BANC INTERNACIONAL D'ANDORRA, S.A. - RNS Submit · Banc Internacional d'Andorra, S.A. (the "Issuer") accepts responsibility for the information contained in this Base Prospectus and

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BASE PROSPECTUS

BANC INTERNACIONAL D'ANDORRA, S.A. (incorporated with limited liability in the Principality of Andorra)

EUR 500,000,000

Euro Medium Term Note Programme

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This Base Prospectus has been approved by the United Kingdom Financial Services Authority (the "FSA"), which is the United Kingdom competent authority for the purposes of Directive 2003/71/EC (the "Prospectus Directive") and relevant implementing measures in the United Kingdom, as a base prospectus issued in compliance with the Prospectus Directive and relevant implementing measures in the United Kingdom for the purpose of giving information with regard to the issue of notes ("Notes") issued under the Euro Medium Term Note Programme (the "Programme") described in this Base Prospectus during the period of twelve months after the date hereof. Applications have been made for such Notes to be admitted during the period of twelve months after the date hereof to listing on the Official List of the FSA and to trading on the Regulated Market of the London Stock Exchange plc (the "London Stock Exchange"). The Regulated Market of the London Stock Exchange is a regulated market for the purposes of Directive 2004/39/EC on markets in financial instruments. 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 competent authority, stock exchange and/or quotation system or to be admitted to listing, trading and/or quotation by such other or further competent authorities, stock exchanges and/or quotation systems as may be agreed with the Issuer.

Investing in Notes issued under the Programme involves certain risks. The principal risk factors that may affect the ability of the Issuer to fulfil its obligations under the Notes are discussed under "Risk Factors" below.

Arranger

BIBM

Dealer

BIBM

29 September 2010

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CONTENTS

Page

IMPORTANT NOTICES ............................................................................................................................. 2 OVERVIEW ................................................................................................................................................. 4 RISK FACTORS .......................................................................................................................................... 7 FINAL TERMS AND DRAWDOWN PROSPECTUSES ........................................................................ 12 FORMS OF THE NOTES .......................................................................................................................... 13 TERMS AND CONDITIONS OF THE NOTES ....................................................................................... 16 FORM OF FINAL TERMS ........................................................................................................................ 37 SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM ............... 49 DESCRIPTION OF THE ISSUER ............................................................................................................. 52 TAXATION ............................................................................................................................................... 59 SUBSCRIPTION AND SALE ................................................................................................................... 60 GENERAL INFORMATION .................................................................................................................... 62 FINANCIAL STATEMENTS AND AUDITORS' REPORTS .................................................................. 66 SUMMARY OF THE PRINCIPAL DIFFERENCES BETWEEN IFRS AND ANDORRAN

ACCOUNTING PRINCIPLES .................................................................................................... 67

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IMPORTANT NOTICES

Banc Internacional d'Andorra, S.A. (the "Issuer") accepts responsibility for the information contained in this Base Prospectus and declares that, having taken all reasonable care to ensure that such is the case, the information contained in this Base Prospectus is, to the best of its knowledge, in accordance with the facts and contains no omission likely to affect its import.

Each Tranche (as defined herein) of Notes will be issued on the terms set out herein under "Terms and Conditions of the Notes" (the "Conditions") as amended and/or supplemented by a document specific to such Tranche called final terms (the "Final Terms") or in a separate prospectus specific to such Tranche (the "Drawdown Prospectus") as described under "Final Terms and Drawdown Prospectuses" below. In the case of a Tranche of Notes which is the subject of a Drawdown Prospectus, each reference in this Base Prospectus to information being specified or identified in the relevant Final Terms shall be read and construed as a reference to such information being specified or identified in the relevant Drawdown Prospectus unless the context requires otherwise. This Base Prospectus must be read and construed together with any amendments or supplements hereto and with any information incorporated by reference herein and, in relation to any Tranche of Notes which is the subject of Final Terms, must be read and construed together with the relevant Final Terms.

The Issuer has confirmed to the Dealer named under "Subscription and Sale" below (and will confirm to any other Dealer appointed from time to time by the Issuer either generally in respect of the Programme or in relation to a particular Tranche of Notes) that this Base Prospectus contains all information which is (in the context of the Programme, the issue, offering and sale of the Notes) material; that such information is true and accurate in all material respects and is not misleading in any material respect; that any opinions, predictions or intentions expressed herein are honestly held or made and are not misleading in any material respect; that this Base Prospectus does not omit to state any material fact necessary to make such information, opinions, predictions or intentions (in the context of the Programme, the issue and the offering and sale of the Notes) not misleading in any material respect; and that all proper enquiries have been made to verify the foregoing.

No person has been authorised to give any information or to make any representation not contained in or not consistent with this Base Prospectus or any other document entered into in relation to the Programme or any information supplied by the Issuer or such other information as is in the public domain and, if given or made, such information or representation should not be relied upon as having been authorised by the Issuer or any Dealer.

Neither the Dealers nor any of their respective affiliates have authorised the whole or any part of this Base Prospectus and none of them makes any representation or warranty or accepts any responsibility as to the accuracy or completeness of the information contained in this Base Prospectus. Neither the delivery of this Base Prospectus or any Final Terms nor the offering, sale or delivery of any Note shall, in any circumstances, create any implication that the information contained in this Base Prospectus is true subsequent to the date hereof or the date upon which this Base Prospectus has been most recently amended or supplemented or that there has been no adverse change, or any event reasonably likely to involve any adverse change, in the prospects or financial or trading position of the Issuer since the date thereof or, if later, the date upon which this Base Prospectus has been most recently amended or supplemented or that any other information supplied in connection with the Programme is correct at any time subsequent to the date on which it is supplied or, if different, the date indicated in the document containing the same.

The distribution of this Base Prospectus and any Final Terms and the offering, sale and delivery of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Base Prospectus or any Final Terms comes are required by the Issuer and the Dealers to inform themselves about and to observe any such restrictions. For a description of certain restrictions on offers, sales and deliveries of Notes and on the distribution of this Base Prospectus or any Final Terms and other offering material relating to the Notes, see "Subscription and Sale". In particular, Notes have not been and will not be registered under the United States Securities Act of 1933 (as amended) (the "Securities Act") and are subject to U.S. tax law requirements. Subject to certain exceptions, Notes may not be offered, sold or delivered within the United States or to U.S. persons.

Neither this Base Prospectus nor any Final Terms constitutes an offer or an invitation to subscribe for or purchase any Notes and should not be considered as a recommendation by the Issuer, the Dealers or any

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of them that any recipient of this Base Prospectus or any Final Terms should subscribe for or purchase any Notes. Each recipient of this Base Prospectus or any Final Terms shall be taken to have made its own investigation and appraisal of the condition (financial or otherwise) of the Issuer.

The maximum aggregate principal amount of Notes outstanding at any one time under the Programme will not exceed EUR 500,000,000 (and for this purpose, any Notes denominated in another currency shall be translated into euro at the date of the agreement to issue such Notes (calculated in accordance with the provisions of the Dealer Agreement). The maximum aggregate principal amount of Notes which may be outstanding at any one time under the Programme may be increased from time to time, subject to compliance with the relevant provisions of the Dealer Agreement as defined under "Subscription and Sale".

In this Base Prospectus, unless otherwise specified, references to a "Member State" are references to a Member State of the European Economic Area and references to "EUR" or "euro" are to the single currency introduced at the start of the third stage of European Economic and Monetary Union pursuant to the Treaty establishing the European Community, as amended.

Certain figures included in this Base Prospectus have been subject to rounding adjustments; accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them.

In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as the Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in the applicable Final Terms may over allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilising Manager(s) (or persons acting on behalf of a Stabilising Manager) will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of Notes. Any stabilisation action or over-allotment must be conducted by the relevant Stabilising Manager(s) (or person(s) acting on behalf of any Stabilising Manager(s)) in accordance with all applicable laws and rules.

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OVERVIEW

The following overview does not purport to be complete and is qualified in its entirety by the remainder of this Base Prospectus. Any decision to invest in the Notes should be based on a consideration of the Base Prospectus as a whole, including any information incorporated by reference.

Words and expressions defined in the "Terms and Conditions of the Notes" below or elsewhere in this Base Prospectus have the same meanings in this summary.

Issuer: Banc Internacional d'Andorra, S.A.

Risk Factors: Investing in Notes issued under the Programme involves certain risks. The principal risk factors that may affect the ability of the Issuer to fulfil its obligations under the Notes are discussed under "Risk Factors" below.

Arranger: Banc Internacional d'Andorra, S.A.

Dealers: Banc Internacional d'Andorra, S.A. and any other Dealer appointed from time to time by the Issuer either generally in respect of the Programme or in relation to a particular Tranche of Notes.

Fiscal and Paying Agent: The Bank of New York Mellon.

Final Terms or Drawdown Prospectus:

Notes issued under the Programme may be issued either (1) pursuant to this Base Prospectus and associated Final Terms or (2) pursuant to a Drawdown Prospectus. The terms and conditions applicable to any particular Tranche of Notes will be the Terms and Conditions of the Notes as supplemented, amended and/or replaced to the extent described in the relevant Final Terms or, as the case may be the relevant Drawdown Prospectus.

Listing and Trading: Applications have been made for Notes to be admitted during the period of twelve months after the date hereof to listing on the Official List of the FSA and to trading on the Regulated Market of the London Stock Exchange. 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 competent authority, stock exchange and/or quotation system or to be admitted to listing, trading and/or quotation by such other or further competent authorities, stock exchanges and/or quotation systems as may be agreed with the Issuer.

Clearing Systems: Euroclear and/or Clearstream, Luxembourg and/or, in relation to any Tranche of Notes, any other clearing system as may be specified in the relevant Final Terms.

Initial Programme Amount: Up to EUR 500,000,000 (or its equivalent in other currencies) aggregate principal amount of Notes outstanding at any one time.

Issuance in Series: Notes will be issued in Series. Each Series may comprise one or more Tranches issued on different issue dates. The Notes of each Series will all be subject to identical terms, except that the issue date and the amount 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.

Forms of Notes: Notes may only be issued in bearer form. Each Tranche of Notes will initially be in the form of either a Temporary Global Note or a Permanent Global Note, in each case as specified in the relevant

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Final Terms. Each Global Note which is not intended to be issued in new global note form (a "Classic Global Note" or "CGN"), as specified in the relevant Final Terms, will be deposited on or around the relevant issue date with a depositary or a common depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and each Global Note which is intended to be issued in new global note form (a "New Global Note" or "NGN"), as specified in the relevant Final Terms, will be deposited on or around the relevant issue date with a common safekeeper for Euroclear and/or Clearstream, Luxembourg. Each Temporary Global Note will be exchangeable for a Permanent Global Note or, if so specified in the relevant Final Terms, for Definitive Notes. If the TEFRA D Rules are specified in the relevant Final Terms as applicable, certification as to non-U.S. beneficial ownership will be a condition precedent to any exchange of an interest in a Temporary Global Note or receipt of any payment of interest in respect of a Temporary Global Note. Each Permanent Global Note will be exchangeable for Definitive Notes in accordance with its terms. Definitive Notes will, if interest-bearing, have Coupons attached and, if appropriate, a Talon for further Coupons.

Currencies: Notes may be denominated in euro or in any other currency or currencies, subject to compliance with all applicable legal and/or regulatory and/or central bank requirements. Payments in respect of Notes may, subject to such compliance, be made in and/or linked to, any currency or currencies other than the currency in which such Notes are denominated.

Status of the Notes: Notes may be issued on a subordinated or unsubordinated basis, as specified in the relevant Final Terms.

Issue Price: Notes may be issued at any price and either on a fully or partly paid basis, as specified in the relevant Final Terms. The price and amount of Notes to be issued under the Programme will be determined by the Issuer and the relevant Dealer(s) at the time of issue in accordance with prevailing market conditions.

Maturities: Any maturity, subject, in relation to specific currencies, to compliance with all applicable legal and/or regulatory and/or central bank requirements.

Where Notes have a maturity of less than one year and either (a) the issue proceeds are received by the Issuer in the United Kingdom or (b) the activity of issuing the Notes is carried on from an establishment maintained by the Issuer in the United Kingdom, such Notes must: (i) have a minimum redemption value of £100,000 (or its equivalent in other currencies) and be issued only to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses; or (ii) be issued in other circumstances which do not constitute a contravention of section 19 of the FSMA by the Issuer.

Redemption: Notes may be redeemable at par or at such other Redemption Amount (detailed in a formula, index or otherwise) as may be specified in the relevant Final Terms. Notes may also be redeemable in two or more instalments on such dates and in such

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manner as may be specified in the relevant Final Terms.

Optional Redemption: Notes may be redeemed before their stated maturity at the option of the Issuer (either in whole or in part) and/or the Noteholders to the extent (if at all) specified in the relevant Final Terms.

Tax Redemption: Except as described in "Optional Redemption" above, early redemption will only be permitted for tax reasons as described in Condition 10(b) (Redemption and Purchase - Redemption for tax reasons).

Interest: Notes may be interest-bearing or non-interest bearing. Interest (if any) may accrue at a fixed rate or a floating rate or other variable rate or be index-linked and the method of calculating interest may vary between the issue date and the maturity date of the relevant Series.

Denominations: Notes will be issued in such denominations as may be specified in the relevant Final Terms, subject to compliance with all applicable legal and/or regulatory and/or central bank requirements, and in any event in the minimum denomination of EUR 100,000 or its equivalent in the relevant currency per Note.

Negative Pledge: The Notes will have the benefit of a negative pledge as described in Condition 5 (Negative Pledge).

Cross Default: The Notes will have the benefit of a cross default as described in Condition 13 (Events of Default).

Taxation: All payments in respect of Notes will be made free and clear of withholding taxes of the Principality of Andorra, unless the withholding is required by law. In that event, the Issuer will (subject as provided in Condition 12 (Taxation)) pay such additional amounts as will result in the Noteholders receiving such amounts as they would have received in respect of such Notes had no such withholding been required.

Governing Law: English law, except for Condition 4 (Status of the Notes) which is governed by the laws of Andorra.

Enforcement of Notes in Global Form:

In the case of Global Notes, individual investors' rights against the Issuer will be governed by a Deed of Covenant dated 29 September 2010, a copy of which will be available for inspection at the specified office of the Fiscal Agent.

Selling Restrictions: For a description of certain restrictions on offers, sales and deliveries of Notes and on the distribution of offering material in the United States of America and the United Kingdom, see "Subscription and Sale" below.

Use of Proceeds The net proceeds of the issue of the Notes will be applied by the Issuer towards its general financing requirements.

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RISK FACTORS

The following is a description of principal risk factors that the Issuer believes (a) may affect its ability to fulfil its obligations under the Notes issued to investors and (b) are material for the purpose of assessing the market risk associated with the Notes. Most of these factors are contingencies which may or may not occur and the Issuer is not in a position to express a view on the likelihood of any such contingency occurring. 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 any amounts due on or in connection with any Notes or the Deed of Covenant may occur for other reasons and the Issuer does not represent that the statements below regarding the risks of holding any Notes are exhaustive.

Prospective investors should read the entire Base Prospectus and reach their own view prior to making any investment decision. In addition, prospective investors should determine whether an investment in the Notes is appropriate in their particular circumstances and should consult with their legal, business and tax advisers to determine the consequences of an investment in the Notes and to arrive at their own evaluations of the investment. Words and expressions defined in the "Terms and Conditions of the Notes" below or elsewhere in this Base Prospectus have the same meanings in this section.

Risks Relating To The Issuer

Risks Relating to the Business Activities of the Issuer

As a result of its business activities, the Issuer is exposed to a variety of risks, the most significant of which are reputational risk, operational risk, credit risk, market risk and liquidity risk. Failure to control these risks could result in material adverse effects on the Issuer's financial performance and reputation.

Reputational Risk

As a private bank, the Issuer relies to a significant degree on the quality of its reputation in order to attract and retain customers. Although the Issuer has implemented policies and procedures designed to protect the Issuer's brand, there can be no assurances that the Issuer will be able to safeguard its reputation as successfully in the future as it has in the past, or that for factors beyond the Issuer's control its brand may become damaged. If the Issuer is unable to manage the risks related to its reputation, this could have a material adverse effect on the business, financial condition and results of operations of the Issuer.

Operational Risk

The Issuer's businesses are dependent on the ability to process a very large number of transactions efficiently and accurately. Operational risk and losses can result from fraud, errors by employees, failure to document transactions properly or to obtain proper internal authorisation, failure to comply with regulatory requirements and conduct of business rules, equipment failures, natural disasters or the failure of external systems, for example, those of the Issuer's suppliers or counterparties. Although the Issuer has implemented risk controls and loss mitigation actions, and substantial resources are devoted to developing efficient procedures and to staff training, there can be no assurances that the Issuer will be able to implement procedures that are fully effective in controlling each of these operational risks.

Credit Risk

Risks arising from changes in credit quality and the recoverability of loans and amounts due from counterparties are inherent in a wide range of the Issuer's businesses. Adverse changes in the credit quality of the Issuer's borrowers and counterparties or a general deterioration in the Andorran, or global economic conditions, or arising from systematic risks in the financial systems, could affect the recoverability and value of its assets and require an increase in the Issuer's provision for bad and doubtful debts and other provisions.

Market Risk

The most significant market risks the Issuer faces are interest rate, foreign exchange and bond and equity price risks. Changes in interest rate levels, yield curves and spreads may affect the interest rate margin realised between lending and borrowing costs. Changes in currency rates affect the value of assets and liabilities denominated in foreign currencies and may affect income from foreign exchange dealing. The performance of financial markets may cause changes in the value of the Issuer's investment and trading

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portfolios. The Issuer has implemented risk management methods to mitigate and control these and other market risks to which the Issuer is exposed and exposures are regularly measured and monitored. However, there can be no assurances that the Issuer will accurately predict changes in economic or market conditions and anticipate the effects that such changes could have on the Issuer's financial performance and business operations.

Liquidity Risk

The inability of a bank, including the Issuer, to anticipate and provide for unforeseen decreases or changes in funding sources could have an adverse effect on such bank's ability to meet its obligations when they fall due.

Impact of Regulatory Changes

The Issuer is subject to financial services laws, regulations, administrative actions and policies in each location that the Issuer operates. Changes in supervision and regulation, in particular in Andorra, could materially affect the Issuer's business, the products and services offered or the value of its assets. Although the Issuer works closely with its regulators and continually monitors the situation, future changes in regulation, fiscal or other policies can be unpredictable and are beyond the control of the Issuer.

Financial Information

In accordance with Andorran accounting principles, the Issuer is not required to prepare, and accordingly does not prepare, interim financial information. There is therefore no publicly available financial information in respect of the Issuer for any period after 31 December 2009, which means that the financial information available for examination by investors may not accurately reflect the financial position of the Issuer at the time of an investor's decision to invest in the Notes.

Risks Relating To Andorra

Economic Activity in Andorra

The Issuer's business activities are dependent on the level of banking, finance and financial services required by its customers. In particular, levels of borrowing are heavily dependent on customer confidence, employment trends, the state of the economy and market interest rates at the time. As the Issuer currently conducts the majority of its business in Andorra, its performance is influenced by the level and cyclical nature of business activity in Andorra. The Andorran economy is in turn affected by both domestic and international economic and political events. There can be no assurance that a weakening in the Andorran economy will not have a material effect on the Issuer's future results.

Absence of Systemic Support

Although the euro is used in Andorra, the authorities in that country do not have the ability to create local currency. Furthermore, the Andorran government has limited financial resources compared to the size of the financial institutions that operate there. In the event of a macroeconomic crisis, the government of Andorra would not be able to rely on currency controls as a means to support the local economy or provide financial support to the banking sector.

Enforceability of English Court Judgments in Andorra

Since the Issuer is an Andorran entity, any judgements obtained in the English courts will need to be enforced in Andorra. Accordingly, a judgement obtained in an English court may not be enforceable in Andorra due to a lack of reciprocity between Andorra and England (in the exequatur procedure). For this reason, investors should be aware that any judgement obtained in an English court against the Issuer may not be enforced in Andorra by an Andorran court.

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Risks Relating To The Notes

There is no active trading market for the Notes

Notes issued under the Programme will be new securities which may not be widely distributed and for which there is currently no active trading market (unless in the case of any particular Tranche, such Tranche is to be consolidated with and form a single series with a Tranche of Notes which is already issued). If the Notes are traded after their initial issuance, they may trade at a discount to their initial offering price, depending upon prevailing interest rates, the market for similar securities, general economic conditions and the financial condition of the Issuer. Although applications have been made for the Notes issued under the Programme to be admitted to listing on the Official List of the UK Listing Authority and to trading on the Regulated Market of the London Stock Exchange, there is no assurance that such applications will be accepted, that any particular Tranche of Notes will be so admitted or that an active trading market will develop. Accordingly, there is no assurance as to the development or liquidity of any trading market for any particular Tranche of Notes.

The Notes may be redeemed prior to maturity

Unless in the case of any particular Tranche of Notes the relevant Final Terms specifies otherwise, in the event that the Issuer would be obliged to increase the amounts payable in respect of any Notes due to any withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or on behalf of the Principality of Andorra or any political subdivision thereof or any authority therein or thereof having power to tax, the Issuer may redeem all outstanding Notes in accordance with the Conditions.

In addition, if in the case of any particular Tranche of Notes the relevant Final Terms specifies that the Notes are redeemable at the Issuer's option in certain other circumstances the Issuer may choose to redeem the Notes at times when prevailing interest rates may be relatively low. In such circumstances an investor may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as that of the relevant Notes.

Because the Global Notes are held by or on behalf of Euroclear and Clearstream, Luxembourg, investors will have to rely on their procedures for transfer, payment and communication with the Issuer

Notes issued under the Programme may be represented by one or more Global Notes. Such Global Notes will be deposited with a common depositary for Euroclear and Clearstream, Luxembourg. Except in the circumstances described in the relevant Global Note, investors will not be entitled to receive definitive Notes. Euroclear and Clearstream, Luxembourg will maintain records of the beneficial interests in the Global Notes. While the Notes are represented by one or more Global Notes, investors will be able to trade their beneficial interests only through Euroclear and Clearstream, Luxembourg.

While the Notes are represented by one or more Global Notes the Issuer will discharge its payment obligations under the Notes by making payments to the common depositary for Euroclear and Clearstream, Luxembourg for distribution to their account holders. A holder of a beneficial interest in a Global Note must rely on the procedures of Euroclear and Clearstream, Luxembourg to receive payments under the relevant Notes. The Issuer has no responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in the Global Notes.

Holders of beneficial interests in the Global Notes will not have a direct right to vote in respect of the relevant Notes. Instead, such holders will be permitted to act only to the extent that they are enabled by Euroclear and Clearstream, Luxembourg to appoint appropriate proxies. Similarly, holders of beneficial interests in the Global Notes will not have a direct right under the Global Notes to take enforcement action against the Issuer in the event of a default under the relevant Notes but will have to rely upon their rights under the Deed of Covenant.

Risks related to the structure of a particular issue of Notes

A wide range of Notes may be issued under the Programme. A number of these Notes may have features which contain particular risks for potential investors. Set out below is a description of the most common such features:

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Notes subject to optional redemption by the Issuer

An optional redemption feature of Notes is likely to limit their market value. During any period when the Issuer may elect to redeem Notes, the market value of those Notes generally will not rise substantially above the price at which they can be redeemed. This also may be true prior to any redemption period. The Issuer may be expected to redeem Notes when their cost of borrowing is lower than the interest rate on the Notes. At those times, an investor generally would not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the Notes being redeemed and may only be able to do so at a significantly lower rate. Potential investors should consider reinvestment risk in light of other investments available at that time.

Structured Notes (including index linked Notes and dual currency Notes)

The Issuer may issue Notes with principal or interest determined by reference to an index or formula, to changes in the prices of securities or commodities, to movements in currency exchange rates or other factors (each, a "Relevant Factor"). In addition, the Issuer may issue Notes with principal or interest payable in one or more currencies which may be different from the currency in which the Notes are denominated. Potential investors should be aware that:

(i) the market price of such Notes may be volatile;

(ii) they may receive no interest;

(iii) payment of principal or interest may occur at a different time or in a different currency than expected;

(iv) they may lose all or a substantial portion of their principal;

(v) a Relevant Factor may be subject to significant fluctuations that may not correlate with changes in interest rates, currencies or other indices;

(vi) if a Relevant Factor is applied to Notes in conjunction with a multiplier greater than one or contains some other leverage factor, the effect of changes in the Relevant Factor on principal or interest payable likely will be magnified; and

(vii) the timing of changes in a Relevant Factor may affect the actual yield to investors, even if the average level is consistent with their expectations. In general, the earlier the change in the Relevant Factor, the greater the effect on yield.

Partly-paid Notes

The Issuer may issue Notes where the issue price is payable in more than one instalment. Failure to pay any subsequent instalment could result in an investor losing all of their investment.

Variable rate Notes with a multiplier or other leverage factor

Notes with variable interest rates can be volatile investments. If they are structured to include multipliers or other leverage factors, or caps or floors, or any combination of those features or other similar related features, their market values may be even more volatile than those for securities that do not include those features.

Inverse floating rate Notes

Inverse floating rate Notes have an interest rate equal to a fixed rate minus a rate based upon a reference rate such as LIBOR. The market values of those Notes typically are more volatile than market values of other conventional floating rate debt securities based on the same reference rate (and with otherwise comparable terms). Inverse floating rate Notes are more volatile because an increase in the reference rate not only decreases the interest rate of the Notes, but may also reflect an increase in prevailing interest rates, which further adversely affects the market value of these Notes.

Fixed/floating rate Notes

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Fixed/floating rate Notes may bear interest at a rate that may convert from a fixed rate to a floating rate, or from a floating rate to a fixed rate. Where the relevant Issuer has the right to effect such a conversion, this will affect the secondary market and the market value of the Notes since the Issuer may be expected to convert the rate when it is likely to produce a lower overall cost of borrowing. If the relevant Issuer converts from a fixed rate to a floating rate in such circumstances, the spread on the fixed/floating rate Notes may be less favourable than then prevailing spreads on comparable floating rate Notes tied to the same reference rate. In addition, the new floating rate at any time may be lower than the rates on other Notes. If the relevant Issuer converts from a floating rate to a fixed rate in such circumstances, the fixed rate may be lower than then prevailing rates on its Notes.

Notes issued at a substantial discount or premium

The market values of securities issued at a substantial discount or premium from their principal amount tend to fluctuate more in relation to general changes in interest rates than do prices for conventional interest-bearing securities. Generally, the longer the remaining term of the securities, the greater the price volatility as compared to conventional interest-bearing securities with comparable maturities.

The Issuer's obligations under subordinated Notes are subordinated

The Issuer's obligations under subordinated Notes will be unsecured and subordinated and will rank junior in priority of payment to all unsubordinated obligations of the Issuer. Although subordinated Notes may pay a higher rate of interest than comparable Notes which are not subordinated, there is a real risk that an investor in subordinated Notes will lose all or some of his investment should the Issuer become insolvent.

Payments of principal and interest in respect of short term subordinated Notes may be suspended in certain circumstances.

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FINAL TERMS AND DRAWDOWN PROSPECTUSES

In this section the expression "necessary information" means, in relation to any Tranche of Notes, the information necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the Issuer and of the rights attaching to the Notes. In relation to the different types of Notes which may be issued under the Programme the Issuer have endeavoured to include in this Base Prospectus all of the necessary information except for information relating to the Notes which is not known at the date of this Base Prospectus and which can only be determined at the time of an individual issue of a Tranche of Notes.

Any information relating to the Notes which is not included in this Base Prospectus and which is required in order to complete the necessary information in relation to a Tranche of Notes will be contained either in the relevant Final Terms or in a Drawdown Prospectus. Such information will be contained in the relevant Final Terms unless any of such information constitutes a significant new factor relating to the information contained in this Base Prospectus in which case such information, together with all of the other necessary information in relation to the relevant series of Notes, may be contained in a Drawdown Prospectus.

For a Tranche of Notes which is the subject of Final Terms, those Final Terms will, for the purposes of that Tranche only, supplement this Base Prospectus and must be read in conjunction with this Base Prospectus. The terms and conditions applicable to any particular Tranche of Notes which is the subject of Final Terms are the Conditions as supplemented, amended and/or replaced to the extent described in the relevant Final Terms.

The terms and conditions applicable to any particular Tranche of Notes which is the subject of a Drawdown Prospectus will be the Conditions as supplemented, amended and/or replaced to the extent described in the relevant Drawdown Prospectus. In the case of a Tranche of Notes which is the subject of a Drawdown Prospectus, each reference in this Base Prospectus to information being specified or identified in the relevant Final Terms shall be read and construed as a reference to such information being specified or identified in the relevant Drawdown Prospectus unless the context requires otherwise.

Each Drawdown Prospectus will be constituted either (1) by a single document containing the necessary information relating to the Issuer and the relevant Notes or (2) by a registration document (the "Registration Document") containing the necessary information relating to the Issuer, a securities note (the "Securities Note") containing the necessary information relating to the relevant Notes and, if necessary, a summary note. In addition, if the Drawdown Prospectus is constituted by a Registration Document and a Securities Note, any significant new factor, material mistake or inaccuracy relating to the information included in the Registration Document which arises or is noted between the date of the Registration Document and the date of the Securities Note which is capable of affecting the assessment of the relevant Notes will be included in the Securities Note.

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FORMS OF THE NOTES

Each Tranche of Notes will initially be in the form of either a temporary global note (the "Temporary Global Note"), without interest coupons, or a permanent global note (the "Permanent Global Note"), without interest coupons, in each case as specified in the relevant Final Terms. Each Temporary Global Note or, as the case may be, Permanent Global Note (each a "Global Note") which is not intended to be issued in new global note ("NGN") form, as specified in the relevant Final Terms, will be deposited on or around the issue date of the relevant Tranche of the Notes with a depositary or a common depositary for Euroclear Bank S.A./N.V. as operator of the Euroclear System ("Euroclear") and/or Clearstream Banking, société anonyme, Luxembourg ("Clearstream, Luxembourg") and/or any other relevant clearing system and each Global Note which is intended to be issued in NGN form, as specified in the relevant Final Terms, will be deposited on or around the issue date of the relevant Tranche of the Notes with a common safekeeper for Euroclear and/or Clearstream, Luxembourg.

On 13 June 2006 the European Central Bank (the "ECB") announced that Notes in NGN form are in compliance with the "Standards for the use of EU securities settlement systems in ESCB credit operations" of the central banking system for the euro (the "Eurosystem"), provided that certain other criteria are fulfilled. At the same time the ECB also announced that arrangements for Notes in NGN form will be offered by Euroclear and Clearstream, Luxembourg as of 30 June 2006 and that debt securities in global bearer form issued through Euroclear and Clearstream, Luxembourg after 31 December 2006 will only be eligible as collateral for Eurosystem operations if the NGN form is used.

The relevant Final Terms will also specify whether United States Treasury Regulation §1.163-5(c)(2)(i)(C) (the "TEFRA C Rules") or United States Treasury Regulation §1.163-5(c)(2)(i)(D) (the "TEFRA D Rules") are applicable in relation to the Notes or, if the Notes do not have a maturity of more than 365 days, that neither the TEFRA C Rules nor the TEFRA D Rules are applicable.

Temporary Global Note exchangeable for Permanent Global Note

If the relevant Final Terms specifies the form of Notes as being "Temporary Global Note exchangeable for a Permanent Global Note", then the Notes will initially be in the form of a Temporary Global Note which will be exchangeable, in whole or in part, for interests in a Permanent Global Note, without interest coupons, not earlier than 40 days after the issue date of the relevant Tranche of the Notes upon certification as to non-U.S. beneficial ownership. No payments will be made under the Temporary Global Note unless exchange for interests in the Permanent Global Note is improperly withheld or refused. In addition, interest payments in respect of the Notes cannot be collected without such certification of non-U.S. beneficial ownership.

Whenever any interest in the Temporary Global Note is to be exchanged for an interest in a Permanent Global Note, the Issuer shall procure (in the case of first exchange) the prompt delivery (free of charge to the bearer) of such Permanent Global Note to the bearer of the Temporary Global Note or (in the case of any subsequent exchange) an increase in the principal amount of the Permanent Global Note in accordance with its terms against:

(i) presentation and (in the case of final exchange) surrender of the Temporary Global Note to or to the order of the Fiscal Agent; and

(ii) receipt by the Fiscal Agent of a certificate or certificates of non-U.S. beneficial ownership,

within 7 days of the bearer requesting such exchange.

The principal amount of the Permanent Global Note shall be equal to the aggregate of the principal amounts specified in the certificates of non-U.S. beneficial ownership; provided, however, that in no circumstances shall the principal amount of the Permanent Global Note exceed the initial principal amount of the Temporary Global Note.

The Permanent Global Note will be exchangeable in whole, but not in part, for Notes in definitive form ("Definitive Notes"):

(i) on the expiry of such period of notice as may be specified in the relevant Final Terms; or

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(ii) if the relevant Final Terms specifies "in the limited circumstances described in the Permanent Global Note", then if (a) Euroclear or Clearstream, Luxembourg or any other relevant clearing system is closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention permanently to cease business or (b) any of the circumstances described in Condition 13 (Events of Default) occurs.

Whenever the Permanent Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principal amount equal to the principal amount of the Permanent Global Note to the bearer of the Permanent Global Note against the surrender of the Permanent Global Note to or to the order of the Fiscal Agent within 30 days of the bearer requesting such exchange.

Temporary Global Note exchangeable for Definitive Notes

If the relevant Final Terms specifies the form of Notes as being "Temporary Global Note exchangeable for Definitive Notes" and also specifies that the TEFRA C Rules are applicable or that neither the TEFRA C Rules or the TEFRA D Rules are applicable, then the Notes will initially be in the form of a Temporary Global Note which will be exchangeable, in whole but not in part, for Definitive Notes not earlier than 40 days after the issue date of the relevant Tranche of the Notes.

If the relevant Final Terms specifies the form of Notes as being "Temporary Global Note exchangeable for Definitive Notes" and also specifies that the TEFRA D Rules are applicable, then the Notes will initially be in the form of a Temporary Global Note which will be exchangeable, in whole or in part, for Definitive Notes not earlier than 40 days after the issue date of the relevant Tranche of the Notes upon certification as to non-U.S. beneficial ownership. Interest payments in respect of the Notes cannot be collected without such certification of non-U.S. beneficial ownership.

