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NACF Corporate Reorganization Scheme Overview

NACF Corporate Reorganization Scheme Overview. January 27, 2012. Disclaimer. The information in this document which has been prepared by National Agricultural Cooperative Federation (the NACF) does not constitute a recommendation regarding any securities of NACF.

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NACF Corporate Reorganization Scheme Overview

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  1. NACF Corporate Reorganization Scheme Overview January 27, 2012

  2. Disclaimer The information in this document which has been prepared by National Agricultural Cooperative Federation (the NACF) does not constitute a recommendation regarding any securities of NACF. The information communicated in this document contains certain statements that are or may be forward looking. These statements typically contain words such as "will", "expects" and "anticipates" and words of similar import including those relating to general business plans and strategy of NACF. By their nature forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Investment in NACF will also involve certain risks. There may be additional material risks that are currently not considered to be material or of which NACF and its advisors or representatives are unaware. NACF assumes no responsibility to update forward-looking statements or to adapt them to future events or developments. Actual results may differ materially from these forward-looking statements due to a number of factors, including future changes or developments in NACF’s business, its competitive environment, its ability to implement its strategies and initiatives and respond to technological changes and political, economic, regulatory and social conditions in Korea. This presentation does not constitute a prospectus, offering circular or offering memorandum or an offer, or a solicitation of any offer, to purchase or sell, any securities and should not be considered as a recommendation that any investor should subscribe for or purchase any of NACF's securities. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information, or opinions contained herein. Neither NACF nor any of NACF's advisors or representatives shall have any responsibility or liability whatsoever (for negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. The information set out herein may be subject to updating, completion, revision, verification and amendment and such information may change materially. This presentation is based on the economic, regulatory, market and other conditions as in effect on the date hereof. It should be understood that subsequent developments may affect the information contained in this document, which neither NACF nor its advisors are under an obligation to update, revise or affirm. THIS DOCUMENT AND THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER OR SOLICITATION OF ANY OFFER TO PURCHASE OR SELL ANY SECURITIES OF NACF. The securities of NACF have not been and will not be registered under the US Securities Act of 1933, as amended (the Securities Act), and may not be offered, sold or delivered within the United States or to US persons absent from registration under or an applicable exemption from the registration requirements of the United States securities laws. Any failure to comply with this restriction may constitute a violation of the United States or other national securities laws.

  3. Corporate Reorganization Overview The revision of Agricultural Cooperative Law has been enacted by the National Assembly on March 11, 2011 and the proposed reorganization is scheduled to be completed by March 2, 2012 Before Starting March 2, 2012 Organization Structure Member Co-ops Member Co-ops NACF NACF Education& Support Mutual Credit Education& Support Marketing& Supply Livestock Business Credit & Banking NH AgriBusiness Holdco NH FinancialHoldco NH Bank Subsidiary Subsidiary Subsidiary Subsidiary NH Distribution Namhae Chemical NH Fodder NH Life Others Ownership Structure Member Co-ops MemberCo-ops Government Capital Contribution Capital Support 100% Capitalcontribution NACF NACF NH Agri Business Holdco NH Financial Holdco Subsidiaries Non-Fin Subsidiaries Financial Subsidiaries

  4. Rationale of Corporate Reorganization Stronger Support for Farmers and Member Cooperatives Purpose • Strengthen Agricultural Competitiveness • Enrich the Standard of Living for Farmers • National Economic Growth Stronger Support for NACF’s Non-Profit Operation Strategy Enhanced Profitability and Profit Center Capacity • Create a Financial and Non-Financial Holding Companies by splitting off the existing profit generating business of NACF Non-FinancialHolding Company FinancialHolding Company Benefit NH Distribution • Enhance professionalism of each business, and strengthen efficiency and responsible management • Achieve transparency in funding between business units and thereby enhance capital efficiency • The Financial Holding Company to take on a diverse financial business portfolio in order to become a major financial group Namhae Chemical NH Life NH Fodder Other Responsible Management System Stronger Professionalism Enhanced Transparency

