Download as pdf or txt
Download as pdf or txt
You are on page 1of 25



ECB Legal Conference 2017


6KDSLQJDQHZOHJDORUGHUIRU(XURSH
DWDOHRIFULVHVDQGRSSRUWXQLWLHV
6HSWHPEHU

December 2017
$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWV
LQUHODWLRQWRWKH660

%\)UpGpULF$OOHPDQG 

 )RUHZRUGWKHDFFRXQWDELOLW\LVVXHLQPRGHUQ
GHPRFUDFLHV
7KH(XURSHDQ8QLRQLVDGHPRFUDWLFSROLWLFDOSURMHFW'HPRFUDF\WKHIXQGDPHQWDO
YDOXHRIOLYLQJWRJHWKHU LVHPERGLHGLQDVHULHVRISULQFLSOHVDQGUXOHVWKDWIRUPWKH
EDFNERQHRIWKH8QLRQ¶VVWUXFWXUHDQGRSHUDWLRQWKHUXOHRIODZWKHVHSDUDWLRQRI
SRZHUVDQGWKHFRRSHUDWLRQSULQFLSOH WKHULJKWRIFLWL]HQVWRSDUWLFLSDWHGLUHFWO\DQG
LQGLUHFWO\LQWKHH[HUFLVHRISRZHU WKHSULQFLSOHRIRSHQQHVVDQGWUDQVSDUHQF\ DQG
UHFRJQLWLRQRIWKHULJKWVIUHHGRPVDQGSULQFLSOHVVHWRXWLQWKH&KDUWHURI
)XQGDPHQWDO5LJKWVRIWKH(XURSHDQ8QLRQ $FFRXQWDELOLW\RI(8LQVWLWXWLRQVDQG
RUJDQVLVYLWDOIRUWKHLPSOHPHQWDWLRQRIWKHGHPRFUDWLFSULQFLSOH±LWLVZKDW
JXDUDQWHHVWKHHIIHFWLYHQHVVRIDOOWKHRWKHUGLPHQVLRQVRIGHPRFUDF\7KHQRWLRQRI
DFFRXQWDELOLW\FDQEHWUDFHGEDFNWRWKH)UHQFKZRUGDFRQWH LWRULJLQDOO\UHIHUUHGWR
DOLVWRIPRQLHVUHFHLYHGRUGXHXSRQSUHVHQWDWLRQRIDFFRXQWV7KHPRGHUQ
GHILQLWLRQRIDFFRXQWDELOLW\DOOXGHVWRWKHJHQHUDOREOLJDWLRQRIRIILFHKROGHUVWRJLYH
DQDFFRXQWRIWKHH[HUFLVHRIWKHLUPDQGDWHWRWKHSULQFLSDO:KHQDSSOLHGWRD
GHPRFUDWLFSROLWLFDOUHJLPHLWUHIHUVWRWKHREOLJDWLRQRIWKRVHJRYHUQLQJWRUHSRUWWR
WKRVHEHLQJJRYHUQHGRUWKHLUUHSUHVHQWDWLYHVLQRUGHUWRDFFRXQWIRUWKHLUFRQGXFW
RISXEOLFDIIDLUV$FFRXQWDELOLW\VHUYHVDGXDOSXUSRVH,WUHIOHFWVWKHIDFWWKDWSRZHU
RULJLQDOO\VWHPVIURPWKRVHEHLQJJRYHUQHGDQGDOVRWKDWGHFLVLRQPDNHUVDUHGXW\
ERXQGWRH[HUFLVHWKHLUSRZHULQDFFRUGDQFHZLWKWKHZLOORIWKHSHRSOH 7KLVQRWLRQ
WKHUHIRUHHQFDSVXODWHVERWKVWUDQGVRIWKHOHJLWLPDWLRQRISROLWLFDOSRZHUILUVWO\WKH
ZD\LQZKLFKSRZHULVFRQIHUUHGRQGHFLVLRQPDNHUV LQSXWOHJLWLPDF\ DQGVHFRQGO\
WKHDUUDQJHPHQWVPDGHWRVXSHUYLVHWKHHIIHFWLYHSHUIRUPDQFHRIWKDWSRZHU RXWSXW
OHJLWLPDF\  



 5HVHDUFK)HOORZ5REHUW6FKXPDQ,QVWLWXWHRI(XURSHDQ$IIDLUV)DFXOW\RI/DZ(FRQRPLFVDQG
)LQDQFHV8QLYHUVLW\RI/X[HPERXUJ/HFWXUHULQ(8/DZ6FLHQFHV3R3DULV&KLHI(GLWRURI5HYXHGH
O¶HXUR7KHDXWKRUZLVKHVWRWKDQNWKHDQRQ\PRXVUHYLHZHUIRUKLVKHUWKRURXJKUHYLHZDQGLQVLJKWIXO
FRPPHQWV$Q\HUURUVRURPLVVLRQVUHPDLQHQWLUHO\RXUUHVSRQVLELOLW\

 $UWLFOHRIWKH7UHDW\RQ(XURSHDQ8QLRQ 7(8 

 $UWLFOH  7(8

 $UWLFOHVWR7(8

 $UWLFOH7(8$UWLFOHRIWKH7UHDW\RQWKH)XQFWLRQLQJRIWKH(XURSHDQ8QLRQ 7)(8 

 $UWLFOH7(8

 2[IRUG(QJOLVK'LFWLRQDU\  ³$FRQWH´LQ*RGHIUR\  S

 (XURSHDQ&HQWUDO%DQN  S

 6FKDUSI  

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
7KHVKHHUGLYHUVLW\RIGHPRFUDWLFUHJLPHVPHDQVWKDWDFFRXQWDELOLW\FDQQRWEH
UHGXFHGWRDVLQJOHIRUPRIOHJDODUUDQJHPHQWVLQVWHDGLWLVUHIOHFWHGLQDVHULHVRI
LQWHUDFWLRQVEHWZHHQWKH³DFFRXQWDEOHERG\´DQGWKH³DFFRXQWHH´ 6RPHFRPPRQ
IHDWXUHVFDQKRZHYHUEHV\VWHPDWLFDOO\REVHUYHGWKHDFFRXQWDEOHERG\LV
DQVZHUDEOHWRWKHSDUOLDPHQWDU\UHSUHVHQWDWLRQDQGLVWKHUHIRUHREOLJHGWRSXEOLVK
UHJXODUUHSRUWVRUWDNHSDUWLQSXEOLFGHEDWHVDQGLWVSHUIRUPDQFHLVDOVRVXEMHFWWR
HYDOXDWLRQE\DQLQGHSHQGHQWRUJDQLVDWLRQZLWKDVXIILFLHQWOHYHORIH[SHUWLVHQDPHO\
DQH[WHUQDOSXEOLFDQGRUSULYDWHDXGLWRU7KHVHWZRZD\VWRJLYHDFFRXQWDUH
FRPSOHPHQWDU\ 7KHLQFUHDVLQJO\WHFKQRFUDWLFDSSURDFKWRSXEOLFDIIDLUVUHTXLUHVD
KLJKOHYHORIH[SHUWLVHDQGVSHFLDOLVDWLRQWKDWWHQGVWREHODFNLQJLQSDUOLDPHQWVEXW
SDUOLDPHQWVDUHLQQHHGRI³HDV\WRUHDG´ LQIRUPDWLRQWRH[HUFLVHWKHLURZQ
VXUYHLOODQFH )XUWKHUPRUHWHFKQLFDOVXSHUYLVLRQLVRQO\HIIHFWLYHLILWLVVXIILFLHQWO\
YLVLEOHWRFRPPDQGWKHDWWHQWLRQRIVRFLHW\DVDZKROH7KHVHWHFKQLFDODQGSROLWLFDO
DVSHFWVDUHPXWXDOO\UHLQIRUFLQJ6XSHUYLVLRQE\QRPHDQVZHDNHQVDFFRXQWHHVRQ
WKHFRQWUDU\LWVWUHQJWKHQVWKHPE\JXDUDQWHHLQJWKHHIIHFWLYHSHUIRUPDQFHRIWKHLU
PLVVLRQV

 7KHDFFRXQWDELOLW\LVVXHIURPDORFDOFRQFHUQWRD
(XURSHDQPLVJLYLQJ
8QWLOWKHILQDQFLDOFULVLVOLWWOHDWWHQWLRQZDVSDLGWRWKHDFFRXQWDELOLW\RI
DXWKRULWLHVUHVSRQVLEOHIRUWKHSUXGHQWLDOVXSHUYLVLRQRIFUHGLWLQVWLWXWLRQV7KHWDVNRI
VXSHUYLVLRQZDVPDLQO\SHUIRUPHGE\WKH0HPEHU6WDWHV¶QDWLRQDOFRPSHWHQW
DXWKRULW\ 1&$  7KHVHGXWLHVZHUHTXDOLILHGDV³RWKHUIXQFWLRQV´WKDWWKH1&%V
FRXOGSHUIRUPRQWKHLURZQUHVSRQVLELOLW\DQGOLDELOLW\ :KHQWKLVPDWWHUZDV
UHIHUUHGWRWKH(&%LQLWVDGYLVRU\FDSDFLW\ILUVWO\LWVWDWHGWKDWWKHUHVKRXOGEHD
FOHDUVHSDUDWLRQEHWZHHQPRQHWDU\DQGEDQNLQJVXSHUYLVRU\UHVSRQVLELOLWLHVLIWKLV
WDVNZDVFRQIHUUHGRQDQDWLRQDOFHQWUDOEDQN DQGVHFRQGO\LWHPSKDVLVHGWKDWWKH
SHUIRUPDQFHRIDQ\DGGLWLRQDOWDVNVPXVWQRWUHVWULFWWKH1&%¶VKXPDQRUILQDQFLDO
UHVRXUFHVIRUWKHSHUIRUPDQFHRILWVUHVSRQVLELOLWLHVZLWKLQWKH(XURSHDQ6\VWHPRI



 $PWHQEULQNDQG/DVWUD  SS

 0LWFKHOO  

 &RQFOXVLRQDQG5HFRPPHQGDWLRQVRIWKHUG81,1726$,6\PSRVLXP813RVW'HYHORSPHQW
$JHQGD7KH5ROHRI6$,VDQG0HDQVRI,PSOHPHQWDWLRQIRU6XVWDLQDEOH'HYHORSPHQW0DUFK
9LHQQD$XVWULDSRLQW

 %UDQGVPD  S9HVHO  S

 /RXLV D 'RKHUW\DQG/HQLKDQ  SS9HVHO  RSFLWS2QHRIWKHPRVW
WKRURXJKVWXGLHVRIWKHLQGHSHQGHQFHDQGDFFRXQWDELOLW\UHJLPHVRISUXGHQWLDOVXSHUYLVRU\DXWKRULWLHV
LVWKDWDQQH[HGWRDQDGGUHVVE\/RUHQ]R%LQL6PDJKL6HH%LQL6PDJKL  

 $UWLFOH  RIWKH(6&%6WDWXWHRIWKH(6&%

 6HHIRUH[DPSOHRSLQLRQRIWKH(&%RI-XQHDWWKHUHTXHVWRIWKH,ULVK'HSDUWPHQWRI)LQDQFH
RQDGUDIW&HQWUDO%DQNDQG)LQDQFLDO6HUYLFHV$XWKRULW\RI,UHODQG%LOO &21 SW
2SLQLRQRIWKH(&%RI6HSWHPEHUDWWKHUHTXHVWRI1iURGQiEDQND6ORYHQVNDRQDGUDIWODZ
RQVXSHUYLVLRQRIWKHILQDQFLDOPDUNHWDQGRQDPHQGPHQWVWRFHUWDLQODZV &21 SW

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
&HQWUDO%DQNV (6&%  1DWLRQDOFHQWUDOEDQNVPD\EHVXSHUYLVHGE\VXSUHPH
DXGLWLQVWLWXWLRQV  6$,V XQGHUFHUWDLQFRQGLWLRQV$VSXEOLF DOEHLWLQGHSHQGHQW 
DXWKRULWLHV6$,VDUHGLIIHUHQWIURPWKH³H[WHUQDODXGLWRUV´LQWKHVHQVHRI$UWLFOH  
RIWKH(6&%6WDWXWH7KH\FDQQRWH[DPLQHWKHVHFWLRQVRI1&%V¶ILQDQFLDODFFRXQWV
WKDWDUHOLQNHGZLWKWKH(6&%UHODWHGWDVNV7KLVUHVWULFWLRQGRHVQRWSUHYHQW6$,V
IURP³FDUU\>LQJ@RXWILQDQFLDODQGPDQDJHPHQWDXGLWVRIWKRVHDFWLYLWLHVRIWKH>1&%@
WKDWDUHQRWUHODWHGWRLWV(6&%WDVNVDQGFRPSHWHQFHVSURYLGHGWKDW>WKHLU@UHSRUWV
DQGDXGLWDFWLYLWLHVGRQRWLPSLQJHRQWKH>1&%¶V@LQGHSHQGHQFH´ RURQWKHUHYLHZ
RIWKH(6&%UHODWHGWDVNVRIWKHQDWLRQDOFHQWUDOEDQNWREHXQGHUWDNHQE\WKH
FHQWUDOEDQNV¶LQGHSHQGHQWH[WHUQDODXGLWRUV 