Whenever the Temporary Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principal amount equal to the principal amount of the Temporary Global Note to the bearer of the Temporary Global Note against the surrender of the Temporary Global Note to or to the order of the Fiscal Agent within 30 days of the bearer requesting such exchange

Permanent Global Note exchangeable for Definitive Notes

If the relevant Final Terms specifies the form of Notes as being "Permanent Global Note exchangeable for Definitive Notes", then the Notes will initially be in the form of a Permanent Global Note which will be exchangeable in whole, but not in part, for Definitive Notes:

(i) on the expiry of such period of notice as may be specified in the relevant Final Terms; or

(ii) if the relevant Final Terms specifies "in the limited circumstances described in the Permanent Global Note", then if (a) Euroclear or Clearstream, Luxembourg or any other relevant clearing system is closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention permanently to cease business or (b) any of the circumstances described in Condition 13 (Events of Default) occurs.

Whenever the Permanent Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principal amount equal to the principal amount of the Permanent Global Note to the bearer of the Permanent Global Note against the surrender of the Permanent Global Note to or to the order of the Fiscal Agent within 30 days of the bearer requesting such exchange.

Terms and Conditions applicable to the Notes

The terms and conditions applicable to any Definitive Note will be endorsed on that Note and will consist of the terms and conditions set out under "Terms and Conditions of the Notes" below and the provisions of the relevant Final Terms which supplement, amend and/or replace those terms and conditions.

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The terms and conditions applicable to any Note in global form will differ from those terms and conditions which would apply to the Note were it in definitive form to the extent described under "Summary of Provisions Relating to the Notes while in Global Form" below.

Legend concerning United States persons

In the case of any Tranche of Notes having a maturity of more than 365 days, the Notes in global form, the Notes in definitive form and any Coupons and Talons appertaining thereto will bear a legend to the following effect:

"Any United States person who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue Code."

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TERMS AND CONDITIONS OF THE NOTES

The following is the text of the terms and conditions which, as supplemented, amended and/or replaced by the relevant Final Terms, will be endorsed on each Note in definitive form issued under the Programme. The terms and conditions applicable to any Note in global form will differ from those terms and conditions which would apply to the Note were it in definitive form to the extent described under "Summary of Provisions Relating to the Notes while in Global Form" below.

1. Introduction

(a) Programme: Banc Internacional d'Andorra, S.A. (the "Issuer") has established a Euro Medium Term Note Programme (the "Programme") for the issuance of up to EUR epfka+efkp•] in aggregate principal amount of notes (the "Notes").

(b) Final Terms: Notes issued under the Programme are issued in series (each a "Series") and each Series may comprise one or more tranches (each a "Tranche") of Notes. Each Tranche is the subject of final terms (the "Final Terms") which supplement these terms and conditions (the "Conditions"). The terms and conditions applicable to any particular Tranche of Notes are these Conditions as supplemented, amended and/or replaced by the relevant Final Terms. In the event of any inconsistency between these Conditions and the relevant Final Terms, the relevant Final Terms shall prevail.

(c) Agency Agreement: The Notes are the subject of an issue and paying agency agreement dated 29 September 2010 (the "Agency Agreement") between the Issuer, The Bank of New York Mellon as fiscal agent (the "Fiscal Agent", which expression includes any successor fiscal agent appointed from time to time in connection with the Notes) and as paying agent (together with the Fiscal Agent, the "Paying Agents", which expression includes any successor or additional paying agents appointed from time to time in connection with the Notes).

(d) The Notes: All subsequent references in these Conditions to "Notes" are to the Notes which are the subject of the relevant Final Terms. Copies of the relevant Final Terms are available for viewing at, and may be obtained from, Avenida Meritxell, 96, AD500 Andorra la Vella, Principat d'Andorra.

(e) Summaries: Certain provisions of these Conditions are summaries of the Agency Agreement and are subject to their detailed provisions. The holders of the Notes (the "Noteholders") and the holders of the related interest coupons, if any, (the "Couponholders" and the "Coupons", respectively) are bound by, and are deemed to have notice of, all the provisions of the Agency Agreement applicable to them. A copy of the Agency Agreement is available for inspection by Noteholders during normal business hours at the Specified Offices of each of the Paying Agents, the initial Specified Offices of which are set out below.

2. Interpretation

(a) Definitions: In these Conditions the following expressions have the following meanings:

"Accrual Yield" has the meaning given in the relevant Final Terms;

"Additional Business Centre(s)" means the city or cities specified as such in the relevant Final Terms;

"Additional Financial Centre(s)" means the city or cities specified as such in the relevant Final Terms;

"Business Day" means:

(a) in relation to any sum payable in euro, a TARGET Settlement Day and a day on which commercial banks and foreign exchange markets settle payments generally in each (if any) Additional Business Centre; and

(b) in relation to any sum payable in a currency other than euro, a day on which commercial banks and foreign exchange markets settle payments generally in London, in the

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Principal Financial Centre of the relevant currency and in each (if any) Additional Business Centre;

"Business Day Convention", in relation to any particular date, has the meaning given in the relevant Final Terms and, if so specified in the relevant Final Terms, may have different meanings in relation to different dates and, in this context, the following expressions shall have the following meanings:

(a) "Following Business Day Convention" means that the relevant date shall be postponed to the first following day that is a Business Day;

(b) "Modified Following Business Day Convention" or "Modified Business Day Convention" means that the relevant date shall be postponed to the first following day that is a Business Day unless that day falls in the next calendar month in which case that date will be the first preceding day that is a Business Day;

(c) "Preceding Business Day Convention" means that the relevant date shall be brought forward to the first preceding day that is a Business Day;

(d) "FRN Convention", "Floating Rate Convention" or "Eurodollar Convention" means that each relevant date shall be the date which numerically corresponds to the preceding such date in the calendar month which is the number of months specified in the relevant Final Terms as the Specified Period after the calendar month in which the preceding such date occurred provided, however, that:

(i) if there is no such numerically corresponding day in the calendar month in which any such date should occur, then such date will be the last day which is a Business Day in that calendar month;

(ii) if any such date would otherwise fall on a day which is not a Business Day, then such date will be the first following day which is a Business Day unless that day falls in the next calendar month, in which case it will be the first preceding day which is a Business Day; and

(iii) if the preceding such date occurred on the last day in a calendar month which was a Business Day, then all subsequent such dates will be the last day which is a Business Day in the calendar month which is the specified number of months after the calendar month in which the preceding such date occurred; and

(e) "No Adjustment" means that the relevant date shall not be adjusted in accordance with any Business Day Convention;

"Calculation Agent" means the Fiscal Agent or such other Person specified in the relevant Final Terms as the party responsible for calculating the Rate(s) of Interest and Interest Amount(s) and/or such other amount(s) as may be specified in the relevant Final Terms;

"Calculation Amount" has the meaning given in the relevant Final Terms;

"Coupon Sheet" means, in respect of a Note, a coupon sheet relating to the Note;

"Day Count Fraction" means, in respect of the calculation of an amount for any period of time (the "Calculation Period"), such day count fraction as may be specified in these Conditions or the relevant Final Terms and:

(a) if "Actual/Actual (ICMA)" is so specified, means:

(i) where the Calculation Period is equal to or shorter than the Regular Period during which it falls, the actual number of days in the Calculation Period divided by the product of (1) the actual number of days in such Regular Period and (2) the number of Regular Periods in any year; and

(ii) where the Calculation Period is longer than one Regular Period, the sum of:

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(A) the actual number of days in such Calculation Period falling in the Regular Period in which it begins divided by the product of (1) the actual number of days in such Regular Period and (2) the number of Regular Periods in any year; and

(B) the actual number of days in such Calculation Period falling in the next Regular Period divided by the product of (a) the actual number of days in such Regular Period and (2) the number of Regular Periods in any year;

(iii) if "Actual/Actual (ISDA)" is so specified, means the actual number of days in the Calculation Period divided by 365 (or, if any portion of the Calculation Period falls in a leap year, the sum of (A) the actual number of days in that portion of the Calculation Period falling in a leap year divided by 366 and (B) the actual number of days in that portion of the Calculation Period falling in a non-leap year divided by 365);

(iv) if "Actual/365 (Fixed)" is so specified, means the actual number of days in the Calculation Period divided by 365;

(v) if "Actual/360" is so specified, means the actual number of days in the Calculation Period divided by 360;

(vi) if "30/360" is so specified, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows

Day Count Fraction =360

)()](30[)](360[ 121212 DDMMxYYx −+−+−

where:

"Y1" is the year, expressed as a number, in which the first day of the Calculation Period falls;

"Y2" is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

"M1" is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;

"M2" is the calendar month, expressed as number, in which the day immediately following the last day included in the Calculation Period falls;

"D1" is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D1 will be 30; and

"D2" is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31 and D1 is greater than 29, in which case D2 will be 30";

(vii) if "30E/360" or "Eurobond Basis" is so specified, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows:

Day Count Fraction = 360

)()](30[)](360[ 121212 DDMMxYYx −+−+−

where:


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"M2" is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

"D1" is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D1 will be 30; and

"D2" is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31, in which case D2 will be 30; and

(viii) if "30E/360 (ISDA)" is so specified, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows:

Day Count Fraction = 360

()](30[)](360[ )121212 DDMMxYYx −+−+−

where:




"M2" is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

"D1" is the first calendar day, expressed as a number, of the Calculation Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and

"D2" is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31, in which case D2 will be 30,

provided, however, that in each such case the number of days in the Calculation Period is calculated from and including the first day of the Calculation Period to but excluding the last day of the Calculation Period;

"Early Redemption Amount (Tax)" means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms;

"Early Termination Amount" means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, these Conditions or the relevant Final Terms;

"Extraordinary Resolution" has the meaning given in the Agency Agreement;

"Final Redemption Amount" means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms;

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"First Interest Payment Date" means the date specified in the relevant Final Terms;

"Fixed Coupon Amount" has the meaning given in the relevant Final Terms;

"Guarantee" means, in relation to any Indebtedness of any Person, any obligation of another Person to pay such Indebtedness including (without limitation):

(a) any obligation to purchase such Indebtedness;

(b) any obligation to lend money, to purchase or subscribe shares or other securities or to purchase assets or services in order to provide funds for the payment of such Indebtedness;

(c) any indemnity against the consequences of a default in the payment of such Indebtedness; and

(d) any other agreement to be responsible for such Indebtedness;

"Indebtedness" means any indebtedness of any Person for money borrowed or raised including (without limitation) any indebtedness for or in respect of:

(a) amounts raised by acceptance under any acceptance credit facility;

(b) amounts raised under any note purchase facility;

(c) the amount of any liability in respect of leases or hire purchase contracts which would, in accordance with applicable law and generally accepted accounting principles, be treated as finance or capital leases;

(d) the amount of any liability in respect of any purchase price for assets or services the payment of which is deferred for a period in excess of 90 days; and

(e) amounts raised under any other transaction (including, without limitation, any forward sale or purchase agreement) having the commercial effect of a borrowing;

"Interest Amount" means, in relation to a Note and an Interest Period, the amount of interest payable in respect of that Note for that Interest Period;

"Interest Commencement Date" means the Issue Date of the Notes or such other date as may be specified as the Interest Commencement Date in the relevant Final Terms;

"Interest Determination Date" has the meaning given in the relevant Final Terms;

"Interest Payment Date" means the First Interest Payment Date and any other date or dates specified as such in, or determined in accordance with the provisions of, the relevant Final Terms and, if a Business Day Convention is specified in the relevant Final Terms:

(a) as the same may be adjusted in accordance with the relevant Business Day Convention; or

(b) if the Business Day Convention is the FRN Convention, Floating Rate Convention or Eurodollar Convention and an interval of a number of calendar months is specified in the relevant Final Terms as being the Specified Period, each of such dates as may occur in accordance with the FRN Convention, Floating Rate Convention or Eurodollar Convention at such Specified Period of calendar months following the Interest Commencement Date (in the case of the first Interest Payment Date) or the previous Interest Payment Date (in any other case);

"Interest Period" means each period beginning on (and including) the Interest Commencement Date or any Interest Payment Date and ending on (but excluding) the next Interest Payment Date;

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"ISDA Definitions" means the 2006 ISDA Definitions (as amended and updated as at the date of issue of the first Tranche of the Notes of the relevant Series (as specified in the relevant Final Terms) as published by the International Swaps and Derivatives Association, Inc.);

"Issue Date" has the meaning given in the relevant Final Terms;

"Margin" has the meaning given in the relevant Final Terms;

"Maturity Date" has the meaning given in the relevant Final Terms;

"Maximum Redemption Amount" has the meaning given in the relevant Final Terms;

"Minimum Redemption Amount" has the meaning given in the relevant Final Terms;

"Optional Redemption Amount (Call)" means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms;

"Optional Redemption Amount (Put)" means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms;

"Optional Redemption Date (Call)" has the meaning given in the relevant Final Terms;

"Optional Redemption Date (Put)" has the meaning given in the relevant Final Terms;

"Participating Member State" means a Member State of the European Communities which adopts the euro as its lawful currency in accordance with the Treaty;

"Payment Business Day" means:

(a) if the currency of payment is euro, any day which is a TARGET Settlement Day and a day on which dealings in foreign currencies may be carried on in each (if any) Additional Financial Centre; or

(b) if the currency of payment is not euro, any day which is a day on which dealings in foreign currencies may be carried on in the Principal Financial Centre of the currency of payment and in each (if any) Additional Financial Centre;

"Person" means any individual, company, corporation, firm, partnership, joint venture, association, organisation, state or agency of a state or other entity, whether or not having separate legal personality;

"Principal Financial Centre" means, in relation to any currency, the principal financial centre for that currency provided, however, that:

(a) in relation to euro, it means the principal financial centre of such Member State of the European Communities as is selected (in the case of a payment) by the payee or (in the case of a calculation) by the Calculation Agent; and

(b) in relation to Australian dollars, it means either Sydney or Melbourne and, in relation to New Zealand dollars, it means either Wellington or Auckland; in each case as is selected (in the case of a payment) by the payee or (in the case of a calculation) by the Calculation Agent;

"Put Option Notice" means a notice which must be delivered to a Paying Agent by any Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder;

"Put Option Receipt" means a receipt issued by a Paying Agent to a depositing Noteholder upon deposit of a Note with such Paying Agent by any Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder;

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"Rate of Interest" means the rate or rates (expressed as a percentage per annum) of interest payable in respect of the Notes specified in the relevant Final Terms or calculated or determined in accordance with the provisions of these Conditions and/or the relevant Final Terms;

"Redemption Amount" means, as appropriate, the Final Redemption Amount, the Early Redemption Amount (Tax), the Optional Redemption Amount (Call), the Optional Redemption Amount (Put), the Early Termination Amount or such other amount in the nature of a redemption amount as may be specified in, or determined in accordance with the provisions of, the relevant Final Terms;

"Reference Banks" has the meaning given in the relevant Final Terms or, if none, four major banks selected by the Calculation Agent in the market that is most closely connected with the Reference Rate;

"Reference Price" has the meaning given in the relevant Final Terms;

"Reference Rate" has the meaning given in the relevant Final Terms;

"Regular Period" means:

(a) in the case of Notes where interest is scheduled to be paid only by means of regular payments, each period from and including the Interest Commencement Date to but excluding the first Interest Payment Date and each successive period from and including one Interest Payment Date to but excluding the next Interest Payment Date;

(b) in the case of Notes where, apart from the first Interest Period, interest is scheduled to be paid only by means of regular payments, each period from and including a Regular Date falling in any year to but excluding the next Regular Date, where "Regular Date" means the day and month (but not the year) on which any Interest Payment Date falls; and

(c) in the case of Notes where, apart from one Interest Period other than the first Interest Period, interest is scheduled to be paid only by means of regular payments, each period from and including a Regular Date falling in any year to but excluding the next Regular Date, where "Regular Date" means the day and month (but not the year) on which any Interest Payment Date falls other than the Interest Payment Date falling at the end of the irregular Interest Period .

"Relevant Date" means, in relation to any payment, whichever is the later of (a) the date on which the payment in question first becomes due and (b) if the full amount payable has not been received in the Principal Financial Centre of the currency of payment by the Fiscal Agent on or prior to such due date, the date on which (the full amount having been so received) notice to that effect has been given to the Noteholders;

"Relevant Financial Centre" has the meaning given in the relevant Final Terms;

"Relevant Indebtedness" means any Indebtedness which is in the form of or represented by any bond, note, debenture, debenture stock, loan stock, certificate or other instrument which is, or is capable of being, listed, quoted or traded on any stock exchange or in any securities market (including, without limitation, any over-the-counter market);

"Relevant Screen Page" means the page, section or other part of a particular information service (including, without limitation, Reuters) specified as the Relevant Screen Page in the relevant Final Terms, or such other page, section or other part as may replace it on that information service or such other information service, in each case, as may be nominated by the Person providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to the Reference Rate;

"Relevant Time" has the meaning given in the relevant Final Terms;

"Reserved Matter" means any proposal to change any date fixed for payment of principal or interest in respect of the Notes, to reduce the amount of principal or interest payable on any date in respect of the Notes, to alter the method of calculating the amount of any payment in respect

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of the Notes or the date for any such payment, to change the currency of any payment under the Notes or to change the quorum requirements relating to meetings or the majority required to pass an Extraordinary Resolution;

"Security Interest" means any mortgage, charge, pledge, lien or other security interest including, without limitation, anything analogous to any of the foregoing under the laws of any jurisdiction;

"Specified Currency" has the meaning given in the relevant Final Terms;

"Specified Denomination(s)" has the meaning given in the relevant Final Terms;

"Specified Office" has the meaning given in the Agency Agreement;

"Specified Period" has the meaning given in the relevant Final Terms;

"Subsidiary" means, in relation to any Person (the "first Person") at any particular time, any other Person (the "second Person"):

(a) whose affairs and policies the first Person controls or has the power to control, whether by ownership of share capital, contract, the power to appoint or remove members of the governing body of the second Person or otherwise; or

(b) whose financial statements are, in accordance with applicable law and generally accepted accounting principles, consolidated with those of the first Person;

"Talon" means a talon for further Coupons;

"TARGET2" means the Trans-European Automated Real-Time Gross Settlement Express Transfer payment system which utilises a single shared platform and which was launched on 19 November 2007;

"TARGET Settlement Day" means any day on which TARGET2 is open for the settlement of payments in euro;

"Treaty" means the Treaty establishing the European Communities, as amended;

"Zero Coupon Note" means a Note specified as such in the relevant Final Terms.

(b) Interpretation: In these Conditions:

(i) if the Notes are Zero Coupon Notes, references to Coupons and Couponholders are not applicable;

(ii) if Talons are specified in the relevant Final Terms as being attached to the Notes at the time of issue, references to Coupons shall be deemed to include references to Talons;

(iii) if Talons are not specified in the relevant Final Terms as being attached to the Notes at the time of issue, references to Talons are not applicable;

(iv) any reference to principal shall be deemed to include the Redemption Amount, any additional amounts in respect of principal which may be payable under Condition 12 (Taxation), any premium payable in respect of a Note and any other amount in the nature of principal payable pursuant to these Conditions;

(v) any reference to interest shall be deemed to include any additional amounts in respect of interest which may be payable under Condition 12 (Taxation) and any other amount in the nature of interest payable pursuant to these Conditions;

(vi) references to Notes being "outstanding" shall be construed in accordance with the Agency Agreement;

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(vii) if an expression is stated in Condition 2(a) to have the meaning given in the relevant Final Terms, but the relevant Final Terms gives no such meaning or specifies that such expression is "not applicable" then such expression is not applicable to the Notes; and

(viii) any reference to the Agency Agreement shall be construed as a reference to the Agency Agreement as amended and/or supplemented up to and including the Issue Date of the Notes.

3. Form, Denomination and Title

The Notes are in bearer form in the Specified Denomination(s) with Coupons and, if specified in the relevant Final Terms, Talons attached at the time of issue. In the case of a Series of Notes with more than one Specified Denomination, Notes of one Specified Denomination will not be exchangeable for Notes of another Specified Denomination. Title to the Notes and the Coupons will pass by delivery. The holder of any Note or Coupon shall (except as otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any other interest therein, any writing thereon or any notice of any previous loss or theft thereof) and no Person shall be liable for so treating such holder. No person shall have any right to enforce any term or condition of any Note under the Contracts (Rights of Third Parties) Act 1999.

4. Status of the Notes

(a) Senior Notes

If this Condition 4(a) is specified in the final Terms as being applicable, the Notes shall be "Senior Notes". The Senior Notes and the Coupons relating thereto constitute direct, general, unconditional, unsubordinated and unsecured obligations of the Issuer which will at all times rank pari passu without any preference among the obligations of the Issuer in respect of other Senior Notes of the same Series of the Issuer and at least pari passu with all other present and future unsecured and unsubordinated obligations of the Issuer, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application.

(b) Subordinated Notes

If this Condition 4(b) is specified in the Final Terms as being applicable, the Notes shall be "Subordinated Notes". The Subordinated Notes and the Coupons relating thereto constitute direct, general, subordinated and unsecured obligations of the Issuer. In the event of the bankruptcy, dissolution or winding up of the Issuer, the payment obligations of the Issuer under the Subordinated Notes, and the Coupons relating to them, will rank in right of payment after unsubordinated unsecured creditors of the Issuer but at least pari passu with all other subordinated obligations of the Issuer which are not expressed by their terms to rank junior to the Subordinated Notes and in priority to the claims of shareholders of the Issuer.

5. Negative Pledge

So long as any Note remains outstanding, the Issuer shall not, and the Issuer shall procure that none of its Subsidiaries will, create or permit to subsist any Security Interest upon the whole or any part of its present or future undertaking, assets or revenues (including uncalled capital) to secure any Relevant Indebtedness or Guarantee of Relevant Indebtedness without (a) at the same time or prior thereto securing the Notes equally and rateably therewith or (b) providing such other security for the Notes as may be approved by an Extraordinary Resolution of Noteholders.

6. Fixed Rate Note Provisions

(a) Application: This Condition 6 (Fixed Rate Note Provisions) is applicable to the Notes only if the Fixed Rate Note Provisions are specified in the relevant Final Terms as being applicable.

(b) Accrual of interest: The Notes bear interest from the Interest Commencement Date at the Rate of Interest payable in arrear on each Interest Payment Date, subject as provided in Condition 11 (Payments). Each Note will cease to bear interest from the due date for final redemption unless,

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upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest in accordance with this Condition 6 (as well after as before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Fiscal Agent has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

(c) Fixed Coupon Amount: The amount of interest payable in respect of each Note for any Interest Period shall be the relevant Fixed Coupon Amount and, if the Notes are in more than one Specified Denomination, shall be the relevant Fixed Coupon Amount in respect of the relevant Specified Denomination.

(d) Calculation of interest amount: The amount of interest payable in respect of each Note for any period for which a Fixed Coupon Amount is not specified shall be calculated by applying the Rate of Interest to the Calculation Amount, multiplying the product by the relevant Day Count Fraction, rounding the resulting figure to the nearest sub-unit of the Specified Currency (half a sub-unit being rounded upwards) and multiplying such rounded figure by a fraction equal to the Specified Denomination of such Note divided by the Calculation Amount. For this purpose a "sub-unit" means, in the case of any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, in the case of euro, means one cent.

7. Floating Rate Note and Index-Linked Interest Note Provisions

(a) Application: This Condition 7 (Floating Rate Note and Index-Linked Interest Note Provisions) is applicable to the Notes only if the Floating Rate Note Provisions or the Index-Linked Interest Note Provisions are specified in the relevant Final Terms as being applicable.

(b) Accrual of interest: The Notes bear interest from the Interest Commencement Date at the Rate of Interest payable in arrear on each Interest Payment Date, subject as provided in Condition 11 (Payments). Each Note will cease to bear interest from the due date for final redemption unless, upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest in accordance with this Condition (as well after as before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Fiscal Agent has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

(c) Screen Rate Determination: If Screen Rate Determination is specified in the relevant Final Terms as the manner in which the Rate(s) of Interest is/are to be determined, the Rate of Interest applicable to the Notes for each Interest Period will be determined by the Calculation Agent on the following basis:

(i) if the Reference Rate is a composite quotation or customarily supplied by one entity, the Calculation Agent will determine the Reference Rate which appears on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date;

(ii) in any other case, the Calculation Agent will determine the arithmetic mean of the Reference Rates which appear on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date;

(iii) if, in the case of (i) above, such rate does not appear on that page or, in the case of (ii) above, fewer than two such rates appear on that page or if, in either case, the Relevant Screen Page is unavailable, the Calculation Agent will:

(A) request the principal Relevant Financial Centre office of each of the Reference Banks to provide a quotation of the Reference Rate at approximately the Relevant Time on the Interest Determination Date to prime banks in the

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Relevant Financial Centre interbank market in an amount that is representative for a single transaction in that market at that time; and

(B) determine the arithmetic mean of such quotations; and

(iv) if fewer than two such quotations are provided as requested, the Calculation Agent will determine the arithmetic mean of the rates (being the nearest to the Reference Rate, as determined by the Calculation Agent) quoted by major banks in the Principal Financial Centre of the Specified Currency, selected by the Calculation Agent, at approximately 11.00 a.m. (local time in the Principal Financial Centre of the Specified Currency) on the first day of the relevant Interest Period for loans in the Specified Currency to leading European banks for a period equal to the relevant Interest Period and in an amount that is representative for a single transaction in that market at that time,

and the Rate of Interest for such Interest Period shall be the sum of the Margin and the rate or (as the case may be) the arithmetic mean so determined; provided, however, that if the Calculation Agent is unable to determine a rate or (as the case may be) an arithmetic mean in accordance with the above provisions in relation to any Interest Period, the Rate of Interest applicable to the Notes during such Interest Period will be the sum of the Margin and the rate or (as the case may be) the arithmetic mean last determined in relation to the Notes in respect of a preceding Interest Period.

(d) ISDA Determination: If ISDA Determination is specified in the relevant Final Terms as the manner in which the Rate(s) of Interest is/are to be determined, the Rate of Interest applicable to the Notes for each Interest Period will be the sum of the Margin and the relevant ISDA Rate where "ISDA Rate" in relation to any Interest Period means a rate equal to the Floating Rate (as defined in the ISDA Definitions) that would be determined by the Calculation Agent under an interest rate swap transaction if the Calculation Agent were acting as Calculation Agent for that interest rate swap transaction under the terms of an agreement incorporating the ISDA Definitions and under which:

(i) the Floating Rate Option (as defined in the ISDA Definitions) is as specified in the relevant Final Terms;

(ii) the Designated Maturity (as defined in the ISDA Definitions) is a period specified in the relevant Final Terms; and

(iii) the relevant Reset Date (as defined in the ISDA Definitions) is either (A) if the relevant Floating Rate Option is based on the London inter-bank offered rate (LIBOR) for a currency, the first day of that Interest Period or (B) in any other case, as specified in the relevant Final Terms.

(e) Index-Linked Interest: If the Index-Linked Interest Note Provisions are specified in the relevant Final Terms as being applicable, the Rate(s) of Interest applicable to the Notes for each Interest Period will be determined in the manner specified in the relevant Final Terms.

(f) Maximum or Minimum Rate of Interest: If any Maximum Rate of Interest or Minimum Rate of Interest is specified in the relevant Final Terms, then the Rate of Interest shall in no event be greater than the maximum or be less than the minimum so specified.

(g) Calculation of Interest Amount: The Calculation Agent will, as soon as practicable after the time at which the Rate of Interest is to be determined in relation to each Interest Period, calculate the Interest Amount payable in respect of each Note for such Interest Period. The Interest Amount will be calculated by applying the Rate of Interest for such Interest Period to the Calculation Amount, multiplying the product by the relevant Day Count Fraction, rounding the resulting figure to the nearest sub-unit of the Specified Currency (half a sub-unit being rounded upwards) and multiplying such rounded figure by a fraction equal to the Specified Denomination of the relevant Note divided by the Calculation Amount. For this purpose a "sub-unit" means, in the case of any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, in the case of euro, means one cent.

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(h) Calculation of other amounts: If the relevant Final Terms specifies that any other amount is to be calculated by the Calculation Agent, the Calculation Agent will, as soon as practicable after the time or times at which any such amount is to be determined, calculate the relevant amount. The relevant amount will be calculated by the Calculation Agent in the manner specified in the relevant Final Terms.

(i) Publication: The Calculation Agent will cause each Rate of Interest and Interest Amount determined by it, together with the relevant Interest Payment Date, and any other amount(s) required to be determined by it together with any relevant payment date(s) to be notified to the Paying Agents and each competent authority, stock exchange and/or quotation system (if any) by which the Notes have then been admitted to listing, trading and/or quotation as soon as practicable after such determination but (in the case of each Rate of Interest, Interest Amount and Interest Payment Date) in any event not later than the first day of the relevant Interest Period. Notice thereof shall also promptly be given to the Noteholders. The Calculation Agent will be entitled to recalculate any Interest Amount (on the basis of the foregoing provisions) without notice in the event of an extension or shortening of the relevant Interest Period. If the Calculation Amount is less than the minimum Specified Denomination the Calculation Agent shall not be obliged to publish each Interest Amount but instead may publish only the Calculation Amount and the Interest Amount in respect of a Note having the minimum Specified Denomination.

(j) Notifications etc: All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of this Condition by the Calculation Agent will (in the absence of manifest error) be binding on the Issuer, the Paying Agents, the Noteholders and the Couponholders and (subject as aforesaid) no liability to any such Person will attach to the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions for such purposes.

8. Zero Coupon Note Provisions

(a) Application: This Condition 8 (Zero Coupon Note Provisions) is applicable to the Notes only if the Zero Coupon Note Provisions are specified in the relevant Final Terms as being applicable.

(b) Late payment on Zero Coupon Notes: If the Redemption Amount payable in respect of any Zero Coupon Note is improperly withheld or refused, the Redemption Amount shall thereafter be an amount equal to the sum of:

(i) the Reference Price; and

(ii) the product of the Accrual Yield (compounded annually) being applied to the Reference Price on the basis of the relevant Day Count Fraction from (and including) the Issue Date to (but excluding) whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Fiscal Agent has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

9. Dual Currency Note Provisions

(a) Application: This Condition 9 (Dual Currency Note Provisions) is applicable to the Notes only if the Dual Currency Note Provisions are specified in the relevant Final Terms as being applicable.

(b) Rate of Interest: If the rate or amount of interest falls to be determined by reference to an exchange rate, the rate or amount of interest payable shall be determined in the manner specified in the relevant Final Terms.

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10. Redemption and Purchase

(a) Scheduled redemption: Unless previously redeemed, or purchased and cancelled, the Notes will be redeemed at their Final Redemption Amount on the Maturity Date, subject as provided in Condition 11 (Payments).

(b) Redemption for tax reasons: The Notes may be redeemed at the option of the Issuer in whole, but not in part:

(i) at any time (if neither the Floating Rate Note Provisions or the Index-Linked Interest Note Provisions are specified in the relevant Final Terms as being applicable); or

(ii) on any Interest Payment Date (if the Floating Rate Note Provisions or the Index-Linked Interest Note Provisions are specified in the relevant Final Terms as being applicable),

on giving not less than 30 nor more than 60 days' notice to the Noteholders (which notice shall be irrevocable), at their Early Redemption Amount (Tax), together with interest accrued (if any) to the date fixed for redemption, if:

(A) the Issuer has or will become obliged to pay additional amounts as provided or referred to in Condition 12 (Taxation) as a result of any change in, or amendment to, the laws or regulations of the Principality of Andorra or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations (including a holding by a court of competent jurisdiction), which change or amendment becomes effective on or after the date of issue of the first Tranche of the Notes; and

(B) such obligation cannot be avoided by the Issuer taking reasonable measures available to it,

provided, however, that no such notice of redemption shall be given earlier than:

(1) where the Notes may be redeemed at any time, 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts if a payment in respect of the Notes were then due; or

(2) where the Notes may be redeemed only on an Interest Payment Date, 60 days prior to the Interest Payment Date occurring immediately before the earliest date on which the Issuer would be obliged to pay such additional amounts if a payment in respect of the Notes were then due.

Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Fiscal Agent (A) a certificate signed by two directors of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred of and (B) an opinion of independent legal advisers of recognised standing to the effect that the Issuer has or will become obliged to pay such additional amounts as a result of such change or amendment. Upon the expiry of any such notice as is referred to in this Condition 10(b), the Issuer shall be bound to redeem the Notes in accordance with this Condition 10(b).

(c) Redemption at the option of the Issuer: If the Call Option is specified in the relevant Final Terms as being applicable, the Notes may be redeemed at the option of the Issuer in whole or, if so specified in the relevant Final Terms, in part on any Optional Redemption Date (Call) at the relevant Optional Redemption Amount (Call) on the Issuer's giving not less than 30 nor more than 60 days' notice to the Noteholders (which notice shall be irrevocable and shall oblige the Issuer to redeem the Notes or, as the case may be, the Notes specified in such notice on the

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relevant Optional Redemption Date (Call) at the Optional Redemption Amount (Call) plus accrued interest (if any) to such date).

(d) Partial redemption: If the Notes are to be redeemed in part only on any date in accordance with Condition 10(c) (Redemption at the option of the Issuer), the Notes to be redeemed shall be selected by the drawing of lots in such place as the Fiscal Agent approves and in such manner as the Fiscal Agent considers appropriate, subject to compliance with applicable law, the rules of each competent authority, stock exchange and/or quotation system (if any) by which the Notes have then been admitted to listing, trading and/or quotation and the notice to Noteholders referred to in Condition 10(c) (Redemption at the option of the Issuer) shall specify the serial numbers of the Notes so to be redeemed. If any Maximum Redemption Amount or Minimum Redemption Amount is specified in the relevant Final Terms, then the Optional Redemption Amount (Call) shall in no event be greater than the maximum or be less than the minimum so specified.

(e) Redemption at the option of Noteholders: If the Put Option is specified in the relevant Final Terms as being applicable, the Issuer shall, at the option of the holder of any Note redeem such Note on the Optional Redemption Date (Put) specified in the relevant Put Option Notice at the relevant Optional Redemption Amount (Put) together with interest (if any) accrued to such date. In order to exercise the option contained in this Condition 10(e), the holder of a Note must, not less than 30 nor more than 60 days before the relevant Optional Redemption Date (Put), deposit with any Paying Agent such Note together with all unmatured Coupons relating thereto and a duly completed Put Option Notice in the form obtainable from any Paying Agent. The Paying Agent with which a Note is so deposited shall deliver a duly completed Put Option Receipt to the depositing Noteholder. No Note, once deposited with a duly completed Put Option Notice in accordance with this Condition 10(e), may be withdrawn; provided, however, that if, prior to the relevant Optional Redemption Date (Put), any such Note becomes immediately due and payable or, upon due presentation of any such Note on the relevant Optional Redemption Date (Put), payment of the redemption moneys is improperly withheld or refused, the relevant Paying Agent shall mail notification thereof to the depositing Noteholder at such address as may have been given by such Noteholder in the relevant Put Option Notice and shall hold such Note at its Specified Office for collection by the depositing Noteholder against surrender of the relevant Put Option Receipt. For so long as any outstanding Note is held by a Paying Agent in accordance with this Condition 10(e), the depositor of such Note and not such Paying Agent shall be deemed to be the holder of such Note for all purposes.

