Annual report 2009 - Crédit Agricole CIB

Annual report2009CALYON BANK S.A., organizační složka

CONTENTSStatement of the Senior country officer......................................... 3Organization Chart .......................................................................... 4Independent Auditor’s Report on Annual Report.......................... 5Independent Auditor’s Report on Financial Statements............... 7Financial Statements as of 31 December 2009.............................. 9Business Contacts ........................................................................ 47(2)

Statement of the Senior country officerOur performance in 2009 continued to feel the effects of the global economic andfinancial crisis which has severely impacted the real economy worldwide, includingthe Czech Republic.Under this new environment, we followed the re-focus strategy of our groupCALYON under the 4 main goals:1 – re-focus our business on the key business lines2 – reduce our risk profile3 – concentrate our development on our existing clients4 – reduce our costs.Although these were already the core focus of our local strategy, we havereinforced our activities under these specific criteria.A closer follow up of some of our clients did not lead us to create furtherimpairment provisions and the current quality of our portfolio makes us reasonablyoptimistic about this field for the current year.During the first quarter of 2010, an important step was undertaken by our groupCredit Agricole to re-brand its Corporate and Investment Bank subsidiaries andbranches from CALYON to Crédit Agricole Corporate and Investment Bankworldwide. The change in name was effective in Czech Republic on 1 April 2010.This change in name confirms the strategy and the full support of our group tocontinue to invest and develop under its global brand, as well as its corporate andinvestment banking activities.We are confident that Crédit Agricole Corporate and Investment Bank CzechRepublic, with the full support of Group Crédit Agricole, being one of the majorinternational banking institutions, and thanks to the professionalism of its staff, willcontinue to strengthen its activities and market share alongside an improvedprofitability of our operations in the Czech Republic.There were no events, which have occurred subsequent to the year end until thedate of preparation of this annual report, which would have a material impacton the financial statements and the annual report of our bank as at 31 December2009 and would require additional disclosure.On behalf of the Management committee, I wish to extend our thanks to all theclients of the bank for their support and loyalty as well as to all the employees ofthe bank for their valuable contributions.Thierry HebraudSenior country officer(3)

Organization Chart / Organizační schémaSENIOR COUNTRY OFFICERŘEDITELLEGAL & COMPLIANCECAPITAL MARKETS SALES STRUCTURED FINANCE CORPORATE BANKING & FINANCIAL INSTITUTION CHIEF OPERATING OFFICER RISK AND PERMANENT CONTROLKAPITÁLOVÉ TRHY STRUKTUROVANÉ FINANCOVÁNÍ KORPORÁTNÍ BANKOVNICTVÍ a FINANČNÍ INSTITUCE ADMINISTRATIVNÍ A FINANČNÍ ŘEDITEL ŔÍZENÍ RIZIK A PERMANENTNÍ KONTROLYMONEY MARKET REGIONAL REAL ESTATE EDP & EB CREDIT ADMINISTRATIONFINANČNÍ TRH REGIONALNÍ FINANCOVÁNÍ NEMOVISTOSTÍ ELEKTRONICKÉ ZPRACOVANÍ DAT ADMINISTRACE ÚVĚRŮIRD SALES FINANCIALS CREDIT ANALYSTIRD PRODEJ ÚČTÁRNA ANALÝZA ÚVĚROVÉHO RIZIKAFX SALES GENERAL AFFAIRS PERMANENT CONTROLFX PRODEJ PROVOZ PERMANENTNÍ KONTROLAOPERATIONSPLATEBNÍ STYKREGIONAL MARKET ACTIVITY MONITORINGREGIONÁLNÍ SLEDOVÁNÍ TR ŽNÍCH AKTIVITORGANIZATIONCUSTOMER SERVICE DEPT.KLIENTSKÉ SLUŽBYHUMAN RESOURCESPERSONÁLNÍ ODDĚLENÍ(4)

Independent Auditor’s Report on Annual ReportCALYON SA., organizační složkaINDEPENDENT AUDITOR’S REPORTPricewaterhouseCoopers Audit, s.r.o.Kateřinská 40/466120 00 Prague 2Czech RepublicTelephone +420 251 151 111Fax +420 251 156 111ENGLISH TRANSLATIONINDEPENDENT AUDITOR’S REPORTTO THE HEAD OFFICE OF CALYON S.A., ORGANIZAČNÍ SLOŽKAWe have audited the financial statements of CALYON S.A., organizační složka,identification number 27391639, with registered office at Ovocný trh 8, Praha 1 (“theBranch”) for the year ended 31 December 2009 disclosed in the annual report onpages 9-46 and issued the opinion dated 29 March 2010 and disclosed on page 8.Report on the Annual ReportWe have verified that the other information included in the annual report of the Branch forthe year ended 31 December 2009 is consistent with the financial statements referred toabove. The management of the Branch is responsible for the accuracy of the annualreport. Our responsibility is to express an opinion on the consistency of the annual reportwith the financial statements based on our verification procedures.Auditor’s ResponsibilityWe conducted our verification procedures in accordance with the International Standardson Auditing and the related application guidance of the Chamber of Auditors of the CzechRepublic. Those standards require that we plan and perform the verification procedures toobtain reasonable assurance about whether the other information included in the annualreport which describes matters that are also presented in the financial statements is, in allmaterial respects, consistent with the relevant financial statements. We believe thatthe verification procedures performed provide a reasonable basis for our opinion.PricewaterhouseCoopers Audit, s.r.o., registered seat Kateřinská 40/466, 120 00 Prague 2, Czech Republic, Identification Number:40765521, registered with the Commercial Register kept by the Municipal Court in Prague, Section C, Insert 3637, and in the Register ofAudit Companies with the Chamber of Auditors of the Czech Republic under Licence No 021. 2010 PricewaterhouseCoopers Audit, s.r.o. All rights reserved. "PricewaterhouseCoopers" refers to the Czech firm ofPricewaterhouseCoopers Audit, s.r.o. or, as the context requires, the network of member firms of PricewaterhouseCoopers InternationalLimited, each of which is a separate and independent legal entity.

