor's and Moody's. Each of the
rating agencies reviews its ratings and rating methodologies on a recurring basis and may decide on a downgrade at
any time.
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On 2 December 2013, Standard & Poor's lowered the long-term rating of NWB Bank. The downgrade of NWB
Bank reflects a similar action on the Netherlands on 29 November 2013. In accordance with Standard & Poor's
criteria for rating government-related entities, they believe that there is an `almost certain' likelihood that NWB
Bank as a government-related entity would receive timely and sufficient extraordinary support from the Dutch
government in the event of financial distress. As a result, Standard & Poor's equalized the long-term ratings with
that of the Netherlands. Standard and Poor's opinion of an `almost certain' likelihood of government support for
NWB Bank reflects their view that NWB Bank plays a `critical role' for the Dutch government through its key
public policy mandate and has an `integral' link with the Dutch government as Standard & Poor's considers NWB
Bank as an extension of the government.
Notwithstanding Standard & Poor's view that NWB Bank is a `government-related entity', you should note that
NWB Bank is not a government entity and its debt (including the Notes) are not direct or indirect obligations of the
State of the Netherlands or guaranteed in any way by the State of the Netherlands.
As evidenced by the rating action taken by Standard & Poor's, any rating action taken by Standard & Poor's or
Moody's with respect to the State of the Netherlands can be expected to impact NWB Bank's ratings. While NWB
Bank has not experienced significant negative effects as a result of the recent rating action by Standard & Poor's,
any adverse rating action could adversely affect NWB Bank. In the event of a downgrade or negative outlook with
respect to NWB Bank or if NWB Bank is placed on credit watch, NWB Bank's cost of issuing debt instruments
might increase, having an adverse effect on net profit and potentially impacting NWB Bank's competitive position
with its clients in the public sector and its financial condition.
NWB Bank is exposed to certain concentration risks in its loan portfolio
NWB Bank lends primarily to public authorities and institutions guaranteed by public authorities. In addition,
NWB Bank holds an interest-bearing securities portfolio comprising mainly securitized Dutch home mortgage loans
(`Residential Mortgage Backed Securities' or `RMBS notes') that are guaranteed under the National Mortgage
Guarantee (a guarantee provided to certain mortgage lenders by Stichting WEW, a private entity, covering payment
obligations of the borrowers vis-à-vis the mortgage lender), which carry limited to high weighted credit risk, and
bonds issued or guaranteed by public sector institutions, which carry limited weighted credit risk. The portfolio of
RMBS notes grew by 1.2 billion during 2013 to 1.8 billion at year-end 2013. A relatively small proportion of
loans is provided to government controlled companies without government guarantee (Dutch utility companies),
which carry a high weighted credit risk. In addition, NWB Bank carries out hedging transactions with financial
institutions, including currency and interest rate swaps, and enters into other derivative transactions, as well as
money market transactions, based on which there is a counterparty risk. NWB Bank's Articles of Association
prohibit all lending to privately owned entities, except that, since the amendments to the Articles of Association on
29 April 2013, NWB Bank is permitted to extend long-term financing in a public-private partnership (`PPP') model.
A potential future PPP portfolio would carry a higher weighted credit risk.
While NWB Bank's niche position as a specialized lender to the Dutch public sector means it has a low-risk
weighted portfolio, it also has a limited ability to diversify its lending and hence its main revenue source (net-
interest income), which are strongly concentrated in both sector and geography. In particular, NWB Bank has a
strong concentration in lending to social housing associations (approximately 65% of its total lending portfolio as at
31 December 2013), which loans are guaranteed by Stichting Waarborgfonds Sociale Woningbouw (`WSW'), a
social housing fund ultimately supported by the Dutch central government and municipalities. Government policies
and European rules on permitted state aid have a major impact on the social housing sector's financial position and
ability to invest. On 1 January 2011, an interim state aid scheme for social housing associations took effect, which
defines activities that are eligible for state aid and the conditions to which they are subject. Clarity on the restrictions
imposed by the legislation is expected as the regulations are developed further. If the ultimate impact of the new
framework is to limit the volume of guaranteed loans to social housing associations, NWB Bank's financial
condition and results of operations could be adversely affected.