  5. Government Support will Continue after the Proposed Reorganization NH Bank will continue to be the policy arm that implements nationwide agriculture-related finance policy, and its operation will continue to be supervised and supported by Ministries, Financial Regulators and the National Assembly Before Starting March 2, 2012 NACF (Implementing non-financial business) MIFAFF Financial Services Commission Credit & Banking (Implementing financial business) Budget Support Comprehensive Supervision Banking Business Supervision NACF (Non-Financial Business) NH Bank (Financial Business) Budget Support Comprehensive Supervision Credit Business Supervision National Audit Capital Injection National Audit Ministry of Strategy and Finance MIFAFF Financial Services Commission National Assembly National Assembly • Government may guarantee principal amount of the bond issued by NH Bank and NACF • Government Capital Subsidy – The government will subsidize the insufficient capital incurred by the Reorganization • Government has already decided to provide tax exemptions for any additional taxes incurred in the process of proposed reorganization

  6. Government Capital Subsidy Program Strong capital support from the Government to subsidize the insufficient capital incurred owing to the Reorganization through appropriate methods Capital Subsidy Approved under 2012 Government Budget Strong Commitment from the Government Liquid Assets Injection Interest Payment Support 1 2 • For KRW 3 Trillion Debt Financing • Payment of interest at a rate of up to 5% per annum and for up to 5 years. The total interest support amount could be up to KRW150 billion per annum for a total of KRW750 billion over 5 years • Acquire Agricultural Financial Debentures through pension funds, etc. • KRW 2 Trillion • In-kind capital contribution in form of securities held by the Government, such as shares of public enterprises Initial Capital Enhancement Capital through Net Income Increase1 1 Consistently enhances capital for 5 years owing to increase in Net Income as interest cost on Agricultural Financial Debentures is borne by the Government

  7. December 2011 ~ January 2012 • Establish plan for Reorganization: Finalize asset, liabilities and equity; Finalize Board members and articles of incorporation December 31, 2011 • Government Subsidy:The National Assembly passed a general budget which included the financial support to NACF February 2, 2012 February 21, 2012 • Board of Directors Meeting: Meeting of the Board of Directors of NACF to approve the Reorganization plan • General Assembly Meeting: Meeting of the representative assembly of NACF to approve the Reorganization plan March 2, 2012 March 2, 2012 • Board of Directors Meeting: Meeting of the board of directors of the Company and announcement for reorganization report • Inaugural General Meeting: Inaugural general meetings of shareholders of the split-off entities • Reorganization Registration: Registration of split-off and registration of incorporation for newly established entities; reorganization officially effective March 5, 2012 • Financial Supervisory Service (FSS): FSS reporting and approval for concurrent offices under Financial Holdings Companies Act (date subject to change) • Fair Trade Commission filings: Filingsbythe Holding Companies to Fair Trade Commission (date subject to change) March 15, 2012 Timeline of Reorganization and Key Milestones NACF’s Reorganization Plan will be implemented with all necessary preparation in due course

  8. Q A Will NACF’s Business Scope Change? • No, it will not • NACF’s current business units will be transferred to NH Agri Business Holdco, NH Financial Holdco, NH Bank, NH Life Insurance and NH Non-Life Insurance, depending on the nature of the business • There should neither be any unsuspected emergence of businesses, nor be any discontinuation of currently managed businesses Q A Will the Government Withdraw Any of its Financial and Strategic Support? • No, it will not • NACF is established under the National Agricultural Cooperative Federation Act • An essential role of NACF is to perform policy function, and therefore, the Government’s current financial and strategic support to NACF will not discontinue upon completion of the Reorganization Q Who Will be Responsible for the Repayment of Debt Outstanding? A • NACF and all newly established entities jointly will • By the Commercial Codes of Korea, NACF and all newly established entities will jointly and severally be responsible for the repayment of debt incurred prior to the Reorganization • Furthermore, NACF and NH Bank will, on the date of the Reorganization, become parties to the Agency Agreement and execute a Deed of Covenant, thus becoming direct co-obligors for all the Notes issued under the GMTN Programme Key Implications of NACF Reorganization Upcoming Reorganization of NACF will have NO impact on NACF’s business scope and existing strong relationship with the Government

  9. Key Implications of NACF Reorganization (Cont’d) Q How is the Government providing Capital Support to NACF? • Government’s Capital Support • Government’s capital support to NACF forms part of 2012 Government Budget approved by the National Assembly on December 31, 2011 • Government’s support consists of 2 elements that enhances the capital • KRW 2 trillion in-kind capital injection • Payment of interest on up to KRW3 trillion of debt financing, at a rate of up to 5% per annum and for up to 5 years. The total interest support amount could be up to KRW150 billion per annum for a total of KRW750 billion over 5 years A

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