CALYON S.A., organizační složkaIndependent auditor´s reportReport on the Annual Report (continued)OpinionIn our opinion, the other information included in the annual report of the Branch forthe year ended 31 December 2009 is consistent, in all material respects, with the financialstatements.24 August 2010PricewaterhouseCoopers Audit, s.r.o.represented by partnerPetr KřížStatutory Auditor, Licence No. 1140Translation noteThis version of our report is a translation from the original, which was prepared in Czech language. All possible care has been taken toensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views oropinions, the Czech version of our report takes precedence over this translation.(6)

Independent Auditor’s Report on Financial StatementsENGLISH TRANSLATIONPricewaterhouseCoopers Audit, s.r.o.Kateřinská 40/466120 00 Prague 2Czech RepublicTelephone +420 251 151 111Fax +420 251 156 111INDEPENDENT AUDITOR’S REPORTTO THE HEAD OFFICE OF CALYON S.A., ORGANIZAČNÍ SLOŽKAWe have audited the accompanying financial statements of CALYON S.A., organizačnísložka, identification number 27391639, with registered office at Ovocný trh 8, Praha 1(“the Branch”), which comprise the balance sheet as at 31 December 2009, the incomestatement and statement of changes in equity for the year then ended and notes,including a summary of significant accounting policies (“the financial statements”).Management’s Responsibility for the Financial StatementsThe Management is responsible for the preparation and fair presentation of the financialstatements in accordance with Czech accounting legislation. This responsibility includes:designing, implementing and maintaining internal control relevant to the preparation andfair presentation of financial statements that are free from material misstatement, whetherdue to fraud or error; selecting and applying appropriate accounting policies; and makingaccounting estimates that are reasonable in the circumstances.Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements basedon our audit. We conducted our audit in accordance with the Act on Auditorsof the Czech Republic, International Standards on Auditing and the related applicationguidance of the Chamber of Auditors of the Czech Republic. Those standards require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonableassurance whether the financial statements are free from material misstatement.PricewaterhouseCoopers Audit, s.r.o., registered seat Kateřinská 40/466, 120 00 Prague 2, Czech Republic, Identification Number:40765521, registered with the Commercial Register kept by the Municipal Court in Prague, Section C, Insert 3637, and in the Register ofAudit Companies with the Chamber of Auditors of the Czech Republic under Licence No 021. 2010 PricewaterhouseCoopers Audit, s.r.o. All rights reserved. "PricewaterhouseCoopers" refers to the Czech firm ofPricewaterhouseCoopers Audit, s.r.o. or, as the context requires, the network of member firms of PricewaterhouseCoopers InternationalLimited, each of which is a separate and independent legal entity.

CALYON S.A., organizační složkaIndependent auditor’s reportAuditor’s Responsibility (continued)An audit involves performing procedures to obtain audit evidence about the amountsand disclosures in the financial statements. The procedures selected dependon the auditor’s judgment, including assessment of the risks of material misstatementof the financial statements, whether due to fraud or error. In making those riskassessments, the auditor considers internal control relevant to the Branch‘s preparationand fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinionon the effectiveness of the Branch‘s internal control. An audit also includes evaluatingthe appropriateness of the accounting policies used and the reasonablenessof accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements.We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion.OpinionIn our opinion, the financial statements give a true and fair view of the financial positionof the Branch as at 31 December 2009 and its financial performance for the year thenended in accordance with Czech accounting legislation.29 March 2010PricewaterhouseCoopers Audit, s.r.o.represented by partnerPetr KřížStatutory Auditor, Licence No. 1140Translation noteThis version of our report is a translation from the original, which was prepared in Czech language. All possible care has been taken toensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views oropinions, the Czech version of our report takes precedence over this translation.(8)

CALYON S.A., organizační složkaResidence: Ovocný trh 8, Praha 1Identification number: 27391639Legal form: branch of foreign bankPrimary business: bankingDate of preparation: 15 March 2010BALANCE SHEETAS AT 31 DECEMBER 2009Note 31 December 2009 31 December 2008Assets CZK million CZK millionCash and cash deposits with central banks 3 4,131 614Due from banks 4 15,016 16,475a) repayable on demand 4,793 8,102b) other receivables 10,223 8,373Due from customers 5 16,396 21,238a) repayable on demand 1,248 804b) other receivables 15,148 20,434Receivables due from Branch’s Head office 103 -Debt securities issued by non-banking entities 6 527 493Long-term tangible fixed assets 7 (4) (2)Other assets 8 1,607 2,076Prepayments and accrued income 10 18Total assets 37,786 40,912Liabilities and equityDue to banks 10 22,358 21,479a) repayable on demand 6,232 439b) other payables 16,126 21,040Due to customers 11 13,006 17,489a) repayable on demand 3,991 5,341b) other payables 9,015 12,148Other liabilities 12 1,703 1,635Accruals and deferred income 85 66Other provisions 9 4 4Liabilities to Branch’s Head office 0 51Capital reserves 328 342Revaluation differences 27 -Profit / (loss) for the accounting period 275 (154)Total liabilities and equity 37,786 40,912Translation noteThis version of the financial statements is a translation from the original, which was prepared in Czech language. All possible care has beentaken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, viewsor opinions, the Czech version of the financial statements takes precedence over this translation.(9)

CALYON S.A., organizační složkaOFF-BALANCE SHEETAS AT 31 DECEMBER 2009Note 31 December 2009 31 December 2008CZK millionCZK millionOff-balance sheet assetsCommitments and guarantees given 14 10,408 13,581Collaterals given - 2,782Receivables from spot transactions 12,844 146Receivables from term instruments 22 101,848 63,958Receivables from option instruments 22 11,713 19,727Total off-balance sheet assets 136,813 100,194Off-balance sheet liabilitiesCommitments and guarantees received 14,5 3,519 6,524Collateral received and pledges 4,740 6,489Payables from spot transactions 12,845 145Payables from term instruments 22 101,805 63,984Payables from option instruments 22 11,713 19,727Total off-balance sheet liabilities 134,622 96,869(10)

CALYON S.A., organizační složkaINCOME STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2009Note 2009 2008CZK millionCZK millionInterest and similar income 15 955 1,777of which:interest income from debt securities 25 37Interest and similar expense 16 (467) (1,439)Fee and commission income 17 119 120Fee and commission expense 17 (4) (4)Gains less losses from financial transactions 18 (20) (82)Other operating income 29 21 21Administrative expense 20 (255) (230)of which: a) staff costs (151) (133)of which: aa) wages and salaries (118) (114)ab) social and health insurance (33) (19)b) other administrative expenses (104) (97)Depreciation of tangible fixed assets 7 (2) (4)Release of allowances for receivables, income fromreceivables already written off 9 5 13Additions to allowances for receivables 9 (8) (366)Profit / (loss) on ordinary activities before taxation 344 (194)Income tax 21 (69) 40Profit / (loss) for the accounting period after taxation 275 (154)(11)

