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A7,500,000,000 Euro MediumTerm Note Programme by wbg11188

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									PROSPECTUS                                                                                                          4 July 2007




                                   SPAREBANKEN MIDT-NORGE
                                          (incorporated with limited liability in Norway)

                                  SPAREBANKEN NORD-NORGE
                                          (incorporated with limited liability in Norway)

                                     SPAREBANKEN ROGALAND
                                          (incorporated with limited liability in Norway)

                                          A7,500,000,000
                                Euro Medium Term Note Programme
        This Prospectus (as defined below) supersedes the Prospectus dated 29 June 2006 relating to the A5,000,000,000 Euro
Medium Term Note Programme (the ‘‘Programme’’) of Sparebanken Midt-Norge, Sparebanken Nord-Norge and Sparebanken
Rogaland (each an ‘‘Issuer’’ and together the ‘‘Issuers’’). This Prospectus does not affect any Notes already issued. This document
constitutes three base prospectuses for the purposes of Article 5.4 of Directive 2003/71/EC (the ‘‘Prospectus Directive’’), (i) the
base prospectus for Sparebanken Midt-Norge, in respect of non-equity securities within the meaning of Article 22 No. 6(4) of the
Commission Regulation (EC) No. 809/2004 of 29 April 2004 (the ‘‘Notes’’) to be issued by Sparebanken Midt-Norge under the
Programme, (ii) base prospectus for Sparebanken Nord-Norge in respect of Notes to be issued by Sparebanken Nord-Norge under
the Programme, and (iii) the base prospectus for Sparebanken Rogaland in respect of Notes to be issued by Sparebanken Rogaland
under the Programme (together, the ‘‘Prospectus’’).
        Under the Programme each Issuer may from time to time issue Notes denominated in any currency agreed between the
Issuer and the relevant Dealer (as defined below). The Notes of each Issuer will be obligations of that Issuer alone.
        As more fully described herein, Notes may be (i) issued on an unsubordinated basis (‘‘Unsubordinated Notes’’), (ii)
(issued on a subordinated basis with a fixed maturity as provided in ‘‘Terms and Conditions of the Notes’’ herein (‘‘Dated
Subordinated Notes’’) or (iii) issued on a subordinated basis with no fixed maturity as provided in ‘‘Terms and Conditions of
the Notes’’ herein (‘‘Undated Subordinated Notes’’). The Terms and Conditions of Dated and Undated Subordinated Notes will
not contain any events of default.
        The maximum aggregate nominal amount of all Notes from time to time outstanding under the Programme will not
exceed A7,500,000,000 (or its equivalent in other currencies calculated as described in the Programme Agreement described
herein), subject to increase as described herein.
        The Notes may be issued on a continuing basis to one or more of the Dealers specified under ‘‘Overview of the
Programme’’ and any additional Dealer appointed under the Programme from time to time by an Issuer (each a ‘‘Dealer’’ and
together the ‘‘Dealers’’), which appointment may be for a specific issue or on an ongoing basis. References in this Prospectus to
the ‘‘relevant Dealer’’ shall, in the case of an issue of Notes being (or intended to be) subscribed by more than one Dealer, be
to all Dealers agreeing to purchase such Notes.
        An investment in Notes issued under the Programme involves certain risks. For a discussion of these risks see ‘‘Risk
Factors’’.
        Application has been made to the Commission de Surveillance du Secteur Financier (the ‘‘CSSF’’) in its capacity as
competent authority under the Luxembourg Act dated 10th July, 2005 on prospectuses for securities to approve this document
as a base prospectus. Application has also been made to the Luxembourg Stock Exchange for Notes issued under the
Programme to be admitted to trading on the Luxembourg Stock Exchange’s regulated market and to be listed on the
Luxembourg Stock Exchange. The Luxembourg Stock Exchange’s regulated market (the ‘‘Regulated Market’’) is a regulated
market for the purposes of the Markets in Financial Instruments Directive (Directive 2004/39/EC).
        Notice of the aggregate nominal amount of Notes, interest (if any) payable in respect of Notes, the issue price of Notes
and any other terms and conditions not contained herein which are applicable to each Tranche (as defined under ‘‘Terms and
Conditions of the Notes’’) of Notes will be set out in a final terms document (the ‘‘Final Terms’’) which, with respect to Notes
to be listed on the Luxembourg Stock Exchange will be filed with the CSSF.
        The Programme provides that Notes may be listed or admitted to trading, as the case may be, on such other or further
stock exchanges or markets as may be agreed between the relevant Issuer and the relevant Dealer. Each Issuer may also issue
unlisted Notes and/or Notes not admitted to trading on any market.
        Any Issuer may agree with any Dealer that Notes may be issued in a form not contemplated by the Terms and
Conditions of the Notes herein, in which event a supplement to the Prospectus, if appropriate, will be made available which
will describe the effect of the agreement reached in relation to such Notes.

                                                      Arranger
                                             Merrill Lynch International
                                                           Dealers
JPMorgan                                                                                    Merrill Lynch International
Swedbank                                                                                        UBS Investment Bank
                                                        WestLB AG
      Each Issuer accepts responsibility for the information contained in this Prospectus. To the best of
the knowledge of each Issuer (each having taken all reasonable care to ensure that such is the case) the
information contained in this Prospectus is in accordance with the facts and does not omit anything
likely to affect the import of such information.
      Copies of the Final Terms will be available from the registered office of each Issuer and the
specified office set out below of each of the Paying Agents (as defined below) and will be published on
the website of the Luxembourg Stock Exchange (www.bourse.lu).
      This Prospectus is to be read in conjunction with all documents which are deemed to be
incorporated herein by reference (see ‘‘Documents Incorporated by Reference’’). This Prospectus shall be
read and construed on the basis that such documents are incorporated and form part of this Prospectus.
      The Dealers have not independently verified the information contained herein. Accordingly, no
representation, warranty or undertaking, express or implied, is made and no responsibility or liability is
accepted by the Dealers as to the accuracy or completeness of the information contained or incorporated
in this Prospectus or any other information provided by any Issuer in connection with the Programme.
No Dealer accepts any liability in relation to the information contained or incorporated by reference in
this Prospectus or any other information provided by any Issuer in connection with the Programme.
      No person is or has been authorised by any Issuer to give any information or to make any
representation not contained in or not consistent with this Prospectus or any other information supplied
in connection with the Programme or the Notes and, if given or made, such information or
representation must not be relied upon as having been authorised by any of the Issuers or any of the
Dealers.
      Neither this Prospectus nor any other information supplied in connection with the Programme or
any Notes (i) is intended to provide the basis of any credit or other evaluation or (ii) should be
considered as a recommendation by any of the Issuers or any of the Dealers that any recipient of this
Prospectus or any other information supplied in connection with the Programme or any Notes should
purchase any Notes. Each investor contemplating purchasing any Notes should make its own independent
investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of any
of the Issuers. Neither this Prospectus nor any other information supplied in connection with the
Programme or the issue of any Notes constitutes an offer or invitation by or on behalf of any of the
Issuers or any of the Dealers to any person to subscribe for or to purchase any Notes.
      Neither the delivery of this Prospectus nor the offering, sale or delivery of any Notes shall in any
circumstances imply that the information contained herein concerning any Issuer is correct at any time
subsequent to the date hereof or that any other information supplied in connection with the Programme
is correct as of any time subsequent to the date indicated in the document containing the same. The
Dealers expressly do not undertake to review the financial condition or affairs of any Issuer during the
life of the Programme or to advise any investor in the Notes of any information coming to their
attention.
     The Notes have not been and will not be registered under the United States Securities Act of 1933,
as amended, (the ‘‘Securities Act’’) and are subject to U.S. tax law requirements. Subject to certain
exceptions, Notes may not be offered, sold or delivered within the United States or to, or for the
account or benefit of, U.S. persons (see ‘‘Subscription and Sale’’).
      This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any Notes
in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such
jurisdiction. The distribution of this Prospectus and the offer or sale of Notes may be restricted by law
in certain jurisdictions. Each Issuer and the Dealers do not represent that this Prospectus may be
lawfully distributed, or that any Notes may be lawfully offered, in compliance with any applicable
registration or other requirements in any such jurisdiction, or pursuant to an exemption available
thereunder, or assume any responsibility for facilitating any such distribution or offering. In particular,
no action has been taken by any of the Issuers or the Dealers which is intended to permit a public
offering of any Notes or distribution of this document in any jurisdiction where action for that purpose is
required. Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this Prospectus
nor any advertisement or other offering material may be distributed or published in any jurisdiction,
except under circumstances that will result in compliance with any applicable laws and regulations.

                                                    2
Persons into whose possession this Prospectus or any Notes may come must inform themselves about,
and observe, any such restrictions on the distribution of this Prospectus and the offering and sale of
Notes. In particular, there are restrictions on the distribution of this Prospectus and the offer or sale of
Notes in the United States, the European Economic Area (including the United Kingdom and Norway)
and Japan, see ‘‘Subscription and Sale’’.
      This Prospectus has been prepared on the basis that any offer of Notes in any Member State of
the European Economic Area which has implemented the Prospectus Directive (2003/71/EC) (each, a
Relevant Member State) will be made pursuant to an exemption under the Prospectus Directive, as
implemented in that Relevant Member State, from the requirement to publish a prospectus for offers of
Notes. Accordingly any person making or intending to make an offer in that Relevant Member State of
Notes which are the subject of a placement contemplated in this Prospectus as completed by final terms
in relation to the offer of those Notes may only do so in circumstances in which no obligation arises for
the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or
supplement a prospectus pursuant to Article 16 of the Prospectus Directive, in each case, in relation to
such offer. Neither the Issuer nor any Dealer have authorised, nor do they authorise, the making of any
offer of Notes in circumstances in which an obligation arises for the Issuer or any Dealer to publish or
supplement a prospectus for such offer.
      All references in this document to ‘‘U.S. dollars’’, ‘‘U.S.$’’ and ‘‘$’’ are to United States dollars
and all references to ‘‘NOK’’ are to Norwegian Kroner. In addition, all references to ‘‘Sterling’’ and ‘‘£’’
refer to pounds sterling and to ‘‘euro’’ and ‘‘A’’ refer to the currency introduced at the start of the third
stage of European economic and monetary union pursuant to the Treaty establishing the European
Community, as amended.
                                                         ____________________

                                                       TABLE OF CONTENTS

General Description of the Programme .......                      4       The SpareBank 1 Alliance ............................ 54
Risk Factors .................................................    9       Sparebanken Midt-Norge ............................. 55
Documents Incorporated by Reference ........                     16       Sparebanken Nord-Norge............................. 69
Form of the Notes........................................        17       Sparebanken Rogaland ................................. 81
Applicable Final Terms ................................          19       Taxation ........................................................ 99
Terms and Conditions of the Notes .............                  30       Subscription and Sale ................................... 101
Use of Proceeds ............................................     53       General Information ..................................... 104
                                                         ____________________
       In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as the
Stabilising Manager(s) (or persons acting on behalf of any Stabilising Managers(s)) in the applicable
Final Terms may over-allot Notes or effect transactions with a view to supporting the market price of
the Notes at a level higher than that which might otherwise prevail. However, there is no assurance that
the Stabilising Manager(s) (or persons acting on behalf of a Stabilising Manager) will undertake
stabilisation action. Any stabilisation action may begin on or after the date on which adequate public
disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if begun, may be
ended at any time, but it must end no later than the earlier of 30 days after the issue date of the
relevant Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of Notes.
Any stabilisation action or over-allotment must be conducted by the relevant Stabilising Manager(s) (or
person(s) acting on behalf of any Stabilising Manager(s)) in accordance with the applicable laws and
rules.




                                                                      3
                        GENERAL DESCRIPTION OF THE PROGRAMME

      The following description does not purport to be complete and is taken from, and is qualified in its
entirety by, the remainder of this Prospectus and, in relation to the terms and conditions of any
particular Tranche of Notes, the applicable Final Terms. Words and expressions defined in ‘‘Form of the
Notes’’ and ‘‘Terms and Conditions of the Notes’’ shall have the same meanings in this Overview.
Issuers:                              Sparebanken Midt-Norge
                                      Sparebanken Nord-Norge
                                      Sparebanken Rogaland
Guarantor:                            None
Description:                          Euro Medium Term Note Programme
Arranger:                             Merrill Lynch International
Dealers:                              J.P. Morgan Securities Ltd.
                                      Merrill Lynch International
                                      Swedbank AB (publ)
                                      UBS Limited
                                      WestLB AG
                                      and any other Dealers appointed in accordance with the
                                      Programme Agreement.
Risk Factors                          There are certain factors that may affect the Issuer’s ability to fulfil
                                      its obligations under Notes issued under the Programme. These are
                                      set out under ‘‘Risk Factors’’ below and include ‘‘Risk Assessment’’,
                                      ‘‘Risk Management’’, ‘‘Credit Risk’’, ‘‘Market Risk’’, ‘‘Liquidity
                                      Risk’’ and ‘‘Operational Risk’’. In addition, there are certain factors
                                      which are material for the purpose of assessing the market risks
                                      associated with Notes issued under the Programme. These are set
                                      out under ‘‘Risk Factors’’ and include the fact that the Notes may
                                      not be a suitable investment for all investors, certain risks relating
                                      to the structure of particular Series of Notes and certain market
                                      risks.
Certain Restrictions:                 Each issue of Notes denominated in a currency in respect of which
                                      particular laws, guidelines, regulations, restrictions or reporting
                                      requirements apply will only be issued in circumstances which
                                      comply with such laws, guidelines, regulations, restrictions or
                                      reporting requirements from time to time (see ‘‘Subscription and
                                      Sale’’) including the following restrictions applicable at the date of
                                      this Prospectus.
                                      Notes having a maturity of less than one year
                                      Notes having a maturity of less than one year will, if the issue
                                      proceeds are accepted in the United Kingdom, constitute deposits
                                      for the purposes of the prohibition on accepting deposits contained
                                      in section 19 of the Financial Services and Markets Act 2000 (the
                                      ‘‘FSMA’’) unless they are issued to a limited class of professional
                                      investors and have a denomination of at least £100,000 or its
                                      equivalent, see ‘‘Subscription and Sale’’.
                                      Under the Luxembourg Law on Prospectuses for Securities which
                                      implements the Prospectus Directive, prospectuses for the listing of
                                      money market instruments having a maturity at issue of less than
                                      12 months and complying also with the definition of securities are
                                      not subject to the approval provisions of Part II of such law.
Issuing and Principal Paying Agent:   The Bank of New York

                                                    4
Programme Size:        Up to A7,500,000,000 (or its equivalent in other currencies
                       calculated as described in the Programme Agreement)
                       outstanding at any time. The Issuers may increase the amount of
                       the Programme in accordance with the terms of the Programme
                       Agreement.

Distribution:          Notes may be distributed by way of private or public placement
                       and in each case on a syndicated or non-syndicated basis.

Currencies:            Notes may be denominated in Euro, Norwegian Kroner, U.S.
                       dollars, yen and, subject to any applicable legal or regulatory
                       restrictions, any other currency agreed between the relevant Issuer
                       and the relevant Dealer.

Redenomination:        The applicable Final Terms may provide that certain Notes may be
                       redenominated in euro.

Maturities:            The Notes will have such maturities as may be agreed between the
                       relevant Issuer and the relevant Dealer, subject to such minimum or
                       maximum maturities as may be allowed or required from time to
                       time by the relevant central bank (or equivalent body) or any laws
                       or regulations applicable to the relevant Issuer or the relevant
                       Specified Currency. Unless otherwise permitted by then current
                       laws, regulations and directives, Dated Subordinated Notes will
                       have a minimum maturity of at least five years. Undated
                       Subordinated Notes will not have a fixed maturity.

Issue Price:           Notes may be issued on a fully-paid or a partly-paid basis and at an
                       issue price which is at par or at a discount to, or premium over, par.

Form of Notes:         The Notes will be issued in bearer form as described in ‘‘Form of the
                       Notes’’.

Fixed Rate Notes:      Fixed interest will be payable on such date or dates as may be
                       agreed between the relevant Issuer and the relevant Dealer and on
                       redemption, and will be calculated on the basis of such Day Count
                       Fraction as may be agreed between the relevant Issuer and the
                       relevant Dealer.

Floating Rate Notes:   Floating Rate Notes will bear interest at a rate determined:

                       (i)   on the same basis as the floating rate under a notional
                             interest rate swap transaction in the relevant Specified
                             Currency governed by an agreement incorporating the 2006
                             ISDA Definitions (as published by the International Swaps
                             and Derivatives Association, Inc., and as amended and
                             updated as at the Issue Date of the first Tranche of the
                             Notes of the relevant Series); or

                       (ii) on the basis of a reference rate appearing on the agreed
                            screen page of a commercial quotation service; or

                       (iii) on such other basis as may be agreed between the relevant
                             Issuer and the relevant Dealer.

                       The margin (if any) relating to such floating rate will be agreed
                       between the relevant Issuer and the relevant Dealer for each Series
                       of Floating Rate Notes.

                                    5
Index Linked Notes:               Payments of principal in respect of Index Linked Redemption
                                  Notes or of interest in respect of Index Linked Interest Notes will
                                  be calculated by reference to such index and/or formula or to
                                  changes in the prices of securities or commodities or to such other
                                  factors as the relevant Issuer and the relevant Dealer may agree.
Other provisions in relation to
Floating Rate Notes and Index
Linked Interest Notes:            Floating Rate Notes and Index Linked Interest Notes may also
                                  have a maximum interest rate, a minimum interest rate or both.
                                  Interest on Floating Rate Notes and Index Linked Interest Notes in
                                  respect of each Interest Period, as agreed prior to issue by the
                                  relevant Issuer and the relevant Dealer, will be payable on such
                                  Interest Payment Dates, and will be calculated on the basis of such
                                  Day Count Fraction, as may be agreed between the relevant Issuer
                                  and the relevant Dealer.
Dual Currency Notes:              Payments (whether in respect of principal or interest and whether at
                                  maturity or otherwise) in respect of Dual Currency Notes will be
                                  made in such currencies, and based on such rates of exchange, as
                                  the relevant Issuer and the relevant Dealer may agree.
Zero Coupon Notes:                Zero Coupon Notes will be offered and sold at a discount to their
                                  nominal amount and will not bear interest.
Redemption:                       The applicable Final Terms will indicate either that the relevant
                                  Notes cannot be redeemed prior to their stated maturity (other than
                                  in specified instalments, if applicable, or for taxation reasons or
                                  following an Event of Default) or that such Notes will be
                                  redeemable at the option of the relevant Issuer and/or the
                                  Noteholders upon giving notice to the Noteholders or the
                                  relevant Issuer, as the case may be, on a date or dates specified
                                  prior to such stated maturity and at a price or prices and on such
                                  other terms as may be agreed between the relevant Issuer and the
                                  relevant Dealer.
                                  The applicable Final Terms may provide that Notes may be
                                  redeemable in two or more instalments of such amounts and on
                                  such dates as are indicated in the applicable Final Terms.
                                  Notes having a maturity of less than one year may be subject to
                                  restrictions on their denomination and distribution, see ‘‘Certain
                                  Restrictions – Notes having a maturity of less than one year’’ above.
Denomination of Notes:            Notes will be issued in such denominations as may be agreed
                                  between the relevant Issuer and the relevant Dealer save that the
                                  minimum denomination of each Note will be such as may be
                                  allowed or required from time to time by the relevant central bank
                                  (or equivalent body) or any laws or regulations applicable to the
                                  relevant Specified Currency, see ‘‘Certain Restrictions – Notes
                                  having a maturity of less than one year’’ above, and save that the
                                  minimum denomination of each Note admitted to trading on a
                                  regulated market within the European Economic Area or offered to
                                  the public in a Member State of the European Economic Area in
                                  circumstances which require the publication of a prospectus under
                                  the Prospectus Directive will be A50,000 (or, if the Notes are
                                  denominated in a currency other than euro, the equivalent amount
                                  in such currency).

                                               6
Taxation:                            All payments in respect of the Notes will be made without
                                     deduction for or on account of withholding taxes imposed by the
                                     Kingdom of Norway as provided in Condition 8. In the event that
                                     any such deduction is made, the relevant Issuer will, save in certain
                                     limited circumstances provided in Condition 8, be required to pay
                                     additional amounts to cover the amounts so deducted.
Cross Default:                       The terms of the Unsubordinated Notes will contain a cross default
                                     provision as further described in Condition 10.
                                     Neither Dated Subordinated Notes nor Undated Subordinated Notes
                                     will contain any events of default.
Status of the Unsubordinated
Notes:                               The Unsubordinated Notes will constitute direct, unconditional,
                                     unsubordinated and, subject to the provisions of Condition 3(c),
                                     unsecured obligations of the relevant Issuer and will rank pari passu
                                     among themselves and (save for certain debts required to be
                                     preferred by law) equally with all other unsecured obligations
                                     (including deposits) (other than subordinated obligations, if any) of
                                     the relevant Issuer, present and future, from time to time
                                     outstanding.
Status of the Dated Subordinated
Notes:                               The Dated Subordinated Notes will constitute unsecured
                                     subordinated obligations of the relevant Issuer, conditional as
                                     described in Condition 3(c), and will rank pari passu without any
                                     preference among themselves and at least equally with all other
                                     subordinated obligations of the Issuer (whether actual or
                                     contingent) having a fixed maturity from time to time
                                     outstanding. The Dated Subordinated Notes shall, in the event of
                                     a liquidation, dissolution, administration or other winding-up of
                                     the relevant Issuer by way of public administration, be
                                     subordinated in right of payment only to the claims against that
                                     Issuer of all unsubordinated creditors of that Issuer and to claims
                                     preferred under Norwegian law generally.
Status of the Undated Subordinated
Notes:                               The Undated Subordinated Notes will constitute undated and
                                     unsecured subordinated obligations of the relevant Issuer,
                                     conditional as described in Conditions 3(b) and 3(c), and will
                                     rank pari passu without any preference among themselves and rank
                                     at least equally with Other Pari Passu Claims from time to time
                                     outstanding. The right to payment in respect of the Undated
                                     Subordinated Notes will be subordinated to the claims of Senior
                                     Creditors and payments of principal and interest in respect of the
                                     Undated Subordinated Notes will be conditional upon the relevant
                                     Issuer being Solvent at the time of payment by that Issuer and no
                                     principal or interest shall be payable in respect of the Undated
                                     Subordinated Notes except to the extent that the relevant Issuer
                                     could make such payment in whole or in part, rateably with
                                     payments in respect of Other Pari Passu Claims, and still be Solvent
                                     immediately thereafter, all as set out in Condition 3(b).
Listing, approval and admission to   Application has been made to the CSSF to approve this document
trading:                             as a base prospectus. Application has also been made to the
                                     Luxembourg Stock Exchange for Notes issued under the
                                     Programme to be admitted to trading on the Official List of the
                                     Luxembourg Stock Exchange’s regulated market and to be listed

                                                  7
                                      on the Luxembourg Stock Exchange. Notes may be listed or
                                      admitted to trading, as the case may be, on other or further stock
                                      exchanges or markets agreed between the relevant Issuer and the
                                      relevant Dealer in relation to the Series.
                                      Notes which are neither listed nor admitted to trading on any
                                      market may also be issued.
                                      The applicable Final Terms will state whether or not the relevant
                                      Notes are to be listed and, if so, on which stock exchanges and/or
                                      markets.
Ratings:                              The rating of certain Series of Notes to be issued under the
                                      Programme may be specified in the applicable Final Terms.
Governing Law:                        The Notes will be governed by, and construed in accordance with,
                                      English law, except Condition 3 and 5(f) which will be governed by,
                                      and construed in accordance with, Norwegian law.
Selling Restrictions:                 There are restrictions on the offer, sale and transfer of the Notes in
                                      the United States, the European Economic Area (including the
                                      United Kingdom and Norway) and Japan and such other
                                      restrictions as may be required in connection with the offering
                                      and sale of a particular Tranche of Notes, see ‘‘Subscription and
                                      Sale’’.
United States Selling Restrictions:   Regulation S, Category 2. TEFRA C or D, as specified in the
                                      applicable Final Terms.




                                                   8
                                             RISK FACTORS

      Each of the Issuers believes that the following factors may affect its ability to fulfil its obligations
under Notes issued under the Programme. All of these factors are contingencies which may or may not
occur and none of the Issuers are in a position to express a view on the likelihood of any such
contingency occurring.
     In addition, factors which are material for the purpose of assessing the market risks associated
with Notes issued under the Programme are also described below.
      Each of the Issuers believes that the factors described below represent the principal risks inherent
in investing in Notes issued under the Programme, but the inability of the Issuers to pay interest,
principal or other amounts on or in connection with any Notes may occur for other reasons and none of
the Issuers represent that the statements below regarding the risks of holding any Notes are exhaustive.
Prospective investors should also read the detailed information set out elsewhere in this Prospectus and
reach their own views prior to making any investment decision.

Factors that may affect the Issuers’ ability to fulfil its obligations under Notes issued under the Programme
Risk Assessment
      The Norwegian banking sector works under a regulatory regime which ensures that there is little
regulatory risk. The Norwegian regulators adopt European Union laws regarding the financial
markets and this ensures that the regulatory risk is comparable to other European banks.
      Norway has historically been a low risk from a litigation risk point of view. Consumer rights
are clearly regulated which ensures a uniform treatment of customers across the industry. Selling of
new products (saving and investment) has not resulted in any rise in the litigation risk.
      In the course of its business activities the Issuers are exposed to a variety of risks, the most
significant of which are risk management, market risk, liquidity risk and operational risk. Whilst the
Issuers believe it has implemented the appropriate policies, systems and processes to control and
mitigate these risks, investors should note that any failure to control these risks adequately could
result in adverse affect on the Issuers’ financial condition and reputation. A description of these risk
and the systems and processes used to control them is detailed below.

Risk management
      Risk is a basic element in a bank’s business model. Consequently, the Issuers place heavy
emphasis on identifying, measuring, managing and monitoring central risks in such a way that the
Issuers achieve its strategic objectives.
      Risk management is a key element of the Issuers’ management philosophy, organisation,
routines and systems, including good management by objectives using the balanced scorecard
approach. The Issuers aim to maintain a moderate risk profile and to apply risk monitoring of such
high quality that no single event will seriously impair the Issuers’ financial position. As part of this
effort, the Issuers’ scrutinise its most critical risk areas and the measures established to manage these
risks at least once a year. This scrutiny is an important element in the Issuers’ ongoing risk
management. Together with the other banks in the SpareBank 1 collaboration, the Issuers continued
the task of adapting existing risk management processes, including the relevant framework, guidelines
and organisation, to meet the expected future requirements from Basel.

Credit risk
      The Issuers’ credit policy derives from its main strategy, and contains guidelines for risk profile,
distribution between the retail market and the business market, geographical constraints, maximum
overall commitment in some sectors and size of individual commitments, as well as separate rules for
specific types of commitments.
     The Issuers’ risk classification systems are designed with a view to managing the Issuers’ loan
portfolio in line with the Issuers’ credit strategy and to securing an appropriate risk-adjusted return.
      Lending authority is related to size of commitment and is delegated with a basis in the
individual market area’s portfolio and risk.

                                                     9
     The classification system for business market customers is based on a scoring model that takes
into account financial position and the value of any collateral of the customer. All criteria are
objective and based on publicly available information such as audited accounts, credit information
and data from the Issuers’ own registers.
      The risk classification system and credit routines make clear-cut demands on the processes and
risk assessments involved in dealing with business and retail market commitments.
      A staff member is assigned responsibility for each customer. This staff member is responsible for
following up the customer on a daily basis and for checking that the customer maintains its ability to
pay. In addition the Issuers have a credit support division that takes over dealings with customers
who are obviously unable, or are highly likely to become unable, to service their commitments unless
action is taken beyond ordinary follow-up.

Market risk
      Market risk is defined as the potential for losses arising from market value falls resulting from
fluctuations in the fixed-income, currency and securities markets. Market risk is managed by means of
detailed limits for investments in equities, bonds and on positions taken in the fixed-income and
currency markets. The limits are reviewed at least once a year and are adopted yearly by the Issuers’
Board of Directors. Exposures relative to the adopted limits are reported monthly to the Board of
Directors. The Issuers’ limits are well within the maximum limits set by the authorities.

Liquidity risk
      The Issuers’ most important source of finance is customer deposits. Due to changes in customer
savings behaviour and relatively high credit demand, the Issuers’ dependence on other sources of
capital has increased. the Issuers expect that this situation will persist.
     The Issuers reduce its liquidity risk by diversifying funding across a variety of markets, funding
sources and instruments, and by employing long-term borrowing. The Issuers’ Board of Directors
have adopted a liquidity strategy and established a framework that promote a long-term perspective
and balance in liquidity procurement. The position in relation to the adopted framework is monitored
by Risk Management and reported to the Issuers’ Board of Directors on a monthly basis. A reserve
in the form of committed drawing rights is maintained to further reduce liquidity risk. the Issuers
have adopted a preparedness plan to handle both bank-specific and sector-related crisis scenarios.

Operational risk
     Operational risk is defined as the risk of loss inherent in the Issuers’ ongoing operations as well
as in external events, including the risk of loss as a result of inadequate or faulty internal processes
and systems, human error and various forms of attack on the Issuers such as robbery, check
counterfeiting, embezzlement, arson and computer crime.
     The Issuers consider that authorisation structures, good descriptions of routines and properly
defined responsibilities in supply contracts between the respective divisions are elements in any
framework for handling operational risk.

Factors which are material for the purpose of assessing the market risks associated with Notes issued under the
Programme
The Notes may not be a suitable investment for all investors
      Each potential investor in the Notes must determine the suitability of that investment in light of
its own circumstances. In particular, each potential investor should:
     (i)    have sufficient knowledge and experience to make a meaningful evaluation of the Notes,
            the merits and risks of investing in the Notes and the information contained or
            incorporated by reference in this Prospectus or any applicable supplement;
     (ii)   have access to, and knowledge of, appropriate analytical tools to evaluate, in the context
            of its particular financial situation, an investment in the Notes and the impact the Notes
            will have on its overall investment portfolio;

                                                      10
     (iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in
           the Notes, including Notes with principal or interest payable in one or more currencies, or
           where the currency for principal or interest payments is different from the potential
           investor’s currency;
     (iv) understand thoroughly the terms of the Notes and be familiar with the behaviour of any
          relevant indices and financial markets; and
     (v)    be able to evaluate (either alone or with the help of a financial adviser) possible scenarios
            for economic, interest rate and other factors that may affect its investment and its ability
            to bear the applicable risks.
      Some Notes are complex financial instruments. Sophisticated institutional investors generally do
not purchase complex financial instruments as stand-alone investments. They purchase complex
financial instruments as a way to reduce risk or enhance yield with an understood, measured,
appropriate addition of risk to their overall portfolios. A potential investor should not invest in Notes
which are complex financial instruments unless it has the expertise (either alone or with a financial
adviser) to evaluate how the Notes will perform under changing conditions, the resulting effects on
the value of the Notes and the impact this investment will have on the potential investor’s overall
investment portfolio.

Risks related to the structure of a particular issue of Notes
     A wide range of Notes may be issued under the Programme. A number of these Notes may
have features which contain particular risks for potential investors. Set out below is a description of
the most common such features:

Notes subject to optional redemption by the Issuers
     An optional redemption feature of Notes is likely to limit their market value. During any period
when an Issuer may elect to redeem Notes, the market value of those Notes generally will not rise
substantially above the price at which they can be redeemed. This also may be true prior to any
redemption period.
      An Issuer may be expected to redeem Notes when its cost of borrowing is lower than the
interest rate on the Notes. At those times, an investor generally would not be able to reinvest the
redemption proceeds at an effective interest rate as high as the interest rate on the Notes being
redeemed and may only be able to do so at a significantly lower rate. Potential investors should
consider reinvestment risk in light of other investments available at that time.

Index Linked Notes and Dual Currency Notes
      The Issuers may issue Notes with principal or interest determined by reference to an index or
formula, to changes in the prices of securities or commodities, to movements in currency exchange
rates or other factors (each, a ‘‘Relevant Factor’’). In addition, the Issuers may issue Notes with
principal or interest payable in one or more currencies which may be different from the currency in
which the Notes are denominated. Potential investors should be aware that:
     (i)    the market price of such Notes may be volatile;
     (ii)   they may receive no interest;
     (iii) payment of principal or interest may occur at a different time or in a different currency
           than expected;
     (iv) they may lose all or a substantial portion of their principal;
     (v)    a Relevant Factor may be subject to significant fluctuations that may not correlate with
            changes in interest rates, currencies or other indices;
     (vi) if a Relevant Factor is applied to Notes in conjunction with a multiplier greater than one
          or contains some other leverage factor, the effect of changes in the Relevant Factor on
          principal or interest payable likely will be magnified; and

                                                   11
     (vii) the timing of changes in a Relevant Factor may affect the actual yield to investors, even if
           the average level is consistent with their expectations. In general, the earlier the change in
           the Relevant Factor, the greater the effect on yield.
      The historical experience of an index should not be viewed as an indication of the future
performance of such index during the term of any Index Linked Notes. Accordingly, each potential
investor should consult its own financial and legal advisers about the risk entailed by an investment
in any Index Linked Notes and the suitability of such Notes in light of its particular circumstances.

Partly-paid Notes
     The Issuers may issue Notes where the issue price is payable in more than one instalment.
Failure to pay any subsequent instalment could result in an investor losing all of his investment.

Variable rate Notes with a multiplier or other leverage factor
      Notes with variable interest rates can be volatile investments. If they are structured to include
multipliers or other leverage factors, or caps or floors, or any combination of those features or other
similar related features, their market values may be even more volatile than those for securities that
do not include those features.

Inverse Floating Rate Notes
      Inverse Floating Rate Notes have an interest rate equal to a fixed rate minus a rate based upon
a reference rate such as LIBOR. The market values of those Notes typically are more volatile than
market values of other conventional floating rate debt securities based on the same reference rate
(and with otherwise comparable terms). Inverse Floating Rate Notes are more volatile because an
increase in the reference rate not only decreases the interest rate of the Notes, but may also reflect an
increase in prevailing interest rates, which further adversely affects the market value of these Notes.

Fixed/Floating Rate Notes
      Fixed/Floating Rate Notes may bear interest at a rate that converts from a fixed rate to a
floating rate, or from a floating rate to a fixed rate. Where the relevant Issuer has the right to effect
such a conversion, this will affect the secondary market and the market value of the Notes since the
relevant Issuer may be expected to convert the rate when it is likely to produce a lower overall cost
of borrowing. If the relevant Issuer converts from a fixed rate to a floating rate in such
circumstances, the spread on the Fixed/Floating Rate Notes may be less favourable than then
prevailing spreads on comparable Floating Rate Notes tied to the same reference rate. In addition,
the new floating rate at any time may be lower than the rates on other Notes. If the relevant Issuer
converts from a floating rate to a fixed rate in such circumstances, the fixed rate may be lower than
then prevailing rates on its Notes.

Notes issued at a substantial discount or premium
      The market values of securities issued at a substantial discount or premium from their principal
amount tend to fluctuate more in relation to general changes in interest rates than do prices for
conventional interest-bearing securities. Generally, the longer the remaining term of the securities, the
greater the price volatility as compared to conventional interest-bearing securities with comparable
maturities.

The relevant Issuer’s obligations under Subordinated Notes are subordinated
      The relevant Issuer’s obligations under Dated Subordinated Notes will be unsecured and
subordinated and will rank junior in priority of payment to the claims of all unsubordinated creditors
of the relevant Issuer and to claims preferred under Norwegian law (as set out in Condition 3(a)(i)).
      The relevant Issuer’s obligations under Undated Subordinated Notes will also be unsecured but
will be further subordinated and will rank junior in priority of payment to claims of depositors and
other unsubordinated creditors of the Issuer, as well as fixed maturity claims which are, or are
expressed to be subordinated, except those which rank, pari passu with or junior to Undated
Subordinated Notes (as set out in Condition 3(b)(i)).

                                                   12
      Although Dated and Undated Subordinated Notes may pay a higher rate of interest than
comparable Notes which are not subordinated, there is a real risk that an investor in Dated
Subordinated Notes or Undated Subordinated Notes will lose all or some of his investment should
the relevant Issuer become insolvent.