 7KHDXGLWJDSLVVXHLQUHODWLRQWRWKHGLYHUVLW\RI6$,V¶PDQGDWHV

7KHILQDQFLDOFULVLVHPSKDVLVHGWKHVKRUWFRPLQJVRIWKHVXSHUYLVLRQDSSOLHGWRFUHGLW
LQVWLWXWLRQVDQGWKHZHDNQHVVRIWKHDXGLWIUDPHZRUNIRUEDQNLQJVXSHUYLVRUV ,WOHG
WRDPDMRURYHUKDXOLQWKHSUXGHQWLDOVXSHUYLVLRQRIFUHGLWLQVWLWXWLRQVDWERWK
0HPEHU6WDWHDQG(8OHYHO $WWKHVDPHWLPHWKHFRQVLGHUDEOHILQDQFLDOVXSSRUW
SURYLGHGE\0HPEHU6WDWHVWRWKHEDQNLQJVHFWRUMXVWLILHGDVWUHQJWKHQLQJRI6$,V¶
SRZHUV*XDUDQWHHLQJWKHVPRRWKRSHUDWLRQRIWKHEDQNLQJVHFWRUDQGSUHYHQWLQJ
WKHHPHUJHQFHRIDIXUWKHUFULVLVZRXOGDOVRUHTXLUHEHWWHUSXEOLFDXGLWRIEDQNLQJ
VXSHUYLVRUV ,QVHYHUDO0HPEHU6WDWHV6$,VZHUHJLYHQQHZUHVSRQVLELOLWLHVWR
LQFUHDVHWKHLUDXGLWLQJSRZHUVRYHUWKHDFWLYLWLHVSHUIRUPHGE\DXWKRULWLHV
UHVSRQVLEOHIRUEDQNLQJVXSHUYLVLRQLQFOXGLQJ1&%V7KLVOHGWKH(&%WRFODULI\WKH
VFRSHRI$UWLFOHRIWKH(6&%6WDWXWHDQGWKHLQWHUDFWLRQEHWZHHQWKHSULQFLSOHVRI
1&%LQGHSHQGHQFHDQGDFFRXQWDELOLW\WKHVFRSHRISXEOLFDXGLWVVKRXOGEHFOHDUO\
GHILQHGE\ODZDQGVKRXOGEHZLWKRXWSUHMXGLFHWRWKHSRZHUVRIH[WHUQDOSULYDWH
DXGLWRUV$XGLWVVKRXOGEHFRQGXFWHGRQDQRQSROLWLFDOLQGHSHQGHQWDQGSXUHO\
SURIHVVLRQDOEDVLV 7KH(&%LGHQWLILHGLQFRPSDWLELOLWLHVEHWZHHQQDWLRQDOOHJLVODWLRQ
DQGWKHLQGHSHQGHQFHDSSOLFDEOHWR1&%VWRSXUVXHWKHLU(6&%UHODWHGWDVNV,WZDV
QHLWKHUWKHLQWHQWLRQQRUWKHHIIHFWRIWKLVQHJDWLYHKDUPRQLVDWLRQWRLPSRVHDXQLIRUP
DXGLWIUDPHZRUN7KHPLVVLRQVDQGSRZHUVRI6$,VWKHUHIRUHYDU\FRQVLGHUDEO\IURP


 6HHIRUH[DPSOH(XURSHDQ&HQWUDO%DQN  SRSLQLRQRIWKH(&%RI)HEUXDU\DWWKH
UHTXHVWRIWKH*HUPDQ0LQLVWU\RI)LQDQFHRQDGUDIWODZDPHQGLQJWKH/DZRQWKH'HXWVFKH
%XQGHVEDQN &21 SWRSLQLRQRIWKH(&%RI-DQXDU\DWWKHUHTXHVWRIWKH
%DQTXHFHQWUDOHGX/X[HPERXUJRQWKHOHJDOIUDPHZRUNIRUWKHFRPSLODWLRQRIVWDWLVWLFVDQGWKHUROHRI
WKH%DQTXHFHQWUDOHGX/X[HPERXUJLQWKHILHOGVRIEDODQFHRISD\PHQWVDQGTXDUWHUO\ILQDQFLDO
DFFRXQWVVWDWLVWLFV &21 SW

 :HPDNHQRGLVWLQFWLRQEHWZHHQWKHWHUPV³VXSUHPHDXGLWLQVWLWXWLRQV´DQG³FRXUWVRIDXGLW´

 2SLQLRQVRIWKH(&%RI-XQHDQGRI2FWREHUERWKDWWKHUHTXHVWRIWKH&\SULRW
0LQLVWU\RI)LQDQFHRQDGUDIWSURYLVLRQDPHQGLQJWKHGUDIWODZDPHQGLQJWKH&HQWUDO%DQNRI&\SUXV
/DZVRIDQG&21  SRLQWDQG&21 &21 SRLQW

 LELG

 6LNND  SSVHHDOVR&RPPLVVLRQ  

 1DWLRQDO$XGLW2IILFHRI)LQODQG  

 (XURSHDQ&RXUWRI$XGLWRUV  6DQFKH]%DUUXHFR  SS

 (XURSHDQ&HQWUDO%DQN  SDOVR2SLQLRQRIWKH(&%RI6HSWHPEHURQWKHSXEOLF
DXGLWRI/LHWXYRVEDQNV &21 2SLQLRQRIWKH(&%RI-XQHRQWKH+XQJDULDQ6WDWH
$XGLW2IILFHLQUHODWLRQWRLWVDXGLWRIWKH0DJ\DU1HP]HWL%DQN &21 2SLQLRQRIWKH(&%RI
)HEUXDU\RQDPHQGPHQWVWRWKH3ROLVK&RQVWLWXWLRQFRQFHUQLQJDGRSWLRQRIWKHHXUR
&21 SRLQW

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
RQH0HPEHU6WDWHWRDQRWKHU 7KLVKDVDVLJQLILFDQWLPSDFWRQWKHHIIHFWLYHQHVVRI
DXGLWVSHUIRUPHGRQEDQNLQJVXSHUYLVRUV,WFRXOGHYHQZHDNHQWKHTXDOLW\RI
EDQNLQJVXSHUYLVLRQDW(XURSHDQOHYHOVLQFHWKHVXSHUYLVRUVDUHQRWVXEMHFWWRWKH
VDPHDXGLWUHTXLUHPHQWV 

7KH$OJHPHQH5HNHQNDPHU 1HWKHUODQGV&RXUWRI$XGLW SDLGSDUWLFXODUDWWHQWLRQWR


WKLVVLWXDWLRQJLYHQWKHLPSRUWDQFHDQGKLJKO\LQWHUQDWLRQDOQDWXUHRIWKHEDQNLQJ
LQGXVWU\LQWKH1HWKHUODQGV7KHPHUJHURIWKH3HQVLRQDQG,QVXUDQFH6XSHUYLVRU\
$XWKRULW\RIWKH1HWKHUODQGV 39. ZLWK'H1HGHUODQGVFKH%DQN '1% LQ
UHWDLQHGWKH&RXUW¶VSRZHUVRIDXGLWRYHUVXSHUYLVRU\WDVNV WKLVGHYHORSPHQWGLG
QRWJLYHULVHWRDQ\SDUWLFXODUREVHUYDWLRQVIURPWKH(&% ,QWKHDXGLWSRZHUV
RIWKH&RXUWZHUHH[WHQGHGWRFRYHUDOOWKH'1%¶VDFWLYLWLHV $WWKH1HWKHUODQGV¶
UHTXHVWWKHOLVWRIDGGUHVVHHVRIFRQILGHQWLDOEDQNLQJLQIRUPDWLRQZDVH[WHQGHG
ZKHQWKH&DSLWDO5HTXLUHPHQWV'LUHFWLYH (& ZDVUHYLVHG $FFRUGLQJWR
$UWLFOHRIWKHQHZGLUHFWLYH NQRZQDV&5',9 WKH0HPEHU6WDWHVPD\DXWKRULVH
WKHGLVFORVXUHRIFHUWDLQLQIRUPDWLRQUHODWLQJWRWKHSUXGHQWLDOVXSHUYLVLRQRI
LQVWLWXWLRQVWRFRXUWVRIDXGLWRUVLQWKHLU0HPEHU6WDWHRQWKHFRQGLWLRQWKDW³WKH
HQWLWLHVKDYHDSUHFLVHPDQGDWHXQGHUQDWLRQDOODZWRLQYHVWLJDWHRUVFUXWLQLVHWKH
DFWLRQVRIDXWKRULWLHVUHVSRQVLEOHIRUWKHVXSHUYLVLRQRILQVWLWXWLRQVRUIRUODZVRQ
VXFKVXSHUYLVLRQ´ 7KLVOHJLVODWLYHGHYHORSPHQWZDVWUDQVSRVHGDQGWRRNHIIHFWLQ
'XWFKODZLQ7KH$OJHPHQH5HNHQNDPHUREWDLQHGWKHULJKWWRDFFHVV
FRQILGHQWLDOLQIRUPDWLRQUHODWHGWREDQNLQJVXSHUYLVLRQKHOGE\WKH'1%SURYLGHG
WKDWWKLVLQIRUPDWLRQZDVVWULFWO\QHFHVVDU\IRUWKHSHUIRUPDQFHRILWVGXWLHV 7KH
WUDQVSRVLWLRQRI$UWLFOHRIWKHGLUHFWLYHUHPDLQVRSWLRQDOIRUWKH0HPEHU6WDWHV
7KHVLWXDWLRQLQWHUPVRISXEOLFDXGLWKDGWKHUHIRUHEDUHO\SURJUHVVHGIURPWKH
SUHYLRXVVWDWHRIWKHODZ

7KH$OJHPHQH5HNHQNDPHUUDLVHGWKHLVVXHRIWKHGLYHUVLW\RI6$,V¶VWDWXWHVLQ
ZLWKLQWKH&RQWDFW&RPPLWWHHRIWKH6XSUHPH$XGLW,QVWLWXWLRQVRIWKH(XURSHDQ
8QLRQ$ZRUNLQJJURXSFRRUGLQDWHGE\WKH'XWFK&RXUWZDVVHWXSZLWKWKHDLPRI
FDUU\LQJRXWDSLORWVWXG\DPRQJ(XURSHDQ&RXUWVRI$XGLW ³LQRUGHUWRLGHQWLI\
SRVVLEOHSXEOLFDXGLWGHILFLWVUHODWHGWR6$,PDQGDWHFRYHUDJHDQGLQIRUPDWLRQ
DFFHVVULJKWV´ )RXUWHHQ6$,VWRRNSDUWLQWKHVWXG\,WFRQFOXGHGWKDWRQO\KDOIWKH


 6HHWKHUHSRUWSURGXFHGE\WKH2(&'  RQIRXU0HPEHU6WDWHV*HUPDQ\,UHODQGWKH
1HWKHUODQGVDQG6ZHGHQ

 '¶+XOVWHU  S

 %RYHQVFKHQ  SS

 2SLQLRQRIWKH(&%RI2FWREHUDWWKHUHTXHVWRIWKH0LQLVWU\RI)LQDQFHRIWKH1HWKHUODQGVRQ
DGUDIWODZRQSURYLVLRQVFRQFHUQLQJWKHPHUJHURI'H1HGHUODQGVFKH%DQNDQGWKH3HQVLRQVDQG
,QVXUDQFH6XSHUYLVRU\$XWKRULW\)RXQGDWLRQ &21 

 %RYHQVFKHQ  S

 'LUHFWLYH(&RIWKH(XURSHDQ3DUOLDPHQWDQGRIWKH&RXQFLORI-XQHUHODWLQJWRWKH
WDNLQJXSDQGSXUVXLWRIWKHEXVLQHVVRIFUHGLWLQVWLWXWLRQV 2-/-XQH 

 $UWLFOH D RI'LUHFWLYH(8RIWKH(XURSHDQ3DUOLDPHQWDQGRIWKH&RXQFLORI-XQH
RQDFFHVVWRWKHDFWLYLW\RIFUHGLWLQVWLWXWLRQVDQGWKHSUXGHQWLDOVXSHUYLVLRQRIFUHGLWLQVWLWXWLRQVDQG
LQYHVWPHQWILUPVDPHQGLQJ'LUHFWLYH(&DQGUHSHDOLQJ'LUHFWLYHV(&DQG
(& 2-/-XQH 

 $UWLFOH E RI'LUHFWLYH(8

 &RQWDFW&RPPLWWHH5HVROXWLRQ&&51RWSXEOLVKHG

 &RQWDFW&RPPLWWHHRIWKH6XSUHPH$XGLW,QVWLWXWLRQVRIWKH(XURSHDQ8QLRQ &RQWDFW&RPPLWWHH 
 

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
FRXUWVKDGEHHQPDQGDWHGWRDXGLWEDQNLQJVXSHUYLVRU\DXWKRULWLHVRIWKHVHVL[KDG
DFFHVVWRWKHEDQNUHFRUGVRIWKHVHDXWKRULWLHVEXWZHUHUHVWULFWHGLQWKHLUSXEOLVKLQJ
SROLF\E\FRQILGHQWLDOLW\FODXVHVUHJDUGLQJFHUWDLQLQIRUPDWLRQRQEDQNV 

 7KHDXGLWJDSLVVXHLQUHODWLRQWRWKHHVWDEOLVKPHQWRIWKH660

 7KHWZRVSHHGDFFRXQWDELOLW\UHJLPH

&RXQFLO5HJXODWLRQ (8 1R 6605HJXODWLRQ FRQIHUVVSHFLILFWDVNVRQ


WKH(&%LQWKHDUHDRISUXGHQWLDOVXSHUYLVLRQRIFUHGLWLQVWLWXWLRQV7KLVUHJXODWLRQ
UHYLYHGWKHGHEDWHRYHUKRZDFFRXQWDELOLW\VKRXOGEHH[HUFLVHGLQWKHILHOGRI
SUXGHQWLDOVXSHUYLVLRQ(QKDQFHGDFFRXQWDELOLW\UHTXLUHPHQWVVKRXOGEDODQFHWKH
FRQVLGHUDEOHUHVSRQVLELOLW\JLYHQWRWKH(&%LQWKHDUHDRIILQDQFLDOVWDELOLW\ 8QGHU
$UWLFOHRIWKH5HJXODWLRQWKH(&%KDVWRGUDZXSDQDQQXDOUHSRUWRQLWV660
UHODWHGDFWLYLWLHVWKDWLWVXEPLWVWRWKH(XURSHDQ3DUOLDPHQWWKH&RXQFLOWKH
&RPPLVVLRQDQGWKH(XURJURXS7KHUHSRUWLVSUHVHQWHGWRDQGGHEDWHGLQWKH
(XURSHDQ3DUOLDPHQWDQGWKH(XURJURXS 7KH\PD\DOVRHDFKSXWTXHVWLRQVWRWKH
(&%RQSUXGHQWLDOVXSHUYLVLRQDQGWKH(&%KDVWRUHSO\LQZULWLQJRURUDOO\7KH
&KDLURIWKH(&%¶V6XSHUYLVRU\%RDUGKDVVSHFLILFREOLJDWLRQV+HRUVKHPD\EH
LQYLWHGWRSURYLGHH[SODQDWLRQVRQWKHIXOILOPHQWRIWKH(&%VXSHUYLVRU\WDVNVWRWKH
(XURSHDQ3DUOLDPHQWRUWKH(XURJURXSDWDQ\WLPHGXULQJWKH\HDULIUHTXLUHGIRU
SDUOLDPHQWDU\ZRUNKHRUVKHPD\DOVRKROGFRQILGHQWLDOGLVFXVVLRQVEHKLQGFORVHG
GRRUVZLWKWKH%XUHDXRIWKH(XURSHDQ3DUOLDPHQW¶V(FRQRPLFDQG0RQHWDU\$IIDLUV
&RPPLWWHH 