CALYON S.A., organizační složkaSTATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2009CapitalreservesCZK millionRetainedearningsCZK millionRevaluationreserveCZK millionTotalCZK millionBalance as at 1 January 2008 342 247 2 591Net profit for the accounting period - (154) - (154)Refunding of the profit to Branch’s Head office - (196) - (196)Revaluation differences not included inprofit after tax - - (2) (2)Reclassification of profit toliabilities due to Branch’s Head office - (51) - (51)Balance as at 31 December 2008 342 (154) - 188Net profit for the accounting period 275 275Decrease in capital reserves from Branch’sHead office (14) - - (14)Revaluation differences not included inprofit after tax 27 27Reclassification of loss to receivables fromBranch’s Head office 154 - 154Balance as at 31 December 2009 328 275 27 630(12)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 20091 GENERAL INFORMATIONCALYON S.A., organizační složka (hereinafter referred to as “the Branch”) was inceptedon 26 October 2005. The Branch has its registered office at Ovocný trh 8, Praha 1, 117 19 andthe Head office, Crédit Agricole Corporate and Investment Bank S.A., incorporated in France,is registered at Paris La Defense Cedex, Quai Du President Paul Doumer, 9, 92920, France.The ultimate holding company is SAS Rue La Boétie, incorporated in France.The Branch’s operations mainly consist of:providing Czech crown and foreign currency loans and guarantees;accepting and placing deposits in Czech crowns and foreign currency;accepting current and term accounts denominated in Czech crowns and foreign currency;rendering of general banking services;providing foreign exchange transactions on the inter-bank money market;2 ACCOUNTING POLICIES(a)Basis of preparationThe financial statements, comprising a balance sheet, off-balance sheet, income statement,statement of changes in equity and accompanying notes are prepared in accordance withthe Act on Accounting and the applicable accounting rules and standards set by the Ministryof Finance of the Czech Republic. The financial statements are prepared under the historicalcost convention as modified by the revaluation of financial instruments at fair value throughprofit or loss and available-for-sale financial instruments to fair value.The financial statements are rounded to millions of Czech crowns (“CZK million”or “CZK m” ) unless otherwise stated.Ongoing global financial crisisThe ongoing global financial crisis which commenced in the middle of 2007 and developed inthe Czech Republic from 2008 has resulted in, among other things, a lower level of capitalmarket trading, lower liquidity levels across the banking sector, higher interbank lending ratesand very high volatility in stock markets. The uncertainties in the global financial marketshave also led to bank failures and state assisted bank rescues in the United States ofAmerica, Western Europe, Russia and elsewhere. Indeed the full extent of the impact of theongoing financial crisis is proving to be impossible to anticipate or completely guard against.(13)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 20092 ACCOUNTING POLICIES (continued)(b)Foreign currenciesFinancial assets and liabilities denominated in foreign currencies are translated to Czechcrowns at the exchange rate announced by the Czech National Bank (“CNB”) effective at thebalance sheet date. All resulting foreign exchange gains and losses are recognized in Gainsless losses from financial transactions.(c)Securities financing arrangementsSecurities borrowed or purchased under agreements to resell (reverse repo agreements)are not recognized on the balance sheet. Securities lent or sold under agreementsto repurchase (repo agreements) are retained in their original portfolio. The underlying cashflows are recorded as Due to banks or customers and Due from banks or customers,as appropriate, on the settlement date.(d)Fair value of securitiesThe fair value of Branch’s securities is determined as net present value of cash flows for debtsecurities.The Branch uses only observable market data in its models used for determining of the fairvalue of securities. The valuation models reflect current market conditions at themeasurement date which may not be representative of market conditions either before orafter the measurement date. As at the balance sheet date Branch’s management hasreviewed its models to ensure they appropriately reflect current market conditions, includingthe relative liquidity of the market and credit spreads.(e)Recognition and derecognition of the financial assets and liabilitiesThe following rules apply for the recognition of the financial assets and liabilities:The Bank shall recognise a financial asset or a financial liability in its balance sheet when,and only when, the entity becomes a party to the contractual provisions of the instrument.The following rules apply for the derecognition of the financial assets and liabilities:(14)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 20092 ACCOUNTING POLICIES (continued)(e)Recognition and derecognition of the financial assets and liabilities (continued)Financial assets are derecognized when the contractual rights to receive the cash flows fromthese assets have ceased to exist or the assets have been transferred and substantially allthe risks and rewards of ownership of the assets are also transferred (that is, if substantiallyall the risks and rewards have not been transferred, the Bank tests control to ensure thatcontinuing involvement on the basis of any retained powers of control does not preventderecognition). Financial liabilities are derecognized when they have been redeemed orotherwise extinguished.Collateral (shares and bonds) furnished by the Bank under standard repurchase agreementsand securities lending and borrowing transactions is not derecognized because the Bankretains substantially all the risks and rewards on the basis of the predetermined repurchaseprice, and the criteria for derecognition are therefore not met.A regular way purchase or sale of financial assets are recognized and derecognized, asapplicable, using settlement date accounting.(f)Securities at fair value through profit or lossSecurities at fair value through profit or loss have two subcategories. Securities held fortrading, which were acquired for generating profit from short-term fluctuations in prices orfrom dealers’ margins or included in a portfolio in which a pattern of short-term profit takingexists, and securities designated at fair value through profit or loss at inception. Any securitythat is a financial asset or liability can be designated at fair value through profit or loss atinception except for participation interests that are not publicly traded and the fair value ofwhich cannot be reliably measured and securities issued by the Branch.Securities at fair value through profit or loss are initially recognized at cost, which includesexpenses incurred in connection with their acquisition, and they are subsequently measuredat fair value. All related gains and losses are included in gains less losses from financialtransactions.(g)Securities held-to-maturitySecurities held-to-maturity are securities with a fixed maturity where the Branch hasboth the intent and the ability to hold them to maturity. They are measured at amortised cost.(15)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 20092 ACCOUNTING POLICIES (continued)(h)Securities available-for-saleAvailable-for-sale securities are neither securities at fair value through profit or loss norsecurities held-to-maturity. They comprise debt securities held for liquidity management.Available-for-sale securities are initially recognized at cost which includes expenses incurredin connection with their acquisition and are subsequently measured at fair value.Any subsequent gains and losses arising from changes in the fair value of available-for-salesecurities are recognized directly in equity (net of any tax effect) until the financial asset isderecognized or impaired at which time the cumulative gain or loss previously recognized inequity should be recognized in the income statement. Interest on debt securities calculatedusing the effective interest rate method is recognized in the income statement.(i)Derivative financial instrumentsDerivative financial instruments are initially recognized on balance sheet at costand subsequently are remeasured at their fair value. Fair values are obtained from quotedmarket prices, discounted cash-flow models and option pricing models as appropriate.All derivatives are presented in Other assets or Other liabilities when their fair valueis positive or negative respectively.Changes in the fair value of derivatives held for trading are included in Gains less losses fromfinancial transactions.