POSTBANK March 2007

1. Real Estate Financing Standing its ground in a challenging environment Real Estate Financing Standing its ground in a challenging environment Anna V. Ivanova Eurobank EFG Bulgaria POSTBANK March 2007 Anna V. Ivanova Eurobank EFG Bulgaria St. Peterbourg, 14-15 May 2009 St. Petersburg, 14-15 May 2009

2. Global Markets Instability and Risks • Significant degree of uncertainty in commercial real estate markets • Increased volatility of prices & values expected whilst the market absorbs various issues and reaches its conclusions • Lack of liquidity in the capital markets

3. Property Market Structure & Trends in Bulgaria • Privatization process practically completed • Interests turning to RE investment • Bulgaria has recently joined the E.U. as a full member • Further reinforces demand for prime location property • Bulgarian property market immature • Opens up new perspectives • Stable macroeconomic environment • FDI inflows • Currency board in place • Increased confidence

4. Macroeconomic Environment Although the credit crunch undoubtedly affected the banking and RE sectors, its impact tend to be much softer than in other SEE countries due to: • Stable macroeconomic environment • Still decent GDP growth • Inflation slowing down(to 4.9% YoY at the end of Q1 ‘09) • Significant CADimprovement (by 55% YOY in the end of Feb ’09) • Stable public finances (3% planned budget surplus) • Inflow of FDIs (Traditional focus on RE and construction; in 2008 they amounted up to 40% of the total FDIs)

5. Latest RE market challenges in Bulgaria The financial crises will have a sobering effect on the RE market reducing the number of projects that are developed, as well as pressuring the market: • Approximately 15 projects for shopping centers and retail parks have been postponed throughout the country, mainly due to lack of debt financing; • Rental levels on the high street of major Bulgarian cities have decreased by 5-15%; • The vacancy levels of shopping centers in some secondary cities is still relatively high; • Many planned office projects have been put on-hold while others have been frozen during the rough construction process; • The overall vacancy rate for office space continued to increase; • Residential properties market slowed down and prices went down;

6. Banking sector adapting … … in an exceptionally challenging operating environment • Review interest rates • Balanced lending growth • Intensified deposit gathering • Focus on credit risk • More conservative approach • Review of credit criteria (much more selective in terms of ‘fit’ customers) • Lower loan-to-value ratio • Restructuring and renegotiation processes started throughout the banking sector • Strengthen collection activities • Redeployment of resources

7. Residential property loans: 4 phases Phase 1: Fueling the market (2003-2005) • Increasing loan-to-value ratio • Decreasing interest rates • Easing collateral rules Phase 2: Price competition (2005-2006) • 0% rates for the first year • Lower introductory fixed rates for the first 1-2-3 years • Financing of properties under construction Phase 3: Focus on profitability and customer service (2006-2008) • Promoting floating rates for the entire period • Longer tenors • Cross-selling (credit cards, consumer loans) Phase 4: Focus on credit risk (2008-2009) • Higher interest rates • Strict requirements for income proof • Lending at lower LTV • Restructuring & Collection activities

8. Reaching the limits … and back to basics Size No limit Int. rate 6.4-7.9% Tenor 5-35y LTV 70-100% Debt to income 60-70% Fees 1-2.5% Until H1 ‘08: • Quick response time (2-3 days for initial approval) • Bundling (credit cards, additional consumer loans, internet banking) • No documentary proof of income (for BG citizens only) Since H2 ’08: • Product standardization (lack of promotions) • Going away from risk (higher risk premiums, no prepayment fees) • Upper limit set at EUR 100 000 (with income proof only) Size Limited Int. rate 9.8-11.6% Tenor 10-25y LTV 60-80% Debt to Income 30-40% Fees 1.5-3%

9. Banking sector priorities Survival of the ‘fittest’ • To sustain and improve pre-provision earnings capacity (loan margin, fee business, cross-selling, cost containment) • To further strengthen the Risk management process (underwriting, collection, conservative provisioning policy) • To improve the effectiveness of balance sheet management (further strengthen capital position and liquidity management) • Crisis is an opportunity to strengthen the value of our franchise (Stand by our client – deepen relationship)

10. EFG Eurobank – a regional banking group • Total assets amounting to €82.2bn and PAT reaching €652 mln • A force of more than 24 000 people in 8 countries throughout CSEE • A distribution network of over 1 700 locations Universal Bank (London Branch)

11. Postbank – a member of EFG Group Leading universal bank • Established in 1991 • 99.7% owned by EFG Eurobank • Eurobank EFG acquired DZI Bank in Sept ’06 • Postbank – DZI merger in 2007 • Present in more than 220 locations • Workforce in excess of 2 700 • Strengths: Local knowledge, good brand recognition, wide range of services • Sister companies – Leasing, Factoring, Investment Banking, Card operations, Business services and Property valuation, advisory and management.