7KHORFDOLPSDFWRIGHFLVLRQVWKDWWKH(&%PLJKWWDNHLQFRQQHFWLRQZLWKLWV
VXSHUYLVRU\SRZHUVRYHUFUHGLWLQVWLWXWLRQV UHVXOWVLQVSHFLILFIHDWXUHVZLWKUHVSHFW
WRWKHQDWLRQDOSDUOLDPHQWV 7KHODWWHUDUHVHQWWKH(&%¶VDQQXDOUHSRUWRQ



 &RQWDFW&RPPLWWHH5HVROXWLRQRQWKHUHVXOWVRIWKHSLORWVWXG\RQWKHDFFHVVRIVXSUHPHDXGLW
LQVWLWXWLRQVWRWKHPDLQILQDQFLDOVXSHUYLVRUVLQ(80HPEHU6WDWHV/LVERQ&&5

 6HHUHFLWDORIWKH&RPPLVVLRQSURSRVDOIRUD&RXQFLOUHJXODWLRQFRQIHUULQJVSHFLILFWDVNVRQWKH
(XURSHDQ&HQWUDO%DQNFRQFHUQLQJSROLFLHVUHODWLQJWRWKHSUXGHQWLDOVXSHUYLVLRQRIFUHGLWLQVWLWXWLRQV
%UXVVHOV6HSWHPEHU&20  ILQDO

 7KHUHSUHVHQWDWLYHVRIWKH0HPEHU6WDWHVQRWLQWKHHXURDUHDEXWSDUWLFLSDWLQJLQWKH660DOVR
DWWHQGHGWKLVPHHWLQJRIWKH(XURJURXS7KHUHJXODWLRQIRUPDOLVHGDSUDFWLFHDSSURYHGE\WKH
/X[HPERXUJ(XURSHDQ&RXQFLORQ'HFHPEHUQDPHO\WKHRSHQLQJRIWKH(XURJURXSWR
0HPEHU6WDWHVRXWVLGHWKHHXURDUHDZKHQPDWWHUVRIFRPPRQLQWHUHVWDUHGLVFXVVHG

 'HWDLOHGDUUDQJHPHQWVDUHSURYLGHGIRUWKH(&%¶VDFFRXQWDELOLW\WRWKH(XURSHDQ3DUOLDPHQWDQGWKH
(XURJURXSXQGHUWKH6606HH,QWHULQVWLWXWLRQDO$JUHHPHQWEHWZHHQWKH(XURSHDQ3DUOLDPHQWDQGWKH
(XURSHDQ&HQWUDO%DQNRQWKHSUDFWLFDOPRGDOLWLHVRIWKHH[HUFLVHRIGHPRFUDWLFDFFRXQWDELOLW\DQG
RYHUVLJKWRYHUWKHH[HUFLVHRIWKHWDVNVFRQIHUUHGRQWKH(&%ZLWKLQWKHIUDPHZRUNRIWKH6LQJOH
6XSHUYLVRU\0HFKDQLVP (8 2-/1RYHPEHU0HPRUDQGXPRI8QGHUVWDQGLQJ
EHWZHHQWKH&RXQFLODQGWKH(&%RQWKHFRRSHUDWLRQRQSURFHGXUHVUHODWHGWRWKH660%UXVVHOV
'HFHPEHU)UDQNIXUWDP0DLQ'HFHPEHU

 6HHUHFLWDORI6605HJXODWLRQ

 $UWRI6605HJXODWLRQ7KLVDUWLFOHH[WHQGVWKHJHQHUDOREOLJDWLRQRI$UWLFOH7(8RQWKH
FRQWULEXWLRQRIQDWLRQDOSDUOLDPHQWVWRWKHIXQFWLRQLQJRIWKH8QLRQ8QGHUWKLVDUWLFOHWKH(8
LQVWLWXWLRQVPXVWIRUZDUGDQ\GUDIWOHJLVODWLYHDFWVWRWKHQDWLRQDOSDUOLDPHQWV$QQXDOUHSRUWVDUHQRW
LQFOXGHGLQWKHGRFXPHQWVWKDWQHHGWREHIRUZDUGHGLQFOXGLQJIRUWKH(XURSHDQ&RPPLVVLRQ6HH
$UWDQGRIWKH3URWRFRO 1R RQWKHUROHRIQDWLRQDOSDUOLDPHQWVLQWKH(XURSHDQ8QLRQ

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
SUXGHQWLDOVXSHUYLVLRQWKH\PD\VXEPLWREVHUYDWLRQVDQGTXHVWLRQVWRWKH(&%DQG
LQYLWHWKH&KDLURUDPHPEHURIWKH6XSHUYLVRU\%RDUGWRSDUWLFLSDWHLQDQH[FKDQJH
RIYLHZVLQUHODWLRQWRWKHVXSHUYLVLRQRIFUHGLWLQVWLWXWLRQVEDVHGLQWKDW0HPEHU
6WDWHWRJHWKHUZLWKDUHSUHVHQWDWLYHRIWKH1&$

$UWLFOHRI6605HJXODWLRQVWDWHVWKDWWKLVDFFRXQWDELOLW\UHJLPHDSSOLFDEOHWRWKH
(&%LVZLWKRXWSUHMXGLFHWRWKHDFFRXQWDELOLW\RIQDWLRQDOVXSHUYLVRU\DXWKRULWLHVWR
QDWLRQDOSDUOLDPHQWV,WLVLPSRUWDQWWRSRLQWRXWWKDWWKH6605HJXODWLRQDGPLWVWKDW
QDWLRQDODXWKRULWLHVPD\EHDFFRXQWDEOHIRUWKHLPSOHPHQWDWLRQRIVRPHVXSHUYLVRU\
WDVNVDWWULEXWHGWRWKH(&% IRUH[DPSOHWKHVXSHUYLVLRQRI³OHVVVLJQLILFDQW´FUHGLW
LQVWLWXWLRQV DQGDOVRIRUWKHSHUIRUPDQFHRIDVVLVWDQFHIXQFWLRQVWRWKH(&%LQLWV
VXSHUYLVRU\WDVNV7KLVVKRXOGEHUHDGDORQJVLGH$UWLFOH  RIWKH5HJXODWLRQ
ZKLFKVWDWHVWKDWWKHDVVLVWDQFHSURYLGHGE\QDWLRQDOVXSHUYLVRU\DXWKRULWLHVLV
ZLWKRXWSUHMXGLFHWRWKHUHVSRQVLELOLW\DQGDFFRXQWDELOLW\RIWKH(&%IRUWKHWDVNV
FRQIHUUHGRQLWLQWKHDUHDRISUXGHQWLDOVXSHUYLVLRQ$QDWLRQDODXWKRULW\PD\QRWEH
DFFRXQWDEOHIRUWKHPHDVXUHVWDNHQE\WKH(&%ZLWKUHVSHFWWRD³VLJQLILFDQW´FUHGLW
LQVWLWXWLRQDQGYLFHYHUVDRQWKHRWKHUKDQGLWPD\EHKHOGUHVSRQVLEOHDQG
DFFRXQWDEOHIRUWKHPHDVXUHVFRQIHUUHGRQLWLQFRQQHFWLRQZLWKLWVFRRSHUDWLRQZLWK
WKHSHUIRUPDQFHRIWKH(&%¶VWDVNV)LQDOO\QDWLRQDODXWKRULWLHVUHPDLQDFFRXQWDEOH
IRUWKHRWKHUWDVNVWKH\SHUIRUPRXWVLGHWKHIUDPHZRUNRIWKHVLQJOHVXSHUYLVRU\
PHFKDQLVP 660 LQDFFRUGDQFHZLWKDSSOLFDEOHQDWLRQDOODZ

+RZHYHUDXGLWRISUXGHQWLDOVXSHUYLVLRQLQWKH(8LVUHVWULFWHGLQWZRUHVSHFWV 
)LUVWO\WKH6605HJXODWLRQRQO\H[SOLFLWO\UHIHUVWRWKHVLWXDWLRQRIWKH(&%ZLWK
UHVSHFWWRWKH(XURSHDQ&RXUWRI$XGLWRUV (&$ 8QGHU$UWLFOH  ³:KHQWKH
(XURSHDQ&RXUWRI$XGLWRUVH[DPLQHVWKHRSHUDWLRQDOHIILFLHQF\RIWKHPDQDJHPHQW
RIWKH(&%XQGHU$UWLFOH  RIWKH(6&%6WDWXWHLWVKDOODOVRWDNHLQWRDFFRXQWWKH
VXSHUYLVRU\WDVNVFRQIHUUHGRQWKH(&%E\WKLV5HJXODWLRQ´,QVHUWHGEHWZHHQWZR
SDUDJUDSKVRQHDGGUHVVLQJWKHTXHVWLRQVWKDWPD\EHUDLVHGE\WKH(XURSHDQ
3DUOLDPHQWDQGWKHRWKHUWKHFORVHGGRRUGLVFXVVLRQVRIWKHSDUOLDPHQWDU\
FRPPLWWHHWKLVSDUDJUDSKLOOXVWUDWHVWKHIXQFWLRQDOUROHDWWULEXWHGWRWKH(&$¶V
DXGLWLQJDFWLYLWLHVQDPHO\WRLQIRUPSDUOLDPHQWDU\GHEDWHV7KLVSURYLVLRQQRW
LQFOXGHGLQWKHOHJLVODWLYHSURSRVDOIURPWKH&RPPLVVLRQZDVLQVHUWHGE\WKH&\SULRW
3UHVLGHQF\LQLWVFRPSURPLVHWH[WRI'HFHPEHU ,WGLGQRWJLYHULVHWR
GHEDWHLQWKHDGKRFZRUNLQJJURXSRIWKH&RXQFLOLQ&RXQFLORULQ3DUOLDPHQWQR
DPHQGPHQWVZHUHWDEOHGLQWKHSDUOLDPHQWDU\FRPPLWWHHRULQWKHSOHQDU\VHVVLRQ

0RUHRYHUWKHUHVSRQVLELOLW\RIQDWLRQDO6$,VLQWKHIUDPHZRUNRIWKH660LVDQ\WKLQJ
EXWFOHDU$UWLFOHV  DQG  RIWKH6605HJXODWLRQOD\GRZQWKHSULQFLSOHRIWKH
PDLQWHQDQFHRIQDWLRQDODFFRXQWDELOLW\UHJLPHVRYHUQDWLRQDOEDQNLQJVXSHUYLVRUV
$UWLFOH  DSSHDUVVSHFLILFDOO\WRUHIHUWRDFFRXQWDELOLW\WRQDWLRQDOSDUOLDPHQWV



 $WKLUGOLPLWDWLRQGHULYHVIURPWKHVFRSHRIWKH6605HJXODWLRQOLPLWHGWRWKHHXURDUHD0HPEHU6WDWHV
RU0HPEHU6WDWHVSDUWLFLSDWLQJLQWKH660

 $UW  RIWKHSURSRVDOIRUD&RXQFLO5HJXODWLRQFRQIHUULQJVSHFLILFWDVNVRQWKH(XURSHDQ&HQWUDO
%DQNFRQFHUQLQJSROLFLHVUHODWLQJWRWKHSUXGHQWLDOVXSHUYLVLRQRIFUHGLWLQVWLWXWLRQV3UHVLGHQF\
FRPSURPLVH%UXVVHOV'HFHPEHU()(&2),1,RZHWKLVSRLQWWR
.URSSHQVWHGW  S