(16)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 20092 ACCOUNTING POLICIES (continued)(j)Interest income and expenseInterest income and expense are recognized for all interest bearing instruments on an accrualbasis using the effective yield method based on the acquisition cost.The effective interest method is a method of calculating the amortised cost of a financialasset or a financial liability and of allocating the interest income or interest expense over therelevant period.The effective interest rate is the rate that exactly discounts estimated future cash flows untilmaturity or the nearest change of interest rate to the net carrying amount of the financialasset or financial liability. The straight-line method is used as an approximation of theeffective interest method for for loans with individual repayment periods shorter than 1 year.Interest income includes accrued coupons, discount and premium on all fixed incomeinstruments.Income on non-performing receivables is also accrued and capitalized into the related loanbalance. Such amounts are considered in estimating the provision for non-performingreceivables.(k)Penalty interestPenalty interest income, which is suspended or forgiven, is excluded from interest incomeuntil received. Amounts previously recognized as income are not reversed.(l)Fee and commission incomeFees and commissions are generally recognized on an accrual basis when the service hasbeen provided. Commission and fees arising from negotiating, or participating in thenegotiation of a transaction for a third party are recognized on completion of the underlyingtransaction. Arrangement fees for syndicated loans are recognized on completionof the underlying transaction. All other fees and commissions for syndicated loans arerecognized on an effective interest rate basis over life time of the deal. Management advisoryand service fees are recognized based on the applicable service contracts, usually on a timeapportionatebasis.(m)ReceivablesReceivables originated by the Branch are stated at nominal value less allowances.Irrecoverable receivables are written off upon completion of bankruptcy proceedings againstthe debtor.(17)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 20092 ACCOUNTING POLICIES (continued)(n)ProvisionsProvisions are recognized when the Branch has a present obligation as a result of pastevents, it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation, and a reliable estimate of the amount of the obligation can bemade.Additions to provisions are recognized in the income statement, their utilisation is recognizedtogether with expenses or losses, for which purpose they were created in the incomestatement. Release of provisions in case they are no longer necessary is recognized asincome.Provisions are set aside in the currency, in which the settlement is expected to be made.(o)Allowances for impairmentThe Branch assesses at each balance sheet date whether there is objective evidence thata receivable or group of receivables is impaired.A receivable or group of receivables is impaired and impairment losses are incurred if, and onlyif, there is objective evidence of impairment as a result of one or more events that occurred afterthe initial recognition of the receivable (a “loss event”) and that loss event has an impact on theestimated future cash flows of the receivable or group of receivablesthat can be reliably estimated.Objective evidence that a receivable or group of receivables is impaired includes observabledata that comes to the attention of the Branch about the following loss events:(i)(ii)(iii)(iv)(v)significant financial difficulty of the issuer;a breach of contract, such as a default or delinquency in interest or principal payments;the Branch granting to the borrower, for economic or legal reasons relating to theborrower’s financial difficulty, a concession that the lender would not otherwiseconsider;it becoming probable that the borrower will enter bankruptcy or other financialreorganisation;observable data indicating that there is a measurable decrease in the estimated futurecash flows from a group of receivables since the initial recognition of those receivables,although the decrease cannot yet be identified with the individual receivables in thegroup, including adverse changes in the payment status of borrowers in the group oreconomic conditions that correlate with defaults on the receivables in the group.(18)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 20092 ACCOUNTING POLICIES (continued)(o)Allowances for impairment (continued)The Branch first assesses whether objective evidence of impairment exists individuallyfor receivables that are individually significant.If there is objective evidence that an impairment loss on a receivable carried at amortisedcost has been incurred, the amount of the loss is measured as the difference betweenthe receivable’s carrying amount and the present value of estimated future cash flows(excluding future credit losses that have not been incurred) discounted at the receivable’soriginal effective interest rate. The carrying amount of the receivable is reduced through theuse of an allowance account and the amount of the loss is recognized in the incomestatement. If a receivable has a variable interest rate, the discount rate for measuring anyimpairment loss is the current effective interest rate determined under the contract.The calculation of the present value of the estimated future cash flows of a collateralisedreceivable reflects the cash flows that may result from foreclosure less costs for obtaining andselling the collateral, whether or not foreclosure is probable.The methodology and assumptions used for estimating future cash flows are reviewedregularly by the Branch to reduce any differences between loss estimates and actual lossexperience.When a receivable is uncollectable, it is written off against the related provision for receivableimpairment. Such receivables are written off after all the necessary procedures have beencompleted and the amount of the loss has been determined.If, in a subsequent period, the amount of the impairment loss decreases and the decreasecan be related objectively to an event occurring after the impairment was recognized (such asan improvement in the debtor’s credit rating), the previously recognized impairment loss isreversed by adjusting the allowance account against the income statement.(19)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 20092 ACCOUNTING POLICIES (continued)(p)Long-term tangible and intangible fixed assetsLong-term tangible and intangible fixed assets are recorded at cost. Fixed assets aredepreciated/amortised by applying the straight-line basis over their estimated useful livesresulting in the following annual rates:First year of useOther years% %Technical appreciation of leased property 1.0 – 20 3.4 – 20Hardware and equipment 2.3 – 25 10.5 – 40Motor vehicles 14.2 28.6Furniture and fittings 2.3 - 11 18.3 - 22.3Revaluation difference 6.7 6.7Software 20 40Repair and maintenance expenditures are charged to expense as incurred. Expendituresenhancing the value of the asset are capitalised and depreciated.(q)Value added taxThe Branch is registered for value added tax (“VAT”). Intangible and tangible fixed assets arestated at cost including appropriate VAT. The Branch claims input VAT up to the minimumlimit set by law (i.e. 1%), as the ratio of the taxable income to the total income of the Branchis sufficient according to the currently valid VAT legislation. Input VAT which is not re-claimedis expensed immediately.(20)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 20092 ACCOUNTING POLICIES (continued)(r)Deferred taxationDeferred tax liability is recognized on all temporary differences between the carrying amountof an asset or liability in the balance sheet and its tax base using the full liability method.A deferred tax asset is recognized to the extent that it is probable that future taxable profit willbe available against which this asset can be utilized.The enacted tax rate for the period in which the Branch expects to utilize the asset/liability isused for the deferred taxation calculation.Deferred tax related to fair value remeasurement of available-for-sale securities, which arecharged or credited directly to equity, is also credited or charged directly to equity.