Under certain conditions, interest payments under Undated Subordinated Notes must be deferred
     If the relevant Issuer’s most recent quarterly report to the Banking, Insurance and Securities
Commission of the Kingdom of Norway or such other agency of the Kingdom of Norway as assumes
or performs the functions as at the issue date of the Undated Subordinated Notes performed by such
Commission disclosed that it was in breach of the capital adequacy requirements of the Norwegian
Ministry of Finance (or of such other Governmental Authority as shall at the time be the
promulgator of such requirements) applicable to the relevant Issuer then the relevant Issuer may defer
the payment of interest on the Undated Subordinated Notes due on the next scheduled Interest
Payment Date (as set out in Condition 5(f)).
      The relevant Issuer will pay all deferred interest, and interest on that deferred interest, on all
Undated Subordinated Notes as soon as, after giving effect to such payments, it would no longer be
required to defer interest under the terms described above. The relevant Issuer will make this payment
in respect of all Undated Subordinated Notes on the next scheduled Interest Payment Date that
occurs in respect of any issue of Undated Subordinated Notes, unless it elects to make the payment
earlier.
      Any deferral of interest payments will likely have an adverse effect on the market price of the
Undated Subordinated Notes. In addition, as a result of the interest deferral provision of the
Undated Subordinated Notes, the market price of the Undated Subordinated Notes may be more
volatile than the market prices of other debt securities on which original issue discount or interest
accrues that are not subject to such deferrals and may be more sensitive generally to adverse changes
in the relevant Issuer’s financial condition.

Risks related to Notes generally
     Set out below is a brief description of certain risks relating to the Notes generally:

Modification
     The conditions of     the Notes contain provisions for calling meetings of Noteholders to consider
matters affecting their    interests generally. These provisions permit defined majorities to bind all
Noteholders including     Noteholders who did not attend and vote at the relevant meeting and
Noteholders who voted     in a manner contrary to the majority.

EU Savings Directive
      Under EC Council Directive 2003/48/EC on the taxation of savings income, Member States are
required to provide to the tax authorities of another Member State details of payments of interest (or
similar income) paid by a person within its jurisdiction to an individual resident in that other
Member State. However, for a transitional period, Belgium, Luxembourg and Austria are instead
required (unless during that period they elect otherwise or other certain information reporting is
provided) to operate a withholding system in relation to such payments (the ending of such
transitional period being dependent upon the conclusion of certain other agreements relating to
information exchange with certain other countries). A number of non-EU countries and territories
including Switzerland adopted similar measures (a withholding system in the case of Switzerland).
      If a payment were to be made or collected through a Member State which has opted for a
withholding system and an amount of, or in respect of tax were to be withheld from that payment,
neither the relevant Issuer nor any Paying Agent nor any other person would be obliged to pay
additional amounts with respect to any Note as a result of the imposition of such withholding tax. If
a withholding tax is imposed on payment made by a Paying Agent following implementation of this
Directive, the relevant Issuer will be required to maintain a Paying Agent in a Member State that will
not be obliged to withhold or deduct tax pursuant to the Directive.

                                                   13
Change of law
     The conditions of the Notes are based on English law in effect as at the date of this Prospectus.
No assurance can be given as to the impact of any possible judicial decision or change to English law
or administrative practice after the date of this Prospectus.

Notes where denominations involve integral multiples: definitive Notes
In relation to any issue of Notes which have denominations consisting of a minimum Specified
Denomination plus one or more higher integral multiples of another smaller amount, it is possible
that such Notes may be traded in amounts that are not integral multiples of such minimum Specified
Denomination. In such a case a holder who, as a result of trading such amounts, holds an amount
which is less than the minimum Specified Denomination in his account with the relevant clearing
system at the relevant time may not receive a definitive Note in respect of such holding (should
definitive Notes be printed) and would need to purchase a principal amount of Notes such that its
holding amounts to a Specified Denomination.

     If definitive Notes are issued, holders should be aware that definitive Notes which have a
denomination that is not an integral multiple of the minimum Specified Denomination may be illiquid
and difficult to trade.

Risks related to the market generally
     Set out below is a brief description of the principal market risks, including liquidity risk,
exchange rate risk, interest rate risk and credit risk:

The secondary market generally
      Notes may have no established trading market when issued, and one may never develop. If a
market does develop, it may not be very liquid. Therefore, investors may not be able to sell their
Notes easily or at prices that will provide them with a yield comparable to similar investments that
have a developed secondary market. This is particularly the case for Notes that are especially sensitive
to interest rate, currency or market risks, are designed for specific investment objectives or strategies
or have been structured to meet the investment requirements of limited categories of investors. These
types of Notes generally would have a more limited secondary market and more price volatility than
conventional debt securities. Illiquidity may have a severely adverse effect on the market value of
Notes.

Exchange rate risks and exchange controls
      Each Issuer will pay principal and interest on the Notes in the Specified Currency. This presents
certain risks relating to currency conversions if an investor’s financial activities are denominated
principally in a currency or currency unit (the ‘‘Investor’s Currency’’) other than the Specified
Currency. These include the risk that exchange rates may significantly change (including changes due
to devaluation of the Specified Currency or revaluation of the Investor’s Currency) and the risk that
authorities with jurisdiction over the Investor’s Currency may impose or modify exchange controls.
An appreciation in the value of the Investor’s Currency relative to the Specified Currency would
decrease (1) the Investor’s Currency-equivalent yield on the Notes, (2) the Investor’s Currency-
equivalent value of the principal payable on the Notes and (3) the Investor’s Currency-equivalent
market value of the Notes.

      Government and monetary authorities may impose (as some have done in the past) exchange
controls that could adversely affect an applicable exchange rate. As a result, investors may receive less
interest or principal than expected, or no interest or principal.

Interest rate risks
      Investment in Fixed Rate Notes involves the risk that subsequent changes in market interest
rates may adversely affect the value of the Fixed Rate Notes.

                                                   14
Credit ratings may not reflect all risks
      One or more independent credit rating agencies may assign credit ratings to the Notes. The
ratings may not reflect the potential impact of all risks related to structure, market, additional factors
discussed above, and other factors that may affect the value of the Notes. A credit rating is not a
recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency
at any time.
Legal investment considerations may restrict certain investments
      The investment activities of certain investors are subject to legal investment laws and
regulations, or review or regulation by certain authorities. Each potential investor should consult its
legal advisers to determine whether and to what extent (1) Notes are legal investments for it, (2)
Notes can be used as collateral for various types of borrowing and (3) other restrictions apply to its
purchase or pledge of any Notes. Financial institutions should consult their legal advisors or the
appropriate regulators to determine the appropriate treatment of Notes under any applicable risk-
based capital or similar rules.




                                                   15
                                   DOCUMENTS INCORPORATED BY REFERENCE

      The following documents which have previously been published and have been filed with the
CSSF shall be incorporated in, and form part of, this Prospectus:
      (a) the auditors report and audited consolidated and non-consolidated annual financial
            statements for the two financial years ended 31 December 2006 of each Issuer; and
      (b) memorandum and articles of association of each of the Issuers (for information purposes
            only).
      Following the publication of this Prospectus a supplement may be prepared by the Issuers and
approved by the CSSF in accordance with Article 16 of the Prospectus Directive. Statements
contained in any such supplement (or contained in any document incorporated by reference therein)
shall, to the extent applicable (whether expressly, by implication or otherwise) be deemed to modify
or supersede statements contained in this Prospectus or in a document which is incorporated by
reference in this Prospectus. Any statement so modified or superseded shall not, except as so modified
or superseded, constitute a part of this Prospectus.
      Copies of documents incorporated by reference in this Prospectus can be obtained from the
registered office of the Issuers and from the specified office of the Paying Agents for the time being in
London and Luxembourg and will also be published on the Luxembourg Stock Exchange’s website
(www.bourse.lu).
      Each Issuer will, in the event of any significant new factor, material mistake or inaccuracy
relating to information included in this Prospectus, prepare a supplement to this Prospectus or
publish a new Prospectus for use in connection with any subsequent issue of Notes.

Cross Reference List
                                                                              Annual Report 2005   Annual Report 2006
Sparebanken Midt-Norge
Financial Statements
Balance Sheet
     –     unconsolidated ........................................            page 87              page 93
     –     consolidated.............................................          page 51              page 53
Income Statement
     –     unconsolidated ........................................            page 86              page 92
     –     consolidated.............................................          page 50              page 52
Accounting Policies and Explanatory Notes
     –     unconsolidated ........................................            pages 94-112         pages 102-122
     –     consolidated.............................................          pages 58-80          pages 60-88
Auditors’ reports.......................................................      page 116             page 124
Sparebanken Nord-Norge
Financial Statements
Balance Sheet
     –     unconsolidated ........................................            page 17              page 21
     –     consolidated.............................................          page 53              page 61
Income Statement
     –     unconsolidated ........................................            page 15              page 20
     –     consolidated.............................................          page 51              page 60
Accounting Policies and Explanatory Notes ............                        pages 57-85
     –     unconsolidated ........................................                                 pages 22-56
     –     consolidated.............................................                               pages 64-102
Auditors’ reports.......................................................      page 89              page 105
Sparebanken Rogaland
Financial Statements
Balance Sheet ............................................................    page 56              page 61
Income Statement .....................................................        page 55              page 60
Accounting Policies and Explanatory Notes ............                        pages 59-91          pages 64-91
Auditors’ reports.......................................................      page 92              page 92
     Any information not listed in the cross reference list but included in the documents incorporated
by reference is given for information purposes only.

                                                                         16
                                       FORM OF THE NOTES

      Each Tranche of Notes will be in bearer form and will be initially issued in the form of a
temporary global note (a ‘‘Temporary Global Note’’) which will (i) if the Global Notes are intended
to be issued in new global note (‘‘NGN’’) form, as stated in the applicable Final Terms, be delivered
on or prior to the original issue date of the Tranche to a common safekeeper (the ‘‘Common
                                                                                        ´ ´
Safekeeper’’) for Euroclear Bank SA/NV (‘‘Euroclear’’) and Clearstream Banking, societe anonyme
(‘‘Clearstream, Luxembourg’’); and (ii) if the Global Notes are not intended to be issued in NGN
form, be delivered on or prior to the original issue date of the Tranche to a common depositary (the
‘‘Common Depositary’’) of Euroclear and Clearstream Luxembourg.

      Whilst any Note is represented by a Temporary Global Note, payments of principal, interest (if
any) and any other amount payable in respect of the Notes due prior to the Exchange Date (as
defined below) will be made (against presentation of the Temporary Global Note if the Temporary
Global Note is not intended to be issued in NGN form) only to the extent that certification (in a
form to be provided) to the effect that the beneficial owners of interests in such Note are not U.S.
persons or persons who have purchased for resale to any U.S. person, as required by U.S. Treasury
regulations, has been received by Euroclear and/or Clearstream, Luxembourg and Euroclear and/or
Clearstream, Luxembourg, as applicable, has given a like certification (based on the certifications it
has received) to the Issuing and Principal Paying Agent (the ‘‘Agent’’).

      On and after the date (the ‘‘Exchange Date’’) which is 40 days after the Temporary Global
Note is issued, interests in such Temporary Global Note will be exchangeable (free of charge) upon a
request as described therein either for (i) interests in a Permanent Global Note of the same Series or
(ii) for definitive Notes of the same Series with, where applicable, receipts, interest coupons and
talons attached (as indicated in the applicable Final Terms and subject, in the case of definitive
Notes, to such notice period as is specified in the applicable Final Terms), in each case against
certification of beneficial ownership as described above unless such certification has already been
given. The holder of a Temporary Global Note will not be entitled to collect any payment of interest,
principal or other amount due on or after the Exchange Date unless, upon due certification, exchange
of the Temporary Global Note for an interest in a Permanent Global Note or for definitive Notes is
improperly withheld or refused.

      Payments of principal, interest (if any) or any other amounts on a Permanent Global Note will
be made through Euroclear and/or Clearstream, Luxembourg (against presentation or surrender (as
the case may be) of the Permanent Global Note if the Permanent Global Note is not intended to be
issued in NGN form) without any requirement for certification.

       The applicable Final Terms will specify that a Permanent Global Note will be exchangeable
(free of charge), in whole but not in part, for definitive Notes with, where applicable, receipts, interest
coupons and talons attached upon either (i) not less than 60 days’ written notice from Euroclear and/
or Clearstream, Luxembourg (acting on the instructions of any holder of an interest in such
Permanent Global Note) to the Agent as described therein or (ii) only upon the occurrence of an
Exchange Event. For these purposes, ‘‘Exchange Event’’ means that (i) an Event of Default (as
defined in Condition 10) has occurred and is continuing, (ii) the relevant Issuer has been notified that
both Euroclear and Clearstream, Luxembourg have been closed for business for a continuous period
of 14 days (other than by reason of holiday, statutory or otherwise) or have announced an intention
permanently to cease business or have in fact done so and no successor clearing system is available or
(iii) the relevant Issuer has or will become subject to adverse tax consequences which would not be
suffered were the Notes represented by the Permanent Global Note in definitive form. The relevant
Issuer will promptly give notice to Noteholders in accordance with Condition 14 if an Exchange
Event occurs. In the event of the occurrence of an Exchange Event, Euroclear and/or Clearstream,
Luxembourg (acting on the instructions of any holder of an interest in such Permanent Global Note)
may give notice to the Agent requesting exchange and, in the event of the occurrence of an Exchange
Event as described in (iii) above, the relevant Issuer may also give notice to the Agent requesting
exchange. Any such exchange shall occur not later than 45 days after the date of receipt of the first
relevant notice by the Agent.

                                                   17
     The following legend will appear on all Notes which have an original maturity of more than
365 days and on all receipts and interest coupons relating to such Notes:
    ‘‘ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE
SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS,
INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE
INTERNAL REVENUE CODE.’’
      The sections referred to provide that United States holders, with certain exceptions, will not be
entitled to deduct any loss on Notes, receipts or interest coupons and will not be entitled to capital
gains treatment of any gain on any sale, disposition, redemption or payment of principal in respect of
such Notes, receipts or interest coupons.
      Notes which are represented by a Global Note will only be transferable in accordance with the
rules and procedures for the time being of Euroclear or Clearstream, Luxembourg, as the case may
be.
      Pursuant to the Agency Agreement (as defined under ‘‘Terms and Conditions of the Notes’’),
the Agent shall arrange that, where a further Tranche of Notes is issued which is intended to form a
single Series with an existing Tranche of Notes, the Notes of such further Tranche shall be assigned a
common code and ISIN which are different from the common code and ISIN assigned to Notes of
any other Tranche of the same Series until at least the expiry of the distribution compliance period
(as defined in Regulation S under the Securities Act) applicable to the Notes of such Tranche.
      Any reference herein to Euroclear and/or Clearstream, Luxembourg shall, whenever the context
so permits, be deemed to include a reference to any additional or alternative clearing system specified
in the applicable Final Terms.
      Any Unsubordinated Note may be accelerated by the holder thereof in certain circumstances
described in Condition 10. In such circumstances, where any Note is still represented by a Global
Note and the Global Note (or any part thereof) has become due and repayable in accordance with
the Terms and Conditions of such Notes and payment in full of the amount due has not been made
in accordance with the provisions of the Global Note then the Global Note will become void at
8.00 p.m. (London time) on such day. At the same time, holders of interests in such Global Note
credited to their accounts with Euroclear and/or Clearstream, Luxembourg, as the case may be, will
become entitled to proceed directly against the Issuer on the basis of statements of account provided
by Euroclear and/or Clearstream, Luxembourg on and subject to the terms of a deed of covenant
(the ‘‘Deed of Covenant’’) dated 13 October 2005, executed by each Issuer.




                                                  18
                                       APPLICABLE FINAL TERMS

      Set out below is the form of Final Terms which will be completed for each Tranche of Notes
issued under the Programme.
[Date]
                   [Sparebanken Midt-Norge/Sparebanken Nord-Norge/Sparebanken Rogaland]
                       Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes]
                                          under the A7,500,000,000
                                     Euro Medium Term Note Programme

                                     PART A – CONTRACTUAL TERMS

      Terms used herein shall be deemed to be defined as such for the purposes of the Conditions
set forth in the Prospectus dated 4 July 2007 which constitutes a base prospectus for the purposes of
the Prospectus Directive (Directive 2003/71/EC) (the ‘‘Prospectus Directive’’). This document
constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of the
Prospectus Directive and must be read in conjunction with the Prospectus. Full information on the
Issuer and the offer of the Notes is only available on the basis of the combination of these Final
Terms and the Prospectus. The Prospectus is available for viewing at, and copies may be obtained
from, the specified office of each of the Paying Agents. The Prospectus and (in the case of Notes
listed and admitted to trading on the regulated market of the Luxembourg Stock Exchange) the
applicable Final Terms will also be published on the website of the Luxembourg Stock Exchange
(www.bourse.lu).
     [The following alternative language applies if the first tranche of an issue which is being increased
was issued under a Prospectus with an earlier date.
      Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the
‘‘Conditions’’) set forth in the Prospectus dated [original date]. This document constitutes the Final
Terms of the Notes described herein for the purposes of Article 5.4 of the Prospectus Directive
(Directive 2003/71/EC) (the ‘‘Prospectus Directive’’) and must be read in conjunction with the
Prospectus dated [current date] which constitutes a base prospectus for the purposes of the Prospectus
Directive, save in respect of the Conditions which are extracted from the Prospectus dated [original
date] and are attached hereto. Full information on the Issuer and the offer of the Notes is only
available on the basis of the combination of these Final Terms and the Prospectuses dated [current
date] and [original date]. Copies of such Prospectuses are available for viewing at, and copies may be
obtained from, the specified office of each of the Paying Agents. The Prospectus and (in the case of
Notes listed and admitted to trading on the regulated market of the Luxembourg Stock Exchange)
the applicable Final Terms will also be published on the website of the Luxembourg Stock Exchange
(www.bourse.lu).
     [Include whichever of the following apply or specify as ‘‘Not Applicable’’ (N/A). Note that the
numbering should remain as set out below, even if ‘‘Not Applicable’’ is indicated for individual
paragraphs or sub-paragraphs. Italics denote directions for completing the Final Terms.]
      [When adding any other final terms or information consideration should be given as to whether
such terms or information constitute ‘‘significant new factors’’ and consequently trigger the need for a
supplement to the Prospectus under Article 16 of the Prospectus Directive.]
     [If the Notes have a maturity of less than one year from the date of their issue, the minimum
denomination may need to be £100,000 or its equivalent in any other currency.]

1.       Issuer:                                      [Sparebanken Midt-Norge/Sparebanken
                                                      Nord-Norge/Sparebanken Rogaland]
2.       (i)        Series Number:                    [    ]
         (ii)       Tranche Number:                   [     ]
                                                      (If fungible with an existing Series, details of that
                                                      Series, including the date on which the Notes become
                                                      fungible)

                                                     19
3.          Specified Currency or Currencies:                  [    ]
4.          Aggregate Nominal Amount:
            (i)        Series:                                [    ]
            (ii)       Tranche:                               [    ]
5.          Issue Price:                                      [     ] per cent. of the Aggregate Nominal Amount
                                                              [plus accrued interest from [insert date] (if applicable)
6.          (a)        Specified Denominations:                [    ]
                                                              [    ]
                                                              (Note – where multiple denominations above
                                                              [A50,000] or equivalent are being used the following
                                                              sample wording should be followed:
                                                              ‘‘[A50,000] and integral multiples of [A1,000] in excess
                                                              thereof up to and including [A99,000]. No Notes in
                                                              definitive form will be issued with a denomination
                                                              above [A99,000].’’)1
                                                              (N.B. If an issue of Notes is (i) NOT admitted to
                                                              trading on an European Economic Area exchange; and
                                                              (ii) only offered in the European Economic Area in
                                                              circumstances where a prospectus is not required to be
                                                              published under the Prospectus Directive the A50,000
                                                              minimum denomination is not required.)
            (b)        Calculation Amount                     (If only one Specified Denomination, insert the
                                                              Specified Denomination.
                                                              If more than one Specified Denomination, insert the
                                                              highest common factor. Note: There must be a
                                                              common factor in the case of two or more Specified
                                                              Denominations.)
7.          (i)        Issue Date:                            [    ]
            (ii)       Interest Commencement Date:            [specify/Issue Date/Not Applicable]
                                                              (N.B. An Interest Commencement Date will not be
                                                              relevant for certain Notes, for example Zero Coupon
                                                              Notes.)
8.          Maturity Date:                                    [Fixed rate – specify date/
                                                              Floating rate – Interest Payment Date falling in or
                                                              nearest to [specify month]]
9.          Interest Basis:                                   [[     ] per cent. Fixed Rate]
                                                              [[LIBOR/EURIBOR] +/– [          ] per cent. Floating
                                                              Rate]
                                                              [Zero Coupon]
                                                              [Index Linked Interest]
                                                              [Dual Currency Interest]
                                                              [specify other]
                                                              (further particulars specified below)
10.         Redemption/Payment Basis:                         [Redemption at par]
                                                              [Index Linked Redemption]
                                                              [Dual Currency Redemption]
                                                              [Partly Paid]
                                                              [Instalment]
                                                              [specify other]
                                                              (N.B. If the Final Redemption Amount is other than
1     Delete if notes being issued are in registered form.


                                                             20
                                                    100% of the nominal value the Notes will be derivative
                                                    securities for the purposes of the Prospectus Directive
                                                    and the requirements of Annex XII to the Prospectus
                                                    Directive Regulation will apply.)
11.   Change of Interest Basis or Redemption/       [Specify details of any provision for change of Notes
      Payment Basis:                                into another Interest Basis or Redemption/ Payment
                                                    Basis]
12.   Put/Call Options:                             [Investor Put]
                                                    [Issuer Call]
                                                    [(further particulars specified below)]
13.   (i)     Status of the Notes:                  [Unsubordinated/Dated Subordinated/Undated
                                                    Subordinated]
      (ii)    [Date [Board] approval for            [    ] [and [    ], respectively]]
              issuance of Notes obtained:           (N.B. Only relevant where Board (or similar)
                                                    authorisation is required for the particular tranche
                                                    of Notes)
14.   Method of distribution:                       [Syndicated/Non-syndicated]

PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE
15.   Fixed Rate Note Provisions                    [Applicable/Not Applicable]
                                                    (If not applicable, delete the remaining sub-paragraphs
                                                    of this paragraph)
      (i)     Rate(s) of Interest:                  [    ] per cent. per annum [payable [annually/semi-
                                                    annually/quarterly/other (specify)] in arrear]
                                                    (If payable other than annually, consider amending
                                                    Condition 5)
      (ii)    Interest Payment Date(s):             [[    ] in each year up to and including the Maturity
                                                    Date]/[specify other]
                                                    (N.B. This will need to be amended in the case of long
                                                    or short coupons)
      (iii)   Fixed Coupon Amount(s):               [    ] per Calculation Amount
              (Applicable to Notes in definitive
              form.)
      (iv)    Broken Amount(s):                     [    ] per Calculation Amount, payable on the
              (Applicable to Notes in definitive     Interest Payment Date falling [in/on] [ ]
              form.)
      (v)     Day Count Fraction:                   [30/360 or Actual/Actual (ICMA) or specify other]
      (vi)    [Determination Date(s):               [     ] in each year
                                                    (Insert regular interest payment dates, ignoring issue
                                                    date or maturity date in the case of a long or short first
                                                    or last coupon. N.B. This will need to be amended in
                                                    the case of regular interest payment dates which are
                                                    not of equal duration)
                                                    (NB: Only relevant where Day Count Fraction is
                                                    Actual/Actual (ICMA))]
      (vii)   Other terms relating to the           [None/Give details]
              method of calculating interest for
              Fixed Rate Notes:

16.   Floating Rate Note Provisions                 [Applicable/Not Applicable]
                                                    (If not applicable, delete the remaining sub-paragraphs
                                                    of this paragraph)

                                                   21
(i)      Specified Period(s)/Specified          [     ]
         Interest Payment Dates:
(ii)     First Interest Payment Date:         [     ]
(iii)    Business Day Convention:             [Floating Rate Convention/Following Business Day
                                              Convention/Modified Following Business Day
                                              Convention/Preceding Business Day Convention/
                                              [specify other]]
(iv)     Additional Business Centre(s):       [     ]
(v)      Manner in which the Rate of          [Screen Rate Determination/ISDA Determination/
         Interest and Interest Amount is      specify other]
         to be determined:
(vi)     Party responsible for calculating    [     ]
         the Rate of Interest and Interest
         Amount (if not the Agent):
(vii)    Screen Rate Determination:
         –   Reference Rate:                  [     ]
                                              (Either LIBOR, EURIBOR or other, although
                                              additional information is required if other –
                                              including fallback provisions in the Agency
                                              Agreement)
         –   Interest Determination           [     ]
             Date(s):                         (Second London business day prior to the start of
                                              each Interest Period if LIBOR (other than Sterling
                                              or euro LIBOR), first day of each Interest Period
                                              if Sterling LIBOR and the second day on which the
                                              TARGET System is open prior to the start of each
                                              Interest Period if EURIBOR or euro LIBOR)
         –   Relevant Screen Page:            [     ]
                                              (In the case of EURIBOR, if not Reuters Page
                                              EURIBOR01 ensure it is a page which shows a
                                              composite rate or amend the fallback provisions
                                              appropriately)
(viii)   ISDA Determination:
         –   Floating Rate Option:            [     ]
         –   Designated Maturity:             [     ]
         –   Reset Date:                      [     ]
(ix)     Margin(s):                           [+/–] [    ] per cent. per annum
(x)      Minimum Rate of Interest:            [     ] per cent. per annum
(xi)     Maximum Rate of Interest:            [     ] per cent. per annum
(xii)    Day Count Fraction:                  [Actual/365
                                              Actual/365 (Fixed)
                                              Actual/365 (Sterling)
                                              Actual/360
                                              30/360
                                              30E/360
                                              Other]
                                              (See Condition 5 for alternatives)
(xiii)   Fall back provisions, rounding       [     ]
         provisions and any other terms
         relating to the method of
         calculating interest on Floating

                                             22
               Rate Notes, if different from
               those set out in the Conditions:

17.   Zero Coupon Note Provisions                   [Applicable/Not Applicable]
                                                    (If not applicable, delete the remaining sub-paragraphs
                                                    of this paragraph)
      (i)      Accrual Yield:                       [    ] per cent. per annum
      (ii)     Reference Price:                     [    ]
      (iii)    Any other formula/basis of           [    ]
               determining amount payable:
      (iv)     Day Count Fraction in relation       [Conditions 7(e), (iii) and (j) apply/specify other]
               to Early Redemption Amounts
               and late payment:

18.   Index Linked Interest Note Provisions         [Applicable/Not Applicable]
                                                    (If not applicable, delete the remaining sub-paragraphs
                                                    of this paragraph)
                                                    (N.B. If the Final Redemption Amount is other than
                                                    100 per cent. of the nominal value the Notes will be
                                                    derivative securities for the purposes of the Prospectus
                                                    Directive and the requirements of Annex XII to the
                                                    Prospectus Directive Regulation will apply.)
      (i)      Index/Formula:                       [give or annex details]
      (ii)     Party responsible for calculating    [    ]
               the Rate of Interest and/or
               Interest Amount (if not the
               Agent):
      (iii)    Provisions for determining           [need to include a description of market disruption or
               coupon where calculation by          settlement disruption events and adjustment provisions]
               reference to Index and/or
               Formula is impossible or
               impracticable:
      (iv)     Specified Period(s)/Specified          [    ]
               Interest Payment Dates:
      (v)      Business Day Convention:             [Floating Rate Convention/Following Business Day
                                                    Convention/Modified Following Business Day
                                                    Convention/Preceding Business Day Convention/
                                                    specify other]
      (vi)     Additional Business Centre(s):       [    ]
      (vii)    Minimum Rate of Interest:            [    ] per cent. per annum
      (viii)   Maximum Rate of Interest:            [    ] per cent. per annum
      (ix)     Day Count Fraction:                  [    ]

19.   Dual Currency Note Provisions                 [Applicable/Not Applicable]
                                                    (If not applicable, delete the remaining sub-paragraphs
                                                    of this paragraph)
                                                    (N.B. If the Final Redemption Amount is other than
                                                    100 per cent. of the nominal value the Notes will be
                                                    derivative securities for the purposes of the Prospectus
                                                    Directive and the requirements of Annex XII to the
                                                    Prospectus Directive Regulation will apply.)

                                                   23
      (i)     Rate of Exchange/method of             [give or annex details]
              calculating Rate of Exchange:
      (ii)    Party, if any, responsible for         [    ]
              calculating the principal and/or
              interest due (if not the Agent):
      (iii)   Provisions applicable where            [need to include a description of market disruption or
              calculation by reference to Rate       settlement disruption events and adjustment provisions]
              of Exchange impossible or
              impracticable:
      (iv)    Person at whose option Specified        [    ]
              Currency(ies) is/are payable:

PROVISIONS RELATING TO REDEMPTION
20.   Issuer Call:                                   [Applicable/Not Applicable]
                                                     (If not applicable, delete the remaining sub-paragraphs
                                                     of this paragraph)
      (i)     Optional Redemption Date(s):           [    ]
      (ii)    Optional Redemption Amount of          [    ] per Calculation Amount
              each Note and method, if any, of
              calculation of such amount(s):
      (iii)   If redeemable in part:
              (a)     Minimum Redemption             [    ]
                      Amount:
              (b)     Maximum Redemption             [    ]
                      Amount:
      (iv)    Notice period (if other than as set    [     ]
              out in the Conditions):                (N.B. If setting notice periods which are different to
                                                     those provided in the Conditions, the Issuer is advised
                                                     to consider the practicalities of distribution of
                                                     information through intermediaries, for example,
                                                     clearing systems and custodians, as well as any other
                                                     notice requirements which may apply, for example, as
                                                     between the Issuer and the Agent)
21.   Investor Put:                                  [Applicable/Not Applicable]
                                                     (If not applicable, delete the remaining sub-paragraphs
                                                     of this paragraph)
      (i)     Optional Redemption Date(s):           [    ]
      (ii)    Optional Redemption Amount             [    ] per Calculation Amount
              and method, if any, of calculation
              of such amount(s):
      (iii)   Notice period (if other than as set    [     ]
              out in the Conditions):                (N.B. If setting notice periods which are different to
                                                     those provided in the Conditions, the Issuer is advised
                                                     to consider the practicalities of distribution of
                                                     information through intermediaries, for example,
                                                     clearing systems and custodians, as well as any other
                                                     notice requirements which may apply, for example, as
                                                     between the Issuer and the Agent)
22.   Final Redemption Amount:                       [    ] per Calculation Amount/specify other/see
                                                     Appendix]
                                                     (N.B. If the Final Redemption Amount is other than
                                                     100 per cent. of the nominal value the Notes will be

                                                    24
                                                                  derivative securities for the purposes of the Prospectus
                                                                  Directive and the requirements of Annex XII to the
                                                                  Prospectus Directive Regulation will apply.)
23.         Early Redemption Amount payable on                    [   ] per Calculation Amount/specify other/see
            redemption for                                        Appendix]
            taxation reasons or on event of default
            and/or the method of calculating the same
            (if required or if different from that set out
            in Condition7(e):

GENERAL PROVISIONS APPLICABLE TO THE NOTES

24.         Form of Notes:
            (a)    Form:                                          Temporary Global Note exchangeable for a
                                                                  Permanent Global Note which is exchangeable for
                                                                  Definitive Notes [on 60 days’ notice given at any
                                                                  time/only upon an Exchange Event]
                                                                  [Temporary Global Note exchangeable for Definitive
                                                                  Notes on and after the Exchange Date]
                                                                  [Permanent Global Note exchangeable for Definitive
                                                                  Notes [on 60 days’ notice given at any time/only
                                                                  upon an Exchange Event]]
                                                                  (Ensure that this is consistent with the wording in the
                                                                  ‘‘Form of the Notes’’ section in the Prospectus and the
                                                                  Notes themselves. N.B. The exchange upon notice/at
                                                                  any time options should not be expressed to be
                                                                  applicable if the Specified Denomination of the Notes
                                                                  in paragraph 6 includes language substantially to the
                                                                  following effect: ‘‘[d50,000] and integral multiples of
                                                                  [d1,000] in excess thereof up to and including
                                                                  [d99,000].’’)2
            (b)        New Global Note:                           [Yes][No]
25.         Additional Financial Centre(s) or                     [Not Applicable/give details]
            other special provisions relating                     (Note that this paragraph relates to the place of
            to Payment Dates:                                     payment and not Interest Period end dates to which
                                                                  sub paragraphs 16(iv) and 18(vi) relate)
26.         Talons for future Coupons or Receipts                 [Yes/No. If yes, give details]
            to be attached to Definitive Notes
            (and dates on which such Talons mature):
27.         Details relating to Partly Paid Notes;                [Not Applicable/give details. NB: a new form of
            amount of each payment comprising                     Temporary Global Note and/or Permanent Global
            the Issue Price and date on which each                Note may be required for Partly Paid issues]
            payment is to be made and consequences
            of failure to pay, including any right of
            the Issuer to forfeit the Notes and interest
            due on late payment:
28.         Details relating to Instalment Notes:
            (i)        Instalment Amount(s):                      [Not Applicable/give details]
            (ii)       Instalment Date(s):                        [Not Applicable/give details]
2     Delete if the notes being issued are in registered form.


                                                                 25
29.       Redenomination applicable:                        Redenomination [not] applicable
                                                            (if Redenomination is applicable, specify the
                                                            terms of the redenomination in an Annex to
                                                            the Final Terms)
30.       Other final terms:                                 [Not Applicable/give details]
                                                            [When adding any other final terms consideration
                                                            should be given as to whether such terms constitute
                                                            ‘‘significant new factors’’ and consequently trigger the
                                                            need for a supplement to the Prospectus under Article
                                                            16 of the Prospectus Directive.]
                                                            (Consider including a term providing for tax
                                                            certification if requested to enable interest to be paid
                                                            gross by issuers.)
DISTRIBUTION
31.       (i)         If syndicated, names of               [Not Applicable/give names]
                      Managers:
          (ii)        Stabilising Manager (if any):         [Not Applicable/give name]
32.       If non-syndicated, name of relevant               [    ]
          Dealer:
33.       U.S. Selling Restrictions:                        [Reg S Compliance Category: TEFRA D/TEFRA C/
                                                            TEFRA not applicable]
34.       Additional selling restrictions:                  [Not Applicable/give details]

PURPOSE OF FINAL TERMS
     These Final Terms comprise the details required for issue and admission to trading on the
Regulated Market of the Luxembourg Stock Exchange and listing on the Official List of the
Luxembourg Stock Exchange of the Notes described herein pursuant to the A7,500,000,000 Euro
Medium Term Note Programme of Sparebanken Midt-Norge, Sparebanken Nord-Norge and
Sparebanken Rogaland.

RESPONSIBILITY
      The Issuer accepts responsibility for the information contained in these Final Terms. [[Relevant
third party information for example in compliance with Annex XII of the Prospectus Directive
Regulation in relation to an index or its components] has been extracted from [specify source]. The
Issuer confirms that such information has been accurately reproduced and that, so far as it is aware
and is able to ascertain from information published by [specify source], no facts have been omitted
which would render the reproduced information inaccurate or misleading].
      Signed on behalf of the Issuer:
      By: ..............................................
      Duly authorised




                                                           26
                                PART B – OTHER INFORMATION


1.   LISTING AND ADMISSION TO TRADING
     (i)   Listing and admission to trading: [Application has been made by the Issuer (or on its
                                             behalf) for the Notes to be admitted to trading on
                                             [the Regulated Market of the Luxembourg Stock
                                             Exchange and to be listed on the Official List of the
                                             Luxembourg Stock Exchange] [specify relevant
                                             regulated market and, if relevant, to admission to an
                                             official list if not Luxembourg Stock Exchange] with
                                             effect from [       ].] [Application is expected to be
                                             made by the Issuer (or on its behalf) for the Notes to
                                             be admitted to trading on [the Regulated Market of
                                             the Luxembourg Stock Exchange and to be listed on
                                             the Official List of the Luxembourg Stock Exchange]
                                             [specify relevant regulated market and, if relevant, to
                                             admission to an official list if not Luxembourg Stock
                                             Exchange] with effect from [         ].] [Not Applicable.]
     (ii)      Estimate of total expenses related    [    ]
               to admission to trading:

2.   RATINGS
     Ratings:                                        The Notes to be issued have been rated:
                                                     [S & P:      [     ]]
                                                     [Moody’s:    [     ]]
                                                     [Fitch]:     [     ]]
                                                     [[Other]:    [     ]]
                                                     (The above disclosure should reflect the rating
                                                     allocated to Notes of the type being issued under the
                                                     Programme generally or, where the issue has been
                                                     specifically rated, that rating.)

3.   INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE ISSUE
     [Save for any fees payable to the [Managers/Dealers], so far as the Issuer is aware, no person
     involved in the issue of the Notes has an interest material to the offer. – Amend as appropriate if
     there are other interests]
     [(When adding any other description, consideration should be given as to whether such matters
     described constitute ‘‘significant new factors’’ and consequently trigger the need for a supplement to
     the Offering Circular under Article 16 of the Prospectus Directive.)]