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
OHDYLQJXQFHUWDLQW\DVWRWKHVLWXDWLRQRI6$,V 7KLVLQWHUSUHWDWLRQVKRXOGEHUXOHG
RXW±WKHDXGLWSHUIRUPHGE\6$,VZLWKUHJDUGWRORFDOVXSHUYLVRU\DXWKRULWLHV
UHPDLQVDSSOLFDEOHDVORQJDVLWGRHVQRWDIIHFWHGWKHLQGHSHQGHQFHWKHDWWULEXWLRQ
RIUHVSRQVLELOLWLHVRUWKHDFFRXQWDELOLW\RIWKH(&%DQGRIQDWLRQDODXWKRULWLHVLQWKH
DSSOLFDWLRQRI6605HJXODWLRQ 7KLVLQWHUSUHWDWLRQLVFRQILUPHGE\UHFLWDORIWKH
OHJLVODWLYHSURSRVDOLQLWLDOO\SUHVHQWHGE\WKH&RPPLVVLRQZKLFKSURYLGHGLQJHQHUDO
WKDW³:KHUHQDWLRQDOVXSHUYLVRUVWDNHDFWLRQXQGHUWKLV5HJXODWLRQDFFRXQWDELOLW\
DUUDQJHPHQWVSURYLGHGXQGHUQDWLRQDOODZVKRXOGFRQWLQXHWRDSSO\´ ,WZRXOGDOVR
EHLOORJLFDOWRDOORZWKHFRQWLQXHGDSSOLFDWLRQRIDFFRXQWDELOLW\UHJLPHVSURYLGHGE\
QDWLRQDOODZIRUWKHEHQHILWRIQDWLRQDOSDUOLDPHQWVDQGQRW6$,VZKHQWKHDXGLWVRI
WKHODWWHULQIRUPWKHZRUNRIWKHIRUPHU,QWKHVDPHZD\UHFRJQLVLQJWKH(&$¶V
VXSHUYLVLRQRIWKH(&%LPSOLHVWKDWQDWLRQDO6$,VVKRXOGEHDEOHWRVXSHUYLVHWKH
DXWKRULWLHVWDVNHGZLWKSUXGHQWLDOVXSHUYLVLRQLQWKHLUVWDWHVDVORQJDVWKH\DUH
JLYHQVXFKDUHVSRQVLELOLW\XQGHUQDWLRQDOODZ2QWKLVVSHFLILFSRLQWLWVKRXOGEH
QRWHGWKDWLQDFFRUGDQFHZLWKWKHSULQFLSOHRISURFHGXUDODQGLQVWLWXWLRQDODXWRQRP\
LWLVQRWXSWRWKH(8WRLPSRVHDFFRXQWDELOLW\DSSOLFDEOHDWWKHQDWLRQDOOHYHO 
)LQDOO\WKLVLQWHUSUHWDWLRQLVLQOLQHZLWKWKHFRQFHUQRIWKHOHJLVODWRUDQGWKH(&%WR
HQVXUHKLJKVWDQGDUGVLQWHUPVRIDFFRXQWDELOLW\LQWKHILHOGRIEDQNLQJVXSHUYLVLRQ
$VVXJJHVWHGE\0DULDQQH7K\VVHQ0HPEHURIWKH(XURSHDQ3DUOLDPHQWDQG
UDSSRUWHXURQWKHSURSRVHGUHJXODWLRQ³$Q\VKLIWRIVXSHUYLVRU\SRZHUVIURPWKH
0HPEHU6WDWHWRWKH8QLRQOHYHOVKRXOGEHEDODQFHGE\DSSURSULDWHWUDQVSDUHQF\´ 



 2QWKLVVHH%RYHQVFKHQ  S7KHDXWKRUJLYHVDQLQFRUUHFWLQWHUSUHWDWLRQRIWKHVFRSHRI
$UWLFOH  ZKHQKHVXJJHVWVWKDW³RQHFRXOGFRQVLGHUWKHDFFRXQWDELOLW\RIDQ1&$YLVjYLVD6WDWH
DXGLWRUWREHSDUWRISDUOLDPHQWDU\DFFRXQWDELOLW\´>2XUHPSKDVLV@+HUHMHFWVWKLVLQWHUSUHWDWLRQDVLW
FRQWUDGLFWVZLWKUHFLWDORIWKHUHJXODWLRQ7KHHUURUFRPHVIURPWKHIDFWWKDWKHEHOLHYHVLWVHHNVWR
H[WHQGWKHVFRSHRI$UWLFOH  WRWKHVLWXDWLRQRI6$,V7KLVZDVQHYHUWKHLQWHQWLRQRIWKHOHJLVODWRU
7KHZRUNRIWKH(XURSHDQ3DUOLDPHQWVKRZVWKDWWKHOHJLVODWRUZDVVHHNLQJWRVWUHQJWKHQLWVSRVLWLRQ
DQGWKHSRVLWLRQRIWKHQDWLRQDOSDUOLDPHQWVLQWKHQHZVXSHUYLVRU\UHJLPHLWVUHTXLUHPHQWVDUHSDUWRI
DEURDGHUGHEDWHRQWKHJHQHUDOGHPDQGVPDGHE\WKH(XURSHDQ3DUOLDPHQWWRSOD\DJUHDWHUUROHLQ
(XURSHDQHFRQRPLFJRYHUQDQFH VHH$OOHPDQGDQG0DUWXFFL  SS +RZHYHUWKH
VWUHQJWKHQLQJRIDFFRXQWDELOLW\REOLJDWLRQVEDVHGRQ(8ODZZDVQRWLQWHQGHGWRZHDNHQWKH
DUUDQJHPHQWVSURYLGHGXQGHUQDWLRQDOODZLQWKHLQWHUHVWRIQDWLRQDOSDUOLDPHQWV6XFKDGHYHORSPHQW
ZRXOGKDYHUXQFRXQWHUWRWKHSULQFLSOHODLGGRZQLQ$UWLFOH7(8RIDVWURQJHUFRQWULEXWLRQRIQDWLRQDO
SDUOLDPHQWVWRWKHIXQFWLRQLQJRIWKH8QLRQ

 ,QLWV2SLQLRQRQWKHDXGLWLQJRI%DQND6ORYHQLMH¶VEXVLQHVVRSHUDWLRQVWKH(&%FODULILHGWKHOLPLWDWLRQV
RQDXGLWVFDUULHGRXWE\&RXUWVRIDXGLWRQ&HQWUDOEDQNV¶VXSHUYLVRU\WDVNV7KHDXGLWVKRXOG³ D QRW
H[WHQGWRWKHDSSOLFDWLRQDQGLQWHUSUHWDWLRQRIVXSHUYLVRU\ODZDQGSUDFWLFHVLQWKHFRQWH[WRIWKH660
E QRWLQWHUIHUHZLWKDQGQRWLQFOXGHWKHWDVNVFRQIHUUHGRQWKH(&%E\>6605HJXODWLRQ@DQG F QRW
H[WHQGWRUHVXOWLQDQLQGLUHFWDXGLWRIWKH(&%´,QDGGLWLRQ³WKHDXGLWVKRXOGDOVREHFDUULHGRXWRQD
QRQSROLWLFDOLQGHSHQGHQWDQGSXUHO\SURIHVVLRQDOEDVLV´6HHRSLQLRQRIWKH(&%RI'HFHPEHU
RQWKHDXGLWLQJRI%DQND6ORYHQLMH¶VEXVLQHVVRSHUDWLRQ &21 SW

 &20  ILQDO

 $UWLFOH  7)(8WKHEDVLVIRUWKHDGRSWLRQRI5HJXODWLRQ (8 1RHQDEOHVVSHFLILF
WDVNVWREHFRQIHUUHGRQWKH(&%LWGRHVQRWJLYHWKH8QLRQDQ\VXEVWDQWLYHSRZHUVWRGHILQH
DFFRXQWDELOLW\UHJLPHVLQWKH0HPEHU6WDWHV7KHILUVWSDUDJUDSKRI3URWRFRO 1R RQWKHUROHRI
QDWLRQDOSDUOLDPHQWVLVTXLWHFOHDUDVWRWKHVXSHUYLVRU\UROHH[HUFLVHGE\QDWLRQDOSDUOLDPHQWVRYHU
QDWLRQDOLQVWLWXWLRQVDQGERGLHV³WKHZD\LQZKLFKQDWLRQDO3DUOLDPHQWVVFUXWLQLVHWKHLUJRYHUQPHQWVLQ
UHODWLRQWRWKHDFWLYLWLHVRIWKH8QLRQLVDPDWWHUIRUWKHSDUWLFXODUFRQVWLWXWLRQDORUJDQLVDWLRQDQG
SUDFWLFHRIHDFK0HPEHU6WDWH´7KLVSULQFLSOHVWDWHGLQWKH-XGJPHQWRIWKH&RXUWRI-XVWLFHLQWKH
,QWHUQDWLRQDO)UXLW&RPSDQ\FDVH &-(&'HFHPEHU&DVHVWR(&5S 
DQGSURWHFWHGE\$UWLFOH  7(8DSSOLHVPXWDWLVPXWDQGLVWRWKHVXSHUYLVRU\UROHH[HUFLVHGE\6$,V
,WLVWKLVSULQFLSOHWKDWLVUHLWHUDWHGLQERWK$UWLFOH  DQGUHFLWDORIWKH6605HJXODWLRQ

 6HHDPHQGPHQWRQUHFLWDORIWKHGUDIWUHSRUWSUHVHQWHGE\0DULDQQH7K\VVHQRQWKHSURSRVDOIRU
D&RXQFLOUHJXODWLRQFRQIHUULQJVSHFLILFWDVNVRQWKH(XURSHDQ&HQWUDO%DQNFRQFHUQLQJSROLFLHV
UHODWLQJWRWKHSUXGHQWLDOVXSHUYLVLRQRIFUHGLWLQVWLWXWLRQV(XURSHDQ3DUOLDPHQW&RPPLWWHHRQ
(FRQRPLFDQG0RQHWDU\$IIDLUV2FWREHU &16 

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
 ³3RROHGVRYHUHLJQW\GLYLGHGDFFRXQWDELOLW\´ 

7KHODFNRIGHWDLOLQWKHLQLWLDO&RPPLVVLRQOHJLVODWLYHSURSRVDOSURPSWHGDUHDFWLRQ
IURPWKH(&$LQ)HEUXDU\DVWKHLQIRUPDOWULORJXHVEHWZHHQWKH(XURSHDQ
3DUOLDPHQWWKH&RXQFLODQGWKH&RPPLVVLRQZHUHJHWWLQJXQGHUZD\,QKLV
VWDWHPHQWWKH3UHVLGHQWRIWKH(&$FRQVLGHUHGPRUHVSHFLILFDOO\WKDW³WKH
H[DPLQDWLRQRIWKHRSHUDWLRQDOHIILFLHQF\RIWKHPDQDJHPHQWRIWKH(&%LQUHVSHFWRI
LWVVXSHUYLVRU\WDVNVHQFRPSDVVHVWKHDXGLWRIVRXQGILQDQFLDOPDQDJHPHQWDV
DSSOLHGWRRWKHUERGLHVKHOGDFFRXQWDEOHWRWKH(XURSHDQ3DUOLDPHQWDQG&RXQFLO
XQGHUWKHSURYLVLRQVRI$UWLFOH7)(8´ 2QHPRQWKODWHUWKH,0)QRWHGWKDWWKH
OLPLWHGDFFRXQWDELOLW\RIWKH(&%¶VQHZVXSHUYLVRU\WDVNVUHSUHVHQWHGDSDUWLFXODU
FKDOOHQJH7KHUHFRPPHQGDWLRQVRIWKH,0)¶VH[SHUWVLQFOXGHGWKHSURYLVLRQRI
SHULRGLFUHYLHZVE\H[WHUQDOH[SHUWVRIWKH(&%¶VSHUIRUPDQFHDQGSUDFWLFHVZLWK
UHJDUGWRWKH660IXQFWLRQ ,QHDUO\WKHDFFRXQWDELOLW\UHJLPHSURYLGHGIRU
WKH660EHFDPHDPDWWHURIVKDUHGFRQFHUQIRUDOOWKH6$,V7KH6$,&RQWDFW
&RPPLWWHHFDOOHGIRUVXIILFLHQWDXGLWFRYHUDJHFRQFHUQLQJWKHSUXGHQWLDOVXSHUYLVLRQ
RIFUHGLWLQVWLWXWLRQVIDOOLQJXQGHUWKHVFRSHRIWKH660 7KH$OJHPHQH
5HNHQNDPHUZDVPRUHFORVHO\LQYROYHGLQWKHGHEDWH7KH1HWKHUODQGV&RXUWUDLVHG
WKHTXHVWLRQRIWKHHPHUJHQFHRIDQDXGLWJDSLQDFFRXQWDELOLW\ZLWKUHJDUGWRWKH
DSSOLFDWLRQRIWKH6605HJXODWLRQ

8QGHUWKH6605HJXODWLRQWKH(&%KDVDQH[FOXVLYHFRPSHWHQFHWRFDUU\RXWDOORI
WKHSUXGHQWLDOWDVNVUHIHUUHGWRLQ$UWLFOH  RI6605HJXODWLRQ7KHFKRLFHPDGH
E\WKH(8OHJLVODWRULQIDYRXUDGHFHQWUDOLVHGIUDPHZRUNIRUWKHLPSOHPHQWDWLRQRI
VRPHVXSHUYLVRU\WDVNVFRQIHUUHGRQWKH(&%UHVXOWVLQDSRVVLEOHVSOLWRIWKH
EDQNLQJVXSHUYLVLRQUHVSRQVLELOLWLHVDWWKHORFDOOHYHO:KLOHWKH(&%H[HUWVGLUHFW
VXSHUYLVLRQRYHU DWOHDVW WKHLPSRUWDQWFUHGLWLQVWLWXWLRQVWKH1&$PD\FDUU\RXW
VXSHUYLVRU\WDVNVRYHUWKHRWKHUFUHGLWLQVWLWXWLRQV$FFRUGLQJWRWKH1HWKHUODQGV
&RXUWWKHGLUHFWH[HUFLVHRIVXSHUYLVRU\WDVNVE\WKH(&%RYHU'XWFKFUHGLW
LQVWLWXWLRQVFDXVHVWKHDXGLWJDS7KH$OJHPHQH5HNHQNDPHUGRHVQRWKDYHWKH
FRPSHWHQFHWRDXGLWWKH(&%7KLVVXSHUYLVRU\UROHIDOOVWRWKH(&$ZKLFKKDV
OLPLWHGSRZHUVRIDXGLWRYHUWKH(&%7KHTXDOLW\RIEDQNLQJVXSHUYLVLRQRI'XWFK
FUHGLWLQVWLWXWLRQVLVWKXVQRPRUHJXDUDQWHHG 7KHLQWHUSUHWDWLRQE\WKH$OJHPHQH
5HNHQNDPHULVVRPHZKDWUHVWULFWLYHLWH[FOXGHVWKHDXGLWSHUPLWWHGXQGHU(8ODZLQ
WHUPVRIWKHVXSHUYLVRU\WDVNVQRWFRQIHUUHGRQWKH(&%DQGWKHDVVLVWDQFH
IXQFWLRQVSHUIRUPHGE\QDWLRQDOEDQNLQJVXSHUYLVRUV +RZHYHULQLWVILUVWUHSRUWRQ
WKHVXSHUYLVLRQRIFUHGLWLQVWLWXWLRQVLQWKH1HWKHUODQGVWKH&RXUWSRLQWVRXWVRPH
GLIILFXOWLHVWKDWLWIDFHGZKHQDXGLWLQJWKHVXSHUYLVRU\WDVNVRIWKH'1%
0HWKRGRORJLHVDQG5LVNDQDO\VLVPRGHOVIROORZHGE\WKH'1%DUHEDVHGRQWKRVH


