Nomura Bank (Luxembourg) S.A. · Nomura Bank (Luxembourg) S.A. Bâtiment A – 33 rue de Gasperich L-5826 Luxembourg R.C.S. B 32921 – SWIFT NBLXLULL Imprimerie Linden s.àr.l.,

Nomura Bank (Luxembourg) S.A.

Annual accounts,Directors’ report andIndependent auditor’s report

as of 31 March 2015


Bâtiment A – 33 rue de Gasperich

L-5826 Luxembourg

R.C.S. B 32921 – SWIFT NBLXLULL Impr

imer

ie L

inde

n s.

àr.l.

, Lux

embo

urg

Nomura - Couverture 2015.indd 1 28.07.2015 14:24:34 Uhr

1

Table of Contents

Directors’ Report ............................................................................................................................................................... 3

Independent Auditor’s Report ............................................................................................................................................ 9

Annual accounts

- Statement of fi nancial position ....................................................................................................................................... 11

- Income statement ......................................................................................................................................................... 15

- Statement of comprehensive income ............................................................................................................................ 17

- Statement of changes in equity ..................................................................................................................................... 19

- Statement of cash fl ows ................................................................................................................................................ 21

- Notes to the annual accounts ........................................................................................................................................ 25

Directors’ Report

4

Directors’ Report

Year ended 31 March 2015

The directors of Nomura Bank (Luxembourg) S.A. (the “Bank”, “NBL”, “we”, “our”, “us”) are pleased to announce the fi nancial results of the Bank for the fi scal year ended 31 March 2015. During the fi scal year, we focused on the implementation of several international and European regulations as well as on the quality of our client service combined with effi ciency gains generated by more trade automation.

As in previous years, the major part of our businesses has been promoted by the strong relationships with the Nomura Group’s global network, specifi cally in investment trusts businesses in Japan. Management of Nomura Group had set strategy in 2012 emphasising further marketing of existing investment trusts. Financial stability enhanced globally and new Japanese political initiative so called Abenomics brought growth in equity market in Japan. The new Nippon Individual Savings Account program (“NISA”) launched in 2014 further contributed to promote investment by individuals in mid to long term assets. However, the Bank’s Assets under Administration (“AuA”) have been decreased by 10% (USD 81bn in March 2014 to USD 73bn in March 2015) as of 31 March 2015 partially because of the important fl uctuations of the exchanges rates but also because of redemptions from unitholders. Luxembourg funds represented USD 15bn (USD 18bn in March 2014) of the AuA while Cayman funds accounted for USD 58bn (USD 63bn in March 2014). As of 31 March 2015, the Bank was calculating 601 NAV/shs (540 in March 2014), servicing more than 307 funds and sub-funds, 79% of which were Cayman funds.

Nevertheless, our funds custody and funds administration business generated EUR 67m revenues (5% above fi scal year 2014 and 20% above budget) and our treasury activities, although diffi cult market conditions prevailed, generated EUR 22m (6% less than fi scal year 2014 and 3% below budget).

As a result of these activities and transactions, profi t before tax for the fi scal year amounted to EUR 49m (EUR 62m in March 2014), our balance sheet as of 31 March 2015 amounts to EUR 5,186m (EUR 5,562m in March 2014) and shareholders’ equity amounts to EUR 442m (EUR 398m in March 2014).

Similarly to previous fi scal years, the Bank profi table funds business is fi rst of all to be attributed to Nomura Securities Co., Ltd’s ability to broadly distribute investment funds in Japan. As a trend, additional new classes of units have been opened for CDSC (Contingental Differal Sales Charge) funds. In the meantime, the Asset Management division of the Nomura Group continued to be innovative and proposed new multi-manager structure funds with currency exposures to retail investors in Japan. The fact that the assets of so-called “T+0” funds (intraday or closing prices valuation for European and US markets) have increased slightly to USD 26bn (USD 23bn in March 2014) during the period, shows that there is still a strong demand for such kind of products.

With regards to Global Funds Management S.A. (“GFM”), NBL’s fully owned management company domiciled in Luxembourg, the risk management framework has been gradually rolled out with a focus on the development of tools and reports ensuring an appropriate monitoring and oversight of all its delegates. During the year, GFM has also strengthened its governance, improved the Alternative Investment Funds (“AIFs”) fi nancial risk monitoring and successfully implemented the Alternative Investment Fund Managers Directive (“AIFMD”) regulatory reporting platform.

In a view to demonstrate the quality of its level of services and related control procedures to its existing and potential new counterparties, the Bank has mandated Deloitte to re-issue a combined ISAE 3402/SSAE 16 report for the fi scal year 1 April 2014 to 31 March 2015, our third Service Organisation Control report.

5

The Bank has a permanent focus on managing its business and associated risks appropriately. As in previous fi scal years, this resulted in constant search for improvement in processes, structure, tools, expertise and education. Accordingly, during the year closed on 31 March 2015, signifi cant investments have been made in applications and systems, research and analysis as well as enhancing processes and controls. Those investment commitments are made for the long term and will continue over the next years.

For illustration purpose, it is important to mention as major achievement the implementation of a dedicated collateral management system (i.e. Colline from Lombard Risk) in February 2015.

We reorganised the Bank’s management structure by implementing an additional hierarchical level of “Divisional Heads”, striving to further strengthen the Bank’s corporate governance and support for its Executive Committee.

Believing that human capital is the biggest asset of the Bank, we continued investments in our work force by further enhancing Training & Development initiatives for both, management and staff.

In collaboration with an external provider we performed a Management Assessment on all Department Heads and higher hierarchical levels in order to identify development needs. Afterwards we established individual development plans for the people concerned and organised a mandatory Senior Management Training. With this initiative we ensure a good management quality within the Bank, supporting its future and upcoming challenges.

As of 31 March 2015, the Bank employs 358 staff (349 in March 2014).

In order to sustain our growth coupled with the evolution of legal and business environment, we continuously strengthened the proper monitoring of capital and liquidity related items (solvency, liquidity, large exposure, allocated capital or funding) in line with the continued importance given by the various regulations. In this context, the following developments are worth to be mentioned:

1) Our solvency ratio has remained comfortably stable throughout the year above the required 10.50% reaching, as of 31 March 2015, the level of 39.90% (35.41% in March 2014) thus further outlining the robustness of our Tier 1 capital.

2) The Basel III and CRR/CRD IV requirements have been successfully on-boarded and corresponding operational processes are continuously enhanced. This evolution further supports but also requires ongoing efforts to strengthen the overall liquidity management as well as promotion of a broader range of counterparty credit risk mitigation techniques such as International Swaps and Derivatives Association (“ISDA”), Credit Support Annex (“CSA”), Collateral Support Document (“CSD”) or pledge agreements. In addition, the Bank has successfully moved from the “Original Exposure Method” to the “Mark-to-Market” method for assessing Large Exposures under CRD IV.

3) A core focus, internally as well as externally by regulations, has been set on further improving the collateral management framework. A collateral management system has been successfully implemented strengthening and easing the effi cient collateral management activity as well as setting the framework for upcoming regulatory requirements imposed through e.g. European Market Infrastructure Regulation (“EMIR”) or the Japanese Fund regulations. All over the year closed on 31 March 2015 the Bank’s banking business and thus the size of our balance sheet has remained stable. All throughout the fi scal year, the Bank communicated closely with CSSF and BCL in order to follow up on the Bank’s business and development and maintain regulatory ratios at more comfortable levels enlarging room for further growth.

6

With regards to the internal audit control function, a new Chief Internal Auditor has been appointed in July 2014, which ensures adequate staff rotation at Internal Audit and guarantees the independence of the Internal Audit Department (“IAD”). We confi rm that, during this fi scal year, IAD has completed its internal audit plan with the exception of one audit of project management which has been postponed to August 2015. Management is also performing a close follow-up of all audit issues and is committed to address them timely and adequately.

Because of the nature of our business with main focus on funds administration, custody and agency services, it is by our policies not allowed to take any signifi cant market risks through foreign exchange, interest rate or other market risk drivers. It is also our policy to closely monitor credit risks towards all our counterparties through the specialists in our local Risk Management Department with the support of and in full transparency with the risk experts and guidelines of Nomura Group in London. We continuously monitor and manage liquidity risk as well as operational risk and search for improvements within the internal control environment.

The Bank has formalised its approach to risk within the Risk Strategy document, defi ning the internal risk appetite framework in line with our business and risk profi le. The Bank has gone through the internal capital adequacy assessment process (“ICAAP”) and performed capital forecasts over a 3-year period by considering the activities of its various business lines and its subsidiaries activities. The Bank has performed stress tests analysis for all the material risks identifi ed such as operational risk, market risk, counterparty credit risk, liquidity risk, business risk and systematic risk. As a result of the analysis conducted, and considering all the risks the Bank faces, we concluded that the Bank continues to be adequately capitalised.

In parallel, under the aegis of the Compliance function, the Regulatory Steering Committee acting as the arm of NBL to properly and timely address relevant Regulatory developments, continued to foster an appropriate knowledge of the key business stakeholders in the Regulatory fi eld. Moreover, the newly rolled out Anti-Fraud Task Force contributed to increase further the overall awareness of NBL Staff in this regard through the issuance of targeted communications and further enhancements of some controls and processes.

Finally, the Chief Risk Offi cer (“CRO”), with the support of the Operational Risks and the Financial Risks monitoring experts chairs the monthly Risk Management Committee meetings with key business stakeholders as well as the Authorised Management attending.

To conclude all actions taken by NBL with regards to new regulatory requirements throughout the fi scal year under review, we should not forget to highlight the continuous efforts of dedicated working groups composed by business experts, control functions holders and external consultancy fi rms. Below we are listing the most important ones:

1) AIFMD: in July 2014, NBL was able to achieve the signing of the Service Level Agreement (“SLA”) being part of the Depositary Agreement under the AIFMD laws and regulations.

2) EMIR and Foreign Account Tax Compliance Act (“FATCA”): policies, procedures and staff trainings have been completed and all reporting requirements to Trade Repository bodies, respectively the Luxembourg and Cayman Islands authorities are up and running.

3) Due Diligence: multiple on-site visits to sub-custodians and cash correspondent agents took place throughout the fi scal year under review and hereto related progress and fi ndings reports have been shared at the Due Diligence Steering Committee meetings, complemented by a summary update report to the CSSF in December 2014. Currently our Network Management team is evaluating the answers to our Due Diligence special questionnaire received back from all our Prime Broker counterparties. Full assessment details should be available second half 2015.

7

The Bank has no activities in research and development, has not bought its own shares during the fi scal year and has not created any branches.

There are no post balance sheet events to report that would affect the fi nancial results for the year ended 31 March 2015 or that would require a disclosure in the notes to the annual accounts.

There will be more fi nancial impact brought to the Bank from ceaseless challenges of regulatory implementation as well as Customers’ changes of investment attributes. As a conclusion we would emphasise that the Bank during this last fi scal year decided which direction to take with regards to business and systems developments and targets for 2020 and beyond, in line with the overall 2020 Nomura Group leitmotiv “Chance & Change”.

10 June 2015

Chie SHIMPO (Toriumi) Masaru KONNOChairman President & CEONomura Bank (Luxembourg) S.A. Nomura Bank (Luxembourg) S.A.

Independent Auditor’s Report

10

To the Board of Directors ofNomura Bank (Luxembourg) S.A.Société Anonyme33, rue de GasperichL-5826 Hesperange

Report on the annual accounts

Following our appointment by the Board of Directors, we have audited the accompanying annual accounts of Nomura Bank (Luxembourg) S.A., which comprise the statement of fi nancial position as of 31 March 2015, the income statement, the statement of comprehensive income, the statement of changes in equity, the statement of cash fl ows for the year then ended, and a summary of signifi cant accounting policies and other explanatory information.

Board of Directors’ responsibility for the annual accounts

The Board of Directors is responsible for the preparation and fair presentation of these annual accounts in accordance with International Financial Reporting Standards as adopted by the European Union and for such internal control as the Board of Directors determines is necessary to enable the preparation and presentation of annual accounts that are free from material misstatement, whether due to fraud or error.

Responsibility of the “réviseur d’entreprises agréé”

Our responsibility is to express an opinion on these annual accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted for Luxembourg by the “Commission de Surveillance du Secteur Financier”. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts. The procedures selected depend on the judgement of the “réviseur d’entreprises agréé”, including the assessment of the risks of material misstatement of the annual accounts, whether due to fraud or error. In making those risk assessments, the “réviseur d’entreprises agréé” considers internal control relevant to the entity’s preparation and fair presentation of the annual accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the overall presentation of the annual accounts.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the annual accounts give a true and fair view of the fi nancial position of Nomura Bank (Luxembourg) S.A. as of 31 March 2015, and of its fi nancial performance and its cash fl ows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

Report on other legal and regulatory requirements

The Directors’ report, which is the responsibility of the Board of Directors, is consistent with the annual accounts.

Ernst & Young Société Anonyme Cabinet de révision agréé Sylvie Testa

Luxembourg, 10 June 2015

Statement of fi nancial position

As of 31 March 2015(expressed in EUR)

12

Assets

Notes 31 March 2015 31 March 2014

Cash and balances with central banks 4, 31, 32 160,005,335 517,046,884

Derivatives held for trading 5, 31, 32, 35 855,020,661 1,232,394,811

Available-for-sale fi nancial instruments 6, 31, 32, 35 708,333,666 455,238,148Equity instruments 8,755,064 6,510,760Debt instruments 699,578,602 448,727,388

Loans and advances 7, 29, 31, 32, 35 3,387,891,961 3,280,203,095Loans and advances to credit institutions 2,680,307,737 2,993,264,774Loans and advances to customers 707,584,224 286,938,321

Tangible assets 8, 31 2,740,257 3,032,164

Intangible assets 8, 31 8,928,455 7,856,904

Deferred tax assets 14, 31 383,928 2,773,495

Other assets 9, 31 62,987,801 63,240,245

Total assets 5,186,292,064 5,561,785,746

The accompanying notes form an integral part of these annual accounts.