(f) No other redemption: The Issuer shall not be entitled to redeem the Notes otherwise than as provided in paragraphs (a) to (e) above.

(g) Early redemption of Zero Coupon Notes: Unless otherwise specified in the relevant Final Terms, the Redemption Amount payable on redemption of a Zero Coupon Note at any time before the Maturity Date shall be an amount equal to the sum of:

(i) the Reference Price; and

(ii) the product of the Accrual Yield (compounded annually) being applied to the Reference Price from (and including) the Issue Date to (but excluding) the date fixed for redemption or (as the case may be) the date upon which the Note becomes due and payable.

Where such calculation is to be made for a period which is not a whole number of years, the calculation in respect of the period of less than a full year shall be made on the basis of such Day Count Fraction as may be specified in the Final Terms for the purposes of this Condition 10(g) or, if none is so specified, a Day Count Fraction of 30E/360.

(h) Purchase: The Issuer or any of its Subsidiaries may at any time purchase Notes in the open market or otherwise and at any price, provided that all unmatured Coupons are purchased therewith.

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(i) Cancellation: All Notes so redeemed or purchased by the Issuer or any of its Subsidiaries and any unmatured Coupons attached to or surrendered with them shall be cancelled and may not be reissued or resold.

11. Payments

(a) Principal: Payments of principal shall be made only against presentation and (provided that payment is made in full) surrender of Notes at the Specified Office of any Paying Agent outside the United States by cheque drawn in the currency in which the payment is due on, or by transfer to an account denominated in that currency (or, if that currency is euro, any other account to which euro may be credited or transferred) and maintained by the payee with, a bank in the Principal Financial Centre of that currency (in the case of a sterling cheque, a town clearing branch of a bank in the City of London).

(b) Interest: Payments of interest shall, subject to paragraph (h) below, be made only against presentation and (provided that payment is made in full) surrender of the appropriate Coupons at the Specified Office of any Paying Agent outside the United States in the manner described in paragraph (a) above.

(c) Payments in New York City: Payments of principal or interest may be made at the Specified Office of a Paying Agent in New York City if (i) the Issuer has appointed Paying Agents outside the United States with the reasonable expectation that such Paying Agents will be able to make payment of the full amount of the interest on the Notes in the currency in which the payment is due when due, (ii) payment of the full amount of such interest at the offices of all such Paying Agents is illegal or effectively precluded by exchange controls or other similar restrictions and (iii) payment is permitted by applicable United States law.

(d) Payments subject to fiscal laws: All payments in respect of the Notes are subject in all cases to any applicable fiscal or other laws and regulations in the place of payment, but without prejudice to the provisions of Condition 12 (Taxation). No commissions or expenses shall be charged to the Noteholders or Couponholders in respect of such payments.

(e) Deductions for unmatured Coupons: If the relevant Final Terms specifies that the Fixed Rate Note Provisions are applicable and a Note is presented without all unmatured Coupons relating thereto:

(i) if the aggregate amount of the missing Coupons is less than or equal to the amount of principal due for payment, a sum equal to the aggregate amount of the missing Coupons will be deducted from the amount of principal due for payment; provided, however, that if the gross amount available for payment is less than the amount of principal due for payment, the sum deducted will be that proportion of the aggregate amount of such missing Coupons which the gross amount actually available for payment bears to the amount of principal due for payment;

(ii) if the aggregate amount of the missing Coupons is greater than the amount of principal due for payment:

(A) so many of such missing Coupons shall become void (in inverse order of maturity) as will result in the aggregate amount of the remainder of such missing Coupons (the "Relevant Coupons") being equal to the amount of principal due for payment; provided, however, that where this sub-paragraph would otherwise require a fraction of a missing Coupon to become void, such missing Coupon shall become void in its entirety; and

(B) a sum equal to the aggregate amount of the Relevant Coupons (or, if less, the amount of principal due for payment) will be deducted from the amount of principal due for payment; provided, however, that, if the gross amount available for payment is less than the amount of principal due for payment, the sum deducted will be that proportion of the aggregate amount of the Relevant Coupons (or, as the case may be, the amount of principal due for payment)

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which the gross amount actually available for payment bears to the amount of principal due for payment.

Each sum of principal so deducted shall be paid in the manner provided in paragraph (a) above against presentation and (provided that payment is made in full) surrender of the relevant missing Coupons.

(f) Unmatured Coupons void: If the relevant Final Terms specifies that this Condition 11(f) is applicable or that the Floating Rate Note Provisions or the Index-Linked Interest Note Provisions are applicable, on the due date for final redemption of any Note or early redemption in whole of such Note pursuant to Condition 10(b) (Redemption for tax reasons), Condition 10(e) (Redemption at the option of Noteholders), Condition 10(c) (Redemption at the option of the Issuer) or Condition 13 (Events of Default), all unmatured Coupons relating thereto (whether or not still attached) shall become void and no payment will be made in respect thereof.

(g) Payments on business days: If the due date for payment of any amount in respect of any Note or Coupon is not a Payment Business Day in the place of presentation, the holder shall not be entitled to payment in such place of the amount due until the next succeeding Payment Business Day in such place and shall not be entitled to any further interest or other payment in respect of any such delay.

(h) Payments other than in respect of matured Coupons: Payments of interest other than in respect of matured Coupons shall be made only against presentation of the relevant Notes at the Specified Office of any Paying Agent outside the United States (or in New York City if permitted by paragraph (c) above).

(i) Partial payments: If a Paying Agent makes a partial payment in respect of any Note or Coupon presented to it for payment, such Paying Agent will endorse thereon a statement indicating the amount and date of such payment.

(j) Exchange of Talons: On or after the maturity date of the final Coupon which is (or was at the time of issue) part of a Coupon Sheet relating to the Notes, the Talon forming part of such Coupon Sheet may be exchanged at the Specified Office of the Fiscal Agent for a further Coupon Sheet (including, if appropriate, a further Talon but excluding any Coupons in respect of which claims have already become void pursuant to Condition 14 (Prescription). Upon the due date for redemption of any Note, any unexchanged Talon relating to such Note shall become void and no Coupon will be delivered in respect of such Talon.

12. Taxation

(a) Gross up: All payments of principal and interest in respect of the Notes and the Coupons by or on behalf of the Issuer shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or on behalf of the Principality of Andorra or any political subdivision therein or any authority therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments, or governmental charges is required by law. In that event, the Issuer shall pay such additional amounts as will result in receipt by the Noteholders and the Couponholders after such withholding or deduction of such amounts as would have been received by them had no such withholding or deduction been required, except that no such additional amounts shall be payable in respect of any Note or Coupon presented for payment:

(i) by or on behalf of a holder which is liable to such taxes, duties, assessments or governmental charges in respect of such Note or Coupon by reason of its having some connection with the jurisdiction by which such taxes, duties, assessments or charges have been imposed, levied, collected, withheld or assessed other than the mere holding of the Note or Coupon; or

(ii) where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to European Council Directive 2003/48/EC on the taxation

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of savings income or any law implementing or complying with, or introduced in order to conform to, this Directive; or

(iii) by or on behalf of a holder who would have been able to avoid such withholding or deduction by presenting the relevant Note or Coupon to another Paying Agent in a Member State of the European Union; or

(iv) more than 30 days after the Relevant Date except to the extent that the holder of such Note or Coupon would have been entitled to such additional amounts on presenting such Note or Coupon for payment on the last day of such period of 30 days.

(b) Taxing jurisdiction: If the Issuer becomes subject at any time to any taxing jurisdiction other than the Principality of Andorra, references in these Conditions to the Principality of Andorra shall be construed as references to the Principality of Andorra and/or such other jurisdiction.

13. Events of Default

If any of the following events occurs:

(a) Non-payment: the Issuer fails to pay any amount of principal in respect of the Notes on the due date for payment thereof or fails to pay any amount of interest in respect of the Notes within three days of the due date for payment thereof; or

(b) Breach of other obligations: the Issuer defaults in the performance or observance of any of its other obligations under or in respect of the Notes and such default remains unremedied for 30 days after written notice thereof, addressed to the Issuer by any Noteholder, has been delivered to the Issuer or to the Specified Office of the Fiscal Agent; or

(c) Cross-default of Issuer or Subsidiary:

(i) any Indebtedness of the Issuer or any of their respective Subsidiaries is not paid when due or (as the case may be) within any originally applicable grace period;

(ii) any such Indebtedness becomes (or becomes capable of being declared) due and payable prior to its stated maturity otherwise than at the option of the Issuer or (as the case may be) the relevant Subsidiary or (provided that no event of default, howsoever described, has occurred) any Person entitled to such Indebtedness; or

(iii) the Issuer or any of its Subsidiaries fails to pay when due any amount payable by it under any Guarantee of any Indebtedness; or

(d) Unsatisfied judgment: one or more judgment(s) or order(s) is rendered against the Issuer or any of its Subsidiaries and continue(s) unsatisfied and unstayed for a period of 30 days after the date(s) thereof or, if later, the date therein specified for payment; or

(e) Security enforced: a secured party takes possession, or a receiver, manager or other similar officer is appointed, of the whole or a substantial part of the undertaking, assets and revenues of the Issuer or any of its Subsidiaries; or

(f) Insolvency etc: (i) the Issuer or any its Subsidiaries becomes insolvent or is unable to pay its debts as they fall due, (ii) an administrator or liquidator of the Issuer or any of its Subsidiaries or the whole or a substantial part of the undertaking, assets and revenues of the Issuer or any of its Subsidiaries is appointed (or application for any such appointment is made), (iii) the Issuer or any of its Subsidiaries takes any action for a readjustment or deferment of any of its obligations or makes a general assignment or an arrangement or composition with or for the benefit of its creditors or declares a moratorium in respect of any of its Indebtedness or any Guarantee of any Indebtedness given by it or (iv) the Issuer or any of its Subsidiaries ceases or threatens to cease to carry on all or any substantial part of its business (otherwise than, in the case of a Subsidiary of the Issuer, for the purposes of or pursuant to an amalgamation, reorganisation or restructuring whilst solvent); or

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(g) Winding up etc: an order is made or an effective resolution is passed for the winding up, liquidation or dissolution of the Issuer or any of its Subsidiaries (otherwise than, in the case of a Subsidiary of the Issuer, for the purposes of or pursuant to an amalgamation, reorganisation or restructuring whilst solvent); or

(h) Analogous event: any event occurs which under the laws of the Principality of Andorra has an analogous effect to any of the events referred to in paragraphs (d) to (g) above; or

(i) Failure to take action etc: any action, condition or thing at any time required to be taken, fulfilled or done in order (i) to enable the Issuer lawfully to enter into, exercise their respective rights and perform and comply with their respective obligations under and in respect of the Notes, (ii) to ensure that those obligations are legal, valid, binding and enforceable and (iii) to make the Notes and the Coupons admissible in evidence in the courts of the Principality of Andorra is not taken, fulfilled or done; or

(j) Unlawfulness: it is or will become unlawful for the Issuer to perform or comply with any of its obligations under or in respect of the Notes; or

(k) Government intervention: (A) all or any substantial part of the undertaking, assets and revenues of the Issuer or any of its Subsidiaries is condemned, seized or otherwise appropriated by any Person acting under the authority of any national, regional or local government or (B) the Issuer or any of its Subsidiaries is prevented by any such Person from exercising normal control over all or any substantial part of its undertaking, assets and revenues,

then any Note may, by written notice addressed by the holder thereof to the Issuer and delivered to the Issuer or to the Specified Office of the Fiscal Agent, be declared immediately due and payable, whereupon it shall become immediately due and payable at its Early Termination Amount together with accrued interest (if any) without further action or formality.

14. Prescription

Claims for principal shall become void unless the relevant Notes are presented for payment within ten years of the appropriate Relevant Date. Claims for interest shall become void unless the relevant Coupons are presented for payment within five years of the appropriate Relevant Date.

15. Replacement of Notes and Coupons

If any Note or Coupon is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the Specified Office of the Fiscal Agent (and, if the Notes are then admitted to listing, trading and/or quotation by any competent authority, stock exchange and/or quotation system which requires the appointment of a Paying Agent in any particular place, the Paying Agent having its Specified Office in the place required by such competent authority, stock exchange and/or quotation system), subject to all applicable laws and competent authority, stock exchange and/or quotation system requirements, upon payment by the claimant of the expenses incurred in connection with such replacement and on such terms as to evidence, security, indemnity and otherwise as the Issuer may reasonably require. Mutilated or defaced Notes or Coupons must be surrendered before replacements will be issued.

16. Agents

In acting under the Agency Agreement and in connection with the Notes and the Coupons, the Paying Agents act solely as agents of the Issuer and do not assume any obligations towards or relationship of agency or trust for or with any of the Noteholders or Couponholders.

The initial Paying Agents and their initial Specified Offices are listed below. The initial Calculation Agent (if any) is specified in the relevant Final Terms. The Issuer reserves the right at any time to vary or terminate the appointment of any Paying Agent and to appoint a successor fiscal agent or Calculation Agent and additional or successor paying agents; provided, however, that:

(a) the Issuer shall at all times maintain a Fiscal Agent; and

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(b) the Issuer shall at all times maintain a paying agent in an EU member state that will not be obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC; and

(c) if a Calculation Agent is specified in the relevant Final Terms, the Issuer shall at all times maintain a Calculation Agent; and

(d) if and for so long as the Notes are admitted to listing, trading and/or quotation by any competent authority, stock exchange and/or quotation system which requires the appointment of a Paying Agent in any particular place, the Issuer shall maintain a Paying Agent having its Specified Office in the place required by such competent authority, stock exchange and/or quotation system.

Notice of any change in any of the Paying Agents or in their Specified Offices shall promptly be given to the Noteholders.

17. Meetings of Noteholders; Modification and Waiver

(a) Meetings of Noteholders: The Agency Agreement contains provisions for convening meetings of Noteholders to consider matters relating to the Notes, including the modification of any provision of these Conditions. Any such modification may be made if sanctioned by an Extraordinary Resolution. Such a meeting may be convened by the Issuer and shall be convened by them upon the request in writing of Noteholders holding not less than one-tenth of the aggregate principal amount of the outstanding Notes. The quorum at any meeting convened to vote on an Extraordinary Resolution will be two or more Persons holding or representing one more than half of the aggregate principal amount of the outstanding Notes or, at any adjourned meeting, two or more Persons being or representing Noteholders whatever the principal amount of the Notes held or represented; provided, however, that Reserved Matters may only be sanctioned by an Extraordinary Resolution passed at a meeting of Noteholders at which two or more Persons holding or representing not less than three-quarters or, at any adjourned meeting, one quarter of the aggregate principal amount of the outstanding Notes form a quorum. Any Extraordinary Resolution duly passed at any such meeting shall be binding on all the Noteholders and Couponholders, whether present or not.

In addition, a resolution in writing signed by or on behalf of all Noteholders who for the time being are entitled to receive notice of a meeting of Noteholders will take effect as if it were an Extraordinary Resolution. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Noteholders.

(b) Modification: The Notes and these Conditions may be amended without the consent of the Noteholders or the Couponholders to correct a manifest error. In addition, the parties to the Agency Agreement may agree to modify any provision thereof, but the Issuer shall not agree, without the consent of the Noteholders, to any such modification unless it is of a formal, minor or technical nature, it is made to correct a manifest error or it is, in the opinion of such parties, not materially prejudicial to the interests of the Noteholders.

18. Further Issues

The Issuer may from time to time, without the consent of the Noteholders or the Couponholders, create and issue further notes having the same terms and conditions as the Notes in all respects (or in all respects except for the first payment of interest) so as to form a single series with the Notes.

19. Notices

Notices to the Noteholders shall be valid if published in a leading English language daily newspaper published in London (which is expected to be the Financial Times) or, if such publication is not practicable, in a leading English language daily newspaper having general circulation in Europe. Any such notice shall be deemed to have been given on the date of first publication (or if required to be published in more than one newspaper, on the first date on which publication shall have been made in all the required newspapers). Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the Noteholders.

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20. Currency Indemnity

If any sum due from the Issuer in respect of the Notes or the Coupons or any order or judgment given or made in relation thereto has to be converted from the currency (the "first currency") in which the same is payable under these Conditions or such order or judgment into another currency (the "second currency") for the purpose of (a) making or filing a claim or proof against the Issuer, (b) obtaining an order or judgment in any court or other tribunal or (c) enforcing any order or judgment given or made in relation to the Notes, the Issuer shall indemnify each Noteholder, on the written demand of such Noteholder addressed to the Issuer and delivered to the Issuer or to the Specified Office of the Fiscal Agent, against any loss suffered as a result of any discrepancy between (i) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (ii) the rate or rates of exchange at which such Noteholder may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof.

This indemnity constitutes a separate and independent obligation of the Issuer and shall give rise to a separate and independent cause of action.

21. Rounding

For the purposes of any calculations referred to in these Conditions (unless otherwise specified in these Conditions or the relevant Final Terms), (a) all percentages resulting from such calculations will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with 0.000005 per cent. being rounded up to 0.00001 per cent.), (b) all United States dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one half cent being rounded up), (c) all Japanese Yen amounts used in or resulting from such calculations will be rounded downwards to the next lower whole Japanese Yen amount, and (d) all amounts denominated in any other currency used in or resulting from such calculations will be rounded to the nearest two decimal places in such currency, with 0.005 being rounded upwards.

22. Governing Law and Jurisdiction

(a) Governing law: The Notes (except for Condition 4 (Status of the Notes), which is governed by the laws of Andorra) and any non-contractual obligations arising out of or in connection with the Notes are governed by English law.

(b) English courts: The courts of England have exclusive jurisdiction to settle any dispute (a "Dispute") arising out of or in connection with the Notes (including any non-contractual obligation arising out of or in connection with the Notes).

(c) Appropriate forum: The Issuer agrees that the courts of England are the most appropriate and convenient courts to settle any Dispute and, accordingly, that it will not argue to the contrary.

(d) Rights of the Noteholders to take proceedings outside England: Condition 22(b) (English courts) is for the benefit of the Noteholders only. As a result, nothing in this Condition 22 (Governing law and jurisdiction) prevents any Noteholder from taking proceedings relating to a Dispute ("Proceedings") in any other courts with jurisdiction. To the extent allowed by law, Noteholders may take concurrent Proceedings in any number of jurisdictions.

(e) Process agent: The Issuer agrees that the documents which start any Proceedings and any other documents required to be served in relation to those Proceedings may be served on it by being delivered to TMF Corporate Services Limited at Pellipar House, 1st Floor, 9 Cloak Lane, London EC4R 2RU or, if different, its registered office for the time being or at any address of the Issuer in Great Britain at which process may be served on it. If such person is not or ceases to be effectively appointed to accept service of process on behalf of the Issuer, the Issuer shall, on the written demand of any Noteholder addressed and delivered to the Issuer or to the Specified Office of the Fiscal Agent appoint a further person in England to accept service of process on its behalf and, failing such appointment within 15 days, any Noteholder shall be entitled to appoint such a person by written notice addressed to the Issuer and delivered to the Issuer or to the Specified Office of the Fiscal Agent. Nothing in this paragraph shall affect the right of any

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Noteholder to serve process in any other manner permitted by law. This Condition applies to Proceedings in England and to Proceedings elsewhere.

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FORM OF FINAL TERMS

The Final Terms in respect of each Tranche of Notes will be substantially in the following form, duly supplemented (if necessary), amended (if necessary) and completed to reflect the particular terms of the relevant Notes and their issue. Text in this section appearing in italics does not form part of the form of the Final Terms but denotes directions for completing the Final Terms.

Final Terms dated •

BANC INTERNACIONAL D'ANDORRA, S.A.

Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes]

under the EUR 500,000,000 Euro Medium Term Note Programme

PART A – CONTRACTUAL TERMS

Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the "Conditions") set forth in the Base Prospectus dated 29 September 2010 [and the supplemental Base Prospectus dated •] which [together] constitute[s] a base prospectus (the "Base Prospectus") for the purposes of the Prospectus Directive (Directive 2003/71/EC) (the "Prospectus Directive"). This document constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of the Prospectus Directive. These Final Terms contain the final terms of the Notes and must be read in conjunction with such Base Prospectus [as so supplemented].

Full information on the Issuer, and the offer of the Notes described herein is only available on the basis of the combination of these Final Terms and the Base Prospectus [as so supplemented]. The Base Prospectus [and the supplemental Base Prospectus] [is] [are] available for viewing [during normal business hours at [Avenida Meritxell, 96, AD500 Andorra la Vella, Principat d'Andorra]].

[Include whichever of the following apply or specify as "Not Applicable" (N/A). Note that the numbering should remain as set out below, even if "Not Applicable" is indicated for individual paragraphs or sub-paragraphs. Italics denote guidance for completing the Final Terms.]

[When completing any final terms, or adding any other final terms or information, consideration should be given as to whether such terms or information constitute "significant new factors" and consequently trigger the need for a supplement to the Prospectus under Article 16 of the Prospectus Directive].

1. Issuer: Banc Internacional d'Andorra, S.A.

2. [(i) Series Number:] [ ]

[(ii) Tranche Number: [ ]

(If fungible with an existing Series, details of that Series, including the date on which the Notes become fungible).]

3. Specified Currency or Currencies: [ ]

4. Aggregate Nominal Amount: [ ]

[(i)] [Series]: [ ]

[(ii) Tranche: [ ]]

5. Issue Price: [ ] per cent. of the Aggregate Nominal Amount [plus accrued interest from [insert date] (in the case of fungible issues only, if applicable)]

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6. (i) Specified Denominations: [ ]

[No Notes may be issued which have a minimum denomination of less than EUR 100,000 (or nearly equivalent in another currency)]

(ii) Calculation Amount: [ ]

7. (i) Issue Date: [ ]

(ii) Interest Commencement Date: [Specify/Issue Date/Not Applicable]

8. Maturity Date: [Specify date or (for Floating Rate Notes) Interest Payment Date falling in or nearest to the relevant month and year]

[If the Maturity Date is less than one year from the Issue Date and either (a) the issue proceeds are received by the Issuer in the United Kingdom, or (b) the activity of issuing the Notes is carried on from an establishment maintained by the Issuer in the United Kingdom, (i) the Notes must have a minimum redemption value of £100,000 (or its equivalent in other currencies) and be sold only to "professional investors" or (ii) another applicable exemption from section 19 of the FSMA must be available.]

9. Interest Basis: [[ ] per cent. Fixed Rate]

[[Specify reference rate] +/– [ ] per cent. Floating Rate]

[Zero Coupon]

[Index Linked Interest]

[Other (Specify)]

(further particulars specified below)

10. Redemption/Payment Basis: [Redemption at par]

[Index Linked Redemption]

[Dual Currency]

[Partly Paid]

[Instalment]

[Other (Specify)]

11. Change of Interest or Redemption/Payment Basis:

[Specify details of any provision for convertibility of Notes into another interest or redemption/ payment basis]

12. Put/Call Options: [Investor Put]

[Issuer Call]

[(further particulars specified below)]

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13. [(i)] Status of the Notes: [Senior/[Dated/Perpetual]/Subordinated]. Condition [4(a)/4(b)] applies.

[(ii)] [Date [Board] approval for issuance of Notes] obtained:

[ ] [and [ ], respectively

(N.B. Only relevant where Board (or similar) authorisation is required for the particular tranche of Notes)]

14. Method of distribution: [Syndicated/Non-syndicated]

PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE

15. Fixed Rate Note Provisions [Applicable/Not Applicable]

(If not applicable, delete the remaining sub-paragraphs of this paragraph)

(i) Rate[(s)] of Interest: [ ] per cent. per annum [payable [annually/semi-annually/quarterly/monthly/other (specify)] in arrear]

(ii) Interest Payment Date(s): [ ] in each year [adjusted in accordance with [specify Business Day Convention and any applicable Business Centre(s) for the definition of "Business Day"]/not adjusted]

(iii) Fixed Coupon Amount[(s)]: [ ] per Calculation Amount

(iv) Broken Amount(s): [ ] per Calculation Amount, payable on the Interest Payment Date falling [in/on] [ ]

(v) Day Count Fraction: [30/360 / Actual/Actual (ICMA/ISDA) / other]

(vi) [Determination Dates: [ ] in each year (insert regular interest payment dates, ignoring issue date or maturity date in the case of a long or short first or last coupon. N.B. only relevant where Day Count Fraction is Actual/Actual (ICMA))]

(vii) Other terms relating to the method of calculating interest for Fixed Rate Notes:

[Not Applicable/give details]

16. Floating Rate Note Provisions [Applicable/Not Applicable]


(i) Interest Period(s): [ ]

(ii) Specified Period: [ ]

(Specified Period and Specified Interest Payment Dates are alternatives. A Specified Period, rather than Specified Interest Payment Dates, will only be relevant if the Business Day Convention is the FRN Convention, Floating Rate Convention or EurodollarConvention. Otherwise, insert "Not Applicable")

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(iii) Specified Interest Payment Dates:

[ ]

(Specified Period and Specified Interest Payment Dates are alternatives. If the Business Day Convention is the FRN Convention, Floating Rate Convention or Eurodollar Convention, insert "Not Applicable")

(iv) [First Interest Payment Date]: [ ]

(v) Business Day Convention: [Floating Rate Convention/Following Business Day Convention/ Modified Following Business Day Convention/ Preceding Business Day Convention/ other (give details)]

(vi) Additional Business Centre(s): [Not Applicable/give details]

(vii) Manner in which the Rate(s) of Interest is/are to be determined:

[Screen Rate Determination/ISDA Determination/other (give details)]

(viii) Party responsible for calculating the Rate(s) of Interest and/or Interest Amount(s) (if not the [Fiscal Agent]):

[[Name] shall be the Calculation Agent (no need to specify if the Fiscal Agent is to perform this function)]

(ix) Screen Rate Determination:

• Reference Rate: [For example, LIBOR or EURIBOR]

• Interest Determination Date(s):

[ ]

• Relevant Screen Page: [For example, Reuters LIBOR 01/ EURIBOR 01]

• Relevant Time: [For example, 11.00 a.m. London time/Brussels time]

• Relevant Financial Centre:

[For example, London/Euro-zone (where Euro-zone means the region comprised of the countries whose lawful currency is the euro]

(x) ISDA Determination:

• Floating Rate Option: [ ]

• Designated Maturity: [ ]

• Reset Date: [ ]

(xi) Margin(s): [+/-][•] per cent. per annum

(xii) Minimum Rate of Interest: [ ] per cent. per annum

(xiv) Maximum Rate of Interest: [ ] per cent. per annum

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(xv) Day Count Fraction: [ ]

(xv) Fall back provisions, rounding provisions, denominator and any other terms relating to the method of calculating interest on Floating Rate Notes, if different from those set out in the Conditions:

[ ]

17. Zero Coupon Note Provisions [Applicable/Not Applicable]


(i) [Amortisation/Accrual] Yield:

[ ] per cent. per annum

(ii) Reference Price: [ ]

(iii) Any other formula/basis of determining amount payable:

[Consider whether it is necessary to specify a Day Count Fraction for the purposes of Condition 10(g)]

18. Index-Linked Interest Note/other variable-linked interest Note Provisions

[Applicable/Not Applicable]


(i) Index/Formula/other variable: [give or annex details]

(ii) Calculation Agent responsible for calculating the interest due:

[ ]

(iii) Provisions for determining Coupon where calculated by reference to Index and/or Formula and/or other variable:

[ ]

(iv) Interest Determination Date(s): [•]

(v) Provisions for determining Coupon where calculation by reference to Index and/or Formula and/or other variable is impossible or impracticable or otherwise disrupted:

[ ]

(vi) Interest or calculation period(s):

[ ]

(vii) Specified Period: [ ]

(Specified Period and Specified Interest Payment Dates are alternatives. A Specified Period, rather than Specified Interest Payment Dates, will only be relevant if the Business Day Convention is the FRN Convention, Floating Rate Convention or EurodollarConvention. Otherwise, insert "Not Applicable")

(viii) Specified Interest Payment Dates:

[ ]

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(Specified Period and Specified Interest Payment Dates are alternatives. If the Business Day Convention is the FRN Convention, Floating Rate Convention or Eurodollar Convention, insert "Not Applicable")

(ix) Business Day Convention: [Floating Rate Convention/ Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention/other (give details)]

(x) Additional Business Centre(s) : [ ]

(xi) Minimum Rate/Amount of Interest:


(xii) Maximum Rate/Amount of Interest:


(xiv) Day Count Fraction: [ ]

19. Dual Currency Note Provisions [Applicable/Not Applicable]


(i) Rate of Exchange/method of calculating Rate of Exchange:

[give details]

(ii) Calculation Agent, if any, responsible for calculating the principal and/or interest due:

[ ]

(iii) Provisions applicable where calculation by reference to Rate of Exchange impossible or impracticable:

[ ]

(iv) Person at whose option Specified Currency(ies) is/are payable:

[ ]

PROVISIONS RELATING TO REDEMPTION

20. Call Option [Applicable/Not Applicable]


(i) Optional Redemption Date(s):

[ ]

(ii) Optional Redemption Amount(s) of each Note and method, if any, of calculation of such amount(s):

[ ] per Calculation Amount

(iii) If redeemable in part:

(a) Minimum Redemption [ ] per Calculation Amount

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Amount:

(b) Maximum Redemption Amount


(iv) Notice period: [ ]

21. Put Option [Applicable/Not Applicable]


(i) Optional Redemption Date(s):

[ ]

(ii) Optional Redemption Amount(s) of each Note and method, if any, of calculation of such amount(s):


(iii) Notice period: [ ]

22. Final Redemption Amount of each Note


In cases where the Final Redemption Amount is Index-Linked or other variable-linked:

(i) Index/Formula/variable: [give or annex details]

(ii) Calculation Agent responsible for calculating the Final Redemption Amount:

[ ]

(iii) Provisions for determining Final Redemption Amount where calculated by reference to Index and/or Formula and/or other variable:

[ ]

(iv) Date for determining Final Redemption Amount where calculation by reference to Index and/or Formula and/or other variable:

[ ]

(v) Provisions for determining Final Redemption Amount where calculation by reference to Index and/or Formula and/or other variable is impossible or impracticable or otherwise disrupted:

[ ]

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(vi) [Payment Date]: [ ]

(vii) Minimum Final Redemption Amount:


(viii) Maximum Final Redemption Amount:


23. Early Redemption Amount

Early Redemption Amount(s) per Calculation Amount payable on redemption for taxation reasons or on event of default or other early redemption and/or the method of calculating the same (if required or if different from that set out in the Conditions):

[Not Applicable

(If both the Early Redemption Amount (Tax) and the Early Termination Amount are the principal amount of the Notes/specify the Early Redemption Amount (Tax) and/or the Early Termination Amount if different from the principal amount of the Notes)]

GENERAL PROVISIONS APPLICABLE TO THE NOTES

24. Form of Notes: Bearer Notes:

[Temporary Global Note exchangeable for a Permanent Global Note which is exchangeable for Definitive Notes on [•] days' notice/in the limited circumstances specified in the Permanent Global Note]

[Temporary Global Note exchangeable for Definitive Notes on [•] days' notice]

[Permanent Global Note exchangeable for Definitive Notes on [•] days' notice/in the limited circumstances specified in the Permanent Global Note]

25. New Global Note: [Yes] [No]

26. Additional Financial Centre(s) or other special provisions relating to payment dates:

[Not Applicable/give details.

Note that this paragraph relates to the date and place of payment, and not interest period end dates, to which sub paragraphs 15(ii), 16(vi) and 18(x) relate]

27. Talons for future Coupons or Receipts to be attached to Definitive Notes (and dates on which such Talons mature):

[Yes/No. If yes, give details]

28. Details relating to Partly Paid Notes: amount of each payment comprising the Issue Price and date on which each payment is to be made [and consequences (if any) of failure to pay, including any right of the Issuer to forfeit the Notes and interest due on late payment]:


29. Details relating to Instalment Notes: amount of each instalment, date on


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which each payment is to be made:

30. Redenomination, renominalisation and reconventioning provisions:

[Not Applicable/The provisions in Condition 30 (Further Issues) apply]

31. Consolidation provisions: Not Applicable/The provisions [in Condition 18 (Further Issues)] [annexed to this Final Terms] apply

32. Other final terms: [Not Applicable/give details]

[(When adding any other final terms consideration should be given as to whether such terms constitute "significant new factors" and consequently trigger the need for a supplement to the Prospectus under Article 16 of the Prospectus Directive.)]

DISTRIBUTION

33. (i) If syndicated, names and addresses of Managers and underwriting commitments:

[Not Applicable/give names, addresses and underwriting commitments]

(Include names and addresses of entities agreeing to underwrite the issue on a firm commitment basis and names and addresses of the entities agreeing to place the issue without a firm commitment or on a "best efforts" basis if such entities are not the same as the Managers.)

(ii) Date of [Subscription] Agreement:

[ ]

(iii) Stabilising Manager(s) (if any):

[Not Applicable/give name]

34. If non-syndicated, name and address of Dealer:

[Not Applicable/give name and address]

35. Total commission and concession: [ ] per cent. of the Aggregate Nominal Amount

36. U.S. Selling Restrictions: [Reg. S Compliance Category; TEFRA C/TEFRA D/ TEFRA not applicable]

37. Non-exempt Offer: [Not Applicable] [An offer of the Notes may be made by the Managers [and [specify, if applicable]] other than pursuant to Article 3(2) of the Prospectus Directive in [specify relevant Member State(s) - which must be jurisdictions where the Prospectus and any supplements have been passported] (Public Offer Jurisdictions) during the period from [specify date] until [specify date] (Offer Period). See further Paragraph 10 of Part B below.

38. Additional selling restrictions: [Not Applicable/give details]

PURPOSE OF FINAL TERMS

These Final Terms comprise the final terms required for issue and admission to trading on [specify relevant regulated market] of the Notes described herein pursuant to the EUR [insert Programme Amount] Euro Medium Term Note Programme of Banc Internacional d'Andorra, S.A.

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RESPONSIBILITY

The Issuer accepts responsibility for the information contained in these Final Terms. [(Relevant third party information) has been extracted from (specify source). The Issuer confirms that such information has been accurately reproduced and that, so far as it is aware, and is able to ascertain from information published by (specify source), no facts have been omitted which would render the reproduced information inaccurate or misleading.]