 3HWHUVRQ  

 &DOGHLUD  

 ,QWHUQDWLRQDO0RQHWDU\)XQG  SRLQW

 &RQWDFW&RPPLWWHHRIWKH6XSUHPH$XGLW,QVWLWXWLRQVRIWKH(XURSHDQ8QLRQ  

 $OJHPHQH5HNHQNDPHU  $FRS\RIWKLVOHWWHUZDVVHQWWRWKH(&$

 ,QLWVDXGLWRIWKHVXSHUYLVLRQRIEDQNVLQWKH1HWKHUODQGVE\WKH'1%WKH$OJHPHQH5HNHQNDPHU
FRQFOXGHGWKDWWKH'1%RUJDQLVHGLWVVXSHUYLVLRQZHOO7KLVDXGLWSURYLGHVWKH&RXUWRI$XGLWZLWKWKH
RSSRUWXQLW\WRDVN'1%IRUDJXDUDQWHHWKDWLWZRXOGUHWDLQDFFHVVWRLQIRUPDWLRQRQWKHVXSHUYLVLRQRI
PHGLXPVL]HGDQGVPDOOEDQNV6HH$OJHPHQH5HNHQNDPHU  

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
DSSOLHGE\WKH(&%$EHWWHUHYDOXDWLRQRIWKHTXDOLW\RIWKHEDQNLQJVXSHUYLVLRQ
FRXOGUHTXLUHWKH&RXUWWRREWDLQDGGLWLRQDOLQIRUPDWLRQIURPWKH(&%7KH660
5HJXODWLRQGRHVQRWUHJXODWHWKLVLVVXH7KHOLPLWHGQDWXUHRIWKHDXGLWSRZHUVWKDW
WKH(&$FDQH[HUFLVHRYHUWKH(&%DQGWKHODFNRIIUDPHZRUNIRUH[FKDQJHRI
LQIRUPDWLRQEHWZHHQWKHQDWLRQDO6$,DQGWKH(&%UHSUHVHQWDVWHSEDFNZDUGVLQ
WKRVH0HPEHU6WDWHVZKHUHWKH6$,VKDGH[WHQVLYHDXGLWSRZHUV,Q0D\WKH
(&$WKH$OJHPHQH5HNHQNDPHUDQGWKH*HUPDQ%XQGHVUHFKQXQJVKRIXQGHUWRRND
WKRURXJKDQDO\VLVRIWKH6$,V¶UHPLWDQGSRZHUVLQWKHDUHDRIEDQNLQJVXSHUYLVLRQ 
,QDXWXPQDWDVNIRUFHFKDLUHGMRLQWO\E\WKH1HWKHUODQGVDQG*HUPDQ\ZDV
VHWXSZLWKLQWKH6$,&RQWDFW&RPPLWWHHWRFRQWLQXHWKLVVWXG\DQGSUHSDUHIRUD
FROODERUDWLYHDXGLWRQEDQNLQJVXSHUYLVLRQ 

7KH/DQGVFDSHUHYLHZRI(8DFFRXQWDELOLW\DQGSXEOLFDXGLWDUUDQJHPHQWVDGRSWHG
E\WKH(&$LQ6HSWHPEHUFRQFXUUHGZLWKWKHFULWLFLVPOHYHOOHGE\WKH6$,VDW
WKHDFFRXQWDELOLW\LVVXHLQWKHVXSHUYLVLRQILHOG³WKHUHDUHQRSURYLVLRQVLQSODFHIRU
WKHDVVHVVPHQWE\DXGLWRUVRIWKHVXSHUYLVRU\V\VWHPDVDZKROH´ 7KHDXGLWRIWKH
SUXGHQWLDOVXSHUYLVRU\WDVNVH[HUFLVHGE\WKH(&%WKDWWKH(&$FDUULHGRXWLQ
SURYLGHGWKH&RXUWZLWKDQRSSRUWXQLW\WRWHVWWKHOLPLWVRILWVUHPLWLQSUDFWLFH
3ULRUWRWKLVDXGLWWKH(&$KDGDXGLWHGWKH(&% DQGLWVSUHGHFHVVRUWKH(XURSHDQ
0RQHWDU\,QVWLWXWH RQRFFDVLRQV7KHQRWLFHDEO\EULHIUHSRUWV GLGQRWJLYHULVH
WRDQ\SDUWLFXODUGLVFXVVLRQVEHWZHHQWKHWZRLQVWLWXWLRQVWKH(&%DFFHSWHGPRVWRI
WKHUHFRPPHQGDWLRQVPDGHE\WKH(&$DQGHYHQVRPHWLPHVXVHGWKHPWRMXVWLI\
GHFLVLRQVWKDWKDGEHHQFULWLFLVHGE\0HPEHUVRIWKH(XURSHDQ3DUOLDPHQW 7KH
(XURSHDQ3DUOLDPHQWVKRZHGYHU\OLWWOHLQWHUHVW LQWKHDXGLWVSHUIRUPHGRQWKH
(&%7KHVLWXDWLRQZDVFRPSOHWHO\GLIIHUHQWLQ1RYHPEHUZLWKWKHSXEOLFDWLRQ
RIWKH660VSHFLDODXGLWUHSRUW7KH(&$FULWLFLVHG³DQLPSRUWDQWREVWDFOHLQDOO
DUHDVRIRXULQWHQGHGDXGLW±QDPHO\WKHHPHUJHQFHRIGLVDJUHHPHQWZLWKWKH(&%
RYHUWKHH[DFWWHUPVRIRXUPDQGDWHDQGULJKWWRDFFHVVGRFXPHQWV$UJXLQJWKDW
WKH\OD\RXWVLGHRXUUHPLWWKH(&%ZDVQRWZLOOLQJWRVKDUHDQXPEHURIGRFXPHQWV
WKDWZHQHHGHGWRFRPSOHWHRXUZRUN$VDUHVXOWZHZHUHRQO\SDUWO\DEOHWRDVVHVV



 LELGS

 &RQWDFW&RPPLWWHHRIWKH6XSUHPH$XGLW,QVWLWXWLRQVRIWKH(XURSHDQ8QLRQ  S$VSDUWRI
WKLVZRUNWKH(&$KHOGDVHPLQDULQ%UXVVHOVRQ2FWREHUHQWLWOHG³$FFRXQWLQJIRU(XURSH±
LVVXHVLQDFFRXQWDELOLW\DQGDXGLWVWUXFWXUHVLQWKH(8´DWWHQGHGE\UHSUHVHQWDWLYHVRIWKH(&$WKH
QDWLRQDO6$,VDQGWKH(XURSHDQ3DUOLDPHQW

 (XURSHDQ&RXUWRI$XGLWRUV  S

 7KHDXGLWUHSRUWVDGRSWHGEHWZHHQDQGZHUHDQDYHUDJHRIILYHSDJHVORQJ7KH\RIIHUHGD
YHU\JHQHUDORYHUYLHZRIWKHRSHUDWLRQDOHIILFLHQF\RIWKH(&%LQDOODUHDVRIDFWLYLW\DQGSURMHFWV)URP
RQZDUGVWKH(&$FKDQJHGLWVDSSURDFKDQGIRFXVHGLWVDWWHQWLRQRQVSHFLILFDUHDVWKHDXGLWV
ZHUHFDUULHGRXWLQPRUHGHSWKDQGWKHOHQJWKRIWKHUHSRUWVLQFUHDVHGUHDFKLQJDQDYHUDJHRI
SDJHV%\ZD\RIFRPSDULVRQWKHVSHFLDOUHSRUWDGRSWHGE\WKH(&$RQWKH660LQ1RYHPEHU
LVSDJHVORQJ

 7KLVZDVSDUWLFXODUO\WKHFDVHIRUWKHUHQRYDWLRQRIWKH*URVVPDUNWKDOOHWRKRXVHWKHRIILFHVRIWKH
(&%6HHIRUH[DPSOH'UDJKL0DULR/HWWHUWR0U5DUHú/XFLDQ1LFXOHVFX)UDQNIXUW1RYHPEHU
/0'/HWWHUWR0U0DULR%RUJKHVLR)UDQNIXUWDP0DLQ1RYHPEHU
/0',QWKHVHFDVHVWKH(&%PDGHUHIHUHQFHQRWWRWKHDXGLWUHSRUWVGUDZQXSE\WKH(&%RQ
WKHEDVLVRI$UWLFOH  RIWKH6WDWXWHEXWRQWKH(&$¶V6SHFLDO5HSRUW1RFRQFHUQLQJWKH
LQVWLWXWLRQV¶H[SHQGLWXUHRQEXLOGLQJV 2-& 

 2QO\WZRDXGLWVZHUHPHQWLRQHGLQWKHLQWURGXFWRU\UHFLWDOVWRWKH(XURSHDQ3DUOLDPHQWUHSRUWVRQWKH
(&%¶VDQQXDOUHSRUWV

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
ZKHWKHUWKH(&%LVPDQDJLQJWKH660HIILFLHQWO\LQWKHDUHDVRIJRYHUQDQFHRIIVLWH
VXSHUYLVLRQDQGRQVLWHLQVSHFWLRQV´ 

,QOLJKWRIWKHSODQQHGUHYLHZRIWKH6605HJXODWLRQ WKHFRQFOXVLRQVRIWKH(&$
DXGLWSURYLGHGVLJQLILFDQWVXSSRUWIRUWKH6$,V¶FDOOIRUDUHYLVLRQRI$UWLFOH  RIWKH
UHJXODWLRQRUHYHQDUHYLVLRQRI$UWLFOH  RIWKH(6&%6WDWXWH ,QLWVUHSO\WRWKH
(&$DQQH[HGWRWKHUHSRUWWKH(&%H[SUHVVHVLWVGLVDJUHHPHQWZLWKWKH(&$DVWR
WKHLQWHUSUHWDWLRQRIWKHVFRSHRILWVPDQGDWHDQGWKH&RXUW¶VFULWLFLVPWKDWWKH%DQN
SURYLGHGYHU\OLWWOHRIWKHLQIRUPDWLRQUHTXHVWHGRQWKHFRQWUDU\LWFRQVLGHUVWKDWLW
FRRSHUDWHGIXOO\ZLWKWKH(&$ 7KHVHQVLWLYLW\RIWKHVXEMHFWWRJHWKHUZLWKWKH
RSHQLQJRIGLVFXVVLRQVRQWKHUHYLHZRIWKH6605HJXODWLRQOHGWKH(8¶VWZRFR
OHJLVODWRUVWRMRLQWKHGHEDWH,Q)HEUXDU\WKH(FRILQ&RXQFLOSUHIHUUHGWR
UHPDLQFDXWLRXVLWUHLWHUDWHGWKHQHHGWR³HQVXU>H@WKHKLJKHVWVWDQGDUGVLQWHUPVRI
DFFRXQWDELOLW\DQGWUDQVSDUHQF\RIWKH660´ DQGZHOFRPHGWKH&RPPLVVLRQ¶V
LQWHQWLRQWRDGGUHVVWKLVVXEMHFWGXULQJWKHZRUNWRUHYLHZWKHUHJXODWLRQ 7KH
FRPSOHPHQWDULW\RI(&$DXGLWVDQGSDUOLDPHQWDU\VXSHUYLVLRQSURPSWHGDPRUH
FULWLFDOVWDQFHIURPWKH(XURSHDQ3DUOLDPHQW,QLWVUHVROXWLRQRI)HEUXDU\
RQWKH%DQNLQJ8QLRQ3DUOLDPHQWH[SUHVVHGLWVFRQFHUQWKDW³RZLQJWROLPLWDWLRQV
LPSRVHGE\WKH(&%RQWKH(&$¶VDFFHVVWRGRFXPHQWVLPSRUWDQWDUHDVDUHOHIW
XQDXGLWHG´DQG³XUJH>G@WKH(&%WRIXOO\FRRSHUDWHZLWKWKH(&$WRHQDEOHLWWR
H[HUFLVHLWVPDQGDWHDQGWKHUHE\HQKDQFHDFFRXQWDELOLW\´ ,QODWH$XJXVWWKH(&%
GHQLHGWKLVFULWLFLVPDERXWWKHDOOHJHGODFNRIFRRSHUDWLRQDQGHPSKDVLVHGLWV
FRPPLWPHQW³WRFRRSHUDWLQJIXOO\ZLWKWKH(&$ZLWKLQWKHH[LVWLQJOHJDOIUDPHZRUN
>RXUHPSKDVLV@ZKLOHSD\LQJGXHUHVSHFWWRWKHFRQILGHQWLDOLW\RIVXSHUYLVLRQ
LQIRUPDWLRQ>«@´ 

 7KH(&$¶VPDQGDWHLQUHODWLRQWRWKH(&%
$VDQ(8LQVWLWXWLRQ WKH(&$LVREOLJHGWRDFWZLWKLQWKHOLPLWVRIWKHSRZHUV
FRQIHUUHGRQLWLQWKH7UHDWLHV ,WPXVWH[HUFLVHLWVSRZHUVZLWKGXHUHJDUGIRUWKH