4.   REASONS FOR THE OFFER, ESTIMATED NET PROCEEDS AND TOTAL EXPENSES
     [(i) Reasons for the offer    [   ]
     [(ii)]    Estimated net proceeds:               [    ]
     [(iii)]   Estimated total expenses:             [     ]
                                                     (N.B.: If the Notes are derivative securities to which
                                                     Annex XII of the Prospectus Directive Regulation
                                                     applies (i) above is required where the reasons for the
                                                     offer are different from making profit and/or hedging
                                                     certain risks regardless of the minimum denomination
                                                     of the securities and where this is the case disclosure of
                                                     net proceeds and total expenses at (ii) and (iii) above
                                                     are also required.)


                                                    27
5.   YIELD (Fixed Rate Notes only)
     Indication of yield:                           [    ]
                                                    The yield is calculated at the Issue Date on the basis
                                                    of the Issue Price. It is not an indication of future
                                                    yield.

6.   PERFORMANCE OF INDEX/FORMULA, EXPLANATION OF EFFECT ON VALUE OF
     INVESTMENT AND ASSOCIATED RISKS AND OTHER INFORMATION CONCERNING
     THE UNDERLYING (Index-Linked Notes only)
     [Need to include details of where past and future performance and volatility of the index/formula can
     be obtained.]
     [Need to include a description of any market disruption or settlement disruption events that affect the
     underlying.]
     [Need to include adjustment rules in relation to events covering the underlying.]
     [Where the underlying is a security the name of the issuer of the security and its ISIN or other such
     security identification code.]
     [Where the underlying is an index need to include the name of the index and a description if composed
     by the Issuer and if the index is not composed by the Issuer need to include details of where the
     information about the index can be obtained. Where the underlying is not an index need to include
     equivalent information.]
     [Where the underlying is an interest rate a description of the interest rate.]
     [Where the underlying is a basket of underlyings disclosure of the relevant weightings of each
     underlying in the basket.]
     [(When completing this paragraph, consideration should be given as to whether such matters described
     constitute ‘‘significant new factors’’ and consequently trigger the need for a supplement to the
     Offering Circular under Article 16 of the Prospectus Directive.)]
     The Issuer [intends to provide post-issuance information [specify what information will be
     reported and where it can be obtained]] [does not intend to provide post-issuance information.]

7.   PERFORMANCE OF RATE[S] OF EXCHANGE AND EXPLANATION OF EFFECT ON
     VALUE OF INVESTMENT (Dual Currency Notes only)
     [Need to include details of where past and future performance and volatility of the relevant rates can
     be obtained.]
     (N.B. The above applies if the Notes are derivative securities to which Annex XII of the Prospectus
     Directive Regulation applied.)
     [(When completing this paragraph, consideration should be given as to whether such matters described
     constitute ‘‘significant new factors’’ and consequently trigger the need for a supplement to the
     Offering Circular under Article 16 of the Prospectus Directive.)]

8.   OPERATIONAL INFORMATION
     (i)  ISIN Code:                                [    ]
     (ii)    Common Code:                           [    ]
     (iii)   Any clearing system(s) other than      [Not Applicable/give name(s) and number(s)]
             Euroclear Bank S.A./N.V. and
                                       ´ ´
             Clearstream Banking, societe
             anonyme and the relevant
             identification number(s):
     (iv)    Delivery:                              Delivery [against/free of] payment
     (v)     Names and addresses of initial         [    ]
             Paying Agent(s):
     (vi)    Names and addresses of                 [    ]

                                                  28
         additional Paying Agent(s) (if
         any):
[(vii)   Intended to be held in a manner    [Yes] [No]
         which would allow Eurosystem
         eligibility:
                                            [Note that the designation ‘‘yes’’ simply means that
                                            the Notes are intended upon issue to be deposited
                                            with one of the ICSDs as common safekeeper and
                                            does not necessarily mean that the Notes will be
                                            recognised as eligible collateral for Eurosystem
                                            monetary policy and intra-day credit operations by
                                            the Eurosystem either upon issue or at any or all
                                            times during their life. Such recognition will depend
                                            upon satisfaction of the Eurosystem eligibility
                                            criteria.] [include this text if ‘‘yes’’ selected in which
                                            case the Notes must be issued in NGN form]




                                           29
                             TERMS AND CONDITIONS OF THE NOTES

      The following are the Terms and Conditions of the Notes which will be incorporated by reference
into each Global Note (as defined below) and each Definitive Note, in the latter case only if permitted
by the relevant stock exchange (if any) and agreed by the relevant Issuer and the relevant Dealer at the
time of issue but, if not so permitted and agreed, such definitive Note will have endorsed thereon or
attached thereto such Terms and Conditions. The applicable Final Terms in relation to any Tranche of
Notes may specify other terms and conditions which shall, to the extent so specified or to the extent
inconsistent with the following Terms and Conditions, replace or modify the following Terms and
Conditions for the purpose of such Notes. The applicable Final Terms (or the relevant provisions
thereof) will be endorsed upon, or attached to, each Global Note and definitive Note. Reference should
be made to ‘‘Form of the Notes’’ for a description of the content of Final Terms which will specify
which of such terms are to apply in relation to the relevant Notes.
      This Note is one of a Series (as defined below) of Notes issued pursuant to the Agency
Agreement (as amended and restated) (as defined below). References to the ‘‘Issuer’’ shall be
references to the party specified as such in the applicable Final Terms (as defined below).
     References herein to the ‘‘Notes’’ shall be references to the Notes of this Series and shall mean:
     (i)    in relation to any Notes represented by a global Note (a ‘‘Global Note’’), units of each Specified
            Denomination in the Specified Currency;
     (ii)   any Global Note; and
     (iii) any definitive Notes issued in exchange for a Global Note.
      The Notes, the Receipts (as defined below) and the Coupons (as defined below) have the benefit
of an Agency Agreement (as amended and restated) (such Agency Agreement, as amended and/or
supplemented and/or restated from time to time, the ‘‘Agency Agreement’’) dated 4 July 2007, and
made between, inter alia, Sparebanken Midt-Norge, Sparebanken Nord-Norge, Sparebanken
Rogaland, The Bank of New York as issuing and principal paying agent and agent bank (the
‘‘Agent’’, which expression shall include any successor agent) and the other paying agents named
therein (together with the Agent, the ‘‘Paying Agents’’, which expression shall include any additional
or successor paying agents).
      Interest bearing definitive Notes have interest coupons (‘‘Coupons’’) and, if indicated in the
applicable Final Terms, talons for further Coupons (‘‘Talons’’) attached on issue. Any reference
herein to Coupons or coupons shall, unless the context otherwise requires, be deemed to include a
reference to Talons or talons. Definitive Notes repayable in instalments have receipts (‘‘Receipts’’) for
the payment of the instalments of principal (other than the final instalment) attached on issue. Global
Notes do not have Receipts, Coupons or Talons attached on issue.
      The Final Terms for this Note (or the relevant provisions thereof) are set out in Part A of the
Final Terms attached to or endorsed on this Note which supplement these Terms and Conditions (the
‘‘Conditions’’) and may specify other terms and conditions which shall, to the extent so specified or
to the extent inconsistent with these Terms and Conditions, replace or modify these Terms and
Conditions for the purposes of this Note. References to the ‘‘applicable Final Terms’’ are to Part A
of the Final Terms (or the relevant provisions thereof) attached to or endorsed on this Note.
      Any reference to ‘‘Noteholders’’ or ‘‘holders’’ in relation to any Notes shall mean the holders of
the Notes and shall, in relation to any Notes represented by a global Note, be construed as provided
below. Any reference herein to ‘‘Receiptholders’’ shall mean the holders of the Receipts and any
reference herein to ‘‘Couponholders’’ shall mean the holders of the Coupons and shall, unless the
context otherwise requires, include the holders of the Talons.
       As used herein, ‘‘Tranche’’ means Notes which are identical in all respects (including as to
listing and admission to trading) and ‘‘Series’’ means a Tranche of Notes together with any further
Tranche or Tranches of Notes which are (i) expressed to be consolidated and form a single series and
(ii) identical in all respects (including as to listing and admission to trading) except for their respective
Issue Dates, Interest Commencement Dates and/or Issue Prices.

                                                     30
      The Noteholders, the Receiptholders and the Couponholders are entitled to the benefit of the
Deed of Covenant (such Deed of Covenant, as amended and/or supplemented and/or restated from
time to time, the ‘‘Deed of Covenant’’) dated 13 October 2005 and made by Sparebanken Midt-
Norge, Sparebanken Nord-Norge and Sparebanken Rogaland. The original of the Deed of Covenant
is held by the common depositary for Euroclear (as defined below) and Clearstream, Luxembourg (as
defined below).
      Copies of the Agency Agreement and the Deed of Covenant are available for inspection during
normal business hours at the specified office of each of the Paying Agents. Copies of the applicable
Final Terms are available for viewing at the specified registered office of each of the Issuers and the
specified offices of each of the Paying Agents save that, if this Note is neither admitted to trading on
a regulated market in the European Economic Area nor offered in the European Economic Area in
circumstances where a prospectus is required to be published under the Prospectus Directive, the
applicable Final Terms will only be obtainable by a Noteholder holding one or more such Notes and
such Noteholder must produce evidence satisfactory to the Issuer and the relevant Paying Agent as to
its holding of such Notes and identity. The Noteholders, the Receiptholders and the Couponholders
are deemed to have notice of, and are entitled to the benefit of, all the provisions of the Agency
Agreement, the Deed of Covenant and the applicable Final Terms which are applicable to them. The
statements in these Terms and Conditions include summaries of, and are subject to, the detailed
provisions of the Agency Agreement.
      Words and expressions defined in the Agency Agreement or used in the applicable Final Terms
shall have the same meanings where used in these Terms and Conditions unless the context otherwise
requires or unless otherwise stated and provided that, in the event of inconsistency between the
Agency Agreement and the applicable Final Terms, the applicable Final Terms will prevail.

1.   FORM, DENOMINATION AND TITLE
     The Notes are in bearer form and, in the case of definitive Notes, serially numbered, in the
Specified Currency and the Specified Denomination(s). Notes of one Specified Denomination may not
be exchanged for Notes of another Specified Denomination.
     This Note may be a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note, an Index
Linked Interest Note, a Dual Currency Interest Note or a combination of any of the foregoing,
depending upon the Interest Basis shown in the applicable Final Terms.
    This Note may be an Index Linked Redemption Note, an Instalment Note, a Dual Currency
Redemption Note, a Partly Paid Note or a combination of any of the foregoing, depending on the
Redemption/Payment Basis shown in the applicable Final Terms.
    This Note may also be an Unsubordinated Note, a Dated Subordinated Note or an Undated
Subordinated Note, as indicated in the applicable Final Terms.
      Definitive Notes are issued with Coupons attached, unless they are Zero Coupon Notes in which
case references to Coupons and Couponholders in these Terms and Conditions are not applicable.
      Subject as set out below, title to the Notes, Receipts and Coupons will pass by delivery. The
Issuer and the Paying Agents will (except as otherwise required by law) deem and treat the bearer of
any Note, Receipt or Coupon as the absolute owner thereof (whether or not overdue and
notwithstanding any notice of ownership or writing thereon or notice of any previous loss or theft
thereof) for all purposes but, in the case of any Global Note, without prejudice to the provisions set
out in the next succeeding paragraph.
      For so long as any of the Notes is represented by a Global Note held on behalf of Euroclear
                                                                       ´ ´
Bank S.A./N.V. (‘‘Euroclear’’) and/or Clearstream Banking, societe anonyme (‘‘Clearstream,
Luxembourg’’), each person (other than Euroclear or Clearstream, Luxembourg) who is for the time
being shown in the records of Euroclear or of Clearstream, Luxembourg as the holder of a particular
nominal amount of such Notes (in which regard any certificate or other document issued by
Euroclear or Clearstream, Luxembourg as to the nominal amount of such Notes standing to the
account of any person shall be conclusive and binding for all purposes save in the case of manifest
error) shall be treated by the Issuer and the Paying Agents as the holder of such nominal amount of
such Notes for all purposes other than with respect to the payment of principal or interest on such

                                                 31
nominal amount of such Notes, for which purpose the bearer of the relevant Global Note shall be
treated by the Issuer and any Paying Agent as the holder of such nominal amount of such Notes in
accordance with and subject to the terms of the relevant Global Note and the expressions
‘‘Noteholder’’ and ‘‘holder of Notes’’ and related expressions shall be construed accordingly. Notes
which are represented by a Global Note will be transferable only in accordance with the rules and
procedures for the time being of Euroclear and Clearstream, Luxembourg, as the case may be.
      References to Euroclear and/or Clearstream, Luxembourg shall, whenever the context so permits,
be deemed to include a reference to any additional or alternative clearing system specified in the
applicable Final Terms.

2.  STATUS OF THE UNSUBORDINATED NOTES
    This Condition applies only to Unsubordinated Notes and references to ‘‘Notes’’ in this
Condition shall be construed accordingly.
      The Notes and the relative Receipts and Coupons are direct, unconditional, unsubordinated and
unsecured obligations of the Issuer and rank pari passu among themselves and (save for certain debts
required to be preferred by law) equally with all other unsecured obligations (including deposits)
(other than subordinated obligations, if any) of the Issuer, present and future, from time to time
outstanding. So long as any of the Notes remains outstanding (as defined in the Agency Agreement),
the Issuer undertakes to ensure that, subject to Condition 4, the obligations of the Issuer under the
Notes rank and will rank pari passu with all other unsecured and unsubordinated obligations
(including deposits) of the Issuer and with all its unsecured and unsubordinated obligations under
guarantees of obligations of third parties, in each case except for any obligations preferred by
mandatory provisions of applicable law.

3.   STATUS OF THE DATED AND UNDATED SUBORDINATED NOTES
(a) This Condition 3(a) applies only to Dated Subordinated Notes and references to ‘‘Notes
‘‘Coupons’’, ‘‘Noteholders’’ and ‘‘Couponholders’’ in this Condition 3(a) shall be construed
accordingly.
(i) The Notes and the relative Receipts and Coupons constitute unsecured subordinated obligations
of the Issuer, conditional as described in Condition 3(c), and rank pari passu without any preference
among themselves and at least equally with all other subordinated obligations of the Issuer (whether
actual or contingent) having a fixed maturity from time to time outstanding. The Notes and the
Coupons shall, in the event of a liquidation, dissolution, administration or other winding-up of the
Issuer by way of public administration, be subordinated in right of payment only to the claims
against the Issuer of all unsubordinated creditors of the Issuer and to claims preferred under
Norwegian law generally.
(ii) The Issuer shall not, without the prior approval of an Extraordinary Resolution (as defined in
the Agency Agreement) of the Noteholders, incur, create, assume, grant or permit to be outstanding
any subordinated indebtedness (whether actual or contingent) having a fixed maturity unless such
indebtedness is subordinated, subject to applicable law, in the event of liquidation, dissolution,
administration or other winding-up of the Issuer by way of public administration in right of payment
so as to rank pari passu with or junior to the claims of the Noteholders and the Couponholders.
(iii) The Issuer shall not, without the prior approval of an Extraordinary Resolution of the
Noteholders, incur, create, assume, grant or permit to be outstanding any Undated Subordinated
Indebtedness (whether actual or contingent) unless such Undated Subordinated Indebtedness is
subordinated, subject to applicable law, in the event of liquidation, dissolution, administration or
other winding-up of the Issuer by way of public administration in right of payment so as to rank
junior to the claims of the Noteholders and the Couponholders.
(b) This Condition 3(b) applies only to Undated Subordinated Notes and references to ‘‘Notes’’,
‘‘Coupons’’, ‘‘Noteholders’’ and ‘‘Couponholders’’ in this Condition 3(b) shall be construed
accordingly.

                                                 32
(i)   General
      The Notes and the relative Coupons constitute, in the case of the Notes, undated and, in the
case of the Notes and the Coupons, unsecured, subordinated obligations of the Issuer, conditional as
described in Condition 3(c), and rank pari passu without any preference among themselves and rank
at least equally with Other Pari Passu Claims from time to time outstanding. The right to payment in
respect of the Notes and the Coupons is subordinated to the claims of Senior Creditors and payments
of principal and interest in respect of the Notes and the Coupons are conditional upon the Issuer
being Solvent at the time of payment by the Issuer and no principal or interest shall be payable in
respect of the Notes or the Coupons except to the extent that the Issuer could make such payment in
whole or in part, rateably with the payments in respect of Other Pari Passu Claims, and still be
Solvent immediately thereafter. Payment of interest on the Notes is also subject to the provisions of
Condition 5(f).

(ii) Solvency
      The Issuer shall be ‘‘Solvent’’ (any determination of such status being a determination of
‘‘Solvency’’) if:
      (A) it is able to pay its debts as they fall due; and
      (B)   its Assets exceed its Liabilities (other than its Liabilities to Persons who are not Senior
            Creditors).
      A report as to the Solvency of the Issuer by two (2) members of the board of directors of the
Issuer or (if the Issuer is in liquidation, dissolution, administration or other winding-up in the
Kingdom of Norway) its board of administration shall in the absence of proven error be treated and
accepted by the Issuer and the Noteholders and Couponholders as correct and sufficient evidence
thereof.

(iii) No Set-off
      No Noteholder or Couponholder that shall in any respect be indebted to the Issuer shall be
entitled to exercise any right of set-off or counterclaim against moneys owed to the Issuer in respect
of such indebtedness.

(iv) Liquidation, Dissolution, Administration or Winding-Up
      If at any time the Issuer is liquidated, dissolved, put into administration or otherwise wound-up,
there shall be payable on the Notes and the Coupons (in lieu of any other payment, but subject as
provided in this Condition 3) such amounts, if any, as would have been payable to the Noteholders
and the Couponholders if, on the day prior to the commencement of the liquidation, dissolution,
administration or winding-up and thereafter, they were the holders of securities having a preferential
right to a return of assets in the liquidation, dissolution, administration or winding-up, as the case
may be, over the holders of all primary capital certificates for the time being in the capital of the
Issuer, on the assumption that such securities were entitled to receive on a return of capital in such
liquidation, dissolution, administration or winding-up, in respect of the principal amount of the Notes
an amount equal to the principal amount of the Notes and, in the case of interest on the Notes, an
amount equal to interest accrued to but excluding the date of repayment and any Arrears of Interest
(as defined in Condition 5(f)(i)) and any Additional Interest Amount (as defined in Condition 5(f)(i)),
and where such amounts ranked at least pari passu with any other Undated Subordinated
Indebtedness.

(v) Limitation on other Undated Subordinated Indebtedness
     The Issuer shall not, without the prior approval of an Extraordinary Resolution of the
Noteholders, incur, create, assume, grant or permit to be outstanding any Undated Subordinated
Indebtedness (whether actual or contingent) unless such Undated Subordinated Indebtedness is
subordinated in right of payment, subject to applicable law, in the event of liquidation, dissolution,
administration or other winding-up of the Issuer by way of public administration so as to rank pari
passu with or junior to the claims of the Noteholders and the Couponholders.

                                                     33
(vi) Definitions
     In these Terms and Conditions, the following terms shall bear the following meanings:
     ‘‘Assets’’ means, at any time, the non-consolidated total assets of the Issuer, as shown by the
then latest published audited balance sheet of the Issuer, but adjusted for contingencies and for
subsequent events, all valued in such manner as the members of the board of directors of the Issuer
or the board of administration of the Issuer (as the case may be) may determine.
      ‘‘Capital Adequacy Requirements’’ has the meaning specified in the definition of Optional
Interest Payment Date,
      ‘‘Commission’’ means the Banking, Insurance and Securities Commission of the Kingdom of
Norway or such other agency of the Kingdom of Norway as assumes or performs the functions as at
the Issue Date performed by such Commission.
      ‘‘Governmental Authority’’ means the government of any jurisdiction in which the Issuer
conducts all or any part of its business (including, without limitation, the government of the
Kingdom of Norway and all other countries and all political subdivisions thereof), or that asserts any
jurisdiction over the conduct of the affairs, or the Property, of the Issuer and any entity exercising
executive, legislative, judicial, regulatory or administrative functions is of, or pertaining to, any such
government (including, without limitation, the Commission).
     ‘‘Liabilities’’ means, at any time, the non-consolidated total liabilities of the Issuer, as shown by
the then latest published audited balance sheet of the Issuer, but adjusted for contingencies and for
subsequent events, all valued in such manner as the members of the board of directors of the Issuer
or the board of administration of the Issuer (as the case may be) may determine.
      ‘‘Optional Interest Payment Date’’ means any Interest Payment Date following the date as of
which the Issuer’s most recent quarterly report to the Commission disclosed that it was in breach (a
‘‘Breach’’) of the capital adequacy requirements of the Norwegian Ministry of Finance (or of such
other Governmental Authority as shall at the time be the promulgator of such requirements)
applicable to the Issuer (the ‘‘Capital Adequacy Requirements’’), provided that such Interest Payment
Date shall not be an Optional Interest Payment Date if, since the date of publication of such report,
the Issuer has at any time been in compliance with the Capital Adequacy Requirements and will after
such payment still be in such compliance and, provided further, that in the event that such report
does not disclose a Breach, the relevant Interest Payment Date shall still be deemed to be an
Optional Interest Payment Date if immediately after such payment there would be a Breach.
     ‘‘Other Pari Passu Claims’’ means, in relation to an issue of Undated Subordinated Notes,
claims of creditors of the Issuer that are subordinated so as to rank pari passu with the claims of the
Noteholders and the Couponholders.
     ‘‘Person’’ means an individual, a partnership, a corporation, a trust, an unincorporated
organisation or a government or agency or political subdivision thereof.
     ‘‘Property’’ means any interest in any kind of property or asset, whether real, personal, mixed,
tangible, intangible or of any other type.
      ‘‘Senior Creditors’’ means, in relation to an issue of Undated Subordinated Notes, creditors of
the Issuer:
     (a)   who are depositors or other unsubordinated creditors of the Issuer; or
     (b)   whose claims are, or are expressed to be, subordinated (whether only in the event of the
           liquidation, dissolution, administration or other winding-up of the Issuer or otherwise) to the
           claims of depositors and other unsubordinated creditors of the Issuer but have a fixed maturity,
           except those whose claims rank, or are expressed to rank, pari passu with or junior to the claims
           of the Noteholders and the Couponholders.
     ‘‘Undated Subordinated Indebtedness’’ means any indebtedness of the Issuer:
     (a)   that by its terms or otherwise is in any respect junior or subordinate in right of payment
           (whether upon liquidation, dissolution, administration or other winding-up of the Issuer or
           otherwise) to any other indebtedness of the Issuer; and

                                                    34
     (b)   the principal of which has no fixed maturity.
     ‘‘Violation’’ means the occurrence and continuation of the Issuer failing to comply, or not being
in compliance, with any provision of the Notes.

(c) Loss Absorption
     This Condition 3(c) applies both to Dated Subordinated Notes and to Undated Subordinated
Notes.
      Under Norwegian legislation, if the Issuer’s most recent audited accounts reveal that its net
assets are less than 25 per cent. of its primary capital certificate capital and savings bank reserve, the
Committee of Representatives of the Issuer can or the relevant authorities can if the Committee of
Representatives of the Issuer does not do so: first, cancel primary capital certificate capital and
savings bank reserve to compensate for the shortfall and secondly, if any remaining shortfall exceeds
a substantial part (as determined by the Committee of Representatives of the Issuer or by the
relevant Norwegian authorities) of the Issuer’s subordinated loan capital, cancel, in whole or in part,
such subordinated loan capital (which would include principal in respect of all Dated Subordinated
Notes and Undated Subordinated Notes).
     For the benefit of holders of Dated Subordinated Notes, the Issuer undertakes that it will
procure that the Committee of Representatives of the Issuer cancel principal in respect of all Undated
Subordinated Indebtedness before cancelling any principal in respect of any Dated Subordinated
Notes.
      The Issuer shall give not more than 30 nor less than 5 Business Days (as defined in Condition
5(b) (i)) prior notice to the Agent and/or the Registrar, as the case may be, and to the Noteholders
in accordance with Condition 13 of any cancellation of principal in respect of any Dated
Subordinated Notes and/or any Undated Subordinated Notes pursuant to this Condition 3(c).
      To the extent that part only of the outstanding principal amount of any Dated Subordinated
Notes or Undated Subordinated Notes has been cancelled as provided above, interest will continue to
accrue in accordance with the terms hereof on the then outstanding principal amount of such Dated
Subordinated Notes or Undated Subordinated Notes, as the case may be, and on any Arrears of
Interest (including any Additional Interest Amounts).
      It should be noted that the undertaking of the Issuer to cancel principal in respect of all Undated
Subordinated Indebtedness before any principal in respect of any Dated Subordinated Notes does not
bind Norwegian authorities. Under Norwegian law, Norwegian authorities may cancel the principal in
respect of any Dated Subordinated Notes and any Undated Subordinated Indebtedness in such order as
they decide.
      Whilst Norwegian legislation does not specifically grant the right to cancel interest relating to
subordinated loan capital, there is a possibility that the Norwegian courts would permit Norwegian
authorities, or the Committee of Representatives of the Issuer, to cancel accrued but unpaid interest in
respect of subordinated loan capital (which would include interest in respect of both Dated Subordinated
Notes and Undated Subordinated Notes). In the event that cancellation of interest in respect of
subordinated loan capital is permitted by the Norwegian courts, the Issuer undertakes, for the benefit of
holders of Dated Subordinated Notes, that it will procure that the Committee of Representatives of the
Issuer cancel all interest in respect of all Undated Subordinated Indebtedness before cancelling any
interest in respect of any Dated Subordinated Notes. The provisions of the preceding paragraph apply,
mutatis mutandis, to the cancellation of interest.

4.   NEGATIVE PLEDGE
     This Condition 4 is applicable only in relation to Unsubordinated Notes.
      So long as any Note remains outstanding (as defined in the Agency Agreement), the Issuer shall
not create or permit to subsist any Security Interest upon the whole or any part of its present or
future undertaking, assets or revenues to secure any Relevant Indebtedness or Guarantee of Relevant
Indebtedness without (a) at the same time or prior thereto securing the Notes equally and rateably
therewith or (b) providing such other security for the Notes as may be approved by an Extraordinary
Resolution (as defined in the Agency Agreement) of the Noteholders.

                                                   35
     In these Conditions:

     ‘‘Guarantee’’ means, in relation to any indebtedness for money borrowed or raised of any Person, any
     obligation of another Person to pay such indebtedness for money borrowed or raised;

     ‘‘Indebtedness’’ means any indebtedness of any Person for money borrowed or raised;

     ‘‘Person’’ means any individual, company, corporation, firm, partnership, joint venture, association,
     organisation, state or agency of a state or other entity, whether or not having separate legal
     personality;

     ‘‘Relevant Indebtedness’’ means any Indebtedness which is in the form of or represented by any bond,
     note, debenture, debenture stock, loan stock, certificate or other instrument which is, or is capable of
     being listed, quoted or traded on any stock exchange or in any securities market (including without
     limitation, any over-the-counter market); and

     ‘‘Security Interest’’ means any mortgage, charge, pledge, lien or other security interest including,
     without limitation, anything analogous to any of the foregoing under the laws of any jurisdiction.


5.   INTEREST

(a) Interest on Fixed Rate Notes
      Each Fixed Rate Note bears interest from (and including) the Interest Commencement Date at
the rate(s) per annum equal to the Rate(s) of Interest. Interest will be payable in arrear on the
Interest Payment Date(s) in each year up to (and including) the Maturity Date.

     If the Notes are in definitive form, except as provided in the applicable Final Terms, the
amount of interest payable on each Interest Payment Date in respect of the Fixed Interest Period
ending on (but excluding) such date will amount to the Fixed Coupon Amount. Payments of interest
on any Interest Payment Date will, if so specified in the applicable Final Terms, amount to the
Broken Amount so specified.

      As used in these Terms and Conditions, ‘‘Fixed Interest Period’’ means the period from (and
including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next
(or first) Interest Payment Date.

      Where a Fixed Coupon Amount or Broken Amount is specified in the applicable Final Terms,
interest shall be calculated in respect of any period by applying the Rate of Interest to:

     (A) in the case of Fixed Rate Notes which are represented by a Global Note, the aggregate
         outstanding nominal amount of the Fixed Rate Notes represented by such Global Note (or, if
         they are Partly Paid Notes, the aggregate amount paid up); or

     (B)   in the case of Fixed Rate Notes in definitive form, the Calculation Amount;

     and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding
the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-
unit being rounded upwards or otherwise in accordance with applicable market convention. Where
the Specified Denomination of a Fixed Rate Note in definitive form comprises more than one
Calculation Amount, the amount of interest payable in respect of such Fixed Rate Note shall be the
aggregate of the amounts (determined in the manner provided above) for each Calculation Amount
comprising the Specified Denomination without any further rounding.

     In these Terms and Conditions:

     ‘‘Day Count Fraction’’ means, in respect of the calculation of an amount of interest in accordance
     with this Condition 5(a):

     (i)   if ‘‘Actual/Actual (ICMA)’’ is specified in the applicable Final Terms:

                                                    36
             (a)   in the case of Notes where the number of days in the relevant period from (and including)
                   the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to
                   (but excluding) the relevant payment date (the ‘‘Accrual Period’’) is equal to or shorter
                   than the Determination Period during which the Accrual Period ends, the number of days
                   in such Accrual Period divided by the product of (1) the number of days in such
                   Determination Period and (2) the number of Determination Dates (as specified in the
                   applicable Final Terms) that would occur in one calendar year; or
             (b)   in the case of Notes where the Accrual Period is longer than the Determination Period
                   during which the Accrual Period ends, the sum of:
                   (1)   the number of days in such Accrual Period falling in the Determination Period in
                         which the Accrual Period begins divided by the product of (x) the number of days in
                         such Determination Period and (y) the number of Determination Dates (as specified
                         in the applicable Final Terms) that would occur in one calendar year; and
                   (2)   the number of days in such Accrual Period falling in the next Determination Period
                         divided by the product of (x) the number of days in such Determination Period and
                         (y) the number of Determination Dates that would occur in one calendar year; and
      (ii)   if ‘‘30/360’’ is specified in the applicable Final Terms, the number of days in the period from
             (and including) the most recent Interest Payment Date (or, if none, the Interest Commencement
             Date) to (but excluding) the relevant payment date (such number of days being calculated on
             the basis of a year of 360 days with 12 30-day months) divided by 360.
     ‘‘Determination Period’’ means each period from (and including) a Determination Date to but
excluding the next Determination Date (including, where either the Interest Commencement Date or
the final Interest Payment Date is not a Determination Date, the period commencing on the first
Determination Date prior to, and ending on the first Determination Date falling after, such date);
and
     ‘‘sub-unit’’ means, with respect to any currency other than euro, the lowest amount of such
currency that is available as legal tender in the country of such currency and, with respect to euro,
means one cent.

(b) Interest on Floating Rate Notes and Index Linked Interest Notes
(i)   Interest Payment Dates
      Each Floating Rate Note and Index Linked Interest Note bears interest from (and including)
the Interest Commencement Date and such interest will be payable in arrear on either:
      (A) the Specified Interest Payment Date(s) in each year specified in the applicable Final Terms; or
      (B)    if no Specified Interest Payment Date(s) is/are specified in the applicable Final Terms, each date
             (each such date, together with each Specified Interest Payment Date, an ‘‘Interest Payment
             Date’’) which falls the number of months or other period specified as the Specified Period in the
             applicable Final Terms after the preceding Interest Payment Date or, in the case of the first
             Interest Payment Date, after the Interest Commencement Date.
      Such interest will be payable in respect of each Interest Period (which expression shall, in these
Terms and Conditions, mean the period from (and including) an Interest Payment Date (or the
Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date).
      If a Business Day Convention is specified in the applicable Final Terms and (x) if there is no
numerically corresponding day on the calendar month in which an Interest Payment Date should
occur or (y) if any Interest Payment Date would otherwise fall on a day which is not a Business Day,
then, if the Business Day Convention specified is:
      (1)    in any case where Specified Periods are specified in accordance with Condition 5(b)(i)(B) above,
             the Floating Rate Convention, such Interest Payment Date (i) in the case of (x) above, shall be the
             last day that is a Business Day in the relevant month and the provisions of (B) below shall apply
             mutatis mutandis or (ii) in the case of (y) above, shall be postponed to the next day which is a

                                                       37
           Business Day unless it would thereby fall into the next calendar month, in which event (A) such
           Interest Payment Date shall be brought forward to the immediately preceding Business Day and
           (B) each subsequent Interest Payment Date shall be the last Business Day in the month which falls
           the Specified Period after the preceding applicable Interest Payment Date occurred; or
     (2)   the Following Business Day Convention, such Interest Payment Date shall be postponed to the
           next day which is a Business Day; or
     (3)   the Modified Following Business Day Convention, such Interest Payment Date shall be
           postponed to the next day which is a Business Day unless it would thereby fall into the next
           calendar month, in which event such Interest Payment Date shall be brought forward to the
           immediately preceding Business Day; or
     (4)   the Preceding Business Day Convention, such Interest Payment Date shall be brought forward
           to the immediately preceding Business Day.
     In these Terms and Conditions, ‘‘Business Day’’ means a day which is both:
     (A) a day on which commercial banks and foreign exchange markets settle payments and are open
         for general business (including dealing in foreign exchange and foreign currency deposits) in
         London and any Additional Business Centre specified in the applicable Final Terms; and
     (B)   either (1) in relation to any sum payable in a Specified Currency other than euro, a day on which
           commercial banks and foreign exchange markets settle payments and are open for general
           business (including dealing in foreign exchange and foreign currency deposits) in the principal
           financial centre of the country of the relevant Specified Currency (if other than London and any
           Additional Business Centre and which if the Specified Currency is Australian dollars or New
           Zealand dollars shall be Melbourne or Wellington, respectively) or (2) in relation to any sum
           payable in euro, a day on which Trans-European Automated Real-Time Gross Settlement
           Express Transfer (TARGET) System (the ‘‘TARGET System’’) is open.

(ii) Rate of Interest
     The Rate of Interest payable from time to time in respect of Floating Rate Notes and Index
Linked Interest Notes will be determined in the manner specified in the applicable Final Terms.

(A) ISDA Determination for Floating Rate Notes
      Where ISDA Determination is specified in the applicable Final Terms as the manner in which
the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will be the
relevant ISDA Rate plus or minus (as indicated in the applicable Final Terms) the Margin (if any).
For the purposes of this sub-paragraph (A), ‘‘ISDA Rate’’ for an Interest Period means a rate equal
to the Floating Rate that would be determined by the Agent under an interest rate swap transaction
if the Agent were acting as Calculation Agent for that swap transaction under the terms of an
agreement incorporating the 2006 ISDA Definitions, as published by the International Swaps and
Derivatives Association, Inc. and as amended and updated as at the Issue Date of the first Tranche
of the Notes (the ‘‘ISDA Definitions’’) and under which:
     (1)   the Floating Rate Option is as specified in the applicable Final Terms;
     (2)   the Designated Maturity is a period specified in the applicable Final Terms; and
     (3)   the relevant Reset Date is either (i) if the applicable Floating Rate Option is based on the
           London inter-bank offered rate (‘‘LIBOR’’) or on the Euro-zone inter-bank offered rate
           (‘‘EURIBOR’’), the first day of that Interest Period or (ii) in any other case, as specified in the
           applicable Final Terms.
      For the purposes of this sub-paragraph (A), ‘‘Floating Rate’’, ‘‘Calculation Agent’’, ‘‘Floating
Rate Option’’, ‘‘Designated Maturity’’ and ‘‘Reset Date’’ have the meanings given to those terms in
the ISDA Definitions.
    Unless otherwise stated in the applicable Final Terms the Minimum Rate of Interest shall be
deemed to be zero.