13


Liabilities and shareholders’ equity

Liabilities Notes 31 March 2015 31 March 2014

Deposits from central banks 31, 32 --- 507,732,637

Derivatives held for trading 10, 31, 32, 35 855,788,067 1,240,238,154

Financial liabilities designated at fair value through profi t or loss 13, 31, 32 89,680,141 81,536,510

Financial liabilities measured at amortised cost 31, 32, 35 3,733,844,238 3,267,009,632Amounts due to credit institutions 11 2,411,269 190,063,279Amounts due to customers 12 3,731,432,969 3,076,946,353

Tax liabilities 14, 31 15,163,255 19,231,310Current tax liabilities 13,946,815 15,934,946Deferred tax liabilities 1,216,440 3,296,364

Other liabilities 15, 31 49,321,724 47,595,695

Total liabilities 4,743,797,425 5,163,343,938

Shareholders’ equity

Issued capital 16 28,000,000 28,000,000

Reserves (including retained earnings) 17 364,951,006 310,068,666

Available-for-sale reserve 6 7,466,668 5,490,802

Profi t for the year 42,076,965 54,882,340

Total shareholders’ equity 442,494,639 398,441,808

Total liabilities and shareholders’ equity 5,186,292,064 5,561,785,746

Income statement

For the year ended 31 March 2015(expressed in EUR)

16

Notes 31 March 2015 31 March 2014

Net interest income 35 4,789,401 4,923,660Interest and similar income 19 15,695,892 18,007,571Interest and similar expenses 20 (10,906,491) (13,083,911)

Dividend income 21, 35 --- 11,704,500

Net fee and commission income 22, 35 82,165,655 77,347,298Fee and commission income 82,437,240 77,687,233Fee and commission expenses (271,585) (339,935)

Net realised gains (losses) on fi nancial assets and liabilities not designated at fair value through profi t or loss 23 --- ---

Net (un) realised gains (losses) on fi nancial assets and liabilities held for trading 24 22,837,780 17,852,528

Net (un) realised gains (losses) on fi nancial assets and liabilities designated at fair value through profi t or loss 13, 32 (7,165,460) (845,965)

Foreign exchange differences 25 (500,498) (155,135)

Net other operating income/expenses (791,587) (675,284)Other operating income 684,300 624,208Other operating expenses (1,475,887) (1,299,492)

Administrative expenses 26, 29, 30, 34, 35 (48,280,905) (45,380,974)

Depreciation and amortisation (3,880,870) (2,293,694)Tangible assets 8, 27 (3,235,798) (1,622,666)Intangible assets 8, 27 (645,072) (671,028)

Impairment 27 --- ---

Profi t before tax 49,173,516 62,476,934

Income tax expenses 14 (7,096,551) (7,594,594)



Statement of comprehensive income


18

31 March 2015 31 March 2014


Other comprehensive income

Items that may be reclassifi ed subsequently to profi t or lossNet gains (losses) on available-for-sale fi nancial instruments 2,309,540 1,514,073Income tax relating to components of other comprehensive income (333,674) (113,941)

Other comprehensive income for the year, net of tax 1,975,866 1,400,132

Total comprehensive income for the year, net of tax 44,052,831 56,282,472


Statement of changes in equity


20

Balance at Transfers and Total Balance at 31 March 2014 allocation of comprehensive 31 March 2015 prior year’s profi t income

Issued capital 28,000,000 --- --- 28,000,000

Profi t brought forward 275,861,993 49,487,340 --- 325,349,333

FTA Reserve * 3,201,673 --- --- 3,201,673

Reserves: 31,005,000 5,395,000 --- 36,400,000a) Legal reserve (1) 2,800,000 --- --- 2,800,000b) Special reserves (2) 28,205,000 5,395,000 --- 33,600,000

AFS reserve 5,490,802 --- 1,975,866 7,466,668

Profi t for the year 54,882,340 (54,882,340) 42,076,965 42,076,965

Shareholders’ equity 398,441,808 --- 44,052,831 442,494,639

Balance at Transfers and Total Balance at 31 March 2013 allocation of comprehensive 31 March 2014 prior year’s profi t income

Issued capital 28,000,000 --- --- 28,000,000

Profi t brought forward 226,084,745 49,777,248 --- 275,861,993

FTA Reserve 3,201,673 --- --- 3,201,673

Reserves: 26,605,000 4,400,000 --- 31,005,000a) Legal reserve (1) 2,800,000 --- --- 2,800,000b) Special reserves (2) 23,805,000 4,400,000 --- 28,205,000

AFS reserve 4,090,670 --- 1,400,132 5,490,802

Profi t for the year 54,177,248 (54,177,248) 54,882,340 54,882,340

Shareholders’ equity 342,159,336 --- 56,282,472 398,441,808


* Unavailable reserve1 Legal reserve recorded under Luxembourg law (see Note 17)2 Reserves linked to exoneration of Net Wealth Tax charge subject to conditions (see Note 17)

Statement of cash fl ows


22

31 March 2015 31 March 2014

Profi t before tax 49,173,516 62,476,934

Adjustments:Depreciation / Amortisation / Impairment (Note 27) 3,880,870 2,293,694Fair value adjustments 9,642,687 (7,254,454)

Cash fl ows from operating profi ts before changes in operating assets and liabilities 62,697,073 57,516,174

Net (increase)/decrease in loans and advances to credit institutions 210,132,597 7,127,990Net (increase)/decrease in loans and advances to customers (420,645,903) 930,445,335Net (increase)/decrease in available-for-sale fi nancial assets (251,119,652) (62,307,135)Net (increase)/decrease in other assets 252,444 33,083,220Net increase/(decrease) in deposits from banks (695,384,647) 183,708,421Net (increase)/decrease in deposits from customers 654,486,616 (415,058,244)Net increase/(decrease) in fi nancial liabilities (Note 32) (7,942,171) 43,769,112Net increase/(decrease) in other liabilities 1,726,029 (39,652,656)Income tax (9,637,745) (5,700,000)Net variations in other operating assets/liabilities 229,884 151,390

Net cash fl ow from operating activities (455,205,475) 733,083,607

Acquisition of intangible/tangible assets (Note 8) (4,660,514) (8,708,169)

Net cash fl ow from investing activities (4,660,514) (8,708,169)

Net increase/decrease in cash and cash equivalents (459,865,989) 724,375,438

Cash and cash equivalents at the beginning of the year 2,980,027,168 2,255,651,730Net increase/decrease in cash and cash equivalents (459,865,989) 724,375,438

Cash and cash equivalents at the end of the year 2,520,161,179 2,980,027,168

of which: not available 160,000,125 ---


23

For the purposes of the statement of cash fl ows, cash and cash equivalents comprise the following balances with less than three months maturity from the date of acquisition:

31 March 2015 31 March 2014

Cash and balances with central banks (Note 4) 160,005,335 517,046,884

Loans and advances to credit institutions 2,360,155,844 2,462,980,284repayable with less or three months maturity from the date of acquisition 2,360,155,844 2,462,980,284

Cash and cash equivalents 2,520,161,179 2,980,027,168


Notes to the annual accounts

As of 31 March 2015

26

NOTE 1 - CORPORATE INFORMATION

Corporate matters

Nomura Bank (Luxembourg) S.A. (the “Bank” or “NBL”) was incorporated in Luxembourg on 2 February 1990 as a Société Anonyme.

Nature of the Bank’s business

The object of the Bank is to undertake all banking, financial securities and fiduciary operations and to engage in leasing and factoring activities for its own account or for account of its customers.

The Bank can establish or take part in finance and other companies or acquire, encumber or dispose of real estate for its own or for account of its customers.

A significant volume of the Bank’s transactions is concluded directly with companies of the Nomura Group or with their Japanese clients.

Annual accounts

The Bank’s accounting year ends on 31 March of each year. The annual accounts were authorised for issue by the Bank’s Board of Directors on 10 June 2015.

Parent undertaking

The Bank is a subsidiary of Nomura Europe Holdings Plc (the “Parent company”), a holding company incorporated under the laws of United Kingdom and whose registered office is in London. The consolidated accounts of Nomura Europe Holdings Plc may be obtained at 1 Angel Lane, London, EC4R 3AB, UK.

The Bank’s ultimate parent is Nomura Holdings, Inc., a holding company incorporated under the laws of Japan whose registered office is in Tokyo. The consolidated accounts of Nomura Holdings, Inc. may be obtained at 1-9-1, Nihonbashi, Chuoku, Tokyo 103-8645, Japan.

27

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Note 2.1 - Basis of preparation

The annual accounts are prepared on the historical cost basis except for derivatives held for trading, available-for-sale financial instruments and debt certificates designated at fair value through profit or loss which are measured at fair value.

Statement of compliance

The annual accounts have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and the relative interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”) as adopted for use in the European Union.

The preparation of annual accounts in accordance with IFRS requires the Board of Directors to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expense items. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Judgments made by the Board of Directors in the application of IFRS that have significant effect on the annual accounts and estimates with a significant risk of material adjustments in the next year are developed in Note 3.

Changes in accounting policies

The accounting policies adopted are consistent with those of the previous year, except for the following amendments to IFRS effective as of 1 January 2014:

lAS 32 Offsetting Financial Assets and Financial Liabilities - Amendments to lAS 32

These amendments clarify the meaning of “currently has a legally enforceable right to set-off” and the criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting. These amendments, effective for annual periods beginning on or after 1 January 2014, have no impact the Bank’s financial position or performance.

IFRIC Interpretation 21 Levies (IFRIC 21)

IFRIC 21 clarifies that an entity recognises a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be anticipated before the specified minimum threshold is reached. IFRIC 21, effective for annual periods beginning on or after 1 January 2014, does not have any material financial impact on the Bank’s annual accounts.

lAS 39 Novation of Derivatives and Continuation of Hedge Accounting - Amendments to lAS 39

These amendments, effective for annual periods beginning on or after 1 January 2014, provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. The Bank has not novated derivatives designated in effective hedging relationships during the current financial year. However, these amendments will be considered for any future novations.

28

Standards issued but not yet effective

The following IFRS standards and IFRIC interpretations were issued with an effective date for financial periods beginning on or after 1 January 2015. The Bank has chosen not to early adopt these standards and interpretations before their effective dates.

Only accounting policies and disclosures applicable or potentially applicable to the Bank are mentioned below.

IFRS 9 Financial Instruments - Classification and Measurement (Not endorsed by the European Union yet)

In July 2014, the IASB issued the final version of IFRS 9 – Financial Instruments which reflects all phases of the financial instruments project and replaces IAS 39 – Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. Analyses will have to be carried on in order to quantify the impact of the whole standard on the Bank’s financial position and performance.

Defined Benefit Plans: Employee Contributions – Amendments to IAS 19

IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. Where the contributions are linked to service, they should be attributed to periods of service as a negative benefit. These amendments clarify that, if the amount of the contributions is independent of the number of years of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service.

This amendment is effective for annual periods beginning on or after 1 July 2014. The amendment would not be relevant to the Bank as it has no defined benefit plan which requires contributions from employees or third parties.

Annual Improvements to IFRS – 2010-2012 Cycle

The annual improvement process amends seven standards. However, no amendment is expected to significantly affect the Bank’s financial position and performance.

The improvements – most of which are to be applied for annual periods beginning on or after 1 July 2014 – notably include:

IFRS 8 – Operating Segments

The amendments – which are to be applied retrospectively – clarify that:

- An entity must disclose the judgements made by the Board of Directors in applying the aggregation criteria in paragraph 12 of IFRS 8. This disclosure will include a brief description of operating segments that have been aggregated and the economic indicators that have been assessed in determining that the aggregated operating segments share similar economic characteristics;

- The reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker, similarly to the required disclosure for segment liabilities.

IFRS 15 – Revenue from Contracts with Customers

IFRS 15 provides a model for the recognition and measurement of disposal of certain non-financial assets including property, equipment and intangible assets.

The standard outlines the principles an entity must apply to measure and recognise revenue. The core principle is that an entity will recognise revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to a customer.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

29

The principles in IFRS 15 will be applied using a five-step model:

Identify the contract(s) with a customer;1.

Identify the performance obligations in the contract;2.

Determine the transaction price;3.

Allocate the transaction price to the performance obligations in the contract;4.

Recognise revenue when (or as) the entity satisfies a performance obligation.5.

The standard requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers.

The standard also specifies how to account for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract.

Application guidance is provided in IFRS 15 to assist entities in applying its requirements to certain common arrangements, including licences of intellectual property, warranties, rights of return, principal-versus-agent considerations, options for additional goods or services and breakage.

Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2017 with early adoption permitted.

Impact of IFRS 15 on the Bank’s financial position and performance has not been assessed yet.

Clarification of Acceptable Methods of Depreciation and Amortisation – Amendments to IAS 16 and 38

The amendments clarify the principle in IAS 16 and IAS 38 that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets. The amendments are effective prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact on the Bank’s financial position and performance.

Disclosure initiative – Amendments to IAS 1

These amendments are effective for annual periods beginning on or after 1 January 2016.

The amendments to IAS 1 Presentation of Financial Statements clarify, rather than significantly change, existing IAS 1 requirements.

The amendments clarify:

- The materiality requirements in IAS 1;

- That specific line items in the statements of profit or loss and OCI and the statement of financial position may be disaggregated;

- That entities have flexibility as to the order in which they present the notes to financial statements;

- That the share of OCI of associates and joint ventures accounted for using the equity method must be presented in aggregate as a single line item, and classified between those items that will or will not be subsequently reclassified to profit or loss.

Furthermore, the amendments clarify the requirements that apply when additional subtotals are presented in the statement of financial position and the statements of profit or loss and other comprehensive income.

The amendments will not have any impact on the Bank’s financial position and performance.


30

Exemption from preparing consolidated accounts

These annual accounts are prepared on a stand-alone basis.

According to the current Luxembourg regulation, the Bank is exempt from the requirement to publish consolidated accounts and a consolidated management report.

Note 2.2 - Summary of significant accounting policies

(a) Foreign currency translation

The annual accounts are presented in Euro (“EUR”), which is also the Bank’s functional currency.

Transactions in foreign currencies are initially recorded at the functional currency rate of exchange ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency exchange rates prevailing at the statement of financial position date. All differences arising on non-trading activities are taken to “Foreign exchange differences” in the income statement.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

(b) Financial instruments – initial recognition and subsequent measurement

(i) Date of recognition

All financial assets and liabilities are initially recognised on the value date. This includes purchases or sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the marketplace.

(ii) Initial measurement of financial instruments

The classification of financial instruments at initial recognition depends on the purpose and the management’s intention for which the financial instruments were acquired and their characteristics. All financial instruments are measured initially at their fair value plus transaction costs, except in the case of financial assets and financial liabilities recorded at fair value through profit or loss.