 (XURSHDQ&RXUWRI$XGLWRUV  S6HHHVSHFLDOO\UHFRPPHQGDWLRQVDQG S 

 $UWLFOHRI6605HJXODWLRQ

 &RQWDFW&RPPLWWHHRIWKH6XSUHPH$XGLW,QVWLWXWLRQVRIWKH(XURSHDQ8QLRQ  S$VVWDWHG
WKH7DVN)RUFHRQWKH(XURSHDQ%DQNLQJ8QLRQ³HQFRXUDJHVWKH(XURSHDQ&RPPLVVLRQWRSURSRVHD
VWUHQJWKHQLQJRIWKH(&$¶VPDQGDWHFRQFHUQLQJWKHDXGLWRIWKH(&%¶VVLQJOHVXSHUYLVRU\PHFKDQLVP
LQFOXGLQJFODULI\LQJWKHVFRSHRI$UW  6605HJXODWLRQDQGRUFKDQJLQJ$UW  6605HJXODWLRQ
DQG$UW  RIWKH(6&%6WDWXWHLIQHFHVVDU\´

 LELGS7KHSRVLWLRQH[SUHVVHGE\WKH(&%LQLWVUHSO\WRWKH(&$¶VUHFRPPHQGDWLRQVZDV
UHLWHUDWHGE\'DQLqOH1RX\  &KDLURIWKH6XSHUYLVRU\%RDUGLQWKHUHVSRQVHVHQWWR(XURJURXS
3UHVLGHQW-HURHQ'LMVVHOEORHP

 7KHZRUGLQJXVHGE\WKH&RXQFLOLVSUHFLVHO\WKHVDPHDVWKDWXVHGE\WKH(&%LQLWVRSLQLRQRQWKH
OHJLVODWLYHSURSRVDO&20  ILQDO

 7KHSRVVLELOLW\RIUHYLHZLQJWKH660DFFRXQWDELOLW\UHJLPHLVH[SOLFLWO\SURYLGHGE\$UWLFOHRI
5HJXODWLRQ (8 1R7KH&RXQFLO¶VVXSSRUWGLGQRWDGGDQ\WKLQJQHZWRWKHVXEVWDQFH

 (XURSHDQ3DUOLDPHQW  SW

 (XURSHDQ&HQWUDO%DQN  SRLQW

 $UWLFOH  7(8

 $UWLFOH  7(8

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
SRZHUVRIRWKHULQVWLWXWLRQV 7KHVHSDUDWLRQRISRZHUVXQGHUWKH7UHDWLHVGRHVQRW
PHDQWKDWHDFKLQVWLWXWLRQVKRXOGDFWLQLVRODWLRQRQWKHFRQWUDU\LWUHTXLUHVWKHPWR
SUDFWLVHPXWXDOVLQFHUHFRRSHUDWLRQ +RZHYHULQGHSHQGHQWLWPD\EHQR(8
LQVWLWXWLRQLVHQWLUHO\VHSDUDWHIURPWKH8QLRQDQGH[HPSWIURPHYHU\UXOHRI(8ODZ
DVQRWHGE\WKH&RXUWRI-XVWLFHZLWKUHJDUGWRWKH(&%LQLWV2/$)MXGJPHQW 

8QGHU$UWLFOH7)(8WKH(&$H[DPLQHVWKHDFFRXQWVRIDOOUHYHQXHDQG
H[SHQGLWXUHRIWKH8QLRQDQGWKRVHRIDOOERGLHVRIILFHVRUDJHQFLHVVHWXSE\WKH
8QLRQLQVRIDUDVWKHUHOHYDQWFRQVWLWXHQWLQVWUXPHQWGRHVQRWSUHFOXGHVXFK
H[DPLQDWLRQ,QDGGLWLRQWRWKLVILQDQFLDODXGLWWKH(&$LVUHVSRQVLEOHIRUH[DPLQLQJ
WKHOHJDOLW\DQGUHJXODULW\RIUHYHQXHDQGH[SHQGLWXUHDQGHQVXULQJWKHVRXQG
ILQDQFLDOPDQDJHPHQWRIWKH(8LQVWLWXWLRQVERGLHVDQGDJHQFLHVFRYHUHGE\LWV
PDQGDWH7KH(&$¶VVXSHUYLVRU\SRZHUVH[WHQGWRDOOSXEOLFRUSULYDWHERGLHV
RIILFHVRUDJHQFLHVDW8QLRQRU0HPEHU6WDWHOHYHOZKLFKPDQDJHUHYHQXHRU
H[SHQGLWXUHRQEHKDOIRIWKH8QLRQRUDUHLQUHFHLSWRISD\PHQWVIURPWKH(8
EXGJHW 6SHFLILFSURYLVLRQVLQWKH7UHDWLHVOD\GRZQWKH(&$¶VPDQGDWHZLWKUHJDUG
WRWKH³EDQNLQJ´LQVWLWXWLRQVQDPHO\WKH(,%DQGWKH(&%%RWKDUHIXQGHG
LQGHSHQGHQWO\±WKH\GRQRWFODLPDQ\SD\PHQWVIURPWKH(8EXGJHW7KH(,%KDV
FDSLWDOVXEVFULEHGE\WKH0HPEHU6WDWHV DQGWKH(&%KDVFDSLWDOVXEVFULEHGE\
WKH1&%VRIWKH(80HPEHU6WDWHV 7KHWDVNVRIDXGLWLQJWKHEDQNLQJDFWLYLWLHVRI
WKH(,%YHULI\LQJLWVDFFRXQWVDQGRSHUDWLRQVDQGPDNLQJVXUHLWVERRNVDUHNHSWLQ
DSURSHUPDQQHUFRPHXQGHUWKHUHPLWRIDQLQGHSHQGHQWERG\WKH$XGLW
&RPPLWWHH %XWVLQFHLWPDQDJHV(8UHYHQXHDQGH[SHQGLWXUHWKH(,%LVVXEMHFW
WRVXSHUYLVLRQE\WKH(&$IRUWKHVHPDQDJHPHQWDFWLYLWLHV WKH(&$¶VULJKWWR
DFFHVVWKH EDQNLQJ LQIRUPDWLRQKHOGE\WKH(,%LQFRQQHFWLRQZLWKWKHVHDFWLYLWLHVLV
JRYHUQHGE\DQDJUHHPHQWEHWZHHQWKH&RXUWWKH%DQNDQGWKH&RPPLVVLRQ 
*LYHQWKDWWKH(,%DQGWKH(&%ERWKHQMR\VLPLODUEXGJHWDU\DXWRQRP\LWPD\KDYH
VHHPHGORJLFDOIRUWKH(&%WREHH[FOXGHGIURPWKHVFRSHRIWKH(&$¶VVXSHUYLVRU\
UHPLW7KHGUDIW(6&%6WDWXWHGUDZQXSE\WKH&RPPLWWHHRI*RYHUQRUVRQO\
SURYLGHVIRUILQDQFLDOVXSHUYLVLRQE\H[WHUQDODXGLWRUV$WWKHUHTXHVWRIWKH8QLWHG
.LQJGRP WKH(&$¶VPDQGDWHZDVH[WHQGHGWRLQFOXGHWKH(&%EXWLQOLPLWHG


 -XGJPHQWRIWKH&RXUWRI0D\(XURSHDQ3DUOLDPHQWY&RXQFLORIWKH(XURSHDQ&RPPXQLWLHV
&DVH&(&5S,

 $UWLFOH  7(8

 -XGJPHQWRIWKH&RXUWRI-XO\&RPPLVVLRQY(XURSHDQ&HQWUDO%DQN&DVH&>2/$)
FDVH@(&/,(8SW

 $UWLFOH  7)(8

 $UWLFOHRI3URWRFRO 1R RQWKH6WDWXWHRIWKH(XURSHDQ,QYHVWPHQW%DQN

 $UWLFOH  (6&%6WDWXWH

 7KH(,%DOVRPDNHVXVHRIH[WHUQDODXGLWILUPV6HH0pJUHW:DHOEURHFN/RXLVHWDO  S

 %LHEHU  S

 $UWLFOH  E 7)(85HTXHVWHGE\WKH(,%LQWKHQHJRWLDWLRQVIRUWKH7UHDW\RI$PVWHUGDPWKLV
VXESDUDJUDSKLVGHVLJQHGWROLPLWWKHVFRSHRIWKH(&$¶VULJKWRIDFFHVVWRLQIRUPDWLRQ,QWKHDEVHQFH
RIVXFKDQDJUHHPHQWWKH(&$KDVWKHULJKWWRDFFHVVWKHLQIRUPDWLRQLWQHHGVIRUWKHSHUIRUPDQFHRI
LWVDXGLWWDVNV6HH,QJKHOUDP  SS

 -DQ,QJKHOUDP RSFLWS RIIHUVDPLVLQWHUSUHWDWLRQRIWKHDQDO\VLVSURYLGHGE\-LP&ORRVHWDO
QHJRWLDWRUVRIWKH0DDVWULFKW7UHDW\IRU/X[HPERXUJ 7KHVHDXWKRUVPHQWLRQD%ULWLVKQRWHGDWHG
)HEUXDU\ZKLFKWKH8.VHQWWRLWVSDUWQHUVFRQFHUQLQJWKH(&$¶VSRZHUV1RZKHUHGRWKH\
PHQWLRQWKHTXHVWLRQRIWKH(&%¶VPDQGDWH+RZHYHU-DQ,QJKHOUDPDWWULEXWHVWKHLGHDRIDUHGXFHG
PDQGDWHIRUWKH(&%WRWKH8QLWHG.LQJGRP6HH&ORRV5HLQHVFKDQG:H\ODQG  S7KLV
PLVLQWHUSUHWDWLRQLVUHSHDWHGLQ%DH]6HDUDDQG/DPEULQRF6FKDQ]  S

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
WHUPVWRUHVSHFWWKHODWWHU¶VLQGHSHQGHQFH8QGHU$UWLFOHRIWKH(6&%6WDWXWHWKH
YHULILFDWLRQRIDFFRXQWVZKLFKLQFOXGHVH[DPLQLQJWKDWRSHUDWLRQVKDYHEHHQ
FRQGXFWHGDQGERRNVNHSWLQDSURSHUPDQQHULVWKHUHVSRQVLELOLW\RIH[WHUQDO
DXGLWRUVDQGQRWRIWKH(&$7KHVHDXGLWRUVDUHDSSURYHGE\WKH&RXQFLODFWLQJRQ
DUHFRPPHQGDWLRQIURPWKH(&% 7KH(&$¶VDXGLWSRZHUVGRQRWLQFOXGHWKH
YHULILFDWLRQRIDFFRXQWVDFFRUGLQJWR$UWLFOH  LWPD\RQO\H[DPLQH³WKH
RSHUDWLRQDOHIILFLHQF\RIWKHPDQDJHPHQWRIWKH(&%´ 

 6FRSHRI$UWLFOH  RIWKH(6&%6WDWXWH

$UWLFOH  RIWKH(6&%6WDWXWHUHVWULFWVWKH(&$¶VPDQGDWHWRDQH[DPLQDWLRQRI
WKHRSHUDWLRQDOHIILFLHQF\RIWKHPDQDJHPHQWRIWKH(&%,WDSSOLHVH[FOXVLYHO\WRWKH
(&% DQGQRWWKH(6&% DQGWKHUHE\SUHYHQWVWKH(&$IURPH[WHQGLQJLWVSRZHUVWR
HQWLWLHVWKDWDUHOHJDOO\GLVWLQFWIURPWKH(&%EXWDVVRFLDWHGZLWKWKHSHUIRUPDQFHRI
WDVNVXQGHUWKHUHPLWRIWKH(&%

0RUHRYHU$UWLFOH  SURYLGHVIRUDQDXGLWRIRSHUDWLRQDOHIILFLHQF\RIWKH
PDQDJHPHQWRIWKH(&%ZLWKRXWGHILQLQJRUUHVWULFWLQJWKHQRWLRQRIPDQDJHPHQW
DQGWKHILHOGVRIDFWLRQWRZKLFKWKLVDSSOLHV$FFRUGLQJO\WKH(&$FRXOGFRQWLQXH
H[HUWLQJLWVDXGLWLQJSRZHUVLQILHOGVZKHUHQHZWDVNVZHUHFRQIHUUHGXSRQWKH(&%
SXUVXDQWWR(8ODZ $UWLFOH  RULQWHUQDWLRQDOODZ (607UHDW\ DVORQJDV
PDQDJHPHQWLVUHTXLUHG7KHGHIDXOWRIDQ\VSHFLILFGHILQLWLRQRIWKHPDQDJHPHQW
PHDQVDOVRWKDWWKHIRUPWDNHQE\WKHPDQDJHPHQWLVLUUHOHYDQWWRWKHVFRSHRIWKH
(&$¶VPDQGDWH2QHVKRXOGUHJUHWWKHOHHZD\JLYHQWRWKH(&$+RZHYHUWKLV
FRXQWHUEDODQFHVWKH(&%¶VRSHUDWLRQDOLQGHSHQGHQFHWKHPDQDJHPHQWSURFHGXUHV
WREHHPSOR\HGE\WKH(&%IRUWKHSHUIRUPDQFHRILWVWDVNVDUHQRWODLGGRZQLQWKH
7UHDWLHVEXWDUHOHIWHQWLUHO\WRWKH%DQN¶VGLVFUHWLRQ7KH(&%LVIUHHWRRUJDQLVHLWV
RSHUDWLRQLQVXFKDZD\WKDWLWFDQFDUU\RXWLWVWDVNVDQGFRQGXFWDSSURSULDWH
DFWLYLWLHVWKH*RYHUQLQJ&RXQFLOLVUHVSRQVLEOHIRUGHWHUPLQLQJWKH(&%¶VLQWHUQDO
RUJDQLVDWLRQ ZKLOHWKH([HFXWLYH%RDUGLVUHVSRQVLEOHIRUWKHFXUUHQWEXVLQHVVRI
WKH(&% 

7KHDXGLWWREHSHUIRUPHGE\WKH(&$VKRXOGH[DPLQHWKHRSHUDWLRQDOHIILFLHQF\RI
WKH(&%¶VPDQDJHPHQW7KLVWHUPµHIILFLHQF\¶LVQRWGHILQHGLQWKH7UHDWLHVRUWKH
6WDWXWHDQGWKHZD\LWLVWUDQVODWHGLQWKHYDULRXVOLQJXLVWLFYHUVLRQVGRHVQRWVKHG