                                                    38
(B) Screen Rate Determination for Floating Rate Notes
     Where Screen Rate Determination is specified in the applicable Final Terms as the manner in
which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will,
subject as provided below, be either:
     (1)   the offered quotation; or
     (2)   the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being
           rounded upwards) of the offered quotations,
     (expressed as a percentage rate per annum) for the Reference Rate which appears or appear, as the
     case may be, on the Relevant Screen Page as at 11.00 a.m. (London time, in the case of LIBOR, or
     Brussels time, in the case of EURIBOR) on the Interest Determination Date in question plus or
     minus (as indicated in the applicable Final Terms) the Margin (if any), all as determined by the Agent.
     If five or more of such offered quotations are available on the Relevant Screen Page, the highest (or, if
     there is more than one such highest quotation, one only of such quotations) and the lowest (or, if
     there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the
     Agent for the purpose of determining the arithmetic mean (rounded as provided above) of such
     offered quotations.
     The Agency Agreement contains provisions for determining the Rate of Interest in the event that the
     Relevant Screen Page is not available or if, in the case of (1) above, no such offered quotation appears
     or, in the case of (2) above, fewer than three such offered quotations appear, in each case as at the
     time specified in the preceding paragraph.
     If the Reference Rate from time to time in respect of Floating Rate Notes is specified in the applicable
     Final Terms as being other than LIBOR or EURIBOR, the Rate of Interest in respect of such Notes
     will be determined as provided in the applicable Final Terms.

(iii) Minimum Rate of Interest and/or Maximum Rate of Interest
      If the applicable Final Terms specifies a Minimum Rate of Interest for any Interest Period, then,
in the event that the Rate of Interest in respect of such Interest Period determined in accordance with
the provisions of paragraph (ii) above is less than such Minimum Rate of Interest, the Rate of
Interest for such Interest Period shall be such Minimum Rate of Interest.
      If the applicable Final Terms specifies a Maximum Rate of Interest for any Interest Period,
then, in the event that the Rate of Interest in respect of such Interest Period determined in
accordance with the provisions of paragraph (ii) above is greater than such Maximum Rate of
Interest, the Rate of Interest for such Interest Period shall be such Maximum Rate of Interest.

(iv) Determination of Rate of Interest and calculation of Interest Amounts
      The Agent, in the case of Floating Rate Notes, and the Calculation Agent, in the case of Index
Linked Interest Notes, will at or as soon as practicable after each time at which the Rate of Interest
is to be determined, determine the Rate of Interest for the relevant Interest Period. In the case of
Index Linked Interest Notes, the Calculation Agent will notify the Agent of the Rate of Interest for
the relevant Interest Period as soon as practicable after calculating the same.
      The Agent will calculate the amount of interest (the Interest Amount) payable on the Floating
Rate Notes or Index Linked Interest Notes for the relevant Interest Period by applying the Rate of
Interest to:
     (A) in the case of Floating Rate Notes or Index Linked Interest Notes which are represented by a
         Global Note, the aggregate outstanding nominal amount of the Notes represented by such
         Global Note (or, if they are Partly Paid Notes, the aggregate amount paid up); or
     (B)   in the case of Floating Rate Notes or Index Linked Interest Notes in definitive form, the
           Calculation Amount;
     and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding
the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-
unit being rounded upwards or otherwise in accordance with applicable market convention. Where
the Specified Denomination of a Floating Rate Note or an Index Linked Interest Note in definitive

                                                    39
form comprises more than one Calculation Amount, the Interest Amount payable in respect of such
Note shall be the aggregate of the amounts (determined in the manner provided above) for each
Calculation Amount comprising the Specified Denomination without any further rounding.
      ‘‘Day Count Fraction’’ means, in respect of the calculation of an amount of interest for any
Interest Period:
     (i)    if ‘‘Actual/365’’ or ‘‘Actual/Actual’’ is specified in the applicable Final Terms, the actual number
            of days in the Interest Period divided by 365 (or, if any portion of that Interest Period falls in a
            leap year, the sum of (A) the actual number of days in that portion of the Interest Period falling
            in a leap year divided by 366 and (B) the actual number of days in that portion of the Interest
            Period falling in a non-leap year divided by 365);
     (ii)   if ‘‘Actual/365 (Fixed)’’ is specified in the applicable Final Terms, the actual number of days in
            the Interest Period divided by 365;
     (iii) if ‘‘Actual/365 (Sterling)’’ is specified in the applicable Final Terms, the actual number of days
           in the Interest Period divided by 365 or, in the case of an Interest Payment Date falling in a leap
           year, 366;
     (iv) if ‘‘Actual/360’’ is specified in the applicable Final Terms, the actual number of days in the
          Interest Period divided by 360;
     (v)    if ‘‘30/360’’, ‘‘360/360’’ or ‘‘Bond Basis’’ is specified in the applicable Final Terms, the number
            of days in the Interest Period divided by 360 (the number of days to be calculated on the basis of
            a year of 360 days with 12 30-day months (unless (a) the last day of the Interest Period is the
            31st day of a month but the first day of the Interest Period is a day other than the 30th or 31st
            day of a month, in which case the month that includes that last day shall not be considered to be
            shortened to a 30-day month, or (b) the last day of the Interest Period is the last day of the
            month of February, in which case the month of February shall not be considered to be
            lengthened to a 30-day month)); and
     (vi) if ‘‘30E/360’’ or ‘‘Eurobond Basis’’ is specified in the applicable Final Terms, the number of
          days in the Interest Period divided by 360 (the number of days to be calculated on the basis of a
          year of 360 days with 12 30-day months, without regard to the date of the first day or last day of
          the Interest Period unless, in the case of the final Interest Period, the Maturity Date is the last
          day of the month of February, in which case the month of February shall not be considered to
          be lengthened to a 30-day month).

(v) Notification of Rate of Interest and Interest Amounts
      The Agent will cause the Rate of Interest and each Interest Amount for each Interest Period
and the relevant Interest Payment Date to be notified to the Issuer and any stock exchange on which
the relevant Floating Rate Notes or Index Linked Interest Notes are for the time being listed (by no
later than the first day of each Interest Period) and notice thereof to be published in accordance with
Condition 14 as soon as possible after their determination but in no event later than the fourth
London Business Day thereafter. Each Interest Amount and Interest Payment Date so notified may
subsequently be amended (or appropriate alternative arrangements made by way of adjustment)
without prior notice in the event of an extension or shortening of the Interest Period. Any such
amendment will be promptly notified to each stock exchange on which the relevant Floating Rate
Notes or Index Linked Interest Notes are for the time being listed and to the Noteholders in
accordance with Condition 14. For the purposes of this paragraph, the expression ‘‘London Business
Day’’ means a day (other than a Saturday or a Sunday) on which banks and foreign exchange
markets are open for general business in London.

(vi) Certificates to be final
      All certificates, communications, opinions, determinations, calculations, quotations and decisions
given, expressed, made or obtained for the purposes of the provisions of this Condition 5(b), whether
by the Agent or, if applicable, the Calculation Agent, shall (in the absence of wilful default, bad faith
or manifest error) be binding on the Issuer, the Agent, the Calculation Agent (if applicable), the
other Paying Agents and all Noteholders, Receiptholders and Couponholders and (in the absence as

                                                      40
aforesaid) no liability to the Issuer, the Noteholders, the Receiptholders or the Couponholders shall
attach to the Agent or the Calculation Agent (if applicable) in connection with the exercise or non-
exercise by it of its powers, duties and discretions pursuant to such provisions.

(c) Interest on Dual Currency Interest Notes
     The rate or amount of interest payable in respect of Dual Currency Interest Notes shall be
determined in the manner specified in the applicable Final Terms.

(d) Interest on Partly Paid Notes
      In the case of Partly Paid Notes (other than Partly Paid Notes which are Zero Coupon Notes),
interest will accrue as aforesaid on the paid-up nominal amount of such Notes and otherwise as
specified in the applicable Final Terms.

(e) Accrual of interest
      Each Note (or in the case of the redemption of part only of a Note, that part only of such
Note) will cease to bear interest (if any) from the date for its redemption unless, upon due
presentation thereof, payment of principal is improperly withheld or refused. In such event, interest
will continue to accrue until whichever is the earlier of:

      (1)   the date on which all amounts due in respect of such Note have been paid; and

      (2)   five days after the date on which the full amount of the moneys payable in respect of such Note
            has been received by the Agent and notice to that effect has been given to the Noteholders in
            accordance with Condition 14.

(f)  Interest Deferral
     This Condition 5(f) applies only to Undated Subordinated Notes and references to ‘‘Notes’’ in
this Condition 5(f) shall be construed accordingly. All payments of interest in respect of Undated
Subordinated Notes are subject to the provisions of this Condition 5(f).

(i)    Arrears of Interest
       On any Optional Interest Payment Date (as defined in Condition 3(b)(vi)) there may be paid (if
the Issuer so elects) the interest in respect of the Notes accrued in the Interest Period or Fixed
Interest Period, as the case may be, ending on the day immediately preceding such date, but the
Issuer shall not have any obligation to make such payment and any failure to pay shall not constitute
a Violation for any purpose provided that nothing in this Condition 5(f)(i) shall be construed to
permit the Issuer to defer any interest otherwise due and payable on any Interest Payment Date
except under the circumstances specified in the definition of Optional Interest Payment Date. Any
interest in respect of the Notes not paid on an Interest Payment Date, together with any other
interest in respect thereof not paid on any other Interest Payment Date shall, so long as the same
remains unpaid, constitute ‘‘Arrears of Interest’’. In addition, each amount of Arrears of Interest shall
itself bear interest as if it were principal of the Notes at a rate which corresponds to the rate of
interest from time to time applicable to the Notes and the amount of such interest (‘‘Additional
Interest Amount’’) with respect to each amount of Arrears of Interest shall become due and payable
pursuant to Condition 5(f)(ii) and shall be calculated by the Agent by applying the rate of interest to
the amount of the Arrears of Interest and otherwise mutatis mutandis as provided in this Condition
5. The Additional Interest Amount accrued up to any Interest Payment Date shall be added, for the
purpose only of calculating the Additional Interest Amount accruing thereafter, to the amount of
Arrears of Interest remaining unpaid on such Interest Payment Date so that for such purpose it will
be deemed to be Arrears of Interest.

     Any reference in these Terms and Conditions to interest in respect of the Undated Subordinated
Notes shall be deemed to include Arrears of Interest and any Additional Interest Amounts, unless the
context requires otherwise.

                                                    41
(ii) Payment of Arrears of Interest
      Arrears of Interest (together with the corresponding Additional Interest Amount) shall be
payable, in the case of Notes in definitive form, against presentation or surrender, as the case may
be, of the relevant Coupon or, in the case of Notes represented by a global Note, against
presentation or surrender, as the case may be, of such global Note, all in accordance with Condition
6. Arrears of Interest (together with the corresponding Additional Interest Amount) may at the
option of the Issuer be paid in whole or in part at any time but all Arrears of Interest (together with
the corresponding Additional Interest Amount) in respect of all Notes for the time being outstanding
shall become due on whichever is the earlier of:
     (A) seven Business Days (as defined in Condition 5(b)(i)) following the date on which the Issuer next
         satisfies the Capital Adequacy Requirements provided that the Issuer shall be deemed not to
         have satisfied the Capital Adequacy Requirements if payment of such Arrears of Interest
         (together with the corresponding Additional Interest Amount) would result in a Breach;
     (B)   the date on which the Notes are to be redeemed pursuant to any provision Condition 7; and
     (C)   the commencement of a liquidation, administration, dissolution or other winding-up of the
           Issuer in the Kingdom of Norway.
      If notice is given by the Issuer of its intention to pay the whole or any part of Arrears of
Interest the Issuer shall be obliged to do so (together with the corresponding Additional Interest
Amount) upon the expiration of such notice.
     In the event of any liquidation, administration, dissolution or other winding-up of the Issuer,
unpaid interest in respect of the Notes, including any Arrears of Interest and any Additional Interest
Amounts shall rank pari passu with the principal of the Notes.

(iii) Notice of Interest Deferral and Payment of Arrears of Interest
      The Issuer shall give not more than 14 nor less than 5 Business Days’ (as defined in Condition
5(b)(i)) prior notice to the Agent and/or the Registrar, as the case may be, and Noteholders in
accordance with Condition 14:
     (A) of any Interest Payment Date on which, pursuant to the provisions of Condition 5(f)(i) above,
         interest will not be paid; and
     (B)   of any date upon which amounts in respect of Arrears of Interest and/or Additional Interest
           Amounts shall become due and payable or of any date on which the Issuer shall otherwise elect
           to pay any such amounts.
       Notice of any mandatory or optional payment of amounts in respect of Arrears of Interest and/
or Additional Interest Amounts having been given by the Issuer in accordance with Condition
5(f)(iii)(B) above, the Issuer shall be bound to make such payment to which such notice refers.

(iv) Partial Payment of Arrears of Interest
     If amounts in respect of Arrears of Interest and Additional Interest Amounts become partially
payable:
     (A) all unpaid amounts of Arrears of Interest shall be payable before any Additional Interest
         Amounts;
     (B)   Arrears of Interest accrued for any period shall not be payable until full payment has been made
           of all Arrears of Interest that have accrued during any earlier period and the order of payment
           of Additional Interest Amounts shall follow that of the Arrears of Interest to which they relate;
           and
     (C)   the amount of Arrears of Interest or Additional Interest Amounts payable in respect of any
           Note shall be pro rata to the total amount of all unpaid Arrears of Interest or, as the case may
           be, Additional Interest Amounts accrued to the date of payment.

                                                    42
6.   PAYMENTS
(a) Method of payment
    Subject as provided below:
     (i)    payments in a Specified Currency other than euro will be made by credit or transfer to an
            account in the relevant Specified Currency maintained by the payee with, or, at the option of the
            payee, by a cheque in such Specified Currency drawn on, a bank in the principal financial centre
            of the country of such Specified Currency (which, if the Specified Currency is Australian dollars
            or New Zealand dollars, shall be Melbourne or Wellington, respectively); and
     (ii)   payments in euro will be made by credit or transfer to a euro account (or any other account to
            which euro may be credited or transferred) specified by the payee or, at the option of the payee,
            by a euro cheque.
      Payments will be subject in all cases to any fiscal or other laws and regulations applicable
thereto in the place of payment, but without prejudice to the provisions of Condition 8.

(b) Presentation of definitive Notes, Receipts and Coupons
     Payments of principal in respect of definitive Notes will (subject as provided below) be made in
the manner provided in paragraph (a) above only against presentation and surrender (or, in the case
of part payment of any sum due, endorsement) of definitive Notes, and payments of interest in
respect of definitive Notes will (subject as provided below) be made as aforesaid only against
presentation and surrender (or, in the case of part payment of any sum due, endorsement) of
Coupons, in each case at the specified office of any Paying Agent outside the United States (which
expression, as used herein, means the United States of America (including the States and the District
of Columbia, its territories, its possessions and other areas subject to its jurisdiction)).
      Payments of instalments of principal (if any) in respect of definitive Notes, other than the final
instalment, will (subject as provided below) be made in the manner provided in paragraph (a) above
only against presentation and surrender (or, in the case of part payment of any sum due,
endorsement) of the relevant Receipt in accordance with the preceding paragraph. Payment of the
final instalment will be made in the manner provided in paragraph (a) above only against
presentation and surrender (or, in the case of part payment of any sum due, endorsement) of the
relevant Note in accordance with the preceding paragraph. Each Receipt must be presented for
payment of the relevant instalment together with the definitive Note to which it appertains. Receipts
presented without the definitive Note to which they appertain do not constitute valid obligations of
the Issuer. Upon the date on which any definitive Note becomes due and repayable, unmatured
Receipts (if any) relating thereto (whether or not attached) shall become void and no payment shall
be made in respect thereof.
      Fixed Rate Notes in definitive form (other than Dual Currency Notes, Index Linked Notes or
Long Maturity Notes (as defined below)) should be presented for payment together with all
unmatured Coupons appertaining thereto (which expression shall for this purpose include Coupons
falling to be issued on exchange of matured Talons), failing which the amount of any missing
unmatured Coupon (or, in the case of payment not being made in full, the same proportion of the
amount of such missing unmatured Coupon as the sum so paid bears to the sum due) will be
deducted from the sum due for payment. Each amount of principal so deducted will be paid in the
manner mentioned above against surrender of the relative missing Coupon at any time before the
expiry of 10 years after the Relevant Date (as defined in Condition 8) in respect of such principal
(whether or not such Coupon would otherwise have become void under Condition 9) or, if later, five
years from the date on which such Coupon would otherwise have become due, but in no event
thereafter.
      Upon any Fixed Rate Note in definitive form becoming due and repayable prior to its Maturity
Date, all unmatured Talons (if any) appertaining thereto will become void and no further Coupons
will be issued in respect thereof.
      Upon the date on which any Floating Rate Note, Dual Currency Note, Index Linked Note or
Long Maturity Note in definitive form becomes due and repayable, unmatured Coupons and Talons
(if any) relating thereto (whether or not attached) shall become void and no payment or, as the case

                                                     43
may be, exchange for further Coupons shall be made in respect thereof. A ‘‘Long Maturity Note’’ is
a Fixed Rate Note (other than a Fixed Rate Note which on issue had a Talon attached) whose
nominal amount on issue is less than the aggregate interest payable thereon provided that such Note
shall cease to be a Long Maturity Note on the Interest Payment Date on which the aggregate
amount of interest remaining to be paid after that date is less than the nominal amount of such
Note.
      If the due date for redemption of any definitive Note is not an Interest Payment Date, interest
(if any) accrued in respect of such Note from (and including) the preceding Interest Payment Date or,
as the case may be, the Interest Commencement Date shall be payable only against surrender of the
relevant definitive Note.

(c) Payments in respect of Global Notes
      Payments of principal and interest (if any) in respect of Notes represented by any Global Note
will (subject as provided below) be made in the manner specified above in relation to definitive Notes
and otherwise in the manner specified in the relevant Global Note against presentation or surrender,
as the case may be, of such Global Note at the specified office of any Paying Agent outside the
United States.On the occasion of each payment, (i) in the case of any Global Note which is not
issued in new global note (‘‘NGN’’) form, a record of such payment made on such Global Note,
distinguishing between any payment of principal and any payment of interest, will be made on such
Global Note by the Agent, and such record shall be prima facie evidence that the payment in
question has been made and (ii) in the case of any Global Note which is a NGN, the Agent shall
instruct Euroclear and Clearstream, Luxembourg to make appropriate entries in their records to
reflect such payment.

(d) General provisions applicable to payments
      The holder of a Global Note shall be the only person entitled to receive payments in respect of
Notes represented by such Global Note and the Issuer will be discharged by payment to, or to the
order of, the holder of such Global Note in respect of each amount so paid. Each of the persons
shown in the records of Euroclear or Clearstream, Luxembourg as the beneficial holder of a
particular nominal amount of Notes represented by such Global Note must look solely to Euroclear
or Clearstream, Luxembourg, as the case may be, for his share of each payment so made by the
Issuer to, or to the order of, the holder of such Global Note.
      Notwithstanding the foregoing provisions of this Condition, if any amount of principal and/or
interest in respect of Notes is payable in U.S. dollars, such U.S. dollar payments of principal and/or
interest in respect of such Notes will be made at the specified office of a Paying Agent in the United
States if:
     (i)    the Issuer has appointed Paying Agents with specified offices outside the United States with the
            reasonable expectation that such Paying Agents would be able to make payment in U.S. dollars
            at such specified offices outside the United States of the full amount of principal and interest on
            the Notes in the manner provided above when due;
     (ii)   payment of the full amount of such principal and interest at all such specified offices outside the
            United States is illegal or effectively precluded by exchange controls or other similar restrictions
            on the full payment or receipt of principal and interest in U.S. dollars; and
     (iii) such payment is then permitted under United States law without involving, in the opinion of the
           Issuer, adverse tax consequences to the Issuer.

(e) Payment Day
     If the date for payment of any amount in respect of any Note, Receipt or Coupon is not a
Payment Day, the holder thereof shall not be entitled to payment until the next following Payment
Day in the relevant place and shall not be entitled to further interest or other payment in respect of
such delay. For these purposes, ‘‘Payment Day’’ means any day which (subject to Condition 9) is:
     (i)    a day on which commercial banks and foreign exchange markets settle payments and are open
            for general business (including dealing in foreign exchange and foreign currency deposits) in:

                                                      44
             (A) the relevant place of presentation;
             (B)   London;
             (C)   any Additional Financial Centre specified in the applicable Final Terms; and
      (ii)   either (1) in relation to any sum payable in a Specified Currency other than euro, a day on which
             commercial banks and foreign exchange markets settle payments and are open for general
             business (including dealing in foreign exchange and foreign currency deposits) in the principal
             financial centre of the country of the relevant Specified Currency (if other than the place of
             presentation, London and any Additional Financial Centre and which if the Specified Currency
             is Australian dollars or New Zealand dollars shall be Melbourne or Wellington, respectively) or
             (2) in relation to any sum payable in euro, a day on which the TARGET System is open.

(f) Interpretation of principal and interest
    Any reference in these Terms and Conditions to principal in respect of the Notes shall be
deemed to include, as applicable:
      (i)    any additional amounts which may be payable with respect to principal under Condition 8;
      (ii)   the Final Redemption Amount of the Notes;
      (iii) the Early Redemption Amount of the Notes;
      (iv) the Optional Redemption Amount(s) (if any) of the Notes;
      (v)    in relation to Notes redeemable in instalments, the Instalment Amounts;
      (vi) in relation to Zero Coupon Notes, the Amortised Face Amount (as defined in Condition 7(e));
           and
      (vii) any premium and any other amounts (other than interest) which may be payable by the Issuer
            under or in respect of the Notes.
      Any reference in these Terms and Conditions to interest in respect of the Notes shall be deemed
to include, as applicable, any additional amounts which may be payable with respect to interest under
Condition 8.

7.    REDEMPTION AND PURCHASE
(a) Redemption at maturity
      Unless previously redeemed or purchased and cancelled as specified below, each Note (including
each Index Linked Redemption Note and Dual Currency Redemption Note) will be redeemed by the
Issuer at its Final Redemption Amount specified in, or determined in the manner specified in, the
applicable Final Terms in the relevant Specified Currency on the Maturity Date. Undated
Subordinated Notes have no final maturity and are redeemable or repayable in accordance with the
following provisions of this Condition.

(b) Redemption for tax reasons
      Subject, in the case of Dated and Undated Subordinated Notes, as provided in Condition 7(k),
the Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time (if this
Note is neither a Floating Rate Note nor an Index Linked Interest Note) or on any Interest Payment
Date (if this Note is either a Floating Rate Note or an Index Linked Interest Note), on giving not
less than 30 nor more than 60 days’ notice to the Agent and, in accordance with Condition 14, the
Noteholders (which notice shall be irrevocable), if:
      (i)    on the occasion of the next payment due under the Notes, the Issuer has or will become obliged
             to pay additional amounts as provided or referred to in Condition 8 as a result of any change in,
             or amendment to, the laws or regulations of Norway or any authority therein having power to
             tax or any political subdivision thereof, or any change in the application or official
             interpretation of such laws or regulations, which change or amendment becomes effective on
             or after the date on which agreement is reached to issue the first Tranche of the Notes; and
      (ii)   such obligation cannot be avoided by the Issuer taking reasonable measures available to it,

                                                       45
     provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest
     date on which the Issuer would be obliged to pay such additional amounts were a payment in respect
     of the Notes then due.
      Prior to the publication of any notice of redemption pursuant to this Condition, the Issuer shall
deliver to the Agent a certificate signed by two Directors of the Issuer stating that the Issuer is
entitled to effect such redemption and setting forth a statement of facts showing that the conditions
precedent to the right of the Issuer so to redeem have occurred, and an opinion of independent legal
advisers of recognised standing to the effect that the Issuer has or will become obliged to pay such
additional amounts as a result of such change or amendment.
     Notes redeemed pursuant to this Condition 7(b) will be redeemed at their Early Redemption
Amount referred to in paragraph (e) below together (if appropriate) with interest accrued to (but
excluding) the date of redemption.

(c) Redemption at the option of the Issuer (Issuer Call)
      Subject in the case of Dated Subordinated Notes and Undated Subordinated Notes, to obtaining
the prior written consent of the Commission as provided in Condition 7(k), if Issuer Call is specified
in the applicable Final Terms, the Issuer may, having given:
     (i)    not less than 15 nor more than 30 days’ notice to the Noteholders in accordance with Condition
            14; and
     (ii)   not less than 15 days before the giving of the notice referred to in (i), notice to the Agent;
(which notices shall be irrevocable and shall specify the date fixed for redemption), redeem all or
some only of the Notes then outstanding on any Optional Redemption Date and at the Optional
Redemption Amount(s) specified in, or determined in the manner specified in, the applicable Final
Terms together, if appropriate, with interest accrued to (but excluding) the relevant Optional
Redemption Date. Any such redemption must be of a nominal amount not less than the Minimum
Redemption Amount or not more than a Maximum Redemption Amount, in each case as may be
specified in the applicable Final Terms. In the case of a partial redemption of Notes, the Notes to be
redeemed (‘‘Redeemed Notes’’) will be selected individually by lot, in the case of Redeemed Notes
represented by definitive Notes, and in accordance with the rules of Euroclear and/or Clearstream,
Luxembourg, (to be reflected in the records of Euroclear and Clearstream, Luxembourg as either a
pool factor or a reduction in nominal amount, at their discretion) in the case of Redeemed Notes
represented by a Global Note, not more than 30 days prior to the date fixed for redemption (such
date of selection being hereinafter called the ‘‘Selection Date’’). In the case of Redeemed Notes
represented by definitive Notes, a list of the serial numbers of such Redeemed Notes will be published
in accordance with Condition 14 not less than 15 days prior to the date fixed for redemption. No
exchange of the relevant Global Note will be permitted during the period from (and including) the
Selection Date to (and including) the date fixed for redemption pursuant to this paragraph (c) and
notice to that effect shall be given by the Issuer to the Noteholders in accordance with Condition 14
at least five days prior to the Selection Date.

(d) Redemption at the option of the Noteholders (Investor Put)
     Subject, in the case of Dated Subordinated Notes, to obtaining the prior written consent of the
Commission, as provided in Condition 7(k), if Investor Put is specified in the applicable Final Terms,
upon the holder of any Note giving to the Issuer in accordance with Condition 14 not less than 15
nor more than 30 days’ notice the Issuer will, upon the expiry of such notice, redeem, subject to, and
in accordance with, the terms specified in the applicable Final Terms, such Note on the Optional
Redemption Date and at the Optional Redemption Amount together, if appropriate, with interest
accrued to (but excluding) the Optional Redemption Date. It may be that before an Investor Put can
be exercised, certain conditions and/or circumstances will need to be satisfied. Where relevant, the
provisions will be set out in the applicable Final Terms.
      To exercise the right to require redemption of this Note the holder of this Note must deliver, at
the specified office of any Paying Agent at any time during normal business hours of such Paying
Agent falling within the notice period, accompanied by a duly completed and signed notice of exercise
in the form (for the time being current) obtainable from any specified office of any Paying Agent (a

                                                     46
‘‘Put Notice’’) and in which the holder must specify a bank account (or, if payment is required to be
made by cheque, an address) to which payment is to be made under this Condition accompanied by,
if this Note is in definitive form, this Note or evidence satisfactory to the Paying Agent concerned
that this Note will, following delivery of the Put Notice, be held to its order or under its control.
     Any Put Notice given by a holder of any Note pursuant to this paragraph shall be irrevocable
except where prior to the due date of redemption an Event of Default shall have occurred and be
continuing in which event such holder, at its option, may elect by notice to the Issuer to withdraw
the notice given pursuant to this paragraph and instead to declare such Note forthwith due and
payable pursuant to Condition 10.

(e) Early Redemption Amounts
     For the purpose of paragraph (b) above and Condition 10, each Note will be redeemed at the
Early Redemption Amount calculated as follows:
      (i)    in the case of a Note with a Final Redemption Amount equal to the Issue Price, at the Final
             Redemption Amount thereof;
      (ii)   in the case of a Note (other than a Zero Coupon Note but including an Instalment Note and a
             Partly Paid Note) with a Final Redemption Amount which is or may be less or greater than the
             Issue Price or which is payable in a Specified Currency other than that in which the Note is
             denominated, at the amount specified in, or determined in the manner specified in, the
             applicable Final Terms or, if no such amount or manner is so specified in the applicable Final
             Terms, at its nominal amount; or
      (iii) in the case of a Zero Coupon Note, at an amount (the ‘‘Amortised Face Amount’’) calculated in
            accordance with the following formula:
             Early Redemption Amount = RP (1 + AY)y
             where:
             ‘‘RP’’   means the Reference Price;
             ‘‘AY’’ means the Accrual Yield expressed as a decimal; and
             ‘‘y’’    is a fraction the numerator of which is equal to the number of days (calculated on the
                      basis of a 360-day year consisting of 12 months of 30 days each) from (and including)
                      the Issue Date of the first Tranche of the Notes to (but excluding) the date fixed for
                      redemption or (as the case may be) the date upon which such Note becomes due and
                      repayable and the denominator of which is 360,
             or on such other calculation basis as may be specified in the applicable Final Terms.

(f)  Instalments
     Instalment Notes will be redeemed in the Instalment Amounts and on the Instalment Dates. In
the case of early redemption, the Early Redemption Amount will be determined pursuant to
paragraph (e) above.

(g) Partly Paid Notes
     Partly Paid Notes will be redeemed, whether at maturity, early redemption or otherwise, in
accordance with the provisions of this Condition and the applicable Final Terms.

(h) Purchases
      Subject, in the case of Dated and Undated Subordinated Notes, as provided in Condition 7(k)
the Issuer or any Subsidiary of the Issuer may at any time purchase Notes (provided that, in the case
of definitive Notes, all unmatured Receipts, Coupons and Talons appertaining thereto are purchased
therewith) at any price in the open market or otherwise. If purchases are made by tender, tenders
must be available to all Noteholders alike. Such Notes may be held, reissued, resold or, at the option
of the Issuer, surrendered to any Paying Agent for cancellation.

                                                      47
(i)  Cancellation
     All Notes which are redeemed will forthwith be cancelled (together with all unmatured Receipts,
Coupons and Talons attached thereto or surrendered therewith at the time of redemption). All Notes
so cancelled and any Notes purchased and cancelled pursuant to paragraph (h) above (together with
all unmatured Receipts, Coupons and Talons cancelled therewith) shall be forwarded to the Agent
and cannot be reissued or resold.

(j)  Late payment on Zero Coupon Notes
     If the amount payable in respect of any Zero Coupon Note upon redemption of such Zero
Coupon Note pursuant to paragraph (a), (b), (c) or (d) above or upon its becoming due and
repayable as provided in Condition 10 is improperly withheld or refused, the amount due and
repayable in respect of such Zero Coupon Note shall be the amount calculated as provided in
paragraph (e)(iii) above as though the references therein to the date fixed for the redemption or the
date upon which such Zero Coupon Note becomes due and payable were replaced by references to
the date which is the earlier of:
      (i)    the date on which all amounts due in respect of such Zero Coupon Note have been paid; and
      (ii)   five days after the date on which the full amount of the moneys payable in respect of such Zero
             Coupon Notes has been received by the Agent and notice to that effect has been given to the
             Noteholders in accordance with Condition 14.

(k) Consent
     In the case of Dated and Undated Subordinated Notes, no early redemption in any
circumstances or purchase under Condition 7(h) shall take place without the prior written consent of
the Commission. For the avoidance of doubt, redemption of Dated Subordinated Notes under
Condition 7(a) shall not require the consent of the Commission.

8.    TAXATION
      All payments of principal and interest in respect of the Notes, Receipts and Coupons by the
Issuer will be made without withholding or deduction for or on account of any present or future
taxes or duties of whatever nature imposed or levied by or on behalf of the Kingdom of Norway or
any political subdivision or any authority thereof or therein having power to tax unless such
withholding or deduction is required by law. In such event, the Issuer will pay such additional
amounts as shall be necessary in order that the net amounts received by the holders of the Notes,
Receipts or Coupons after such withholding or deduction shall equal the respective amounts of
principal and interest which would otherwise have been receivable in respect of the Notes, Receipts or
Coupons, as the case may be, in the absence of such withholding or deduction; except that no such
additional amounts shall be payable with respect to any Note, Receipt or Coupon:
      (a)    presented for payment by or on behalf of a holder who is liable for such taxes or duties in
             respect of such Note, Receipt or Coupon by reason of his having some connection with the
             Kingdom of Norway other than the mere holding of such Note, Receipt or Coupon; or
      (b)    presented for payment by more than 30 days after the Relevant Date (as defined below) except
             to the extent that the holder thereof would have been entitled to an additional amount on
             presenting the same for payment on such thirtieth day assuming that day to have been a
             Payment Day (as defined in Condition 6(e)); or
      (c)    where such withholding or deduction is imposed on a payment to an individual and is required
             to be made pursuant to European Council Directive 2003/48/EC on the taxation of savings or
             any law implementing or complying with, or introduced in order to conform to, such Directive;
             or
      (d)    presented for payment by or on behalf of a Noteholder, Receiptholder or Couponholder who
             would have been able to avoid such withholding or deduction by presenting the relevant Note,
             Receipt or Coupon to another Paying Agent in a Member State of the European Union.

                                                     48
     As used in these Conditions the ‘‘Relevant Date’’ means the date on which such payment first
becomes due, except that, if the full amount of the moneys payable has not been duly received by the
Agent on or prior to such due date, it means the date on which, the full amount of such moneys
having been so received, notice to that effect is duly given to the Noteholders in accordance with
Condition 14.

9.   PRESCRIPTION
     The Notes, Receipts and Coupons will become void unless presented for payment within a
period of 10 years (in the case of principal) and five years (in the case of interest) after the Relevant
Date (as defined in Condition 8) therefor.
      There shall not be included in any Coupon sheet issued on exchange of a Talon any Coupon
the claim for payment in respect of which would be void pursuant to this Condition or Condition
6(b) or any Talon which would be void pursuant to Condition 6(b).

10.   EVENTS OF DEFAULT
(a) Events of Default relating to Unsubordinated Notes
      This Condition 10(a) only applies to Unsubordinated Notes. If any one or more of the
following events (each an ‘‘Event of Default’’) shall occur and be continuing with respect to any
Unsubordinated Note:
      (i)    if default is made in the payment of any principal or interest due in respect of the Notes or any
             of them and in the case of interest that default continues for a period of 7 days; or
      (ii)   if the Issuer fails to perform or observe any of its other obligations under these Conditions and
             (except in any case where the failure is incapable of remedy when no such continuation or notice
             as is hereinafter mentioned will be required) the failure continues for the period of 30 days next
             following the service by a Noteholder on the Issuer of notice requiring the same to be remedied;
             or
      (iii) any payment obligation under any indebtedness (including deposits) of the Issuer or any of its
            Principal Subsidiaries becomes due and repayable prematurely by reason of an event of default
            (howsoever described) or the Issuer or any of its Principal Subsidiaries fails to make any
            payment in respect of any indebtedness (including deposits) within 30 days of the due date for
            payment (or within the applicable grace period, if such period is longer than 30 days) or any
            security given by the Issuer or any of its Principal Subsidiaries for any indebtedness (including
            deposits) becomes enforceable or if default is made by the Issuer or any of its Principal
            Subsidiaries in making any payment due under any guarantee and/or indemnity given by it in
            relation to any obligation of any other person for 30 days (or within the applicable grace period,
            if such period is longer than 30 days), PROVIDED that no such event shall constitute an Event
            of Default unless the indebtedness (including deposits) or other relative liability either alone or
            when aggregated with other indebtedness (including deposits) and/or liabilities relating to all (if
            any) other events which shall have occurred and be outstanding shall amount to at least
            A10,000,000 (or its equivalent in any other currency) and PROVIDED further that, for the
            purposes of this Condition 10(iii), neither the Issuer nor any of its Principal Subsidiaries shall
            not be deemed to be in default with respect to any such indebtedness (including deposits),
            guarantee or indemnity if it shall be contesting in good faith by appropriate means its liability to
            make payment thereunder; or
      (iv) if any order is made by any competent court or resolution passed for the winding up or
           dissolution of the Issuer or any of its Principal Subsidiaries, save for the purposes of
           reorganisation on terms approved by an Extraordinary Resolution of the Noteholders; or
      (v)    if the Issuer or any of its Principal Subsidiaries ceases or threatens to cease to carry on the whole
             or a substantial part of its business, save for the purposes of reorganisation on terms approved
             by an Extraordinary Resolution of the Noteholders, or the Issuer or any of its Principal
             Subsidiaries stops or threatens to stop payment of, or is unable to, or admits inability to, pay, its
             debts (or any class of its debts) as they fall due, or is deemed unable to pay its debts pursuant to
             or for the purposes of any applicable law, or is adjudicated or found bankrupt or insolvent; or

                                                        49
      (vi) if (A) proceedings are initiated against the Issuer or any of its Principal Subsidiaries under any
           applicable liquidation, insolvency, composition, reorganisation or other similar laws, or an
           application is made for the appointment of an administrative or other receiver, manager,
           administrator or other similar official, or an administrative or other receiver, manager,
           administrator or other similar official is appointed, in relation to the Issuer or any of its
           Principal Subsidiaries or, as the case may be, in relation to the whole or a substantial part of the
           undertaking or assets of any of them, or an encumbrancer takes possession of the whole or a
           substantial part of the undertaking or assets of any of them, or a distress, execution,
           attachment, sequestration or other process is levied, enforced upon, sued out or put in force
           against the whole or a substantial part of the undertaking or assets of any of them and (B) in
           any case (other than the appointment of an administrator) is not discharged within l4 days; or
      (vii) if the Issuer or any of its Principal Subsidiaries initiates or consents to judicial proceedings
            relating to itself under any applicable liquidation, insolvency, composition, reorganisation or
            other similar laws or makes a conveyance or assignment for the benefit of, or enters into any
            composition or other arrangement with, its creditors generally (or any class of its creditors) or
            any meeting is convened to consider a proposal for an arrangement or composition with its
            creditors generally (or any class of its creditors),
      then any holder of an Unsubordinated Note may, by written notice to the Issuer at the specified office
      of the Agent, effective upon the date of receipt thereof by the Agent, declare any Unsubordinated
      Notes held by the holder to be forthwith due and payable whereupon the same shall become forthwith
      due and payable at the Early Redemption Amount (as described in Condition 7(e)), together with
      accrued interest (if any) to the date of repayment, without presentment, demand, protest or other
      notice of any kind.
      For the purpose of this Condition:
      ‘‘Principal Subsidiary’’ at any time shall mean a Subsidiary of the Issuer inter alia:
      (A) whose gross revenues attributable to the Issuer (consolidated in the case of a Subsidiary which
          itself has Subsidiaries) or whose total assets (consolidated in the case of a Subsidiary which itself
          has Subsidiaries) represent not less than five per cent. of the consolidated gross revenues
          attributable to the shareholders of the Issuer, or, as the case may be, consolidated total assets, of
          the Issuer and its Subsidiaries taken as a whole, all as calculated respectively by reference to the
          then latest audited accounts (consolidated or, as the case may be, unconsolidated) of the
          Subsidiary and the then latest audited consolidated accounts of the Issuer and its Subsidiaries;
          or
      (B)   to which is transferred the whole or substantially the whole of the undertaking and assets of a
            Subsidiary of the Issuer which immediately before the transfer is a Principal Subsidiary;
      all as more particularly defined in the Agency Agreement.
      A report by the Directors of the Issuer that in their opinion a Subsidiary of the Issuer is/was or
is/was not at any particular time or throughout any specified period, a Principal Subsidiary,
accompanied, if requested, by a report by the Auditors addressed to the Directors of the Issuer as to
proper extraction of the figures used by the Directors of the Issuer in determining the Principal
Subsidiaries of the Issuer and mathematical accuracy of the calculations, shall, in the absence of
manifest error, be conclusive and binding on all parties.
     There are no events of default in relation to Dated Subordinated Notes or Undated Subordinated
Notes.