(s)Staff costs, pensions and social fundStaff costs are included in administrative expense and include also managementemoluments.No formal or informal pension plan is currently in operation at the Branch.Regular contributions are made to the Czech state to fund the national pension plan.(t)Related partiesRelated parties are defined in accordance with the Act on Banks as follows:Senior management of the Branch, being persons responsible for management functionsbased on employment or other contracts and powers and responsibilitiesof which are defined in the Branch’s statute (“senior management”);Entities controlling the Branch, their shareholders holding more than 10% of share capitaland their senior management;Relatives (direct family members) of senior management of the Branch;Entities in which Management committee members of the Branch, senior management orentities controlling the Branch hold more than 10% shareholding;Entities controlled by Crédit Agricole, S.A.In accordance with the Czech accounting rules the following related party balancesand transactions are disclosed in Notes 4, 10 and 21:Total amount of loans, deposits or guarantees provided or received by the Branchto or from any related party;All salaries and other remuneration of members of the senior managementand of the Management committee of the Branch in aggregated amounts.(21)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 20092 ACCOUNTING POLICIES (CONTINUED)(u)Subsequent eventsThe effects of events, which occurred between the balance sheet date and the dateof preparation of the financial statements, are reflected in the financial statements in the casethat these events provide further evidence of conditions, which existed at the balance sheetdate.Where significant events occur subsequent to the balance sheet date but prior to preparationof the financial statements that are indicative of conditions which arose subsequent to thebalance sheet date, the effects of these events are disclosed,but are not themselves reflected in the financial statements.3 CASH AND CASH DEPOSITS WITH CENTRAL BANKS31 December 2009 31 December 2008CZK mCZK mCurrent accounts with central bank 4,100 515Obligatory reserves with central bank 24 92Cash on hand 7 74,131 614Obligatory reserves are mandatory deposits with the CNB and they are not available for usein the Branch’s day-to-day operations. These deposits bear interest at the CZK repo rate,which was 1% p.a. at 31 December 2009 (2008: 2.25% p.a.).4 DUE FROM BANKS31 December 2009 31 December 2008CZK mCZK mCurrent accounts with other banks and other deposits repayableon demand (including overnight deposits) 4,793 8,102Term deposits with other banks 1,572 3,061Receivables from reverse repo transactions 8,651 5,30315,016 16,475Fair values of collaterals received within reverse repotransactions (Note 14) 8,652 5,266(22)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 20094 DUE FROM BANKS (continued)Due from related parties31 December 2009 31 December 2008CZK mCZK mEntities controlled by Crédit Agricole, S.A. 3,445 10,661Management consider loans to related parties to be granted under the same terms andconditions, including interest rates, as those prevailing at the same time for comparabletransactions with other customers, and did not, in the opinion of management, involve morethan normal interest rate and liquidity risk or present other unfavourable features.5 DUE FROM CUSTOMERS(a)Receivables by type of debtor31 December 2009 31 December 2008CZK mCZK mReceivables from companies and individuals 16,781 21,621Allowances for impaired receivables (Note 9) (385) (383)16,396 21,238Syndicate loans forming part of Due from customers totalled CZK 6,181 million at31 December 2009 (2008: CZK 9,490 million).The Branch restructured its receivables in amount of CZK 771 million for the year ended31 December 2009 (2008: CZK 0 million). Receivables are considered as restructured in casethat the Branch grants relief to clients because it is likely that the Branch would incur losses ifacting otherwise. Roll-over of a short-term loan is not considered to be restructuring of the loanin the case that the client has fulfilled all requirements of loan agreements.(23)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 20095 DUE FROM CUSTOMERS (continued)(b)Quality of receivables portfolioIn accordance with the definitions issued by the CNB, the receivables due from customerscan be analyzed as follows:31 December 2009 31 December 2008CZK mCZK mStandard 15,193 21,237Watch 1,203 1Impaired – loss 385 38316,781 21,621The current value of assets received as collateral for receivables due from customers can beanalyzed as follows:31 December 2009 31 December 2008CZK mCZK mPledged term deposits 93 167Land and buildings 4,740 6,489Bank guarantees 3,519 6,5246 AVAILABLE-FOR-SALE SECURITIES8,352 13,18031 December 2009 31 December 2008CZK mCZK mDebt securities issued by non-banking entities 527 493Securities are not traded on recognized stock exchanges.(24)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 20097 LONG TERM TANGIBLE FIXED ASSETSLong term tangible fixed assetsYear ended 31 December 2008Leaseholdimprovements EquipmentMotorvehiclesFurnitureRevaluationdifferenceTotalOpening net book amount 5 3 1 3 (15) (3)Additions - 1 - 3 - 4Disposals - (8) - (1) - (9)Depreciation charge (1) (1) - (2) - (4)Accumulated depreciation (disposal) - 8 - 1 - 9Release of the revaluation difference - - - - 1 1Closing net book amount 4 3 1 4 (14) (2)At 31 December 2008Cost 12 36 1 14 (17) 46Accumulated depreciation (8) (33) - (10) 3 (48)Net book amount 4 3 1 4 (14) (2)Year ended 31 December 2009Opening net book amount 4 3 1 4 (14) (2)Disposals - (9) - (1) - (10)Depreciation charge (1) (1) - (1) - (3)Accumulated depreciation (disposal) - 9 - 1 - 10Release of the revaluation difference - - - - 1 1Closing net book amount 3 2 1 3 (13) (4)At 31 December 2009Cost 13 28 2 13 (17) 39Accumulated depreciation (10) (26) (1) (10) 4 (43)Net book amount 3 2 1 3 (13) (4)The negative revaluation difference arose on 1 November 2005 when the Branch purchasedthe business from CALYON BANK CZECH REPUBLIC, a.s.As at 31 December 2009 and 2008, the Branch did not have any assets held under financelease contracts and did not provide any long term fixed assets as security over its liabilities orthird party liabilities of third parties.(25)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 20098 OTHER ASSETS31 December 2009 31 December 2008CZK mCZK mDerivative financial instruments (Note 22(d)) 1,594 1,973Deferred tax asset (Note 21) 0 39Due from state budget (Note 21) 11 57Other receivables 2 71,607 2,0769 ALLOWANCES, PROVISIONS AND WRITE OFFSThe movements in allowances and other provisions can be analysed as follows:Allowances for duefrom customersCZK mOtherprovisionsCZK mAt 1 January 2008 - 4Additions 366 -Release (10) -Foreign exchange differences 27 -At 31 December 2008 383 4Additions 8 -Foreign exchange differences (6) -At 31 December 2009 385 4Income from receivables already written-off2009 2008CZK mCZK mIncome from receivables already written off 5 3(26)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200910 DUE TO BANKS31 December 2009 31 December 2008CZK mCZK mCurrent accounts with banks and other due tobanks repayable on demand 6,232 439Deposits from other banks 16,126 21,04022,358 21,479Deposits from related parties31 December 2009 31 December 2008CZK mCZK mEntities controlled by Crédit Agricole, S.A. 17,275 17,135In the opinion of the Branch’s management deposits from related parties were accepted onsubstantially the same terms and conditions, including interest rates, as those prevailing atthe same time for comparable transactions with other customers, and did not involve morethan normal interest rate and liquidity risk or present other unfavourable features.11 DUE TO CUSTOMERS31 December 2009 31 December 2008CZK mCZK mLiabilities repayable on demand 3,991 5,341Term accounts for fixed term 8,920 9,077Repo transactions - 2,801Term accounts with fixed notice period 93 195Other due to customers 2 7513,006 17,489(27)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200912 OTHER LIABILITIES31 December 2009 31 December 2008CZK mCZK mDerivative financial instruments (Note 22 (d)) 1,696 1,635Deferred tax liability (Note 21) 6 -Other liabilities 1 -1,703 1,635The Branch had as at 31 December 2009 and 2008 no overdue liabilities for social insuranceand contribution to the state employment policy, overdue liabilities for health insurance or taxliabilities payable.13 EQUITY AND PROFIT DISTRIBUTIONHead office of the BranchThe Branch’s Head office as at 31 December 2009 and 2008 is CALYON S.A., incorporatedin France and registered at Paris La Defense Cedex, Quai Du President Paul Doumer, 9,92920, France. Crédit Agricole Corporate and Investment Bank S.A. is a 100% subsidiary ofCrédit Agricole S.A. (Note 1).Capital reserves represent long term financial resources provided to the Branch by its Headoffice. Unlike from receivables from and liabilities to Branch’s Head office, capital funds donot have defined maturity.Profit distributionThe profit of CZK 275 million for the year ended 31 December 2009 will be transferred toReceivables from Liabilities to Branch’s Head office.14 CONTINGENCIES AND COMMITMENTSThe Branch is subject to legal disputes. As of 31 December 2009 and 2008 a provisionof CZK 4 million was recognized on the basis of the Branch’s assessment of the expectedoutcome of these legal disputes (Note 9).