The social housing sector has been facing multiple challenges for several years. These challenges have included
the additional tax on housing corporations (verhuurdersheffing), the financial crisis, demographic trends and
political decision-making , all of which affect housing corporations' policies and finances. In response to these
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developments the social housing sector has implemented cost-saving measures, including restructurings and lowered
investments, including their level of borrowing.
As a public sector bank, NWB Bank attracts funds from and lends funds to local and regional authorities. As at
31 December 2013, approximately 15% of NWB Bank's total lending portfolio consisted of loans granted to
municipal authorities. The introduction of mandatory treasury banking (verplicht schatkistbankieren) for local and
regional authorities, which took effect on 1 January 2014 pursuant to the Act on Mandatory Treasury Banking (Wet
Verplicht Schatkistbankieren) may have an adverse impact on NWB Bank's business in this sector. With the
introduction of mandatory treasury banking, the government aims to decrease the EMU debt of the public sector.
Mandatory treasury banking requires local and regional authorities, including water boards, to hold their surplus
liquid funds in accounts held at the Netherlands Ministry of Finance (Ministerie van Financiën). Alternatively, local
and regional authorities may choose to use surplus funds to repay debts or grant each other loans. Most provincial
authorities have a sound liquidity position and some choose to lend their surpluses to municipal authorities and
water boards, which is expected to reduce the demand for long-term loans in this sector. In addition, finance
requirements in this sector are depressed due to lower than expected land sales, decreases in land prices and the
introduction of the Dutch Sustainability of Public Finances Act, which contains budgetary rules for local and
regional authorities. Furthermore, municipal authorities are forced to implement cost savings as duties and
responsibilities are transferred from the central government to lower-tier authorities.

As a result of the foregoing there can be no assurance that the impact of the above developments will not
negatively impact NWB Bank's prospects, financial condition and results of operations.

NWB Bank may be unable to manage its risks successfully through derivatives
NWB Bank 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 liquidity and credit spread changes. NWB Bank seeks to mitigate
these risks by, among other things, entering into a number of derivative instruments, such as swaps 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 NWB Bank from risks associated with those fluctuations. NWB Bank's hedging strategies also rely on
assumptions and projections regarding its assets and liabilities, general market factors and the creditworthiness of its
counterparties that may prove to be incorrect or prove to be inadequate. Accordingly, NWB Bank'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 NWB Bank's risks and losses. If
NWB Bank terminates a hedging arrangement, it may also be required to pay additional costs, such as transaction
fees or breakage costs. NWB Bank'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 NWB Bank's hedging transactions
may result in losses.
NWB Bank's risk management methods may leave it exposed to unidentified, unanticipated or incorrectly
quantified risks, which could lead to material losses or material increases in liabilities
In the course of its business activities, NWB Bank is exposed to a variety of risks, the most significant of which
are market risk, interest rate risk, liquidity risk, credit and counterparty risk and operational risk (including model
risk). NWB Bank's revenues and interest rate risk are dependent upon its ability to properly identify changes in the
value of financial instruments caused by changes in market prices, rates and spreads. NWB Bank's earnings are
dependent upon the effectiveness of its management of migrations in credit quality and risk concentrations, the
accuracy of its valuation models and its critical accounting estimates. Extreme market volatility could make it
difficult, or in some cases impossible, to value some of the financial instruments that NWB Bank holds. Market
volatility may also result in significant unrealized losses or impairment losses on such instruments. In 2013, NWB
Bank adjusted its hedge accounting models and its method for measuring the fair value of its outstanding swap
portfolio, prompted by evolved best practices in the financial markets. Such revaluation of swaps resulted in
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