Signed on behalf of [name of the Issuer]:

By: ............................................ Duly authorised

PART B – OTHER INFORMATION

1. LISTING [London/Other(specify)/None]

(i) Listing [Application is has been made by the Issuer (or on its behalf) for the Notes to be admitted to trading on [specify relevant regulated market]] with effect from [ ].] [Application is expected to be made by the Issuer (or on its behalf) for the Notes to be admitted to trading on [specify relevant regulated market] with effect from [ ].] [Not Applicable.]

(ii) Admission to trading (Where documenting a fungible issue need to indicate that original Notes are already admitted to trading.)

2. RATINGS The Notes to be issued have been rated:

Ratings: [S & P: [ ]]

[Moody's: [ ]]

[Fitch: [ ]]

[[Other]: [ ]]

[Need to include a brief explanation of the meaning of the ratings if this has previously been published by the rating provider.]

(The above disclosure should reflect the rating allocated to Notes of the type being issued under the Programme generally or, where the issue has been specifically rated, that rating.)

3. [INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE ISSUE/OFFER]

Need to include a description of any interest, including conflicting ones, that is material to the issue/offer, detailing the persons involved and the nature of the interest. May be satisfied by the inclusion of the following statement:

"Save as discussed in ["Subscription and Sale"], so far as the Issuer is aware, no person involved in the offer of the Notes has an interest material to the offer."]

[(When adding any other description, consideration should be given as to whether such matters described constitute "significant new factors" and consequently trigger the need for

- 47 -

a supplement to the Prospectus under Article 16 of the Prospectus Directive.)]

4. REASONS FOR THE OFFER, ESTIMATED NET PROCEEDS AND TOTAL EXPENSES

(i) Reasons for the offer: [ ]

(See "Use of Proceeds" wording in Prospectus – if reasons for offer different from general funding requirements will need to include those reasons here.)

(ii) Estimated net proceeds: [ ]

(If proceeds are intended for more than one use will need to split out and present in order of priority. If proceeds insufficient to fund all proposed uses state amount and sources of other funding.)

(iii) Estimated total expenses: [ ]

[Include breakdown of expenses]

(If the Notes are derivative securities to which Annex XII of the Prospectus Directive Regulation applies it is only necessary to include disclosure of net proceeds and total expenses at (ii) and (iii) above where disclosure is included at (i) above.)

[Fixed Rate Notes only – YIELD

Indication of yield: [ ]

Calculated as [include details of method of calculation in summary form] on the Issue Date.

As set out above, the yield is calculated at the Issue Date on the basis of the Issue Price. It is not an indication of future yield. ]

[Floating Rate Notes only - HISTORIC INTEREST RATES

Details of historic [LIBOR/EURIBOR/other] rates can be obtained from [Reuters].]

[Index-linked or other variable-linked notes only – PERFORMANCE OF INDEX/FORMULA/OTHER VARIABLE, EXPLANATION OF EFFECT ON VALUE OF INVESTMENT AND ASSOCIATED RISKS AND OTHER INFORMATION CONCERNING THE UNDERLYING

Need to include details of where past and future performance and volatility of the index/formula/other variable can be obtained and a clear and comprehensive explanation of how the value of the investment is affected by the underlying and the circumstances when the risks are most evident. [Where the underlying is an index need to include the name of the index and a description if composed by the Issuer and if the index is not composed by the Issuer need to include details of where the information about the index can be obtained. Where the underlying is not an index need to include equivalent information. Include other information concerning the underlying required by Paragraph 4.2 of Annex XII of the Prospectus Directive Regulation.] ]

[(When completing this paragraph, consideration should be given as to whether such matters described constitute "significant new factors" and consequently trigger the need for

- 48 -

a supplement to the Prospectus under Article 16 of the Prospectus Directive.)]

The Issuer [intends to provide post-issuance information [specify what information will be reported and where it can be obtained]] [does not intend to provide post-issuance information].

[Dual Currency Notes only – PERFORMANCE OF RATE[S] OF EXCHANGE AND EXPLANATION OF EFFECT ON VALUE OF INVESTMENT

Need to include details of where past and future performance and volatility of the relevant rate[s] can be obtained and a clear and comprehensive explanation of how the value of the investment is affected by the underlying and the circumstances when the risks are most evident.]

[(When completing this paragraph, consideration should be given as to whether such matters described constitute "significant new factors" and consequently trigger the need for a supplement to the Prospectus under Article 16 of the Prospectus Directive.)]

OPERATIONAL INFORMATION

ISIN Code: [ ]

Common Code: [ ]

Any clearing system(s) other than Euroclear Bank S.A./N.V. and Clearstream Banking, société anonyme and the relevant identification number(s):

[Not Applicable/give name(s) and number(s)]

Delivery: Delivery [against/free of] payment

Names and addresses of initial Paying Agent(s): [ ]

Names and addresses of additional Paying Agent(s) (if any):

[ ]

Intended to be held in a manner which would allow Eurosystem eligibility:

[Yes][No][Not Applicable]

[Note that the designation "yes" simply means that the Notes are intended upon issue to be deposited with one of the ICSDs as common safekeeper and does not necessarily mean that the Notes will be recognized as eligible collateral for Eurosystem monetary policy and intra day credit operations by the Eurosystem either upon issue or at any or all times during their life. Such recognition will depend upon the ECB being satisfied that Eurosystem eligibility criteria have been met.][include this text if "yes" selected in which case the Notes must be issued in NGN form]

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SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM

Clearing System Accountholders

Each Global Note will be in bearer form. Consequently, in relation to any Tranche of Notes represented by a Global Note, references in the Terms and Conditions of the Notes to "Noteholder" are references to the bearer of the relevant Global Note which, for so long as the Global Note is held by a depositary or a common depositary, in the case of a CGN, or a common safekeeper, in the case of an NGN for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system, will be that depositary or common depositary or, as the case may be, common safekeeper.

Each of the persons shown in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system as being entitled to an interest in a Global Note (each an "Accountholder") must look solely to Euroclear and/or Clearstream, Luxembourg and/or such other relevant clearing system (as the case may be) for such Accountholder's share of each payment made by the Issuer to the bearer of such Global Note and in relation to all other rights arising under the Global Note. The extent to which, and the manner in which, Accountholders may exercise any rights arising under the Global Note will be determined by the respective rules and procedures of Euroclear and Clearstream, Luxembourg and any other relevant clearing system from time to time. For so long as the relevant Notes are represented by the Global Note, Accountholders shall have no claim directly against the Issuer in respect of payments due under the Notes and such obligations of the Issuer will be discharged by payment to the bearer of the Global Note.

Exchange of Temporary Global Notes

Whenever any interest in a Temporary Global Note is to be exchanged for an interest in a Permanent Global Note, the Issuer shall procure:

(a) in the case of first exchange, the prompt delivery (free of charge to the bearer) of such Permanent Global Note, duly authenticated and, in the case of an NGN, effectuated, to the bearer of the Temporary Global Note; or

(b) in the case of any subsequent exchange, an increase in the principal amount of such Permanent Global Note in accordance with its terms,

in each case in an aggregate principal amount equal to the aggregate of the principal amounts specified in the certificates issued by Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and received by the Fiscal Agent against presentation and (in the case of final exchange) surrender of the Temporary Global Note to or to the order of the Fiscal Agent within 7 days of the bearer requesting such exchange.

Whenever a Temporary Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principal amount equal to the principal amount of the Temporary Global Note to the bearer of the Temporary Global Note against the surrender of the Temporary Global Note to or to the order of the Fiscal Agent within 30 days of the bearer requesting such exchange.

If:

(a) a Permanent Global Note has not been delivered or the principal amount thereof increased by 5.00 p.m. (London time) on the seventh day after the bearer of a Temporary Global Note has requested exchange of an interest in the Temporary Global Note for an interest in a Permanent Global Note; or

(b) Definitive Notes have not been delivered by 5.00 p.m. (London time) on the thirtieth day after the bearer of a Temporary Global Note has requested exchange of the Temporary Global Note for Definitive Notes; or

(c) a Temporary Global Note (or any part thereof) has become due and payable in accordance with the Terms and Conditions of the Notes or the date for final redemption of a Temporary Global Note has occurred and, in either case, payment in full of the amount of principal falling due with

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all accrued interest thereon has not been made to the bearer of the Temporary Global Note in accordance with the terms of the Temporary Global Note on the due date for payment,

then the Temporary Global Note (including the obligation to deliver a Permanent Global Note or increase the principal amount thereof or deliver Definitive Notes, as the case may be) will become void at 5.00 p.m. (London time) on such seventh day (in the case of (a) above) or at 5.00 p.m. (London time) on such thirtieth day (in the case of (b) above) or at 5.00 p.m. (London time) on such due date (in the case of (c) above) and the bearer of the Temporary Global Note will have no further rights thereunder (but without prejudice to the rights which the bearer of the Temporary Global Note or others may have under a deed of covenant dated 29 September 2010 (the "Deed of Covenant") executed by the Issuer). Under the Deed of Covenant, persons shown in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system as being entitled to an interest in a Temporary Global Note will acquire directly against the Issuer all those rights to which they would have been entitled if, immediately before the Temporary Global Note became void, they had been the holders of Definitive Notes in an aggregate principal amount equal to the principal amount of Notes they were shown as holding in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system.

Exchange of Permanent Global Notes

Whenever a Permanent Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principal amount equal to the principal amount of the Permanent Global Note to the bearer of the Permanent Global Note against the surrender of the Permanent Global Note to or to the order of the Fiscal Agent within 30 days of the bearer requesting such exchange.

If:

(a) Definitive Notes have not been delivered by 5.00 p.m. (London time) on the thirtieth day after the bearer of a Permanent Global Note has duly requested exchange of the Permanent Global Note for Definitive Notes; or

(b) a Permanent Global Note (or any part of it) has become due and payable in accordance with the Terms and Conditions of the Notes or the date for final redemption of the Notes has occurred and, in either case, payment in full of the amount of principal falling due with all accrued interest thereon has not been made to the bearer of the Permanent Global Note in accordance with the terms of the Permanent Global Note on the due date for payment,

then the Permanent Global Note (including the obligation to deliver Definitive Notes) will become void at 5.00 p.m. (London time) on such thirtieth day (in the case of (a) above) or at 5.00 p.m. (London time) on such due date (in the case of (b) above) and the bearer of the Permanent Global Note will have no further rights thereunder (but without prejudice to the rights which the bearer of the Permanent Global Note or others may have under the Deed of Covenant. Under the Deed of Covenant, persons shown in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system as being entitled to an interest in a Permanent Global Note will acquire directly against the Issuer all those rights to which they would have been entitled if, immediately before the Permanent Global Note became void, they had been the holders of Definitive Notes in an aggregate principal amount equal to the principal amount of Notes they were shown as holding in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system.

Conditions applicable to Global Notes

Each Global Note will contain provisions which modify the Terms and Conditions of the Notes as they apply to the Global Note. The following is a summary of certain of those provisions:

Payments: All payments in respect of the Global Note will be made against presentation and (in the case of payment of principal in full with all interest accrued thereon) surrender of the Global Note to or to the order of any Paying Agent and will be effective to satisfy and discharge the corresponding liabilities of the Issuer in respect of the Notes. On each occasion on which a payment of principal or interest is made in respect of the Global Note, the Issuer shall procure that in respect of a CGN the payment is noted in a schedule thereto and in respect of an NGN the payment is entered pro rata in the records of Euroclear and Clearstream, Luxembourg. For the purpose of any payments made in respect of a Global Note, the

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definition of "Payment Business Day" in Condition 2 (Interpretation) of the Terms and Conditions of the Notes shall mean:

(a) if the currency of payment is euro, any day which is a TARGET Settlement Day and a day on which dealings in foreign currencies may be carried on in each (if any) Additional Financial Centre; or

(b) if the currency of payment is not euro, any day which is a day on which dealings in foreign currencies may be carried on in the Principal Financial Centre of the currency of payment and in each (if any) Additional Financial Centre.

Exercise of put option: In order to exercise the option contained in Condition 10(e) (Redemption at the option of Noteholders) the bearer of the Permanent Global Note must, within the period specified in the Conditions for the deposit of the relevant Note and put notice, give written notice of such exercise to the Fiscal Agent specifying the principal amount of Notes in respect of which such option is being exercised. Any such notice will be irrevocable and may not be withdrawn.

Partial exercise of call option: In connection with an exercise of the option contained in Condition 10(c) (Redemption at the option of the Issuer) in relation to some only of the Notes, the Permanent Global Note may be redeemed in part in the principal amount specified by the Issuer in accordance with the Conditions and the Notes to be redeemed will not be selected as provided in the Conditions but in accordance with the rules and procedures of Euroclear and Clearstream, Luxembourg (to be reflected in the records of Euroclear and Clearstream, Luxembourg as either a pool factor or a reduction in principal amount, at their discretion).

Notices: Notwithstanding Condition 19 (Notices), while all the Notes are represented by a Permanent Global Note (or by a Permanent Global Note and/or a Temporary Global Note) and the Permanent Global Note is (or the Permanent Global Note and/or the Temporary Global Note are) deposited with a depositary or a common depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system or a common safekeeper, notices to Noteholders may be given by delivery of the relevant notice to Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and, in any case, such notices shall be deemed to have been given to the Noteholders in accordance with Condition 19 (Notices) on the date of delivery to Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system.

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DESCRIPTION OF THE ISSUER

History and Development

The Issuer's name is Banc Internacional D'Andorra, S.A. and its commercial name is "BIBM".

The Issuer was incorporated under the laws of Andorra as a limited liability company or Societat de responsabilitat limitada for an indefinite term as Banca Coma, S.L. by a public deed executed on 17 June 1958, before Mr. Matias Aleix Santure, Notary Public in Andorra, under number 129 of his official records.

The name of the Issuer was amended to Banc Internacional d'Andorra, S.A. by a public deed executed on 1 December 1970, before Mr. Matias Aleix Santuré, Notary Public in Andorra, under number 1,071 of his official records. The Issuer was authorised to conduct business by the Andorran Government on 14 November 1970 by means of Decree number D/1970/741 and was registered on 18 November 1971, at the Registre de Societats Mercantils of the M.I. Govern of Andorra under number 1,828, Volume B-1 and Sheet 88.

The Issuer's registered office is at Avenida Meritxell, 96, AD500 Andorra la Vella, Principat d'Andorra and the telephone number of its registered office is +376 88 48 80.

The Issuer's aim, as set out in its bylaws, is exclusively to carry out al1 manner of operations which are permissible for banks under the laws in force in the Principality of Andorra at any given time.

Investments

Mora Wealth Management AG, a wholly-owned subsidiary of Banc Internacional d’Andorra, S.A. was founded on 25 September 2008, and registered in the Commercial Registry of Zurich (Switzerland). The entity operates as an independent asset manager and financial adviser and has obtained the authorisation to operate as such from the Swiss Association of Asset Managers.

Mora Wealth Management Ltd., a 94.90% subsidiary of Banc Internacional d’Andorra, S.A., and registered in Miami (United States), was acquired on 9 July 2009. The entity operates as an independent asset manager and financial advisor.

Management hopes to use these subsidiaries as an alternative source of growth over the medium term by attracting new clients from emerging private banking markets. However, these subsidiaries do not yet contribute to the Group's results of operations. In addition, the Issuer changed the composition of its asset portfolio substantially during 2009. Whereas the Issuer has historically tended to invest in the financial sector (namely, by allocating excess liquidity in the form of interbank deposits), during 2009 the Issuer reduced its interbank positions. At the same time, the Issuer invested correspondingly in fixed-income securities comprised of government bonds, senior bank debt and corporate bonds with the aim of holding such investments to maturity.

This shift in composition of the Issuer's asset portfolio from interbank deposits to "held-to-maturity" investments has been maintained in 2010.

Business of Banc Internacional D'Andorra, S.A.

The Issuer mainly operates in the Principality of Andorra although it has recently expanded into the United States and Switzerland through two subsidiaries (see "Investments" above).

The Issuer, which in 2009 was the third largest bank by assets under management in Andorra, and the second in terms of profit, operates in two main business fields:

(a) Commercial banking: This field includes retail banking and corporate banking activities. The Issuer's retail banking business focuses on individuals resident in Andorra and comprises

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products and services such as current and savings accounts, credit and debit card services, lending and mortgage lending, mutual funds and insurance products.

Corporate banking focuses on rendering services to enterprises and public institutions and offers specific products and services such as financing, cash management, commercial payments and derivatives.

(b) Private banking: This field focuses on wealthy customers wishing to be offered a more sophisticated range of products and more specialised and personalised service. Among these products and services the customer may choose, for instance, discretionary portfolio management, structured products, alternative investments and advisory services.

These two main fields of business are also supported by an on-line banking business unit, including electronic and telephone banking services that enable the customer to be obtain real-time information and carry out banking transactions. Some of the products and services offered by the Issuer are granted by fully owned subsidiary companies. For example, BIBM Gestió d'Actius, SAU provides management services for the mutual funds offered by the Group and BIBM Assegurances, SAU is an insurance company that provides life insurance products and retirement plans. See "Organisational Structure", below.

The Issuer operates via two brands: Banc International d'Andorra, S.A. and Banca Mora, S.A.U. Each brand offers the same products and services and operates under the same IT platform and accountancy system. The clients of the Issuer are serviced through 11 branches spread around the country. Banca Mora is a wholly-owned subsidiary of Banc Interncaional d'Andorra, S.A. See "Organisational Structure", below.

As of 31 December 2009, the Issuer had total assets of €2,661 million. Total assets of the Issuer declined by 29% in 2009, from €3,756 million in 2008. This was due primarily to a combination of decreased lending activity and a reduction in deposits, neither of which was compensated by an increase in the Issuer's securities portfolio.

Also during 2009, the Issuer carried out a significant shift from on-balance sheet funding to off-balance sheet funding. As a result, although customer deposits declined by 31.3% during 2009 compared with 2008, off-balance sheet funds increased by 45% during the same period, reaching €4.2 billion.

During 2009, customer deposits represented more than 97% of total funding of the Issuer.

In 2009, the Issuer had equity of €240 million, loans to customers of €1,036 million and assets under management of €6,608 million.

The main sources of revenues of the Issuer are commissions, including transactional fees as well as fees on balances such as custody or management or advisory commissions. Although management believes that revenue sources are fairly diversified, revenue does depend to some degree on the evolution of the markets. In 2009, the consolidated net profit of the Issuer decreased by 4% in 2009, to €50.1 million from €52.2 million in 2008. This decline was due to an 11.1% decline in fee and commission income during that period, attributable primarily to an overall decline in the financial markets and, to a lesser extent, extraordinary charges linked to general provisions and pension funds.

The Andorran banking system

Andorran banks have a different financial profile to that of most international commercial banks. Owing to Andorra's relatively small economy, lending tends to represent a fairly limited proportion of the banks' total assets, with on-balance sheet activities being focused on retail deposit-taking and the placement of these funds in the interbank market and in fixed-income securities. Nevertheless, over the past few years, with the growth of private banking in Andorra, Andorran banks have tended to become more focused on asset management and fairly innovative investment banking products in response to their customers' demands for more remunerative alternatives to bank deposits given the context of a low interest rate environment.

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The regulator of the Andorran banking system is the Andorran National Institute of Finance (Institut Nacional Andorrà de Finances) ("INAF"). In 2003, a law was approved which redefines the functions of the INAF, giving it more independence and bringing its jurisdiction into line with that of supervising entities in other EU counties.

The Association of Andorran Banks, which was founded in 1960, represents the interests of all its members and monitors banking practices within the Andorran financial market.

Andorran banks have not yet introduced the application of Basel II standards, and management of the Issuer does not believe that such standards will be implemented in Andorra in the near term. Nevertheless, BIBM adheres to most of the policies proposed by Basel II standards voluntarily.

Risk Management

The Issuer's governance model for value and risk management seeks to define the responsibilities and tasks of various bodies and persons within the organisation with the aim of ensuring the sound management of value creation and the associated risks for the Issuer's banking business.

The ultimate authority over the Issuer's risk management policies and limits lies with its senior management and Board of Directors, which delegate certain functions to an Executive Committee. The Issuer does not take significant credit or market risk, with credit risk predominantly related to commercial lending and, most notably, interbank placements with OECD banks as well as investments in highly rated fixed-income securities.

The policy and risk limits are established and supervised by an Assets and Liabilities Committee. This Committee, among other functions, manages interest-rate risk by developing management strategies designed to maximise net interest income while matching exposure levels to the risk profile defined by the Issuer's Board of Directors. A balance is sought to be maintained between expected earnings and the level of risk incurred.

The actions of this Committee take into account the regulations of INAF, which undertakes the tasks of regulation, control and supervision of the financial activities in Andorra.

The Issuer has for many years been using Value-at-Risk (VaR) methodology for the whole range of risk management. Using statistical and stochastic techniques, the VaR supplies a measurement of risk. The VaR provides a forecast of maximum expected loss in a one-day time horizon, with a 99% confidence level, that can be incurred by trading portfolios.

Management of Credit Risk

Credit risk is the potential for loss caused by a counterparty's insolvency or lack of willingness to pay, or by events or measures taken by the political or monetary authorities of a particular country.

The Issuer manages credit risk on the basis of rules and procedures approved by the Executive Committee regarding the acceptance process for new loan and limit applications, the process of monitoring and the process of supervising credit risks and portfolio management.

At the end of 2009, of the total exposure of the Issuer to credit risk from financial intermediaries represented 9.8 per cent., from the securities portfolio represented 43.7 per cent. and loans to customers the remaining 38.7 per cent.

With respect to interbank deposits, the Issuer has set out a limit structure depending on the counterparty's rating, Credit Default Swaps (CDS) senior levels, risk of the settling country and the maturity of the placement. Deposits up to the limit are calculated using the market value of each instrument plus an estimate of its maximum risk exposure up to maturity.

As regards credit risk, particular attention is paid by management to counterparty risk and country risk. These are monitored daily in order to ensure compliance with established limits. Loans to customers are the subject of in-depth analysis in accordance with what management believes are the leading professional practices and standards. This initiative, among others, is in line with framework for adjustment to the new Basle Capital Accord.

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The solvency or credit rating qualification granted is the subject of regular review by management of the Issuer, with a view to managing the levels of problem loans to total loans. Most of the Issuer's loan portfolio is secured, mainly with mortgage-related loans (approximately 50% of the total loan portfolio) or collateralised on a portfolio of securities to which conservative haircut levels are applied (approximately 19% of the total loan portfolio). During 2009, problem loans increased by 14.3 per cent. to €12.8 million from €11.2 million in 2008. However, the problem loan ratio was broadly stable at 1.43 per cent. at the end of 2009.

Management of Market Risk

Market risk is the potential for loss due to adverse changes in the value of interest rate, foreign exchange, equity and derivatives markets positions held by the Issuer.

The VaR of trading portfolios is calculated on a timescale of one day. A detailed report is sent regularly to the members of the Executive Committee and the Assets and Liabilities Committee indicating the VaR with 99 per cent. confidence level and various stress testing simulations as well as a shortfall analysis.

The analysis of this report is supplemented by backtesting. During 2009, backtesting showed that both gains and losses were in accordance with the intervals of confidence. During this period, the average daily VaR of the portfolio was €115.5 thousand, with a maximum and minimum of €220 thousand and €44.7 thousand respectively, below the established limit of €900 thousand per day.

Management of interest-rate and currency risk

Traditionally, the Issuer has focused on maintaining a strict distinction between its investment activity and its financing activity. For this reason, the Assets and Liabilities Committee has established a limit on the sensitivity of its financial margin as well as on its economic value.

These risks are controlled through the application "SENDERO", a computer programme that enables the Risk area structural interest rate and liquidity risk control and monitoring. With this tool the Risk area performs monthly measurements in order to ensure that exposure levels match the risk profile defined by the Board of Directors and that the balance is kept between expected earnings and the risk level assumed.

The risk of exposure to interest rates as a consequence of gaps between investment and financing is very low. In fact, at the end of 2009, a 1 per cent. movement of the interest rate curve of all currencies would have had an impact of less than 0.45 per cent. on shareholders' equity value. In terms of economic value, the impact would have been less than 3.5 per cent. of shareholders' equity.

The liquidity risk, understood as that risk arising from the entity's difficulty in meeting its payments or obtaining funds for them, is managed through the tools mentioned above. The liquidity management policy followed by the Bank has been based, among other things, on anticipation and prudent control of the risk assumed, supported by the Issuer's capacity to finance itself.

Management of operational risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

In order to manage operational risk, the Issuer has developed a group of tools that can be divided into qualitative tools and quantitative tools. The qualitative tools identify and measure the potential risks arising from the internal process, while the quantitative tools measure the losses caused by operational risk events.

The Issuer has continued developing the organisational structure and establishing the necessary capacities to adapt to the INAF requirements concerning the measurement and management of operational risk. In particular, having established the methodological bases on which models for measurement of operational risk in its most quantitative aspect are founded, the Issuer has continued to make progress in identifying the processes of each operational unit and indicators enabling the management of this type of risk.

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Management of Banc Internacional D'Andorra, S.A.

The following is a list of members of the Board of Directors and the Management Team of the Issuer. The business address for each of the mentioned members is Avenida Meritxell, 96, AD500 Andorra la Vella, Principat d'Andorra.

Board of Directors

Honorary Chairman: Joan Mora Font

Chairman: Francesc Mora Sagués

Members Jordi Aristot Mora Mora Fills, SA, represented

by Jordi Mora Magriñá LAM Management Consulting, SL, represented by

Lluís Álvarez Mora José Luis Palao García-Suelto

Joan Quera Font

Secretary, non-member: Marc Vilallonga Puy

Management Team:

General Manager Joan Quera Font Chief Financial Officer Fernando Lopez Cereijo Director of the Organisational & Information Technology division

Armando García Martínez

Director of the Human Resources and Quality division

Ángel Candela Custardoy

Director of the Compliance division Susagna Arasanz Serra Director of the Commercial Banking Business division

Joan Carles Sasplugas Vilagut

Director of the Private Banking Business division David Massó Pares Director of the Strategic and Communication division Director of the treasury division Director of the Systems division Director of the Administration division Director of the Auditing division

Mireia Maestre Cortadella

Ivan Comerma Poza Javier Iriarte Domezain Josep Pujal Carabantes

Andrés Sendín Diego

Director of the Risk Management division Gisela Villagordo Escola

Director of the Legal Advice division Marc Vilallonga Puy

There are no conflicts of interest between the duties of the persons listed above to the issuer and their private interests or other duties. None of the members of the Board of Directors or of the Management Team carries out any activities outside the Issuer which are significant with respect to the Issuer. The Issuer's Audit Committee is comprised of two members of the Board of Directors, Jordi Aristot Morda and José Luis Palao García-Suelto, as well as a Secretary with no voting rights, Marc Vilallonga

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Puy, and a permanent external advisor with no voting rights, Santiago Guillén Sánchez, the Issuer's former Chief Financial Officer.

The Audit Committee's duties are to assist the Board of Directors in the preparation of the Issuer's financial statements and in the overall management of the Group. In this sense, the Audit Committee, amongst other things, is responsible for:

• Supervising the adequacy and effectiveness of the Issuer's internal management systems and procedures, with the purpose of ensuring the validity, reliability, adequacy and clarity of the Issuer's financial statements and the accounting and financial information required by the relevant authorities;

• Ensuring compliance with local and international standards and legislation relating to issues, amongst others, such as capital laundering and data protection;

• Ensuring that the Ethical Codes and internal behaviour standards applicable to personnel are adequate and meet Andorran legal requirements; and

• Managing relations with external auditors and other supervisory institutions.

All members of the Board of Directors and the Issuer's Management Team fulfil the legal requirements set out under Articles 4 & 5 of the Andorran Regulatory Law on the Basic Administrative Regime of Banking Entities (Llei de regulació del règim administratiu bàsic de les entitats bancàries) which are intended to regulate the corporate governance of financial institutions in Andorra, including:

• The Board of Directors is comprised of at least five members with relevant previous experience;

• A minimum number of members both in the Board of Directors and in the Issuer's Management Team must be native to Andorra; and

• The Management Team is comprised of at least two people, one of them assuming specific responsibility for the internal management of the Group.

Organisational Structure

The Issuer is the parent company of a financial services group including four wholly-owned subsidiaries (Banca Mora, SAU, BIBM Gestió d'Actius, SAU, BIBM Assegurances, S.A.U. and BIBM Preferents Ltd.), one indirectly wholly-owned subsidiary (Seguritat i Serveis, S.A.) and two majority-owned subsidiaries (Mora Wealth Management, AG (Zurich) and Mora Wealth Management, LLC (Miami) (the Issuer together it's consolidated subsidiaries, the "Group").

The following diagram summarises the organisational structure of the Group as at the date of this Base Prospectus:

BIBM Preferents Ltd. is a finance vehicle for the Group. At the date of this Base Prospectus, BIBM Preferents Ltd. had €60,000,000 of Series A Euro CMS Linked Non-Cumulative Perpetual Guaranteed Preference Shares issued and outstanding, and trading on the United Kingdom Professional Securities Market.

100,0% 100,0% 100,0% 95,0% 94,9% 100,0%

14,29%

14,29%

BIBM PREFERENTS LTD. BANCA MORA, S.A.U. BIBM GESTIÓ D'ACTIUS, S.A.U.

MORA WEALTH MANAGEMENT, AG

(ZURICH)

BIBM ASSEGURANCES, S.A.U.

MORA WEALTH MANAGEMENT, LLC

(MIAMI)

BANC INTERNACIONAL D'ANDORRA, S.A.

SEGURETAT I SERVEIS, S.A. (*)

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BIBM Assegurances, S.A.U. provides insurance services to the Group and to customers of the Group. BIBM Gestió d'Actius, S.A.U. carries out the business of managing collective investment schemes. Mora Wealth Management, AG (Zurich) and Mora Wealth Management, LLC (Miami) are new international subsidiaries of the Issuer who provide investment management and financial advisory services in their respective jurisdictions. Seguritat I Serveis, S.A. provides transportation and security services to financial institutions.

Capital Structure

At 1 January 2010, the Issuer's share capital amounted to €42,406,560 divided into 7,056,000 registered shares with a face value of €6.01 each, numbered from 1 to 7,056,000, both inclusive. The share capital is fully subscribed and paid up.

Shares are divided into five classes ("A", "B", "C", "D", "E",) which rank pari-passu among themselves.

Major Shareholders

The Issuer is an Andorran company wholly-owned by the Mora family through certain shareholding companies as follows:

Name Address Percentage holding

TOM, SA Passatge d'Europa, num 2, lr, Andorra la Vella, Andorra

51%

Cartera Armor, SA Passatge d'Europa, núm 2, lr, Andorra la Vella, Andorra

14%

Cartera Morsa, SA Passatge d'Europa, núm 2, lr, Andorra la Vella, Andorra

14%

Elitre, SA Passatge d'Europa, núm 2, lr, Andorra la Vella, Andorra

14%

Laual, SA Passatge d'Europa, num 2, lr, Andorra la Vella, Andorra

7%

Other than certain provisions of the by-laws of the Issuer which limit the free transferability of the Issuer's shares between classes of shareholders or to third parties, no arrangements exist at the date of the this Base Prospectus as between the shareholders concerning the exercise of their rights in respect of the shares held by them. The Issuer is not aware at the date of this Base Prospectus of any arrangements which lead to a change in control of the Issuer. Financial Information The financial statements of the Issuer are prepared in accordance with the generally accepted accounting methods and principles set out in the chart of accounts of the Andorran financial system ("Andorran Accounting Principles"). For an explanation of the principal differences between International Financial Reporting Standards as adopted by the European Union and Andorran Accounting Principles, see "Summary of the Principal Differences Between IFRS and Andorran Accounting Principles". The audited consolidated financial statements of the Issuer for the years ended 31 December 2009 and 31 December 2008, together with the auditor's reports in respect thereof, have been annexed to this Base Prospectus. The Issuer does not produce interim financial statements.

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TAXATION

The following is a general description of certain European and Andorran tax considerations relating to the Notes. It does not purport to be a complete analysis of all tax considerations relating to the Notes, whether in those countries or elsewhere. Prospective purchasers of Notes should consult their own tax advisers as to which countries' tax laws could be relevant to acquiring, holding and disposing of Notes and receiving payments of interest, principal and/or other amounts under the Notes and the consequences of such actions under the tax laws of those countries. This summary is based upon the law as in effect on the date of this Base Prospectus and is subject to any change in law that may take effect after such date.

EU Savings Tax Directive

Under EU Council Directive 2003/48/EC on the taxation of savings income, each Member State is required to provide to the tax authorities of another Member State details of payments of interest or other similar income paid by a person within its jurisdiction to, or collected by such a person for, an individual resident or certain limited types of entity established in that other Member State; however, for a transitional period, Austria, Belgium and Luxembourg may instead apply a withholding system in relation to such payments, deducting tax at rates rising over time to 35%. The transitional period is to terminate at the end of the first full fiscal year following agreement by certain non-EU countries to the exchange of information relating to such payments. Belgium has replaced this withholding tax with a regime of exchange of information to the Member State of residence as from 1 January 2010.

A number of non-EU countries, and certain dependent or associated territories of certain Member States, have adopted similar measures (either provision of information or transitional withholding) in relation to payments made by a person within its jurisdiction to, or collected by such a person for, an individual resident or certain limited types of entity established in a Member State. In addition, the Member States have entered into provision of information or transitional withholding arrangements with certain of those dependent or associated territories in relation to payments made by a person in a Member State to, or collected by such a person for, an individual resident or certain limited types of entity established in one of those territories.

On 13 November 2008 the European Commission published a proposal for amendments to the Directive, which included a number of suggested changes which, if implemented, would broaden the scope of the requirements described above. The European Parliament approved an amended version of this proposal on 24 April 2009. Investors who are in any doubt as to their position should consult their professional advisers.

Andorran Taxation

On 21 February 2005, the Andorran government ratified the Agreement between Andorra and the European Community in relation to the establishment of measures equivalent to those provided in EU Council Directive 2003/34/EC on the taxation of savings income. On 13 June 2005, the Andorran government passed a law in order to implement that Agreement.

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SUBSCRIPTION AND SALE

Notes may be sold from time to time by the Issuer to Banc Internacional d'Andorra, S.A. or to any other dealer appointed from time to time by the Issuer either generally in respect of the Programme or in relation to a particular Tranche of Notes (the "Dealers"). The arrangements under which Notes may from time to time be agreed to be sold by the Issuer to, and purchased by, Dealers are set out in a Dealer Agreement dated 29 September 2010 (the "Dealer Agreement") and made between the Issuer and the Dealers. Any such agreement will, inter alia, make provision for the form and terms and conditions of the relevant Notes, the price at which such Notes will be purchased by the Dealers and the commissions or other agreed deductibles (if any) payable or allowable by the Issuer in respect of such purchase. The Dealer Agreement makes provision for the resignation or termination of appointment of existing Dealers and for the appointment of additional or other Dealers either generally in respect of the Programme or in relation to a particular Tranche of Notes.