11.  REPLACEMENT OF NOTES, RECEIPTS, COUPONS AND TALONS
     Should any Note, Receipt, Coupon or Talon be lost, stolen, mutilated, defaced or destroyed, it
may be replaced at the specified office of the Paying Agent in Luxembourg upon payment by the
claimant of such costs and expenses as may be incurred in connection therewith and on such terms as
to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Notes,
Receipts, Coupons or Talons must be surrendered before replacements will be issued.

                                                      50
12.   PAYING AGENTS
      The names of the initial Paying Agents and their initial specified offices are set out below.
      The Issuer is entitled to vary or terminate the appointment of any Paying Agent and/or appoint
additional or other Paying Agents and/or approve any change in the specified office through which
any Paying Agent acts, provided that:
      (a)   there will at all times be an Agent;
      (b)   so long as the Notes are listed on any stock exchange or admitted to listing by any other relevant
            authority, there will at all times be a Paying Agent with a specified office in such place as may be
            required by the rules and regulations of the relevant stock exchange or any other relevant
            authority;
      (c)   there will at all times be a Paying Agent in a Member State of the European Union that will not
            be obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or
            any law implementing or complying with, or introduced in order to conform to, such Directive;
            and
      (d)   there will at all times be a Paying Agent in a jurisdiction within continental Europe, other than
            the jurisdiction in which the Issuer is incorporated.
      Furthermore, the Issuer shall forthwith appoint a Paying Agent having a specified office in New
York City in the circumstances described in Condition 6(d). Any variation, termination, appointment
or change shall only take effect (other than in the case of insolvency, when it shall be of immediate
effect) after not less than 30 nor more than 45 days’ prior notice thereof shall have been given to the
Noteholders in accordance with Condition 14.
      In acting under the Agency Agreement, the Paying Agents act solely as agents of the Issuer and
do not assume any obligation to, or relationship of agency or trust with, any Noteholders,
Receiptholders or Couponholders. The Agency Agreement contains provisions permitting any entity
into which any Paying Agent is merged or converted or with which it is consolidated or to which it
transfers all or substantially all of its assets to become the successor paying agent.

13.   EXCHANGE OF TALONS
      On and after the Interest Payment Date on which the final Coupon comprised in any Coupon
sheet matures, the Talon (if any) forming part of such Coupon sheet may be surrendered at the
specified office of the Agent or any other Paying Agent in exchange for a further Coupon sheet
including (if such further Coupon sheet does not include Coupons to (and including) the final date
for the payment of interest due in respect of the Note to which it appertains) a further Talon, subject
to the provisions of Condition 9.

14.   NOTICES
      All notices regarding the Notes will be deemed to be validly given if published (i) in a leading
English language daily newspaper of general circulation in London, and (ii) if and for so long as the
Notes are listed on the Official List of the Luxembourg Stock Exchange and admitted to trading on
the regulated market of the Luxembourg Stock Exchange, a daily newspaper of general circulation in
Luxembourg and on the website of the Luxembourg Stock Exchange (www.bourse.lu). It is expected
that such publication will be made in the Financial Times in London and the d’Wort in Luxembourg.
The Issuer shall also ensure that notices are duly published in a manner which complies with the
rules and regulations of any stock exchange (or any other relevant authority) on which the Notes are
for the time being listed or by which they have been admitted to trading. Any such notice will be
deemed to have been given on the date of the first publication or, where required to be published in
more than one newspaper, on the date of the first publication in all required newspapers.
      Until such time as any definitive Notes are issued, there may, so long as any Global Notes
representing the Notes are held in their entirety on behalf of Euroclear and/or Clearstream,
Luxembourg, be substituted for such publication in such newspaper(s) the delivery of the relevant
notice to Euroclear and/or Clearstream, Luxembourg for communication by them to the holders of
the Notes and, in addition, for so long as any Notes are listed on a stock exchange or are admitted

                                                      51
to trading by another relevant authority and the rules of that stock exchange (or any other relevant
authority) so require, such notice will be published in a daily newspaper of general circulation in the
place or places required by the rules of that stock exchange (or any other relevant authority). Any
such notice shall be deemed to have been given to the holders of the Notes on the seventh day after
the day on which the said notice was given to Euroclear and/or Clearstream, Luxembourg.

     Notices to be given by any Noteholder shall be in writing and given by lodging the same,
together (in the case of any Note in definitive form) with the relative Note or Notes, with the Agent.
Whilst any of the Notes are represented by a Global Note, such notice may be given by any holder
of a Note to the Agent through Euroclear and/or Clearstream, Luxembourg, as the case may be, in
such manner as the Agent and Euroclear and/or Clearstream, Luxembourg, as the case may be, may
approve for this purpose.


15.   MEETINGS OF NOTEHOLDERS, MODIFICATION AND WAIVER
      The Agency Agreement contains provisions for convening meetings of the Noteholders to
consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution of
a modification of the Notes, the Receipts, the Coupons or any of the provisions of the Agency
Agreement. Such a meeting may be convened by the Issuer or Noteholders holding not less than
five per cent. in nominal amount of the Notes for the time being remaining outstanding. The quorum
at any such meeting for passing an Extraordinary Resolution is one or more persons holding or
representing not less than 50 per cent. in nominal amount of the Notes for the time being
outstanding, or at any adjourned meeting one or more persons being or representing Noteholders
whatever the nominal amount of the Notes so held or represented, except that at any meeting the
business of which includes the modification of certain provisions of the Notes, the Receipts or the
Coupons (including modifying the date of maturity of the Notes or any date for payment of interest
thereon, reducing or cancelling the amount of principal or the rate of interest payable in respect of
the Notes or altering the currency of payment of the Notes, the Receipts or the Coupons), the
quorum shall be one or more persons holding or representing not less than two-thirds in nominal
amount of the Notes for the time being outstanding, or at any adjourned such meeting one or more
persons holding or representing not less than one-third in nominal amount of the Notes for the time
being outstanding. An Extraordinary Resolution passed at any meeting of the Noteholders shall be
binding on all the Noteholders, whether or not they are present at the meeting, and on all
Receiptholders and Couponholders.

    The Agent and the Issuer may agree, without the consent of the Noteholders, Receiptholders or
Couponholders, to:

      (a)   any modification (except as mentioned above) of the Notes, the Receipts, the Coupons or
            Agency Agreement which is not prejudicial to the interests of the Noteholders; or

      (b)   any modification of the Notes, the Receipts, the Coupons or the Agency Agreement which is of
            a formal, minor or technical nature or is made to correct a manifest error or to comply with
            mandatory provisions of the law.

    Any such modification shall be binding on the Noteholders, the Receiptholders and the
Couponholders and any such modification shall be notified to the Noteholders in accordance with
Condition 14 as soon as practicable thereafter.


16.  FURTHER ISSUES
     The Issuer shall be at liberty from time to time without the consent of the Noteholders, the
Receiptholders or the Couponholders to create and issue further notes having terms and conditions
the same as the Notes or the same in all respects save for the amount and date of the first payment
of interest thereon and so that the same shall be consolidated and form a single Series with the
outstanding Notes.

                                                   52
17.   CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
      No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999
to enforce any term of this Note, but this does not affect any right or remedy of any person which
exists or is available apart from that Act.

18. GOVERNING LAW AND SUBMISSION TO JURISDICTION
(a) Governing law
     The Agency Agreement, the Deed of Covenant, the Notes (except for Condition 3 and
Condition 5(f)), the Receipts and the Coupons are governed by, and shall be construed in accordance
with, English law. Condition 3 and Condition 5(f) are governed by, and shall be construed in
accordance with, Norwegian law.

(b) Submission to jurisdiction
      The Issuer agrees, for the exclusive benefit of the Noteholders, the Receiptholders and the
Couponholders, that the courts of England are to have jurisdiction to settle any disputes which may
arise out of or in connection with the Notes, the Receipts and/or the Coupons and that accordingly
any suit, action or proceedings (together referred to as ‘‘Proceedings’’) arising out of or in connection
with the Notes, the Receipts and the Coupons may be brought in such courts.
      The Issuer hereby irrevocably waives any objection which it may have now or hereafter to the
laying of the venue of any such Proceedings in any such court and any claim that any such
Proceedings have been brought in an inconvenient forum and hereby further irrevocably agrees that a
judgment in any such Proceedings brought in the English courts shall be conclusive and binding upon
it and may be enforced in the courts of any other jurisdiction.
      Nothing contained in this Condition shall limit any right to take Proceedings against the Issuer
in any other court of competent jurisdiction, nor shall the taking of Proceedings in one or more
jurisdictions preclude the taking of Proceedings in any other jurisdiction, whether concurrently or not.

(c) Appointment of Process Agent
      The Issuer appoints Advokatfirman Vinge KB at its registered office at 42 New Broad Street,
London EC2M 1JD, England as its agent for service of process, and undertakes that, in the event of
Advokatfirman Vinge KB ceasing so to act or ceasing to be registered in England, it will appoint
another person as its agent for service of process in England in respect of any Proceedings. Nothing
herein shall affect the right to serve proceedings in any other manner permitted by law.




                                         USE OF PROCEEDS

     The net proceeds from each issue of Notes will be applied by the relevant Issuer for its general
corporate purposes. If, in respect of any particular issue, there is a particular identified use of
proceeds, this will be stated in the applicable Final Terms.




                                                   53
              THE SPAREBANK 1 ALLIANCE AND SPAREBANK 1 GRUPPEN AS

      The purpose of the SpareBank 1-alliance is to acquire and provide competitive financial
products and services, taking advantage of economies of scale in the form of lower costs and/or
higher quality, so that retail, banking and corporate customers will benefit from their banks’ local
roots, competence and an easier way of having their various requirements met.
      The SpareBank 1 banks conduct their alliance-related co-operation and the development of
product companies through the jointly-owned holding company, SpareBank 1 Gruppen AS, which is
owned by SpareBank 1 SR-Bank, SpareBank 1 Midt-Norge, SpareBank 1 Nord-Norge, Sparebanken
Hedmark, Samarbeidende Sparebanker AS (a group of 20 savings banks in the eastern and north-
western parts of Norway), and LO (The Norwegian Federation of Trade Unions)/trade union
federations connected with LO.
      SpareBank 1 Gruppen AS owns 100 per cent. of the shares in SpareBank 1 Livsforsikring AS,
SpareBank 1 Skadeforsikring AS, Bank 1 Oslo AS, ODIN Forvaltning AS, SpareBank 1
Medlemskort AS and SpareBank 1 Utvikling DA. The company also has equity stakes in SpareBank
1 Bilplan AS (19.9 per cent.) and First Securities ASA (24.5 per cent.).
     SpareBank 1 Gruppen AS has the administrative responsibility for all banking co-operation
processes within the SpareBank 1 Alliance, where technology, brand names, competence, joint
processes/the application of best practice, and the purchase function are all key factors. The alliance
also conducts development work through three competence centres, involving training (in Tromso),
payment transmission services (in Trondheim) and credit (in Stavanger).




The SpareBank 1 Alliance’s strategy for the period to 2008 takes account of expectedly tighter
competition in national and regional financial markets alike. This will require stronger collaboration
in order to reap further benefits in terms of lower costs, increased competence and high-quality
customer service.




                                                  54
                                   SPAREBANK 1 MIDT-NORGE

Company Overview
      SpareBank 1 Midt-Norge was founded on 26 May 1823 under the laws of Norway, specifically
Act no. 1 of 24 May 1961 on Savings Banks, and is registered in the Norwegian Company Registry
with organisation number 937 901 003. The address of its registered office is Søndre gt 4, 7467
Trondheim and the telephone number of its registered office is +47 915 07300. SpareBank 1 Midt-
Norge has 950 employees and is Central Norway’s largest bank with assets totalling NOK 63.2
billion. As one of seven members of the SpareBank 1 Alliance, SpareBank 1 Midt-Norge is part of
Norway’s second largest financial grouping. SpareBank 1 Midt-Norge supplies a wide range of
financial products and services to retail customers, small and medium-sized companies and the
agricultural and public sectors. SpareBank 1 Midt-Norge’s business concept is to be a local bank, and
its operations clearly bear out this concept.

     SpareBank 1 Midt-Norge comprises the subsidiaries SpareBank 1 Midt-Norge Finans AS,
EiendomsMegler 1 Midt-Norge AS with its subsidiary company RF Eiendomsmegling AS, Midt-
Norge Regnskap AS, Midt-Norge Fonds AS and Allegro Finans ASA.

      An important part of SpareBank 1 Midt-Norge’s strategy is to maintain a variety of branch
solutions in the municipal and public administration centres in its core market. SpareBank 1 Midt-
Norge has an extensive distribution network in mid-Norway and following the acquisition of
Romsdals Fellesbank, a total of 71 branches in different locations across 51 municipalities. The
acquisition has increased the size of SpareBank 1 Midt-Norge’s core market, which presently consists
of North and South Trøndelag and Møre og Romsdal.


Organisation Structure




Business Segments
      SpareBank 1 Midt-Norge is organised into six divisions to secure a customer-focused and cost-
effective organisation while respecting the differing competencies required by each division. The
Retail, Corporate, RomsdalsFellesbank and Markets divisions focus on customer satisfaction, risk
management and activity-based sales and counselling.

      Business Support focuses on cost-effective work processes and support to enable the customer-
facing divisions to attain their goals, while the Finance Division provides an overall basis for decision
making, risk management and financial and asset-liability management. Through the SpareBank 1
Alliance and through its own subsidiaries, SpareBank 1 Midt-Norge is assured access to competitive
products in the fields of financing, insurance, savings and investment, and money transfer services.

                                                   55
Product Areas
      SpareBank 1 Midt-Norge offers a complete range of products and services in the fields of
financing, savings, insurance and payment services for the retail and corporate markets. SpareBank 1
Midt-Norge’s main strategy is to improve the existing customer portfolio, and the products and
services that are developed or improved will primarily be aimed at its existing customer base.

     SpareBank 1 Midt-Norge aims to ensure that its products and services are comparable in all
respects with those offered by its competitors. SpareBank 1 Midt-Norge’s products and services will
be competitively priced and, at the same time, its main products will generate a satisfactory level of
profitability. Prices are decided according to the competition in the local markets.


The Customer Base and Market Position




     SpareBank 1 Midt-Norge’s core market is North and South Trøndelag and Romsdal and parts
of Nordmøre.


Strategic objectives
      SpareBank 1 Midt-Norge’s vision is that it shall be the recommended bank among the
customers in mid-Norway.

                                                 56
      SpareBank 1 Midt-Norge’s aim is to maintain its position as an independent regional bank with
local roots. SpareBank 1 Midt-Norge wishes to be characterised by its proximity to the market and
its readily accessible and easy-to-use products.
     SpareBank 1 Midt-Norge aims to be a full-service bank for retail customers, the primary
industries, the public sector and the corporate market in mid-Norway.
     Through profitable operations, SpareBank 1 Midt-Norge aims to maintain a capital base
enabling it to fulfil its social responsibility by playing an active role in the creation of value and
growth in its geographical area.

Main financial objectives
      SpareBank 1 Midt-Norge’s main financial objectives are to obtain a capital adequacy ratio of 12
per cent. of which core capital is to account for 8 per cent. The bank aims for a return on equity
after tax of more than 12 per cent., operating costs/operating income ratio of 55 per cent. or less and
loans to private customers of more than 65 per cent. of total loans.

Recent developments
     Sparebanken Midt-Norge recorded a net profit of NOK 896 million (NOK 717 million in 2005)
at end-2006, corresponding to a return on equity of 25.5 per cent. (24 per cent. in 2005). The
improvement compared with 2005 figures is due mainly to good operations, a good result by
SpareBank 1 Gruppen, substantial gains on securities and a reduction in collective loan impairment.

Asset/loan structure

Loans by sector and industry                                                         Loans 2006                Loans 2005

                                                                                                  million                   million
Industry                                                                          % share          NOK      % share          NOK

Agriculture and forestry ........................................                    19.5          3,699       19.4          3,145
Sea farming industries ...........................................                    3.6            682        3.4            557
Industry .................................................................            6.5          1,238        6.6          1,072
Construction / building – power and water supply                                      5.7          1,085        5.0            812
Commodity trade – hotel and restaurant..............                                 10.9          2,066       11.8          1,907
Transport and communication ..............................                           12.3          2,342       10.5          1,684
Real estate .............................................................            32.7          6,224       32.3          5,785
Service industries ...................................................                6.2          1,179        8.3            801
Public sector ..........................................................              0.7            125        0.6            122
Foreign / others .....................................................                1.9            370        2.2            362
Total corporate market ..........................................                    36.0         19,010       35.8         16,248
Total retail market.................................................                 64.0         33,808       64.2         29,032

Total loans .............................................................           100.0         52,818      100.0         45,280


     This financial information has been extracted without material adjustment from the audited
consolidated financial statements as at 31 December 2006 and 2005 of Sparebanken Midt-Norge.

Asset quality/bad debt analysis
Loan losses and non-performance:
      As of 31 December 2006 the amount of loan losses recovered was a net amount of NOK 84
million, compared with NOK 38 million over the same period of the previous year. The net recovery
of losses on corporate customers came to NOK 6 million (net recovery of NOK 15 million in 2005),
essentially as a result of the risks associated with individual exposures being low and a low level of
new loss provisioning. As of 31 December 2006 there was a net loss of NOK 16 million on retail
customers (NOK 2 million in 2005).

                                                                             57
     The losses recorded in SpareBank 1 Midt-Norge’s new market area Møre and Romsdal in
connection with the verification process carried out upon the takeover of Romsdals Fellesbank ASA
were largely written back in 2006.
      Individual impairments amounted to NOK 147 million at as of 31 December 2006 (NOK 236
million in 2005). The reduction of NOK 89 million over the last 12 months was mainly due to write-
backs after individual exposures were assessed as being low and previous periods’ loss provisions were
written off.
     Of defaults in excess of 90 days these totalled NOK 218 million in 2006 (NOK 353 million in
2005), NOK 38 million (NOK 82 million in 2005) or 18 per cent. (23 per cent.) were loss provisioned.
The largest reduction in defaults related to the corporate market.
     Other doubtful exposures totalled NOK 272 million in 2006 (NOK 270 million in 2005), of
which NOK 107 million (NOK 154 million in 2005) or 40 per cent. (57 per cent. in 2005) was loss
provisioned.
      Total problem loans (defaulted and doubtful) came to NOK 490 million in 2006 (NOK 623
million in 2005). This was a reduction of NOK 133 million or 21 per cent. over the 12 months to 31
December 2006.

Defaults, (million NOK)                                                                                                31.12.2006   31.12.2005

Non-performing loans over 90 days ....................................................................                       218          353
Defaults between 30 and 90 days........................................................................                      256          156

Total defaults .....................................................................................................         474          509

Specified loan losses provisions .........................................................................                    147          236
Specified loss provisions in per cent of defaults ................................................                             31%        46%

Risk management
      A separate risk management function has been established at SpareBank 1 Midt-Norge. This
function is independent of the customer-facing units and sees to the development of the bank’s
framework for overall risk management, overall risk reporting and monitoring.


Credit risk
     Credit risk is the risk of loss resulting from the inability or unwillingness of customers or
counterparties to meet all or part of their obligations to SpareBank 1 Midt-Norge.
      Credit risk is the largest area of risk facing SpareBank 1 Midt-Norge. Through its annual review
of the bank’s credit strategy, the Board of Directors define the bank’s risk appetite by establishing
goals and limits for the bank’s credit portfolio. The bank’s credit strategy and credit policy are
derived from the bank’s main strategy, and contain guide lines for the risk profile, including
maximum expected loss (EL), maximum portfolio default probability (PD), and maximum economic
capital (UL) allocated to the credit business. Concentration risk is managed by distribution between
the retail market and corporate market, limits to maximum allocation of economic capital within lines
of business and requirements as to credit quality and number of exposures above 10 per cent. of own
funds.
     Compliance with credit strategy and limits adopted by the Board of Directors are monitored on
a continual basis by Risk Management and reported quarterly to the Board of Directors.
      The bank’s risk classification system is designed to enable management of the bank’s loan
portfolio in line with the bank’s credit strategy and to secure the risk-adjusted return. The Board of
Directors delegates overall lending authorisation to the CEO within the adopted credit strategy and
policy, and the CEO further delegates authorisations within this overall authorisation. Lending
authorisations are graded by size of commitment and risk profile.

                                                                             58
     The bank has a Credit Support unit that takes over dealings with clients who are obviously
unable, or are highly likely to become unable, to service their commitments unless action is taken
beyond ordinary follow-up.

     The bank’s credit models build on three central components.

Probability of default (PD)
      The bank’s credit models are based on statistical computations of probability of default. The
calculations are based on scoring models that take into account financial position along with internal
and external behavioural data. The models are based on point-in-time ratings, and reflect the
probability of default in the course of the next 12 months under existing economic conditions.

      Customers are assigned to one of nine ‘‘healthy’’ risk classes based on PD, in addition to two
risk classes for defaulted and loss provisioned exposures.




      The models are validated at least once per year both with respect to their ability to rank
customers and to estimate PD levels. The validation results confirm that the model’s accuracy meets
internal expectations and international recommendations.

Exposure at Default (EAD)
    The bank estimates exposure at the time of default by taking account of expected drawings on
commitments.

                                                 59
Loss Given Default (LGD)
      The bank estimates the loss ratio for each loan based on expected realisable value of the
underlying collateral, recovery rate on unsecured debt, as well as direct costs of recovery. Values are
determined using standard models, and actual realised values are validated to test the models’
reliability.
     Based on collateral cover (realisable value divided by EAD) the exposure is assigned to one of
seven classes.




      The three parameters underlie the calculation of expected loss (EL) and necessary economic
capital (UL) as well as classification in the bank’s portfolio system.
      At the end of 2006 the risk profile of the bank’s loan portfolio was within the credit strategy
limits adopted by the Board of Directors.

Market risk
      Market risk is the risk of loss resulting from changes in observable market prices such as
interest rates, exchange rates and securities prices. Market risk is managed via detailed limits on
investments in shares, bonds and positions in fixed income and currency markets.
      SpareBank 1 Midt-Norge defines limits on exposure to equity instruments with a basis in stress
tests employed by Kredittilsynet’s (Financial Supervisory Authority of Norway) scenarios. The limits
are reviewed at least once a year and are adopted yearly by the bank’s Board of Directors.
Compliance with the limits is monitored by the Risk Management unit, and exposures relative to the
adopted limits are reported monthly to the Board of Directors. The limits are well within the
maximum limits set by the authorities.
      Interest rate risk arises mainly on fixed interest loans and funding in fixed interest securities.
The risk on all interest rate positions can be viewed in terms of the change in value of interest rate
instruments resulting from a rate change of 1 basis point. SpareBank 1 Midt-Norge utilises analyses
showing the effect of this change for various interest rate bands, with separate limits applying to
interest rate exposure within each maturity band and across all maturity bands as a whole. Interest
rate lock-ins on SpareBank 1 Midt-Norge’s instruments are essentially short, and SpareBank 1 Midt-
Norge’s interest rate risk is low to moderate. As of 31 December 2006 the interest rate risk based on
a change of 1 basis point was NOK 267,000.

Liquidity risk
      Liquidity risk is the risk that SpareBank 1 Midt-Norge will be unable to honour its payment
obligations.
      The bank’s most important source of finance is customer deposits. As of 31 December 2006 the
bank’s ratio of deposits to loans was 57 per cent. compared with 60 per cent. 31 December 2005.
Due to increasing lending activity, money market funding rose by NOK 5.6 billion in 2006.
Moreover, changes in saving behaviour have heightened the bank’s dependence on other sources of
capital. The bank expects this situation to persist. The bank mitigates its liquidity risk by diversifying
funding across a variety of markets, funding sources and instruments, and by employing long-term
funding.

                                                   60
      The bank has established limits on funding from individual institutions to assure sufficient
diversification of the funding portfolio. The bank’s Board of Directors reviews the liquidity strategy
annually and establishes a framework that promotes a longterm perspective and balance in liquidity
procurement.
     Limits have been established for net refinancing needs within a one, seven and 30 day period
frame.
     The bank’s objective is to survive for 12 months without fresh external funding under normal
market conditions, and it has a contingency plan to deal with bank-specific and industry-related crisis
scenarios.
     The bank owns 20.81 per cent. of SpareBank 1 Boligkreditt AS which is at the start-up stage
and expects to be fully operational under new legislation in the course of 2007. The bank expects the
opportunity to market well-secured home mortgage loans through SpareBank 1 Boligkreditt AS to
have a positive effect on its funding needs.
      Compliance with applicable limits is monitored by Risk Management and reported to the Board
of Directors on a monthly basis. A reserve in the form of committed drawing rights is maintained to
further reduce liquidity risk.

Operational risk
      Operational risk is defined as the risk of loss inherent in the bank’s ongoing operations as well
as in external events including risk of loss due to inadequate or faulty internal processes and systems,
human error and various forms of attack on the bank such as robbery, cheque counterfeiting,
embezzlement, arson and computer crime. The bank attaches importance to authorisation structures,
good descriptions of routines and clear definition of responsibilities in supply contracts between the
respective divisions as elements of a framework for handling operational risk.
     Operational risk is assessed in conjunction with the bank’s internal control process, and any
flaws found are reported to appropriate levels of the organisation along with recommended
improvements.
      SpareBank 1 Midt-Norge has a good, stable liquidity position, and as at 31 December 2006
SpareBank 1 Midt-Norge’s Liquidity Indicator 1* was 107 per cent. compared with 101 per cent. at
year-end 2005. The proportion of capital markets financing with maturity above one year was 94 per
cent. (91 per cent. at end-2005).

Primary capital certificates
     The pricing of SpareBank 1 Midt-Norge’s Primary Capital Certificates (PCC) as of 31 December
2006 was NOK 82 (NOK 78.25 as of 31 December 2005).




*   Liquidity indicator 1: (deposits + long-term funding + equity + loss provisions) / (loans + fixed assets + liquidity reserve
    requirement).


                                                             61
Major Primary Capital Certificate Owners as at 31 December 2005
The largest PCC holders as at 31 December 2006                                                                            Number          Share
Reitangruppen AS .........................................................................................              4,154,195         8.23%
State Street Bank & Trust Co.......................................................................                     2,890,681         5.73%
JP Morgan Chase Bank ................................................................................                   2,071,410         4.10%
Romern AS....................................................................................................           1,935,800         3.83%
I.K. Lykke, T. Lykke and others ..................................................................                        948,290         1.88%
DFA-INTL sml cap val ................................................................................                     787,241         1.56%
Frank Mohn AS............................................................................................                 538,300         1.07%
Terra Utbytte Verdipapirfond.......................................................................                       513,950         1.02%
Tveteraas Invest AS and others ....................................................................                       497,135         0.98%
Meieribrukets Pensjonskasse .........................................................................                     447,260         0.89%
Tonsenhagen Forretningssentrum AS ...........................................................                             430,180         0.85%
Otto Morcken................................................................................................              369,640         0.73%
Heglund Holding...........................................................................................                353,500         0.70%
Mellon Bank AS............................................................................................                311,718         0.62%
Jow Invest AS ...............................................................................................             300,000         0.59%
Haugaland Kraft AS .....................................................................................                  294,070          058%
Trondheim Kommune ...................................................................................                     265,800         0.53%
Stichting shell Pension...................................................................................                248,400         0.49%
National Financial Services LLC ..................................................................                        231,400         0.46%
Forsvarets personellservice ............................................................................                  230,595         0.46%
The 20 largest PCC holders in total ..............................................................                     17,819,565        35.29%
Others ............................................................................................................    32,669,520        64.71%

Total Issued PCCs .........................................................................................            50,489,085       100.00%


Capital

Capital adequacy ratios, (million NOK)                                                                                  31.12.2006    31.12.2005

Core capital........................................................................................................         3,498        3,073
Subordinated debt..............................................................................................              1,927        1,181
Cross-ownership items .......................................................................................                 -616         -451
Capital base........................................................................................................         4,809        3,803
Risk-weighted volume........................................................................................                40,473       34,914
Capital adequacy ratio........................................................................................               11.88%       10.89%
Core capital ratio...............................................................................................             8.64%        8.80%

Corporate governance
     SpareBank 1 Midt-Norge has adopted a distinct corporate governance policy, and will further
develop its corporate governance structure within the framework of applicable laws and in keeping
with recommendations issued by influential sources.
        SpareBank 1 Midt-Norge has given special emphasis to:
        *        a structure assuring targeted and independent management and control systems assuring
                 monitoring and accountability;
        *        organisation, health, environment and safety;
        *        effective risk management;
        *        full information and effective communication to underpin the relationship of mutual trust
                 between the Supervisory Board, the Board of Directors and management;
        *        non-discrimination towards PCC holders and a balanced relationship with other
                 stakeholders;

                                                                               62
     *     compliance with laws, rules and ethical standards.


Governing bodies




     The functions of the respective bodies are described below.


Principles of corporate governance
      Good corporate governance at SpareBank 1 Midt-Norge encompasses the values, goals and
overarching principles by which SpareBank 1 Midt-Norge is governed and controlled with a view to
securing the interests of owners, depositors and other stakeholders in SpareBank 1 Midt-Norge.


Operations
     SpareBank 1 Midt-Norge’s object is: ‘‘to promote saving by accepting deposits from an
unrestricted range of depositors and to manage the funds at its disposal in a secure manner in
accordance with the legal rules applying at any and all times to savings banks.’’


PCC capital and dividends
    SpareBank 1 Midt-Norge strives for a clear and predictable PCC holder and dividend policy.

      The authorisations available to the Board of Directors to increase SpareBank 1 Midt-Norge’s
capital are restricted to specified purposes. These authorisations are valid up to the next review of the
annual accounts. Authorisation to buy back SpareBank 1 Midt-Norge’s PCCs is valid for 18 months.

      SpareBank 1 Midt-Norge aims for a total capital ratio of 12.0 per cent. and a tier 1 capital
ratio of 8 per cent. SpareBank 1 Midt-Norge has implemented a tool for measuring economic capital
and risk-adjusted return in the credit area, but will not be adjusting its capital adequacy targets until
further notice.


Election committee
      SpareBank 1 Midt-Norge has two election committees.

     *     Election Committee for the Supervisory Board
           The Supervisory Board appoints an Election Committee from among the members of the
           Supervisory Board. The Election Committee comprises one representative from,
           respectively, the PCC holders, the depositors, public appointees and the employees,
           totalling four in all. The Election Committee shall give due attention to a composition
           based on considerations of competence and gender. According to the bank’s articles of
           association, the composition of the Board of Directors shall reflect an even geographical
           distribution.

                                                   63
        *       Election Committee for PCC holders’ election of Supervisory Board members
                The PCC holders appoint an Election Committee at a meeting of PCC holders. The
                Election Committee shall have three members and two alternates. At least one of the
                members and one of the alternates must be members of the Supervisory Board. The
                Election Committee shall prepare the PCC holders’ election of Supervisory Board members
                and alternates, as well as the election of members and alternates of the Election Committee
                dealt with in this paragraph.

Supervisory Board and Board of Directors, composition and independence
     The Supervisory Board comprises 43 members of whom 17 are elected from among the PCC
holders, while eight are public appointees and eight are elected by the depositors. The employees have
10 members.

        The following sets out the members of the Supervisory Board of SpareBank 1 Midt-Norge

Members/alternates of the Supervisory Board                                                                              Number

Alf Erevik ..........................................................................................................     211,345   (1),   (3), (4)
Arne Lorentsen ..................................................................................................         180,000   (1)
Arne Rian ..........................................................................................................      100,000   (4)
Arnhild Bjørshol ................................................................................................           5,000   (1)
                   ¨
Asbjørn Tronsgard ............................................................................................             15,800   (1)
Aud Skrudland ..................................................................................................              676   (1)
Bjørn Thommesen..............................................................................................           1,940,085   (1),   (3)
Christian Sørensen .............................................................................................           28,125   (4)
Endre Lysø ........................................................................................................            45   (1)
Erik Solberg .......................................................................................................       24,104   (1)
Erik Sture Larre.................................................................................................         430,180   (4)
Gunnar Heglund................................................................................................            353,500   (3)
Gunnar Horten ..................................................................................................          153,855   (4)
Inge Lindseth .....................................................................................................         3,800   (1)
Joar Grimsbu .....................................................................................................         12,700   (1),   (3)
Johan Brobakke.................................................................................................             8,035   (1)
John Geir Hosking ............................................................................................              5,000   (1)
Kirsten Indgjerd Værdal ....................................................................................                  570   (1)
Kjell Hagan........................................................................................................            60   (1)
Knut Helge Nerland ..........................................................................................               3,302   (1)
Lars Sjømo.........................................................................................................       224,120   (1)
Leif Singstad ......................................................................................................       24,105   (1)
Michael Momyr .................................................................................................               330   (1)
Oddbjørn Kulseth ..............................................................................................             2,560   (1)
Per Brovold........................................................................................................        14,450   (1)
Per Ivar Maudal ................................................................................................           20,000   (4)
Per Ivar Mohrsen...............................................................................................             2,040   (1)
Randi Aune........................................................................................................          1,375   (1)
Randi Selnes Herskedal .....................................................................................                4,000   (1)
Rolf Bratlie ........................................................................................................       6,500   (1),   (2)
Rolf Haukdal.....................................................................................................          11,366   (1)
Sigrid Gjendern Fjøtoft .....................................................................................               1,250   (1)
Siv Kifstad Røsæg .............................................................................................             1,840   (2)
Stener Lium .......................................................................................................         8,035   (4)
Sverre Petter Berg ..............................................................................................           2,250   (1)
Terje Skjønhals ..................................................................................................         11,135   (1)
Terje Vareberg ...................................................................................................        231,460   (4)
Thorbjørn Røsæg...............................................................................................              2,355   (1)
Tone Valmot......................................................................................................           4,905   (1)

                                                                             64
Members/alternates of the Supervisory Board                                                                          Number

Tor E. Sitgum ....................................................................................................    20,000   (1)
Tore Hertzenberg-Nafstad .................................................................................             8,195   (1)
Trond Brekke.....................................................................................................      1,400   (3)
Widar Slemdal Andersen ...................................................................................           232,885   (1), (4)

The number of PCC holders shows the sum of own (1), related parties (2), the number owned by companies they exert significant
influence on (3) and the number of PCCs they represent through companies on whose behalf they are designated (4).