 7KH&RXQFLO¶VDSSURYDOLVJLYHQLQWKHIRUPRIDGHFLVLRQ6HHIRUH[DPSOH&RXQFLO'HFLVLRQRI-XQH
DPHQGLQJ'HFLVLRQ(&DSSURYLQJWKHH[WHUQDODXGLWRUVRIWKH(XURSHDQ&HQWUDO%DQN
(8  2-/-XQH 

 $UWLFOH  (6&%6WDWXWH7KLVFRQFHSWZKLFKLVQRWIRXQGDQ\ZKHUHHOVHLQ(8ODZLVXQFOHDUDQG
KDVWKHUHIRUHHOLFLWHGPXFKFULWLFLVP6HHHVSHFLDOO\.URSSHQVWHGW  S9HVHO  S

 $UWLFOH  (6&%6WDWXWH

 $UWLFOH  (6&%6WDWXWH

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
OLJKWRQLWVPHDQLQJRUVFRSH 6LQFHWKHWHUPDSSOLHVWRWKH(&$¶VPDQGDWH
GHILQLQJLWLQYROYHVUHIHUULQJWRWKHOHJDODQGPHWKRGRORJLFDOIUDPHZRUNWKDWJRYHUQV
WKH&RXUW7KHSULQFLSOHVFRQFHSWVDQGSURFHGXUHVWKDWXQGHUSLQWKH(&$¶VSRZHUV
RIDXGLWDUHODLGGRZQLQ5HJXODWLRQ (8(XUDWRP 1RRIWKH(XURSHDQ
3DUOLDPHQWDQGRIWKH&RXQFLORI2FWREHURQWKHILQDQFLDOUXOHVDSSOLFDEOHWR
WKHJHQHUDOEXGJHWRIWKH8QLRQ )LQDQFLDO5HJXODWLRQ 7KH)LQDQFLDO5HJXODWLRQ
OD\VGRZQJXLGHOLQHVIRUWKHSUHVHQWDWLRQDQGDXGLWRIWKHDFFRXQWVRIWKH(8DQGRI
ERGLHVDQGDJHQFLHVFUHDWHGE\LWDVZHOODVWKRVHRI(XUDWRPWKH(&%LVH[FOXGHG
IURPWKHVFRSHRIWKH)LQDQFLDO5HJXODWLRQH[FHSWZKHUHRWKHUZLVHSURYLGHGIRULQ
WKH5HJXODWLRQ $UWLFOHRQVRXQGILQDQFLDOPDQDJHPHQWGHILQHVZKDWWKH
FRQFHSWRIHIILFLHQF\UHIHUVWR LWFRQFHUQV³WKHEHVWUHODWLRQVKLSEHWZHHQUHVRXUFHV
HPSOR\HGDQGUHVXOWVDFKLHYHG´,WGLIIHUVIURPWKHSULQFLSOHRIHFRQRP\ZKLFK
UHTXLUHVWKDW³WKHUHVRXUFHVXVHGE\WKHLQVWLWXWLRQLQWKHSXUVXLWRILWVDFWLYLWLHVVKDOO
EHPDGHDYDLODEOHLQGXHWLPHLQDSSURSULDWHTXDQWLW\DQGTXDOLW\DQGDWWKHEHVW
SULFH´DVZHOODVIURPWKHSULQFLSOHRIHIIHFWLYHQHVVZKLFKFRQFHUQV³WKHDWWDLQPHQW
RIWKHVSHFLILFREMHFWLYHVVHWDQGWKHDFKLHYHPHQWRIWKHLQWHQGHGUHVXOWV´7KHVH
WKUHHGHILQLWLRQVDUHFRSLHGZRUGIRUZRUGLQWKH(&$¶VLQWHUQDOPHWKRGRORJLFDO
GRFXPHQWDWLRQ (8ODZPDLQO\UHSOLFDWHVVWDQGDUGVDGRSWHGE\WKH,QWHUQDWLRQDO
2UJDQL]DWLRQRI6XSUHPH$XGLW,QVWLWXWLRQV ,1726$, $FFRUGLQJWR,1726$,
VWDQGDUGVWKHSULQFLSOHRI³HIILFLHQF\´PHDQV³JHWWLQJWKHPRVWIURPWKHDYDLODEOH
UHVRXUFHV,WLVFRQFHUQHGZLWKWKHUHODWLRQVKLSEHWZHHQUHVRXUFHVHPSOR\HGDQG
RXWSXWVGHOLYHUHGLQWHUPVRITXDQWLW\TXDOLW\DQGWLPLQJ´ 

7KHVSHFLILFPHQWLRQRIHIILFLHQF\LQ$UWLFOH  RIWKH(6&%6WDWXWHVKHGVOLJKWRQ
WKHVFRSHRIWKH(&$¶VPDQGDWH,WSODFHVWKH(&$¶VDXGLWLQWKHFDWHJRU\RI
SHUIRUPDQFHDXGLWVWKHUHE\FRQILUPLQJWKHH[FOXVLRQRIILQDQFLDOFRPSOLDQFHDXGLWV
LPSOLHGE\$UWLFOH  ,1726$,GHILQHVWKHSHUIRUPDQFHDXGLWDV³DQLQGHSHQGHQW
H[DPLQDWLRQRIWKHHIILFLHQF\DQGHIIHFWLYHQHVVRIJRYHUQPHQWXQGHUWDNLQJV
SURJUDPVRURUJDQL]DWLRQVZLWKGXHUHJDUGWRHFRQRP\DQGWKHDLPRIOHDGLQJWR
LPSURYHPHQWV´ +RZHYHUXQOLNHILQDQFLDODXGLWSHUIRUPDQFHDXGLWLVQRWJRYHUQHG


 7KHWHUP³HIILFLHQF\´ RU³HIILFLHQW´ LVXVHGIRXURWKHUWLPHVLQWKH(QJOLVKYHUVLRQRIWKH7)(85HFLWDO
RIWKH3UHDPEOHWRWKH7(8 ³HIILFLHQWIXQFWLRQLQJ´ $UW  RQHQHUJ\SROLF\ ³HQHUJ\HIILFLHQF\´ 
$UW  RQGHYHORSPHQWFRRSHUDWLRQSROLF\ ³>«@FRPSOHPHQWDULW\DQGHIILFLHQF\RI>WKH@DFWLRQ>RI
WKH(8DQGWKH0HPEHU6WDWHV@´ DQG$UW  RQKXPDQLWDULDQDLG ³>«@HIILFLHQF\DQG
FRPSOHPHQWDULW\RI8QLRQDQGQDWLRQDODLGPHDVXUHV´ 7KH)UHQFK,WDOLDQDQG*HUPDQYHUVLRQVRIWKH
7UHDW\WUDQVODWH³HIILFLHQF\´UHVSHFWLYHO\E\³HIILFLHQFH´³HIILFLHQ]D´DQG³(IIL]LHQ]´IRU$UWLFOHRIWKH
7UHDW\DQG$UWLFOHRIWKH(6&%6WDWXWH%XW³HIILFLHQF\´LVWUDQVODWHGE\³HILFDFLD´LQ6SDQLVKDQG
³HILFiFLD´LQ3RUWXJXHVHLQ$UWLFOHDQGQRWLQ$UWLFOH)LQDOO\RQO\WKH*HUPDQYHUVLRQRIWKH(8
7UHDW\DVVRFLDWHVWKHFRQFHSWRIHIILFLHQF\ ³(IIL]LHQ]´ ZLWKWKDWRIGHPRFUDF\ZKHQUHIHUULQJWRWKH
IXQFWLRQLQJRIWKH(8LQVWLWXWLRQVLQWKHRWKHUODQJXDJHVWKHWHUPXVHGLV³HIILFDF\´

 2-/2FWREHU

 5HFLWDODQG$UW  E RIWKHILQDQFLDOUHJXODWLRQ

 7RDYRLGDQ\FULWLFLVPDVWRWKHULVNRIDQDQDFKURQLVWLFLQWHUSUHWDWLRQLWVKRXOGEHQRWHGWKDWGXULQJWKH
QHJRWLDWLRQVIRUWKH0DDVWULFKW7UHDW\WKHDSSOLFDEOHILQDQFLDOUHJXODWLRQZDVEDVHGRQMXVWWZR
SULQFLSOHV³HFRQRP\´DQG³VRXQGILQDQFLDOPDQDJHPHQW´7KHGHILQLWLRQRIWKHSULQFLSOHRIVRXQG
ILQDQFLDOPDQDJHPHQWEDVHGRQWKHWKUHHIROGQRWLRQRI³HFRQRP\HIILFLHQF\HIIHFWLYHQHVV´RQO\
DSSHDUVLQWKHUHYLVHGYHUVLRQRIWKHILQDQFLDOUHJXODWLRQ%XWWKHSULQFLSOHVPHQWLRQHGDERYHDUH
QRWQHZWRSXEOLFDXGLWRUVWKH\DUHUHFRJQLVHGDVIRXQGLQJSULQFLSOHVRIWKHDXGLWVFDUULHGRXWE\6$,V
XQGHUWKH,1726$,/LPD'HFODUDWLRQDGRSWHGLQ6HH,1726$,7KH/LPD'HFODUDWLRQ,66$,
>,1726$,3 @

 6HHIRULQVWDQFH(XURSHDQ&RXUWRI$XGLWRUV D S(XURSHDQ&RXUWRI$XGLWRUV  S

 ,1726$,  S

 ,1726$,  S

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
E\IL[HGVWDQGDUGVDQGE\IRUPDOL]HGRSLQLRQV,WLVPRUHIOH[LEOHLQLWVFKRLFHRIWKH
VXEMHFWVWKHDXGLWREMHFWVPHWKRGVDQGRSLQLRQV0DGHRQDQRQUHFXUULQJEDVLV
WKHSHUIRUPDQFHDXGLWLV³E\QDWXUHZLGHUDQJLQJDQGRSHQWRMXGJPHQWVDQG
LQWHUSUHWDWLRQV>«@LWLVQRWDFKHFNOLVWEDVHGIRUPRIDXGLWLQJ´ %DVHGRQ
VWDQGDUGVDQGJXLGHOLQHVDGRSWHGE\,1726$,WKHGHILQLWLRQRISHUIRUPDQFHDXGLW
E\WKH(&$UHIHUVWR³DQLQGHSHQGHQWREMHFWLYHDQGUHOLDEOHH[DPLQDWLRQRIZKHWKHU
XQGHUWDNLQJVV\VWHPVRSHUDWLRQVSURJUDPPHVDFWLYLWLHVRURUJDQLVDWLRQVDUH
RSHUDWLQJLQDFFRUGDQFHZLWKWKHSULQFLSOHVRIHFRQRP\HIILFLHQF\DQGHIIHFWLYHQHVV
DQGZKHWKHUWKHUHLVURRPIRULPSURYHPHQW´ 

7KHIDFWWKDWWKH(&$¶VPDQGDWHPHQWLRQVH[SOLFLWO\RQO\WKHREMHFWLYHRIHIILFLHQF\
HQWDLOVDQLPSRUWDQWUHVWULFWLRQIRUWKH&RXUWLWH[FOXGHVDQ\DXGLWWKDWH[DPLQHVWKH
(&%¶VPDQDJHPHQWLQWHUPVRIWKHSULQFLSOHVRIHFRQRP\DQGHIIHFWLYHQHVV
$FFRUGLQJO\WKH(&$VKDOOQRWH[DPLQHDQGGHOLYHUDQRSLQLRQDERXWWKHUHVRXUFHV
RIWKH(&%WKHLUDSSURSULDWHTXDQWLW\DQGWKHLUDYDLODELOLW\LQGXHWLPH7KHVDPH
DSSOLHVIRUWKHDWWDLQPHQWRILWVREMHFWLYHVE\WKH(&%

7KLVUHVWULFWLRQLVLQOLQHZLWKWKHLQGHSHQGHQFHSULQFLSOHODLGGRZQLQ$UWLFOH
7)8(DQG$UWLFOHRIWKH(6&%6WDWXWH$FFRUGLQJWRWKHVHWZRSURYLVLRQVWKH(&$
OLNHDQ\RWKHU(8LQVWLWXWLRQPXVWQRWVHHNWRLQIOXHQFHWKHPHPEHUVRIWKH(&%¶V
GHFLVLRQPDNLQJERGLHVLQWKHSHUIRUPDQFHRIWKHLUWDVNV,QSUDFWLFHWKH&RXUWPD\
QRWH[SUHVVDQ\MXGJPHQWRQWKHSROLWLFDOH[SHGLHQF\RIRUJDQLVDWLRQDOPHDVXUHVRU
WKHUHOHYDQFHRIVXEVWDQWLYHPHDVXUHV$OWKRXJKSHUIRUPDQFHDXGLWVPD\FRQFOXGH
WKDWWKHUHDUHVKRUWFRPLQJVWKH\PD\JRQRIXUWKHUWKDQPDNLQJUHFRPPHQGDWLRQV
,QWKH2/$)FDVHUHIHUULQJWRWKHLQYHVWLJDWLYHSRZHUVRIWKHDQWLIUDXGRIILFHWKH
&RXUWRI-XVWLFHFRQILUPHGWKDW2/$)VKRXOGQRWEH³FDSDEOHLQSUDFWLFHRI
SUHYHQWLQJ>WKH(&%@IURPFDUU\LQJRXWLWVSDUWLFXODUWDVNV´ ,QLWVUHSRUWRQWKH
V\VWHPVDQGSURFHGXUHVHVWDEOLVKHGE\WKH(&%IRUPDQDJLQJLWV%XVLQHVV$UHDV¶
DFWLYLWLHVWKH&RXUWLQGLFDWHVWRWKLVHQGWKDW³WKHDXGLWGLGQHLWKHUHYDOXDWHWKH
UHVXOWVRIWKH(&%DVDZKROHQRUWKH%$V¶DFWLYLWLHV´ ,WLVWKHVHDVSHFWVOLQNHGZLWK
WKHSUDFWLFDORSHUDWLRQRIWKHLQVWLWXWLRQWKDWDUHHPSKDVLVHGE\WKHTXDOLILHU
³RSHUDWLRQDO´DVVRFLDWHGZLWKWKHDLPRI³HIILFLHQF\´LQWKH(QJOLVK6SDQLVKDQG
3RUWXJXHVHYHUVLRQVRIWKH7UHDWLHV5HVWULFWLQJWKHDXGLWWR³RSHUDWLRQDOHIILFLHQF\´
H[FOXGHV³DQHIIHFWLYHQHVVEDVHGH[DPLQDWLRQRIWKHHQWLW\¶VGHFLVLRQVDQG
SROLFLHV´ :HZRXOGDOVRVXJJHVWWKDWWKHH[SOLFLWO\³RSHUDWLRQDO´QDWXUHRIWKHDXGLW