(iii) Derivatives held for trading

Derivatives held for trading are recorded in the statement of financial position at fair value. Changes in fair value are recognised in “Net (un) realised gains (losses) on financial assets and liabilities held for trading”. Interest income or expense is recorded in “Net interest income” according to the terms of the contract, or when the right to the payment has been established.

(iv) Derivatives held for hedging

The Bank may use derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, financing and investment activities. Where there is a hedging relationship between a derivative financial instrument and a related item being hedged, the hedging instrument is measured at fair value. The treatment of any resulting gains and losses is set out below.


31

A hedging relationship exists when:

– At the inception of the hedge there is formal documentation of the hedge;

– The hedge is expected to be highly effective throughout the period and prospectively;

– The effectiveness of the hedge can be reliably measured;

– For hedges of a forecasted transaction, the transaction is highly probable and presents an exposure to variations in cash flows that could ultimately affect net profit or loss.

For the purpose of hedge accounting, the Bank has classified hedges as fair value hedges and cash flow hedges.

Fair value hedges

The change in the fair value of a hedging derivative is recognised in the income statement. The change in the fair value of the hedged item attributable to the risk hedged is recorded as a part of the carrying value of the hedged item and is also recognised in the income statement.

For fair value hedges relating to items carried at amortised cost, the adjustment to carrying value is amortised through the income statement over the remaining term to maturity. Any adjustment to the carrying amount of a hedged financial instrument for which the effective interest rate method is used, is amortised through the income statement.

Amortisation may begin as soon as an adjustment exists and shall begin no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.

If the hedged item is derecognised, the unamortised fair value is recognised immediately in the income statement.

When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding gain or loss recognised in the income statement. The changes in the fair value of the hedging instrument are also recognised in the income statement.

As of 31 March 2015 and 2014, the Bank has no fair value hedged transactions.

Cash flow hedges

The effective portion of the gain or loss on the hedging instrument is recognised directly in equity, while any ineffective portion is recognised immediately in the income statement.

Amounts taken to equity are transferred to the income statement when the hedged transaction affects profit or loss, such as when the hedged financial income or financial expense is recognised or when a forecast sale occurs. Where the hedged item is the cost of a non financial asset or non financial liability, the amounts taken to equity are transferred to the initial carrying amount of the non financial asset or liability.

If the forecast transaction or firm commitment is no longer expected to occur, amounts previously recognised in equity are transferred to the income statement. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognised in equity remain in equity until the forecast transaction or firm commitment occurs.

As of 31 March 2015 and 2014, the Bank has no cash flow hedged transactions.


32

(v) Financial liabilities designated at fair value through profit or loss

Financial liabilities classified in this category are those that have been designated by management on initial recognition. Management may only designate an instrument at fair value through profit or loss upon initial recognition when the following criteria are met, and designation is determined on an instrument by instrument basis:

– The designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the liabilities or recognising gains or losses on them on a different basis; or

– The liabilities are part of a group of financial liabilities which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy; or

– The financial instrument contains one or more embedded derivatives which significantly modify the cash flows that otherwise would be required by the contract.

Financial liabilities at fair value through profit or loss are recorded in the statement of financial position at fair value. Changes in fair value are recorded in “Net (un) realised gains (losses) on financial assets and liabilities designated at fair value through profit or loss” in the income statement.

As of 31 March 2015 and 2014, included in this category are structured medium term notes issued by the Bank which contains embedded derivatives not separately recorded as permitted by IAS 39 – 11 A. These financial instruments are not listed in an active market (see Note 13).

(vi) Available-for-sale financial instruments

Available-for-sale financial instruments include equity and debt securities. Equity instruments classified as available-for-sale are those which are neither classified as held for trading nor designated at fair value through profit or loss. Debt instruments in this category are intended to be held for an indefinite period of time and may be sold in response to needs for liquidity or in response to changes in the market conditions.

Available-for-sale equity instruments include mainly non quoted investments in subsidiaries.

The Bank has not designated any loans or receivables as available-for-sale.

After initial measurement, available-for-sale financial instruments are subsequently measured at fair value.

Unrealised gains and losses are recognised directly in equity in the “Available-for-sale reserve”. When the financial instrument is disposed of, the cumulative gain or loss previously recognised in equity is recognised in the income statement in “Net realised gains (losses) on financial assets and liabilities not designated at fair value through profit or loss”. Where the Bank holds more than one investment in the same security they are deemed to be disposed of on a first-in first-out basis.

Dividends earned whilst holding available-for sale equity instruments are recognised in the income statement as “Dividend income” when the right of the payment has been established. The losses arising from impairment of such investments are recognised in the income statement in “Impairment losses on financial investments” and removed from the “Available-for-sale reserve”.

(vii) Loans and advances

Loans and advances include non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than:

– Those that the Bank intends to sell immediately or in the near term and those that the Bank upon initial recognition designates at fair value through profit or loss;


33

– Those that the Bank, upon initial recognition, designates as available-for-sale financial instruments; or

– Those for which the Bank may not recover substantially all of its initial investment, other than because of credit deterioration.

After initial measurement, “Loans and advances” are subsequently measured at amortised cost using the effective interest rate (“EIR”), less allowance for impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees and costs that are an integral part of the EIR. The amortisation is included in the caption “Interest and similar income” in the income statement. The losses arising from impairment are recognised in the income statement.

(c) Derecognition of financial assets and financial liabilities

(i) Financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:

– The rights to receive cash flows from the asset have expired; or

– The Bank has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either:

- The Bank has transferred substantially all the risks and rewards of the asset; or

- The Bank has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Bank has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Bank’s continuing involvement in the asset. In that case, the Bank also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Bank has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Bank could be required to repay.

(ii) Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.

(d) Reverse repurchase agreements

Securities purchased under agreements to resell at a specified future date are not recognised in the statement of financial position. The consideration paid, including accrued interest, is recorded in the statement of financial position reflecting the transaction’s economic substance as a loan by the Bank. The difference between the purchase and resale prices is recorded in the caption “Net interest income” and is accrued over the life of the agreement using the EIR.


34

(e) Determination of fair value

The fair value for financial instruments traded in active markets is based on their quoted market price or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.

For all other financial instruments not traded in an active market, the fair value is determined by using appropriate valuation techniques. Valuation techniques include the discounted cash flow method, comparison to similar instruments for which market observable prices exist, options pricing models, credit models and other relevant valuation models.

Certain financial instruments are recorded at fair value using valuation techniques in which current market transactions or observable market data are not available. Their fair value is determined using a valuation model that has been tested against prices or inputs to actual market transactions and using the Bank’s best estimate of the most appropriate model assumptions. Models are adjusted to reflect the spread for bid and ask prices to reflect costs to close out positions, counterparty credit and liquidity spread and limitations in the models. Also, profit or loss calculated when such financial instruments are first recorded (“Day 1” profit or loss) is deferred and recognised only when the inputs become observable or on derecognition of the instrument

An analysis of fair values of financial instruments and further details as to how they are measured are provided in Note 32.

(f) Impairment of financial assets

The Bank assesses at each statement of financial position date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the borrower or a group of borrowers is experiencing significant financial difficulty, the probability that they will enter bankruptcy or other financial reorganisation, default or delinquency in interest or principal payments and where observable data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

(i) Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Bank first assesses individually whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Bank determines that no objective evidence of impairment exists for an individually assessed financial asset, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of “Interest and similar income”. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and


35

all collateral has been realised or has been transferred to the Bank. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to the income statement.

The present value of the estimated future cash flows is discounted at the financial asset’s original EIR. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current EIR. The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.

For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of the Bank’s internal credit grading assessment.

Future cash flows on a group of financial assets that are collectively evaluated for impairment are estimated on the basis of historical loss experience for assets with credit risk characteristics similar to those in the group.

Historical loss experience, if any, is adjusted on the basis of current observable data to reflect the effects of current conditions on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not exist currently. Estimates of changes in future cash flows reflect, and are directionally consistent with, changes in related observable data from year to year (such as changes in unemployment rates, property prices, commodity prices, payment status, or other factors that are indicative of incurred losses in the group and their magnitude). The methodology and assumptions used for estimating future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience.

As of 31 March 2015 and 2014, no impairment losses on financial assets carried at amortised cost have been recorded by the Bank.

(ii) Available-for-sale financial instruments

For available-for-sale financial instruments, the Bank assess at each statement of financial position date whether there is objective evidence that an investment is impaired.

In the case of debt instruments classified as available-for-sale, the Bank assesses individually whether there is objective evidence of impairment based on the same criteria as financial assets carried at amortised cost. However, the amount recorded for impairment is the cumulative loss measured as the difference between the amortised cost and the current fair value, less any impairment loss on that investment previously recognised in the income statement. Future interest income is based on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of “Interest and similar income”. If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to credit event occurring after the impairment loss was recognised in the income statement, the impairment loss is reversed through the income statement.

In the case of equity investments classified as available-for-sale, objective evidence would also include a “significant” or “prolonged” decline in the fair value of the investment below its cost. Where there is evidence of impairment, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the income statement – is reclassified from equity to income statement as a reclassification adjustment. Impairment losses on equity investments are not reversed through the income statement; increases in the fair value after impairment are recognised directly in equity.


36

(g) Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. This is not generally the case with master netting agreements, therefore, the related assets and liabilities are presented gross in the statement of financial position.

(h) Recognition of income and expenses

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Bank and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

(i) Interest and similar income and expenses

For all financial instruments measured at amortised cost and financial instruments designated at fair value through profit or loss, interest income or expense is recorded using the EIR, which is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or financial liability. The calculation takes into account all contractual terms of the financial instrument (for example, prepayment options) and includes any fees or incremental costs that are directly attributable to the instrument and are an integral part of the EIR, but not future credit losses. The carrying amount of the financial asset or financial liability is adjusted if the Bank revises its estimates of payments or receipts. The adjusted carrying amount is calculated based on the original EIR and the change in carrying amount is recorded as “Other operating income”.

Once the recorded value of a financial asset or a group of similar financial assets has been reduced due to an impairment loss, interest income continues to be recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

(ii) Fee and commission income

The Bank earns fee and commission income from a diverse range of services it provides to its customers. Fee income has to be divided into the following two categories:

Fee income earned from services that are provided over a certain period of time

Fees earned for the provision of services over a period of time are accrued over that period. These fees include commission income and asset management, custody and other management and advisory fees.

Loan commitment fees for loans that are likely to be drawn down and other credit related fees, if any, are deferred (together with any incremental costs) and recognised as an adjustment to the EIR on the loan. When it is unlikely that a loan be drawn down, the loan commitment fees are recognised over the commitment period on a straight line basis.

Fee income from providing transaction services

Fees arising from negotiating or participating in the negotiation of a transaction for a third party, such as the arrangement of the acquisition of shares or other securities or the purchase or sale of businesses, if any, are recognised on completion of the underlying transaction. Fees or components of fees that are linked to a certain performance are recognised after fulfilling the corresponding criteria.

(iii) Dividend income

Dividend income is recognised when the Bank’s right to receive the payment is established.


37

(i) Cash and cash equivalents

Cash and cash equivalents as referred to in the statement of cash flows comprises cash on hand, non-restricted current accounts with central banks and amounts due from banks on demand or with an original maturity of three months or less.

(j) Tangible assets

Tangible assets are stated at cost excluding the costs of day-to-day servicing, less accumulated depreciation and accumulated impairment in value. Changes in the expected useful life are accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates.

Depreciation is calculated using the straight-line method to write down the cost of tangible assets to their residual values over their estimated useful lives. Land is not depreciated. The estimated useful lives are as follows:

– Computer hardware: 3 to 5 years;

– Other fixtures and fittings, tools and equipment: 5 years.

Tangible assets are derecognised on disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognised in the caption “Other operating income/expenses” in the income statement in the year the asset is derecognised.

(k) Intangible assets

The Bank’s intangible assets include the value of computer software and licences. An intangible asset is recognised only when its cost can be measured reliably and it is probable that the expected future economic benefits that are attributable to it will flow to the Bank.

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.

The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful economic life. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the income statement in the expense category consistent with the function of the intangible asset.

Amortisation is calculated using the straight-line method to write down the cost of intangible assets to their residual values over their estimated useful lives as follows:

– Computer software and licences: 3 to 5 years.

(l) Impairment of non-financial assets

The carrying amounts of the Bank’s assets, except deferred income tax assets and financial assets, are reviewed at each statement of financial position date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the income statement. The recoverable amount of


38

other assets is the greater of their net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

As of 31 March 2015 and 2014, the Bank has not booked any impairment on non-financial assets.

(m) Financial guarantees

In the ordinary course of business, the Bank gives financial guarantees, consisting of letters of credit, guarantees and acceptances. Financial guarantees are initially recognised in the financial statements (within “Other liabilities”) at fair value, being the premium received. Subsequent to initial recognition, the Bank’s liability under each guarantee is measured at the higher of the amount initially recognised less, when appropriate, cumulative amortisation recognised in the income statement, and the best estimate of expenditure required to settle any financial obligation arising as a result of the guarantee.

Any increase in the liability relating to financial guarantees is recorded in the income statement. The premium received is recognised in the income statement in the caption “Net fee and commission income” on a straight line basis over the life of the guarantee.

(n) Pension benefits

The Bank operates a defined contribution pension plan. The contribution payable to a defined contribution plan is in proportion to the annual gross salary of the concerned employees and is recorded as an expense under “Administrative expenses”. Unpaid contributions are recorded as a liability.

(o) Provisions

Provisions are recognised when the Bank has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to any provision is presented in the income statement net of any reimbursement.

(p) Taxes

Income tax on the income statement for the year comprises current and deferred taxes. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

(i) Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted by the statement of financial position date.

(ii) Deferred income tax

Deferred income tax is provided using the liability method, on temporary differences at the statement of financial position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except:


39

– Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

– In respect of taxable temporary differences associated with investments in subsidiaries, associates and interest in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilised except:

– Where the deferred income tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

– In respect of deductible temporary differences associated with investments in subsidiaries, associates and interest in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each statement of financial position date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the statement of financial position date.

Income tax relating to items recognised directly in equity is recognised in equity and not in the income statement.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(q) Comparative figures

Certain comparative figures in the notes and in the statement of cash flows as of 31 March 2014 have been modified to allow a better comparison.


40

NOTE 3 - SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Bank makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Going concern

The Bank’s Board of Directors has made an assessment of the Bank’s ability to continue as a going concern and is satisfied that the Bank has the resources to continue in business for the foreseeable future. Furthermore, the Board of Directors is not aware of any material uncertainties that may cast significant doubt upon the Bank’s ability to continue as a going concern. Therefore, the annual accounts continue to be prepared on the going concern basis.