(28)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200914 CONTINGENCIES AND COMMITMENTS (continued)Loan commitments, loan guarantees to third parties, guarantees from acceptance of bills ofexchange and letters of credit expose the Branch to credit risk and to loss in the event of aclient’s inability to meet his obligations. Various commitments and contingent liabilities arisein the normal course of business involving elements of credit, interest rate and liquidity risk.Commitments and guarantees granted 31 December 2009 31 December 2008CZK mCZK mCommitments granted 1,793 7,251Guarantees granted 8,615 6,33010,408 13,581Guarantees and commitments received include:31 December 2009 31 December 2008Commitments received - 238Guarantees received 3,519 6,5243,519 6,762Assets purchased under resale agreements (reverse repo transactions)31 December 2009 31 December 2008CZK mCZK mTreasury bills (Note 4) 8,652 5,266Assets sold under repurchased agreements (repo transactions)31 December 2009 31 December 2008CZK mCZK mTreasury bills - 2,782Liabilities from repo transactions are included in Due to customers (Note 11).(29)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200915 INTEREST AND SIMILAR INCOME2009 2008CZK mCZK mInter-bank transactions 210 642Receivables from customers 720 1,098Debt securities 25 37955 1,777Management estimate that approximately CZK 13 million of interest income was recognized onimpaired receivables in the year ended 31 December 2009 (in the year ended31 December 2008: CZK 22 million).Unrecognized penalty interest income outstanding and the cumulative amount of penaltyinterest forgiven on impaired receivables at 31 December 2009 and 2008 was CZK nil.16 INTEREST AND SIMILAR EXPENSE2009 2008CZK mCZK mInter-bank transactions (204) (599)Deposits from customers and state (263) (840)(467) (1,439)17 FEE AND COMMISSION INCOME AND EXPENSEFee and commission income2009 2008CZK mCZK mDomestic and foreign transfers 16 19Guarantees granted 24 50Credit related fees and commissions 48 15Fees related to derivatives transactions 29 33Fee arising from negotiation securities purchase transactions - 1Other fees and commissions 2 2119 120(30)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200917 FEE AND COMMISSION INCOME AND EXPENSE (continued)Fee and commission expense2009 2008CZK mCZK mDomestic and foreign transfers (3) (3)Money market brokerage (1) (1)(4) (4)18 GAINS LESS LOSSES FROM FINANCIAL TRANSACTIONS2009 2008CZK mCZK mGains less losses from foreign currency transactionsand foreign exchange differences 48 54Gains less losses from trading derivatives (68) (136)(20) (82)19 OTHER OPERATING INCOMEOther operating income2009 2008CZK mCZK mRecharge of expenses within Credit Agricole Group 19 20Other operating income 2 121 21(31)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200920 ADMINISTRATIVE EXPENSE2009 2008CZK mCZK mStaff costs (151) (133)Management fees within Credit Agricole Group (23) (20)Rent and lease charges (20) (17)Software development and maintenance (18) (12)Communication (11) (13)Tax and legal advisory services (4) (1)Services provided by the auditing company (5) (4)Compulsory annual audit of the financial statements (3) (3)Other assurance services (2) (1)Other personnel cost (2) (9)Security and related services (1) (2)Other administrative expenses (20) (19)Staff costs can be analysed as follows:(255) (230)2009 2008CZK mCZK mEmoluments of the senior management (35) (32)Wages, personal costs and emoluments of other employees (83) (82)Social costs and health insurance (33) (19)(151) (133)Staff statistics2009 2008Number of senior management members 11 11Average number of other employees 74 79(32)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200921 TAXATIONThe income tax expense/income consists of the following:2009 2008CZK mCZK mCurrent income tax expense (30) -Deferred income tax (expense) / income (38) 37Adjustment of prior year tax expense (1) 3Total income tax (expense)/ income (69) 40Current tax can be analyzed as follows:2009 2008CZK mCZK m(Loss)/profit before taxation 344 (194)Non-taxable income (7) (11)Use of tax losses carried forward (195) -Non-deductible expenses 9 10Net taxable profit/(tax loss) 151 (195)Current income tax charge at 20% (2008: 21%) (30) -Income tax advances paid 41 57Due from state budget (Note 8) 11 57The deferred tax asset as at 31 December 2009 is calculated at 19%, deferred tax liability asat 31 December 2008 is calculated at 20% and 19% depending on the period of reversal oftemporary difference and can be analysed as follows:Deferred tax assets / (liability) 31 December 2009 31 December 2008CZK mCZK mSocial security and health insurance 1 1Tax losses carried forward - 38Revaluation of securities available-for-sale (7) -Deferred tax asset / (liability) (Note 8) / (Note 12) (6) 39(33)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200921 TAXATION (continued)Change in the net deferred tax asset / liability can be analysed as follows:2009 2008CZK mCZK mNet deferred tax asset at the beginning of the period 39 2Deferred tax charge recognized in the income statement (38) 37Deferred tax on revaluation of securities available-for-sale (7) -Net deferred tax asset / (liability) at the end of the period (6) 3922 FINANCIAL RISKS(a)Strategy in using financial instrumentsThe Branch’s activities are principally related to the use of financial instruments.The Branch accepts deposits from customers at both fixed and floating rates andfor various periods and seeks to earn above average interest margins by investingthese funds in high quality assets. The Branch seeks to increase these margins byconsolidating short-term funds and lending for longer periods at higher rates whilstmaintaining sufficient liquidity to meet all claims that might fall due.The Branch also seeks to raise its interest margins by obtaining above average margins, netof provisions, through lending to commercial and retail borrowers with a rangeof credit standing. Such exposures involve not just on-balance sheet receivablesand advances but the Branch also enters into guarantees and other commitmentssuch as letters of credit and other contractual liabilities.The Branch also trades in financial instruments where it takes positions in over-the-counterinstruments including derivatives to take advantage of short-term market movements in theequity and debt securities markets and in currency, and commodity prices. The ManagementCommittee places trading limits on the level of exposure that can be taken in relation to bothovernight and intra-day market positions. Foreign exchange and interest rate exposuresassociated with these derivatives are normally offset by entering into counterbalancingpositions, thereby controlling the variability in the net cash amounts required to liquidate openmarket positions.