United States of America: Regulation S Category 2; TEFRA D or TEFRA C as specified in the relevant Final Terms or neither if TEFRA is specified as not applicable in the relevant Final Terms.

The Notes have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S.

The Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to a United States person, except in certain transactions permitted by U.S. tax regulations. Terms used in this paragraph have the meanings given to them by the United States Internal Revenue Code and regulations thereunder.

The Dealer has agreed, and each further Dealer appointed under the Programme will be required to agree, that, except as permitted by the Dealer Agreement, it will not offer, sell or deliver Notes, (i) as part of their distribution at any time or (ii) otherwise until 40 days after the completion of the distribution of the Notes comprising the relevant Tranche, as certified to the Fiscal Agent or the Issuer by such Dealer (or, in the case of a sale of a Tranche of Notes to or through more than one Dealer, by each of such Dealers as to the Notes of such Tranche purchased by or through it, in which case the Fiscal Agent or the Issuer shall notify each such Dealer when all such Dealers have so certified) within the United States or to, or for the account or benefit of, U.S. persons, and such Dealer will have sent to each dealer to which it sells Notes during the distribution compliance period relating thereto a confirmation or other notice setting forth the restrictions on offers and sales of the Notes within the United States or to, or for the account or benefit of, U.S. persons.

In addition, until 40 days after the commencement of the offering of Notes comprising any Tranche, any offer or sale of Notes within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act.

Selling Restrictions Addressing United Kingdom Securities Laws

The Dealer has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree, that:

(a) No deposit-taking: in relation to any Notes having a maturity of less than one year:

(i) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business; and:

(ii) it has not offered or sold and will not offer or sell any Notes other than to persons:

(A) whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses; or

(B) who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses,

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where the issue of the Notes would otherwise constitute a contravention of Section 19 of the FSMA by the Issuer;

(b) Financial promotion: it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received by it in connection with the issue or sale of any Notes in circumstances in which section 21(1) of the FSMA does not apply to the Issuer; and

(c) General compliance: it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to any Notes in, from or otherwise involving the United Kingdom.

General

The Dealer has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree, that it has complied and will comply with all applicable laws and regulations in each country or jurisdiction in or from which it purchases, offers, sells or delivers Notes or possesses, distributes or publishes this Base Prospectus or any Final Terms or any related offering material, in all cases at its own expense. Other persons into whose hands this Base Prospectus or any Final Terms comes are required by the Issuer and the Dealers to comply with all applicable laws and regulations in each country or jurisdiction in or from which they purchase, offer, sell or deliver Notes or possess, distribute or publish this Base Prospectus or any Final Terms or any related offering material, in all cases at their own expense.

The Dealer Agreement provides that the Dealers shall not be bound by any of the restrictions relating to any specific jurisdiction (set out above) to the extent that such restrictions shall, as a result of change(s) or change(s) in official interpretation, after the date hereof, of applicable laws and regulations, no longer be applicable but without prejudice to the obligations of the Dealers described in the paragraph headed "General" above.

Selling restrictions may be supplemented or modified with the agreement of the Issuer. Any such supplement or modification may be set out in the relevant Final Terms (in the case of a supplement or modification relevant only to a particular Tranche of Notes) or in a supplement to this Base Prospectus.

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GENERAL INFORMATION

1. Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (the "Transparency Directive") entered into force on 20 January 2005. It requires Member States to take measures necessary to comply with the Transparency Directive by 20 January 2007. If, as a result of the Transparency Directive or any legislation implementing the Transparency Directive, the Issuer could be required to publish financial information either more regularly than it otherwise would be required to or according to accounting principles which are materially different from the accounting principles which it would otherwise use to prepare its published financial information, the Issuer may seek an alternative admission to listing, trading and/or quotation for the Notes on a different section of the London stock exchange or by such other competent authority, stock exchange and/or quotation system inside or outside the European Union as it may decide.

Authorisation

2. The establishment of the Programme was authorised by resolution in the Universal and Extraordinary General Meeting (Junt General Universal i Extraordinària) of the Issuer held on 28 July 2010 and by resolution of the Board of Directors (Consell d’Administració) of the Issuer passed on 13 September 2010. The Issuer has obtained or will obtain from time to time all necessary consents, approvals and authorisations in connection with the issue and performance of the Notes.

Legal and Arbitration Proceedings

3. There are no governmental, legal or arbitration proceedings, (including any such proceedings which are pending or threatened, of which the Issuer is aware), which may have, or have had during the 12 months prior to the date of this Base Prospectus, a significant effect on the financial position or profitability of the Issuer and its Subsidiaries.

Significant/Material Change

4. Since 31 December 2009 there has been no material adverse change in the prospects of the Issuer or the Issuer and its Subsidiaries nor any significant change in the financial or trading position of the Issuer or the Issuer and its Subsidiaries.

Auditors

5. The consolidated financial statements of the Issuer have been audited without qualification for the years ended 31 December 2009 and 2008 by Ernst & Young Ltd of Route de Chancy 59, P.O. Box CH-1213, Geneva, Switzerland. The Issuer does not prepare interim financial statements. The consolidated financial statements for the years ended 31 December 2009 and 2008 have been prepared in accordance with Andorran accounting principles, not in accordance with IFRS

Documents on Display

6. Copies of the following documents may be inspected during normal business hours at the offices of Banc Internacional d'Andorra, S.A. at Avenida Meritxell, 96, AD500 Andorra la Vella, Principat d'Andorra for 12 months from the date of this Base Prospectus:

(a) the constitutive documents of the Issuer;

(b) the audited consolidated financial statements of the Issuer for the years ended 31 December 2009 and 2008;

(c) the Agency Agreement;

(d) the Deed of Covenant;

(e) the Dealer Agreement;

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(f) the Programme Manual (which contains the forms of the Notes in global and definitive form); and

(g) the Issuer-ICSDs Agreement (which is entered into between the Issuer and Euroclear and/or Clearstream, Luxembourg with respect to the settlement in Euroclear and/or Clearstream, Luxembourg of Notes in New Global Note form).

Material Contracts

7. At the date of this Offering Circular, no contracts had been entered into that were not in the ordinary course of business of the Issuer which could result in any obligation or entitlement that is, or may be, material to the Issuer's ability to meet its obligations in respect of the Notes.

Clearing of the Notes

8. The Notes have been accepted for clearance through Euroclear and Clearstream, Luxembourg. The appropriate common code and the International Securities Identification Number in relation to the Notes of each Tranche will be specified in the relevant Final Terms. The relevant Final Terms shall specify any other clearing system as shall have accepted the relevant Notes for clearance together with any further appropriate information.

Passporting

9. The Issuer may, on or after the date of this Base Prospectus, make applications for one or more certificates of approval under Article 18 of the Prospectus Directive as implemented in the United Kingdom to be issued by the FSA to the competent authority in any Member State.

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INDEX OF DEFINED TERMS

"Specified Denomination(s) ........................... 23 30/360 ............................................................. 18 30E/360 .......................................................... 18 30E/360 (ISDA) ............................................. 19 Accountholder ................................................ 49 Accrual Yield ................................................. 16 Actual/360 ...................................................... 18 Actual/365 (Fixed) ......................................... 18 Actual/Actual (ICMA) ................................... 17 Actual/Actual (ISDA) ..................................... 18 Additional Business Centre(s) ........................ 16 Additional Financial Centre(s) ....................... 16 Agency Agreement ......................................... 16 Base Prospectus .............................................. 37 Business Day .................................................. 16 Business Day Convention............................... 17 Calculation Agent ........................................... 17 Calculation Amount ....................................... 17 Calculation Period .......................................... 17 CGN ................................................................. 5 Classic Global Note .......................................... 5 Clearstream, Luxembourg .............................. 13 Conditions ............................................ 2, 16, 37 Coupon Sheet ................................................. 17 Couponholders................................................ 16 Coupons .......................................................... 16 Day Count Fraction ........................................ 17 Dealer Agreement ........................................... 60 Dealers ............................................................ 60 Deed of Covenant ........................................... 50 Definitive Notes ............................................. 13 Dispute ........................................................... 35 Drawdown Prospectus ...................................... 2 Early Redemption Amount (Tax) ................... 19 Early Termination Amount ............................. 19 ECB ................................................................ 13 EUR .................................................................. 3 euro ................................................................... 3 Eurobond Basis............................................... 18 Euroclear ........................................................ 13 Eurodollar Convention ................................... 17 Eurosystem ..................................................... 13 Extraordinary Resolution ................................ 19 Final Redemption Amount ............................. 19 Final Terms ................................................ 2, 16 first currency .................................................. 35 First Interest Payment Date ............................ 20 first Person ...................................................... 23 Fiscal Agent .................................................... 16 Fixed Coupon Amount ................................... 20 Floating Rate Convention ............................... 17 Following Business Day Convention ............. 17 FRN Convention............................................. 17 FSA ................................................................... i Global Note .................................................... 13 Guarantee ....................................................... 20

Indebtedness .................................................... 20 Interest Amount .............................................. 20 Interest Commencement Date ......................... 20 Interest Determination Date ............................ 20 Interest Payment Date ..................................... 20 Interest Period ................................................. 20 ISDA Definitions ............................................ 21 Issue Date ........................................................ 21 Issuer ........................................................... 2, 16 London Stock Exchange .................................... i Margin ............................................................. 21 Maturity Date .................................................. 21 Maximum Redemption Amount ..................... 21 Member State .................................................... 3 Minimum Redemption Amount ...................... 21 Modified Business Day Convention ............... 17 Modified Following Business Day Convention

.................................................................... 17 New Global Note .............................................. 5 NGN ............................................................ 5, 13 No Adjustment ................................................ 17 Noteholders ..................................................... 16 Notes ............................................................ i, 16 Optional Redemption Amount (Call) .............. 21 Optional Redemption Amount (Put) ............... 21 Optional Redemption Date (Call) ................... 21 Optional Redemption Date (Put) ..................... 21 Participating Member State ............................. 21 Paying Agents ................................................. 16 Payment Business Day .................................... 21 Permanent Global Note ................................... 13 Person ............................................................. 21 Preceding Business Day Convention .............. 17 Principal Financial Centre ............................... 21 Proceedings ..................................................... 35 Programme ................................................... i, 16 Prospectus Directive .................................... i, 37 Put Option Notice ........................................... 21 Put Option Receipt .......................................... 21 Rate of Interest ................................................ 22 Redemption Amount ....................................... 22 Reference Banks ............................................. 22 Reference Price ............................................... 22 Reference Rate ................................................ 22 Registration Document ................................... 12 Regular Date ................................................... 22 Regular Period ................................................ 22 Relevant Coupons ........................................... 30 Relevant Date .................................................. 22 Relevant Financial Centre ............................... 22 Relevant Indebtedness .................................... 22 Relevant Screen Page ...................................... 22 Relevant Time ................................................. 22 Reserved Matter .............................................. 22 second currency .............................................. 35 second Person ................................................. 23

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Securities Act ................................................... 2 Securities Note ............................................... 12 Security Interest .............................................. 23 Series .............................................................. 16 Specified Currency ......................................... 23 Specified Office .............................................. 23 Specified Period ............................................. 23 Subsidiary ....................................................... 23 sub-unit ..................................................... 25, 26 Talon .............................................................. 23

TARGET Settlement Day ............................... 23 TARGET2 ....................................................... 23 TEFRA C Rules .............................................. 13 TEFRA D Rules .............................................. 13 Temporary Global Note .................................. 13 Tranche ........................................................... 16 Transparency Directive ................................... 62 Treaty .............................................................. 23 Zero Coupon Note .......................................... 23

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FINANCIAL STATEMENTS AND AUDITORS' REPORTS

Auditors' report and financial statements of the Issuer as at and for the years ended 31 December 2009 and 2008.

F-1

Auditors' report and financial statements of the Guarantor as at and for the years ended 31 December 2008 and 2007.

F-36

Please note that the auditors' reports and financial statements listed above have been prepared in accordance with Andorran accounting principles, not in accordance with IFRS.

For a summary of the principal differences between Andorran accounting principles and IFRS, please see the discussion "Summary Of The Principal Differences Between IFRS And Andorran Accounting Principles" on page 67.

- F1 -

AUDITORS' REPORT AND FINANCIAL STATEMENTS OF THE ISSUER AS AT AND FOR THE YEARS ENDED 31 DECEMBER 2009 AND 2008

11

14

consolidated balance sheets

Banc Internacional d’Andorra, S.A., Banca Mora, S.A.U.and other Companies composing the Banc Internacional - Banca Mora Group

as of December 31, 2009 and 2008* (Notes 1, 2, 3 i 4) Thousands of euros

assets 2009 2008*CASH ON HAND AND DUE FROM OECD CENTRAL BANKS 37,870 21,735

DUE FROM INAF (Note 5) 28,641 28,641

DUE FROM FINANCIAL INTERMEDIARIES (Note 6) 260,739 1,876,284BANKS AND CREDIT INSTITUTIONS 257,590 1,879,548OTHER FINANCIAL INTERMEDIARIES 3,836 6,016LESS - ALLOWANCE FOR CREDIT LOSSES (687) (9,280)

LENDINGS (Note 7) 1,030,807 1,060,642LOANS AND CREDITS 1,015,813 1,040,778CUSTOMER OVERDRAFTS 9,624 13,502CUSTOMER BILL PORTFOLIO 11,024 11,544LESS - ALLOWANCE FOR CREDIT LOSSES (5,654) (5,182)

INVESTMENT SECURITIES (Note 8) 1,162,380 650,971DEBENTURES AND OTHER FIXED-INCOME SECURITIES 1,152,890 638,369LESS - ALLOWANCE FOR CREDIT LOSSES (5,488) (1,032)INVESTMENTS IN GROUP COMPANIES 11,021 10,674OTHER INVESTMENTS 258 258COMMON STOCKS AND OTHER EQUITY SECURITIES 72 72INVESTMENT SCHEMES 3,627 2,630

CONSOLIDATED GOODWILL (Nota 9) 3,206 -CONSOLIDATED GOODWILL 3,436 -LESS - ACCUMULATED AMORTIZATION (230) -

INTANGIBLE ASSETS AND DEFERRED CHARGES (Note 10) 12,988 6,831INTANGIBLE ASSETS AND DEFERRED CHARGES 57,009 45,901LESS - ACCUMULATED AMORTIZATION (44,021) (39,070)

PROPERTY AND EQUIPMENT (Note 11) 95,782 68,851PROPERTY AND EQUIPMENT 130,545 96,888LESS - ACCUMULATED DEPRECIATION (31,303) (28,037)LESS - ALLOWANCE FOR DECLINE IN VALUE OF PROPERTY AND EQUIPMENT (3,460) -

ACCRUAL ACCOUNTS (Note 12) 23,726 36,823UNCOLLECTED ACCRUED INTEREST 22,695 36,099PREPAID EXPENSES 1,031 724

OTHER ASSETS 5,362 5,434CURRENT TRANSACTIONS 1,538 4INVENTORIES 253 186OPTIONS PURCHASED 2,714 2,058OTHER 857 3,186

TOTAL ASSETS 2,661,501 3,756,212

15

Thousands of euros

liabilities and equity 2009 2008*DUE TO INAF (Note 13) 40,607 41,042

DEPOSITS 2,271,330 3,368,232

BANKS AND CREDIT INSTITUTIONS (Note 14) 7,454 74,117OTHER FINANCIAL INTERMEDIARIES (Note 14) 23 26CUSTOMER DEPOSITS (Note 15) 2,263,853 3,294,089

DEBT SECURITIES - -

PROVISIONS FOR CONTINGENCIES AND EXPENSES (Note 16) 18,262 18,707

PROVISIONS FOR PENSIONS AND SIMILAR OBLIGATIONS 11,229 10,424OTHER PROVISIONS 7,033 8,283

GENERAL RISK ALLOWANCE (Note 17) 6,900 -

SUBORDINATED DEBT (Note 18) 60,000 60,000

ACCRUAL ACCOUNTS (Note 19) 12,884 26,647

UNPAID ACCRUED EXPENSES 12,698 26,537UNEARNED REVENUE 186 110

OTHER LIABILITIES 11,768 14,964

CURRENT TRANSACTIONS 4,296 6,117OPTIONS ISSUED 2,099 1,672TRADE AND OTHER ACCOUNTS PAYABLE 5,373 7,175

MINORITY INTERESTS 15 -

CAPITAL STOCK (Note 20) 42,407 42,407

CAPITAL STOCK 42,407 42,407

RESERVES (Note 20) 175,212 162,989

LEGAL RESERVE 14,553 14,553GUARANTEE RESERVES 28,641 28,641VOLUNTARY RESERVES 32,736 27,464CONSOLIDATION RESERVES 99,282 92,331

INCOME (Note 20) 22,116 21,224

INCOME FOR THE YEAR 50,116 52,224LESS - INTERIM DIVIDENDS (28,000) (31,000)

TOTAL LIABILITIES AND EQUITY 2,661,501 3,756,212

* Presented exclusively for comparison purposes.The accompanying Notes 1 to 30 are an integral part of the consolidated balance sheet as of December 31, 2009. .

1616

consolidated statements of income


for the years ended December 31, 2009 and 2008* (Notes 1, 2, 3 i 4) Thousands of euros

statements of income 2009 2008*INTEREST INCOME 77,624 154,820

DUE FROM INAF AND FINANCIAL INTERMEDIARIES 22,166 92,293

LENDINGS 30,555 54,520

DEBENTURES AND OTHER FIXED-INCOME SECURITIES 24,903 8,007

INTEREST EXPENSE (37,697) (117,856)

DUE TO INAF AND FINANCIAL INTERMEDIARIES (1,280) (2,271)

CUSTOMER DEPOSITS (32,691) (111,044)

SUBORDINATED DEBT (3,023) (3,797)

OTHER (703) (744)

INCOME FROM EQUITY SECURITIES 7 3COMMON STOCKS AND OTHER EQUITY SECURITIES 7 3

NET INTEREST INCOME 39,934 36,967

NET SERVICE FEES 58,612 65,913

FEES FOR SERVICES PROVIDED 62,152 69,507

LESS - FEES FOR SERVICES RECEIVED (3,540) (3,594)

GAINS/(LOSSES) ON FINANCIAL TRANSACTIONS 15,692 3,640

EXCHANGE GAINS 947 1,441

GAINS ON SECURITIES TRANSACTIONS 11,615 (464)

GAINS ON FUTURES TRANSACTIONS 1,160 564

SHARE IN (LOSS)/PROFIT OF COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD 1,970 2,099

OTHER OPERATING INCOME 161 201

GROSS OPERATING INCOME 114,399 106,721

17

Thousands of euros

statements of income 2009 2008*GROSS OPERATING INCOME 114,399 106,721

PERSONNEL EXPENSES (19,722) (17,364)

EMPLOYEES, DIRECTORS AND INDEMNITIES (16,159) (14,067)SOCIAL SECURITY COSTS (1,987) (1,750)OTHER PERSONNEL EXPENSES (1,576) (1,547)

GENERAL EXPENSES (25,644) (24,841)

MATERIAL (276) (305)OUTSIDE SERVICES (14,611) (15,418)TAXES OTHER THAN INCOME TAX (10,757) (9,118)

DEPRECIATION AND AMORTIZATION EXPENSE NET OF RECOVERIES (8,327) (7,177)

DEPRECIATION AND AMORTIZATION EXPENSE (Notes 9, 10 and 11) (8,327) (7,177)

PROVISIONS FOR DEPRECIATION OF ASSETS NET OF RECOVERIES (3,460) -

PROVISIONS TO ALLOWANCE FOR DEPRECIATION OF TANGIBLEAND INTANGIBLE ASSETS (Note 11) (3,460) -

NET OPERATING INCOME 57,246 57,339

PROVISIONS FOR CREDIT LOSSES NET OF RECOVERIES (Notes 6, 7 and 8) 2,166 (3,385)

PROVISIONS TO ALLOWANCE FOR CREDIT LOSSES (4,278) (6,977)RECOVERIES FROM ALLOWANCE FOR CREDIT LOSSES 6,444 3,592

PROVISIONS FOR CONTINGENCIES AND EXPENSES NET OF RECOVERIES (Note 16) (558) (3,365)

PROVISIONS FOR CONTINGENCIES AND EXPENSES (558) (3,888)RECOVERIES FROM PROVISIONS FOR CONTINGENCIES AND EXPENSES - 523

PROVISIONS TO GENERAL RISK ALLOWANCE (Note 17) (6,900) -

INCOME FROM ORDINARY ACTIVITIES 51,954 50,589

EXTRAORDINARY (LOSS)/INCOME (Note 21) (1,835) 1,635

CONSOLIDATED INCOME FOR THE YEAR 50,119 52,224

INCOME ATTRIBUTED TO THE MINORY INTEREST 3 -

INCOME ATTRIBUTED TO THE GROUP 50,116 52,224

* Presented exclusively for comparison purposes.The accompanying Notes 1 to 30 are an integral part of the consolidated statement of income as of December 31, 2009.

1818

consolidated memorandum accounts


as of December 31, 2009 and 2008* (Notes 1, 2, 3 i 4) Thousands of euros

memorandum accounts 2009 2008*CONTINGENT LIABILITIES 121,384 120,437

GUARANTEES, BONDS AND SURETIES GIVEN 119,395 112,336DOCUMENTARY CREDITS ISSUED OR RECEIVED AND CONFIRMED TO CUSTOMERS 1,495 3,445ACCEPTANCES AND SIMILAR COMMITMENTS 494 4,656

COMMITMENTS AND CONTINGENCIES 314,603 336,880

OPERATIONAL COMMITMENTS AND CONTINGENCES 303,253 326,329ACTUARIAL COMMITMENTS AND CONTINGENCES 11,350 10,551

FINANCIAL DERIVATIVES (Note 22) 1,487,472 1,354,666

OUTSTANDING CURRENCY SALES AND PURCHASES 1,125,716 1,238,283FINANCIAL FORWARD TRANSACTIONS 314,652 116,383OTHER FUTURES 47,104 -

SECURITIES AND OTHER ASSETS IN CUSTODY 5,324,896 3,456,523

THIRD-PARTY SECURITIES AND OTHER ASSETS HELD IN CUSTODY (Note 23) 4,153,898 2,872,753OWN SECURITIES AND OTHER ASSETS HELD IN CUSTODY 1,170,998 583,770

OTHER MEMORANDUM ACCOUNTS HELD SOLELYFOR ADMINISTRATIVE CONTROL PURPOSES (Note 24) 1,001,743 1,173,484

GUARANTEES AND COMMITMENTS RECEIVED 854,116 971,718OTHER MEMORANDUM ACCOUNTS 147,627 201,766

TOTAL MEMORANDUM ACCOUNTS 8,250,098 6,441,990

* Presented exclusively for comparison purposes.The accompanying Notes 1 to 30 are an integral part of the consolidated memorandum accounts as of December 31, 2009.

19

consolidated statements of changes in financial position


for the years ended December 31, 2009 and 2008* (Notes 1, 2, 3 i 4) Thousands of euros

source of funds 2009 2008*FUNDS OBTAINED FROM OPERATIONS 66,102 63,971

INCOME FOR THE YEAR 50,116 52,224NET PROVISIONS TO ALLOWANCE FOR CREDIT LOSSES (2,166) 3,385NET PROVISIONS TO ALLOWANCE FOR DECLINE IN VALUE OF ASSETS 3,460 -NET PROVISIONS TO OTHER ALLOWANCES (PENSION ALLOWANCE, etc.) 8,335 3,260DEPRECIATION AND AMORTIZATION EXPENSE 8,327 7,177LOSS ON SALE OF FIXED ASSETS - 24PROFIT FROM COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD (1,970) (2,099)

UPWARD VARIATION IN LIABILITIES LESS ASSETS 1,557,037 115,055

INAF AND FINANCIAL INTERMEDIARIES (LIABILITIES - ASSETS) 1,557,037 115,055

NET INCREASE IN LIABILITIES - 467,739DEPOSITS: CUSTOMER DEPOSITS - 467,739

NET DECREASE IN ASSETS 29,363 -LENDINGS: CUSTOMERS 29,363 -

TOTAL FUNDS OBTAINED 1,652,502 646,765

application of funds 2009 2008*UPWARD VARIATION IN ASSETS LESS LIABILITIES 5,189 8,781

INAF AND FINANCIAL INTERMEDIARIES (ASSETS - LIABILITIES) - -OTHER ITEMS (ASSETS - LIABILITIES) 5,189 8,781

NET DECREASE IN LIABILITIES 1,030,236 -

DEPOSITS: CUSTOMERS DEPOSITS 1,030,236 -

NET INCREASE IN ASSETS 531,654 565,357

CASH ON HAND 16,135 4,217LENDINGS: CUSTOMERS - 19,856INVESTMENT SECURITIES LESS INVESTMENTS 515,519 541,284

PURCHASES OF LONG-TERM INVESTMENTS 48,423 22,627

PURCHASES OF INVESTMENTS IN GROUP COMPANIES 3,728 -PURCHASES OF INVESTMENTS 44,695 22,627

FUNDS APPLIED FOR FINANCING ACTIVITIES 37,000 50,000

DIVIDENDS 37,000 50,000

TOTAL FUNDS APPLIED 1,652,502 646,765

* Presented exclusively for comparison purposes.The accompanying Notes 1 to 30 are an integral part of the consolidated statement of changes in financial position as of December 31, 2009.

2020

note 1 Group description

Banc Internacional d’Andorra, S.A. and Banca Mora, S.A.U. (“hereinafter, the Banks”) are Andorran companies and their sole corporate

purpose is to perform all the permitted types of transactions for banking institutions under the legislation in force at that time in Andorra. Banca

Mora, S.A.U. is wholly owned by Banc Internacional d'Andorra, S.A.

The lines of business of the other companies integrated in the consolidated financial statements of Banc Internacional-Banca Mora Group as

of December 31st, 2009, are as follows:

Name Country Line of Business

BIBM Gestió d'Actius, S.A.U. Andorra Management of collective investment schemes

BIBM Assegurances, S.A.U. Andorra Insurance

Seguretat i Serveis, S.A. Andorra Security

BIBM Preferents Ltd. Cayman Islands Finance

Mora Wealth Management AG Switzerland Management of investments and financial advisory

Mora Wealth Management Ltd. United States Management of investments and financial advisory

Mora Wealth Management Ltd., a 94.90% subsidiary of Banc Internacional d’Andorra, S.A. and registered in Miami (United States), was

acquired on July 9th, 2009. The entity operates as an independent asset manager and financial advisor.

note 2 Basis of presentation and consolidation principles

a) True and fair view

The accompanying financial statements, authorized by the board of directors of Banc Internacional d’Andorra, S.A. on March 24th, 2010,

were obtained from the accounting records of the Banks and companies composing the Banc Internacional-Banca Mora Group (hereinafter,

“the Group”) and are presented in accordance with the format established in the chart of accounts of the andorran financial system approved

by the Andorran government on January 19th, 2000 and, accordingly, give a true and fair view of the net worth, financial position and

consolidated results of the Group.

These financial statements will be submitted to the Shareholders’ Meeting for approval and Group Management anticipates that they will be

approved without any changes.

b) Accounting policies

The accompanying consolidated financial statements were prepared by applying the generally accepted accounting methods and principles

set forth in the chart of accounts of the Andorran financial system (see Note 3). All obligatory accounting principles with a significant effect on

these consolidated financial statements were applied in their preparation.

c) Consolidation principles

All subsidiaries were consolidated by the fully integration method with the exception of the investment in the subsidiary BIBM Assegurances,

S.A.U. which was accounted for by the equity method since its insurance business differs from banking activity .

All material intercompany balances and transactions were eliminated for consolidation purposes.

notes to Consolidated Financial Statementsfor the Year Ended December 31, 2009Banc Internacional d’Andorra, S.A., Banca Mora, S.A.U.and other Companies composing the Banc Internacional - Banca Mora Group

21

For subsidiaries consolidated by the fully integration method and which are not fully owned by the Group, minority interests belonging to

other investors are reported on the balance sheet to reflect the claim on assets from minority shareholders. Also, minority interests are

reported on the income statement as a share of profit atributable to minority shareholders.

Details of the consolidated companies as of December 31st, 2009 and 2008, in thousands of euros, are as follows:

2009

Company Percentage Capital Reserves Income for Interim Totalof ownership (1) stock the Year Dividend Equity

Banca Mora, S.A.U. 100% 30,060 80,698 14,349 (13,000) 112,107

BIBM Assegurances, S.A.U. 100% 6,503 4,171 1,947 (1,600) 11,021

Seguretat i Serveis, S.A. (2) 28.57% 63 772 36 - 871

BIBM Gestió d'Actius, S.A.U. 100% 301 2,040 1,323 (1,200) 2,464

BIBM Preferents Ltd. 100% 1 - - - 1

Mora Wealth Management AG (3) 100% 67 (20) (250) - 274

Mora Wealth Management Ltd. 94.90% 186 - 110 - 296

2008

Company Percentage Capital Reserves Income for Interim Totalof ownership (1) stock the Year Dividend Equity

Banca Mora, S.A.U. 100% 30,060 73,912 23,786 (17,000) 110,758


Seguretat i Serveis, S.A. 28.57% 63 719 96 - 878



Mora Wealth Management AG 100% 67 - (20) - 47

(1) Percentage held directly or indirectly.(2) Provisional figures for 2009.(3) Total Equity includes an amount of €477 thousands of Euros as a subordinated debt to other debts, subscribed by Banc Internacional d'Andorra, S.A.

note 3 Accounting policies and valuation standards

The following accounting principles and valuation methods were applied in the preparation of the accompanying consolidated financial statements:

a) Accrual basis

Revenues and expenses are recorded on an accrual basis, and the amortized cost, using the effective interest method, is used for

transactions which take more than twelve months to be completed. Nevertheless, in accordance with conservative accounting principles,

as required by applicable legislation, the interest earned on loans classified as doubtful or very doubtful is recognized as income upon

collection.

Following this principle, the accruals accounts show income/expenses accrued and not yet received/paid, and income/expenses

received/paid in advance (see Notes 12 and 19).

b) Recording basis

In accordance with banking practice, transactions are recorded on the date they take place, which may differ from their value dates, which

are used in the calculation of interest income and expense.

2222

c) Foreign currency

Foreign currency assets, liabilities and memorandum accounts were translated to Euros at the last mid-market exchange rates prevailing

before the balance sheet date as determined by the Andorran Bankers' Association. Exchange gains or losses are recorded in the

accompanying consolidated statements of income under “Gains on Financial Transactions – Exchange Gains”.

d) Doubtful assets

Loans and credits, debentures and other fixed-income securities and other receivables are classified as doubtful assets when the whole

repayment is considered problematic because a reduction in the prospects for collection is noted due to the debtors’ inability to fulfill their

commitments under the contractual terms. The assets –notes, loan, credit or financial lease payments receivable, coupons, fixed-income

securities and other debits due and payable– are included in this category according to their default status when the related principal or

interest becomes more than three months overdue. In the case of loans with periodic payments, subsequent payments will be classified as

doubtful on the day they mature.

When these assets are considered unrecoverable or their recovery value is deemed to be minimal or unlikely to be realized, they are removed

from assets in the balance sheet and recorded in memorandum accounts under the “Other Memorandum Accounts Held Solely for

Administrative Control Purposes – Other Memorandum Accounts” caption (see Note 24). In any case, these unpaid assets are transferred to

memorandum accounts three years after maturity (six years for mortgage loans with adequate collateral).

e) Allowance for credit losses

The allowance is recorded in order to cover losses on the recovery of investments with lending, investment securities and other risks. This

allowance is increased by the expenses charged against income and reduced by charge-offs of loans considered to be uncollectible and

recoveries of amounts previously provided.

The allowances for credit losses as of December 31st, 2009 and 2008, were determined on a case-by-case basis under conservative criteria

and they are kept at the required level to cover all potential losses. To cover any losses that may arise in the future on individual risks that

have not been identified as problematic at present, general-purpose provisions were recorded. The mentioned provisions are equal to 0.5%

of time deposits (see Note 6) placed for more than one business day with banking institutions and varying percentages (between 0.5% and

1%) of lendings (see Note 7) and the fixed-income securities (see Note 8).

f) Unused credit facilities

Credit facilities granted to customers are recorded in the balance sheet at the amount used, and the undrawn amounts are recorded in the

memorandum accounts under “Commitments and Contingencies – Operational Commitments and Contingencies”.

g) Investment securities

Fixed-income securities

The fixed-interest securities in the Banks' portfolio are classified as follows:

a) Trading securities, which are the securities that the Banks expect to sell before maturity with the aim of making a profit in the short term

from price fluctuations, are carried at market value. Any gains or losses arising from variations in the value of these securities, excluding

accrued coupon payments, are recorded net under “Gains on Financial Transactions – Gains on Securities Transactions” in the

accompanying income statements. Coupon payments accruing after securities have been purchased are recorded under “Interest

Income – Debentures and Other Fixed-Income Securities.”

b) The held-to-maturity portfolio is made up of the securities that the Banks have decided to hold to maturity, provided they have the

ability to do so. These securities are stated at adjusted cost price. Cost price is adjusted on a daily basis by accruing the difference

between cost and redemption value, over the remaining life of the related security. The results of accruing this difference, together with

the coupons that have accrued since the securities were purchased, are recorded under “Interest Income – Debentures and Other

Fixed-Income Securities.”


23

c) Other securities are classified as available-for-sale securities, and are valued and recorded at adjusted cost price and market value.

Likewise differences between market value and adjusted cost price are recorded in income statement as a provision of fluctuating fund,

calculating the total value of negative differences less the positive, until the positive differences equals the negative.

Equity securities

a) The securities in the trading portfolio are shown at their market value.

b) The securities in the held-to-maturity or available-for-sale portfolios are recorded at the lower of acquisition cost or market value.

c) Investments accounted for under the equity method (see Note 2) are stated at the value of the portion of the investee’s net worth

they represent.

Market value was determined as follows:

• Listed securities: price at year-end.

• Unlisted securities: underlying book value, obtained from the last available balance sheet.

h) Consolidated goodwill

This caption reflects the positive differences that arise from the acquisition of a consolidated company, between the price paid for the shares

of the company and its underlying book value.

This goodwill is depreciated over five years.

i) Property and equipment

Property and equipment are stated at cost, except for the building housing the Banks’ head offices, which was revalued in 1994.

