Information on dialogue with the Norwegian Ministry of Finance regarding LCR classification

24 Mar 2023 17:04 CET

The Financial Supervisory Authority in Norway (the “NFSA”) has previously been
of the opinion that debt instruments issued by Kommunalbanken AS (“KBN”) are not
covered by the exceptions in Article 7(4) of Commission Delegated Regulation
(EU) 2015/61 (“the LCR Regulation”). We refer, inter alia, to the announcement
KBN published 6 May 2022, which referred to KBN having submitted a request to
the NFSA to clarify whether KBN's debt instruments could be recognized as level
1 assets under the LCR Regulation. It was also disclosed that the NFSA in
response to the enquiry informed KBN that in the opinion of the NFSA, this was
not the case. The opinion of the NFSA was non-binding in its form.

KBN has submitted NFSA’s response to the Norwegian Ministry of Finance with a
request for a new assessment of the question. KBN has received a response from
the Norwegian Ministry of Finance which implies a further clarification that the
opinion of the NFSA is in a non-binding form, and that the correct LCR
classification of KBN's debt instruments must be determined directly from the
conditions in the LCR Regulation. This means that individual investors must
determine the correct LCR classification of various securities for themselves
based on the conditions in the LCR Regulation. A supervisory authority may,
however, direct reporting credit institutions under their supervision to change
a classification if the authority after an assessment determines that securities
have not been classified in accordance with the conditions of the LCR
Regulation.

KBN has previously obtained an external legal opinion that KBN’s debt
instruments satisfy the conditions for being treated as level 1 assets under the
LCR Regulation. The conclusion in the opinion was based in part on the contents
of a letter from the Norwegian Ministry of Local Government and Regional
Development as KBN’s owner of 1 March 2006, last confirmed on 30 June 2017.

For further information, please contact:

Sigbjørn Birkeland, Chief Capital Markets Officer
Tel.: +47 93 48 08 93
E-mail: sib@kbn.com

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