(b) Estimation of fair values of financial instruments

The following summarises the major methods and assumptions used in estimating the fair values of financial instruments.

(i) Securities

The fair values of quoted investments in active markets are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Bank establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants.

(ii) Derivatives

The fair value of derivatives is calculated, for listed instruments, on the basis of market prices ruling at the end of reporting period. When market prices are not available and/or reliable, valuation methods and models are used based on market-derived data (e.g. valuation of listed instruments with similar characteristics, discounted cash flow analysis, option price calculation methods, or valuation used in comparable transactions).

When discounted cash flow techniques are used, estimated future cash flows are based on Board of Directors’ best estimates and the discount rate is a market related rate for a similar instrument at the statement of financial position date. Where other pricing models are used, inputs are based on market related data at the statement of financial position date.

(iii) Interest-bearing loans and borrowings

Fair value is calculated based on discounted expected future principal and interest cash flows.

Where quoted market prices or broker/dealer quotations are not available, prices for similar instruments or valuation pricing models are considered in the determination of fair value. Valuation pricing models consider contractual terms, position size, underlying asset prices, interest rates, dividend rates, time value, volatility and other statistical measurements for the relevant instruments or for instruments with similar characteristics. These models also incorporate adjustments relating to market liquidity adjustments. These adjustments are fundamental components of the fair value calculation process. The valuation technique used maximises the use of market inputs and minimises the use of entity-specific inputs which are unobservable in the market.

41

Valuation pricing models and their underlying assumptions impact the amount and timing of unrealised gains and losses recognised, and the use of different valuation pricing models or underlying assumptions could produce different financial results. Any changes in the fixed income, equity, and foreign exchange and commodity markets can impact the Bank’s estimates of fair value in the future, potentially affecting trading gains and losses. The Bank’s estimates of fair value may involve greater subjectivity due to the lack of transparent market data available upon which to base assumptions underlying valuation pricing models.

(iv) Other financial assets/liabilities

For other financial assets/liabilities with a remaining life of less than one year, the notional amount is deemed to reflect the fair value. All other receivables / payables are discounted to determine the fair value.

(c) Impairment

Assets are subject to impairment tests at the end of reporting periods. In determining whether an impairment loss should be recognised, the Bank makes judgements to ascertain whether there is any objective evidence that a financial asset or group of financial assets is impaired. If there is evidence of a long-term reduction in the value of the asset concerned, this is recognised in income statement on the basis of market prices in the case of listed instruments, and of estimated future cash flows discounted according to the original effective interest rate in the case of unlisted instruments. If the reasons for which the loss was recorded subsequently cease to apply, the impairment is written back to profit and loss accounts.

(d) Deferred taxes

Provisions for income taxes have been calculated on the basis of current, advance and deferred obligations. Advance and deferred taxes are calculated on the basis of temporary differences - without time limits - between the carrying amount of an asset or liability and its tax base.

Deferred tax assets and liabilities have been stated using the assumptions that the tax base of the assets and liabilities are determined by reference to Luxembourg tax principles.

NOTE 3 - SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS (continued)

42

NOTE 4 - CASH AND CASH BALANCES WITH CENTRAL BANKS (in EUR)

31 March 2015 31 March 2014

Petty cash 5,018 4,357

Cash balances with central banks 160,000,317 517,042,527

Total 160,005,335 517,046,884

Credit institutions established in Luxembourg are required to hold minimum reserves with the Luxembourg Central Bank. These deposits represent 1% of some of their liabilities. Compliance with the reserve requirement is determined on the basis of the institutions’ average daily reserve holdings over the maintenance period, thus reserves of credit institutions can vary from one day to another following their treasury management, the money market or their expectations in interest rates.

Mandatory reserve deposits with the Luxembourg central Bank are not used in the Bank’s day to day operations.

NOTE 5 - DERIVATIVES HELD FOR TRADING – ASSETS (in EUR)

They are composed of the positive fair values of interest rate swaps contracts (“IRS”) and forward foreign exchange transactions.

The Bank has entered into interest rate swaps contracts mainly in the context of its medium term notes program (see Note 13). These transactions do not qualify for hedge accounting in accordance with IAS 39 provisions.

The Bank enters into forward foreign exchange contracts mainly in the context of clients’ transactions (these positions are then covered by a reverse transaction in the market) and, to a non significant extent, for dealing purposes.

31 March 2015 31 March 2014

Listed Unlisted Listed Unlisted

Derivatives on interest rates --- 683,603 --- 50,781

Derivatives on foreign exchange rates --- 854,337,058 --- 1,232,344,030

Total --- 855,020,661 --- 1,232,394,811

As of 31 March 2015, the global notional amount of the IRS contracts, including IRS with negative fair values, amounts to 91,736,841 (2014: 90,758,671), which is equal to the nominal of the notes (see Note 13).

43

Interest rates Foreign currency Total - 31 March 2015Type of derivatives /

Notional Fair Notional Fair Notional FairUnderlying assets amount value amount value amount value

Listed derivative products

Financial derivatives --- --- --- --- --- ---

Other --- --- --- --- --- ---

--- --- --- --- --- ---

Unlisted derivative products

Financial derivatives 37,835,621 683,603 21,473,010,739 854,337,058 21,510,846,360 855,020,661

Other --- --- --- --- --- ---

37,835,621 683,603 21,473,010,739 854,337,058 21,510,846,360 855,020,661

Total 37,835,621 683,603 21,473,010,739 854,337,058 21,510,846,360 855,020,661

Interest rates Foreign currency Total - 31 March 2014Type of derivatives /

Notional Fair Notional Fair Notional FairUnderlying assets amount value amount value amount value

Listed derivative products

Financial derivatives --- --- --- --- --- ---

Other --- --- --- --- --- ---

--- --- --- --- --- ---

Unlisted derivative products

Financial derivatives 9,296,871 50,781 31,174,326,583 1,232,344,030 31,183,623,454 1,232,394,811

Other --- --- --- --- --- ---

9,296,871 50,781 31,174,326,583 1,232,344,030 31,183,623,454 1,232,394,811

Total 9,296,871 50,781 31,174,326,583 1,232,344,030 31,183,623,454 1,232,394,811

NOTE 5 - DERIVATIVES HELD FOR TRADING – ASSETS (in EUR) (continued)

44

NOTE 6 - AVAILABLE-FOR-SALE FINANCIAL INSTRUMENTS (in EUR)

Equity instruments

They are composed of:

31 March 2015 31 March 2014

Listed --- ---

Unlisted 8,755,064 6,510,760

Total 8,755,064 6,510,760

As of 31 March 2015 and 2014, unlisted equity instruments are mainly composed of shares in the following affiliated undertakings:

Name: Global Funds Management S.A.Registered office: 33, rue de Gasperich L-5826 HesperangeProportion of the capital held: 100%Amount of capital and reserves as of 31.03.2015: EUR 6,798,436Profit for the year ended 31.03.2015: EUR 633,681

Name: Global Funds Trust CompanyRegistered office: c/o Maples & Calder P.O. Box 309, Ugland House George Town, Grand Cayman Cayman IslandsProportion of the capital held: 100%Amount of capital and reserves as of 31.03.2015: EUR 1,270,001Profit for the year ended 31.03.2015: EUR 480,102

Available-for-sale equity instruments are also composed, for a not significant amount, of other unlisted securities.

Debt instruments

They are composed of:

31 March 2015 31 March 2014

Listed 699,578,602 448,727,388

Unlisted --- ---

Total 699,578,602 448,727,388

45

As of 31 March 2015 and 2014, listed debt instruments are composed of US, Japanese and European countries highly liquid bonds with residual maturity less than 6 months.

31 March 2015 31 March 2014

France 450,774,515 86,356,920

USA 27,788,543 ---

Japan 34,919,201 282,867,276

Germany 111,690,417 50,911,286

Netherlands --- 7,319,489

Sweden 28,073,389 ---

Belgium 46,332,537 ---

European Union --- 21,272,417

Total 699,578,602 448,727,388

Collateral posted

The Bank has pledged some financial assets in favour of Euroclear in order to benefit from a credit facility of USD 400 million to cover daily settlement activity.

31 March 2015 31 March 2014

Fair value of pledged securities 394,640,650 141,436,821

NOTE 6 - AVAILABLE-FOR-SALE FINANCIAL INSTRUMENTS (in EUR) (continued)

46

NOTE 7 - LOANS AND ADVANCES (in EUR)

Total net carrying amounts 31 March 2015 31 March 2014

Unlisted loans and advances to:

- Credit institutions 2,680,307,737 2,993,264,774- Non credit institutions 706,865,906 284,417,367- Corporate customers 1,396 1,816,328- Staff 716,922 704,626

Total 3,387,891,961 3,280,203,095

Impairment allowance for loans and advances

As of 31 March 2015 and 2014, the Bank has not booked any specific and/or collective impairment on its loans and advances.

Loans and advances to credit institutions - breakdown:

31 March 2015 31 March 2014

Current accounts and margin calls 381,558,512 102,896,172

Term deposits 1,154,036,480 1,985,462,124

Other loans and advances:Reverse repo transactions 1,144,712,745 904,906,478

Total 2,680,307,737 2,993,264,774

Loans and advances to non credit institutions - breakdown:

31 March 2015 31 March 2014

Current accounts --- ---

Term deposits --- ---

Other loans and advances:

Reverse repo transactions 706,865,906 284,417,367

Total 706,865,906 284,417,367

47

Guarantees received as collateral

The reverse repo transactions are fully secured by government or corporate bonds.

Loans and advances to corporate customers - breakdown:

31 March 2015 31 March 2014

Current accounts 1,396 1,816,328

Total 1,396 1,816,328

Loans and advances to staff - breakdown:

31 March 2015 31 March 2014

Credit cards, personal loans and loans guaranteed by payrolls 716,922 704,626

Total 716,922 704,626

NOTE 8 - MOVEMENTS IN TANGIBLE AND INTANGIBLE ASSETS (in EUR)

The following table represents the movements which have been occurred on the tangible and intangible assets portfolio during the financial year:

Tangible and intangible Gross Additions Disposals/ Gross value Accumulated Net Netassets value at the Transfers at the end of depreciation carrying carrying beginning of the fi nancial amount amount the fi nancial year as of as of year 31 March 2015 31 March 2014

Tangible assets 12,646,183 800,387 13,446,570 10,706,313 2,740,257 3,032,164of which:Computer hardware 8,104,073 786,145 8,890,218 6,412,511 2,477,707 2,679,545Offi ce furniture, fi xtures, fi ttings and equipment 4,542,110 14,242 4,556,352 4,293,802 262,550 352,619

Intangible assets 26,304,569 3,860,127 30,164,696 21,236,241 8,928,455 7,856,904of which:Computer software and licences 26,304,569 3,860,127 30,164,696 21,236,241 8,928,455 7,856,904

NOTE 7 - LOANS AND ADVANCES (in EUR) (continued)

48

NOTE 9 - OTHER ASSETS (in EUR)

31 March 2015 31 March 2014

Accounts receivable for the account of third parties 38,028,426 36,642,439

Commissions receivable 16,361,574 22,642,053

Prepaid expenses and other items 8,597,801 3,955,753

Total 62,987,801 63,240,245

Accounts receivable for the account of third parties are “Transitory accounts” maintained by the Bank for operational purposes. These accounts are linked to the accounts payable for the account of third parties in the caption “Other liabilities” (Note 15).

Commissions receivable refer to fees receivable for the services (mainly Custodian, Administration and Paying Agency services) rendered by the Bank. A significant part of those commissions are usually claimed on a quarterly basis.

49

They are composed of the negative fair values of the IRS and the forward foreign exchange contracts.

The Bank has entered into the IRS in the context of the medium term notes program (see Note 13). These transactions do not qualify for hedge accounting in accordance with IAS 39 provisions.

The Bank enters into forward foreign exchange contracts mainly in the context of clients’ transactions (these positions are then covered by a reverse transaction in the market) and, to a non-significant extent, for dealing purposes.

31 March 2015 31 March 2014

Listed Unlisted Listed Unlisted

Derivatives on interest rates --- 2,740,303 --- 9,272,942

Derivatives on foreign exchange rates --- 853,047,764 --- 1,230,965,212

Total --- 855,788,067 --- 1,240,238,154

Type of derivatives/ Interest rates Foreign currency Total - 31 March 2015

Underlying assets Notional Fair Notional Fair Notional Fair amount value amount value amount value

Unlisted derivative products Financial derivatives 53,901,220 2,740,303 22,465,515,292 853,047,764 22,519,416,512 855,788,067Other --- --- --- --- --- ---

53,901,220 2,740,303 853,047,764 22,519,416,512 855,788,067

Total 53,901,220 2,740,303 22,465,515,292 853,047,764 22,519,416,512 855,788,067

Type of derivatives/ Interest rates Foreign currency Total - 31 March 2014

Underlying assets Notional Fair Notional Fair Notional Fair amount value amount value amount value

Unlisted derivative products Financial derivatives 81,461,800 9,272,942 32,405,231,630 1,230,965,212 32,486,693,430 1,240,238,154Other --- --- --- --- --- ---

81,461,800 9,272,942 32,405,231,630 1,230,965,212 32,486,693,430 1,240,238,154

Total 81,461,800 9,272,942 32,405,231,630 1,230,965,212 32,486,693,430 1,240,238,154

NOTE 10 - DERIVATIVES HELD FOR TRADING – LIABILITIES (in EUR)

50

NOTE 11 - AMOUNTS DUE TO CREDIT INSTITUTIONS (in EUR)

As of 31 March 2015 and 2014, they are composed of:

31 March 2015 31 March 2014

Current accounts, margin calls and deposits on demand 2,411,269 190,063,279

Loans with agreed maturity --- ---

Total 2,411,269 190,063,279

NOTE 12 - AMOUNTS DUE TO CUSTOMERS (in EUR)

As of 31 March 2015 and 2014, they are composed of:

31 March 2015 31 March 2014

Current accounts 3,697,670,436 3,046,495,822

Term deposits 33,762,533 30,450,531

Total 3,731,432,969 3,076,946,353

NOTE 13 - FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS (in EUR)

The Bank issued structured medium term notes with a nominal value of 91,736,841 (2014: 90,758,671) and with structured coupon rates, including embedded derivatives.