The Group depreciates its property and equipment by the straight-line method based on the following years of estimated useful life:

Years of Estimated Useful Life

Buildings 50

Machinery, furniture and fixtures 5 to 10

Vehicles 5

Computer hardware 3

Assets acquired as settlement to unrepaid loans are recorded at the lowest of the book value of the loan and the market price of the

acquired asset.

j) Intangible assets and deferred charges

The amount of this caption relates to:

• The amounts paid to external companies by several computer programs, which are amortized over three years.

• Other deferred charges arisen from the constitution and acquisition of the companies Mora Wealth Management AG and Mora Wealth

Management Ltd. (see note 1), respectively. These deferred charges are depreciated over five years. It is the period in which these

assets will contribute to generate income.

2424

k) Provisions for pensions and similar obligations

In 1977 the Group set up a pension fund for all employees, for the purpose of supplementing the pensions paid under the Andorran social

security system. In 2007 it was proposed to the employees that this internal fund be changed and replaced by a defined contribution plan,

implemented and managed through a group insurance policy taken out by Banc Internacional d’Andorra, S.A. on behalf of the Banc

Internacional – Banca Mora Group with BIBM Assegurances, S.A.U. (see Note 2) which has been reinsured with Axa Vida, S.A. Almost all

employees accepted this change.

Additionally, an internal pension fund has been maintained for retired and pre-retired employees and serving employees who have not joined

the new pension scheme. The main actuarial assumptions used to calculate the corresponding benefit obligations at December 31st, 2009,

are as follows:

- Nominal discount rate: between 3.00% and 4.85%, depending on the employee group concerned.

- Salary increase rate: 3.00%.

- CPI: 2.00%.

- Mortality tables: PERM/F-2000P.

The regular cost for the year of the internal pension fund was €10 thousand, which is recorded under “Personnel Expenses – Other Personnel

Expenses”, while the portion relating to capitalization of the internal allowance is recorded under “Interest Expense – Other” in the statements

of income. In addition, as a result of the outsourcing of the pension plan, payments amounting to €1,028 thousand were made during 2009.

The amount of these payments is recorded under “Personnel Expenses – Other Personnel Expenses” in the accompanying 2009 consolidated

income statements.

In addition, the provisions required to cover all the salary and welfare commitments with a group of eligible employees who joined the

preretirement scheme offered by the Banks, were recorded against income. The related charge is included under “Provisions for

Contingencies and Expenses” in the accompanying consolidated income statements (see Note 16).

l) General risk allowance

This caption corresponds to the allowance that the Banks assign, according to prudence motives given the risks inherent to banking and financial

activities, to cover the general risks of these activities, without and identified impairment of the assets value (see Note 17).

m) Financial derivatives

The Banks use these instruments basically to hedge the Banks' equity positions. They are recorded in the memorandum accounts at the facevalue of the related contracts (see Note 22). In the case of options, the amount of premiums paid is included in “Other Assets – Optionspurchased” and the amount of premiums received is included in “Other liabilities – Options issued” in the accompanying consolidated balancesheets.

Transactions whose purpose and effect is to eliminate or substantially reduce the currency, interest-rate or market risks associated with equitypositions or other transactions are considered as hedges. Gains or losses on hedging transactions are accrued symmetrically to the revenuesor expenses relating to the item hedged.

Non-hedging transactions (also called trading transactions) arranged on organized markets are recorded at their market price, and anyvariations in market price are recorded in full in the accompanying consolidated income statements.

Gains or losses on trading transactions arranged outside organized markets are not recognized in the accompanying consolidated statementsof income until they have been realized. However, at each month-end a valuation is made of positions, and, if required, a provision is recordedagainst income to cover possible net losses for each type of risk detected in the valuation.


25

n) Indirect service tax

The Law on the indirect tax on the provision of banking and financial services, passed by the General Council of Andorra on May 14th, 2002,

imposes a tax on the banking and financial services provided by banking institutions and by financial institutions. The tax liability is calculated

under a system which provides an estimate of the value of the services provided, based on economic and financial indicators. In accordance

with Law 3/2005, on February, 21st, on the modification of the indirect tax rate on banking and financial services, the applicable tax rate is

12%.

The expense accrued in respect of the indirect service tax amounted to €9,557 in 2009 and €8,187 thousand in 2008, and is recorded in

“General Expenses –Taxes Other Than Income Tax” in the accompanying consolidated income statements.

note 4 Distribution of income

The proposed distribution of Banc Internacional d’Andorra, S.A. 2009 income that the Board of Directors will submit for approval by the

Shareholders’ Meeting and the distribution of 2008 income are as follows:

Thousands of euros

2009 2008

Dividends:

Interim 28,000 31,000

Final 7,000 9,000

35,000 40,000

Reserves:

Voluntary reserve 13,548 5,273

Income for the Year 48,548 45,273

On December 21st, 2009, as per the decision taken by the Board of Directors of Banc Internacional d’Andorra, S.A. dated December 16th, 2009,

a distribution of an interim dividend of €28,000 thousand was performed (see Note 20).

The income of the remaining Group companies shall be distributed in accordance with the resolutions of their respective Shareholders’ Meetings.

note 5 Mandatory bank reserves

a) Mandatory bank reserve ratios

On June 30th, 1994, the General Council of Andorra passed the law regulating mandatory bank reserve ratios. Under this law, all banking

entities must maintain a ratio of their reserves in Andorran public funds.

Government Debt Securities

In order to meet this ratio, the Banks had subscribed as of December 31st, 2008, to Andorran Government debt securities issued onDecember 31st, 2005 for €71,952 thousand. This debt securities matured on December 31st, 2009, and earned interest at one-yearEuribor rate.

On December 23rd, 2009 the General Council of Andorra passed a new law settling a new Government Debt as of December 31st, 2009.This Debt, which the Banks have subscribed for an amount of €57,917 thousand, matures on December 31st, 2013 and earns interestsat one-year Euribor rate. The funds generated by this lending will contribute to refund the debt which matured on December 31st, 2009.

2626

The Government debt securities are recorded in the “Investment Securities – Debentures and Other Fixed-Income Securities” caption inthe accompanying consolidated balance sheets (see Note 8). These debt securities are recorded as held-to-maturity securities.

Special financing program for homebuyers

Loans granted by the Banks under a program of national and social interest providing special financing for homebuyers, approved by the

Andorran government on April 26th, 1995, can also be classified as public funds. The loans granted by the Banks under this program

amounted to €405 thousand as of December 31st, 2009 and €674 thousand as of December 31st, 2008, and are recorded under

"Lendings – Loans and Credits" in the accompanying consolidated balance sheets. These loans earn 6% fixed interest yearly.

b) Guarantee reserves

On May 11th, 1995, the General Council of Andorra approved the law on reserves guaranteeing deposits and other banking liabilities to be

kept and deposited by institutions within the financial system. Under this law, the institutions in the Andorran financial system are required

to keep a minimum equity reserve as permanent equity to guarantee their banking liabilities, equal to 4% of all the institutions’ investments,

net of investments made with equity or banking funds. As of December 31st, 2009 and 2008, this reserve ratio was 1.25%.

The amount of the guarantee reserves (see Note 20) must be held in a deposit with Institut Nacional Andorrà de Finances (INAF). The

reserves and the deposits placed by the Banks for this purpose as of December 31st, 2009 and 2008, amounted to €28,431 thousand,

and were determined on the basis of the balance sheet figures as of December 31st, 2002. The reserves and deposits of BIBM Gestió

d’Actius, S.A.U. amounted to €210 thousand as of December 31st, 2009 and 2008. These deposits earn variable interest at market rate.

The deposits placed for this purpose are recorded in the “Due from INAF” caption on the asset side of the accompanying consolidated

balance sheets.

note 6 Due from financial intermediaries

The breakdown of the balance of this asset caption in the accompanying consolidated balance sheets, by currency and type of transaction,

excluding the allowance for credit losses, is as follows:

Thousands of euros

2009 2008

By currency:

In Euros 156,825 1,332,750

In foreign currency 104,601 552,814

261,426 1,885,564

By type:

Demand deposits:

Correspondent bank accounts 119,133 23,245

Deposits 312 -

Other accounts 5,661 7,091

125,106 30,336

Time deposits 136,320 1,855,228

261,426 1,885,564


27

Time deposits are deposits with an original term of more than one working day.

The breakdown by maturity from the balance sheet date of the time deposits recorded in this caption of the accompanying consolidated balance

sheets, excluding the allowance for credit losses, is as follows:

Thousands of euros

2009 2008

Up to 1 month 96,312 1,031,703

From 1 month to 3 months 21,008 278,562

From 3 months to 1 year 19,000 544,963

136,320 1,855,228

As of December 31, 2009 and 2008, there were no past-due balances or balance with no specified maturity.

The movement of the allowance for credit losses, that corresponds basically to the general provision, for the years 2009 and 2008 was

as follows:

Thousands of euros

2009 2008

Beginning balance 9,280 8,343

Add:

Net provision to allowance - 937

Less:

Allowance released (8,593) -

Ending balance 687 9,280

Under the chart of accounts of the Andorran financial system, this general allowance for credit losses is considered as equity for the purpose

of calculating the capital ratio.

note 7 Lendings

The breakdown of the balance of this asset caption in the accompanying consolidated balance sheets, by currency and sector, excludingthe allowance for credit losses, is as follows:

Thousands of euros

2009 2008

By currency:

In euros 964,395 976,749


1,036,461 1,065,824

By sectors:

Andorran public sector:

Central government 79,658 50,436

Local government 60,264 57,839

Other 3,897 2,728

143,819 111,003

Private sector 892,642 954,821

1,036,461 1,065,824

2828

The detail of the balance of this caption by type of collateral and degree of risk, excluding the allowance for credit losses, is as follows:

Thousands of euros

2009 2008

By type of collateral:

Secured:

Mortgage 516,203 514,871

Cash 20,394 22,973

Securities 193,892 219,200

730,489 757,044

Unsecured 305,972 308,780

1,036,461 1,065,824

By degree of risk:

Normal 1,021,658 1,053,339

Past due 1,958 1,280

Doubtful 12,845 11,205

1,036,461 1,065,824

Among the doubtful assets, a total sum of €9,907 thousand and €7,188 thousand, as of December 31st 2009 and 2008 respectively, were

secured.

The detail by maturity from the balance sheet date of the balance of this caption of the accompanying consolidated balance sheets,


Thousands of euros

2009 2008

Past due and doubtful 14,803 12,485

Up to 1 month 65,426 56,707



From 1 year to 5 years 291,179 317,201

Over 5 years 298,419 298,892

No specified maturity 27,050 31,258

1,036,461 1,065,824

The variation of the allowance in 2009 and 2008 were as follows:

Thousands of euros

2009 2008


Add:

Provisions to allowance 5,324 6,066

Less:

Allowance used (1,765) (1,002)

Allowances released (3,087) (4,401)

Ending balance 5,654 5,182


29

The allowance for credit losses is composed by a specific provision established over an individual basis and by a general provision (see

Note 3-e) as follows:

Thousands of euros

2009 2008

Specific provision 2,603 2,143

General banking provision 3,051 3,039

5,654 5,182

The balance of “Provisions for credit losses net of recoveries” in the accompanying consolidated income statements relates mainly to

changes in the allowance for credit losses, shown in the preceding table, plus net additions to the general allowance for financial

intermediaries and investment securities.

note 8 Investment securities

The breakdown of the “Investment Securities” asset caption in the accompanying consolidated balance sheets as of December 31st, 2009

and 2008, by type of security and listing status, excluding the allowance for credit losses and the security price fluctuation allowance, is as

follows:

Thousands of euros

2009 2008

By type:

Trading securities:

Debentures and other fixed-income securities 28,784 14,957

Investment schemes 3,627 2,630

32,411 17,587

Available-for-sale securities:

Debentures and other fixed-income securities 3 3

Common stocks and other equity securities 72 72

75 75

Held-to-maturity securities:

Debentures and other fixed-income securities 1,124,103 623,409

Long-term securities:

Investments in Group companies 11,021 10,674

Other investments 258 258

11,279 10,932

1,167,868 652,003

By listing status:

Listed 1,098,597 569,044

Unlisted 69,271 82,959

1,167,868 652,003

3030

The market value of the available-for-sale portfolio as of December 31st, 2009 and 2008 does not differ significantly from its book value.

The market value of the held-to-maturity investment portfolio as of December 31st, 2009 is €1,125,967 thousand, and the capital gains not

registered amount to €1,864 thousand. During the year 2009, securities initially recorded in the trading portfolio for an amount of €419,358

thousand were transferred in the held-to-maturity portfolio. For the year 2009 and until the transfer was done, such securities generated an

unrealised gain of €9,041 thousand recorded under the caption “Gains on financial transactions – Gains on securities transactions”, of the 2009

consolidated income statements.

The Banks sold in 2009 securities initially recorded in held-to-maturity portfolio for a total amount of €255,012 thousand. The realised gain resulting

from this transaction was €1,306 thousand, and is accrued on a straight-line basis over the remaining life of the securities sold.

The cost value of the trading portfolio was €35,628 thousand as of December 31st, 2009 and €21,508 thousand as of December 31st, 2008.

The breakdown by maturity from the balance sheet date of the “Debentures and Other Fixed-Income Securities” caption is as follows:

Thousands of euros

2009 2008




More than 5 years 5,503 13,784

1,152,890 638,369

There were no past-due balances as of December 31st, 2009 and 2008.

The caption “Debentures and other fixed-income securities" as of December 31st, 2009 is mainly composed by debt securities issued by

public administrations from OECD countries or guaranteed by these administrations.

The “Investment Schemes” caption as of December 31st, 2009 and 2008 is composed by investments in mutual funds managed by BIBM

Gestió d’Actius, S.A.U.

The “Investments in Group Companies” caption relates to shares in BIBM Assegurances, S.A.U., a company consolidated by the equity

method, amounting to €11,021 thousand as of December 31st, 2009 and €10,674 thousand as of December 31st, 2008.

The detail of the balance of “Other Investments” as of December 31st, 2009 (provisional figures), is as follows:

Thousands of euros

Company Location Line of Percentage of Capital Income for Total Book Interimbusiness ownership (1) stock the Year equity (2) values Dividend

Seguretat i Serveis, S.A. Andorra Security 28.57% 63 36 871 258 -

The figures relating to this company as of December 31st, 2008, are as follows:

Thousands of euros

Company Location Line of Percentage of Capital Income for Total Book Interimbusiness ownership (1) stock the Year equity (2) values Dividend


(1) Percentage held directly or indirectly.

(2) Includes income for the year net of interim dividends.

As of December 31st, 2009 and 2008, none of the investments in the trading portfolio represent more than 5% of capital stock (qualified

holdings).


31

In 2009 and 2008 there were no variations in the security price fluctuation allowance.

The variation of the general provision in 2009 and 2008 were as follows:

Thousands of euros

2009 2008

Beginning balance 1,032 140

Add:

Net provision to allowance 4,456 892


note 9 Consolidated goodwill

The total amount of the caption “consolidated goodwill” is due to the acquisition of Mora Wealth Management Ltd. in 2009 (see Note 1).

The variations of consolidated goodwill in 2009 are as follows:

Thousands of euros

2009

Opening balance -

Add:

Additions 3,436

Less:

Accumulated amortization (230)

Closing balance 3,206

note 10 Intangible assets and deferred charges

The variations in 2009 and 2008 in intangible asset and deferred charge accounts and in the related accumulated amortization were

as follows:

Thousands of euros

2009 Beginning Balance Additions Retirements Transfers and others Ending Balance

Computer software:

Cost 45,449 5,143 - - 50,592

Accumulated amortization (38,662) (4,352) - - (43,014)

6,787 791 - - 7,578

Other:

Cost 452 5,832 - 133 6,417

Accumulated amortization (408) (586) - (13) (1,007)

44 5,246 - 120 5,410

Total 6,831 6,037 - 120 12,988

3232

Thousands of euros


Computer software:Cost 40,929 4,526 (6) - 45,449Accumulated amortization (34,839) (3,823) - - (38,662)

6,090 703 (6) - 6,787

Other:Cost 422 30 - - 452Accumulated amortization (395) (13) - - (408)

27 17 - - 44

Total 6,117 720 (6) -6,831

note 11 Property and equipment

The variations in 2009 and 2008 in property and equipment accounts and in the related accumulated depreciation were as follows:

Thousands of euros

Assets assigned to operations in 2009 Beginning Additions Retirements Transfers Endingbalance and other balance

Land:Cost 23,149 - - - 23,149

Buildings:Cost 24,987 - - - 24,987Accumulated depreciation (4,018) (481) - - (4,499)

20,969 (481) - - 20,488

Furniture:Cost 4,041 233 (43) - 4,231Accumulated depreciation (2,285) (333) 1 - (2,617)

1,756 (100) (42) - 1,614

Machinery and Fixtures:Cost 19,711 674 (18) - 20,367Accumulated depreciation (12,941) (1,443) 18 - (14,366)

6,770 (769) - - 6,001

Computer hardware and data processing equipment:Cost 9,976 1,237 (2) - 11,211Accumulated depreciation (8,585) (990) - - (9,575)

1,391 247 (2) - 1,636

Vehicles:Cost 327 71 - - 398Accumulated depreciation (208) (38) - - (246)

119 33 - - 152

Total 54,154 (1,070) (44) - 53,040

Thousands of euros

Assets not assigned to operations in 2009 Beginning Additions Retirements Transfers Endingbalance and other balance

Buildings:Cost 14,697 31,505 - - 46,202Allowance for decline in value - (3,460) - - (3,460)


33

Total 14,697 28,045 - - 42,742

Thousands of euros


Land:

Cost 23,149 - - - 23,149

Buildings:Cost 24,554 433 - - 24,987Accumulated depreciation (3,537) (481) - - (4,018)

21,017 (48) - - 20,969

Furniture:Cost 3,779 521 (259) - 4,041Accumulated depreciation (2,289) (244) 248 - (2,285)

1,490 277 (11) - 1,756

Machinery and Fixtures::Cost 18,763 1,253 (687) 382 19,711Accumulated depreciation (11,944) (1,670) 673 - (12,941)

6,819 (417) (14) 382 6,770

Computer hardware and data processing equipment:Cost 8,861 1,115 - - 9,976Accumulated depreciation (7,676) (909) - - (8,585)

1,185 206 - - 1,391

Vehicles:Cost 272 86 (31) - 327Accumulated depreciation (202) (37) 31 - (208)

70 49 - - 119

Others:

Cost - 382 - (382) -

- 382 - (382) -

Total 53,730 449 (25) - 54,154

Thousands of euros


Buildings:Cost 416 14,281 - - 14,697

Total 416 14,281 - - 14,697

No interest expenses or exchange losses relating to property and equipment were capitalized in 2009 or 2008.

Assets not assigned to operations include foreclosed assets acquired for unrepaid loans for an amount of €33,922 thousand as of December 31st,

2009 and €5,877 thousand as of December 31st, 2008. In 2009 there has been a unique foreclose, by a total amount of €31,505 thousand. A

3434

provision fund of €3,460 thousand has been recorded to adequate its value to the market value estimated by an independent valuator.

nota 12 Accrual accounts - assets

The breakdown of the balance of this asset caption in the accompanying consolidated balance sheets, at December 31st, 2009 and 2008 is as follows:

Thousands of euros

2009 2008

Uncollected accrued interests

Interests 20,748 34,621

Commissions 1,947 1,478

22,695 36,099

Prepaid expenses 1,031 724

23,726 36,823

note 13 Due to INAF

The detail of demand and time deposits in this liability caption of the accompanying consolidated balance sheets as of December 31st,

2009 and 2008 is as follows:

Thousands of euros

2009 2008

Demand deposits 484 1,229

Time deposits 40,123 39,813

40,607 41,042

All time deposits have a maturity of less than one year.

All balances in this account were solely denominated in Euros and had a specified maturity.

note 14 Due to financial intermediaries

The breakdown of the balances of the “Banks and Credit Institutions” and “Other Financial Intermediaries” liability captions in the

accompanying balance sheets, by currency and type, is as follows:

Thousands of euros

2009 2008

By currency:

In euros 6,808 73,189

In foreign currency 669 954

7,477 74,143

By type:

Demand deposits:


Other accounts 23 26

4,597 50,838


7,477 74,143


35

Time deposits are deposits with a term of more than one business day.

The breakdown by maturity from the balance sheet date of the time deposits recorded in these captions of the accompanying consolidated

balance sheets is as follows:

Thousands of euros

2009 2008

Up to 1 month 2,880 -

From 1 month to 1 year - 4,425

From 1 year to 5 years - 18,880

2,880 23,305

There were no balance with no specified maturity as of December 31st, 2009 and 2008.

note 15 Customer deposits

The detail of the balance of this caption of the accompanying consolidated balance sheets, by currency and type, is as follows:

Thousands of euros

2009 2008

By currency:

In euros 1,915,248 2,664,174


2,263,853 3,294,089

By type:

Demand deposits:

Checking accounts 789,239 671,665

Savings accounts 41,377 27,498

830,616 699,163

Time deposits:

Certificates of deposits 1,433,045 2,594,675

Other 192 251

1,433,237 2,594,926

2,263,853 3,294,089

Taking into account the total amount of available amounts from clients, the decrease of this caption in 2009 is compensated by the increase

of “Third-party securities and other assets held in custody” caption (see Note 23).

The breakdown by maturity from the balance sheet date of the time deposits recorded in this caption of the accompanying consolidated

balance sheets is as follows:

Thousands of euros

2009 2008

Up to 1 month 449,305 1,201,982




1,433,237 2,594,926

3636

There were no balance with no specified maturity as of December 31, 2009 and 2008.

note 16 Provisions for contingencies and expenses

Provisions for pensions and similar obligations

The provisions recorded in this liability caption of the accompanying consolidated balance sheets relate to the pension allowance set up for

employees (see Note 3-k).

The variations in 2009 and 2008 in the balance of this caption were as follows:

Thousands of euros

2009 2008


Add:

Period provision charged against personnel expenses 10 9

Extraordinary provision charged against income (Note 21) 866 305

Return on assets assigned to the allowance (financial cost) 538 541

Less:

Pensions paid (609) (723)

Insurance premiums - (242)


Other provisions

The variations in 2009 and 2008 in the balance of the “Other Provisions” liability caption in the accompanying consolidated balance sheet

were as follows:

Thousands of euros

2009 2008


Add:

Period provisions 3,376 4,311

Less:

Provisions released and other (4,626) (1,173)


“Other provisions” mainly includes the provisions needed in connection with early retirements commitments (see Note 3-k) as of December

31st, 2009 and 2008, which amounted to €2,930 thousand and €3,691 thousand, respectively. The residual provision covers other risks

related to the normal activity of the Group.


37

note 17 General risk allowance

The amount of the provisions recorded in this liability caption of the accompanying consolidated balance sheets relates to the allowance that

the Banks have set aside, for conservative reasons, by reference to the risks inherent to banking and financial activities.

Under the chart of accounts of the Andorran financial system, this general allowance for credit losses is considered as equity for the purpose

of calculating the capital ratio.


Thousands of euros

2009 2008

Beginning balance - 419

Add:

Provisions to general risk allowance 6,900 -

Less:

Allowance released and other (Note 21) - (419)

Ending balance 6,900 -

note 18 Subordinated debt

On July 28th, 2006, BIBM Preferents Ltd. (see Note 1) issued non-voting preferred stock in the amount of €60,000 thousand. This preferred

stock has no specified maturity; however, the issuer is entitled to redeem it after five years from the date of issue subject to INAF approval.

The preferred stock carries a dividend of 5% per year, which is fixed for the first three years after issue and variable yearly thereafter in line

with the 10-year CMS (Constant Maturity Swap) rate plus 30 basic points and with a maximum rate of 8% per year.

Banc Internacional d’Andorra, S.A. owns 100% of the capital stock of BIBM Preferents Ltd. To underwrite the abovementioned issue, Banc

Internacional d’Andorra, S.A. has issued an irrevocable subordinated guarantee in favour of and for the benefit of the preferred stock

subscribers.

Previously, on May 31st, 2006, the Board of Directors of INAF gave authorization for the abovementioned issue of preferred stock to be

considered as equity for the purpose of calculating Banc Internacional d’Andorra, S.A. capital ratio.

note 19 Accruals accounts - liabilities

The detail in this liability caption of the accompanying consolidated balance sheets as of December 31st, 2009 and 2008 is as follows:

Thousands of euros

2009 2008

Unpaid accrued expensesInterests 6,025 21,524Commissions 52 62Others 6,621 4,951

12,698 26,537

Unearned revenueInterests 54 110Commissions 132 -

186 110

12,884 26,647

3838

note 20 Variations in equity

The breakdown of the accounts making up the Group’s equity in 2009 and 2008 and of the variations therein is as follows:

Thousands of euros

Capital Legal Guarantee Voluntary and Income for Interim Final TotalStock Reserve Reserves Consolidation the Year Dividends Dividends

(Note 5-b) Reserves

Balance at December 31, 2007 42,407 7,277 28,641 115,054 94,393 (63,376) - 224,396

Distribution of 2007 income - - - 12,017 (94,393) 63,376 19,000 -

Final dividend - - - - - - (19,000) (19,000)

Transfer of voluntary reserves - 7,276 - (7,276) - - - -

Interim dividend (Note 4) - - - - - (31,000) - (31,000)

2008 income - - - - 52,224 - - 52,224



Final dividend - - - - - - (9,000) (9,000)


Others - - - (1) - - - (1)

2009 income - - - - 50,116 - - 50,116


Capital stock

The capital stock shown in these consolidated financial statements relates to Banc Internacional d’Andorra, S.A., and is composed by 7,056,000

fully subscribed and paid shares with a par value of €6.01 each, owned by an Andorran family group.

Reserves

The legal reserve and the guarantee reserves held by Banca Mora, S.A.U. and BIBM Gestió d’Actius, S.A.U. were deducted from voluntary

and consolidation reserves and are recorded in the "Legal Reserve" and “Guarantee Reserves” captions, respectively, in order to show that

their use is restricted.

Under the new Companies’ Law 20/2007 of October 18th, public companies must deduct 10% of profit each year and transfer it to the legal

reserve until this reserve reaches 20% of the capital stock. As of December 31st, 2009 the legal reserve of the Banks and BIBM Gestió

d’Actius, S.A.U. was totally constituted.


39

note 21 Extraordinary result

The breakdown of the balance of this caption of the accompanying consolidated income statements is as follows:

Thousands of euros

2009 2008

Losses on disposal or retirement of fixed assets (Net) - (24)

Extraordinary provision to the pension allowance (Note 16) (866) (305)

Net recoveries from the general risk allowance (Note 17) - 419

Other extraordinary income/loss (net) (969) 1,545

(1,835) 1,635

note 22 Financial derivatives

The detail of outstanding financial derivatives as of December 31st, 2009 and 2008, classified according to the purpose of the contracts, is as follows:

Thousands of euros

2009 2008

Hedge Trading Total Hedge Trading Total

Firm transactions:

Currency sales and purchases 1,125,716 - 1,125,716 1,238,283 - 1,238,283

Interest-rate swaps 275,966 - 275,966 88,303 - 88,303

1,401,682 - 1,401,682 1,326,586 - 1,326,586

Option transactions:

Currency options - - - 4,247 - 4,247

Securities options 37,852 - 37,852 22,970 - 22,970

Interest-rate options 834 - 834 863 - 863

38,686 - 38,686 28,080 - 28,080

Other futures 47,104 - 47,104 - - -

1,487,472 - 1,487,472 1,354,666 - 1,354,666

As of December 31st, 2009 the Banks held securities options contracted in organized markets for a total amount of €8,706 thousand. As

of December 31st, 2008 there were no operations settled in organized markets.

The face value of the existing contracts does not reflect the total risk held by the Group, since the net position to the foregoing transactions

of these financial instruments is determined by their composition and/or combination.

The open positions in relation to the foregoing transactions do not entail a significant interest-rate, currency or market risk.

4040

The maturity structure from the balance sheet date of financial derivatives contracts held is as follows:

Thousands of euros

2009 2008

Currency sales and purchases:Up to 1 year 1,125,716 1,238,283

Interest-rate swaps:Up to 1 year - 4,247From 1 year to 5 years 182,163 2,174Over 5 years 93,803 81,882

275,966 88,303

Currency options:Up to 1 year - 4,247

Securities options:Up to 1 year 18,144 1,950From 1 year to 5 years 19,708 21,020

37,852 22,970

Interest-rate options:

Over 5 years 834 863

Other futures:Up to 1 year 21,101 -From 1 year to 5 years 22,503 -Over 5 years 3,500 -

47,104 -

1,487,472 1,354,666

note 23 Third-party securities and other assets held in custody

This account reflects the market value of the securities and other assets deposited by customers and held in custody by the Group. The

detail, by type of security, of the balance of this caption in the accompanying consolidated memorandum accounts is as follows:

Thousands of euros

2009 2008

Common stocks and other equity securities 1,109,843 810,120

Debentures and other fixed-income securities 1,969,524 980,415

Securities of investment schemes not managed by the Group 155,962 130,114

Other 918,569 952,104

4,153,898 2,872,753


41

note 24 Other memorandum accounts held solely for administrative control purposes

The breakdown of these captions in the accompanying consolidated memorandum accounts as of December 31st, 2009 and 2008 is as follows:

Thousands of euros

2009 2008

Guarantees and commitments received

Guarantees 854,116 869,751

Documentary credits - 1,967

Available to the entity - 100,000

854,116 971,718

Other memorandum account

Very doubtful assets 11,892 10,114

Own unlisted securities and assets 59,515 78,777

Trusts 3,458 3,458

Other 72,762 109,417

147,627 201,766

1,001,743 1,173,484

The “Trusts” account includes unlisted securities and assets held by the Banks for third parties. These assets are generally recorded at the

number of assets.

The “Other” account basically includes customers’ certificates of deposit arranged with a value date after December 31st.

note 25 Assets assigned as security

As of December 31st, 2009 and 2008, there were assets assigned as security in the amount of €9,478 thousand and €8,482 thousand,

respectively. These amounts basically relate to the security required for financial derivatives transactions arranged on behalf of banks or other

financial institutions.

4242

note 26 Transactions with related parties and Group institutions

Details of balances in the accompanying consolidated financial statements as of December 31st, 2009 resulting from transactions between

the Group and related parties or Group companies that are not fully consolidated (see Note 2-c) exceeding 5% of profit for the year (in the

case of the income statement) or 10% of shareholders' equity (in the case of the balance sheet) are disclosed below:

Thousands of euros

Investees Other related parties

Assets:

Lendings 469 -

Investment securities 11,021 -

Accruals accounts 35 -

11,525 -

Liabilities:

Creditors: Customer deposits 236,476 30,147

Accrual accounts 500 14

Other liabilities 2,287 -

239,263 30,161

Memorandum accounts 363,594 1,733

Income statement

Interest income 65 -

Interest expense (4,886) -

Net service fees 1,856 -

Other 1,474 -

All of the balances with investees relate to BIBM Assegurances, S.A.U., which is consolidated by the equity method (see Note 2-c). The balances

of other parties relate to a company in which members related to the Group have a significant influence. This company was not created with the

aim of offering services to Group clients.

As of December 31st, 2009 there are no transactions with shareholders, other subsidiaries, members of Board of Directors or Management, or

with other parties, exceeding 5% of profit for the year (in the case of the income statement) or 10% of shareholders' equity (in the case of the

balance sheet).

All the Group's transactions with related parties and Group companies during the exercise were carried out at market prices.


43

note 27 Risk management

Credit risk

The main risks held by the Group as of December 31st, 2009 and 2008, are concentrated in the “Financial Intermediaries”, “Lendings” and

“Investment Securities” asset captions in the accompanying consolidated balance sheets.

With the aim of reducing the credit risk associated with transactions with other financial institutions, the Group pursues a conservative policy

with regard to the assessment and diversification of counterparties and exposition limits, and requires, among others, a minimum rating from

rating agencies reports, Credit Default Swap (CDS) senior levels and risk of the settling country.

The risk resulting from customer loans is continuously monitored by a unit set up specifically for this purpose by the Group. This unit is

responsible for keeping the risk profile within the established limits and it works in direct coordination with the various business divisions.

The accounting policy for hedging against credit risk on the loan portfolio is described in Note 3-e.

Market risk

The Group has a Market Risk Management Unit. One of the basic functions of this unit is to measure, control and monitor market risks, and

evaluate exposure and compliance with the limits assigned. It also assesses implements and maintains the computer tools used.

These functions are supervised by the Asset and Liability Committee (ALCO), which is made up of members of the Group’s general

management, among others. The committee meets up at least once a month and its task is to analyze the positions giving rise to market

risk, and define the strategies that the Group must follow. The Banks’ Boards of Directors are periodically informed of the level of risk held

and establish maximum absolute exposure levels for this risk.

Estimating potential losses in adverse market scenarios is the key factor for measuring market risk, which is why variance and covariance

value at risk (VAR) techniques are used.

The VAR used measures the maximum potential loss for each day with a 99% confidence level that investment securities could suffer as a

result of the volatility in financial markets, as well as interest and exchange rates, and credit markets through spread operations. This

calculation is currently performed twice a week and is made by reference to market risk factors: currency, interest rates, equity security

prices and the volatility of options on these, on the basis of historical data on daily market prices and the observed interaction between

these factors.

The maximum exposure thresholds established for 2009 and 2008 under the VaR method, and the maximum exposure reached in these

years, for each risks factor, are as follows:

Thousands of euros

Currency Interest rate Equity securities Total

2009:

Established threshold 900

Maximum exposure reached 79 183 31 220

2008:Established threshold 900

Maximum exposure reached - 105 36 112

4444

Currency risk

According to the valuation standards defined in Note 3-c, the total foreign currency assets and liabilities held by the Group as of December

31st, 2009 and 2008, are as follows:

Thousands of euros

2009 2008

Due from financial intermediaries 104,601 552,814Lendings 72,066 89,075Investment securities 205,019 43,661Other 14,258 3,415

Total assets 395,944 688,965

Deposits: banks and financial intermediaries 669 954Deposits: customer deposits 348,605 629,915Other 3,279 3,407

Total liabilities 352,553 634,276

As of December 31st, 2009 and 2008, the currency risk associated with most of the balances held in foreign currencies had been hedged

with financial derivatives (see Note 22) or equity transactions.

Interest-rate risk

The Assets and Liabilities Committee (ALCO) is in charge of managing the interest rate risk of the balance structural positions, following the

related regulations established by the Board of Directors.

Based on the composition of the Group’s investments and sources of financing, the similarity of their maturities (most of which are short

term) and the consistency of the indexes used to fix prices, the Group has a low exposure to interest-rate risk.