     The Supervisory Board approves the accounts and appoints the members of SpareBank 1 Midt-
Norge’s Board of Directors, Control Committee and Election Committee. The Supervisory Board also
adopts the remuneration of the Board of Directors, Control Committee and Election Committee. The
Supervisory Board is also responsible, at a joint meeting with the Board of Directors, for the
appointment and, in the event, dismissal of the Managing Director.
     The business address for each of the persons listed under Supervisory Board and Board of
Directors is the registered office of SpareBank 1 Midt-Norge.
      As far as is known to SpareBank 1 Midt-Norge, no potential conflicts of interest exist between
any duties to SpareBank 1 Midt-Norge of the Board of Directors and Supervisory Board and their
private interests or other duties in respect of their management roles.

Control Committee
      The Control Committee is appointed by the Supervisory Board and has three members. The
Control Committee’s tasks include overseeing that the bank and SpareBank 1 Midt-Norge conduct
their business in an appropriate and satisfactory manner in accordance with laws and regulations,
articles of association, guidelines issued by the Supervisory Board and orders issued by Kredittilsynet
(Norway’s financial supervisory authority). The Control Committee normally meets 11 times each
year. The Managing Director attends these meetings. The Committee also meets with the Chairman
of the Board of Directors on an annual basis.

Board of Directors
      The Board of Directors has nine members of which eight are appointed by the Supervisory
Board. The members are appointed for two years at a time and can hold office for a maximum of 20
years, but not more than 12 years continuously in the same position. The Chair and Deputy Chair
are elected by the Supervisory Board at separate elections for two years at a time. The Managing
Director is required by law to be a member of the Board of Directors. The Board normally meets 11
times each year.
        The following sets out the members of the Board of Directors of SpareBank 1 Midt-Norge:

Name                                                                     Position

Per Axel Koch (Chairman)                                                 Chairman
Eli Arnstad (Dep. Chairman)                                              Dep. Chairman
Kjell Eriksen
Terje Roll Danielsen
Egill Vatne jr.
Anne-Brit Skjetne
Christel Borge
Stig O. Jacobsen
Venche Johnsen
Finn Haugan                                                              Chief Executive Officer

     A guiding principle at SpareBank 1 Midt-Norge is that members of the Board of Directors shall
be independent, and guidelines have been established to deal with competence issues.

                                                                           65
Board of Directors’ functions
     An annual plan has been adopted for the Board of Directors.
     The Board of Directors conducts an annual self-evaluation.
      A temporary three-strong committee to the Board of Directors was established in conjunction
with changes made to the internal audit arrangement. The committee was mandated to clarify the
internal audit’s mode of co-operation and reporting process. This in no way reduces the
responsibilities of the Board of Directors.
    Two subcommittees have been established by the Board of Directors: a temporary audit
committee and a remuneration committee.

Information and communication
     SpareBank 1 Midt-Norge attaches importance to full and effective communication in
underpinning the relationship of trust between SpareBank 1 Midt-Norge’s owners, Board of Directors
and management, and in ensuring that SpareBank 1 Midt-Norge’s stakeholders are at all times able
to assess and relate to the bank. SpareBank 1 Midt-Norge’s information policy accordingly places a
premium on proactive dialogue with respective stakeholder groups in which openness, predictability
and transparency are at centre stage.
      SpareBank 1 Midt-Norge also attaches importance to correct, relevant and timely information
on SpareBank 1 Midt-Norge’s progress and performance as a means of instilling investor market
confidence. Information is communicated to the market via quarterly investor presentations, an
investor relations area on SpareBank 1 Midt-Norge’s website, and press releases. Presentations for
international partners, lenders and investors are also arranged on a regular basis.

Audit – external and internal
      An external auditor is appointed by the Supervisory Board. SpareBank 1 Midt-Norge utilises the
same auditor in the parent company and in all subsidiaries. The external auditor performs the
statutory confirmation of the financial information provided by the companies in their public
accounts. The external auditor briefs the Board of Directors each year on the main features of the
audit plan, and attends the meeting of the Board of Directors at which the annual accounts are
reviewed.
      The external auditor has not provided SpareBank 1 Midt-Norge with advisory services of
significance. Any such services from the external auditor must comply with the Auditors Act section
4-5.
      The internal audit function’s main task is to confirm that the established internal control system
functions as intended, and to ensure that established risk management arrangements are adequate in
relation to SpareBank 1 Midt-Norge’s risk profile. The internal audit function reports on a quarterly
basis to the Board of Directors which adopts annual plans and budgets for the internal audit. The
internal audit function performs no financial audit. The Board of Directors has appointed a
provisional audit committee.




                                                  66
Profit and loss account (in NOK million)

                                                                                   Non-consolidated            Consolidated
                                                                                     (NGAAP)                (IFRS from 2004)

                                                                                     2006         2005        2006         2005

Interest income ......................................................              2,352        1,823       2,376        1,916
Interest expenses ....................................................              1,379          933       1,369          955

Net interest and credit commission income .............                               973             890    1,008             961

Dividends and profit from associated companies .                                       151              95      190             119
Dividends on securities with variable return .........                                 44              85       17              15
Commission income...............................................                      467             410      621             570
Commission expenses ............................................                      -80             -81      -82             -84
Net gain/loss on securities .....................................                      70              58      127             139
Net gain/loss on currency ......................................                       42              38       36              16
Other operating income.........................................                         5               7       41              52

Total other operating income..................................                        699             611      950             826

Total income ..........................................................             1,672        1,501       1,958        1,787

Salaries, fees and other personnel costs ................                             392             367      512             486
Administrative expenses ........................................                      278             249      322             279
Depreciation etc., of fixed assets etc. ....................                            65              50       50              40
Other operating expenses.......................................                        97              86      106             101

Total operating expenses ........................................                     832             751      990             906

Operating profit before losses, gains and write-
  downs .................................................................             840             750      968             881

Losses on loans and guarantees ............................                           -84             -38      -84             -38
Gains and write-downs on disposals of fixed assets                                      58              11       65               0

Operating profit......................................................                 983             799    1,117             919

Taxes......................................................................           205             166      220             199

Profit......................................................................           778             632      897             720




                                                                              67
Balance sheet (in NOK million)

                                                                                 Non-consolidated         Consolidated
                                                                                   (NGAAP)             (IFRS from 2004)

                                                                                   2005         2005     2006         2005

Cash and claims on central banks.........................                           450        1,669      450        1,669
Loans to and claims on credit institutions ............                           3,346        1,344    1,873          454
Loans before loss provisions .................................                   51,327       44,240   52,819       45,280
– Specified loan loss provisions .............................                      -143         -233     -147         -236
– Unspecified loan loss provisions.........................                         -176         -266     -184         -278
Loans to and claims on customers........................                         51,008       43,741   52,488       44,767
CDs, bonds and other interest-bearing
   instruments ........................................................           5,125        3,686    5,125        5,119
Other assets ...........................................................          2,700        3,167    3,242        2,319

Total assets ............................................................        62,629       53,607   63,178       54,327

Debt to credit institutions .....................................                 2,766        1,029    2,766        1,029
Deposits from, and debt to, customers .................                          30,183       27,115   30,136       27,048
Debt incurred by issue of securities.......................                      22,014       17,960   21,911       18,036
Other liabilities ......................................................          1,508        2,335    1,292        2,201
Provisions for commitments and expenses ............                                287          393      506          554
Subordinated loan capital .....................................                   2,383        1,653    2,383        1,667

Total liabilities.......................................................         59,141       50,485   58,994       50,656

Minority interests ..................................................                                       9            9
Primary capital ......................................................            1,262        1,262    1,262        1,262
Holding of own primary capital certificates..........                                  0            0        0            0
Equity premium fund ............................................                      0            0        0            0
Fund for evalution differences ..............................                         0            0      135            0
Savings bank’s fund...............................................                1,564        1,369    1,684        1,450
Gift fund................................................................             0            0        0            0
Equalisation fund ..................................................                552          491      700          581
Other equity...........................................................             110            0      394          368

Total equity............................................................          3,488        3,123    4,184        3,671

Total liabilities and equity ......................................              62,629       53,607   63,178       54,327




                                                                            68
                                  SPAREBANKEN NORD-NORGE

History
     Sparebanken Nord-Norge’s history goes back to 1836, when Tromsø Sparebank was established
in Tromsø. Sparebanken Nord-Norge (‘‘SpareBank 1 Nord-Norge’’) in its current form was created
by the merger of four northern Norwegian banks during the period 1989 – 1992. SpareBank 1 Nord-
Norge has its head office in Tromsø, and operates 85 local banks and branches in the regions of
Nordland, Troms, Finnmark and Svalbard. As one of seven members of the SpareBank 1 Alliance,
the bank is part of Norway’s third largest financial grouping. Through its co-operation with the
SpareBank 1 Alliance and its own subsidiaries, SpareBank 1 Nord-Norge has gained access to various
forms of expert knowledge and professional skills as well as special products and services which are
in demand in the market. As a supplement to the parent bank’s range of products and services, its
subsidiaries help SpareBank 1 Nord-Norge to fulfil its ambition of being a full-service provider of
financial products and services in North Norway.
        As a leading provider of financial services in northern Norway, SpareBank 1 Nord-Norge’s
activities are linked to trends in the regional economy, which is based on a number of different
sectors, including tourism, fishing and related industry, commerce and information technology. Below
are outlined the key dynamics and market forces affecting commerce and industry in northern
Norway. SpareBank 1 Nord-Norge’s Primary Capital Certificates are listed on the Oslo Stock
Exchange and the bank is rated by Moody’s Investor Service Ltd. and Fitch Rating Ltd.
      SpareBank 1 Nord-Norge is a savings bank duly incorporated under the laws of Norway,
specifically Avt no. 1 of 24 May 1961 on Savings Banks (the Savings Bank Act) and is registered in
the Norwegian Company Registry with organisation number 952706365. The address of its registered
office is Storg. 65, 9008 Tromsø and the telephone number of its registered office is +47 915 022 49.

Recent Developments
      The SpareBank 1 Nord-Norge Group’s 2006 operating result, after credit losses, but before tax,
totalled NOK 972 million. This is NOK 243 million better than in 2005. Tax has been estimated at
NOK 205 million. The result after tax and minority interests totalled NOK 762 million. The return
on equity capital was 24.6 per cent., as against 20.5 per cent. in 2005.
      The good result is primarily ascribable to the good general economic situation in the region,
increased revenue generation, good cost control, low credit losses and a very good profit contribution
from the Bank’s equity stake in SpareBank 1 Gruppen AS.
      In 2006, the most important strategic targets for the Group, set by the main Board of Directors,
relating to core capital coverage, return on equity capital and overall effectiveness were all met.
     Total net interest- and credit commission income increased by NOK 22 million during the last
12 months. In relation to average assets, net interest and credit commission income amounted to 2.14
per cent. (2.39 per cent. in 2005). The Bank attaches great importance to the correct pricing of credit
commitments in relation to risk. However, increasing competition for low-risk customers, coupled
with a continued low level of domestic interest rates, is expected to keep up the downward pressure
on the Bank’s average interest margin in 2007 too.
      Other income amounted to NOK 710 million in 2006, up by NOK 119 million compared with
2005. This improvement is attributable to a NOK 22 million increase in commissions from banking
services, a larger profit contribution from the Bank’s equity stake in SpareBank 1 Gruppen AS
amounting to NOK 63 million, increased income from foreign exchange and securities of NOK 30
million, and a NOK 4 million improvement in other income.
      SpareBank 1 Nord-Norge’s net interest margin has for many years been higher than that of
many other Norwegian banks. Although the market trend is shrinking interest rate margins – a trend
that also applies to SpareBank 1 Nord-Norge – management believes that SpareBank 1 Nord-Norge
in the future will be able to sustain a higher net interest margin compared to its competitors. This
situation will naturally vary somewhat within the northern Norwegian market, but the main reason
for the higher net interest margin is attributable to effects of SpareBank 1 Nord-Norge’s distribution

                                                  69
network. Management strongly believes in the value of SpareBank 1 Nord-Norge’s distribution
network but is nevertheless aware of the necessity of having sufficient flexibility should future branch
network profits fall.

Major Subsidiaries
SpareBank 1 Finans Nord-Norge
     This is a group of finance companies involved in factoring, leasing and car financing.

Sparebank 1 Nord-Norge Invest AS
     The company was established in 2006. Its purpose is to invest in primarily North-Norway-based
growth companies.

AS Eiendomsdrift
    This company handles the operations, management and development of SpareBank 1 Nord-
Norge’s commercial and industrial buildings and other real estate.

Eiendomsmegler 1 Nord-Norge AS
     This is a real estate brokerage company; part of a chain comprising some 30 offices throughout
Norway.

Sparebanken Nord-Norge Securities ASA
      This is a stock brokerage company. In addition to stock exchange business, the company is
active within the areas of asset management, evaluations and other corporate services. SpareBank 1
Nord-Norge owns 55 per cent. of it.

Commerce and industry in northern Norway (Nord-Norge)
      In 2006, the Norwegian economy was characterised by generally good conditions, both for
private households and businesses. A low level of domestic interest rates, coupled with low price
inflation and strong growth both of financial and real assets, meant that most people enjoyed a good
financial situation. There is reason to believe that this situation will also continue in 2007, even if the
growth in real and financial assets may turn out to be somewhat lower and domestic interest rates
somewhat higher. As a result of shortage of labour, wage growth is likely to be high. This should
maintain private households’ purchasing power at a high level, despite any likely increases in domestic
rates of interest.
      In the corporate sector, businesses working within the national and local markets will benefit
from the favourable impact of private households’ good financial position. This is therefore expected
to bring about a continued high demand for financial services in 2007. In the case of export-related
businesses, reduced growth is expected in the most important markets. For the export industries,
however, the foreign exchange situation remains of crucial importance as far as revenue generation is
concerned. The growth within the tourism industry appears to be levelling out. Both nationally and
internationally a great deal of interest has focused on the areas in the north of Norway, where there
appears to be development opportunities within the energy, marine and tourism sectors. In addition,
there has been a significant discovery of oil off the Norwegian coast in the north.
     In 2006, competition within the financial services industry became fiercer, both as far as prices,
products and cost-effective distribution are concerned. This trend is expected to continue in 2007.
      It is expected that the general level of risk in the market will remain low, but that it might
increase somewhat during the course of 2007 as a result of higher interest rates. The structural
changes within certain commercial and industrial sectors will continue, especially in the fisheries area,
where the Government has announced a change in the current fisheries policy.

Market Position
     SpareBank 1 Nord-Norge’s most important competitive advantages are a good distribution
network, competent staff, as well as proximity and closeness to its market and customers. These
competitive advantages were strengthened during 2006. Through targeted development and further

                                                   70
enhancement of staff’s skills and competence, both as far as product knowledge, formal competence
and communications skills are concerned, a further strengthening of the Bank’s competitive powers
represents a target in 2007.
     The main Board of Directors has decided to boost the Bank’s competitive strength in Helgeland,
by making this a separate market area, with its own regional management and corporate market
department. Furthermore, this will be followed up by establishing EiendomsMegler 1 and a stronger
presence by SpareBank 1 Finans. Helgeland is a market area where SpareBank 1 Nord-Norge’s
market share is low, and the Bank’s aim is to increase it.
      As a result of the strong national interest and investment in the areas in the northern parts of
Norway, the Bank established a representative office in Murmansk in May 2007. The representative
office enables the Bank to assist its own customers and to monitor market developments within the
area. In addition, the Bank’s Kirkenes branch has been strengthened in order to be able to follow-up
on customers who either do business in North-Western Russia or whose operations involve that area.
      Through SpareBank 1 Nord-Norge’s co-operation arrangement with the SpareBank 1-alliance,
internal working processes are being improved all the time, as is the range of products and services
made available to customers. These advantages from its co-operation with the SpareBank 1-alliance
should help ensure that the Bank will be at the forefront of developments in the market.

Strategic Objectives
Business concept
      SpareBank 1 Nord-Norge provides total and modern financial solutions to customers with a
basis in the North-Norwegian market. We create competitive advantages by being close to the
customers and professionally competent in all customer relations. We know our customers very well
and have an intimate understanding of their situation. This is why we are best when it comes to
taking care of their needs and best at coming up with solutions which produce added value.
      SpareBank 1 Nord-Norge is an attractive place to work, with a corporate culture characterised
by dynamic training, a will to win and a will to work together. Our business is based on strict
requirements of honesty and corporate ethics, as written into the SNN Code of Conduct.
    SpareBank 1 Nord-Norge is an independent financial group within the SpareBank 1 Alliance.
We know North-Norway extremely well and contribute to development and growth within the region.

Values – Close and Competent
      Close means close to the customers, coupled with intimate understanding and involvement. This
means that we should at all times behave in a pleasant, accommodating and professional manner,
understanding individual needs, being available and accessible, demonstrating intimate local
knowledge, and having a strong presence throughout the market. Being close to the customers means
personal commitment and enthusiasm for the opportunities given to us in the workplace and by our
customers. Competent means having customer focus, solid professional competence, good skills and a
clear attitude. Advisory services and sales shall be based on good, ethical standards and
authorisations. The advice we give shall be of a high professional quality. Competence means the
ability and the will to take initiative and recommend relevant solutions for our customers, and an
ability to work with colleagues in all parts of our organisation in order to realise our overall aims.

Strategy for growth and productivity
      The main Board of Directors continually focuses on strategy. This is based on analyses and
evaluations of market conditions, the competition, framework conditions and internal processes.
     In 2005, SpareBank 1 Nord-Norge completed a broad strategy process which provided a
renewed strategy for growth and productivity. Growth will be achieved through increased business
volumes with existing customers, efforts to capture new customers, the development of market areas,
coupled with the development of new services and business areas. Growth targets take into
consideration SpareBank 1 Nord-Norge’s aim of increased productivity. Effective work processes,
coupled with a strengthening of professional competence throughout the organisation, represent the
most important initiatives.

                                                 71
      The strategy is subject to regular assessment, the aim being to ensure that it is converted into
action in a targeted and effective manner.

Financial targets
Capital adequacy
     SpareBank 1 Nord-Norge will be a financially strong bank with a capital adequacy ratio which
reflects the risk relating to the bank’s market area.
     *     The capital adequacy ratio will be at least 12 per cent. and the core capital ratio a
           minimum of 9 per cent.
     *     SpareBank 1 Nord-Norge’s level of confidence will be at 99.9 per cent.

Profitability
      SpareBank 1 Nord-Norge shall achieve a level of profitability which reflects the risk relating to
its operations and the market requirements for rates of return.
     *     The target is an after-tax return on equity capital of minimum 6 per cent. over the yield
           on long-term government bonds.
     *     The level of profitability will be in line with other banks with which SpareBank 1 Nord-
           Norge would normally compare itself.

Effectiveness
      *    SpareBank 1 Nord-Norge’s target states that overall costs shall not amount to more than
           50 per cent. of income.
     *     The level of effectiveness shall be in line with other banks with which it is natural to
           compare the Bank.

Asset/lOAN Structure (Group/IFRS)
     Group assets rose by NOK 6,359 million, standing at NOK 54,989 million at the end of 2006.
This represented a 13.2 per cent. increase during the last 12 months.
      Gross loans expanded by 11.0 per cent., from NOK 41,612 million at the end of 2005 to NOK
46,226 million at the close of 2006. Retail banking loans grew by 12.9 per cent., corporate and public
sector borrowings by 7.6 per cent. Retail banking customers accounted for 66 per cent. of the Bank’s
total lending, the corporate banking and public sectors for 34 per cent.
     As a result of the good economic situation within commerce and industry in the region, the
overall level of draw-downs under granted credit facilities has been low. After taking into
consideration credit facilities and building loans granted, but not yet drawn against, the retail
banking- and corporate banking sectors accounted for 63 and 37 per cent. respectively of total loans
and credit facilities as of 31 December 2006.
     In order to maintain overall credit risk at an acceptable level as far as its lending activities are
concerned, the Bank attaches particular importance to satisfactory collateral or other security
coverage and also to borrowers’ ability to service their outstanding commitments.
     Deposits from customers rose by NOK 2,434 million or 9.6 per cent. to NOK 27,784 million
during 2006. Retail banking deposits were up by 6.5 per cent., the corporate and public sectors by
13.5 per cent. The relative composition of gross lending to, and deposits from customers, resulted in a
60.1 per cent. ratio for internally generated funding as of 31 December 2006, as against 60.9 per cent.
a year earlier.

Risk and change in overall risk profile – lending
      The Bank uses a risk classification system based on a rating model as the basis for the
assessment of expected probability of the level of commitments in default and credit losses.

                                                   72
Total commitments broken down by different risk groups according to the probability of default show the
following development:
Amounts in NOK million                                                                  31.12.06                    31.12.05

Low risk.................................................................           44,486         84.3%        38,245         82.9%
Medium risk ..........................................................               5,480         10.4%         4,460          9.7%
High risk................................................................            2,803          5.3%         3 455          7.5%

Total ......................................................................        52,769                      46,160




      Through its credit strategy and its rules and regulations relating to the granting of loans etc. the
Bank attaches great importance to applying a restrictive approach with regard to the granting of new
high-risk commitments. This, coupled with good lending growth in the retail banking market and a
positive development within central commercial and industrial sectors during 2006, has helped bring
about an overall risk profile containing a lower portion of high-risk commitments.


      In 2006, NOK 43 million was credited to the profit and loss account as income in connection
with loan losses, equivalent to 0.09 per cent. of gross lending. In 2005, by comparison, NOK 65
million was charged to the profit and loss account in respect of losses, equivalent to 0.16 per cent. of
gross loans. The losses were made up as follows: a net income of NOK 61 million (as opposed to
losses of NOK 50 million in 2005) in the corporate market, and net losses of NOK 18 million (NOK
15 million in 2005) in the retail banking market.


     The assessment of credit losses as at 31 December 2006 for the Parent Bank and Group has
been made in accordance with the new rules and regulations relating to lending introduced by the
Financial Supervisory Authority of Norway (FSAN), these rules and regulations largely corresponding
to IAS 39.


        Losses specified by sector and industry
                                                                                          2006                        2005

                                                                                Proportion                  Proportion
Sector/industry                                                                   of losses        Losses     of losses        Losses

Agriculture, forestry, fisheries, hunting and fish
   farming ..............................................................            188%             -30         18%             16
Industry and mining ..............................................                    19%              -3         28%             24
Building and construction, power- and water
   supply ................................................................           -25%              4           0%              0
Wholesale and retail trade, hotel and restaurant
   industry .............................................................            -56%              9          30%             26
International shipping and pipeline transport.......                                   0%             —            0%             —
Other transport and communications ...................                                -6%              1          -1%             -1
Financing, property management and business
   services ..............................................................           -88%             14          28%             24
Other service industries .........................................                   -25%              4           1%              1
Retail banking sector.............................................                  -150%             24          25%             22
Collective write-downs for impaired value –
   corporate sector.................................................                 313%             -50        -38%             -33
Collective write-downs for impaired value – retail
   banking sector ...................................................                -69%             11           9%              8

                                                                               73
                                                                                   2006                      2005

                                                                         Proportion                Proportion
Sector/industry                                                            of losses      Losses     of losses      Losses

Collective write-downs for impaired value – (losses
  on repossessed properties).................................                   0%           —            0%           —

Losses on loans to customers..................................                100%           -16        100%           87

Payments received on loans previously written-off
  as confirmed lost ...............................................                           27                        22

Net losses on loans .................................................                        -43                       65

(Source: Annual Report 2006)

     As of 31 December 2006, net commitments in default totalled NOK 564 million, representing
1.22 per cent. of gross lending.
       Comparative figures 12 months earlier were NOK 698 million and 1.68 per cent. respectively.


Capitalisation

Equity and Related Capital – Capital Adequacy (Group IFRS)
      During the course of 2006, the Group’s risk-weighted assets (calculated according to NGAAP)
increased by NOK 3,844 million or 12 per cent., totalling NOK 35,594 million at the end of the year.
      As of 31 December 2006, SNN’s core capital totalled NOK 3,478 million, after deductions of
items not to be included when calculating the level of core capital, translating into a core capital
ratio of 9.77 per cent., up from 9.57 per cent a year earlier. The Parent Bank’s core capital ratio was
9.70 per cent.
     Aggregate equity and related capital as of 31 December 2006amounted to NOK 3,688 million,
deductions having been made for equity capital participations in other financial institutions. This
produced a capital adequacy ratio of 10.36 per cent. (10.43 per cent. for Parent Bank), as opposed to
10.91 per cent. (11.12 per cent. for Parent Bank) as of 31 December 2005.
      The lower capital adequacy ratio is mainly due to the increased capital coverage reserve required
as a result of the Bank’s increased shareholding in SpareBank 1 Gruppen AS.


Risk Management
      SpareBank 1 Nord-Norge’s operational risks are monitored and reported in accordance with
statutory regulations and international standards and are regarded to be satisfactory by the Board of
Directors.
     The Bank has no exposure in the foreign exchange market with the exception of the required
exposure in relation to trading on behalf of customers. The aggregate foreign exchange position as at
31 December 2006 amounted to NOK 4.9 million (NOK 7.8 million in 2005)
     The Group’s portfolio of shares as at 31 December 2006 was somewhat higher than it was 12
months earlier. As of 31 December 2006, the portfolio of shares, unit trust certificates and PCCs had
a book value of NOK 518 million, up by NOK 68 million during the last 12 months.
      The main Board of Directors has decided to keep the Bank’s interest rate risk at a low level.
The interest rate risk (measured as a value change in the case of a 1 percentage point shift in interest
rates) amounted to NOK 10.1 million as of 31 December 2006, compared with NOK 0.7 million a
year earlier.

                                                                        74
Risk management
      Risk is a basic element in a bank’s business model. Consequently, SpareBank 1 Nord-Norge
places heavy emphasis on identifying, measuring, managing and monitoring central risks in such a
way that it achieves its strategic objectives. Risk management is a key element of SpareBank 1 Nord-
Norge’s management philosophy, organisation, routines and systems, including good management by
objectives using the balanced scorecard approach.
      SpareBank 1 Nord-Norge aims to maintain a moderate risk profile and to apply risk monitoring
of such high quality that no single event will seriously impair its financial position. As part of this
effort, SpareBank 1 Nord-Norge scrutinises its most critical risk areas and the measures established to
manage these risks at least once a year. This scrutiny is an important element in SpareBank 1 Nord-
Norge’s ongoing risk management. Together with the other banks in the SpareBank 1 collaboration,
SpareBank 1 Nord-Norge continued the task of adapting existing risk management processes,
including the relevant framework, guidelines and organisation, to meet the expected future
requirements from Basel.

Credit risk
      The bank’s credit policy derives from its main strategy, and contains guidelines for risk profile,
distribution between the retail market and the business market, geographical constraints, maximum
overall commitment in some sectors and size of individual commitments, as well as separate rules for
specific types of commitments.
     SpareBank 1 Nord-Norge’s risk classification systems are designed with a view to managing
SpareBank 1 Nord-Norge’s loan portfolio in line with its credit strategy and to securing an
appropriate risk-adjusted return.
      Lending authority is related to size of commitment and is delegated with a basis in the
individual market area’s portfolio and risk.
     The classification system for business market customers is based on a scoring model that takes
into account financial position and the value of any collateral of the customer. All criteria are
objective and based on publicly available information such as audited accounts, credit information
and data from SpareBank 1 Nord-Norge’s own registers.
      The risk classification system and credit routines make clear-cut demands on the processes and
risk assessments involved in dealing with business and retail market commitments.
      A staff member is assigned responsibility for each customer. This staff member is responsible for
following up the customer on a daily basis and for checking that the customer maintains its ability to
pay. In addition SpareBank 1 Nord-Norge has a credit support division that takes over dealings with
customers who are obviously unable, or are highly likely to become unable, to service their
commitments unless action is taken beyond ordinary follow-up.

Market risk
      Market risk is defined as the potential for losses arising from market value falls resulting from
fluctuations in the fixed-income, currency and securities markets. Market risk is managed by means of
detailed limits for investments in equities, bonds and on positions taken in the fixed-income and
currency markets. The limits are reviewed at least once a year and are adopted yearly by the bank’s
Board of Directors. Exposures relative to the adopted limits are reported monthly to the Board of
Directors. SpareBank 1 Nord-Norge’s limits are well within the maximum limits set by the
authorities.

Liquidity risk
      Liquidity/funding is defined as a company’s ability to fund increases in assets and to meet its
obligations as its funding requirements increase. The management of the Bank’s funding structure is
based on an overall funding strategy which is reviewed and agreed by the main Board of Directors at
least once every year. The funding risk is reduced through spreading the funding loans as far as
different markets, funding sources, financial instruments and maturities are concerned.

                                                  75
     The main Board of Directors attaches great importance to predictability and stability. It is
important to make sure that incidental events do not have a serious impact on the Bank’s ability to
meet its financial obligations. The Bank’s strategic aim in this connection is that it should be able to
continue for 12 months without any new external funding,under normal market conditions. The Bank
has a contingency plan for handling both bank-specific and business-related crisis scenarios.

    Deposits from customers represent the Bank’s most important source of funding. As of 31
December 2006, deposits from customers financed 60.1 per cent. of loans made to customers,
compared with a ratio of 60.9 and 60.6 per cent. respectively for 2005 and 2004.

                                                                                         31.12.06         31.12.05

Deposits broken down by commercial, industrial and other
  sectors                                                                              NOK million       NOK million

Central government and social security administration .....                             1%         277    2%        599
Counties and municipalities................................................            14%       3,796   11%      2,854
Agriculture, forestry, fisheries, hunting and fish farming...                             3%         796    3%        765
Production of crude oil and natural gas.............................                    0%           0    0%          1
Industry and mining ...........................................................         2%         643    2%        405
Building and construction, power- and water supply.........                             4%       1,202    4%        949
Wholesale and retail trade; hotel and restaurant industry .                             5%       1,273    5%      1,177
International shipping and pipeline transport ....................                      0%           9    0%          4
Other transport and communications.................................                     2%         635    3%        770
Financing, property management and business services ....                               8%       2,333    7%      1,741
Other professional services .................................................           6%       1,704    6%      1,529
Retail banking sector ..........................................................       53%      14,763   55%     13,861
Foreign sector .....................................................................    1%         189    1%        183
Insurance, securities fund and other financial enterprices..                             1%         254    2%        512

Total deposits broken down by sector and industry ..........                           100%     27,874   100%    25,350

(Source: Annual Report 2006)

     Short-term funding loans (maturities up to 12 months) amounted to NOK 6,835 million as at 31
December 2006, down by NOK 723 million during the last 12 months. As of 31 December 2006,
deposits from customers, together with long-term funding loans and equity capital, amounted to 97
per cent. – including drawing rights facilities – of the Bank’s illiquid assets. The Bank applies Norges
Bank’s definition as a basis for calculating Liquidity Indicator 1. This is a ratio which shows to what
extent the bank’s illiquid assets are funded on a long-term basis.

      The Bank owns 19.08 per cent. of SpareBank 1 Boligkreditt AS, which is currently going
through its starting-up phase, but which is expected to become fully operational under a new law
during the course of 2007. The Bank expects that the possibility of placing well secured housing loans
with SpareBank 1 Boligkreditt AS will have a positive impact on the Bank’s overall funding
requirements.

     The adherence to all limits is monitored by the Bank’s Department for Risk Management, and
the position in relation to the limits fixed by the main Board of Directors is reported to the main
Board of Directors on a monthly basis. In order to reduce the total funding risk further, the Bank
has a reserve in the form of committed drawing rights.

Operational risk
      Operational risk is defined as the risk of loss inherent in SpareBank 1 Nord-Norge’s ongoing
operations as well as in external events, including the risk of loss as a result of inadequate or faulty
internal processes and systems, human error and various forms of attack on the bank such as
robbery, cheque counterfeiting, embezzlement, arson and computer crime.

                                                                          76
     SpareBank 1 Nord-Norge considers that authorisation structures, good descriptions of routines
and properly defined responsibilities in supply contracts between the respective divisions are elements
in any framework for handling operational risk.

IFRS
     SpareBank 1 Nord-Norge has prepared Group accounts in accordance with International
Financial Reporting Standards (IFRS).

Basel II adaptations
      SpareBank 1 Nord-Norge’s management of credit risk, operational risk and market risk will be
in line with the best practice for banks. Good communication with the market and supervisory
authorities forms an important part of this.In 2006, the Bank continued the process of adapting to
the new rules and regulations relating to risk management and the new capital adequacy requirements
in accordance with the international rules and regulations. During the autumn of 2005, the Bank
applied to FSAN for permission to apply the internal rating models in connection with its capital
adequacy computations. In its application, the main Board of Directors emphasised the requirements
relating to overall risk management, change in the competitive situation and the possibility of better
use of the Bank’s financial capital. Following a comprehensive process and frequent dialogue with
FSAN in 2006, on 16 February 2007 the Bank received the necessary approval from FSAN to use
internal models for the calculation of net capitaladequacy requirements for credit risk with effect from
1 January 2007.

Employees
       As at 31 December 2006, the SpareBank 1 Nord-Norge Group employed 825 staff (718 on a
full-time, and 107 on a part-time basis). There were 446 women and 379 men. This was equivalent to
766 employee-years, the Parent Bank and its subsidiaries accounting for 697 and 69 employee-years
respectively.
      SpareBank 1 Nord-Norge employs 105 managers – 32 women and 73 men. The average basic
salary per man-year was NOK 363,000 at the end of 2006, NOK 411,000 for men and NOK 324,000
for women.
       SpareBank 1 Nord-Norge considers its relations with the employees to be good.

Directors and Management
     In accordance with the Norwegian Companies Act, SpareBank 1 Nord-Norge has a two-tiered
board structure consisting of a Supervisory Board and Board of Directors.
     The business address for each of the persons listed under the Supervisory Board and Board of
Directors is the registered office of SpareBank 1 Nord-Norge.

Supervisory Board
     The Supervisory Board is the highest authority for SpareBank 1 Nord-Norge and its role is to
supervise the Board of Directors as it implements management strategy for SpareBank 1 Nord-Norge.
The current Chairman of the Supervisory Board is Kjell Pettersen.
       The following sets out the members of the Supervisory Board of SpareBank 1 Nord-Norge:

       Representatives elected among PCC holders

       Finn Haugan                       Terje Vareberg                  Bodil Steen
       Kjell Kræmer                      Trond Mohn                      Herman Mehren
       Svein Brustad                     Widar Slemdal Andersen          Ole Ovesen
       Bjarne Rasch-Tellefsen            Asbjørg Jensvoll Strøm          Alf E. Erevik
       Tor Lægreid                       Bente Evensen
       Marie M. Fangel                   Torvall Lind

                                                   77
     Representatives elected among depositors

     Lars Klæboe                         Reidun Kristiansen Flakstad   Bjørn Atle Hansen
     Jann Sandøy                         Elise Gjerde                  Sigfred Andersen
                                         Jan-Hugo Sørensen

     Representatives elected among municipalities

     Sissel Brufors Jensen               Ivar B. Prestbakmo            Arne Kr. Bredahl
     Benn Mikalsen                       Kristin Vatnelid Johansen
     Ann-Sissel Emaus                    Magnhild Mathisen

     Representatives elected among employees

     Asbjørn Hopland                     Odd H. Iversen                Ove Hagen
     Terje Sundklakk                     Hans Olav Gjøvik              Brith Sand
     Inger M. Loekken                    Randi Hansen
     Linda Bornø                         Villy Johansen

      As far as is known to SpareBank 1 Nord-Norge, no potential conflicts of interest exist between
any duties to SpareBank 1 Nord-Norge of the Board of Directors and Supervisory Board and their
private interests or other duties in respect of their management roles.