The Bank has decided to use the fair value option (see Note 2.2 (b) (v)) to measure these debt certificates under the medium term notes program due to their embedded derivatives. These financial instruments are not listed in an active market. Their fair value is calculated using a valuation technique.

In the context of the medium term notes program, the Bank is entered into interest rate swap transactions (see Notes 5 and 10).

51

NOTE 14 - TAX EXPENSES, ASSETS AND LIABILITIES (in EUR)

The components of income tax expenses, tax assets and tax liabilities for the years ended 31 March 2015 and 2014 are:

31 March 2015 31 March 2014

Current tax assets --- ---

Deferred tax assets- due to temporary deductible differences 383,928 2,773,495

Total tax assets 383,928 2,773,495

Current tax liabilities 13,946,815 15,934,946

Deferred tax liabilities- due to temporary taxable differences 1,216,440 3,296,364

Total tax liabilities 15,163,255 19,231,310

Income tax expenses 31 March 2015 31 March 2014

Current taxes 7,120,583 7,739,000

Changes in income tax rate for previous fi nancial years --- ---

Deferred tax assets (26,831) (144,681)Related to previous fi scal exercises (reversed to the income statement) (413,232) (550,095)Generated in the fi scal exercise 386,401 413,232Changes in income tax rate for previous fi nancial years --- (7,818)

Deferred tax liabilities 2,799 275Related to previous fi scal exercises (reversed to the income statement) 3,149 3,376Generated in the fi scal exercise (350) (3,149)Changes in income tax rate for previous fi nancial years --- 48

Total 7,096,551 7,594,594

52

Reconciliation of the total tax expenses

A reconciliation between the tax expenses and the accounting profit multiplied by Luxembourg tax rate for the years ended 31 March 2015 and 2014 is as follows:

31 March 2015 31 March 2014

Accounting profi t before tax 49,173,516 62,476,934

Tax expenses at income tax rate of 29.97% (2014: 29.97%) 14,737,303 18,724,337

+/- adjustments linked to:income not subject to tax --- (31,798)non-deductible expenses 346,848 21,156

Other (7,987,600) (11,119,101)

Income tax expenses 7,096,551 7,594,594

NOTE 15 - OTHER LIABILITIES (in EUR)

31 March 2015 31 March 2014

Accounts payable for the account of third parties 38,028,426 36,642,439

Salary related contributions 2,568,280 2,488,820

Deferred revenues 4,601,112 3,926,364

Other 4,123,906 4,538,072

Total 49,321,724 47,595,695

Deferred revenues include payments received by the Bank for its agency activities within its own medium term notes program and within other debt securities programs carried out by other companies of the Nomura Group for which the Bank delivers agency services (Calculation Agent, Paying Agent and Settlement Agent).

NOTE 16 - ISSUED CAPITAL

As of 31 March 2015 and 2014, the Bank’s authorised, subscribed and paid-up capital amounts to EUR 28,000,000, represented by 2,800 ordinary shares with a nominal value of EUR 10,000 each.

NOTE 14 - TAX EXPENSES, ASSETS AND LIABILITIES (in EUR) (continued)

53

NOTE 17 - RESERVES (INCLUDING RETAINED EARNINGS) (in EUR)

Under Luxembourg law, the Bank must appropriate to a legal reserve an amount equivalent to at least 5% of the annual net profit until such reserve is equal to 10% of the share capital. This appropriation is made in the following year. Distribution of the legal reserve is restricted.

The Bank transferred 8,500,000 to a net worth tax reserve for the tax year 2014 (2013: 7,100,000). Luxembourg tax legislation provides for a reduction in the net worth tax equal to its global amount on the condition that a special reserve is established in an amount equal to 5 times the net worth tax charge for the current year, and maintained for 5 years.

Allocation of results as of 31 March 2014:

Profi t of the year 54,882,340

Transfer to special reserve for 2014 8,500,000

Release from special reserve for 2008 (3,105,000)

Allocation to retained earnings 49,487,340

NOTE 18 - ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCY

As of 31 March 2015, the aggregate amount of the Bank’s assets denominated in currencies other than EUR, translated into EUR, amounts to EUR 4,336,876,385 (2014: EUR 4,218,040,266).

As of 31 March 2015, the aggregate amount of the Bank’s liabilities denominated in currencies other than EUR, translated into EUR, amounts to EUR 4,333,553,613 (2014: EUR 4,215,461,691).

NOTE 19 - INTEREST AND SIMILAR INCOME (in EUR)

31 March 2015 31 March 2014

Loans and advances to central banks 100,662 452,949

Loans and advances to credit institutions 7,127,397 9,392,603

Loans and advances to customers 23,686 67,166

Derivatives held for trading 7,706,206 7,573,347

Available-for-sale fi nancial assets 737,941 521,506

Total 15,695,892 18,007,571

54

NOTE 20 - INTEREST EXPENSES AND SIMILAR CHARGES (in EUR)

31 March 2015 31 March 2014

Amounts due to central banks 540,909 2,212,242

Debt certifi cates designated at fair value through profi t or loss 7,560,916 7,477,784

Amounts due to credit institutions 87,704 112,588

Amounts due to customers 2,716,962 3,281,297

Total 10,906,491 13,083,911

NOTE 21 - DIVIDEND INCOME

As of 31 March 2014, the dividend income relates to the available-for-sale financial instruments. No dividend has been received for the year ending on 31 March 2015.

NOTE 22 - NET FEE AND COMMISSION INCOME (in EUR)

31 March 2015 31 March 2014

Administration fees 48,454,768 46,398,978

Custody fees 21,373,191 19,774,733

Other fees 12,609,281 11,513,522

Total fee and commission income 82,437,240 77,687,233

Total fee and commission expenses (271,585) (339,935)

Net fee and commission income 82,165,655 77,347,298

NOTE 23 - NET REALISED GAINS (LOSSES) ON FINANCIAL ASSETS AND LIABILITIES NOT DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS

As of 31 March 2015 and 2014, there is no net realised gains (losses) recognised in this caption.

NOTE 24 - NET (UN)REALISED GAINS (LOSSES) ON FINANCIAL ASSETS AND LIABILITIES HELD FOR TRADING

As of 31 March 2015 and 2014, this caption includes the realised and unrealised gains and losses on derivative financial instruments.

55

NOTE 25 - FOREIGN EXCHANGE DIFFERENCES (in EUR)

31 March 2015 31 March 2014

Spot exchange on derivatives and other fi nancial instruments

Gains 85,863,655 100,380,488

Losses (86,364,153) (100,535,623)

Total (500,498) (155,135)

NOTE 26 - ADMINISTRATIVE EXPENSES (in EUR)

31 March 2015 31 March 2014

Wages and salaries - Wages and salaries 28,187,836 27,608,761- Social contributions 3,106,850 2,895,178- Other expenses 1,263,980 1,318,747- Defi ned contribution plan 433,168 537,044- Expenses for seconded personnel --- 5,602

Total wages and salaries 32,991,834 32,365,332

Other administrative expenses- Advisory and audit fees 734,520 1,178,093- Legal fees 110,831 111,358- Maintenance, repairs and refurbishment 22,063 26,045- Rents and leases 2,738,520 2,684,748- Service providers 149,675 175,738

- Couriers 33,541 36,871- Telephone and web services 116,134 138,867

- Agency and travel expenses 272,485 240,431- Membership subscription 404,911 330,147- IT costs 5,490,354 3,482,359- Pricing and other services 4,505,953 4,061,101- Other 859,759 725,622

Total other administrative expenses 15,289,071 13,015,642

Total administrative expenses 48,280,905 45,380,974

56

NOTE 27 - DEPRECIATION, AMORTISATION AND IMPAIRMENT (in EUR)

As of 31 March 2015 and 2014, depreciation, amortisation and impairment are as follows:

Amortisation Impairment Amounts recoveries 31 March 2015

Tangible assets 3,235,798 --- --- 3,235,798

Intangible assets 645,072 --- --- 645,072

AFS fi nancial instruments --- --- --- ---

Loans and receivables --- --- --- ---

Total 3,880,870 --- --- 3,880,870

Amortisation Impairment Amounts recoveries 31 March 2014

Tangible assets 1,622,666 --- --- 1,622,666

Intangible assets 671,028 --- --- 671,028

AFS fi nancial instruments --- --- --- ---

Loans and receivables --- --- --- ---

Total 2,293,694 --- --- 2,293,694

57

NOTE 28 - GUARANTEES, CONTINGENT LIABILITIES AND COMMITMENTS (in EUR)

The Bank’s guarantees and commitments may be analysed as follows:

31 March 2015 31 March 2014

Guarantees givenFinancial guarantees 146,605 153,120Commercial guarantees --- ---

Irrevocable commitments to lend funds toBanks --- ---Customers --- ---

Total 146,605 153,120

As of 31 March 2015, the Bank’s contingent liabilities include guarantees granted by the Bank on behalf of its employees to third parties for an amount of 146,605 (2014: 153,120).

The Bank has also entered into certain other commitments which are not disclosed in the statement of financial position but which are significant for the purposes of assessing its financial situation of the Bank. As of 31 March, details of such other commitments are as follows:

31 March 2015 31 March 2014

Commitments in respect of fi xed rental payments contracted for premises 14,549,764 16,678,572

There were no such commitments toward related parties as of 31 March 2015 and 2014.

Legal claims

Litigation is a common occurrence in the banking industry due to the nature of the business undertaken. The Bank has formal controls and policies for managing legal claims. Once professional advice has been obtained and the amount of loss reasonably estimated, the Bank makes adjustments to account for any adverse effects which the claims may have on its financial standing.

Association pour la Garantie des Dépôts, Luxembourg (AGDL)

The Bank is a member of the non-profit making organisation “Association pour la Garantie des Dépôts, Luxembourg” (AGDL) that was established on 25 September 1989.

The AGDL has as its sole objective the establishment of a mutual system for the guarantee of cash deposits for the benefit of customers of the member credit institutions of the Association and for claims arising from investment transactions in favour of investors with the credit institutions and investment firms which are members of the Association.

The guarantee of cash deposits and of claims arising from investment transactions in favour of clients, individuals and certain companies as defined by the regulations is limited to a maximum amount fixed at the equivalent value in all currencies of EUR 100,000 per cash deposit and EUR 20,000 per claim arising out of investment transactions.

If the guarantee is called, the annual payment to be made by each member is limited to 5% of the Shareholders’ equity.

58

NOTE 29 - STAFF

As of 31 March 2015 and 2014, the average number of Bank’s staff is as follows:

31 March 2015 31 March 2014

Management – Senior 3 3

Management – Middle 56 47

Other staff 291 295

Total 350 345

As of 31 March 2015 and 2014, the Bank has granted advances and credits to members of its managerial bodies and has entered into guarantees on their behalf as follows (in EUR):

31 March 2015 31 March 2014

Loans and advancesManagerial bodies --- ---

GuaranteesManagerial bodies 17,400 10,650

17,400 10,650

NOTE 30 - AUDIT FEES (in EUR)

As of 31 March 2015 and 2014, the audit fees are split as follows:

31 March 2015 31 March 2014

Audit fees 267,264 255,658

Audit related fees --- ---

Other fees 10,734 124,540

Total 277,998 380,198

59

NOTE 31 - RISK MANAGEMENT (in EUR)

In the Note 31, the concept of “hedging” is to be understood from an economic point of view and not from an IFRS point of view.

1. Four Lines of Defence Model

The Bank has adopted the “Four Lines of Defence” model as the outline for risk governance, comprising the following elements:

1. First Line of Defence: the business owns and manages its risks in accordance with agreed risk policies, appetite and controls, at the operational level. It is composed of the Bank’s main fund and custody activities including Internal Control Department.

2. Second Line of Defence concerns those units responsible for risk oversight and risk guidance in the Bank as well as they are responsible for defining risk policies and risk processes and controls. For instance: Risk Management function, Compliance, Legal and Finance, but also Health and Safety1, Information Security and Human Resources.

3. Third Line of Defence is independent assurance to the Board of Directors and Senior Management of the effectiveness of risk management processes. The assurance is the responsibility of the internal audit.

4. Fourth Line of Defence is composed of the Board of Directors, which has the ultimate responsibility of the risk management processes.

2. Embedding risk governance across the Bank

Board of Directors

The Board of Directors has the ultimate responsibility for setting up the Bank’s appetite for risks and the tolerance limits. In case that the risk appetite is significantly breached, the Board of Directors shall require corrective measures, which may need to be reported to the regulator as per regulatory requirements.

The Board of Directors shall globally define strategies and supervise the risk management and capital adequacy. The Board of Directors also ensures that Management establishes a framework for assessing the various risks, develops a system to relate risk to the Bank’s capital level and establishes a method for monitoring compliance with internal policies. The Board of Directors shall promote the risk culture across the Bank.

Executive Committee (“ExCom”)

The ExCom has the responsibility to manage the Bank’s day-to-day activities. Regarding risk management, the ExCom has to:

1. Implement the Risk Appetite;

2. Adopt and support Risk Management policies and procedures, including controls;

3. Set guidelines for the Risk Management framework;

4. Promote the risk culture across the Bank;

5. Define and review the risk strategy of the Bank.

1 Administration Support Department is in charge of Health and Safety.

60

Risk Management Committee

Risk Management Committee is a standing committee of the Executive Committee. The purpose of this Committee is to assist the ExCom in fulfilling its responsibility with respect to:

1. Oversight of the Bank’s Risk Management framework, including the significant policies, procedures and practices using in managing the Bank’s risks;

2. Review the adequacy of the Bank’s capital, both economic and regulatory;

3. Review certain risk limits and regular risk reporting and make recommendations to the ExCom when appropriate.

The Risk Management Committee meets on a monthly basis and it is well represented by ExCom members as well as Senior Management of the business units.