Nevertheless, the effect of a hypothetical 1% variation in the current market interest rates on the Group’s assets, liabilities and memorandum

accounts will not imply a significant variation in Group equity.

Price risk: fair value of assets and liabilities

Fair value is the amount for which an asset may be exchanged between an experienced buyer and seller, or a liability settled between anexperienced debtor and creditor acting on an arm’s-length basis.

Recording transactions at their fair value, taking into account the accounting methods used and their maturity dates, would not have givenrise to any material gains or losses in relation to the Group’s net worth.

Liquidity risk

The maturity structure of the Group’s assets and liabilities has considerably reduced the liquidity risk inherent to its banking operations.

note 28 Compliance with legislation

Law regulating the capital and liquidity requirements for financial institutions

On February 29, 1996, the General Council of Andorra passed a law regulating the liquidity and capital requirements for financial institutions.

This law specifies that banks must maintain a capital ratio of at least 10%, as recommended by the Basle Committee on Banking Regulationand Supervisory Practices. The law also establishes a mandatory liquidity ratio of at least 40%.

The Group’s capital and liquidity ratios, which were determined in accordance with the provisions of this law, stood at 21.17% and 101.62%


45

as of December 31st, 2009, and 22.01% and 82.90% as of December 31st, 2008.

The law regulating the capital and liquidity requirements for financial institutions also limits the concentration of risks in a single beneficiary to20% of Group equity. Under this law, the aggregate of risks individually exceeding 5% of equity may not exceed 400% of equity. Likewise,the risk on transactions with members of the Board of Directors may not exceed 15% of equity. These risks are weighted in accordance withthe provisions of the above-mentioned law.

The highest risk exposure reached with the same beneficiary was of 13.40% of Group equity in 2009 and 13.60% in 2008. Loans and othertransactions entailing a risk exceeding 5% of equity with the same beneficiary did not exceed an accumulated total of 128.59% in 2009 and128.17% in 2008.

Law on international cooperation on penal matters and the campaign against the laundering of money or valuableswhich are the proceeds of international crime

On December 29th, 2000, the General Council of Andorra passed the Law on international cooperation on penal matters and the campaignagainst the laundering of money or valuables which are the proceeds of international crime. This law was published in the Official Gazette ofAndorra on January 24th, 2001, came into force in 2001 and was modified afterwards by the Law 28/2008 on December, 11th. OnSeptember 9th, 2009 the revised text Law was published in the Official Gazette of Andorra.

The aforesaid law harmonizes the Vienna and Strasbourg conventions with Andorran legislation, aims to maximize the effectiveness ofAndorran legislation on this topic and repeals the Law on the protection of banking secrecy and the prevention of the laundering of money orvaluables which are the proceeds of crime, dated May 11th, 1995. The evolution of international standards has been reflected on this text,through which the Andorran Government takes the dispositions harmonised with the European background.

The responsibility of financial institutions is not purely confined to complying with the law, since they must play a very active role both in theappropriate selection of their customers and in subsequent management of the same, not only due to the risks arising from potential breachesof the law but also due to the associated risks affecting their image.

The Banc Internacional-Banca Mora Group has always been clearly committed to combating criminal money laundering transactions, not onlyas a product of its obligation to comply with the law, but also as a clear exponent of the moral and ethical principles governing theGroup’s activities.

Under Article 52 of this Law, the Group established a series of internal communication and control procedures aimed at protecting bankingsecrecy and preventing and stopping money laundering transactions. Thus, the Bank has implemented staff training programs specificallyaddressing these topics.

Agreement between Andorra and the European Community in relation to the establishment of measures equivalentto those provided in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments

On February 21st, 2005, the Andorran Government ratified the Agreement between Andorra and the European Community in relation to the

establishment of measures equivalent to those provided in Council Directive 2003/48/EC on taxation of savings income in the form of interest

payments. In addition, on June 13th, 2005, the Government passed the Law implementing the above Agreement.

In 2009, the Banks, acting in their capacity as payment agents, complied with the obligations contained in the Agreement and its

implementing Law, and settled the amount of the withholding in accordance with the above-mentioned legislation.

note 29 Community activities and similar

The Banc Internacional-Banca Mora Group has no legal or statutory community obligations. Nevertheless, the Group has always been

deeply involved, through sponsorship and subsidization of events, in all aspects of the development of the society in which operates.

4646

During 2009, the Banc Internacional-Banca Mora Group continued this policy with special emphasis in cultural events. Thus, the Group has

collaborated with public bodies as the Andorran government and different City Councils, as well as social organizations / civil society, in

several activities in the field of culture, education and training.

Culture and training

The Music and Dance season, which has been co-sponsored by the Group with the City Council of Andorra la Vella for the last 13 years,is once more the main sponsorship. This season in counted with high level performances such as “Béjart Ballet” or the Spanish dancingperformance by Antonio Márquez. Special concern has been put on youth, through concerts given by successful groups, like Zahara orCindy Blackman. As for training, the Group has sponsored training courses for liberal professionals, subsidising high degree education andacademic upgrading. Likewise, the Group has continued the concession of scholarships for upper education in foreign countries.

Environment

The exhibition on Andorran Landscapes has been the main activity around the Environmental Agreement with the Andorran government, aimed

at sponsoring the activities of “Centre Andorra Sostenible”. It is also worthy to mention the International Day for the preservation of ozone layer,

celebrated for the first time in Andorra, with the aid of the Banc Internacional-Banca Mora Group.

Health and Science

In the Social field, and following the medical lectures, in 2009 a lecture given by the eminent professor Josep Baselga was sponsored, in

which he presented the latest discoveries on oncology investigation. The Group has also sponsored the Andorran Scientific Society lectures,

which this year were aimed at analysing different matters of Catalan language.

Sports

In sports, the Banc Internacional-Banca Mora Group has sponsored several sporting events, highlighting ski touring, related to the world

cup competition as well as other national events, like the sponsorship of the basketball team, which this year has entered the league

LEB plata.

Aid projects

Lastly, also worthy to mention is the Visa Unicef card, profits from which are used to subsidize aid projects in Mauritania. In 2009, the

Group has also sponsored a project of professional training in Burkina Faso, developed by a group of students from Compte de

Foix Lycée.

The Banc Internacional-Banca Mora Group has also collaborated with a wide range of national organizations in aid projects aiming to

improve social cohesion.

note 30 Explanation added for translation to English

These consolidated financial statements are presented on the basis of generally accepted accounting principles in Andorra. Certain

accounting practices applied by the Group that conform with generally accepted accounting principles in Andorra may not conform with

generally accepted accounting principles in other countries.


- F36 -

AUDITORS' REPORT AND FINANCIAL STATEMENTS OF THE GUARANTOR AS AT AND FOR THE YEARS ENDED 31 DECEMBER 2008 AND 2007

11

memoria ANGLÈS OK:Maquetación 1 06/04/09 18:09 Página 11

14

consolidated balance sheets

Banc Internacional d’Andorra, S.A., Banca Mora, S.A.U. and other Companies composing the Banc Internacional - Banca Mora Group

As of december 31, 2008 and 2007* (Notes 1, 2, 3 and 4) Thousands of euros

assets 2008 2007*

CASH ON HAND AND DUE FROM OECD CENTRAL BANKS 21,735 17,518

DUE FROM INAF (Note 5) 28,641 28,642

DUE FROM FINANCIAL INTERMEDIARIES (Note 6) 1,876,284 1,956,804

BANKS AND CREDIT INSTITUTIONS 1,879,548 1,959,942

OTHER FINANCIAL INTERMEDIARIES 6,016 5,205

LESS - ALLOWANCE FOR CREDIT LOSSES (9,280) (8,343)

LENDINGS (Note 7) 1,060,642 1,041,449

LOANS AND CREDITS 1,040,778 1,013,827

CUSTOMER OVERDRAFTS 13,502 19,380

CUSTOMER BILL PORTFOLIO 11,544 12,761

LESS - ALLOWANCE FOR CREDIT LOSSES (5,182) (4,519)

INVESTMENT SECURITIES (Note 8) 650,971 110,504


LESS - ALLOWANCE FOR CREDIT LOSSES (1,032) (140)

INVESTMENTS IN GROUP COMPANIES 10,674 10,599

OTHER INVESTMENTS 258 258

COMMON STOCKS AND OTHER EQUITY SECURITIES 72 72

INVESTMENT SCHEMES 2,630 3,371

INTANGIBLE ASSETS AND DEFERRED CHARGES (Note 9) 6,831 6,117

INTANGIBLE ASSETS AND DEFERRED CHARGES 45,901 41,351

LESS - ACCUMULATED AMORTIZATION (39,070) (35,234)

PROPERTY AND EQUIPMENT (Note 10) 68,851 54,146

PROPERTY AND EQUIPMENT 96,888 79,794

LESS - ACCUMULATED DEPRECIATION (28,037) (25,648)


UNCOLLECTED ACCRUED INTEREST 36,099 19,361

PREPAID EXPENSES 724 792

OTHER ASSETS 5,434 4,696

CURRENT TRANSACTIONS 4 1,671

INVENTORIES 186 242

OPTIONS PURCHASED 2,058 2,272

OTHER 3,186 511

TOTAL ASSETS 3,756,212 3,240,029


15

Thousands of euros

liabilities and equity 2008 2007*

DUE TO INAF (Note 12) 41,042 36,395

DEPOSITS 3,368,232 2,869,669

BANKS AND CREDIT INSTITUTIONS (Note 13) 74,117 43,186

OTHER FINANCIAL INTERMEDIARIES (Note 13) 26 133

CUSTOMER DEPOSITS (Note 14) 3,294,089 2,826,350

DEBT SECURITIES - -

PROVISIONS FOR CONTINGENCIES AND EXPENSES (Note 15) 18,707 16,791

PROVISIONS FOR PENSIONS AND SIMILAR OBLIGATIONS 10,424 10,534

PROVISIONS FOR FUTURES - 1,112

OTHER PROVISIONS 8,283 5,145

GENERAL RISK ALLOWANCE (Note 16) - 419

SUBORDINATED DEBT (Note 17) 60,000 60,000


UNPAID ACCRUED EXPENSES 26,537 22,109

UNEARNED REVENUE 110 102

OTHER LIABILITIES 14,964 10,148

CURRENT TRANSACTIONS 6,117 2,827

OPTIONS ISSUED 1,672 1,234

TRADE AND OTHER ACCOUNTS PAYABLE 7,175 6,087

CAPITAL STOCK (Note 19) 42,407 42,407

CAPITAL STOCK 42,407 42,407

RESERVES (Note 19) 162,989 150,972

LEGAL RESERVE 14,553 7,277

GUARANTEE RESERVES 28,641 28,641

VOLUNTARY RESERVES 27,464 20,422

CONSOLIDATION RESERVES 92,331 94,632

INCOME (Note 19) 21,224 31,017

INCOME FOR THE YEAR 52,224 94,393

LESS - INTERIM DIVIDENDS (31,000) (63,376)

TOTAL LIABILITIES AND EQUITY 3,756,212 3,240,029

* Presented exclusively for comparison purposes.The accompanying Notes 1 to 29 are an integral part of the consolidated balance sheet as of December 31, 2008.


16

consolidated statements of income


for the years ended december 31, 2008 and 2007* (Notes 1, 2, 3 and 4) Thousands of euros

statements of income 2008 2007*

INTEREST INCOME 154,820 136,523

DUE FROM INAF AND FINANCIAL INTERMEDIARIES 92,293 85,998

LENDINGS 54,520 46,940


INTEREST EXPENSE (117,856) (99,800)

DUE TO INAF AND FINANCIAL INTERMEDIARIES (2,271) (2,110)

CUSTOMER DEPOSITS (111,044) (92,817)

SUBORDINATED DEBT (3,797) (3,210)

OTHER (744) (1,663)

INCOME FROM EQUITY SECURITIES 3 2

COMMON STOCKS AND OTHER EQUITY SECURITIES 3 2

NET INTEREST INCOME 36,967 36,725

NET SERVICE FEES 65,913 99,858

FEES FOR SERVICES PROVIDED 69,507 104,077

LESS- FEES FOR SERVICES RECEIVED (3,594) (4,219)

GAINS ON FINANCIAL TRANSACTIONS 3,640 5,975

EXCHANGE GAINS 1,441 1,771

GAINS ON SECURITIES TRANSACTIONS (464) 1,961

GAINS ON FUTURES TRANSACTIONS 564 463

SHARE OF LOSS/INCOME OF COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD 2,099 1,780

OTHER OPERATING INCOME 201 224

GROSS OPERATING INCOME 106,721 142,782


17

Thousands of euros

statements of income 2008 2007*

PERSONNEL EXPENSES (17,364) (18,000)

EMPLOYEES, DIRECTORS AND INDEMNITIES (14,067) (14,771)

SOCIAL SECURITY COSTS (1,750) (1,739)

OTHER PERSONNEL EXPENSES (1,547) (1,490)

GENERAL EXPENSES (24,841) (25,157)

MATERIAL (305) (231)

OUTSIDE SERVICES (15,418) (12,470)

TAXES OTHER THAN INCOME TAX (9,118) (12,456)

DEPRECIATION AND AMORTIZATION EXPENSE NET OF RECOVERIES (7,177) (7,108)

DEPRECIATION AND AMORTIZATION EXPENSE (Notes 9 and 10) (7,177) (7,108)

PROVISIONS FOR DECLINE IN VALUE OF ASSETS NET OF RECOVERIES - -

NET OPERATING INCOME 57,339 92,517

PROVISIONS FOR CREDIT LOSSES NET OF RECOVERIES (Notes 6, 7 and 8) (3,385) 2,824

PROVISIONS TO ALLOWANCE FOR CREDIT LOSSES (6,977) (5,845)

RECOVERIES FROM ALLOWANCE FOR CREDIT LOSSES 3,592 8,669

PROVISIONS FOR CONTINGENCIES AND EXPENSES NET OF RECOVERIES (Note 15) (3,365) (1,010)

PERIOD PROVISIONS FOR CONTINGENCIES AND EXPENSES (3,888) (1,758)

RECOVERIES FROM PROVISIONS FOR CONTINGENCIES AND EXPENSES 523 748

PROVISIONS TO GENERAL RISK ALLOWANCE (Note 16) - -

INCOME FROM ORDINARY ACTIVITIES 50,589 94,331

EXTRAORDINARY INCOME (Note 20) 1,635 62

CONSOLIDATED INCOME FOR THE YEAR 52,224 94,393

INCOME ATTRIBUTED TO THE GROUP 52,224 94,393

* Presented exclusively for comparison purposes.The accompanying Notes 1 to 29 are an integral part of the consolidated statement of income as of December 31, 2008.


18

consolidated memorandum accounts


As of december 31, 2008 and 2007* (Notes 1, 2, 3 and 4) Thousands of euros

memorandum accounts 2008 2007*

CONTINGENT LIABILITIES 120,437 114,034

GUARANTEES, BONDS AND SURETIES GIVEN 112,336 109,909

DOCUMENTARY CREDITS ISSUED OR RECEIVED AND CONFIRMED TO CUSTOMERS 3,445 3,142

ACCEPTANCES AND SIMILAR COMMITMENTS 4,656 983

COMMITMENTS AND CONTINGENCIES 336,880 333,030

OPERATIONAL COMMITMENTS AND CONTINGENCIES 326,329 322,351

ACTUARIAL COMMITMENTS AND CONTINGENCIES 10,551 10,679

FINANCIAL DERIVATIVES (Note 21) 1,354,666 1,665,430

OUTSTANDING CURRENCY SALES AND PURCHASES 1,238,283 1,482,892

FINANCIAL FORWARD TRANSACTIONS 116,383 182,538

SECURITIES AND OTHER ASSETS IN CUSTODY 3,456,523 4,729,870

THIRD-PARTY SECURITIES AND OTHER ASSETS HELD IN CUSTODY (Note 22) 2,872,753 4,702,466

OWN SECURITIES AND OTHER ASSETS HELD IN CUSTODY 583,770 27,404

OTHER MEMORANDUM ACCOUNTS HELD SOLELY FOR ADMINISTRATIVE CONTROL PURPOSES (Note 23) 1,173,484 1,513,099

GUARANTEES AND COMMITMENTS RECEIVED 971,718 924,114

OTHER MEMORANDUM ACCOUNTS 201,766 588,985

TOTAL MEMORANDUM ACCOUNTS 6,441,990 8,355,463

* Presented exclusively for comparison purposes.The accompanying Notes 1 to 29 are an integral part of the consolidated memorandum accounts as of December 31, 2008.


19

consolidated statements of changes in financial position


for the years ended december 31, 2008 and 2007* (Notes 1, 2, 3 and 4) Thousands of euros

source of funds 2008 2007*

FUNDS OBTAINED FROM OPERATIONS 63,971 98,279

INCOME FOR THE YEAR 52,224 94,393

NET PROVISIONS TO ALLOWANCE FOR CREDIT LOSSES 3,385 (2,824)

NET PROVISIONS TO OTHER ALLOWANCES (PENSION ALLOWANCE, etc.) 3,260 1,858

DEPRECIATION AND AMORTIZATION EXPENSE 7,177 7,108

(GAIN) / LOSS ON SALE OF FIXED ASSETS 24 (476)

INCOME FROM COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD (2,099) (1,780)

UPWARD VARIATION IN LIABILITIES LESS ASSETS 115,055 -

INAF AND FINANCIAL INTERMEDIARIES (LIABILITIES - ASSETS) 115,055 -

NET INCREASE IN LIABILITIES 467,739 188,127

DEPOSITS: CUSTOMER DEPOSITS 467,739 188,127

NET DECREASE IN ASSETS - 5,115

CASH ON HAND - 5,115

SALES OF LONG-TERM INVESTMENTS - 2,022

SALES OF INVESTMENTS - 1,528

SALES OF FIXED ASSETS - 494

TOTAL FUNDS OBTAINED 646,765 293,543

application of funds 2008 2007*

UPWARD VARIATION IN ASSETS LESS LIABILITIES 8,781 110,915

INAF AND FINANCIAL INTERMEDIARIES (ASSETS - LIABILITIES) - 85,158

OTHER ITEMS (ASSETS - LIABILITIES) 8,781 25,757

NET DECREASE IN LIABILITIES - -

NET INCREASE IN ASSETS 565,357 96,424

CASH ON HAND 4,217 -

LENDINGS: CUSTOMERS 19,856 89,069

INVESTMENT SECURITIES LESS INVESTMENTS 541,284 7,355

PURCHASES OF LONG-TERM INVESTMENTS 22,627 7,234

PURCHASES OF INVESTMENTS 22,627 7,234

FUNDS APPLIED FOR FINANCING ACTIVITIES 50,000 78,970

DIVIDENDS 50,000 78,970

TOTAL FUNDS APPLIED 646,765 293,543

* Presented exclusively for comparison purposes.The accompanying Notes 1 to 29 are an integral part of the consolidated statement of changes in financial position as of December 31, 2008.


note 1 Group description

Banc Internacional d'Andorra, S.A. and Banca Mora, S.A.U. (“hereinafter, the Banks”) are Andorran companies and their sole corporate

purpose is to perform all the permitted types of transactions for banking institutions under the legislation in force at that time in Andorra.

Banca Mora, S.A.U. is wholly owned by Banc Internacional d'Andorra, S.A.

The lines of business of the other companies integrated in the consolidated financial statements of Banc Internacional-Banca Mora

Group as of December 31, 2008, are as follows:

Name Country Line of Business

BIBM Gestió d'Actius, S.A.U. Andorra Management of investment schemes

BIBM Assegurances, S.A.U. Andorra Insurance

Seguretat i Serveis, S.A. Andorra Security

BIBM Preferents Ltd. Cayman Islands Finance

Mora Wealth Management AG Switzerland Management of investments and financial assurance

Mora Wealth Management AG, a 100% subsidiary of BIBM Gestió d'Actius, S.AU. was founded on September 25, 2008 and registered

in Commercial Registry of Zurich (Switzerland). The entity operates as an asset manager and financial assurance and has obtained the

authorization to operate as that from the Swiss Association of Asset Managers.

note 2 Basis of presentation and consolidation principles

a) True and fair view

The accompanying financial statements, authorized by the board of directors of Banc Internacional d'Andorra, S.A. on March 18, 2009,

were obtained from the accounting records of the Banks and companies composing the Banc Internacional-Banca Mora Group

(hereinafter, “the Group”) and are presented in accordance with the format established in the chart of accounts of the andorran financial

system approved by the Andorran government on January 19, 2000 and, accordingly, give a true and fair view of the net worth, financial

position and consolidated results of the Group.

These financial statements will be submitted to the Shareholders' Meeting for approval and Group Management anticipates that they

will be approved without any changes.

b) Accounting policies

The accompanying consolidated financial statements were prepared by applying the generally accepted accounting methods and

principles set forth in the chart of accounts of the andorran financial system (see Note 3). All obligatory accounting principles with a

significant effect on these consolidated financial statements were applied in their preparation.

c) Consolidation principles

All subsidiaries were consolidated by the fully integration method with the exception of the investment in the subsidiary BIBM

Assegurances, S.A.U. which was accounted for by the equity method since its insurance business differs from banking activity.

All material intercompany balances and transactions were eliminated for consolidation purposes.

20

notes to consolidated financial statementsfor the year ended december 31, 2008Banc Internacional d’Andorra, S.A., Banca Mora, S.A.U. and other Companies composing the Banc Internacional - Banca Mora Group


Details of the consolidated companies as of December 31, 2008 and 2007, in thousands of euros, are as follows:

2008

Company Percentage Capital Reserves Income for Interim Total of ownership (1) Stock lthe Year Dividend Equity

Banca Mora, S.A.U. 100% 30,060 73,912 23,786 (17,000) 110,758


Seguretat i Serveis, S.A. (2) 28.57% 63 719 96 - 878



Mora Wealth Management AG 100% 67 - (20) - 47

2007

Company Percentage Capital Reserves Income for Interim Total of ownership (1) Stock lthe Year Dividend Equity

Banca Mora, S.A.U. 100% 30,060 68,701 35,718 (30,507) 103,972


Seguretat i Serveis, S.A. 28.57% 32 735 99 - 866



(1) Percentage held directly or indirectly.(2) Estimated figures for 2008.

note 3 Accounting policies and valuation standards

The following accounting principles and valuation methods were applied in the preparation of the accompanyingconsolidated financial statements:

a) Accrual basis

Revenues and expenses are recorded on an accrual basis, and the amortized cost (using the effective interest method) is used for

transactions which take more than twelve months to be completed. Nevertheless, in accordance with conservative accounting principles,

as required by applicable legislation, the interest earned on loans classified as doubtful or very doubtful is recognized as income upon

collection.

Following this principle, the accruals accounts show income/expenses accrued and not yet received/paid, and income/expenses

received/paid in advance (see Notes 11 and 18).

b) Recording basis

In accordance with banking practice, transactions are recorded on the date they take place, which may differ from their value dates, which

are used in the calculation of interest income and expense.

c) Foreign currency

Foreign currency assets, liabilities and memorandum accounts were translated to euros at the last mid-market exchange rates prevailing

before the balance sheet date as determined by the Andorran Bankers' Association. Exchange gains or losses are recorded in the

accompanying consolidated statements of income under “Gains on Financial Transactions - Exchange Gains”.

21


d) Doubtful assets

Loans and credits, debentures and other fixed-income securities and other receivables are classified as doubtful assets when the whole

repayment is considered problematic because a reduction in the prospects for collection is noted due to the debtors' inability to fulfill their

commitments under the contractual terms. The assets -notes, loan, credit or financial lease payments receivable, coupons, fixed-income

securities and other debits due and payable- are included in this category according to their default status when the related principal or

interest becomes more than three months overdue. In the case of loans with periodic payments, subsequent payments will be classified as

doubtful on the day they mature.

When these assets are considered unrecoverable or their recovery value is deemed to be minimal or unlikely to be realized, they are removed

from assets in the balance sheet and recorded in memorandum accounts under the “Other Memorandum Accounts Held Solely for

Administrative Control Purposes - Other Memorandum Accounts” caption (see Note 23). In any case, these unpaid assets are transferred

to memorandum accounts three years after maturity (six years for mortgage loans with adequate collateral).

e) Allowance for credit losses

The allowance for credit losses was set up to cover potential losses on the recovery of investments with financial intermediaries, lending

and other risks. This allowance is increased by the expenses charged against income and reduced by charge-offs of loans considered to

be uncollectible and recoveries of amounts previously provided.

The allowances for credit losses as of December 31, 2008 and 2007, were determined on a case-by-case basis under conservative criteria

and they are kept at the required level to cover all potential losses. To cover any losses that may arise in the future on individual risks that

have not been identified as problematic at present, general-purpose provisions were recorded. The mentioned provisions are equal to 0.5%

of time deposits (see Note 6) placed for more than one business day with banking institutions and varying percentages (between 0.5% and

1%) of lendings (see Note 7) and the fixed-income securities (see Note 8).

f) Unused credit facilities

Credit facilities granted to customers are recorded in the balance sheet at the amount used, and the undrawn amounts are recorded in the

memorandum accounts under “Commitments and Contingencies - Operational Commitments and Contingencies”.

g) Investment securities

Fixed-income securities

The fixed-interest securities in the Banks' portfolio are classified as follows:

a) Trading securities, which are the securities that the Banks expect to sell before maturity with the aim of making a profit in the short term

from price fluctuations, are carried at market value. Any gains or losses arising from variations in the value of these securities, excluding

accrued coupon payments, are recorded net under “Gains on Financial Transactions - Gains on Securities Transactions” in the

accompanying income statements. Coupon payments accruing after securities have been purchased are recorded under “Interest

Income - Debentures and Other Fixed-Income Securities.”

b) The held-to-maturity portfolio is made up of the securities that the Banks have decided to hold to maturity, provided they have the ability

to do so. These securities are stated at adjusted cost price. Cost price is adjusted on a daily basis by accruing the difference between

cost and redemption value, over the remaining life of the related security. The result of accruing this difference, together with the coupons

that have accrued since the securities were purchased, are recorded under “Interest Income - Debentures and Other Fixed-Income

Securities.”

c) Other securities are classified as available-for-sale securities, and are valued and recorded at adjusted cost price and market value.

Likewise differences between market value and adjusted cost price are recorded in income statement as a provision of fluctuating fund,

calculating the total value of negative differences less the positive, until the positive differences equals the negative.

22



Equity securities

a) The securities in the trading portfolio are shown at their market value.

b) The securities in the held-to-maturity or available-for-sale portfolios are recorded at the lower of cost or market.

c) Investments accounted for under the equity method (see Note 2) are stated at the value of the portion of the investee's net worth they

represent.

Market value was determined as follows:

• Listed securities: price at year-end.

• Unlisted securities: underlying book value, obtained from the last available balance sheet.

h) Property and equipment

Property and equipment are stated at cost, except for the building housing the Banks' head offices, which was revalued in 1994.

The Group depreciates its property and equipment by the straight-line method based on the following years of estimated useful life:

Years of Estimated Useful Life

Buildings 50

Machinery, furniture and fixtures 5 to 10

Vehicles 5

Computer hardware 3

i) Intangible assets

The balance of this caption basically relates to sums paid to external suppliers for various computer programs, which are amortized over

three years.

j) Provisions for pensions and similar obligations

In 1977 the Group set up a pension fund for all employees, for the purpose of supplementing the pensions paid under the Andorran social

security system. In 2007 it was proposed to the employees that this internal fund be changed and replaced by a defined contribution plan,

implemented and managed through a group insurance policy taken out by Banc Internacional d'Andorra, S.A. on behalf of the Banc

Internacional - Banca Mora Group with BIBM Assegurances, S.A.U. (see Note 2) which has been reinsured with Axa Vida, S.A. (see Note

15). Almost all employees accepted this proposal. The main assumptions used in the actuarial study relating to March 31, 2007, used as a

basis to the changes' system, are as follows:

- Nominal discount rate: 4.60%.

- Salary increase rate: 2.50%.

- CPI: 1.50%.


Additionally, an internal pension fund has been maintained for retired and pre-retired employees and serving employees who have not joined

the new pension scheme. The main actuarial assumptions used to calculate the corresponding benefit obligations at December 31, 2008,

are as follows:

23


- Nominal discount rate: between 4.10% and 5.30%, depending on the employee group concerned

- Salary increase rate: 3.50%

- CPI: 2.50%.


The regular cost for the year of the internal pension fund was €9 thousand, which is recorded under “Personnel Expenses - Other Personnel

Expenses”, while the portion relating to capitalization of the internal allowance is recorded under “Interest Expense - Other” in the statements

of income. In addition, as a result of the outsourcing of the pension plan, payments amounting to €1,062 thousand were made during 2008.

The amount of these payments is recorded under “Personnel Expenses - Other Personnel Expenses” in the accompanying consolidated

income statements.

In addition, the provisions required to cover all the salary and welfare commitments with a group of eligible employees who joined the

preretirement scheme offered by the Banks, were recorded against income. The related charge is included under “Period Provisions for

Contingencies and Expenses” in the accompanying consolidated income statements (see Note 15).

k) Financial derivatives

The Banks use these instruments basically to hedge the Banks' equity positions. They are recorded in the memorandum accounts at the

face value of the related contracts (see Note 21). In the case of options, the amount of premiums paid is included in “Other Assets - Options

purchased” and the amount of premiums received is included in “Other liabilities - Options issued” in the accompanying consolidated

balance sheets.

Transactions whose purpose and effect is to eliminate or substantially reduce the currency, interest-rate or market risks associated with

equity positions or other transactions are considered as hedges. Gains or losses on hedging transactions are accrued symmetrically to the

revenues or expenses relating to the item hedged.

Non-hedging transactions (also called trading transactions) arranged on organized markets are recorded at their market price, and any

variations in market price are recorded in full in the accompanying consolidated income statements.

Gains or losses on trading transactions arranged outside organized markets are not recognized in the accompanying consolidated statements

of income until they have been realized. However, at each month-end a valuation is made of positions, and, if required, a provision is recorded

against income to cover possible net losses for each type of risk detected in the valuation.

l) Indirect service tax

The Law on the indirect tax on the provision of banking and financial services, passed by the General Council of Andorra on May 14,

2002, imposes a tax on the banking and financial services provided by banking institutions and by financial institutions. The tax liability

is calculated under a system which provides an estimate of the value of the services provided, based on economic and financial

indicators. In accordance with Law 3/2005, on February, 21, on the modification of the indirect tax rate on banking and financial services,

the applicable tax rate is 12%.

The expense accrued in respect of the indirect service tax amounted to €8,187 in 2008 and €11,365 thousand in 2007, and is recorded in

“General Expenses -Taxes Other Than Income Tax” in the accompanying consolidated income statements.

24



note 4 Distribution of income

The proposed distribution of Banc Internacional, S.A.'s 2008 income that the Board of Directors will submit for approval by the

Shareholders' Meeting and the distribution of 2007 income are as follows:

Thousands of euros

2008 2007

Dividends

Interim 31,000 63,376

Final 9,000 19,000

40,000 82,376

Reserves

Voluntary reserve 5,273 11,281

Income for the Year 45,273 93,657

On December 19, 2008, as per the decision taken by the Board of Directors of Banc Internacional d'Andorra, S.A. dated December

16, 2008, a distribution of an interim dividend of €31,000 thousand was performed (see Note 19).

The income of the remaining Group companies shall be distributed in accordance with the resolutions of their respective Shareholders'

Meetings.

note 5 Mandatory bank reserves

a) Mandatory bank reserve ratios

On June 30, 1994, the General Council of Andorra passed the law regulating mandatory bank reserve ratios. Under this law, all

institutions taking funds from the public on deposit and using these funds for loans and other investments must maintain a ratio of their

reserves in Andorran public funds.

Government Debt Securities

In order to meet this ratio the Banks had subscribed, as of December 31, 2008 and 2007, to Andorran government debt securities

issued on December 31, 2005 for €71,952 thousand. These debt securities mature on December 31, 2009, and earn interest at the

one-year Euribor rate.

The amounts subscribed by the Banks for these issues are recorded in the “Investment Securities - Debentures and Other Fixed-

Income Securities” caption in the accompanying consolidated balance sheets (see Note 8). These debt securities are recorded in the

held-to-maturity portfolio.

Special financing program for homebuyers

Loans granted by the Banks under a program of national and social interest providing special financing for homebuyers, approved by

the Andorran government on April 26, 1995, can also be classified as public funds. The loans granted by the Banks under this program

amounted to €674 thousand as of December 31, 2008 and €782 thousand as of December 31, 2007, and are recorded under

"Lendings - Loans and Credits" in the accompanying consolidated balance sheets. These loans earn 6% fixed interest yearly.

25


b) Guarantee reserves

On May 11, 1995, the General Council of Andorra approved the law on reserves guaranteeing deposits and other banking liabilities

to be kept and deposited by institutions within the financial system. Under this law, the institutions in the Andorran financial system

are required to keep a minimum equity reserve as permanent equity to guarantee their banking liabilities, equal to 4% of all the

institutions' investments, net of investments made with equity or banking funds. As of December 31, 2008 and 2007, this reserve ratio

was 1.25%.

The amount of the guarantee reserves (see Note 19) must be held in a deposit with INAF. The reserves and the deposits placed by

the Banks for this purpose as of December 31, 2008 and 2007, amounted to €28,431 thousand, and were determined on the basis of

the balance sheet figures as of December 31, 2002. The reserves and deposits of BIBM Gestió d'Actius, S.A.U. amounted to €210

thousand as of December 31, 2008 and 2007. These deposits earn variable interest at market rate. The deposits placed for this

purpose are recorded in the “Due from INAF” caption on the asset side of the accompanying consolidated balance sheets.

note 6 Due from financial intermediaries

The breakdown of the balance of this asset caption in the accompanying consolidated balance sheets, by currency and type of

transaction, excluding the allowance for credit losses, is as follows:

Thousands of euros

2008 2007

By currency:

In euros 1,332,750 1,467,021


1,885,564 1,965,147

By type:

Demand deposits


Deposits - 280,617

Other accounts 7,091 6,733

30,336 297,517

Time deposits 1,855,228 1,667,630

1,885,564 1,965,147

Time deposits are deposits with an original term of more than one working day.

The breakdown by maturity from the balance sheet date of the time deposits recorded in this caption of the accompanying

consolidated balance sheets, excluding the allowance for credit losses, is as follows:

26



Thousands of euros

2008 2007

Up to 1 month 1,031,703 1,266,330



1,855,228 1,667,630

As of December 31, 2008 and 2007, there were no past-due balance or balance with no specified maturity.