Board of Directors
     As of 31 December 2006, the members of the main Board of Directors of SpareBank 1 Nord-
Norge are as follows:

Name                                       Position

Kjell Olav Pettersen                       Chairman
Tom Veierød                                Deputy Chairman
Hans Olav Karde                            Chief Executive Officer
Elisabeth Johansen
Erik Sture Larre jr.
Hanne P. Bentsen
˚
Ase Annie Opsjøn
Rolf Pedersen
Vivi-Ann Pedersen                          Staff’s representative

     SpareBank 1 Nord-Norge’s senior management is as follows:
     *     Hans Olav Karde, Chief Executive Officer (1946)
     *               ˚
           Oddmund Asen, Deputy Chief Executive Officer (1953)
     *     Olav Karlsen, Senior Group General Manager
     *     Elisabeth Utheim, Senior Deputy General Manager
     *     Rolf Eigil Bygdnes, Senior Deputy General Manager
     *     Stig Arne Engen, Senior Deputy General Manager




                                                    78
Major Primary Capital Certificate Owners as at 31 December 2006
                                                                                                               Number of        Percentage of
The Largest PCC Holders as at 31 December 2006                                                                PCC Shares          Total PCC

Swedbank – client account .......................................................................                 1,541,640            9.74%
Frank Mohn AS .......................................................................................               418,800            2.65%
MP Pensjon...............................................................................................           298,560            1.89%
Tonsenhagen Forretningssentrum AS.......................................................                            244,200            1.54%
Mellon Bank .............................................................................................           212,640            1.34%
Framo Development AS ...........................................................................                    200,000            1.26%
Terra Utbytte ............................................................................................          173,360            1.09%
Ringerikes Sparebank ...............................................................................                124,080            0.78%
Trond Mohn .............................................................................................            120,000            0.76%
SpareBank 1 Rogaland .............................................................................                  116,285            0.73%
Troms Kraft AS........................................................................................              114,700            0.72%
Karl Ditlefsen ...........................................................................................          113,880            0.72%
Olsen, Fred & Co’s Pensjonskasse............................................................                        102,000            0.64%
Trondheim Kommune Kraftfondet ..........................................................                            101,500            0.64%
Bergen Kommunale Pensjonskasse ...........................................................                          100,000            0.63%
National Financial Services Citibank N.A. ..............................................                             98,004            0.62%
Forvarets Personell Service .......................................................................                  86,880            0.55%
Haugaland Kraft AS.................................................................................                  84,592            0.53%
SpareBank 1 Livsforsikring AS ................................................................                       81,285            0.51%
Goldman Sachs .........................................................................................              80,313            0.51%

Total Issued PCCs.....................................................................................            4,412,719            27.87%

(Source: Annual Report 2006)



Annual accounts Group IFRS – Income statement
Amounts in NOK million                                                                                   Notes           2006           2005

Interest income ............................................................................                  6         2,215          1,765
Interest costs                                                                                                6         1,118            690

Net interest income.......................................................................                              1,097          1,075

Fee and commission income........................................................                             7           427            403
Fee and commission costs ...........................................................                          7            65             63

Net fee and commission income....................................................                                         362            340

Net gain from investment in securities ........................................                              8            112             82
Income from associated companies and joint ventures ...............                                         14            156             93
Other operating income ...............................................................                       9             80             76
Operating costs ............................................................................          10,13,24            878            872

Profit before losses .......................................................................                               929            794

Net losses on loans and guarantees.............................................                              19           -43             65

Profit before tax...........................................................................                               972            729

Tax...............................................................................................           11           205            172

Profit for the year ........................................................................                               767            557

(Source: Annual Report 2006)


                                                                               79
Annual accounts Group IFRS – Balance sheet
Amounts in NOK million                                                                                Notes    31.12.06   31.12.05

Assets
Cash and balances with central banks ........................................                                      823        935
Loans and advances to credit institutions ...................................                             17       523         45
Loans and advances to customers ...............................................                       10, 18    46,226     41,638
– Individual write-down for impaired value................................                                19       195        264
– Collective write-down for impaired value ................................                               19       178        217

Net loans and advances to customers .........................................                            19     45,853     41,157
Securities ......................................................................................        15      5,354      4,511
Financial derivatives ....................................................................               16        449        491
Investments in associated companies and joint ventures ............                                      14        785        495
Property, plant and equipment....................................................                        13        506        503
Deferred tax.................................................................................            11         84        105
Other assets..................................................................................           12        585        388

Total assets ..................................................................................                 54,962     48,630

Liabilities
Liabilities to credit institutions....................................................                    17     1,965      1,773
Deposits from customers .............................................................                     20    27,784     25,350
Debt securities in issue ................................................................                 21    18,741     15,668
Financial derivatives ....................................................................                16       372        586
Other liabilities ............................................................................      11,23,24     1,202      1,017
Subordinated loan capital............................................................                     22     1,374      1,289

Total liabilities .............................................................................                 51,438     45,683

Equity
Primary Capital Certificates ........................................................                     25        792        792
Premium Fund.............................................................................                25          8          8
Other equity.................................................................................            25      2,719      2,142

Equity attributable to equity holders of the Bank ......................                                         3,519      2,942
Minority interests ........................................................................                          5          5

Total equity ..................................................................................                  3,524      2,947

Total liabilities and equity ............................................................                       54,962     48,630

(Source: Annual Report 2006)




                                                                              80
                                    SPAREBANKEN ROGALAND

The SpareBank 1 SR-Bank Group
History
      Sparebanken Rogaland, the legal name of SpareBank 1 SR-Bank, was established on 1 October
1976 by merging 22 savings banks to become the country’s first regional savings bank. Sparebanken
Rogaland is incorporated under the laws of Norway, specifically Act no. 1 of 24 May 1961 on
Savings Banks and is registered in the Norwegian Company Registry with organisation number 937
895 321. The address of its registered office is Bjergsted Terrace 1, 4007 Stavanger and the telephone
number of its registered office is +47 9150 2002. After 28 years of operations and merging of a total
of 39 savings banks, the bank has become Rogaland’s leading bank. 2006 was the thirtieth
anniversary of the merger in 1976, which was the most comprehensive merger that had been carried
out up until then among Norwegian savings banks. The bank was Norway’s second largest savings
bank from the very beginning, with total assets of NOK 1.5 billion. The regional savings bank grew
through active interaction with the community and business development in Rogaland. This was in
line with the bank’s roots that extend all the way back to 1839, when the oldest of the merged
savings banks was formed in Egersund. The founders of the savings banks in the rural districts
desired to contribute to a positive development of the community by channelling value created locally
back into the local community.
       In November 1996, Sparebanken Rogaland was party to         the formation of the SpareBank 1
Alliance, a Nordic banking and product partnership. Through         participation in the SpareBank 1
Alliance, the group is linked and cooperates with independent       and locally anchored banks. This
allows Sparebanken Rogaland to combine efficient operations         and economies of scale with the
benefits of being close to customers and the market.

The Group
     SpareBank 1 SR-Bank had 1,015 employees as of 31 December 2006. The group consists of
SpareBank 1 SR-Bank and the subsidiaries SpareBank 1 SR-Finans AS, EiendomsMegler 1 SR-
Eiendom AS, SR-Investering AS and SR-Forvaltning ASA.

The Bank
      During the past year SpareBank 1 SR-Bank opened new branch offices in Grimstad and Bergen.
The group’s market area is Rogaland, Agder and Hordaland. The bank currently has 52 branch
offices and total assets of NOK 84 billion. The head office is located in Stavanger. The customer-
oriented activities are organised in a retail market division, corporate market division and, from
1 February 2007, a capital market division.

Retail Market
      SpareBank 1 SR-Bank is the leading retail customer bank in Rogaland with 191,618 customers.
In addition to retail customers, the retail market division serves 8,400 small business and agricultural
customers. The bank offers products and services in the area of financing, investments, payment
services and pension insurance, as well as general and life insurance.

Corporate Market
      SpareBank 1 SR-Bank has around 5,000 customers in the business sector and public
administration. The division had lending growth of 54.7 per cent. in 2006. Around 40 per cent. of all
businesses in the bank’s traditional market list SpareBank 1 SR-Bank as their main bank. In
addition, there are 8,400 small business and agricultural customers who are served by the retail
market division.

EiendomsMegler 1 SR-Eiendom AS
     EiendomsMegler 1 SR-Eiendom AS is the largest company in the nationwide EiendomsMegler 1
chain and the market leader in the region. In 2006 EiendomsMegler 1 SR-Eiendom AS sold around
6,000 properties valued at around NOK 11 billion from its 23 real estate offices in Rogaland, Agder

                                                  81
and Hordaland. In 2006 company had a combined income of NOK 231 million. In addition to the
brokerage of homes, EiendomsMegler 1 SR-Eiendom AS has a separate division for commercial and
project brokerage, a separate division for the sale of new homes in Spain, and a separate division for
the brokerage of housing cooperative units. The EiendomsMegler 1 chain sold almost 17,000 homes
with a combined value of approximately NOK 27 billion in 2006. The chain has done well and is the
second largest real estate chain in Norway.


SpareBank 1 SR-Finans AS
      Leasing sales in SpareBank 1 SR-Finans AS exceeded NOK 1 billion for the first time in the
company’s history last year. At the end of 2006 there were 30 employees in the company, compared
with 23 in 2005. SpareBank 1 SR-Finans is the leading leasing company in Rogaland, with more than
NOK 2.7 billion in total assets, an increase of 28.6 per cent. from 2005. Profit before tax was NOK
35.5 million in 2006, compared with NOK 20.5 million in 2005. Its main products are leasing and car
loans. The leasing portfolio consists of a wide range of products, and the company’s customers
represent most of the region’s most important industries.


SR-Forvaltning ASA
      SR-Forvaltning ASA was established in 1999. The company’s objective is to be a local
alternative with a high level of competence in financial management. SR-Forvaltning manages
portfolios for SpareBank 1 SR-Bank and SpareBank 1 SR-Bank’s pension fund, in addition to
portfolios for around 2,800 external customers. The external customer base consists of pension funds,
public and private businesses and affluent private individuals. The company’s total assets are
approximately NOK 5.6 billion. External assets under management grew by NOK 1.3 billion in 2006.
The company has nine employees.


SR-Investering AS
     SR-Investering AS provides capital for all phases of a business, from seed capital to stock
exchange introductions and invests primarily in companies that require capital for further growth or
acquisitions. At the end of 2006 the company had investments totalling NOK 220 million in 26
companies. SR-Investering was established on 25 November 2005.


The SpareBank 1 Alliance
      The objective of the SpareBank 1 Alliance is to develop, procure and supply competitive
financial services and products, as well as exploit economies of scale in the form of lower costs and/
or higher quality, so that the customers receive the best advice and the best services at competitive
terms. The banks in the alliance cooperate partly through joint projects and partly through the jointly
owned holding company SpareBank 1 Gruppen AS. In addition to SpareBank 1 SR-Bank, the
SpareBank 1 Group is owned by Sparebanken Nord-Norge, Sparebanken Midt-Norge, Sparebanken
Hedmark, Samarbeidende Sparebanker AS (18 local savings banks in Eastern and Northwestern
Norway), as well as the Norwegian Confederation of Trade Unions (LO) and affiliated unions.
SpareBank 1 Gruppen AS owns 100 per cent. of the shares in SpareBank 1 Livsforsikring AS,
SpareBank 1 Skadeforsikring AS, Bank 1 Oslo AS, ODIN Forvaltning AS and SpareBank 1
Medlemskort AS. The company also has ownership interests in SpareBank 1 Bilplan AS (19.9 per
cent.), First Securities ASA (24.5 per cent.) and SpareBank 1 Utvikling DA (20 per cent.).


Purpose of SpareBank 1 SR-Bank
     The purpose of SpareBank 1 SR-Bank is to contribute to the creation of adding value for the
region we are part of.


Vision
      ‘‘SpareBank 1 SR-Bank – the recommended bank’’

                                                  82
Strategy
      SpareBank 1 SR-Bank shall be a profitable and solid bank that is attractive to customers,
capital markets, primary capital certificate owners and employees. This is to be ensured through:
     *    a savings bank philosophy with a strong brand identity and modern operations, in which
          values are created locally and channelled back to the local community;
     *    clear prioritisation based on customer needs and profitability;
     *    a market area consisting primarily of Rogaland, Agder and Hordaland;
     *    a considerable position in the savings and pension market; and
     *    competent employees who are proud to work for SpareBank 1 SR-Bank.

Primary Capital
      At the end of 2006 SpareBank 1 SR-Bank had primary capital of NOK 1126 million, divided
into 22,522,986 outstanding primary capital certificates, each with a nominal value of NOK 50. As of
31 December 2006 the number of certificates issued was 22,614,585. In addition, the primary capital
certificate owners’ capital consisted of an equalisation reserve of NOK 756 million and a premium
reserve of NOK 18 million.
      To finance the group’s growth and exploitation of interesting business opportunities in the
coming years, a pre-emptive rights issue for NOK 548 million was completed on 23 March 2007. A
private offering to the group’s employees of NOK 33 million was carried out at the same time.

Dividend Policy
      SpareBanken Rogaland’s financial goal for its operations is to achieve results that provide a
good and stable return on the bank’s total equity and thereby to add value for the primary capital
certificate owners in the form of a competitive dividend and appreciation of the primary capital
certificates. The bank’s profit for the year will be divided between the primary capital certificate
owners and the savings bank’s reserve in accordance with their share of the bank’s equity. Variations
may exist in the proportional distribution between cash dividends and the equalisation reserve when
consideration must be given to the development of the bank’s equity.
      Earnings per primary capital certificate were NOK 17.6 in 2006. Based on the bank’s dividend
policy and other considerations, on 15 March 2007 the Board paid a dividend of NOK 12 per
primary capital certificate for 2006.

Investor Policy
      The bank attaches importance to the fact that correct, relevant and timely information on the
bank’s development and results will inspire the confidence of the investor market. Information is
distributed to the market through the bank’s quarterly investor presentations, websites, press releases
and accounting reports. Regular presentations are given to international partners, lenders and
investors, primarily in London.

Information Addresses
     SpareBank 1 SR-Bank is also accessible via the Internet for information of interest to investors,
the media and brokers.
     *    SpareBank 1 SR-Bank’s website on the Internet:
          www.sr-bank.no
     *    Other links to financial information: www.huginonline.no

Financial Calendar for 2007
     *     Second quarter: 10 August 2007
     *    Third quarter: 25 October 2007
     *    The accounting figures for 2007 will be published in February 2008

                                                  83
Ownership
      SpareBank 1 SR-Bank’s goal is to secure good liquidity for the primary capital certificates and a
good diversity of owners that represent customers and regional investors, as well as Norwegian and
foreign institutions. In 2006 the bank made net purchases of 32,623 of its own primary capital
certificates, and as of 31 December 2006 it held a total of 91,599 primary capital certificates. The
bank purchases and sells its own primary capital certificates as an instrument to improve liquidity.
      In 2006 the bank also exercised the authority granted by the Supervisory Board to sell the
bank’s own primary capital certificates (a total of 155,327 certificates) to employees instead of
increasing the primary capital in connection with the employee offering.
      At the end of 2006, there were 11,376 registered owners of the bank’s primary capital
certificates. This is an increase of 1,015 owners (corresponding to 9.8 per cent.) compared to the end
of 2005. In 2006 the percentage of primary capital certificates owned by foreigners was 6.7 per cent.
(19.4 per cent. in 2005), while 63.4 per cent. (47.7 per cent. in 2005) were owned by local investors in
Rogaland, the Agder counties and Hordaland. The 20 largest owners controlled 31.3 per cent. (32.1
per cent. in 2005) of the primary capital at the end of the year.
        The following list shows the 10 largest primary capital certificate owners as of 31 December
2006:

                                                                                                                       Number     Share

1. Spring Capital AS..........................................................................................        2,225,850   9.8%
2. Norwegian National Insurance Fund............................................................                        747,200   3.3%
3. Frank Mohn AS ............................................................................................           457,250   2.0%
4. Clipper AS .....................................................................................................     454,532   2.0%
5. Trygve Stangeland .........................................................................................          401,157   1.8%
6. Tveteraas Finans AS......................................................................................            300,210   1.3%
7. State Street Bank & Trust, USA ...................................................................                   296,238   1.3%
8. Brown Brothers Harriman, USA ..................................................................                      282,000   1.2%
9. Bjergsted Investering AS ...............................................................................             220,000   1.0%
10. Terra Utbytte securities fund.......................................................................                214,900   1.0%

Total 10 largest owners......................................................................................         5,599,337   24.8%


        The ownership structure as of 31 December for the last five years has been as follows:

                                                                  2006                 2005                 2004          2003     2002

Regional share(1)........................................           63%                 48%                   47%           49%      46%
Other Norwegian owners ................                             30%                 33%                   39%           34%      37%
Foreign owners................................                       7%                 19%                   14%           17%      17%
Number of owners...........................                     11,376              10,361                 8,080         7,065    6,412
(1) Share from Rogaland, Agder and Hordaland. Share from Agder is included from 2003, and share from Hordaland included from
    2005.


RISK-adjustment
     Adjustment of the taxable original cost for Norwegian owners using the RISK rules (RISK
stands for (please provide Norwegian full title) ‘‘adjustment of original cost of shares by taxed profit’’)
took place for the last time in 2005. Due to an amendment of the tax regulations, the RISK amount
was eliminated from 2006.

Return on the Bank’s primary capital certificates in 2006
     At the end of 2006 the price of the bank’s primary capital certificates was NOK 189, compared
with NOK 230 at the end of 2005. Including dividends paid, the bank’s primary capital certificate
provided an effective rate of return of -11.7 per cent. in 2006.

                                                                            84
     The liquidity of SpareBank 1 SR-Bank’s primary capital certificates was relatively high in 2006,
and the trading volume corresponded to 34.8 per cent. of the outstanding certificates, compared with
36.1 per cent. in 2005.

Key Figures

                                                                            2006         2005         2004         2003          2002

Market price as of 31 December........................                     189.0        230.0        144.0         107.7          60.0
Taxable price as of 1 January following year ....                         150.40       149.18        93.60         69.66         59.67
Dividend per certificate ......................................              12.0         14.0          9.2           6.7            3.3
Direct return(1) ...................................................         6.3%         6.1%         6.4%          6.2%           5.6%
Effective return(2) ...............................................        -11.7%        66.1%        40.0%         85.0%        -19.3%
Book value per certificate(3) ...............................                84.3         80.8         72.3          72.8          68.8
Earnings per certificate(4) ...................................              17.6         21.0         15.2          10.9            2.5
Allocated to equalisation reserve per certificate                             5.6          6.9          5.8           4.2           -0.9
Payout ratio, net(5) .............................................            68%          67%          61%           61%         -357%
Primary capital certificate percentage(6) .............                      51.0%        53.0%        56.3%         58.4%         60.2%
RISK amount as of 1 January following year                                  n.a.         1.79         6.06          4.31         -0.97
Number of outstanding certificates as of
   31 December..................................................       22,614,585   22,614,585   22,614,585   22,614,585    22,614,585
Own certificates as of 31 December ...................                      91,599       58,976        1,435      115,985       206,670
Number of outstanding certificates as of 31
   December.......................................................     22,522,986   22,555,609   22,613,150   22,498,600    22,407,915
Certificates traded per year (% of outstanding
   certificates).....................................................          35%          36%          27%          31%          27%
(1)   Dividend as a percentage of the market price at the end of the year.
(2)   Price increase during the year plus dividend paid as a percentage of the market price at the beginning of the year.
(3)   Primary capital, equalisation reserve and premium reserve divided by the number of outstanding certificates.
(4)   Primary capital certificates’ share of adjusted profit after tax (parent company NGAAP).
(5)   Dividend per certificate as a percentage of earnings per certificate.
(6)   Primary capital, equalisation reserve and premium reserve as a percentage of the parent bank’s equity at year-end (excluding
      valuation difference fund).

        All figures have been adjusted for the split and capitalisation issue on 1 April 2005.

Risk and Capital Management
      For several years the SpareBank 1 SR-Bank Group has invested a great deal of resources in the
development of methods, processes and risk management systems on par with the best comparable
international banks. Risk management in the group is designed to support the group’s strategic
development and fulfilment of its objectives. Furthermore, risk management shall ensure financial
stability and responsible asset management. This shall be achieved through: a strong risk culture,
characterised by a high level of risk management awareness and a solid understanding of what risks
drive earnings and risk costs, thereby creating a better foundation for decisions striving towards an
optimal application of capital within the adopted business strategy
     avoiding unexpected negative events that can damage the group’s operations and reputation in
the market exploitation of synergy and diversification effects.
      The group has a moderate risk profile with no single event shall be capable of seriously harming
the group’s financial position. The group’s minimum goal is to maintain its current international
rating in order to ensure a long-term ample supply of ordinary deposits from the capital markets.
The size of the group’s risk-adjusted capital is in accordance with such an ambition.
      The group’s risk is quantified, for example, through calculations of the expected losses and need
for risk-adjusted capital (financial capital) to cover unexpected losses. The expected losses and risk-
adjusted capital are calculated for all the main groups of risk, and for all the business categories in
the group. The expected losses describe the amount of losses that must be expected statistically over
the next 12 months. Risk-adjusted capital describes how much capital the group believes it needs to
cover the actual risk the group has assumed. Since it is impossible to fully protect against all losses,

                                                                            85
the group has stipulated that the risk-adjusted capital shall cover 99.9 per cent. of possible
unexpected losses. The calculation of risk-adjusted capital is based on statistical methods, but the
calculation requires the use of qualitative assessments in some cases.
      The return on risk-adjusted capital is one of the most important strategic targets in the internal
management of the SpareBank 1 SR-Bank Group. This entails that the business areas are allocated
capital in accordance with the estimated risk of the activities, and that their return on capital is
monitored on an ongoing basis. The calculation of risk-adjusted capital enables the comparison of
risk across risk groups and business areas. In addition, the risk is measured and followed up though
measurement of the use of limits and important portfolio risk targets.
     An important element of efficient risk management is the monitoring of the current risk
exposure. All managers are responsible for the day-to-day risk management in their own areas of
responsibility, and they shall ensure that the risk exposure is within the limits adopted by the Board
or the CEO at all times.
     The group’s overall risk exposure and risk development are followed up through periodic risk
reports to the administration and Board. Overall risk monitoring and reporting are performed by the
risk management department, which is independent of the individual business units in the group.
Independent risk reporting is an important risk management principle in the SpareBank 1 SR-Bank
Group.

Responsibility for Risk Management and Control
      Risk management and control is part of the SpareBank 1 SR-Bank Group’s corporate
governance. A great deal of emphasis is placed on responsibility through personal authorisation and
independence between the business areas and organisational units that monitor the business areas. To
ensure efficient risk management in the SpareBank 1 SR-Bank Group, the responsibility has been
divided between various roles in the organisation as illustrated in the figure below.

Board of Directors
Adopts the group’s risk profile and ensures that the group has adequate subordinated capital that is
adequate based on the group’s level of risk and government requirements.
CEO, business units and support               Risk Management               Internal Auditing
departments                                   Department
First line of defence                         Second line of defence        Third line of defence
Day-to-day risk management                    Overall risk reporting and    Independent confirmation
                                              follow-up
Instructions, limits and authorisations       Formal reporting
      The Board of Directors of the SpareBank 1 SR-Bank Group is responsible for ensuring that the
group has subordinated capital that is adequate based on the adopted risk profile and government
requirements. The group’s Board adopts the overall goals such as the risk profile, return targets and
how the capital shall be distributed between the various business areas. The Board also determines
the overall limits, authorisations and guidelines for risk management in the group, as well as all the
important aspects of the risk management models and decision-making processes.
     According to resolutions by the bank’s Board, responsibility for risk management and control
with regard to the subsidiaries has been delegated to the boards of the subsidiaries.
     The CEO is responsible for risk management. This means that the CEO is responsible for the
implementation of efficient risk management systems in the group and the monitoring of the risk
exposure. The CEO is also responsible for the delegation of authorisations and reporting to the
Board.
     The business areas are responsible for the day-to-day risk management in their own areas of
responsibility, and they shall ensure that the risk management and risk exposure is within the limits
and general management principles adopted by the Board or the CEO at all times.

                                                  86
      Credit support is a support function in the business areas that is responsible for ensuring that
the decision process and decision making basis associated with loan and credit applications are in
accordance with the credit policy guidelines and credit review routines. The department is responsible
for the preparation of proposals for strategic credit indicators and credit policy guidelines. In
addition, the department handles all the commitments where the debtor is bankrupt, or where forced
liquidation/collection will be initiated in accordance with the group’s procedures.
      The risk management and compliance department is organised independent of the business units
and reports directly to the CEO. The department is responsible for risk models and the further
development of efficient risk management systems. The department is also responsible for independent
risk reporting, compliance and overall risk monitoring in the group.
      Internal auditing is a tool that is used by the Board and management to monitor whether the
risk management process is goal-oriented, effective and functions as intended. The group’s internal
auditing function is performed by an external supplier, and this ensures that the function has the
required independence, competence and capacity. The internal auditing function reports
organisationally to the Board. The internal auditing function’s reports and recommendations for risk
management improvements are reviewed and implemented on an ongoing basis in the group.
      Mainly there are two committees that have been established within the risk management area to
assist the CEO with a basis for making decisions and follow-up:
1.   Credit Committees. The bank has separate credit committees for the corporate market, retail
     market and subsidiaries. In addition, the bank has a joint main credit committee.
     The credit committees are responsible for giving an independent recommendation to the
     authorisation holder:
     *    with an evaluation of the loan and credit applications in accordance with the current credit
          strategy, credit policy guidelines, appropriation regulations and credit review routines;
     *    placing special emphasis on the identification of risk associated with the individual
          application, and performing an independent credit risk assessment; and
     *    ensuring that the consequences of the various risks to the bank have been clarified.
2.   The Balance Sheet Committee is responsible for dealing with matters associated with the capital
     structure and liquidity risk, market risk, transfer pricing of capital and compliance with the
     limits adopted by the Board of Directors.

Capital Management
      The objective of capital management in the SpareBank 1 SR-Bank Group is to ensure
satisfactory capital adequacy, efficient capital employment and responsible asset management in
relation to the group’s adopted business strategy and risk profile. This shall be ensured through an
adequate process for planning and monitoring the group’s capital employment and capital adequacy.
The process is risk driven and includes all significant types of risk in the group. The process is an
integral part of the business strategy, management process and decision structure. The process is
future-oriented and stress tests are conducted. The process is based on recognised and adequate
methods and procedures for risk measurement. The process is reviewed regularly, and at least
annually, by the Board of Directors.
     It is a long-term goal that the risk-adjusted capital shall be allocated within the adopted
business strategy to the areas that give the highest risk-adjusted return.
     The group’s goal for 2007 is a core capital ratio of 7 per cent. and a capital adequacy ratio of
11 per cent.

Credit Risk
     Credit risk is defined as the risk of loss due to customers or other contracting parties not
having the ability or willingness to fulfil their obligations to the group. Credit risk is managed
through the group’s credit strategy, credit policies and appropriation regulations.

                                                 87
      The credit strategy is determined at least annually by the Board of Directors. The group’s credit
strategy focuses on risk-sensitive key performance indicators and the limits that are set so that they
can manage the group’s risk profile in the credit area in the most appropriate and efficient manner.
This is achieved primarily by linking the key performance indicators and limits to the risk-adjusted
capital, risk-adjusted return and expected losses. In addition, the credit strategy sets limits for the
exposure and risk profile at the portfolio level, in industry sectors and with individual customers.
      The Board of Directors is responsible for the group’s loan and credit approvals. The Board of
Directors delegates authority, within certain limits, for the operational responsibility with respect to
decisions in loan and credit cases to the CEO. The CEO can delegate authority further within the
limits of his authority. Delegated authority is linked to a loan or commitment’s expected losses and
the probability of default.
      The group has developed and actively uses a system for risk classification, a risk pricing model
and a portfolio system for managing its portfolio of loans in line with the credit strategy, credit
policies and appropriation regulations. In combination with the credit review routines, this establishes
clear requirements for the credit review process and risk assessments. The aforementioned risk
management systems cover customers in both the corporate and retail market. The risk models on
which the risk management systems are based use statistical calculations and are subject to
continuous development and testing. The models are based on three components:
1.      Probability of default. The customers are classified in a default class based on the probability
        that the customer will default on his obligations during a period of 12 months. The probability
        of default is calculated based on historical data series for key financial figures, as well as non-
        financial criteria such as behaviour and age. Nine default classes (A – I) are used to classify the
        customers according to the probability of default. The table below shows the probability of
        default intervals for each of the default classes.

SpareBank 1 SR-Bank’s default classes

Default class                                                   Lower limit   Upper limit

A ..........................................................             —         0.10%
B...........................................................         0.10%         0.25%
C ..........................................................         0.25%         0.50%
D ..........................................................         0.50%         0.75%
E...........................................................         0.75%         1.25%
F...........................................................         1.25%         2.50%
G ..........................................................         2.50%         5.00%
H ..........................................................         5.00%         10.0%
I............................................................        10.0%         99.9%




                                                                       88
      In addition, the group has two default classes (J and K) for customers with commitments that
are in default and/or written down.




       The volume distribution percentages for commitments is illustrated above (exclusive of
commitments in default or written down) within the various default classes. Commitments include all
types of capital services that are provided to the customer through loans, credit, guarantees including
letters of credit, accrued unpaid interest and commissions, and forward currency and interest rate
instruments. Approved, but unutilised credit limits have also been included.

2.      Expected exposure in the event of default. This is the estimate of what the exposure will be if a
        customer defaults.

3.      Losses in the event of default: This is an estimate of how much the group will loose if the
        customer defaults on his obligations. This estimate takes into account the security furnished by
        the customer, and the costs the group incurs to collect defaulted commitments. These estimates
        are determined based on empirical data over time. Seven classes (1-7) are used for classification
        by the degree of loss in the event of default.

      The three aforementioned components also establish the basis for the group’s portfolio
classification and statistical calculations of expected losses and the need for risk-adjusted capital. The
purpose of the portfolio classification is to provide information on the level and development of the
overall credit risk in the total portfolio. The portfolio has therefore been divided into five risk groups
– lowest, low, medium, high and highest risk, respectively. Categorisation into risk groups is based on
a statistical calculation of each loan or commitment’s expected losses, based on the probability of
default, and exposure and degree of loss in the event of default.


SpareBank 1 SR-Bank’s risk groups

                                                              Lower limit     Upper limit
                                                             for expected    for expected
Risk group                                                          losses          losses

Lowest..................................................           0.00%           0.04%
Low ......................................................         0.04%           0.20%
Medium................................................             0.20%           0.75%
High .....................................................         0.75%           1.25%
Highest .................................................          1.25%            100%

      In addition, there is a separate risk category for loans that have already been defaulted on and
written down.

                                                                     89
       The graph below illustrates the volume distribution percentages for commitments (exclusive of
commitments in default or written down) within the various default classes. Commitments include all
types of capital services that are provided to the customer through loans, credit, guarantees including
letters of credit, accrued unpaid interest and commissions, and forward currency and interest rate
instruments. Approved, but unutilised credit limits have also been included.
     The underlying credit risk in the retail market portfolio showed a stable development in 2006,
while it increased somewhat in the corporate market portfolio as a result of the deliberate focus on
new markets and business areas. The group has a moderate risk profile in the credit area.

Liquidity Risk




      Liquidity risk is defined as the risk of the group not being able to refinance their debt or
finance an increase in assets without incurring significant additional costs. Management of the group’s
financial structure is based on an overall liquidity strategy that is assessed and approved by the
Board of Directors at least annually. The liquidity risk is reduced by the diversification of loans in
different markets, funding sources, instruments and maturity periods. The group’s currency/finance
area is responsible for liquidity management, while the risk management department monitors and
reports the utilisation of limits in accordance with the liquidity strategy.
     Deposits from customers are the group’s most important source of financing. The deposit-to-
loan ratio was 55 per cent. at the end of 2006, a reduction from 60.8 per cent. at the end of 2005.
      The group’s liquidity as of 31 December 2006 was satisfactory. There is an even distribution of
international and national sources of funding. In addition, the group has undrawn committed drawing
rights. Norges Bank’s liquidity indicator is used as a measurement parameter for liquidity
management. The liquidity indicator is determined by dividing the group’s stable financing by the
group’s illiquid assets. Stable financing includes deposits from the public, bearer bonds, subordinated
loan capital and equity. Illiquid assets are defined as gross lending to the public, other receivables,
seized assets, fixed asset investments and fixed assets. The indicator value as of 31 December 2006
was 90.3 per cent., compared with 100.8 per cent. at the end of 2005.

Market Risk
      Market risk is defined as the risk of loss due to changes in observable market variables such as
interest rates, currency rates, and security prices. The risk of security price fluctuations caused by
changes in general credit prices is also considered a market risk.
     Market risk arises in the SpareBank 1 SR-Bank Group primarily from the group’s investments
in bonds, certificates and shares, and as a consequence of activities carried out to support ordinary
banking activities, such as funding and interest rate and currency trading.
     The risk management department is responsible for the continuous, independent monitoring of
the market risk.

                                                  90
     The market risk is measured and monitored based on limits that are adopted by the Board of
Directors. The limits are reviewed and renewed on an annual basis. The limits are determined based
on stress tests and the analysis of negative market movements. The SpareBank 1 SR-Bank Group’s
market risk exposure is moderate.
      Interest rate risk is the risk of loss as a result of interest rate fluctuations. It is measured and
monitored based on limits that are adopted as described above. The risk arises mainly in relation to
fixed-rate loans and funding through fixed-rate securities. The interest rate risk for all interest rate
positions is expressed by looking at the change in the value of interest rate instruments in the event
of an interest rate change of 1 per cent. The group uses analyses that show the effect of the
aforementioned interest rate change for various repricing intervals, and there are separate limits for
interest rate exposure within the individual intervals. The interest rate commitment term for the
group’s instruments is primarily short, and the group’s interest rate risk is moderate.
      Currency risk is the risk of loss due to currency rate fluctuations. The group measures currency
risk based on net positions in each individual currency. The limits for currency risk are expressed by
limits for the maximum aggregate currency position and maximum position in individual currencies.
The currency risk is considered to be low.
     The exchange rate risk for securities is the risk of loss that arises due to fluctuations in the
market price of bonds, certificates and equity instruments that the group has invested in. The value of
these securities is dependent on factors that are specific to the individual issuers and on general
market movements. The group’s exposure to this form of risk is regulated through limits for
maximum investments in the various portfolios.

Operational Risk
     Operational risk can be defined as the risk of loss resulting from:
     *     human error or lack of expertise
     *     failure of ICT systems
     *     unclear policy, strategy or routines
     *     crime and internal irregularities
     *     other internal and external causes
      The group’s risk management and monitoring aims to be so efficient at all times that no single
event caused by operational risk shall be able to seriously harm the group’s financial position. The
risk strategy for operational risk is determined at least annually by the Board of Directors. The risk
strategy focuses on risk-sensitive key performance indicators such as expected losses and risk-adjusted
capital estimates. The group has a moderate risk profile in the operational area.
      The group has also reduced its operational risk further in 2006 through the use of systematic
risk analyses and the implementation of new preventative measures. The group also uses a separate
system for reporting and following up undesired events, so that the group can improve the processes
based on this reporting.

Business Risk
     Business risk can be defined as the risk for unexpected income and cost fluctuations. The risk
can arise in various business or product segments and be linked to cyclical fluctuations or a change in
customer behaviour. The group performs periodic sensitivity calculations to evaluate the effects of
such fluctuations.

Reputation Risk
      Reputation risk can be defined as the risk for a loss of earnings and access to capital due to
declining confidence and reputation in the market, i.e. customers, contracting parties, equities market
and the authorities. The group performs an overall assessment of the reputation risk and the effect of
preventative measures at least once a year.

                                                   91
New Capital Adequacy Regulations (Basel II)
      The EU’s new capital adequacy directive was implemented in Norway on 1 January 2007. The
new regulations are based on a proposal for a new standard for capital adequacy calculations from
the Bank for International Settlements (BIS). In accordance with the group’s high risk management
ambitions, SpareBank 1 SR-Bank was granted approval by the Financial Supervisory Authority of
Norway to use an internal rating based approach for credit risk from 1 January 2007. SpareBank 1
SR-Bank will use IRB Retail for the retail market and IRB Foundation for the corporate market.
For the group this means that the statutory minimum requirements for capital adequacy for credit
risk will be based on the group’s internal risk assessments from 2007. This will make the statutory
minimum capital adequacy requirement more risk sensitive, so that the capital requirement will
correspond more closely with the risk inherent to the underlying portfolios. The implementation of
the new rules will have a positive effect on the group’s capital adequacy, even through the full effect
will not be seen until 2010. For a transitional period, the intention is to set the minimum
subordinated capital requirement in 2007 to no lower than 95 per cent. of the minimum requirement
in accordance with the current regulations (Basel 1) from 2006. In 2008 and 2009 the corresponding
restrictions are 90 and 80 per cent. of the minimum requirement respectively.
      SpareBank 1 SR-Bank aims to use the standard method for the calculation of minimum capital
adequacy for operational risk from 2007. To calculate the minimum capital requirement for
operational risk in accordance with the standard method requires well-documented and integrated
assessment, management and reporting systems for operational risk. The capital requirement is
calculated as a given percentage (from 12 to 18 per cent.) of the income bases for the various
business areas.