(34)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200922 FINANCIAL RISKS (continued)(b)Credit riskThe Branch structures the levels of credit risk it undertakes by placing limits on the amount ofrisk accepted in relation to one borrower, or groups of borrowers, and to geographical andbusiness segments. Such risks are monitored on a regular basis and are subject to an annualor more frequent review.The Branch determines the level of credit risk it is taking by allocating limits to singleborrowers or group of borrowers. Each client request is evaluated based on quantitative(financial structure, company size) as well as qualitative characteristics (such as, but notlimited to, quality of management and organisational structure, market share, industrysensitivity / market fluctuations, growth potential, product quality and placement power,access to external funding, etc.).Based on such assessment and using a standardised tool of Credit Agricole Group, a ratingis assigned to each client by taking - whenever it is applicable - the client’s position within aneconomic group into consideration. The rating approach is based on the methodology ofStandard & Poor’s (“S&P”) whereby the external rating of S&P (if existing) constitutes one ofthe criteria of the designed scale. Collateral to be received has no influence on the allocatedrating. Guarantors are rated by a similar approach. The majority of loans have been grantedto the clients rated with equivalents between BBB+ and BBB-.The Branch does not exclude any industry neither on principal nor on experience.Nonetheless, a very restrictive approach is implemented towards real-estate financing and/oraccepting it as a collateral in order to avoid losses arising from significant market movements.Risks are monitored on a regular basis and are subject to an annual or more frequent review.Due to the nature of its business, granted credits are not grouped into portfolios and theBranch does not use a portfolio approach towards the claims. “significant concentration”is characterized by industry/region or other specific features common for several clients.These features cannot be influenced by the clients nor can it be mitigated by them.Consequently, these clients develop similarly and face the same important risks.The Branch recognizes the definitions of classification for overdue, watch and impairedreceivables as defined by the CNB. Preferably collateral accepted by the Branch includes: bankguarantees, parent company guarantees, receivables, and cash collaterals.(35)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200922 FINANCIAL RISKS (continued)(b)Credit risk (continued)The enforcement of claims is regulated on Branch’s management level and is tailored toindividual clients’ specifics reflecting the local environment.Geographical segmentationAt 31 December 2009EuropeanAssetsDomesticCZK mUnionCZK mOtherCZK mTotalCZK mCash and cash deposits with central banks 4 131 - - 4 131Due from banks 10 497 4 516 3 15 016Due from customers 14 635 1 757 4 16 396Receivables from Branch’s Head office - 103 - 103Debt securities 527 - - 527Other assets 1 263 350 - 1 613Total assets 31 053 6 726 7 37 786At 31 December 2008EuropeanAssetsDomesticCZK mUnionCZK mOtherCZK mTotalCZK mCash and cash deposits with central banks 614 - - 614Due from banks 5,302 11,163 10 16,475Due from customers 17,937 3,301 - 21,238Debt securities 493 - - 493Other assets 1,419 673 - 2,092Total assets 25,765 15,137 10 40,912Business segmentationAs at 31 December 2009 and 2008 the Branch operated only in one business segment,corporate banking.(36)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200922 FINANCIAL RISKS (continued)(c)Market riskThe Branch takes on exposure to market risks which arise from open positions in interest rateand currency.The Branch applies a ‘Value at Risk’ (“VAR”) methodology (applied separately for currency andinterest rate risk) to estimate the market risk of positions held and the maximum lossesexpected, based upon a number of assumptions for various changes in market conditions.The Global Risk Management department of Branch’s Head office sets limits on the level ofrisk that may be accepted, which is monitored on a daily basis.The daily market VAR is an estimate, with a confidence level set at 99%, of the potential losswhich might arise if the current positions were to be held unchanged for one business day.The measurement is structured so that daily losses exceeding the VAR figure should occur, onaverage, not more than once every hundred trading days. Actual outcomes are monitoredregularly to test the validity of the assumptions and parameters/factors used in the VARcalculation.Since VAR constitutes an integral part of the Branch’s market risk control regime, VAR limitsare established for all trading and portfolio operations; actual exposure against limits isreviewed on a daily basis by management. Global VAR for the Branch as at 31 December2009 was CZK 0,2 million (2008: CZK 7 million). Average annual value of VAR was CZK 1,6million in 2009 (2008: CZK 3 million).However, the use of this approach does not prevent losses outside of these limits in the eventof more significant market movements. Therefore, the Branch also performs the stressscenario testing. Based on the Branch’s previous historical experience and hypothetical stressmodels, the Branch defines the stress scenario situation as a situation when the Branch suffersa loss of USD 5 million on open positions as a result of a substantial devaluation of thedomestic currency exchange rate combined with a substantial growth of the domestic interestrates. The Branch defines the substantial devaluation of the domestic currency exchange rateas the devaluation of CZK against USD by 10%.The Branch defines the substantial growth of the domestic currency interest rates as anincrease of the CZK interest rates by 1.5% for the period of up to 1 month (1% for the period of1 – 12 months; 0.75% for the period of above 12 months). The Branch monitors the stressscenario indicators outlined above on a daily basis. The Branch managementis alerted even when the scenario suggests that the Branch may suffer a loss in the amountof 75% of the stress scenario loss limit (i.e. USD 3.75 million).(37)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200922 FINANCIAL RISKS (continued)(d)Derivative financial instrumentsTrading derivatives31 December 2009Nominal Nominal Positive Negativevalue of asset value of liability fair value fair valueCZK m CZK m CZK m CZK mInterest rate derivativesInterest rate swaps 35,327 35,327 499 626Cross-currency interest rate swaps 80 80 2 135,407 35,407 501 628Foreign exchange derivativesForwards 6,883 6,826 154 97Options 11,713 11,713 282 282Currency swaps 59,558 59,572 657 69078,154 78,111 1,093 1,069Total (Notes 8 and 12) 113,561 113,518 1,594 1,696As at 31 December 2009 the Branch recognized only trading derivatives.(38)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200922 FINANCIAL RISKS (continued)(d)Derivative financial instruments (continued)Trading agreements31 December 2008Nominal Nominal Positive Negativevalue of asset value of liability fair value fair valueCZK m CZK m CZK m CZK mInterest rate derivativesFRA 1,000 1,500 1 1Interest rate swaps 38,846 38,846 428 56139,846 40,346 429 562Foreign exchange derivativesForwards 5,373 5,170 220 25Options 19,727 19,727 584 584Interest rate swaps 18,740 18,468 740 46643,840 43,365 1,544 1,075Total (Notes 8 and 12) 83,686 83,711 1,973 1,637As at 31 December 2008 the Branch recognized only trading derivatives.The tables above provide a detailed breakdown of the notional amounts and the fair value ofthe Branch’s derivative financial instruments outstanding at year end. These instrumentsallow the Branch and its customers to transfer, modify or reduce their foreign exchange andinterest rate risks.The notional amounts provide a basis for volume comparison with instruments recognized onthe balance sheet but do not indicate the Branch’s exposure to credit or market risk.