Landeskreditbank Baden-WÃ¼rttemberg - L-Bank

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Justice. The accounting principles set forth in the above statutes and regulations are referred to herein as “German GAAP.” Under German law, we must be audited annually by German independent accountants (Wirtschaftsprüfer) who are appointed annually by our supervisory board. The BaFin must be informed of and may reject such appointment. The independent accountants are required to prepare annually a long form audit report (Prüfungsbericht) on the financial statements prepared by our management, and submit it to our supervisory board, our Guarantor, the BaFin and the Federal Central Bank. This comprehensive audit report is in contrast to the much shorter audit reports typically prepared for other German companies. The contents of the report are prescribed in a regulation issued by the BaFin. In particular, the auditor must review that the bank is in compliance with: (1) the regulatory reporting requirements; (2) the large credit limitations; (3) the limitations on extension of credit to related companies; (4) the requirements of the capital adequacy and liquidity principles (described above) and (5) the regulations concerning the prudent granting of credit. The audit report must also discuss in detail certain large or important loans and review compliance with certain provisions of the German Banking Act, match assets and liabilities bearing interest at fixed rates according to maturity and assets and liabilities bearing interest at floating rates according to interest periods, and explain the effect of a change in interest rates on the unmatched portion of such assets and liabilities, respectively. The auditor’s opinion opines as to compliance with German GAAP and all applicable legal requirements. The audit reports of PwC Deutsche Revision Aktiengesellschaft Wirtschaftsprüfungsgesellschaft (“PwC”) for the years ended December 31, 2004, 2003 and 2002, dated March 1, 2005, March 29, 2004 and April 8, 2003, respectively, each refer to a management report that has not been included to this prospectus. The examinations of and the audit reports upon such management reports are required under German auditing standards. Those examinations were not made in accordance with Statement on Standards for Attestation Engagements No. 10, “Management’s Discussion and Analysis.” PwC does not provide an opinion on this information or on the financial statements included in this prospectus in accordance with U.S. GAAP or U.S. attestation standards. In addition, each year an independent accountant designated by the BaFin must conduct an examination of any bank that acts as depositary of customers’ securities under the German Depositary Act (Depotgesetz). The examination is made in accordance with the Depositary Act and concludes with an opinion as to the proper execution of trading orders by such bank for its customers and as to the safekeeping of securities for such customers. Deposit Protection and Investor Compensation In Germany, private sector commercial banks, credit institutions organized under public law and credit cooperative institutions each have their own system of deposit protection and investor compensation. According to the German Act on Deposit Protection and Investor Compensation of 1998, as amended (“Deposit Protection Act”, Einlagensicherungs- und Anlegerentschädigungsgesetz), the association of the German credit institutions organized under public law (Bundesverband Öffentlicher Banken Deutschlands e.V., “VÖB”) established a company under the name Entschädigungseinrichtung des VÖB GmbH (“Entschädigungseinrichtung GmbH”) to provide deposit protection and investor compensation for customers of German credit institutions organized under public law. We are a member of the Entschädigungseinrichtung GmbH. A creditor of L-Bank has a direct claim against Entschädigungseinrichtung GmbH if (i) the BaFin determines that we are unable to repay deposits (as defined in the Deposit Protection Act) or to satisfy obligations resulting from the securities businesses for reasons that are directly connected to our financial situation, and that no prospects exist for the repayment of the deposits or the satisfaction of the obligations and (ii) the creditor is eligible for compensation. A direct claim against Entschädigungseinrichtung GmbH is limited to 90% of the customer’s deposits and our obligations to the customer resulting from the securities businesses respectively, and may not exceed in any case EUR 20,000. 45
The Entschädigungseinrichtung GmbH is funded through annual contributions by its members in the amount of 0.008% of their liabilities to non-bank customers as shown in their most recent balance sheet. In such determination, certain liabilities may be excluded. Member institutions may be required to make additional contributions in case the funds of the Entschädigungseinrichtung GmbH fall below an amount that equals twice the amount of the aggregate contributions of all member institution for the previous year. Furthermore, we are a member of the Freiwilliger Einlagensicherungsfonds des VÖB, a voluntary deposit protection fund, established by the VÖB, that supplements the statutory protection of the Deposit Protection Act. This deposit protection fund covers deposits and obligations to customers. The compensation by this fund is not limited, but customers do not have a claim against this fund. The Debt Securities described herein are not covered by the funds referred to above. 46
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INTERNATIONAL PROSPECTUS SUPPLEMENT
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ISSUER Landeskreditbank Baden-Würt
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TABLE OF CONTENTS Use of Proceeds .
