IKB Deutsche Industriebank Aktiengesellschaft IKB FINANCE B.V.

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petitive environment, our customers, or our refinancing partners. Reputational risks concern direct or indirect losses incurred as a result of damage to IKB AG’s reputation amongst shareholders, customers, employees, business partners and the general public. 2. Operational risks A holder of Notes is exposed to the operational risk that there can be a threat of loss resulting from external events or disasters. There can be a legal risk, which is defined as the risk of loss incurred through new legal regulations, changes to existing legal regulations as well as interpretations of new or existing legal regulations that are disadvantageous to IKB FINANCE. Currency Risk/Dual Currency Notes Summary of Risk Factors regarding the Notes A holder of a Note denominated in a foreign currency and a holder of Dual Currency Notes is exposed to the risk of changes in currency exchange rates which may affect the yield and/or the redemption amount of such Notes. Liquidity Risk There can be no assurance that a liquid secondary market for the Notes will develop or, if it does develop, that it will continue. In an illiquid market, an investor might not be able to sell his Notes at any time at fair market prices. The possibility to sell the Notes might additionally be restricted by country specific reasons. Risk of Early Redemption If the relevant Issuer has the right to redeem the Notes prior to maturity, a holder of such Notes is exposed to the risk that due to early redemption his investment will have a lower than expected yield. Fixed Rate Notes A holder of a Fixed Rate Note is exposed to the risk that the price of such Note falls as a result of changes in the market interest rate. Floating Rate Notes A holder of a Floating Rate Note is exposed to the risk of fluctuating interest rate levels and uncertain interest income. Fluctuating interest rate levels make it impossible to determine the yield of Floating Rate Notes in advance. A Floating Rate Note may include multipliers of other leverage factors, or caps or floors, or any combination of those features or other similar related features. In addition, Floating Rate Notes may be issued as Inverse Floating Rate Notes. The market value of such structured Floating Rate Notes tend to be more volatile than the market value of conventional Floating Rate Notes. Zero Coupon Notes A holder of a Zero Coupon Note is exposed to the risk that the price of such Note falls as a result of changes in the market interest rate. Prices of Zero Coupon Notes are more volatile than prices of Fixed Rate Notes and are likely to respond to a greater degree to market interest rate changes than interest bearing notes with a similar maturity. 10
Index-linked Notes A holder of an Index-linked Note where payments of interest will be made by reference to a single index or other factors is exposed to the risk of fluctuating interest rate levels and uncertainty with respect to interest income and may receive no interest at all. The yield of such an Index-linked Note may even be negative. A holder of an Index-linked Note where payment of principal will be calculated by reference to a single index or other factors is exposed to uncertainty with respect to the repayment amount and the risk that the yield of such an Index-linked Note may be negative, and an investor might lose the value of all or part of its investment. Uncertainty with respect to interest and repayment amount makes it impossible to determine the yield of Index-linked Notes in advance. The more volatile the relevant index is, the greater is the uncertainty of interest income and repayment amount. Structured Notes An investment in Notes, the premium and/or the interest on or principal of which is determined by reference to one or more values of currencies, commodities, interest rates or other indices or formulae, i.e. directly or inversely, may entail significant risks not associated with similar investments in a conventional debt security, including the risks that the resulting interest rate will be less than that payable on a conventional debt security at the same time and/or that an investor could lose all or a substantial portion of the principal of its Notes. Subordinated Notes In the event of the dissolution, liquidation, institution of insolvency proceedings over the assets of, composition or other proceedings for the avoidance of institution of insolvency proceedings against the relevant Issuer, the obligations under subordinated Notes will be subordinated to the claims of all unsubordinated creditors of the relevant Issuer so that in any such event no amounts will be payable under such obligations until the claims of all unsubordinated creditors of the relevant Issuer will have been satisfied in full. Auditors Summary of the Description of the Issuers IKB Group KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft History and Development of IKB Group IKB AG (together with its consolidated subsidiaries, the “IKB Group”) is a German bank organized as a stock corporation (Aktiengesellschaft). Its activities date back to September 30, 1924 when IKB AG was first incorporated in Berlin as “Bank für deutsche Industrie-Obligationen” to manage the reparation payments owed by German companies pursuant to the Treaty of Versailles. On 29 March 1949 IKB AG was incorporated in Düsseldorf as “Deutsche Industriebank” and is registered today in Düsseldorf and Berlin for an indefinite period of time as a stock corporation under the laws of Germany. IKB AG is registered in the Commercial Registers of the Local Court of Düsseldorf under No. HRB 1130 and of the Local Court of Berlin-Charlottenburg under No. HRB 8860. Business Overview According to its Articles of Association (Satzung), the object of IKB AG is the engagement in the promotion of industry and commerce, in particular by the provision of medium- and long-term debt finance or equity and/or equity surrogates and leasing financing as well as consultancy services in 11