Directors, management and auditors
Management Board
      Under the Norwegian Companies Act, Sparebanken Rogaland is required to have a two-tier
board structure, consisting of a Supervisory Board and a Board of Directors. The business address
for each of the persons listed under Supervisory Board and Board of Directors is the registered office
of SpareBank 1 SR-Bank. As far as is known to SpareBank 1 SR-Bank, no potential conflicts of
interest exist between any duties to SpareBank 1 SR-Bank of the Board of Directors and Supervisory
Board listed below and their private interests or other duties in respect of their management roles.

Supervisory Board
      The Supervisory Board is the highest authority of Sparebanken Rogaland and its role is to
supervise the Board of Directors as it implements management strategy. The Supervisory Board had
56 members from March 2006, consisting of 10 representatives elected among depositors, 10
representatives elected among municipalities, 22 representatives elected among the PCC holders and 14
representatives elected among the employees. The current Chairman of the Supervisory Board is Svein
Kjetil Søyland.
     The following sets out the members of the Supervisory Board of SpareBank 1 SR-Bank:

     Representatives elected among PCC holders
     Alf Erevik                Eva Thorin                           Randi Larsen Skjæveland
     Anne Elise Hystad         Hanne Karoline Kræmer                Terje Nysted
     Berit Rustad              Knut Næss                            Tollak Melberg
     Birte Næsheim             Kristin Hedberg                      Torbjørg Stangeland
     Bjarne Andersson          Kristine Tveteraas                   Torill Stave
     Bjarne Risa               Kurt Mosvold                         Trygve Jacobsen
     Bjørn Apeland             Marta Gudmestad
     Erik Sture Larre          Mona Iren Kolnes




                                                  92
     Representatives elected among depositors
     Hallvard Ween             Mandrup Hovland                     Synnøve I. Bakke
      ˚
     Kare Hansen               Odd Byberg                                     ˚
                                                                   Terje Valskar
     Karl Endre Igland         Sølvi Lysen Nordtveit
                               Olav Sande
                               Olav Halsne
     Representatives elected among municipalities
     Arne Maudal               Peder Eikeland                      Tor Syvert Aass
     Hans Gregers Aarenes      Svein Kj. Søyland                   Per Haram
     Kjell H. Fredriksen       Svein Ove Alvestad
     Lars Johan Sølhusvik      Terjer Hidle
     Representatives elected among employees
     Anne Nystrøm Kvale        Grethe Berge Østhus                 Laila Berntsen
     Arnt Eivind Roth          Harald Utvik Hamre                  Lars Magne Markhus
     Halvorsen                 Janne Clausen                       Oddvar Skretting
     Astrid H. Throndsen       Kari Helen Tollefsen                                 ˚
                                                                   Ole Magnus Sirevag
     Bjørn Berland             Kirsten Siv Ellingsen               Svein Hauge


Board of Directors
      The Board of Directors’ mandate is to develop and implement the strategies of Sparebanken
Rogaland. The Managing Director’s mandate is to lead Sparebanken Rogaland’s day-to-day activities
in accordance with guidelines from the Board of Directors. In addition, local bank councils have been
established in each of the municipalities where Sparebanken Rogaland has offices. The Board consists
of between 6 and 8 members, the Managing Director and 3 deputies elected in accordance with
Sparebanken Rogaland’s Articles of Association.
     The following table sets out the members of the Board of Directors of Sparebanken Rogaland:

The Board of Directors:
     Chairman Kristian Eidesvik Shipowner, Bømlo
                               ˚
     Vice Chairman, Gunn-Jane Haland
     Senior adviser, Petoro AS, Stavanger

Board members:
                 ˚
     Ingrid Landrak, Controller, Revus Energy ASA, Stavanger
                                           ˚
     John Peter Hernes Managing Director, SakornInVest, Forus
     Katrine Trovik, Lawyer Wikborg & Rein, Bergen
     Erling Øverland, Director, Statoil ASA, Forus
     Einar Risa, Main employee representative, Kværner Rosenberg, Stavanger
     Terje Vareberg, Managing Director SpareBank 1 SR-Bank
     Sally Lund-Andersen, Main employee representative, SpareBank 1 SR-Bank

External auditors
     The group’s external auditor is PricewaterhouseCoopers.

Internal audit
      Internal auditing is performed by Ernst & Young. The internal auditing function reports to the
group’s Board.

                                                    93
Employees
      At the year-end of 2006, the Sparebanken Rogaland Group had a total of 1,015 employees,
corresponding to 944 employee-years. There has been no industrial action involving Sparebanken
Rogaland’s employees since its reorganisation in 1976. Sparebanken Rogaland considers its relations
with its employees to be good.


Recent developments
      In 2006, SpareBank 1 SR-Bank attained a group profit before tax of NOK 1,161 million. This is
NOK 65 million above the profit for 2005. The profit after tax was NOK 924 million, up from NOK
862 million in 2005. The rate of return on equity after tax was 22.5 per cent., compared to 24.7 per
cent. in 2005

      The Group owes its very good performance to the general growth in all business areas. This
includes good underlying bank operations, improved performance in its subsidiaries and SpareBank 1
Gruppen AS, as well as good earnings on securities and low losses.

      The Board of Directors is very pleased with the profit for 2006. The Group had a growth in
lending of 25.1 per cent., and a growth in deposits of 13.4 per cent. in 2006. Deposits measured as a
percentage of gross lending were 55 per cent. at the end of the year. Net interest income increased by
NOK 15 million in 2006 compared to 2005.

        The net interest rate margin in 2006 was 1.52 per cent. This is a decline from 1.76 per cent. in
2005.

      Other income (exclusive of capital gains from securities, dividends, and income from equity
interests) constituted 40.3 per cent. of total income compared to 36.5 per cent. in 2005.

        Costs rose by 16.4 per cent. in 2006. The parent bank’s cost percentage was 51.6 per cent.

        Defaults fell by NOK 19 million in 2006, amounting to NOK 111 million.

      The Board of Directors proposes allocating NOK 271 million of the profit to dividends,
equalling NOK 12 per primary capital certificate, NOK 125 million appropriated to the equalisation
reserve, NOK 88 million to endowment funds and NOK 264 million to The Saving Banks fund.


Net interest income
      Net interest and credit commission income was NOK 1,128 million (1.52 per cent.), which is
NOK 15 million higher than in 2005. The net interest margin has been reduced by 24 basis points
since 2005.


Other operating income
      Other income (excluding capital gains on securities, dividend, and income from ownership
interests) constituted 40.3 per cent. of total income. The Group’s net commission income rose from
NOK 377 million in 2005 to NOK 436 million in 2005.

      The commission income from payments services in the parent bank continues to be the largest
contributor to other income, and amounted to NOK 173 million in 2006. Insurance income also
exhibited a positive trend, and was NOK 88 million in 2006.

     Commission income from the sale of funds and structured products (stock index bonds) rose by
39 per cent. and amounted to NOK 136 million. Net gain from investment securities rose by NOK
22 million to NOK 252 million.

      Dividend and income from ownership interests was NOK 189 million compared to NOK 119
million in 2005. The improvement is mainly due to improved results of The SpareBank 1 Group and
the increased ownership part in the group.

                                                    94
Operating costs
      Costs as a proportion of income for 2006 were 51.6 per cent. for the parent bank, and 56.3 per
cent. for the Group, compared to 48.4 per cent. and 53 per cent. respectively in 2005. The Group’s
operating costs were NOK 1.178 million in 2006, compared to NOK 1.012 million in 2005, a rise of
16.4 per cent.

      Personnel costs in the Group rose by 17.2 per cent., from NOK 541 million in 2005, to NOK
634 million in 2006. Other costs increased by 15.5 per cent. Operating costs amounted to 1.59 per
cent. of average total assets, compared to 1.60 per cent. in 2005.


Loans, deposits and investments
      As at 31 December 2006, the Group’s total assets amounted to NOK 85 billion, up NOK 17.8
billion from 2005.

     The growth in lending was 25.1 per cent. in 2006, and overall lending as at 31 December 2006
amounted to NOK 77.3 billion. Lending to the private market rose by NOK 7 billion, an increase of
16.6 per cent., while lending to the corporate market and public sector rose by NOK 8.9 billion, a
44.7 per cent. rise. Lending to the private market and the corporate market constituted 62.7 per cent.
and 37.3 per cent. respectively.

      At 31 December 2006, total deposits amounted to NOK 42.5 billion, corresponding to an
increase of 13.4 per cent. from 2005. The growth in the private and corporate/public sector market
was 9.9 per cent. and 16.4 per cent. respectively.

        The deposit coverage at 31 December 2006 was 55 per cent., a decline from 60.7 per cent. in
2005.


Losses and defaults
      Defaults in the Group have improved and amounted to NOK 111 million in 2006. This is a
decrease of NOK 19 million from 2005. Gross default as a percentage of gross lending was 0.14 per
cent. at 31 December 2006, a decline from 0.21 per cent. at the end of 2005. The Group’s net reverse
losses on lending were NOK 92 million, compared to net reverse losses of NOK 70 million in 2005.

       Losses as a percentage of gross lending were positive at 0.14 per cent. in 2006 against 0.21 per
cent. in 2005.


The capital adequacy ratio
      At the end of 2006, the Group’s capital adequacy ratio was 10.56 per cent., of which 7.39 per
cent. was core capital. The corresponding figures for the parent bank were 10.72 per cent. and 7.45
per cent. respectively. In the fourth quarter of 2006, new subordinated loans totaling NOK 800
million were raised, NOK 450 million of which was non-perpetual and NOK 350 million of which
was perpetual.

      No new fund bonds were issued in 2006. As of 31 December 2006, the fund bonds accounted
for 0.80 per cent. of the group’s core capital and capital adequacy ratio. Up to 15 per cent. of the
core capital can consist of the perpetual capital classified as Tier 1 capital. Any amounts beyond this
are added to capital adequacy calculations as subordinated loans.

      To finance the group’s growth and exploitation of interesting business opportunities in the
coming years, a pre-empitive rights issue for NOK 548 million was completed on 23 March 2007. A
private offering to the group‘s employees of NOK 33 million was carried out at the same time.

                                                  95
The Capital Adequacy Ratio
                                                                                                                             31.12.2006          31.12.2005

Capital adequacy ratio (per cent.) .....................................................................                             10.56%          11.84%
Core capital ratio (per cent.) .............................................................................                          7.39%           8.98%
Risk-weighted asset base used for calculation (million NOK)..........................                                               58,939          45,098
(Source: Annual Report 2006)


        The following list shows the 10 largest primary capital certificate owners as of 31 December
2006:
                                                                                                                                 Number              Share

1.    Spring Capital AS .......................................................................................                2,225,850                9.8%
2.    Norwegian National Insurance Fund .........................................................                                747,200                3.3%
3.    Frank Mohn AS..........................................................................................                    457,250                2.0%
4.    Clipper AS...................................................................................................              454,532                2.0%
5.    Trygve Stangeland.......................................................................................                   401,157                1.8%
6.    Tveteraas Finans AS ...................................................................................                    300,210                1.3%
7.    State Street Bank & Trust, USA.................................................................                            296,238                1.3%
8.    Brown Brothers Harriman, USA ................................................................                              282,000                1.2%
9.    Bjergsted Investering AS .............................................................................                     220,000                1.0%
10.   Terra Utbytte securities fund ......................................................................                       214,900                1.0%

Total 10 largest owners......................................................................................                  5,599,337               24.8%

(Source: Annual Report 2006)


Disposition of Profit/Dividend
     The board proposes that the annual profit for 2006 is allocated as follows:

                                                                                                                                                     NOK
                                                                                                                                                    million

Profit for the year.....................................................................................................................                818
Valuation difference fund ........................................................................................................                      70
Dividend (NOK 12 per primary capital certificates) ...............................................................                                      271
Equalisation fund.....................................................................................................................                 125
The savings banks fund ...........................................................................................................                     264
Endowment of fund .................................................................................................................                     88

Total.........................................................................................................................................         818

(Source: Annual Report 2006)




                                                                               96
     The following financial information has been extracted without material adjustment from the
audited consolidated financial statements of the SpareBank 1 SR-Bank Group as at 31 December
2005 and 2006, prepared in accordance with IFRS.

Profit and loss account (IFRS)                                                                                             2006           2005

                                                                                                                          (All figures in
                                                                                                                          NOK million)
Interest income ..................................................................................................        2,995          2,276
Interest expense..................................................................................................        1,867          1,163
Net interest income.............................................................................................          1,128          1,113
Commission income...........................................................................................                511            453
Commission expenses.........................................................................................                 75             76
Net commission income ......................................................................................                436            377
Income from financial investments ....................................................................                       252            230
Income from associated companies and joint ventures .....................................                                   189            119
Other operating income .....................................................................................                242            199
Personnel expenses.............................................................................................             634            541
Other expenses ...................................................................................................          490            423
Depreciation.......................................................................................................          54             48
Profit before losses .............................................................................................         1,069          1,026
Losses on loans and guarantees ........................................................................                     (92)           (70)
Profit before taxes ..............................................................................................         1,161          1,096
Taxes..................................................................................................................     237            234
Profit after taxes ................................................................................................          924            862
Minority interests...............................................................................................            10              6
Majority intests ..................................................................................................         914            856
Profit per PCC
Profit per PCC ...................................................................................................          21.5          21.4
Earnings per PCC fully diluted .........................................................................                   21.5          21.4




                                                                               97
Balance Sheets (IFRS)
                                                                                                                          31.12.2006   31.12.2005

                                                                                                                              (All figures in
                                                                                                                              NOK million)
Assets
Cash and balances with central banks...............................................................                             834           351
Loans and deposits to credit institutions ..........................................................                            170            43
Loans to customers net of write-downs ............................................................                           77,059        61,480
Securities ............................................................................................................       4,140         3,626
Derivatives .........................................................................................................           478           519
Investments in associated companies and joint ventures...................................                                       793           498
Intangible assets.................................................................................................                4            12
Property, plant and equipment..........................................................................                         299           305
Defered tax assets ..............................................................................................                24            41
Business operations to be sold...........................................................................                       579            —
Other assets........................................................................................................            655           362

Total assets ........................................................................................................        85,035        67,237

Liabilities
Debt to credit institutions..................................................................................                 6,028         3,636
Deposits from and debt to customers ...............................................................                          45,547        37,530
Debt established by issuance of securities .........................................................                         26,057        18,051
Derivatives .........................................................................................................           435           203
Taxes payable ....................................................................................................              217           162
Business operations to be sold...........................................................................                       524            —
Other liabilities...................................................................................................          1,935         1,489
Subordinated loan capital..................................................................................                   2,992         2,336

Total liabilities ...................................................................................................        80,735        63,407

Equity
Primary Capital .................................................................................................              1,126           1,128
Premium reserve ................................................................................................                  18              21
Other reserves ....................................................................................................            3,144           2,674
Minority interests...............................................................................................                 12               7

Total equity .......................................................................................................           4,300           3,830

Total liabilities and equity .................................................................................               85,035        67,237




                                                                               98
                                              TAXATION

      The following is a general description of certain Norwegian and Luxembourg tax considerations
relating to the Notes. It does not purport to be a complete analysis of all tax considerations relating to
the Notes. Prospective purchasers of Notes should consult their tax advisers as to the consequences under
the tax laws of the country of which they are resident for tax purposes and the tax laws of Norway and
Luxembourg of acquiring, holding and disposing of Notes and receiving payments of interest, principal
and/or other amounts under the Notes. This summary is based upon the law as in effect on the date of
this Prospectus and is subject to any change in law that may take effect after such date.


Norwegian Taxation

Taxation on Interest
      Interest paid to a non-resident holder of Notes will not be subject to Norwegian income or
withholding tax. Such holder of Notes may, however, be subject to taxation if the holding of Notes is
effectively connected with a business carried on by the holder of Notes in Norway.

     Such tax liability may be modified through an applicable tax treaty.

Taxation of Capital Gains
     A non-resident holder of Notes is not taxed in Norway on gains derived from the sale, disposal
or redemption of the Notes. Such holder of Notes may, however, be subject to taxation if the holding
of Notes is effectively connected with a business carried on by the holder of Notes in Norway.

     Such tax liability may be modified through an applicable tax treaty.

Wealth Tax
     Norway does not levy any property tax on similar taxes on the Notes.

     An individual non-resident holder of Notes is not subject to wealth tax, unless the holding of
Notes is effectively connected with a business carried on by the holder of Notes in Norway.

     Such tax liability may be modified through an applicable tax treaty.

Transfer Tax
     There is currently no Norwegian transfer tax on the transfer of Notes.


EU Savings Directive
      Under EC Council Directive 2003/48/EC on the taxation of savings income Member States are
required to provide to the tax authorities of another Member State details of payments of interest (or
similar income) paid by a person within its jurisdiction to an individual resident in that other
Member State. However, for a transitional period, Belgium, Luxembourg and Austria are instead
required (unless during that period they elect otherwise) to operate a withholding system in relation
to such payments (the ending of such transitional period being dependent upon the conclusion of
certain other agreements relating to information exchange with certain other countries). A number of
non-EU countries and territories including Switzerland have adopted similar measures (a withholding
system in the case of Switzerland).


Luxembourg Taxation
      The following summary is of a general nature and is included herein solely for information
purposes. It is based on the laws presently in force in Luxembourg, though it is not intended to be,
nor should it be construed to be, legal or tax advice. Prospective investors in the Notes should
therefore consult their own professional advisers as to the effects of state, local or foreign laws,
including Luxembourg tax law, to which they may be subject.

                                                   99
(i)   Non-resident holders of Notes
      Under Luxembourg general tax laws currently in force, there is no withholding tax on payments
of principal, premium or interest made to non-residents holders of Notes, nor on accrued but unpaid
interest in respect of the Notes, nor is any Luxembourg withholding tax payable upon redemption or
repurchase of the Notes held by non-resident holders of Notes.
      However, under the Luxembourg laws of 21 June 2005 (the Laws), implementing the Council
Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments
and ratifying the treaties entered into by Luxembourg and certain dependent and associated territories
of EU Member States (the Territories), payments of interest or similar income made or ascribed by a
paying agent established in Luxembourg to or for the immediate benefit of an individual beneficial
owner or a residual entity, as defined by the Laws, which are resident of, or established in, an EU
Member State (other than Luxembourg) or one of the Territories will be subject to a withholding tax
unless the relevant recipient has adequately instructed the relevant paying agent to provide details of
the relevant payments of interest or similar income to the fiscal authorities of his/her/its country of
residence or establishment, or, in the case of an individual beneficial owner, has provided a tax
certificate issued by the fiscal authorities of his/her country of residence in the required format to the
relevant paying agent. Where withholding tax is applied, it will be levied at a rate of 15 per cent.
during the first three-year period starting 1 July 2005, at a rate of 20 per cent. for the subsequent
three-year period and at a rate of 35 per cent. thereafter. Responsibility for the withholding of the
tax will be assumed by the Luxembourg paying agent. Payments of interest under the Notes coming
within the scope of the Laws would at present be subject to withholding tax of 15 per cent.

(ii) Resident holders of Notes
      Under Luxembourg general tax laws currently in force, there is no withholding tax on payments
of principal, premium or interest made to Luxembourg resident holders of Notes, nor on accrued but
unpaid interest in respect of Notes, nor is any Luxembourg withholding tax payable upon redemption
or repurchase of Notes held by Luxembourg resident holders of Notes.
      However, under the Luxembourg law of 23 December 2005 (the Law) payments of interest or
similar income made or ascribed by a paying agent established in Luxembourg to or for the
immediate benefit of an individual beneficial owner who is resident of Luxembourg will be subject to
a withholding tax of 10 per cent. Such withholding tax will be in full discharge of income tax if the
beneficial owner is an individual acting in the course of the management of his/her private wealth.
Responsibility for the withholding of the tax will be assumed by the Luxembourg paying agent.
Payments of interest under the Notes coming within the scope of the Law would be subject to
withholding tax of 10 per cent.




                                                  100
                                    SUBSCRIPTION AND SALE

      The Dealers have, in a programme agreement (such agreement, as amended and/or supplemented
and/or restated from time to time, the ‘‘Programme Agreement’’) dated 4 July 2007, agreed with each
Issuer a basis upon which they or any of them may from time to time agree to purchase Notes. Any
such agreement will extend to those matters stated under ‘‘Form of the Notes’’ and ‘‘Terms and
Conditions of the Notes’’. In the Programme Agreement, each Issuer has agreed to reimburse the
Dealers for certain of their expenses in connection with the establishment of the Programme and the
issue of Notes under the Programme and to indemnify the Dealers against certain liabilities incurred
by them in connection therewith.

United States
      The Notes have not been and will not be registered under the Securities Act and may not be
offered or sold within the United States or to, or for the account or benefit of, U.S. persons except
in certain transactions exempt from the registration requirements of the Securities Act.

     The Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered
within the United States or its possessions or to a United States person, except in certain transactions
permitted by U.S. tax regulations. Terms used in this paragraph have the meanings given to them by
the U.S. Internal Revenue Code of 1986 and regulations thereunder.

      Each Dealer has represented and agreed, and each further Dealer appointed under the
Programme will be required to represent and agree, that it will not offer, sell or deliver Notes (i) as
part of their distribution at any time or (ii) otherwise until 40 days after the completion of the
distribution, as determined and certified by the relevant Dealer or, in the case of an issue of Notes on
a syndicated basis, the relevant lead manager, of all Notes of the Tranche of which such Notes are a
part, within the United States or to, or for the account or benefit of, U.S. persons. Each Dealer has
further agreed, and each further Dealer appointed under the Programme will be required to agree,
that it will send to each dealer to which it sells any Notes during the distribution compliance period
a confirmation or other notice setting forth the restrictions on offers and sales of the Notes within
the United States or to, or for the account or benefit of, U.S. persons. Terms used in this paragraph
have the meanings given to them by Regulation S under the Securities Act.

      Until 40 days after the commencement of the offering of any Series of Notes, an offer or sale of
such Notes within the United States by any dealer (whether or not participating in the offering) may
violate the registration requirements of the Securities Act if such offer or sale is made otherwise than
in accordance with an available exemption from registration under the Securities Act.

      Each issuance of Index Linked Notes or Dual Currency Notes shall be subject to such
additional U.S. selling restrictions as the relevant Issuer and the relevant Dealer may agree as a term
of the issuance and purchase of such Notes, which additional selling restrictions shall be set out in
the applicable Final Terms.

Public Offer Selling Restriction under the Prospectus Directive
      In relation to each Member State of the European Economic Area which has implemented the
Prospectus Directive (each, a ‘‘Relevant Member State’’), each Dealer has represented and agreed, and
each further Dealer appointed under the Programme will be required to represent and agree, that
with effect from and including the date on which the Prospectus Directive is implemented in that
Relevant Member State (the ‘‘Relevant Implementation Date’’) it has not made and will not make an
offer of Notes which are the subject of the offering contemplated by this Offering Circular as
completed by the final terms in relation thereto to the public in that Relevant Member State except
that it may, with effect from and including the Relevant Implementation Date, make an offer of such
Notes to the public in that Relevant Member State:

     (i)   at any time to legal entities which are authorised or regulated to operate in the financial
           markets or, if not so authorised or regulated, whose corporate purpose is solely to invest
           in securities;

                                                  101
     (ii)   at any time to any legal entity which has two or more of (1) an average of at least 250
            employees during the last financial year; (2) a total balance sheet of more than A43,000,000
            and (3) an annual net turnover of more than A50,000,000, as shown in its last annual or
            consolidated accounts;
     (iv) at any time to fewer than 100 natural or legal persons (other than qualified investors as
          defined in the Prospectus Directive) subject to obtaining the prior consent of the relevant
          Dealer or Dealers nominated by the Issuer for any such offer; or
     (v)    at any time in any other circumstances falling within Article 3(2) of the Prospectus
            Directive,
     provided that no such offer of Notes referred to in (ii) to (v) above shall require the Issuer or
any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a
prospectus pursuant to Article 16 of the Prospectus Directive.
      For the purposes of this provision, the expression an offer of Notes to the public in relation to
any Notes in any Relevant Member State means the communication in any form and by any means
of sufficient information on the terms of the offer and the Notes to be offered so as to enable an
investor to decide to purchase or subscribe the Notes, as the same may be varied in that Member
State by any measure implementing the Prospectus Directive in that Member State and the expression
Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in
each Relevant Member State.

United Kingdom
     Each Dealer has represented and agreed, and each further Dealer appointed under the
Programme will be required to represent and agree, that:
     (i)    in relation to any Notes having a maturity of less than one year, (i) it is a person whose
            ordinary activities involve it in acquiring, holding, managing or disposing of investments
            (as principal or agent) for the purposes of its business and (ii) it has not offered or sold
            and will not offer or sell any Notes other than to persons whose ordinary activities involve
            them in acquiring, holding, managing or disposing of investments (as principal or as agent)
            for the purposes of their businesses or who it is reasonable to expect will acquire, hold,
            manage or dispose of investments (as principal or agent) for the purposes of their
            businesses where the issue of the Notes would otherwise constitute a contravention of
            Section 19 of the FSMA by the Issuer;
     (ii)   it has only communicated or caused to be communicated and will only communicate or
            cause to be communicated an invitation or inducement to engage in investment activity
            (within the meaning of Section 21 of the FSMA) received by it in connection with the
            issue or sale of any Notes in circumstances in which Section 21(1) of the FSMA does not
            apply to the Issuer; and
     (iii) it has complied and will comply with all applicable provisions of the FSMA with respect
           to anything done by it in relation to any Notes in, from or otherwise involving the United
           Kingdom.

Japan
      The Notes have not been and will not be registered under the Securities and Exchange Law of
Japan (the ‘‘Securities and Exchange Law’’) and each Dealer has agreed, and each further Dealer
appointed under the Programme will be required to agree, that it has not offered or sold and will not
offer or sell any Notes, directly or indirectly, in Japan or to, or for the benefit of, any resident of
Japan (which term as used herein means any person resident in Japan, including any corporation or
other entity organised under the laws of Japan), or to others for re-offering or resale, directly or
indirectly, in Japan or to a resident of Japan except pursuant to an exemption from the registration
requirements of, and otherwise in compliance with, the Securities and Exchange Law and any other
applicable laws and regulations and ministerial guidelines of Japan.

                                                  102
General
      Each Dealer has agreed, and each further Dealer appointed under the Programme will be
required to agree, that it will (to the best of its knowledge and belief) comply with all applicable
securities laws and regulations in force in any jurisdiction in which it purchases, offers, sells or
delivers Notes or possesses or distributes this Prospectus and will obtain any consent, approval or
permission required by it for the purchase, offer, sale or delivery by it of Notes under the laws and
regulations in force in any jurisdiction to which it is subject or in which it makes such purchases,
offers, sales or deliveries and neither any of the Issuers nor any of the other Dealers shall have any
responsibility therefor.
     None of the Issuers or the Dealers represents that Notes may at any time lawfully be sold in
compliance with any applicable registration or other requirements in any jurisdiction, or pursuant to
any exemption available thereunder, or assumes any responsibility for facilitating such sale.
      With regard to each Tranche, the relevant Dealer will be required to comply with such other
restrictions as the relevant Issuer and the relevant Dealer shall agree and as shall be set out in the
applicable Final Terms.




                                                 103
                                      GENERAL INFORMATION

Authorisation
      The establishment of the Programme and the issue of Notes have been duly authorised by a
resolution of the Board of Directors of the Sparebanken Midt-Norge dated 17 December 2003,
Sparebanken Nord-Norge dated 19 March 2001 and Sparebanken Rogaland dated 18 December 2003.
      The update of the Programme has been duly authorised by a resolution of the Board of
Directors of Sparebanken Midt-Norge dated 20 December 2006, the Board of Directors of
Sparebanken Nord-Norge dated 13 March 2007 and Sparebanken Rogaland dated 23 November
2006.

Approval, Admission to Trading and Listing of Notes
      Application has been made to the CSSF to approve this document as a base prospectus.
Application has also been made to the Luxembourg Stock Exchange for Notes issued under the
Programme to be admitted to trading on the Luxembourg Stock Exchange’s regulated market and to
be listed on the official list of the Luxembourg Stock Exchange.

Documents Available
     As long as Notes issued under the programme are listed on the official list of the Luxembourg
Stock Exchange and admitted to trading on the regulated market of the Luxembourg Stock
Exchange, copies of the following documents will, when published, be available from the registered
office of each Issuer and from the specified offices of the Paying Agents for the time being in London
and Luxembourg:
     (i)    the constitutional documents (with an English translation thereof) of each Issuer;
     (ii)   the audited consolidated and non-consolidated financial statements of each Issuer in respect
            of the financial years ended 31 December 2005 and 2006 (with an English translation
            thereof), in each case together with the audit reports prepared in connection therewith.
            Each of the Issuers currently prepares audited consolidated and non-consolidated accounts
            on an annual basis;
     (iii) the most recently published audited consolidated and non-consolidated annual financial
           statements of each Issuer, in each case together with the audit reports prepared in
           connection therewith. Each of the Issuers currently prepares audited consolidated and non-
           consolidated accounts on an annual basis; and the most recently published unaudited
           consolidated quarterly interim financial statements of each Issuer with an English
           translation thereof;
     (iv) the Programme Agreement, the Agency Agreement, the Deed of Covenant and the forms
          of the Global Notes, the Notes in definitive form, the Receipts, the Coupons and the
          Talons;
     (v)    a copy of this Prospectus;
     (vi) any future prospectuses, information memoranda and supplements including Final Terms
          (save that a Final Terms relating to a Note which is neither admitted to trading on a
          regulated market in the European Economic Area nor offered in the European Economic
          Area in circumstances where a prospectus is required to be published under the Prospectus
          Directive will only be available for inspection by a holder of such Note and such holder
          must produce evidence satisfactory to the relevant Issuer and the Paying Agent as to its
          holding of Notes and identity) to this Prospectus and any other documents incorporated
          herein or therein by reference; and
     (vii) in the case of each issue of Notes admitted to trading on the Luxembourg Stock
           Exchange’s regulated market subscribed pursuant to a subscription agreement, the
           subscription agreement (or equivalent document).

                                                   104
      In addition, copies of this Prospectus, each Final Terms relating to Notes which are admitted to
trading on the Luxembourg Stock Exchange’s regulated market and each document incorporated by
reference are available on the Luxembourg Stock Exchange’s website (www.bourse.lu).


Clearing Systems
     The Notes have been accepted for clearance through Euroclear and Clearstream, Luxembourg
(which are the entities in charge of keeping the records). The appropriate Common Code and ISIN
for each Tranche of Notes allocated by Euroclear and Clearstream, Luxembourg will be specified in
the applicable Final Terms. If the Notes are to clear through an additional or alternative clearing
system the appropriate information will be specified in the applicable Final Terms.
     The address of Euroclear is Euroclear Bank S.A./N.V., 1 Boulevard du Roi Albert II, B-1210
                                                                                 ´ ´
Brusssels and the address of Clearstream, Luxembourg is Clearstream Banking, societe anonyme, 42
Avenue JF Kennedy, L-1855 Luxembourg.


Conditions for Determining Price
      The price and amount of Notes to be issued under the Programme will be determined by the
relevant Issuer and each relevant Dealer at the time of issue in accordance with prevailing market
conditions.


Significant or Material Change
      Save as disclosed in this Prospectus, there has been no significant change in the financial or
trading position of any of the Issuers since 31 December 2006 and there has been no material adverse
change in the financial position or prospects of any of the Issuers since 31 December 2006.


Litigation
      None of the Issuers are or have been involved in any governmental, legal or arbitration
proceedings (including any such proceedings which are pending or threatened of which any of the
Issuers are aware) in the 12 months preceding the date of this document which may have or have in
such period had a significant effect on the financial position or profitability of any of the Issuers.


Auditors
      The auditors of Sparebanken Midt-Norge are Deloitte & Touche, which are members of the
Norwegian Institute of Public Accountants (Den norske Revisorforening), who have audited both
Sparebanken Midt-Norge’s consolidated and non-consolidated accounts, without qualification, in
accordance with generally accepted auditing standards in the Kingdom of Norway for each of the
two financial years ended on 31 December 2006. The regulations of the Norwegian accounting act
and accounting standards, principles and practices generally accepted in Norway have been applied in
the preparation of the financial statements of the non-consolidated accounts. International Financial
Reporting Standards as adopted by the EU have been applied in the preparation of the financial
statements of the consolidated accounts. The auditors of Sparebanken Midt-Norge have no material
interest in Sparebanken Midt-Norge.
      The auditors of Sparebanken Nord-Norge are KPMG, which are members of the Norwegian
Institute of Public Accountants (Den norske Revisorforening), who have audited both Sparebanken
Nord-Norge’s consolidated and non-consolidated accounts, without qualification, in accordance with
generally accepted auditing standards in the Kingdom of Norway for each of the two financial years
ended on 31 December 2006. The regulations of the Norwegian accounting act and accounting
standards, principles and practices generally accepted in Norway have been applied in the preparation
of the financial statements of the non-consolidated accounts. International Financial Reporting
Standards as adopted by the EU have been applied in the preparation of the financial statements of
the consolidated accounts. The auditors of Sparebanken Nord-Norge have no material interest in
Sparebanken Nord-Norge.

                                                 105
      The auditors of Sparebanken Rogaland are PricewaterhouseCoopers, which are members of the
Norwegian Institute of Public Accountants (Den norske Revisorforening), who have audited both
Sparebanken Rogaland’s consolidated and non-consolidated accounts, without qualification, in
accordance with generally accepted auditing standards in the Kingdom of Norway for each of the
two financial years ended on 31 December 2006. The regulations of the Norwegian accounting act
and accounting standards, principles and practices generally accepted in Norway have been applied in
the preparation of the financial statements of the non-consolidated accounts. International Financial
Reporting Standards as adopted by the EU have been applied in the preparation of the financial
statements of the consolidated accounts. The auditors of Sparebanken Rogaland have no material
interest in Sparebanken Rogaland.

Post-Issuance Information
     The Issuer does not intend to provide any post-issuance information in relation to any assets
underlying issues of Note constituting derivative securities.

Dealers Transacting with the Issuer
      Certain of the Dealers and their affiliates have engaged, and may in the future engage, in
investment banking and/or commercial banking transactions with, and may perform services to the
Issuers and their affiliates in the ordinary course of business.




                                                106
                                     THE ISSUERS
     Sparebanken Midt-Norge                                 Sparebanken Nord-Norge
           Søndre gt 4                                             Storg 65
       N-7467 Trondheim                                         N-9008 Tromsø
                                 Sparebanken Rogaland
                                  Bjergsted Terrasse 1
                                   N-4001 Stavanger


                                       DEALERS
   J.P. Morgan Securities Ltd.                            Merrill Lynch International
        125 London Wall                                  Merrill Lynch Financial Centre
       London EC2Y 5AJ                                       2 King Edward Street
                                                              London EC1A 1HQ

       Swedbank AB (publ)                                        UBS Limited
        Brunkebergstorg 8                                     1 Finsbury Avenue
      SE-105 34 Stockholm                                     London EC2M 2PP
                                     WestLB AG
                                   Herzogstrasse 15
                                           ¨
                                   40217 Dusseldorf

                  ISSUING AND PRINCIPAL PAYING AGENT
                                 The Bank of New York
                                  One Canada Square
                                   London E14 5AL

            PAYING AGENT AND LUXEMBOURG LISTING AGENT
                     The Bank of New York, Luxembourg S.A.
                                 Aerogolf Center
                                 1A, Hoehenhof
                              L-1736 Senningerberg
                          Grand Duchy of Luxembourg

                                  LEGAL ADVISERS
To the Issuers as to Norwegian law                       To the Dealers as to English law
Bugge, Arentz-Hansen & Rasmussen                               Allen & Overy LLP
        PO Box 1524 Vika                                       One Bishops Square
           N-0117 Oslo                                          London E1 6AO

                                      AUDITORS
   To Sparebanken Midt-Norge                              To Sparebanken Nord-Norge
       Deloitte & Touche                                          KPMG AS
       Karenslyst alle 20                                          PO 6262
          N-0278 Oslo                                          N-9292 Tromsø
                              To Sparebanken Rogaland
                               PricewaterhouseCoopers
                                    Forus Atrium
                                    Postbox 8017
                                  N-4068 Stavanger


                                     imprima — C96600

								
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