(39)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200922 FINANCIAL RISKS (continued)(e)Currency riskThe Branch takes on exposure resulting from fluctuations in the prevailing foreign currencyexchange rates on its financial position and cash flows. The Management Committee setslimits on the level of exposure by currency and in total for both overnight and intra-daypositions, which are monitored daily.The information about the VAR amount for foreign currency risk for all open foreign currencypositions is disclosed in Note 22(c).The table below summarises the Branch’s exposure to the currency risk. Included in the tableare the Branch’s foreign currency denominated assets and liabilities at carrying amounts,categorised by currency.As at 31 December 2009AssetsCZKCZK mEURCZK mUSDCZK mOtherCZK mTotalCZK mCash and cash deposits with central banks 4,129 2 - - 4,131Due from banks 11,568 3,369 76 3 15,016Due from customers 9,393 6,706 271 26 16,396Receivables due from Branch’s Head office 103 - - - 103Debt securities 527 - - - 527Other assets 1,656 (43) - - 1,613Assets 27,376 10,034 347 29 37,786LiabilitiesDue to banks 15,794 6,088 450 26 22,358Due to customers 8,251 4,602 150 3 13,006Other liabilities 1,788 - - - 1,788Provisions 4 - - - 4Capital reserves 328 - - - 328Revaluation reserve 27 - - - 27Profit for the accounting period 275 - - - 275Liabilities and equity 26,467 10,690 600 29 37,786Net assets / (liabilities) 909 (656) (253) - -Net off-balance sheet derivatives notionalposition (905) 648 254 -Net open currency position 4 (8) 1 -(40)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200922 FINANCIAL RISKS (continued)(e)Currency risk (continued)As at 31 December 2008AssetsCZKEURUSDSKKOtherTotalCZK mCZK mCZK mCZK mCZK mCZK mCash and cash deposits with central banks 612 2 - - - 614Due from banks 8,792 4,937 3 1,818 925 16,475Due from customers 12,577 8,223 38 - 400 21,238Receivables due from Branch’s Head office 493 - - - - 493Debt securities 1,659 433 - - - 2,092Other assets24,133 13,595 41 1,818 1,325 40,912AssetsLiabilities 5,359 14,896 43 - 1,181 21,478Due to banks 11,588 3,960 3 1,793 145 17,489Due to customers 1,141 560 - - - 1,701Other liabilities 4 - - - - 4Provisions 51 - - - - 51Capital reserves 342 - - - - 342Revaluation reserve (154) - - - - (154)Profit for the accounting periodLiabilities and equity 18,331 19,416 46 1,793 1,326 40,912Net assets / (liabilities) 5,802 (5,821) (5) 25 (1) -Net off-balance sheet derivatives notionalposition (5,074) (5,529) 7 - 1Net open currency position 728 (292) 2 25 -(f)Interest rate riskThe Branch takes on exposure resulting from fluctuations in the prevailing levels of marketinterest rates on its financial position and cash flows. Interest margins may increase as aresult of such changes but may reduce or create losses in the event that unexpectedmovements arise. The Management Committee sets limits on the level of mismatch ofinterest rate repricing that may be undertaken, which is monitored daily.(41)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200922 FINANCIAL RISKS (continued)(f)Interest rate risk (continued)The information about the VAR amount for interest risk for all open interest rate positions isdisclosed in Note 22(c). The table below summarises the Branch’s exposure to interest raterisks. Included in the table are the Branch’s interest bearing assets and liabilities at carryingamounts, categorised by the earlier of contractual, repricing or maturity dates. Non-interestbearing financial assets and liabilities are classified as not specified.As at 31 December 2009AssetsWithin3 monthsCZK m3 – 12monthsCZK m1 - 5yearsCZK mOver5 yearsCZK mNotspecifiedCZK mTotalCZK mCash and cash deposits with central banks 4,131 - - - - 4,131Due from banks 14,647 50 319 - - 15,016Due from customers 11,504 2,866 1,759 267 - 16,396Receivables from Branch’s Head office 103 103Debt securities - - 527 - - 527Other assets 377 316 803 112 5 1,61330,659 3,232 3,408 379 108 37,786LiabilitiesDue to banks 22,326 32 - - - 22,358Due to customers 12,504 183 319 - - 13,006Other liabilities 360 349 889 134 56 1,788Provisions - - - - 4 4Capital reserves - - - - 328 328Revaluation reserve - - - - 27 27Profit for the accounting period - - - - 275 27535,190 564 1,208 134 690 37,786Net assets / (liabilities) (4,531) 2,668 2,200 245 (582) -(42)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200922 FINANCIAL RISKS (continued)(f)Interest rate risk (continued)As at 31 December 2008AssetsWithin3 monthsCZK m3 – 12monthsCZK m1 - 5yearsCZK mOver5 yearsCZK mNotspecifiedCZK mTotalCZK mCash and cash deposits with central banks 614 - - - - 614Due from banks 15,933 542 - - - 16,475Due from customers 17,054 1,961 1,934 289 - 21,238Debt securities - - 493 - - 493Other assets 73 1,132 774 - 113 2,09233,674 3,635 3,201 289 113 40,912LiabilitiesDue to banks 11,220 10,229 30 - - 21,479Due to customers 15,864 1,625 - - - 17,489Other liabilities 176 834 625 - 66 1,701Provisions - - - - 4 4Liabilities to Branch‘s Head office - - - - 51 51Capital reserves - - - - 342 342Loss for the accounting period - - - - (154) (154)27,260 12,688 655 - 309 40,912Net assets / (liabilities) 6,414 (9,053) 2,546 289 (196) -(g)Liquidity riskThe Branch is exposed to daily calls on its available cash resources from overnight deposits,current accounts, maturing deposits, loan draw downs, guarantees and from marginand other calls on cash settled derivatives. The Branch does not maintain cash resourcesto meet all of these needs as experience shows that a minimum level of reinvestmentof maturing funds can be predicted with a high level of certainty. The ManagementCommittee sets limits on the minimum proportion of maturing funds available to meet suchcalls and on the minimum level of inter-bank and other borrowing facilities that shouldbe in place to cover withdrawals at unexpected levels of demand. In case of unexpectedoutflow of liquid resources, the Branch has a back up liquidity line with its Head office.(43)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200922 FINANCIAL RISKS (continued)(g)Liquidity risk (continued)The table below analyses assets and liabilities of the Branch into relevant maturity bandsbased on the remaining period at the balance sheet date to the contractual maturity date.At 31 December 2009AssetsWithin3 monthsCZK m3 – 12monthsCZK m1 - 5yearsCZK mOver5 yearsCZK mNotspecifiedCZK mTotalCZK mCash and cash deposits with central banks 4,131 - - - - 4,131Due from banks 14,647 50 319 - - 15,016Due from customers 2,395 2,355 9,635 2,011 - 16,396Receivables due from Branch’s Head office 103 103Debt securities - - 527 - - 527Other assets 386 316 803 112 (4) 1,61321,559 2,721 11,284 2,123 99 37,786LiabilitiesDue to banks 22,096 262 0 - - 22,358Due to customers 12,504 183 319 - - 13,006Other liabilities 410 349 889 134 6 1,788Provisions - - - - 4 4Capital reserves - - 328 - 328Revaluation reserve - - 27 - - 27Profit for the accounting period - - - - 275 27535,010 794 1 235 462 285 37,786Net assets / (liabilities) (13,451) 1,927 10,049 1,661 (186)(44)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200922 FINANCIAL RISKS (continued)(g)Liquidity risk (continued)The table below analyses assets and liabilities of the Branch into relevant maturity bandsbased on the remaining period at the balance sheet date to the contractual maturity date.At 31 December 2008AssetsWithin3 monthsCZK m3 – 12monthsCZK m1 - 5yearsCZK mOver5 yearsCZK mNotspecifiedCZK mTotalCZK mCash and cash deposits with central banks 614 - - - - 614Due from banks 15,933 542 - - - 16,475Due from customers 1,314 6,280 10,451 3,193 - 21,238Debt securities - - 493 - - 493Other assets 188 1,132 774 - (2) 2,09218,049 7,954 11,718 3,193 (2) 40,912LiabilitiesDue to banks 11,234 10,229 30 - - 21,493Due to customers 15,850 1,625 - - - 17,475Other liabilities 242 834 625 - - 1,701Provisions - - - - 4 4Liabilities to Branch‘s Head office - - - - 51 51Capital reserves - - - 342 - 342Loss for the accounting period (154) - - - - (154)(27,172) 12,688 655 342 55 40,912Net assets / (liabilities) (9,123) (4,734) 11,063 2,851 (57) -(45)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER 200923 SUBSEQUENT EVENTSCalyon S.A. (Head office of the Branch) changed its company and trade name to CréditAgricole Corporate and Investment Bank S.A. on 6th February 2010. Local Branch willchange its name in April 2010.There were no other events, which have occurred subsequent to the year-end until the dateof preparation of the financial statements, which would have a material impacton the financial statements of the Branch as at 31 December 2009.These financial statements have been approved by the Management committeeon 22 March 2010.Statutory representative(46)

CALYON S.A., ORGANIZAČNÍ SLOŽKANOTES TO FINANCIAL STATEMENTSBusiness ContactsFOR THE PERIOD ENDED 31 DECEMBER 2009CALYON S.A., organizační složkaMyslbek Building – Ovocný trh 8117 19 Praha 1Czech RepublicTel: (420) 222 076 111Fax: (420) 222 076 119Telex: 121 346Swift: CRLYCZPPWeb: www.calyon.cz(47)