The movement of the allowance for credit losses that corresponds basically to the general provision for the years 2008 and 2007 was

as follows:

Thousands of euros

2008 2007


Add:

Net provision to the allowance 937 2,211


Under the chart of accounts of the andorran financial system, this general allowance for credit losses is considered as equity for the

purpose of calculating the capital ratio.

note 7 Lendings

The breakdown of the balance of this asset caption in the accompanying consolidated balance sheets, by currency and sector,


Thousands of euros

2008 2007

By currency:

In euros 976,749 953,145


1,065,824 1,045,968

By sectors:

Andorran public sector

Central government 50,436 26,378

Local government 57,839 50,273

Other 2,728 3,644

111,003 80,295

Private sector 954,821 965,673

1,065,824 1,045,968

27


The detail of the balance of this caption by type of collateral and degree of risk, excluding the allowance for credit losses, is as follows:

Thousands of euros

2008 2007

By type of collateral:

Secured

Mortgage 514,871 455,658

Cash 22,973 2,069

Securities 219,200 307,014

757,044 764,741

Unsecured 308,780 281,227

1,065,824 1,045,968

By degree of risk:

Normal 1,053,339 1,039,040

Past due 1,280 1,653

Doubtful 11,205 5,275

1,065,824 1,045,968

Among the doubtful assets, a total sum of €7,188 thousand and €2,028 thousand, at December 31 2008 and 2007 respectively, were

secured.

The detail by maturity from the balance sheet date of the balance of this caption of the accompanying consolidated balance sheets,


Thousands of euros

2008 2007

Past due and doubtful 12,485 6,928

Up to 1 month 56,707 55,575




Over 5 years 298,892 235,716

No specified maturity 31,258 32,030

1,065,824 1,045,968

The variation of the allowance in 2008 and 2007 were as follows:

Thousands of euros

2008 2007


Add:

Provisions to the allowance 6,066 6,691

Less:

Allowance used (1,002) (804)

Allowances released (4,401) (10,668)


28



The allowance for credit losses in relation with lendings is composed by a specific provision established over an individual basis and

by a general provision (see Note 3-e) as follows:

Thousands of euros

2008 2007

Specific provision 2,143 1,722

General banking provision 3,039 2,797

5,182 4,519

The balance of “Provisions for credit losses net of recoveries” in the accompanying consolidated income statements relates mainly to

changes in the allowance for credit losses, shown in the preceding table, plus net additions to the general allowance for financial

intermediaries and investment securities.

note 8 Investment securities

The breakdown of the “Investment Securities” asset caption in the accompanying consolidated balance sheets as of December 31,

2008 and 2007, by type of security and listing status, excluding the allowance for credit losses and the security price fluctuation

allowance, is as follows:

Thousands of euros

2008 2007

By type:

Trading securities


Investment schemes 2,630 3,371

17,587 27,760

Available-for-sale securities

Debentures and other fixed-income securities 3 3

Common stocks and other equity securities 72 72

75 75

Held-to-maturity securities


Long-term securities

Investments in Group companies 10,674 10,599

Other investments 258 258

10,932 10,857

652,003 110,644

By listing status:

Listed 569,044 27,760

Unlisted 82,959 82,884

652,003 110,644

29


The market value of the available-for-sale and held-to-maturity investment portfolios as of December 31, 2008 and 2007 does not differ

significantly from their book value.

The cost value of the trading portfolio was €21,508 thousand as of December 31, 2008 and €28,502 thousand as of December 31,

2007.

The breakdown by maturity from the balance sheet date of the “Debentures and Other Fixed-Income Securities” caption is as follows:

Thousands of euros

2008 2007

From 1 month to 3 months 375,039 -

From 3 months to 1 year 232,393 -


More than 5 years 13,784 13,979

638,369 96,344

There were no past-due balance as of December 31, 2008 and 2007.

The caption “Debentures and other fixed-income securities" as of December 31, 2008 is composed mainly by debts with public

administrations of countries from the OECD.

The “Investment Schemes” caption as of December 31, 2008 and 2007, is composed entirely of investments in mutual funds managed

by BIBM Gestió d'Actius, S.A.U.

The “Investments in Group Companies” caption relates to shares in BIBM Assegurances, S.A.U., a company consolidated by the

equity method, amounting to €10,674 thousand as of December 31, 2008 and €10,599 thousand as of December 31, 2007.

The detail of the balance of “Other Investments” as of December 31, 2008 (provisional figures), is as follows:

Thousands of euros

Company Location Line of Percentage of Capital Income for Total Book Interim Business ownership (1) Stock the Year equity (2) Value Dividend


The figures relating to this company as of December 31, 2007, are as follows:

Thousands of euros

Company Location Line of Percentage of Capital Income for Total Book Interim Business ownership (1) Stock the Year equity (2) Value Dividend


(1) Percentage held directly or indirectly.(2) Includes income for the year net of interim dividends.

As of December 31, 2008 and 2007, none of the investments in the trading portfolio represent interests of more than 5% of capital

stock (qualified holdings).

In 2008 and 2007 there were no variations in the security price fluctuation allowance.

30



The variation of the general provision in 2008 and 2007 were as follows:

Thousands of euros

2008 2007

Beginning balance 140 81

Add:

Net provision to the allowance 892 59

Ending balance 1,032 140

note 9 Intangible assets and deferred charges

The variations in 2008 and 2007 in intangible asset and deferred charge accounts and in the related accumulated amortization were

as follows:

Thousands of euros


Computer software:

Cost 40,929 4,526 (6) - 45,449

Accumulated amortization (34,839) (3,823) - - (38,662)

6,090 703 (6) - 6,787

Other:

Cost 422 30 - - 452

Accumulated amortization (395) (13) - - (408)

27 17 - - 44

Total 6,117 720 (6) - 6,831

Thousands of euros


Computer software:

Cost 36,186 4,748 - (5) 40,929

Accumulated amortization (31,092) (3,752) - 5 (34,839)

5,094 996 - - 6,090

Other:

Cost 419 3 - - 422

Accumulated amortization (386) (9) - - (395)

33 (6) - - 27

Total 5,127 990 - - 6,117

31


note 10 Property and equipment

The variations in 2008 and 2007 in property and equipment accounts and in the related accumulated depreciation were as follows:

Thousands of euros


Land:

Cost 23,149 - - - 23,149

Buildings:

Cost 24,554 433 - - 24,987

Accumulated depreciation (3,537) (481) - - (4,018)

21,017 (48) - - 20,969

Furniture:

Cost 3,779 521 (259) - 4,041

Accumulated depreciation (2,289) (244) 248 - (2,285)

1,490 277 (11) - 1,756

Machinery and Fixtures:

Cost 18,763 1,253 (687) 382 19,711

Accumulated depreciation (11,944) (1,670) 673 - (12,941)

6,819 (417) (14) 382 6,770

Computer hardware and data processing equipment:

Cost 8,861 1,115 - - 9,976


1,185 206 - - 1,391

Vehicles:

Cost 272 86 (31) - 327

Accumulated depreciation (202) (37) 31 - (208)

70 49 - - 119

Others:

Cost - 382 - (382) -

- 382 - (382) -

Total 53,730 449 (25) - 54,154

Thousands of euros


Buildings:

Cost 416 14,281 - - 14,697

Total 416 14,281 - - 14,697

32



Thousands of euros


Land:

Cost 23,149 - - - 23,149

Buildings:

Cost 24,554 - - - 24,554


21,497 (480) - - 21,017

Furniture:

Cost 3,512 314 (47) - 3,779

Accumulated depreciation (2,094) (239) 44 - (2,289)

1,418 75 (3) - 1,490

Machinery and Fixtures:

Cost 17,959 950 (66) (80) 18,763

Accumulated depreciation (10,410) (1,626) 55 37 (11,944)

7,549 (676) (11) (43) 6,819

Computer hardware and data processing equipment:

Cost 12,429 676 (4,329) 85 8,861

Accumulated depreciation (10,993) (970) 4,329 (42) (7,676)

1,436 (294) - 43 1,185

Vehicles:

Cost 253 18 - 1 272

Accumulated depreciation (170) (32) - - (202)

83 (14) - 1 70

Total 55,132 (1,389) (14) 1 53,730

Thousands of euros


Buildings:

Cost 386 524 (494) - 416

Other:

Cost - 1 - (1) -

Total 386 525 (494) (1) 416

No interest expenses or exchange losses relating to property and equipment were capitalized in 2008 or 2007.

Assets not assigned to operations include real estates adjudicated as credits settlements, by an amount of €5,877 and €416 thousand

as of December 31, 2008 and 2007, respectively.

33


note 11 Accrual accounts - assets

The breakdown of the balance of this asset caption in the accompanying consolidated balance sheets, at December 31, 2008 and

2007 is as follows:

Thousands of euros

2008 2007

Uncollected accrued interests

Interests 34,621 17,358

Commissions 1,478 2,003

36,099 19,361

Prepaid expenses 724 792

36,823 20,153

note 12 Due to INAF

The detail of demand and time deposits in this liability caption of the accompanying consolidated balance sheets as of December 31,

2008 and 2007, is as follows:

Thousands of euros

2008 2007

Demand deposits 1,229 2


41,042 36,395

All time deposits have a maturity of less than one year.

All balances in this account were solely denominated in Euros and had a specified maturity.

note 13 Due to financial intermediaries

The breakdown of the balances of the “Banks and Credit Institutions” and “Other Financial Intermediaries” liability captions in the

accompanying balance sheets, by currency and type, is as follows:

Thousands of euros

2008 2007

By currency:In euros 73,189 6,309In foreign currency 954 37,010

74,143 43,319

By type:Demand deposits

Correspondent bank accounts 50,812 2,720Other accounts 26 198

50,838 2,918


74,143 43,319

34



Time deposits are deposits with a term of more than one business day.

The breakdown by maturity from the balance sheet date of the time deposits recorded in these captions of the accompanying

consolidated balance sheets is as follows:

Thousands of euros

2008 2007

From 1 month to 3 months - 12,250



23,305 40,401


note 14 Customer deposits

The detail of the balance of this caption of the accompanying consolidated balance sheets, by currency and type, is as follows:

Thousands of euros

2008 2007

By currency:In euros 2,664,174 2,298,208In foreign currency 629,915 528,142

3,294,089 2,826,350

By type:Demand deposits

Checking accounts 671,665 651,742Savings accounts 27,498 29,189

699,163 680,931

Time depositsCertificates of deposits 2,594,675 2,145,234Other 251 185

2,594,926 2,145,419

3,294,089 2,826,350

The breakdown by maturity from the balance sheet date of the time deposits recorded in this caption of the accompanying

consolidated balance sheets is as follows:

Thousands of euros

2008 2007

Up to 1 month 1,201,982 1,606,138From 1 month to 3 months 847,775 423,588From 3 months to 1 year 537,793 115,311From 1 year to 5 years 7,376 382

2,594,926 2,145,419


35


note 15 Provisions for contingencies and expenses

Provisions for pensions and similar obligations

The provisions recorded in this liability caption of the accompanying consolidated balance sheets relate to the pension allowance set up for

employees (see Note 3-j).


Thousands of euros

2008 2007


Add:

Period provision charged against personnel expenses 9 742

Extraordinary provision charged against income (Note 20) 305 3,000

Reversal of provision credited to income (Note 20) - (464)

Return on assets assigned to the allowance (financial cost) 541 1,470

Less:

Pensions paid (723) (570)

Insurance premiums (242) (31,231)


Other provisions

The variations in 2008 and 2007 in the balances of the “Provisions for Contingent Liabilities”, “Provisions for Financial Derivatives” and

“Other Provisions” liability captions in the accompanying consolidated balance sheet were as follows:

Thousands of euros

2008 Provisions for Otherfinancial derivatives provisions


Add:

Period provisions - 4,311

Less:

Provisions released and other (1,112) (1,173)

Ending balance - 8,283

Thousands of euros

2007 Provisions for contingent Provisions for financial Otherliabilities derivatives provisions

Beginning balance 977 2,623 4,665

Add:

Period provisions - 297 1,718

Less:

Provisions released and other (977) (1,808) (1,238)

Ending balance - 1,112 5,145

36



“Other provisions” mainly includes the provisions needed in connection with early retirements commitments (see Note 3-j) as of

December 31, 2008 and 2007, which amounted to €3,691 thousand and €3,575 thousand, respectively. The rest of the provision

covers other risks related to the normal activity of the Group.

note 16 General risk allowance

The amount of the provisions recorded in this liability caption of the accompanying consolidated balance sheets relates to the allowance

that the Banks have set aside, for conservative reasons, by reference to the risks inherent to banking and financial activities.

Under the chart of accounts of the andorran financial system, this general allowance for credit losses is considered as equity for the

purpose of calculating the capital ratio.


Thousands of euros

2008 2007

Beginning balance 419 2,850

Less:

Allowance released and other (Note 20) (419) (2,431)

Ending balance - 419

note 17 Subordinated debt

On July 28, 2006, BIBM Preferents Ltd. issued non-voting preferred stock in the amount of €60,000 thousand. This preferred stock has

no specified maturity; however, the issuer is entitled to redeem it after five years from the date of issue subject to INAF approval. The

preferred stock carries a dividend of 5% per year, which is fixed for the first three years after issue and variable yearly thereafter in line

with the 10-year CMS (Constant Maturity Swap) rate plus 30 basis points and with a maximum rate of 8% per year.

Banc Internacional d'Andorra, S.A. owns 100% of the capital stock of BIBM Preferents Ltd. To underwrite the abovementioned issue,

Banc Internacional d'Andorra, S.A. has issued an irrevocable subordinated guarantee in favor of and for the benefit of the preferred

stock subscribers.

Previously, on May 31, 2006, the Board of Directors of INAF gave authorization for the abovementioned issue of preferred stock to be

considered as equity for the purpose of calculating Banc Internacional d'Andorra, S.A.'s capital ratio.

37


note 18 Accruals accounts - liabilities

The detail in this liability caption of the accompanying consolidated balance sheets as of December 31, 2008 and 2007 is as follows:

Thousands of euros

2008 2007

Unpaid accrued expenses

Interests 21,524 14,845

Commissions 62 17

Others 4,951 7,247

26,537 22,109

Unearned revenue

Interests 110 102

26,647 22,211

note 19 Variations in equity

The breakdown of the accounts making up the Group's equity in 2008 and 2007 and of the variations therein is as follows:

Thousands of euros

Capital Legal Guarantee Voluntary and Income Interim Final TotalStock Reserve Reserves Consolidation for the Dividends Dividends

(Note 5-b) Reserves Year



Final dividend - - - - - - (9,200) (9,200)

Dividend charged to reserves - - - (6,394) - - - (6,394)


2007 income - - - - 94,393 - - 94,393



Final dividend - - - - - - (19,000) (19,000)

Transfer of voluntary reserves - 7,276 - (7,276) - - - -


2008 income - - - - 52,224 - - 52,224


Capital stock

The capital stock shown in these consolidated financial statements relates to Banc Internacional d'Andorra, S.A., and is composed by

7,056,000 fully subscribed and paid shares with a par value of €6.01 each, owned by an Andorran family group.

38



Reserves

The legal reserve and the guarantee reserves held by Banca Mora, S.A.U. and BIBM Gestió d'Actius, S.A.U. were deducted from

voluntary and consolidation reserves and are recorded in the "Legal Reserve" and “Guarantee Reserves” captions, respectively, in order

to show that their use is restricted.

Under the new Companies' Law 20/2007, October 18, public companies must deduct 10% of profit each year and transfer it to the legal

reserve until this reserve reaches 20% of the capital stock. In order to comply with the requirements of this law, the Banks and BIBM

Gestió d'Actius, S.A.U. have fully constituted the legal reserve required using voluntary reserves during 2008.

note 20 Extraordinary income

The breakdown of the balance of this caption of the accompanying consolidated income statements is as follows:

Thousands of euros

2008 2007

Net income/loss on disposal or retirement of fixed assets (24) 476

Extraordinary provision to the pension allowance (Note 15) (305) (3,000)

Recovery of pension allowance (Note 15) - 464

Net recoveries from the general risk allowance (Note 16) 419 2,431

Other extraordinary income/loss (net) 1,545 (309)

1,635 62

note 21 Financial derivatives

The detail of outstanding financial derivatives as of December 31, 2008 and 2007, classified according to the purpose of the contracts,

is as follows:

Thousands of euros

2008 2007

Hedge Trading Total Hedge Trading Total

Firm transactions:

Currency sales and purchases 1,238,283 - 1,238,283 1,482,892 - 1,482,892

Interest-rate swaps 88,303 - 88,303 161,173 - 161,173

1,326,586 - 1,326,586 1,644,065 - 1,644,065

Option transactions:

Currency options 4,247 - 4,247 - - -

Securities options 22,970 - 22,970 20,480 - 20,480

Interest-rate options 863 - 863 885 - 885

28,080 - 28,080 21,365 - 21,365

1,354,666 - 1,354,666 1,665,430 - 1,665,430

39


On December 31, 2008 and 2007 there were no transactions under contract in organized markets.

The face value of the existing contracts does not reflect the total risk held by the Group, since the net position to the foregoing

transactions of these financial instruments is determined by their composition and/or combination.

The open positions in relation to the foregoing transactions do not entail a significant interest-rate, currency or market risk.

The maturity structure from the balance sheet date of financial derivatives contracts held is as follows:

Thousands of euros

2008 2007

Currency sales and purchases:

Up to 1 year 1,238,283 1,482,892

Interest-rate swaps:

Up to 1 year 4,247 83,649


Over 5 years 81,882 75,868

88,303 161,173

Currency options:

Up to 1 year 4,247 -

4,247 -

Securities options:

Up to 1 year 1,950 4,344


22,970 20,480

Interest-rate options:

Over 5 years 863 885

1,354,666 1,665,430

note 22 Third-party securities and other assets held in custody

This account reflects the market value of the securities and other assets deposited by customers and held in custody by the Group.

The detail, by type of security, of the balance of this caption in the accompanying consolidated memorandum accounts is as follows:

Thousands of euros

2008 2007

Common stocks and other equity securities 810,120 1,688,282

Debentures and other fixed-income securities 980,415 1,540,226

Securities of investment schemes not managed by the Group 130,114 382,421

Other 952,104 1,091,537

2,872,753 4,702,466

40



note 23 Other memorandum accounts held solely for administrative control purposes

The breakdown of these captions in the accompanying consolidated memorandum accounts as of December 31, 2008 and 2007 is as

follows:

Thousands of euros

2008 2007

Guarantees and commitments received

Guarantees 869,751 724,073

Documentary credits 1,967 41

Available to the entity 100,000 200,000

971,718 924,114

Other memorandum account

Very doubtful assets 10,114 9,108

Own unlisted securities and assets 78,777 78,777

Trusts 3,458 3,458

Other 109,417 497,642

201,766 588,985

1,173,484 1,513,099

The “Trusts” account includes unlisted securities and assets held by the Banks for third parties. These assets are generally recorded at

the number of assets.

The “Other” account basically includes customers' certificates of deposit arranged with a value date after December 31.

note 24 Assets assigned as security

As of December 31, 2008 and 2007, there were assets assigned as security in the amount of €8,482 thousand and €110 thousand,

respectively. These amounts basically relate to the security required for financial derivatives transactions arranged on behalf of banks

or other financial institutions.

41


note 25 Transactions with related parties and Group institutions

Details of balances in the accompanying consolidated financial statements as of December 31, 2008 resulting from transactions

between the Group and related parties or Group companies that are not fully consolidated (see Note 2-c) exceeding 5% of profit for the

year (in the case of the income statement) or 10% of shareholders' equity (in the case of the balance sheet) are disclosed below:

Thousands of euros

Investees

Assets:

Lendings 4,172Investment securities 10,674Accruals accounts 26

14,872

Liabilities:Creditors: Customer deposits 355,711Accrual accounts 2,726Other liabilities 2,587

361,024

Memorandum accounts 306,528

Income statementInterest income 41Interest expense (9,527)Net service fees 1,481Other 1,452

All of the balances with investees relate to BIBM Assegurances, S.A.U., which is consolidated by the equity method (see Note 2-c). As

of December 31, there were no transactions among shareholders, other participated societies, members of the Board of Directors or

General Managers, or other related parties exceeding 5% of profit for the year (in the case of the income statement) or 10% of

shareholders' equity (in the case of the balance sheet).

All the Group's transactions with related parties and Group companies during the exercise were carried out at market prices.

note 26 Risk management

Credit risk

The main risks held by the Group as of December 31, 2008 and 2007, are concentrated in the “Financial Intermediaries”, “Lendings”

and “Investment Securities” asset captions in the accompanying consolidated balance sheets.

With the aim of reducing the credit risk associated with transactions with other financial institutions, the Group pursues a conservative

policy with regard to the assessment and diversification of counterparties and exposition limits, and requires, among others, a

minimum rating from rating agencies. Most deposits placed with the interbank market mature in the short term (see Note 6).

The risk resulting from customer loans is continuously monitored by a unit set up specifically for this purpose by the Group. This unit is

responsible for keeping the risk profile within the established limits and it works in direct coordination with the various business divisions.

The accounting policy for hedging against credit risk on the loan portfolio is described in Note 3-e.

42



Market risk

The Group has a Market Risk Management Unit. One of the basic functions of this unit is to measure, control and monitor market risks,

and evaluate exposure and compliance with the limits assigned. It also assesses implements and maintains the computer tools used.

These functions are supervised by the Asset and Liability Committee (ALCO), which is made up of members of the Group's general

management, among others. The committee meets up at least once a month and its task is to analyze the positions giving rise to

market risk, and define the strategies that the Group must follow. The Banks' Boards of Directors are periodically informed of the level

of risk held and establish maximum absolute exposure levels for this risk.

Estimating potential losses in adverse market scenarios is the key factor for measuring market risk, which is why variance and

covariance value at risk (VaR) techniques are used.

The VaR used measures the maximum potential loss for each day with a 99% confidence level that investment securities could suffer

as a result of the volatility in financial markets, as well as interest and exchange rates, and credit markets through spread operations.

This calculation is currently performed twice a week and is made by reference to market risk factors: currency, interest rates, equity

security prices and the volatility of options on these, on the basis of historical data on daily market prices and the observed interaction

between these factors.

The maximum exposure thresholds established for 2008 and 2007 under the VaR method, and the maximum exposure reached in

these years, for each risks factor, are as follows:

Thousands of euros

Currency Interest rate Equity securities Total

2008:Established threshold 900Maximum exposure reached - 105 36 112

2007:Established threshold 900Maximum exposure reached - 35 140 127

Currency risk

According to the valuation standards defined in Note 3-c, the total foreign currency assets and liabilities held by the Group as of

December 31, 2008 and 2007, were as follows:

Thousands of euros

2008 2007

Due from financial intermediaries 552,814 498,126Lendings 89,075 92,823Investment securities 43,661 1,382Other 3,415 3,215

Total assets 688,965 595,546

Deposits: banks and financial intermediaries 954 37,010Deposits: customer deposits 629,915 528,142Other 3,407 2,874

Total liabilities 634,276 568,026

As of December 31, 2008 and 2007, the currency risk associated with most of the balances held in foreign currencies had been

hedged with financial derivatives (see Note 21) or equity transactions.

43


Interest-rate risk

The Assets and Liabilities Committee (ALCO) is in charge of managing the interest rate risk of the balance structural positions,

following the related regulations established by the Board of Directors.

Based on the composition of the Group's investments and sources of financing, the similarity of their maturities (most of which are

short term) and the consistency of the indexes used to fix prices, the Group has a low exposure to interest-rate risk.

Nevertheless, the effect of a hypothetical 1% variation in the current market interest rates on the Group's assets, liabilities and

memorandum accounts will not imply a significant variation in Group equity.

Price risk: fair value of assets and liabilities

Fair value is the amount for which an asset may be exchanged between an experienced buyer and seller, or a liability settled between

an experienced debtor and creditor acting on an arm's-length basis.

Recording transactions at their fair value, taking into account the accounting methods used and their maturity dates, would not have

given rise to any material gains or losses in relation to the Group's net worth.

Liquidity risk

The maturity structure of the Group's assets and liabilities has considerably reduced the liquidity risk inherent to its banking operations.

The Board of Directors and the General Managers consider that the Group will not be affected by the liquidity crisis and other incidents

that are having a significant effect in the international financial markets.

note 27 Compliance with legislation

Law regulating the capital and liquidity requirements for financial institutions

On February 29, 1996, the General Council of Andorra passed a law regulating the liquidity and capital requirements for financialinstitutions.

This law specifies that banks must maintain a capital ratio of at least 10%, as recommended by the Basle Committee on BankingRegulation and Supervisory Practices. The law also establishes a mandatory liquidity ratio of at least 40%.

The Group's capital and liquidity ratios, which were determined in accordance with the provisions of this law, stood at 22.01% and82.90% as of December 31, 2008, and 22.87% and 68.65% as of December 31, 2007.

The law regulating the capital and liquidity requirements for financial institutions also limits the concentration of risks in a singlebeneficiary to 20% of Group equity. Under this law, the aggregate of risks individually exceeding 5% of equity may not exceed 400% ofequity. Likewise, the risk on transactions with members of the Board of Directors may not exceed 15% of equity. These risks are weightedin accordance with the provisions of the above-mentioned law.

The highest risk exposure reached with the same beneficiary was of 13.60% of Group equity in 2008 and 14.32% in 2007. Loans andother transactions entailing a risk exceeding 5% of equity with the same beneficiary did not exceed an accumulated total of 128.17%in 2008 and 99.85% in 2007.

44



Law on international cooperation on penal matters and the campaign against the laundering of money or valuableswhich are the proceeds of international crime

On December 29, 2000, the General Council of Andorra passed the Law on international cooperation on penal matters and thecampaign against the laundering of money or valuables which are the proceeds of international crime. This law was published in theOfficial Gazette of Andorra on January 24, 2001 and came into force in 2001.

The aforesaid law harmonizes the Vienna and Strasbourg conventions with Andorran legislation, aims to maximize the effectiveness ofAndorran legislation on this topic and repeals the Law on the protection of banking secrecy and the prevention of the laundering ofmoney or valuables which are the proceeds of crime, dated May 11, 1995.

The responsibility of financial institutions is not purely confined to complying with the law, since they must play a very active role bothin the appropriate selection of their customers and in subsequent management of the same, not only due to the risks arising frompotential breaches of the law but also due to the associated risks affecting their image.

The Banc Internacional-Banca Mora Group has always been clearly committed to combating criminal money laundering transactions,not only as a product of its obligation to comply with the law, but also as a clear exponent of the moral and ethical principles governingthe Group's activities.

Under Article 52 of this Law, the Group established a series of internal communication and control procedures aimed at protectingbanking secrecy and preventing and stopping money laundering transactions. Thus, the Bank has implemented staff training programsspecifically addressing these topics.

Agreement between Andorra and the European Community in relation to the establishment of measures equivalentto those provided in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments

On February 21, 2005, the Andorran Government ratified the Agreement between Andorra and the European Community in relation to

the establishment of measures equivalent to those provided in Council Directive 2003/48/EC on taxation of savings income in the form

of interest payments. In addition, on June 13, 2005, the Government passed the Law implementing the above Agreement.

In 2008, the Banks, acting in their capacity as payment agents, complied with the obligations contained in the Agreement and its

implementing Law, and settled the amount of the withholding in accordance with the above-mentioned legislation.

45


note 28 Community activities and similar

The Banc Internacional-Banca Mora Group has no legal or statutory community obligations. Nevertheless, the Group has always been

deeply involved, through sponsorship and subsidization of events, in all aspects of the development of the society in which operates.

During 2008, the Banc Internacional-Banca Mora Group continued this policy with special emphasis in cultural events. Thus, the

Group has collaborated with public bodies as the Andorran government and different City Councils, as well as social organizations /

civil society, in several activities in the field of culture, education and training.

Culture and training

During 2008, it is worthy of mention the Music and Dance Season, which the Group has co-sponsored for 11 years with the City Council

of Andorra la Vella, including memorable performances such as “Fuenteovejuna”. In addition, the Group has collaborated in events

for young people, including concerts by prestigious groups both in Escaldes-Engordany and Andorra la Vella. Likewise, the Group

sponsored training courses for liberal professionals, subsidizing high degree education and academic upgrading.

Environment

The Environmental Agreement with the Andorran government aimed at sponsoring the activities of Centre Andorra Sostenible, is still

in force. Specifically, in 2008, an itinerant exhibition about the reasons for the climate change was conducted and several lectures and

workshops on environmental issues were held.

Health and Science

A noteworthy measure in social issues included the sponsoring of the lecture by the researcher Joan Massagué, who presented the

latest advances in cancer research.

Sports

In sports, the Banc Internacional-Banca Mora Group has sponsored several sporting events, highlighting ski touring, related to the

world cup competition as well as, other national events.

Aid projects

Lastly, also worthy of mention is the Visa Unicef card, profits from which are used to subsidize aid projects in Mauritania. These

projects are closely monitored, with regular visits to the Principat d´Andorra of the responsibles, to inform about projects

development, and, subsequently to present a accurate report about the results of the Group´s contribution.

The Banc Internacional-Banca Mora Group has also collaborated with a wide range of national organizations in aid projects aiming

to improve social cohesion.

note 29 Explanation added for translation to English

These consolidated financial statements are presented on the basis of generally accepted accounting principles in Andorra. Certain

accounting practices applied by the Group that conform with generally accepted accounting principles in Andorra may not conform

with generally accepted accounting principles in other countries.

46



- 67 -

SUMMARY OF THE PRINCIPAL DIFFERENCES BETWEEN IFRS AND ANDORRAN ACCOUNTING PRINCIPLES

The Bank’s consolidated financial statements have been prepared using Andorran Accounting Principles. There are certain significant differences between International Financial Reporting Standards as adopted by the European Union ("IFRS") and Andorran Accounting Principles. Significant differences relevant to the Bank’s financial statements are discussed below. The effects of such differences on the Bank’s financial results or position for the data incorporated in or attached to this offering circular have not been quantified. Investors should consult their own professional advisors for an understanding of the differences between IFRS and Andorran Accounting Principles and how these differences might affect the financial information herein. The discussion of the differences between IFRS and Andorran Accounting Principles below represents a summary of those differences, which investors should not consider to be exhaustive. Investors must examine the Issuer, the Bank and their financial information on their own.

No attempt has been made to identify future differences between IFRS and Andorran Accounting Principles as the result of the prescribed changes in accounting standards. Regulatory bodies that promulgate IFRS and Andorran Accounting principles have significant projects ongoing that could affect future comparisons such as this one. Finally, no attempt has been made to identify future differences between IFRS and Andorran Accounting Principles that may affect the Bank’s financial statements as a result of transactions or events that may occur in the future.

Due from financial intermediaries – allowance for credit losses

Under Andorran regulations, it is necessary to make a generic provision for the sum of 0.5 per cent. of the bank deposits with a maturity of longer than one working day in order to provide coverage for those losses that may arise in the future in risks that cannot be identified individually as being problematic at this time. This type of provision is not possible under IFRS since they require that these are specifically assigned to each one of the risks concerned.

Commissions related to Loans and Credits portfolio

Under Andorran regulations, the commissions cited are recognised in the profit and loss account at the time of the granting of the loans, while under IFRS these commissions are treated as a flow to be passed on in the profit and loss account throughout the life of the operation, as one further element to be taken into account in setting the effective rate for the operation.

Loans and credits portfolio – allowance for credit losses

Under Andorran regulations, all entities must establish rules for the provision of the insolvency risk associated with the credit investment portfolio. The cited provisions will be undertaken in both a generic manner, on the basis of certain percentages laid down according to the nature of the risk covered. In relation to the cited provisions, the IFRS sets out the following:

- The deterioration of a financial asset takes place when there is objective evidence that the entirety of the loan will not be covered due to facts occurring that have an effect on forecasted future flows. The losses expected as the result of future losses are not recognised, regardless of their likelihood.

- The deterioration of an asset (accounted at its amortisable cost) is calculated as the difference between the book value of the asset less the updating of all future forecast cash flows, discounted at the original effective interest rate of the loan. The forecast of the flows will be made on a hypothetical basis and based on reasonable and justified forecasts.

- 68 -

- An analysis of the deterioration of the loans portfolio will be undertaken making a distinction between loans that are significant and loans that are not. This distinction will be applied when determining whether the analysis will be made individually or in a collective manner. In the loans portfolio in which there is no objective evidence of deterioration, this will be grouped together according to the risks that have the same characteristics, and an analysis by homogenous groups will be made. A decision will be made as to the deterioration for these similar risk portfolios on the basis of behavioural statistics obtained from the historical evidence of the institution, or other models.

Investment Securities – Investments in group companies

For the purposes of consolidation, under Andorran regulations, the equity procedure will be applied when the entity to be consolidated is an associated entity, when it belongs to a financial grouping but it has a differentiated form of activity, and when it is a multi-group company with differentiated activity and so, accordingly, is not consolidated by proportional integration. According to the IFRS, an entity will have to be included in the consolidation perimeter depending on whether the group has control over it or not. Therefore, the differentiated activity of a participant will not be a factor to be taken into account in determining the consolidation method.

Derivatives

According to the IFRS, it is necessary to recognise all positions in derivatives in the balance sheet of the entity at their reasonable value. Likewise, the cited value will have to be kept updated, attributing the differences of value in the profit and loss account unless there is a question of coverage operations. In the latter case, they can also have an effect on the capital. The main differences that appear with respect to Andorran regulations are determined by the fact that all positions will continue being valued at their reasonable value, and that both the capital gains and the capital losses that could be produced will be recognised at all times.

General Risk Allowance

Andorran regulations allow for the establishment of provisions used for the general risks of the banking and financial activity, without there having been an identified degree of deterioration in the value of the assets. Under IFRS, the establishment of provisions of a generic nature is not allowed.

Ordinary Investment Portfolio

Under IFRS, the ordinary investment portfolio is recorded at market value, while under Andorran Accounting Principles, the ordinary investment portfolio is recorded at the lower of market value or adjusted purchase price.

Taxes

Andorran taxes on banking services are recorded in general expenses. As there is no direct taxation, no specific line exists to show the net income before and after tax.

- 69 -

REGISTERED OFFICE OF THE ISSUER

Banc Internacional d'Andorra, S.A. Avenida Meritxell, 96

AD500 Andorra la Vella Principat d'Andorra

ARRANGER



DEALER



FISCAL AND PAYING AGENT

The Bank of New York Mellon One Canada Square London E14 5AL United Kingdom

LEGAL ADVISERS

To the Dealer as to English law: To the Dealer as to Andorran law:

Clifford Chance, S.L. Bufet Rascagneres Monegal

Paseo de la Castellana, 110 28046 Madrid

Spain

Calle Les Canals 7 pis 4t


AUDITORS TO THE ISSUER

Ernst & Young Ltd Route de Chancy 59 P.O. Box CH-1213

Geneva Switzerland