Other Committees or Groups

The following Committees meet also on a regular basis to complement the risk governance of the Bank:

1. Information Security Committee is a Committee meeting on a quarterly basis with focus on discussion of Information Security topics including Information Security risks and action plans to mitigate Information Security risks. It is discussed about priorities aiming at enhancing the global security level of the Bank. It reviews and follows-up Information Security incidents and audit points, and follows ISO 27002 leading market methodologies in Information Security;

2. Business Continuity Committee is a Committee meeting on a quarterly basis with focus on business resilience topics, including discussion on risks and mitigating action plans as well as ad-hoc risk assessments and their impacts on the Bank;

3. Monthly Interest Rate Review Meeting, whose purpose is to review and approve acceptable interest rate margin rates for the next month. Interest Rate Risk is monitored by the Risk Management Committee;

4. Pricing Advisory Group, whose purpose is to monitor securities pricing issues and make recommendations to the Management Company and Trustee;

5. Regulatory Steering Committee ascertains that NBL and, to some extents, its affiliated companies, are fully and permanently compliant with laws and regulations applicable to them. The Committee ensures that laws and regulations applicable to NBL and its subsidiaries, and under certain circumstances to its clients, are adequately identified and anticipated. The Committee analyses and categorises laws and regulations based on their impacts on the business model, operations and controls. The Committee thoroughly follows-up on the implementation of any regulatory action plan deemed as appropriate to address the regulatory challenges and ensure compliance of the Bank in a consistent way basis over time. The Committee maintains an appropriate level of regulatory awareness at NBL through communication and trainings. The Committee also ensures that relevant regulatory instruments applicable to NBL’s clients are discussed with them and that opportunities to generate revenues through dedicated services have been identified;

6. Due Diligence Steering Committee is dedicated to the process of Due Diligence on sub-custodians and is mainly responsible for taking decisions concerning the necessity of establishing a new relationship with a new local sub-custodian and / or to terminate an existing one;

7. New Product Approval Committee, whose purpose is to formally approve new fund projects or any other banking related transactions which are in the scope of the Bank’s usual fund and custody business.

NOTE 31 - RISK MANAGEMENT (in EUR) (continued)

61

Risk Management Department (“RMD”)

Risk Management department is structured in 2 teams:

1. Financial Risk team, covering market risk, credit risk, liquidity risk and other financial risks;

2. Operational Risk team, covering operational risk events, Risk Control Self-Assessment (“RCSA”), Key Risk Indicators (“KRI”) and Scenario analysis.

(a) Market Risk: qualitative information

Market risk is the risk of any impact on the Bank’s financial condition due to adverse market movements caused by market variables including, but not limited to, interest rates, foreign exchange rates, equity prices, credit spreads and ratings. Exposure to this type of risk primarily results from trading activities.

The Bank has limited dealing activities on its own account, exclusively related to foreign exchange and interest rate products.

The size of this activity is expected to remain limited and the related exposure to market risk is considered as non-material by the Bank.

The Bank is therefore subject to limited equity risk but not subject to commodity risk or basis risk. The economic value of the Bank could however be impacted by adverse movement in interest rates and/or foreign exchange rates.

(i) Interest Rate Risk

Interest rate risk is the potential adverse change in the economic value of a financial instrument or portfolio due to fluctuating interest rates.

The Market Risk Management Policy dictates the Bank not to have any material mismatch of assets and liabilities in terms of maturities.

The analysis of the balance sheet split by time bucket reveals that the Bank is mainly exposed to interest rate risk for periods less than 1 year.

The long term debt schedule, corresponding to the notes issued within the MTN program, is perfectly offset by the notional amount of the IRS reported on the assets and liabilities side.

Despite this observation, according to the CSSF circular 08/338, a calculation is performed twice a year to assess the impact on NBL balance sheet of a +/-200 bps movement in interest rates.

The results indicate that the impact of a 200 bps increase of the interest rates on the economic value of the Bank as of 31 December 2014 (last available calculation) would be -1,139,919 (31 December 2013: -1,416,297).

On the other hand, the impact of a decrease of 200 bps would be 413,312 (31 December 2013: 479,329).

This stress test confirmed the non-material nature of interest rate risk to the Bank.

(ii) Foreign Exchange Risk

Exchange rates risk is the risk of loss arising from future movements in the exchange rates applicable to the currency positions maintained by the Bank. Similarly to all market risks, foreign exchange risk arises from both open and imperfectly offset or hedged positions.


62

– Foreign Exchange Risks on Own Positions

As agent acting upon the orders of its clients, the Bank deals spot and forward transactions in JPY, USD, and other currencies. The highest transaction volumes are being performed on USD and JPY currencies.

The Treasury Department has to cover each customer’s position, trading or hedging intra-day. As such, no significant speculative transactions are carried out by the Bank for its own account.

The Banks has adopted an Open Currency Position Policy which defines the following open currency position limits:

– Open currency position less than EUR 150,000 equivalent per actively traded currency (with the exception of USD and JPY less than EUR 500,000 equivalent each);

– EUR 50,000 equivalent per other currency;

– Aggregate open position of EUR 2,500,000 equivalent.

Risk Management Department also performs an independent check against Treasury Department figures and reports to ExCom on a daily basis.

The stress testing scenarios resulted in the worst case to a potential loss of EUR 106,553, which is deemed not material.

– Foreign Exchange Risks on the Custody and Administration Fees

Another source of foreign exchange risk relates to the mismatch between expenses (mainly in EUR) and revenues as the invoices to funds clients are mainly denominated in non-EUR currencies (in USD and JPY).

Treasury Department has set up a procedure for converting estimated cash inflows resulting from its main source of revenues: the fund custody and administration fees.

The Treasury Department monitors the trends of exchange rate curves and may suggest converting measures to cope with the risk attached to the negative variation of exchange rates.

This process allows the Bank to reduce its exposure on foreign exchange risk.

(b) Credit risk

Credit risk is the risk that unexpected losses may arise as a result of the Bank’s borrowers or market counterparties failing to meet their obligations to pay. While loans are the largest and most obvious source of credit risk, other sources of credit risk exist throughout the activities of a bank, including in the banking book and in the trading book, and both on and off the balance sheet (derivatives transactions, acceptances, interbank transactions, foreign exchange transactions, bonds, etc.).

(i) Counterparty Credit Risk

Counterparty credit risk is the risk that counterparty will default before settlement in a particular transaction. Counterparty credit risk is the risk that an organisation does not pay out on a credit derivative, credit default swap, credit insurance contract, or other trade or transaction when it is supposed to.

Because of the nature of its activity, the Bank enters into a reduced set of transactions for its own account.

The credit risk management and monitoring is performed at two levels:

– Firstly, at local level, by the Risk Management Department;

– Secondly, at the level of the Group, by Nomura International Plc (“NIP”), which is the London-based securities broker/dealer operating company.

The applicable framework is defined in the Credit Risk Management Policy.


63

– On-Balance Sheet Transactions

The counterparty risk for on-balance sheet activities mainly concerns deposits that are done on a daily basis by Treasury Department.

The major part of this liquidity comes from the cash held on the funds cash accounts under the Bank’s custody. These cash positions are then placed on the market by the Bank as deposits or reverse repos essentially with short-term maturities.

Every day, the Treasury Department in charge of cash management monitors its credit limits on the peak exposure of outstanding trades and the maximum tenor, which is a time limit of the exposure, as well as the regulatory large exposures limits that reduce the exposures to a maximum of EUR 150 million by counterparty.

These exposures are compared to the credit limits to define which initial or additional positions may be taken with a specific counterparty.

At the end of the day, Risk Management Department performs relevant exposure control and monitoring. Moreover, a credit risk report is sent by RMD on a daily basis to the ExCom.

Every morning, an extraction of all deposits as of last business day is provided to the Investment Evaluation & Credit Department of NIP and the same day, the Treasury Department, the Risk Management Department and the ExCom receive from NIP a detailed report containing all the limits (exposure and tenor) and the actual positions by counterparty.

On top of the Bank’s internal applicable controls, NIP also performs the credit exposure monitoring of the nostro accounts the Bank holds with its counterparties and for the overdrafts of the funds accounts in the Bank’s books.

– Off-Balance Sheet Transactions

Foreign exchange transactions

The net currency position of the Bank for credit risk exposure on foreign exchange transactions made for its own account remains quite low.

The Bank enters into foreign exchange transactions with the investment funds under administration (in this case, the Bank is the counterparty of the funds) and then an opposite foreign exchange is performed with market counterparties (mainly NIP).

Besides, the Open Currency Position Policy prevents Treasury Department to take an aggregate foreign exchange exposure exceeding EUR 2,500,000 equivalent for its own account.

Interest Rate Swaps (“IRS”)

The Bank’s exposure to IRS comes from the Medium-Term Notes (“MTN”) program where the Bank is issuing its own Notes.

In that respect, the Bank, as an issuer, is not exposed to credit risk but may be exposed to interest rate risk.

In order to cover this risk, the Bank enters into Interest Rate Swaps with Nomura Securities Company (“NSC”) every time a Note is issued.

This systematic IRS transaction covers the interest rate risk but creates an exposure to a counterparty risk with NSC.

As of 31 March 2015, the exposure to NSC represented 91,736,841 (nominal amount), of which 12,500,304 less than one year (2014: exposure to NSC: nominal of 90,758,671, of which 19,808,115 less than one year).


64

– Netting agreements

As a credit risk mitigation technique, the Bank signed netting agreements with most of its counterparties who have entered into foreign exchange transactions.

These contractual netting agreements create a single legal obligation, covering all included transactions, such that, in the event of a counterparty’s failure to perform owing to default, bankruptcy, liquidation or any other similar circumstance, the credit institution would have a claim to receive or an obligation to pay only the net sum of the positive and negative mark-to-market values of included individual transactions.

These netting agreements have been subject to legal opinions and have been submitted to the CSSF for recognition as credit risk mitigation technique.

– Collateral Management Activities

The Bank is engaged in the following collateral management programmes:

Pledge of assets

Main credit risk exposure towards the investment funds comes from forward foreign exchange transactions. In order to reduce this exposure, the Bank has entered into pledge agreements with certain investment funds allowing taking financial collateral (cash or securities). The securities pledged to the Bank meet the eligibility criteria prescribed by the applicable regulation.

Pledge agreements are considered for investment funds having a size of USD 1.5 billion or more.

The exposure of existing investment funds is reviewed on a daily basis, to identify those without pledge agreement and for which the exposure reaches EUR 20 million, to allow appropriate and timely set-up of a pledge agreement.

In case the exposure with one investment fund is going to exceed 25% of the Bank’s eligible own funds, the adequate amount of eligible collateral is transferred from the investment fund’s portfolio and pledged to the collateral account in order to keep the exposure below the 25% limit.

– Margin calls under CSA

For the forward foreign exchange transactions concluded between the Bank and external counterparties, both counterparties to the transaction manage the economic potential loss or gain and require that collateral is allocated to cover the exposure, through a margining process.

The Bank has entered into ISDA/CSA agreements with third-party financial institutions, which describe all the collateral requirements (eligibility, valuation, conditions) that must be followed to cover the mark-to-market exposure arising from these transactions.

In order to make sure that the margin calls are correctly handled, the Bank actively monitors the forward foreign exchange mark-to-market exposure and coverage on a daily basis. The conditions are negotiated by the Bank with the brokers, and are in line with the Group Credit Risk guidelines.


65

Securities Lending

For the securities lending activity, the Bank acts as an agent to allow NIP, which is the exclusive borrower, to borrow securities from the portfolios of the investment funds that agree to participate as lenders.

All the securities lent to NIP are pledged by collateral (USD cash amount or G-10 government bonds) in order to cover the counterparty risk. This collateral must represent 105% of the market value of the lent securities.

As agent, the Bank has the responsibility to manage the collateral pledged to cover the counterparty risk. The high eligibility criteria ensure appropriate liquidity of the collateral and the 105% margin covers the potential losses and costs generated by the lent securities buy-in.

The table below shows the maximum exposure to credit risk for financial assets. The maximum exposure is shown before the effect of mitigation through the use of collateral agreements.

Maximum Maximum exposure exposure 31 March 2015 31 March 2014

Balances with central banks 160,000,317 517,042,527

Derivatives held for trading 855,020,661 1,232,394,811

Available-for-sale equity instruments 8,755,064 6,510,760

Available-for-sale debt instruments 699,578,602 448,727,388

Loans and advances 3,387,891,961 3,280,203,095

Total 5,111,246,605 5,484,878,581

Where financial instruments are recorded at fair value, the amounts shown above represent the current credit risk exposure but not the maximum risk exposure that could arise in the future as a result of change in values.

Maximum Maximum exposure exposure 31 March 2015 31 March 2014

Guarantees 146,605 153,120


66

Credit quality per class of financial assets

The table below shows the credit quality by class of credit risk assets, based on the Bank’s credit rating system (outstanding carrying amounts at the reference date).

Neither past due nor impaired

Prime Quality High grade Standard Sub- Not rated Past due or Impairment Total 31 March 31 March grade standard 31 March individually 31 March 31 March 2015 2015 2015 31 March grade 2015 impaired 2015 2015 31 March 31 March 2015 2015

Balances with central banks 160,000,317 --- --- --- --- --- --- 160,000,317

Derivatives held for trading --- 412,848,274 312,009,587 665,101 129,497,699 --- --- 855,020,661

Available-for-sale equity instruments --- --- --- --- 8,755,064 --- --- 8,755,064

Available-for-sale debt instruments 139,763,806 559,814,796 --- --- --- --- --- 699,578,602

Loans and advances 799,535,706 2,461,705,651 3,822,524 --- 122,828,080 --- --- 3,387,891,961

Total 1,099,299,829 3,434,368,721 315,832,111 665,101 261,080,843 --- --- 5,111,246,605

Neither past due nor impaired

Prime Quality High grade Standard Sub- Not rated Past due or Impairment Total 31 March 31 March grade standard 31 March individually 31 March 31 March 2014 2014 2014 31 March grade 2014 impaired 2014 2014 31 March 31 March 2014 2014

Balances with central banks 517,042,527 --- --- --- --- --- --- 517,042,527

Derivatives held for trading --- 584,897,069 283,840,520 --- 363,657,222 --- --- 1,232,394,811

Available-for-sale equity instruments --- --- --- --- 6,510,760 --- --- 6,510,760

Available-for-sale debt instruments 354,131,693 43,684,409 50,911,286 --- --- --- --- 448,727,388

Loans and advances --- 2,197,939,144 1,079,742,998 --- 2,520,953 --- --- 3,280,203,095

Total 871,174,220 2,826,520,622 1,414,494,804 --- 372,688,935 --- --- 5,484,878,581


67

Note: Prime quality: AAA High grade: AA-A Standard grade: BBB-BB Sub-standard grade: B and less

Geographical allocation of risks

As of 31 March 2015 and 2014, the distribution by geographical area of the risks held in the Derivatives held for trading and Loans and advances before taking into account collateral held and other credit enhancements can be summarised as follows:

31 March 2015 31 March 2014

Australia 5,489,806 90,688Belgium 8,262,605 184,893,426Japan 95,260,116 42,697,541Canada 6,704,979 7,540,945Germany 595,629,487 329,733,933Denmark 45,029,114 137,475,240Spain 3,073 12,375Finland 6,032 10,639France 370,769,530 43,517,026United Kingdom 1,579,742,794 2,611,176,442Italy 1,464,368 9,316Luxembourg 400,728,866 373,362,297The Netherlands 325,283,978 140,152,999USA 29,635,405 133,742,379Cayman Islands 500,959,962 198,508,463Singapore 110,789,701 251,310,840Switzerland 150,893,397 51,779,136Other 16,259,409 6,584,221

Total 4,242,912,622 4,512,597,906


68

Sectorial allocation of risks

An industry sector analysis of the Bank’s Loans and advances, before and after taking into account collateral held or other credit enhancements, is as follows:

31 March 2015 31 March 2014

Gross exposure Net exposure Gross exposure Net exposure

Financial services 3,387,175,039 1,365,481,322 3,279,498,469 1,616,315,258

Other 716,922 716,922 704,626 704,626

Total 3,387,891,961 1,366,198,244 3,280,203,095 1,617,019,884

Net exposure consists of the gross exposure less the amount of the collateral received at the reference date.