Page 1 and 2: This document constitutes two base
Page 3 and 4: tranche of Notes on a regulated mar
Page 5 and 6: I. General GENERAL DESCRIPTION OF T
Page 7 and 8: - the Terms and Conditions will be
Page 9: ures required to develop IKB AG bus
Page 13 and 14: Major Shareholders With an interest
Page 15 and 16: agement Board and the development o
Page 17 and 18: tion of the Notes will be Euro 1,00
Page 19 and 20: Other Notes Notes may be of any oth
Page 21 and 22: Place of Performance and Jurisdicti
Page 23 and 24: 5. Geschäftsrisiko Unter Geschäft
Page 25 and 26: fig variabel verzinsliche Schuldver
Page 27 and 28: Verwaltungs-, Management-, und Aufs
Page 29 and 30: Organisationsstruktur Die IKB FINAN
Page 31 and 32: Soweit United States Treasury Regul
Page 33 and 34: der jeweiligen Emittentin und dem(n
Page 35 and 36: Schuldverschreibungen der emittiere
Page 37 and 38: Risk Factors regarding IKB AG RISK
Page 39 and 40: f) Strategic risks and reputation r
Page 41 and 42: Inverse/Reverse Floating Rate Notes
Page 43 and 44: ment to the contrary unless the amo
Page 45 and 46: Corporate Lending IKB AG’s core c
Page 47 and 48: groups, offer new products (leasing
Page 49 and 50: The current composition of the Supe
Page 51 and 52: Financial Information concerning IK
Page 53 and 54: Cash flow statement Fiscal Year End
Page 55 and 56: Conflict of Interests IKB FINANCE i
Page 57 and 58: TERMS AND CONDITIONS OF THE NOTES G
Page 59 and 60: TEIL I - GRUNDBEDINGUNGEN EMISSIONS
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BGB dar, welcher das Recht eines je
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Garantie unmittelbar von der Garant
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[bei Anwendung der Vorhergegangener
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national Swap and Derivatives Assoc
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cher nicht vorgesehen ist, vom Verz
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auf Zinsen auf die Schuldverschreib
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(iv) den Wahl-Rückzahlungsbetrag (
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Eine ¾nderung, Abberufung, Bestell
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von Zahlungen auf die Garantie, der
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genommen wird, unterläßt und dies
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schreibungen zahlbaren Beträge zu
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[(2)] Mitteilungen an das Clearing
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TEIL II - ZUSATZ ZU DEN GRUNDBEDING
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am fünfzehnten Tag vor einem solch
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[§ [12] (MITTEILUNGEN) ist vollst
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Dies sind die endgültigen Bedingun
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CURRENCY, DENOMINATION, FORM, CERTA
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Interest Commencement Date [ ] Verz
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Other Method of Determination/Index
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Final Redemption Amount (for each S
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Paying Agents Zahlstellen Additiona
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C. INFORMATION CONCERNING THE NOTES
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[Underlying is an Interest Rate Bas
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Specify details Einzelheiten einfü
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firm commitment [ ] feste Zusage r
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The Issuer accepts responsibility f
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worden wären. Die Verpflichtung zu
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WHEREAS: Non-binding translation of
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IKB Deutsche Industriebank Aktienge
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keitstag der nachrangigen Schuldver
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WHEREAS: Non-binding translation of
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(5) This subordinated Guarantee is
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the initial subscriber of the Note
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sentative in the Netherlands and to
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starting 1 July 2005, at a rate of
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will have sent to each distributor,
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(iii) it has only communicated or c
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shall be furnished to any potential
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other relevant clearing system (whi
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Comparative table of Documents inco
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IKB AG DOCUMENTS ON DISPLAY Copies
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Citibank, N.A. Citigroup Centre Can
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IKB Deutsche Industriebank Aktiengesellschaft IKB FINANCE B.V.

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