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ANNEX I LIST OF COMMITMENTS REFERRED TO IN ARTICLE 1(2) AND ARTICLE 2

1.1. [Restructuring phase/monitoring trustee] The restructuring phase ends on 31 December 2014. The commitments apply in the restructuring phase, provided the individual conditions do not state otherwise.

1.2.Full and proper implementation of all commitments and conditions listed in Annexes I, II and III will be continuously and thoroughly monitored and checked in detail by a suitably qualified monitoring trustee that is independent of HSH.

2. [Core bank and internal restructuring unit] HSH has set up an internal restructuring unit which is responsible for winding up certain assets. In functional and organisational terms, the internal restructuring unit is separate from the ongoing business areas (the core bank), and is managed as a segment in its own right with independent governance.

3. [Sale of parts of the business] The hiving off or sale of parts or subparts of the business with the approval of the public-sector owners is compatible with Article 2 of this Decision.

4.1. [Reduction of balance sheet total – group] On the basis of the HSH group’s audited balance sheet total at 31 December 2008 (EUR 208 billion), its balance sheet assets are to be reduced to around EUR [100-150] billion by 31 December 2012 and around EUR 120 billion by 31 December 2014. Of that amount, EUR […] billion will come from derivatives(1).

4.2. [Reduction of balance sheet total – core bank] The total balance sheet assets of the core bank are to be reduced to around EUR [60-90] billion by 31 December 2012 and around EUR 82 billion by 31 December 2014. Of that amount, EUR […] billion will come from derivatives(2).

4.3. [Reduction of balance sheet total – restructuring unit] The total balance sheet assets of the restructuring unit are to be reduced to around EUR [50 – 70] billion by 31 December 2012 and around EUR 38 billion by 31 December 2014. Of that amount EUR […] billion will come from derivatives(3).

4.4. [Correlation] Should the total balance sheet assets of the core bank at 31 December 2014 be less than EUR 82 billion, the maximum amount permitted for the restructuring unit will be increased by the difference. The maximum amount for the group under point 4.1 will remain unchanged.

4.5. [Withdrawal from object-related aircraft financing] HSH will withdraw completely from object-related aircraft financing, in accordance with the amended restructuring plan.

4.6. [Definition of the aircraft financing business area] HSH’s aviation division offers aircraft financing solutions worldwide. HSH acts as an arranger and lead bank, particularly in priority asset and project financing. The corporate business division will not provide object-related aircraft financing either in the future.

4.7. [Withdrawal from the international real estate business] HSH will give up international real estate financing in accordance with the amended restructuring plan.

4.8. [Downsizing of the ship financing business area] HSH will cut back its ship financing business, in accordance with the amended restructuring plan. The total balance sheet assets of the ship financing division in the core bank are to be reduced to around EUR 15 billion by 31 December 2014. The reduction will be achieved in particular by relinquishing the financing of roll-on/roll-off vessels and cruise ships, […]

4.9. [Restrictions in the ship financing business] Until 31 December 2014, HSH’s annual market share of new business in worldwide ship financing will not exceed [< 8 %] on a yearly basis. Until 31 December 2014 HSH will undertake not to be among the top three ship-financing providers with the highest annual volume of new business, according to the market rankings determined on a yearly basis.

4.10. [Definition of the ship financing business area] HSH’s shipping division acts as a strategic partner for clients, including shipowners in the global shipping and shipbuilding industry. In contrast to the shipping division, the corporate business division will not be active in object-related ship financing.

4.11. [New business in the ship financing business area] The following activities constitute new business over a specific period: (a) payments made in that period pursuant to newly concluded contracts; (b) undertakings to make future payments on the basis of contracts newly concluded during that period; renewals of commitments already entered into in the past, and payments made on account of the expiry of conditions or capital tie-ups, are regarded as extensions.

5. [Restriction of external growth] Until 31 December 2014 there may be no further expansion of business activities through the acquisition of other firms (no external growth). Subject to the European Commission’s approval, an exception may be made for acquisitions/mergers as part of the possible consolidation of Landesbanken, for the purposes of vertical integration or for other substantial reasons (e.g. to prepare the entry of strategic investors or to broaden the funding basis). Debt-to-equity swaps and other routine credit management measures are not considered to be expansion of business activities unless carried out with the intention of circumventing the restriction of growth referred to in the first sentence.