Collateral received under pledge agreements

The Bank holds the following collateral from its clients (Funds) as per the pledge agreements in place. The collateral is intended to reduce the risk exposure arising from the forward foreign exchange transactions. None of this collateral has been sold nor repledged:

31 March 2015 31 March 2014

Fair value of cash collateral 177,821,726 82,044,684

Fair value of securities collateral 562,601,177 280,557,801

Concentration of risk

Concentration risk arises where the Bank becomes overly focused on one particular counterparty, business area, issuer or geographical region thereby meaning the Bank’s performance could be overly influenced by a small number of factors.

Large Exposures

The Bank complies with the Large Exposure limits defined by the applicable regulation, namely the EU Regulation 575/2013 which transposes Basel 3 framework at European level. The total risk exposure towards a single client or group of connected clients must not exceed 25% of the own funds of the Bank. In this context, the Bank has asked for and has been granted by CSSF in December 2010 a partial exemption for its intra-group transactions as follows:

– With NBI, the Bank is benefiting from a global exemption up to 1.5 billion;

– With NIP, the Bank is benefiting from an exemption on forward exchange derivative transactions up to 1.3 billion credit risk equivalent (since a Netting Agreement has been effectively put in place with NIP and recognised by the CSSF).

Intragroup exposure, in particular towards NIP, has been reduced through the use of short-term reverse repurchase transactions (secured loans).

Exposures with third-party financial institutions are limited to EUR 150 million per counterparty or group of connected clients.

As the Bank is mainly involved with high rated financial institutions established in OECD countries with stable political and economic environment, the country risk can be considered as limited.


69

Solvency ratio (or Capital ratio)

This ratio, as defined by the applicable regulation, defines the minimum amount of own funds that the Bank has to maintain in relation to the total risk-weighted assets and off-balance sheet items. The minimum level is 8%.

The Bank’s own funds are fully composed of Tier 1 Capital (retained earnings).

As of 31 March 2015, the solvency ratio of the Bank was 39.90% under the EU Regulation 575/2013 (2014: 35.41%).

Impairment

As of 31 March 2015 and 2014, neither specific, nor collective impairments have been recorded by the Bank.

(c) Liquidity risk

Liquidity for a bank is the ability to fund increases in assets and meet obligations as they come due, without incurring unacceptable losses, in both normal and stressed circumstances.

Liquidity risk is composed of Funding liquidity risk and of Market liquidity risk. Funding liquidity risk is the risk that the Bank will not be able to meet efficiently both expected and unexpected current and future cash flows and collateral needs without affecting either daily operations or the financial conditions of the Bank. Market liquidity risk is the risk that a Bank cannot easily offset or eliminate a position at the market price because of inadequate market depth or market disruption.

Because liquidity risk can be corollary to other risks, such as credit risk and market risk, the liquidity risk management framework has been designed to fit into the overall enterprise risk management framework.

(i) Liquidity Risk Profile

It is the Bank’s policy to have no material mismatch of assets and liabilities in terms of maturities.

The Bank does not have a trading book, and so does not hold significant securities for its own account.

The Bank is a liability-driven bank which does not rely on the interbank market to fund its business. Liquidity is placed with both external and intra-group financial counterparties and in both secured and unsecured form, mainly on an overnight basis. Therefore, NBL has a very limited exposure to funding-liquidity risk and it is not directly exposed to market-liquidity risk.

NBL’s principal source of funding is clients’ deposits, a portion of which is Nomura Group owned. The Bank’s liquidity pool is reflective of the clients’ liquidity: as such there is none or very limited mismatch of currency between assets and liabilities. Consequently, NBL is not relying on any USD funding and is therefore not exposed to the recommendation of the European Systemic Risk Board (‘ESRB’) on US dollar denominated funding of credit institutions (ESRB/2011/2).

NBL holds a portfolio of liquid assets which is used to offset outflows in the event of stress (Liquidity Buffer) and a portion which is used as collateral for the settlement cycle at International Central Securities Depository (‘ISCD’) as Euroclear, Clearstream, etc. Securities in the liquidity portfolio are held to maturity and consist in highly liquid government bonds.

Regarding derivatives positions, the Bank has entered into:

– Interest rate swaps with Nomura Securities Co. Ltd (“NSC”) to hedge the MTN program;

– Foreign exchange (“FX”) forward contracts taken for the funds (undertakings for collective investment administered by the Bank): 1 leg with the funds, 1 leg with brokers, both legs offset each other after consideration of market spread and currency position rounding.


70

Given the hedging and back-to-back structure of the above mentioned derivative positions, these positions do not have a material impact on the Bank’s liquidity position.

NBL may be subject to liquidity risk as a consequence of other risks, as identified hereafter:

– Counterparty-Credit Risk:

For NBL, the failure of its counterparties could impair its cash flows and hence its ability to meet its commitments as they fall due. This risk is mitigated at two levels. On one hand, Treasury Department deals with selected counterparties within the limits that are set by the Group and, with particular reference to foreign exchange trades, Credit Support Annexes (“CSA”), which have been put in place. On the other hand, NBL has signed pledge agreements with the funds having significant FX exposure, allowing it to take collateral from those funds.

– Concentration Risk:

Concentrations of assets or liabilities can lead to liquidity problems. This risk is mitigated with the respect of credit limits which prevent unacceptable counterparty exposures. Furthermore, the Bank complies with Nomura Global Investment Guidelines setting forth concentration limits in terms of country and product exposures. Although the Bank concentrates a significant portion of its placings within the Group, it is done only in secured form, through the use of reverse repos.

– Operational Risk:

Significant problems can arise if the systems that process payment transactions or participants fail or delay transactions. Similarly, disruptions can be caused by operational problems at the level of critical participants or key third-party service providers. Cash Management activities are monitored by the Treasury and Back Office departments. These activities are governed by clearly defined processes and procedures, which are periodically reviewed.

(ii) Liquidity Risk Appetite

The Bank’s liquidity risk appetite is defined in line with forecasting cash available using the Bank’s Maximum Cumulative Outflow (“MCO”) model. NBL’s liquidity risk appetite is aligned with Nomura Holding Incorporated liquidity risk appetite.

The Bank has set up its liquidity risk appetite as follows:

1. Liquidity under Severe Stress: forecasting cash available under a severe market scenario using the Bank’s MCO model. Remaining positive at all times for at least 12 months and above the Minimum Regulatory Requirement set up by Basel III standards i.e. total inflows must be above 75% of the total outflows.

2. Liquidity under Acute Stress: forecasting cash available under both market- and Nomura event must remain positive at all times for at least 1 month and be above the Minimum Regulatory Requirement.

3. Liquidity Ratio B1.5 must be above the regulatory limit of 30%, with a tolerance zone of 30% - 50%. This ratio will be replaced by the Liquidity Coverage Ratio and the Net Stable Funding Ratio (Basel III standards).

4. No material mismatch between assets and liabilities in terms of maturities and currencies is tolerated. Materiality is defined as a difference large enough to generate interest or Foreign Exchange (FX) Risk.

5. Different Risk Tolerance Zones have been set up (green, amber, red) corresponding to the level of available cash.


71

(iii) Liquidity Measurement and Stress Testing

The main Liquidity Risk Measuring and Monitoring tools for the Bank are:

1. Maximum Cumulative Outflow (‘MCO’): the purpose of the model is to determine the adequate size of NBL’s liquidity pool under normal and stressed circumstances in order to meet the Bank’s own liquidity risk appetite both as a standalone entity and as part of Nomura Group. The MCO model compares and matches cumulative inflows and outflows considering both on- and off-balance sheet liquidity risk drivers. NBL liquidity monitoring and stress testing comprise a normal scenarii and two stressed scenarios, applied cumulatively by degree of severity to a starting pool of available cash.

2. Liquidity Buffer: a pool of high liquid and unencumbered assets that can be monetised in certain amount of days whenever deemed necessary. For prudent reasons, NBL considers level 1 type of assets. NBL has purchased highly rated short-term government bonds.

3. Liquidity Coverage Ratio (LCR): the Bank calculates and reports to the CSSF the LCR on a monthly basis as requested by the regulation EU 680/2014. As of 31 March 2015, the LCR is 160%.

4. Basel III liquidity monitoring tools: Risk Management is developing additional liquidity risk monitoring tools in line with Basel III regulation.

(iv) Liquidity Risk Controls and Mitigation

The MCO is run on a daily basis by Risk Management Department and discussed with Treasury Department.

Treasury Department is responsible for managing the liquidity buffer with “no trading intent” to ensure that the portfolio is classified within the banking book and not trading book. Risk Management Department monitors the value of the liquidity buffer and compares it to the minimum required level of liquidity on a daily basis.

Treasury Department provides ExCom members with a daily report which gives an overview of the liquidity situation of the Bank, including a high-level status of the intra-group concentration. The same information is also used to produce the “Monthly Global Treasury Report” for reporting to Global Treasury in London.

Treasury Department sends daily to Global Treasury London the Outstanding Deposits File and the Cash variation between T+1 and T+2. Those reports are consolidated by Global Treasury who sends a summary report back to the Bank and to all the concerned entities.

A daily liquidity conference call is held with Global Treasury London to discuss the liquidity situation at Group level and share business information having a liquidity impact.

Risk Management Department performs a daily analysis of concentrations in terms of counterparties and currencies.

Risk Management Department monitors daily the liquidity ratio and verifies that it is maintained at 50% at least.

A daily liquidity report is run daily and submitted to LCB. This report identifies the cash inflows and outflows expected in the upcoming five days.

Financial Accounting performs the Liquidity Coverage Ratio calculation and reporting to the CSSF and the BCL as required by the authorities (Basel III quantitative impact study until 31 December 2013, then EU Regulation 575/2013 applicable since 1 January 2014).

Lastly, in case of emergency situation of liquidity shortage, the Head of Treasury may invoke the Liquidity Task Force which will decide on the activation of the Contingency Funding Plan.

These procedures have been set-out to deal with serious adverse market conditions. They operate on an incremental escalation basis where the triggers and related actions depend on the defined severity level (green, red, amber).


72

Duration analysis

The tables below present the analysis of financial liabilities of the Bank by contractual maturity dates (initial maturity):

31 March 2015 < 1month ≥1 month ≥3 months ≥6 months ≥1 year ≥2 years ≥5 years Total <3 months <6 months <1 year <2 years <5 years

Deposits from central banks --- --- --- --- --- --- --- ---

Derivatives held for trading 68,936,119 776,833,635 6,528,741 756,094 392,821 1,622,584 718,073 855,788,067

Financial liabilities designated at fair value through profi t or loss --- 2,699,270 457,503 --- 7,380,294 58,536,336 20,606,738 89,680,141

Amounts due to credit institutions 2,411,269 --- --- --- --- --- --- 2,411,269

Amounts due to customers 3,727,685,889 --- --- 3,747,080 --- --- --- 3,731,432,969

Total fi nancial liabilities 3,799,033,277 779,532,905 6,986,244 4,503,174 7,773,115 60,158,920 21,324,811 4,679,312,446

31 March 2014 < 1month ≥1 month ≥3 months ≥6 months ≥1 year ≥2 years ≥5 years Total <3 months <6 months <1 year <2 years <5 years

Deposits from central banks --- --- --- --- --- 507,732,637 --- 507,732,637

Derivatives held for trading 268,761,856 954,314,641 7,752,698 177,368 656,466 7,984,502 590,623 1,240,238,154

Financial liabilities designated at fair value through profi t or loss --- 4,695,529 1,023,302 --- 10,766,947 55,456,230 9,594,502 81,536,510

Amounts due to credit institutions 190,063,279 --- --- --- --- --- --- 190,063,279

Amounts due to customers 3,069,208,289 --- --- 7,738,064 --- --- --- 3,076,946,353

Total fi nancial liabilities 3,528,033,424 959,010,170 8,776,000 7,915,432 11,423,413 571,173,369 10,185,125 5,096,516,933


73

Duration analysis

The tables below present the analysis of the guarantees of the Bank by contractual maturity dates (initial maturity):

31 March 2015 <1 month ≥1 month ≥3 months ≥6 months ≥1 year ≥2 years ≥5 years Undetermined Total <3 months <6 months <1 year <2 years <5 years

Guarantees --- --- --- --- 22,700 101,630 22,275 --- 146,605

31 March 2014 <1 month ≥1 month ≥3 months ≥6 months ≥1 year ≥2 years ≥5 years Undetermined Total <3 months <6 months <1 year <2 years <5 years

Guarantees --- --- --- --- 45,540 107,580 --- --- 153,120


74

(d) Foreign exchange risk

Foreign exchange risk is the risk that the value of an asset or liability will fluctuate due to changes in foreign exchange rates.