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EXCHANGE RATE INFORMATION The follo
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Maturity, Repurchase Maturity. The
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the rules of such stock exchange pe
Page 13 and 14: THE CLEARING SYSTEMS DTC DTC is a l
Page 15 and 16: Cross-market transfers between pers
Page 17 and 18: For the purposes of this provision,
Page 19 and 20: These activities by the managers or
Page 21 and 22: You should rely only on the informa
Page 23 and 24: PROSPECTUS SUMMARY The following su
Page 25 and 26: APPLICATION OF PROCEEDS As may be m
Page 27 and 28: (4) Loans to customers (i.e., non-c
Page 29 and 30: transferred to independent subsidia
Page 31 and 32: Our housing-related activities are
Page 33 and 34: (1) Holdings in companies for strat
Page 35 and 36: Loan Portfolio Risks We maintain a
Page 37 and 38: securities portfolio. In accordance
Page 39 and 40: The following table shows our borro
Page 41 and 42: authorized limits. A daily risk and
Page 43 and 44: MANAGEMENT INFORMATION Introduction
Page 45 and 46: credit institutions increased by 10
Page 47 and 48: To control the risks of unhedged po
Page 49 and 50: RECENT DEVELOPMENTS Development of
Page 51 and 52: MANAGEMENT Board of Management Our
Page 53 and 54: Wirtsch.-Ing. Bernd Bechtold Presid
Page 55 and 56: REGULATION AND SUPERVISION OF L-BAN
Page 57 and 58: non-banking corporations if the use
Page 59 and 60: Covering Market Risk Positions Mark
Page 61 and 62: ank, and the aggregate nominal valu
Page 63: may at any time change the reserve
Page 68 and 69: ECONOMY General Germany The economy
Page 70 and 71: Industrial Structure General Positi
Page 72 and 73: The following table shows the amoun
Page 74 and 75: The Euro-zone follows a mutual mone
Page 76 and 77: Revenue Equalization While the Germ
Page 78 and 79: For more detailed information regar
Page 80 and 81: Outstanding Principal Maturity Amou
Page 82 and 83: DESCRIPTION OF THE DEBT SECURITIES
Page 84 and 85: (iv) a waiver by the holders of the
Page 86 and 87: CURRENCY CONVERSION RATES The follo
Page 88 and 89: TAXATION UNITED STATES FEDERAL INCO
Page 90 and 91: number of complete years to maturit
Page 92 and 93: will equal such U.S. Holder’s ini
Page 94 and 95: using the constant yield method des
Page 96 and 97: We have included the federal income
Page 98 and 99: Capital gains resulting from the di
Page 100 and 101: SUMMARY OF CERTAIN DIFFERENCES BETW
Page 102 and 103: The credit risk of the loan and sec
Page 104 and 105: Under U.S. GAAP, repurchased debt s
Page 106 and 107: LIMITATIONS ON ACTIONS AGAINST THE
Page 108 and 109: GLOSSARY This glossary describes ce
Page 110 and 111: Administrative loans, which are loa
Page 112 and 113: Depreciation and accumulated amorti
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Landeskreditbank Baden-Württemberg
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Balance sheet as at December 31, 20
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Statement of income for the period
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Notes to the annual financial state
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Authorities of Landeskreditbank Bad
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Proposal of the Board of Management
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FINANCIAL STATEMENTS OF L-BANK AS O
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Landeskreditbank Baden - Württembe
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Directorships held by members of th
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State government deputy representat
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Independent Auditors’ opinion We
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Directorships held by members of th
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Authorities of Landeskreditbank Bad
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Proposal of the Board of Management
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Debt of L-Bank at December 31, 2004
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Debt Securities
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Landeskreditbank Baden-WÃ¼rttemberg - L-Bank

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