6.1. [Locations] The following HSH offices will close by no later than 31 December 2011:

(a)

Within the European Union:

  • Copenhagen

  • Helsinki

  • Paris

  • Riga

  • Naples

  • Lübeck

  • Warsaw

  • Stockholm

  • Amsterdam

  • Tallinn

(b)

Outside the European Union:

  • Oslo

  • Moscow

  • San Francisco

  • Hanoi

  • Shanghai

  • Mumbai

6.2.The existing business that has not been wound up by the time the offices mentioned under paragraph 6.1 close is to be transferred or allowed to expire after that time upon the maturity of the underlying business. No new business is to be accepted.

6.3.In so far as the existing business in Copenhagen has not been wound up and or cannot be transferred by 31 December 2011, and its winding up requires active management, Copenhagen may continue as a temporary location until the remaining business has finally been wound up or has expired. In that case the office being phased out will (1) have the bare minimum of staff and equipment required for actively winding up the business, (2) acquire no new business, (3) serve no core bank clients and (4) be closed down immediately once its portfolios have been dismantled. The office in question is to be assigned immediately to the restructuring unit.

6.4.HSH may retain the following offices:

6.5.The London and New York operations will be downsized by 31 December 2012 at the latest, and by the same date the Hong Kong branch will be transformed into a representative office. From 31 December 2012, the Luxembourg branch will remain solely as a branch of the Restructuring Unit.

7.1. [Holdings] HSH is to sell the holdings mentioned in Annex III on the dates specified there in greater detail.

7.2.HSH may postpone a sale of the holdings referred to in Annex III for no longer than […] until […] at the latest if it should transpire after obtaining binding offers that the proceeds obtained by the transaction would be lower than the book value of the holding in the individual accounts drawn up by HSH in accordance with the German Commercial Code (HGB).

7.3.The holdings marked with an asterisk ‘*’ in Annex III (particularly in the leasing and energy sectors) include outside financing by HSH whose duration in each case may extend beyond the date of sale stated in Annex III. If HSH cannot redeem those holdings together with the underlying loans, the sale of the holdings can be postponed for no longer than […] until […] at the latest.

7.4.The proceeds of the sale of HSH’s holdings are to be used entirely to finance the company’s restructuring plan.

7.5.The existing business from holdings that have not been sold within the deadlines laid down in points 7.1 to 7.3 is to be transferred or allowed to expire after the relevant deadline upon the maturity of the underlying business. No new business is to be accepted.

8. [Trading for own account] HSH is to end dedicated proprietary trading. This means that HSH is to carry on only trading activities indicated in its trading book that are necessary either (a) for accepting, transferring and executing its customers sales and purchase orders (i.e. trading with financial instruments as a service, up to a value measured in value at risk of EUR […]/1 day/99 % confidence) or (b) for hedging customer business or interest and liquidity management in the treasury sector (so-called trading for own account, up to a value measured with value at risk of EUR […]/1 day/99 % confidence) or (c) so that the economic transfer of balance sheet items to the restructuring unit or to third parties can be carried out (up to a value measured in value at risk of EUR […]/1 day/99 % confidence). As those positions can be taken on only within the limits defined above, they cannot jeopardise the sustainability or liquidity situation of HSH. Under no circumstances will HSH carry on business activities that serve purely to make a profit apart from the purposes mentioned in (a), (b) or (c).

9.1. [Liquidity/funding] Starting from 31 December 2012 and until 31 December 2014, HSH will fulfil the following liquidity indexes at the end of each year:

9.2.Net stable funding ratio (NSFR) of […] and liquidity coverage ratio (LCR) of […]. Once the corresponding liquidity indexes under Basel III have to be fulfilled by all the affected institutions, an additional premium of […] will be taken into account.

9.3.The share of the core bank’s USD business that is refinanced by means of USD-denominated funding (and not through swaps) will develop as follows from 2012 to 2014: at least […] by the end of 2012, at least […] by the end of 2013 and at least […] by the end of 2014.