As of 31 March 2015 and 2014, the assets and liabilities denominated in EUR, in JPY, in USD and in other currencies are as follows:

31 March 2015 EUR JPY USD Other Total

Cash and balances with central banks 160,005,068 --- --- 267 160,005,335

Derivatives held for trading 1,110,116 295,836,692 539,120,938 18,952,915 855,020,661

Available-for-sale equity instruments 8,755,064 --- --- --- 8,755,064

Available-for-sale debt instruments 144,998,204 --- 554,580,398 --- 699,578,602

Loans and advancesLoans and advances to credit institutions 508,338,998 339,494,557 1,667,032,344 165,441,838 2,680,307,737Loans and advances to customers 717,361 706,865,906 629 328 707,584,224

Tangible assets 2,740,257 --- --- --- 2,740,257

Intangible assets 8,928,455 --- --- --- 8,928,455

Deferred tax assets 383,928 --- --- --- 383,928

Other assets 13,353,052 6,596,776 41,681,384 1,356,589 62,987,801

Total assets 849,330,503 1,348,793,931 2,802,415,693 185,751,937 5,186,292,064


Deposits from central banks --- --- --- --- ---

Derivatives held for trading 1,840,390 21,205,803 28,195,897 804,545,977 855,788,067

Debt certifi cates designated at fair value through profi t or loss --- 86,309,955 3,370,186 --- 89,680,141

Financial liabilities measured at amortised costAmounts due to credit institutions 798,774 --- 1,612,455 40 2,411,269Amounts due to customers 380,474,315 959,253,006 2,226,337,835 165,367,813 3,731,432,969

Tax liabilities 15,163,255 --- --- --- 15,163,255of which: deferred tax liabilities 1,216,440 --- --- --- 1,216,440

Other liabilities 11,967,078 5,317,591 31,492,930 544,125 49,321,724

Total liabilities 410,243,812 1,072,086,355 2,291,009,303 970,457,955 4,743,797,425


75


Cash and balances with central banks 517,045,035 --- 610 1,239 517,046,884

Derivatives held for trading 339,608 3,405,807 33,198,099 1,195,451,297 1,232,394,811

Available-for-sale equity instruments 6,510,760 --- --- --- 6,510,760

Available-for-sale debt instruments 49,992,000 282,867,276 115,868,112 --- 448,727,388

Loans and advancesLoans and advances to credit institutions 739,265,743 573,475,373 1,537,046,558 143,477,100 2,993,264,774Loans and advances to customers 1,217,306 285,580,186 378 140,451 286,938,321

Tangible assets 3,032,164 --- --- --- 3,032,164

Intangible assets 7,856,904 --- --- --- 7,856,904

Deferred tax assets 2,773,495 --- --- --- 2,773,495

Other assets 15,712,465 5,212,305 40,656,004 1,659,471 63,240,245

Total assets 1,343,745,480 1,150,540,947 1,726,769,761 1,340,729,558 5,561,785,746


Deposits from central banks 507,732,637 --- --- --- 507,732,637

Derivatives held for trading 509,473 515,396,218 723,061,199 1,271,264 1,240,238,154

Debt certifi cates designated at fair value through profi t or loss --- 79,268,077 2,268,433 --- 81,536,510

Financial liabilities measured at amortised costAmounts due to credit institutions 68,908,538 --- 121,021,031 133,710 190,063,279Amounts due to customers 342,065,235 1,055,837,876 1,535,316,724 143,726,518 3,076,946,353

Tax liabilities 19,231,310 --- --- --- 19,231,310of which: deferred tax liabilities 3,296,364 --- --- --- 3,296,364

Other liabilities 9,435,054 4,166,363 33,261,911 732,367 47,595,695

Total liabilities 947,882,247 1,654,668,534 2,414,929,298 145,863,859 5,163,343,938


76

(e) Interest rate risk

Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of financial instruments.

The tables below show the interest rate risk by maturity dates:

31 March 2015 <1 month ≥1 month ≥3 months ≥6 months ≥9 months ≥12 months or Total <3 months <6 months <9 months <12 months Undetermined

Cash and balances with central banks 160,005,335 --- --- --- --- --- 160,005,335

Derivatives held for trading (IRS) --- 8,491 43,081 6,999 17,954 607,078 683,603

Available-for-sale debt instruments 296,530,466 375,259,592 27,788,544 --- --- --- 699,578,602

Loans and advances Loans and advances to credit institutions 2,416,601,798 188,683,476 75,022,463 --- --- --- 2,680,307,737Loans and advances to customers 706,904,207 73,226 87,810 81,545 75,236 362,200 707,584,224

Total 3,580,041,806 564,024,785 102,941,898 88,544 93,190 969,278 4,248,159,501


Deposits from central banks --- --- --- --- --- --- ---

Derivatives held for trading (IRS) --- 6,825 --- 787 373,101 2,359,590 2,740,303

Debt certifi cates designated at fair value through profi t or loss 2,699,270 1,235,618 1,508,398 1,277,183 5,475,647 77,484,025 89,680,141

Financial liabilities measured at amortised cost Amounts due to credit institutions 2,411,269 --- --- --- --- --- 2,411,269 Amounts due to customers 3,727,685,889 --- 3,747,080 --- --- --- 3,731,432,969

Total 3,732,796,428 1,242,443 5,255,478 1,277,970 5,848,748 79,843,615 3,826,264,682

Gap (152,754,622) 562,782,342 97,686,420 (1,189,426) (5,755,558) (78,874,337) 421,894,819


77


Cash and balances with central banks 517,046,884 --- --- --- --- --- 517,046,884

Derivatives held for trading (IRS) 9,760 3,692 11,407 --- 23,253 2,669 50,781

Available-for-sale debt instruments 332,859,276 115,868,112 --- --- --- --- 448,727,388

Loans and advances Loans and advances to credit institutions 2,340,278,482 137,253,015 --- 8,000,640 507,732,637 --- 2,993,264,774Loans and advances to customers 286,269,842 69,264 76,141 72,782 68,073 382,219 286,938,321

Total 3,476,464,244 253,194,083 87,548 8,073,422 507,823,963 384,888 4,246,028,148


Deposits from central banks --- --- --- --- 507,732,637 --- 507,732,637

Derivatives held for trading (IRS) 509,236 1,731,553 367,367 59,279 392,283 6,213,224 9,272,942

Debt certifi cates designated at fair value through profi t or loss 6,239,298 2,359,747 1,836,432 789,388 5,571,644 64,740,001 81,536,510

Financial liabilities measured at amortised cost Amounts due to credit institutions 190,063,279 --- --- --- --- --- 190,063,279 Amounts due to customers 3,069,208,289 --- --- 7,738,064 --- --- 3,076,946,353

Total 3,266,020,102 4,091,300 2,203,799 8,586,731 513,696,564 70,953,225 3,865,551,721

Gap 210,444,142 249,102,783 (2,116,251) (513,309) (5,872,601) (70,568,337) 380,476,427


78

(f) Operational risk

The Bank has an Operational Risk Management Policy in place which defines the applicable Operational Risk Management Framework (Risk Appetite, incidents reporting, Key Risk Indicators, Risk and Control Self-Assessment).

Operational Risk is defined as the risk of loss associated with inadequate or failed internal processes, people and systems or from external events. This is based on the standard Basel definition and excludes strategic risk (the risk of loss as a result of poor strategic business decisions), but includes the risk of breach of legal and regulatory requirements, and the risk of damage to the Bank’s reputation if caused by an Operational Risk event. System Risk is considered to be a component of Operational Risk as defined above.

Operational Risk is deemed to be a risk inherent to NBL activities, being one of its most material risks.

Segregation of duties, internal procedures, and technological systems in place mitigate the risk of losses due to errors or inadequacies.

Besides, NBL has business continuity management in place (including a Disaster Recovery Plan) to ensure ability to operate on an ongoing basis and limit losses in the event of severe business disruption.

(g) Profitability risk

Profitability risk is low due to the fact that management maintains sufficient control over its margins and costs in order to ensure continued profitability.


79

The following table summarises the carrying amounts and fair values of financial assets and liabilities measured at amortised cost in the statement of financial position.

Carrying amount Fair value 31 March 2015 31 March 2014 31 March 2015 31 March 2014

AssetsBalances with central banks 160,000,317 517,042,527 160,000,317 517,042,527Loans and advances 3,387,891,961 3,280,203,095 3,387,891,961 3,280,203,095

LiabilitiesDeposits from central banks --- 507,732,637 --- 507,732,637Financial liabilities measured at amortised cost 3,733,844,238 3,267,009,632 3,733,844,238 3,267,009,632

The fair value of the financial assets and liabilities corresponds to the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

NOTE 32 - FAIR VALUE OF FINANCIAL INSTRUMENTS (in EUR)

80

Fair value hierarchy

As of 31 March 2015 and 2014, the Bank uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation techniques:

Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities. This level includes listed equity securities and debt instruments on exchanges (for example, London Stock Exchange, Frankfurt Stock Exchange, New York Stock Exchange) and exchanges traded derivatives like futures (for example, Nasdaq, S&P 500);

Level 2: techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly;

Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

31 March 2015 Level 1 Level 2 Level 3 Total

Financial assetsBalances with central banks --- 160,000,317 --- 160,000,317Derivatives held for trading --- 855,020,661 --- 855,020,661Available-for-sale equity instruments --- --- 8,755,064 8,755,064Available-for-sale debt instruments 699,578,602 --- --- 699,578,602Loans and advances --- 3,387,891,961 --- 3,387,891,961

Total fi nancial assets 699,578,602 4,402,912,939 8,755,064 5,111,246,605

Financial liabilitiesDeposits from central banks --- --- --- ---Derivatives held for trading --- 855,788,067 --- 855,788,067Financial liabilities designated at fair value through profi t or loss --- --- 89,680,141 89,680,141Financial liabilities measured at amortised cost --- 3,733,844,238 --- 3,733,844,238

Total fi nancial liabilities --- 4,589,632,305 89,680,141 4,679,312,446

NOTE 32 - FAIR VALUE OF FINANCIAL INSTRUMENTS (in EUR) (continued)

81

31 March 2014 Level 1 Level 2 Level 3 Total

Financial assetsBalances with central banks --- 517,042,527 --- 517,042,527Derivatives held for trading --- 1,232,394,811 --- 1,232,394,811Available-for-sale equity instruments --- --- 6,510,760 6,510,760Available-for-sale debt instruments 448,727,388 --- --- 448,727,388Loans and advances --- 3,280,203,095 --- 3,280,203,095

Total fi nancial assets 448,727,388 5,029,640,433 6,510,760 5,484,878,581

Financial liabilitiesDeposits from central banks --- 507,732,637 --- 507,732,637Derivatives held for trading --- 1,240,238,154 --- 1,240,238,154Financial liabilities designated at fair value through profi t or loss --- --- 81,536,510 81,536,510Financial liabilities measured at amortised cost --- 3,267,009,632 --- 3,267,009,632

Total fi nancial liabilities --- 5,014,980,423 81,536,510 5,096,516,933

During the year ending 31 March 2015, in relation with financial instruments measured at fair value, there were no transfers between Level 1 and Level 2 categories, and no transfers into and out of Level 3 category.

During the year ending 31 March 2015, the movement in the Available-for-sale equity instruments classified in the Level 3 mainly results from the revaluation of the related assets at their fair value.

During the year ended 31 March 2015, the movement in the financial liabilities designated at fair value through profit or loss can be analysed as follows:

Financial liabilities designated at fair value through profi t or loss as of 31 March 2014 81,536,510

Total loss recognised in the income statement 7,165,460

Issues 175,880,122

Redemptions (183,822,293)

Transfers from/to Level 3 ---

Foreign exchange rates fl uctuations 8,920,342

Financial liabilities designated at fair value through profi t or loss as of 31 March 2015 89,680,141

NOTE 32 - FAIR VALUE OF FINANCIAL INSTRUMENTS (in EUR) (continued)

82

NOTE 33 - CAPITAL MANAGEMENT

The Bank maintains an actively managed capital base to cover risks inherent in the business.

The adequacy of the Bank’s capital is monitored using, among other measures, the rules and ratios established by the Basel Committee on Banking Supervision (BIS rules/ratios) and adopted by the Commission de Surveillance du Secteur Financier supervising the Bank.

During the years ended 31 March 2015 and 2014, the Bank had complied in full with all its externally imposed capital requirements.

NOTE 34 - RETIREMENT BENEFIT PLAN

Since 2002, the Bank has entered into an agreement for payment of the retirement pension charges under the corporate defined contribution pension plan organised by its Parent company.

Only expatriate employees of the Bank are entitled to participate into this corporate pension plan.

NOTE 35 - RELATED PARTY DISCLOSURES (IN EUR)

The Bank has a related party relationship with its Parent company, entities of its Group and with its directors and executive officers.

The amounts of assets, liabilities, income and expenses as of 31 March 2015 and 2014 concerning Group entities, subsidiaries and the Parent company are as follows:

Subsidiaries: 31 March 2015 31 March 2014

Available-for-sale equity instruments 8,693,324 6,476,680

Total assets 8,693,324 6,476,680

Financial liabilities measured at amortised cost 10,674,058 16,156,093

Total liabilities 10,674,058 16,156,093

Income and expenses 31 March 2015 31 March 2014

Dividend income --- 11,704,500


83

Group entities: 31 March 2015 31 March 2014


Loans and advances 785,897,932 828,522,991

Total assets 844,017,849 1,346,193,009


Financial liabilities measured at amortised cost 372,304,434 360,662,128

Total liabilities 833,857,710 506,915,493

Income and expenses 31 March 2015 31 March 2014

Net interest income 8,450,404 10,170,474


The Bank’s incurred in expenses with respect to the remuneration of the members of the administrative, management and supervisory bodies of the Bank are as follows:

31 March 2015 31 March 2014

Supervisory bodies 50,000 50,000

Managerial bodies 1,035,487 829,570

Corporate pensions 184,158 265,332

Total 1,269,645 1,144,902

For guarantees granted to Managerial bodies, please refer to Note 29.

NOTE 35 - RELATED PARTY DISCLOSURES (in EUR) (continued)

84

NOTE 36 - EVENTS AFTER THE STATEMENT OF FINANCIAL POSITION DATE

The Bank is not aware of any adjusting or non-adjusting event that would have occurred between 31 March 2015 and the date when the present annual accounts were authorised for issue.


Annual accounts,Directors’ report andIndependent auditor’s report

as of 31 March 2015


Bâtiment A – 33 rue de Gasperich

L-5826 Luxembourg

R.C.S. B 32921 – SWIFT NBLXLULL Impr

imer

ie L

inde

n s.

àr.l.

, Lux

embo

urg

Nomura - Couverture 2015.indd 1 28.07.2015 14:24:34 Uhr

Documents

Nomura Bank (Luxembourg) S.A. · Nomura Bank (Luxembourg) S.A. Bâtiment A – 33 rue de Gasperich L-5826 Luxembourg R.C.S. B 32921 – SWIFT NBLXLULL Imprimerie Linden s.àr.l.,