10. [Advertising] HSH must not use the granting of the aid measures or any advantages over competitors arising therefrom for advertising purposes.

11.1. [Assurances regarding corporate governance] All members of the supervisory board are to have the competences stated in the first sentence of Section 36(3) of the German Banking Act. They are competent if they are reliable and have the required expertise to perform regulatory functions, and to assess and monitor HSH’s business transactions.

11.2.There must be no more than twenty supervisory board members. HSH and the public-sector owners must aim to reduce that number to sixteen at the end of the present board’s term of office.

11.3.At least half the seats allocated to the Länder of Hamburg and Schleswig-Holstein are to be occupied by external experts.

12.1. [Remuneration of bodies, employees and essential agents] HSH must verify the incentive effect and appropriateness of its remuneration systems and ensure, using the possibilities under civil law, that they do not result in exposure to undue risks, are oriented towards sustainable, long-term company objectives, and are transparent. That obligation will be satisfied if HSH’s remuneration systems meet the requirements in point 13.2 of the Annex ‘Obligations of HSH’ to the contract on the provision of a guarantee framework’ of 2 June 2009.

12.2.In the context of the possibilities under civil law, HSH is to remunerate its bodies, employees and essential agents in line with the following principles:

(a)

Its employees and essential agents must not receive any inappropriate salaries, salary components, bonuses, or any other inappropriate benefits.

(b)

The salary paid to HSH’s representatives and to its leading employees must be restricted to an appropriate level, whereby particular account should be taken of

  • the relevant person’s contribution to HSH’s economic state, especially in the context of previous business policies and risk management; and

  • the necessity of a market-oriented salary so as to be able to employ particularly suitable persons who can achieve sustainable economic growth.

(c)

Salaries, salary components and bonuses are considered to be inappropriate if they do not meet the principles laid down in the Annex ‘Obligations of HSH’ to the contract on the provision of a guarantee framework of 2 June 2009. In particular, the payment of a cash remuneration to its bodies, employees and essential agents in the case of HSH’s inability to pay a dividend (Dividendenfähigkeit) will be considered inappropriate if it exceeds EUR 500 000 a year.

13.1. [Discontinuation of obligations] If the public-sector owners relinquish control within the meaning of Article 3 of Regulation (EC) No 139/2004 (joint and sole control) over HSH after 31 December 2013, then the commitments in points 4, 5, 8, 9, 10, 12, 13 and 15 of this Annex, and the conditions in points 2, 3 and 4 of Annex II, no longer apply. The commitment in point 5 will nonetheless apply for at least 3 years.

13.2. [Independence of the buyer] The buyer of HSH must be independent of the public-sector owners. A buyer is independent of the public-sector owners if they are not able to exercise control within the meaning of Article 3 of Regulation (EC) No 139/2004 over the buyer at the time of sale. A buyer is independent of HSH if, at the time of sale, HSH has neither any direct or indirect shares in the buyer, nor any other connections under corporate law with the buyer. The Commission must confirm the buyer’s independence. The public-sector owners confirm that the term ‘the public-sector owners’ covers all their constituent levels (Länder, municipalities), public institutions and publicly controlled companies. It does not exclude a sale involving, for example, one or more Landesbanks following the Commission’s prior approval.

14. [Other rules of conduct] In the context of its lending and investing, HSH will take into account the borrowing requirements of the economy, in particular the requirements of medium-sized businesses, through conditions that are in line with market practice and appropriate from a supervisory/banking point of view. HSH must continue to expand its risk-monitoring operations. HSH’s commercial policy must be prudent, sound and oriented towards sustainability.

15. [Transparency] During the implementation of the Decision, the Commission is to have unlimited access to all information necessary for monitoring its implementation. The Commission may ask HSH to provide explanations and clarifications. Germany and HSH are to cooperate fully with the Commission in response to any request in connection with monitoring and implementation of this Decision.

(1)

EUR […] billion is the projected value of derivatives in both 2012 and 2014.

(2)

EUR […] billion is the projected value of derivatives in both 2012 and 2014.

(3)

EUR […] billion is the projected value of derivatives in both 2012 and 2014.