 LELG

 (XURSHDQ&RXUWRI$XGLWRUV  S

 -XGJPHQWRIWKH&RXUWRI-XO\&RPPLVVLRQRIWKH(XURSHDQ&RPPXQLWLHVY(XURSHDQ&HQWUDO
%DQN&DVH&(&5,SWVHHDOVR-XGJPHQWRIWKH&RXUWRI-XO\
&RPPLVVLRQRIWKH(XURSHDQ&RPPXQLWLHVY(XURSHDQ,QYHVWPHQW%DQN&(&5,
SW

 5HSRUWRIWKH(&$RQWKHDXGLWRIWKHRSHUDWLRQDOHIILFLHQF\RIWKHPDQDJHPHQWRIWKH(XURSHDQ
&HQWUDO%DQNIRUWKHILQDQFLDO\HDUWKHV\VWHPVDQGSURFHGXUHVHVWDEOLVKHGE\WKH(&%IRU
PDQDJLQJLWV%XVLQHVV$UHDV¶DFWLYLWLHVWRJHWKHUZLWKWKHUHSOLHVRIWKH(XURSHDQ&HQWUDO%DQN 2-
&-XQH SW(XURSHDQ&RXUWRI$XGLWRUV  S

 %DH]6HDUDDQG/DPEULQRF6FKDQ]  S

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
HPSKDVLVHVWKHIDFWWKDWLWGLIIHUVIURPWKH(&$¶VJHQHUDODXGLWSRZHUVLQWKHDUHDRI
³ILQDQFLDOPDQDJHPHQW´ 

7KH(&$¶VDXGLWPXVWWKHUHIRUHEHVHHQDVDQH[SHUWFRQWULEXWLRQDLPHGDWWKH
FRQWLQXRXVLPSURYHPHQWRIWKH(&%¶VLQWHUQDORSHUDWLRQYLDWKHLGHQWLILFDWLRQRIDQ\
VKRUWFRPLQJV,QSUDFWLFHWKHDXGLWSHUIRUPHGE\WKH(&$H[DPLQHV L WKH
DSSURSULDWHQHVVRILQWHUQDORUJDQLVDWLRQDOPHDVXUHVZLWKUHVSHFWWRWKHDLPVDQG
WDVNVDWWULEXWHGE\WKH7UHDWLHV LL WKHUHOHYDQFHRIPDQDJHPHQWSURFHGXUHVDQG
LLL WKHHIIHFWLYHRSHUDWLRQRIWKH(&%ZLWKUHJDUGWRLQWHUQDOUXOHVDQGSURFHGXUHV
$QDQDO\VLVRIWKHDXGLWUHSRUWVFRQFHUQLQJWKHRSHUDWLRQDOHIILFLHQF\RIWKH
PDQDJHPHQWRIWKH(0,DQGWKH(&%UHYHDOVWKHXQUHVWULFWHGQDWXUHRIWKHILHOGVRI
DFWLRQFRYHUHGE\WKH(&$WKHVHLQFOXGHEXGJHWDU\PDQDJHPHQWLQWHUQDODXGLW
V\VWHPVSURMHFWPDQDJHPHQWDQGPRQLWRULQJGHFLVLRQLPSOHPHQWDWLRQSURFHVV
HIILFLHQF\RIKXPDQUHVRXUFHVSROLF\ULVNPDQDJHPHQWSURFHGXUHVDQGV\VWHPV
DQGHQYLURQPHQWDOPDQDJHPHQW

 $SSOLFDELOLW\RI$UWLFOH  RIWKH6WDWXWHWRWKHVXSHUYLVRU\WDVNV


RIWKH(&%

$UWLFOH  RIWKH6605HJXODWLRQVSHFLILFDOO\SURYLGHVWKDWWKH(&$VKDOODOVRWDNH
LQWRDFFRXQWWKHVXSHUYLVRU\WDVNVFRQIHUUHGRQWKH(&%ZKHQLWH[DPLQHVWKH
RSHUDWLRQDOHIILFLHQF\RIWKHPDQDJHPHQWRIWKH%DQNXQGHU$UWLFOH  RIWKH
6WDWXWH7KLVLVVXUSULVLQJZKHQFRPSDUHGZLWKRXULQWHUSUHWDWLRQRIWKHVFRSHRI
$UWLFOH  RIWKH(6&%6WDWXWH(LWKHU$UWLFOH  LVPHUHO\GHVFULSWLYH DQG
VHUYHVQRSXUSRVHRWKHUWKDQWRUHPRYHDQ\DPELJXLW\DVWRWKHJHQHUDOVFRSHRI
$UWLFOH  RULWILOOVDVLOHQFHLQWKH7UHDWLHVDQGHQVKULQHVWKH(&$¶VFRPSHWHQFH
WRH[HUFLVHLWVSRZHUVRIDXGLWLQWKLVQHZILHOGRIDFWLRQIRUWKH(&%$FFRUGLQJWR
WKLVVHFRQGLQWHUSUHWDWLRQ$UWLFOH  ZRXOGDSSO\RQO\WRWKHDUHDVIRUZKLFKWKH
(&%KDVEHHQJLYHQPLVVLRQVDQGWDVNVXQGHUSULPDU\ODZIRUWDVNVFRQIHUUHGWRLW
XQGHUVHFRQGDU\ODZWKHOHJLVODWRUZRXOGEHIUHHWRGHILQHWKHVFRSHRIWKH(&$¶V
PDQGDWH,WLVWKHODWWHULQWHUSUHWDWLRQWKDWLVVXSSRUWHGE\WKH(&$DQGWKHQDWLRQDO
6$,VZKHQWKH\FDOORQWKH(XURSHDQ3DUOLDPHQW&RXQFLOWKH(XURSHDQ&RXQFLODQG
WKH&RPPLVVLRQ³WRFRQVLGHUDVWUHQJWKHQLQJRIWKH(&$¶VPDQGDWHFRQFHUQLQJWKH
DXGLWRIWKH(&%¶VVLQJOHVXSHUYLVRU\PHFKDQLVPLQFOXGLQJFODULI\LQJWKHVFRSHRI
$UWLFOH  6605HJXODWLRQDQGRUFKDQJLQJ$UWLFOH  6605HJXODWLRQDQG
$UWLFOH  RIWKH(6&%6WDWXWHLIQHFHVVDU\>«@´ :HGLVSXWHWKLV

7KHRQO\SXUSRVHRI$UWLFOH  7)(8RQZKLFKWKH6605HJXODWLRQLVEDVHGLV
WRDVVLJQDGGLWLRQDOWDVNVWRWKH(&%,WFDQQRWEHFRQVLGHUHGDVDVSHFLDOUHYLHZ



 $UWLFOH  7)(8)RUDVKRUWVXPPDU\RIWKHPDLQGLIIHUHQFHVEHWZHHQWKHSHUIRUPDQFHDXGLWDQG
WKHILQDQFLDODXGLWVHH(XURSHDQ&RXUWRI$XGLWRUV  S,QDGGLWLRQLWLVLQWHUHVWLQJWRREVHUYH
WKDWRSHUDWLRQDOPDQDJHPHQWLVFORVHO\UHODWHGWRILQDQFLDOPDQDJHPHQWLQWKH1HWKHUODQGV3XUVXDQW
WR$UW  RIWKH*RYHUQPHQW$FFRXQW$FWRIWKHWHUP³RSHUDWLRQDOPDQDJHPHQW´LQFOXGHLQ
DQ\HYHQWILQDQFLDOPDQDJHPHQWPDWHULDOPDQDJHPHQWDQGWKHUHFRUGVKHOGIRUPDQDJHPHQW
SXUSRVHV´

 6HH.URSSHQVWHGW  SIRRWQRWHDOVRVXJJHVWHGE\=LOLROL  S

 &RQWDFW&RPPLWWHHRIWKH6$,VRIWKH(XURSHDQ8QLRQ  

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
FODXVHDSSOLFDEOHWRHFRQRPLFDQGPRQHWDU\SROLF\ LWGRHVQRWDXWKRULVH
FRQIHUULQJQHZFRPSHWHQFHVXSRQWKH(8RUDPHQGLQJWKHVFRSHRIRWKHUSULPDU\
ODZSURYLVLRQVDSSOLFDEOHWRWKH(&%+RZHYHU$UWLFOH  DXWKRULVHVWKH
(XURSHDQOHJLVODWRUWRILOOWKHYRLGVLQWKH7UHDW\FRQFHUQLQJWKHH[DFWVXEVWDQFHRI
QHZWDVNVZKLFKPD\EHDVVLJQHGWRWKH(&%,QWKHFDVHLQSRLQWDVGHPRQVWUDWHG
DERYHLQSRLQW$UWLFOHRIWKH(6&%6WDWXWHLVFOHDUO\DQGSUHFLVHO\ZRUGHG
SDUDJUDSKOD\VGRZQWKHFRPSHWHQFHRIH[WHUQDODXGLWRUVWRH[DPLQHWKHDFFRXQWV
RIWKH(&%DQGFRQIHUVRQWKHPIXOOSRZHUWRGRVRSDUDJUDSKJLYHVWKH&RXUW
UHVSRQVLELOLW\IRUDXGLWLQJWKHPDQDJHPHQWRIWKH(&%,QERWKFDVHVQR
UHVHUYDWLRQVDUHPDGHDVWRWKHILHOGVRIDFWLRQFRQFHUQHGE\WKHDXGLWV$Q\FKDQJH
LQWURGXFHGE\DUHJXODWLRQDGRSWHGXQGHU$UWLFOH  ZLOOWKHUHIRUFRQWUDGLFW$UWLFOH
  RIWKH(6&%6WDWXWH7KHVLWXDWLRQLVFRPSOHWHO\GLIIHUHQWZKHQLWFRPHVWR
UHODWLRQVEHWZHHQWKH(&%DQGSROLWLFDODXWKRULWLHV WKH(XURJURXSDQGWKHQDWLRQDO
SDUOLDPHQWV (8SULPDU\ODZJLYHVIHZGHWDLOVRQWKLVPDWWHUGUDIWOHJLVODWLYHDFWV
RULJLQDWLQJIURPWKH(&%VKDOOEHIRUZDUGHGWRWKHQDWLRQDOSDUOLDPHQWVE\WKH
&RXQFLOWKLVODWWHUVKDOOIRUZDUGWKHFRPPRQUHDVRQHGRSLQLRQDGRSWHGE\WKH
QDWLRQDOSDUOLDPHQWVRURSLQLRQVWRWKH(&% WKH(&%PD\EHLQYLWHGWRWDNHSDUW
LQWKH(XURJURXS 7KLVJLYHVWKH(XURSHDQOHJLVODWRUOHHZD\WRFODULI\WKHUHSRUWLQJ
REOLJDWLRQV

,QWKLVFRQWH[WZK\GLGWKHOHJLVODWRUIHHOWKDWLWZDVQHFHVVDU\WRLQWURGXFH
$UWLFOH  ":HZRXOGVXJJHVWWKDWWKHDLPRIWKLVVXSHUIOXRXVFODULILFDWLRQZDVWR
VHWWOHDOHJDOGHEDWHWKDWZDVEHJLQQLQJWRHPHUJHDPRQJWKH6$,VDQGWRFOHDUXS
ZKDWZDVVHHQDVD³JUH\DUHD´ ,QFLGHQWDOO\WKHFODULILFDWLRQDOVRVWUHQJWKHQVWKH
FRKHUHQFHRIWKHWH[WDVVHHQLQWKHUHLWHUDWLRQRIWKHH[WHUQDODXGLWRUV¶PDQGDWHLQ
$UWLFOHRIWKH6605HJXODWLRQRQ³%XGJHWDQGDQQXDODFFRXQWV´7KHVH
UHSHWLWLRQVXOWLPDWHO\HQDEOHWZRSLWIDOOVWREHDYRLGHGH[FOXGLQJIURPWKHVFRSHRI
WKH(&$¶VVXSHUYLVLRQDQDUHDRIDFWLYLW\WKDWKDVEHFRPHHVVHQWLDOQDPHO\
SUXGHQWLDOVXSHUYLVLRQRIFUHGLWLQVWLWXWLRQVDQGH[FOXGLQJWKHDSSOLFDWLRQRIDPRUH
WKRURXJKDXGLWUHJLPHWRWKH(&%IRULWVSHUIRUPDQFHRIWKHWDVNVFRQIHUUHGRQLWE\
WKH6605HJXODWLRQDVFDOOHGIRUE\WKH6$,V

 &DOOVIRUDPRUHLQWUXVLYHDXGLWPDQGDWH

7KHILQDQFLDOFULVLVDQGVXEVHTXHQWVRYHUHLJQGHEWFULVLVREOLJHGWKH(&%WRPDNH
XVHRIDOOWKHIOH[LELOLW\ZLWKLQWKH7UHDWLHVWRDQXQSUHFHGHQWHGH[WHQW,WZDVDOVR



 6HH$UW  DQG$UW  7)(8$UWRIWKH6WDWXWHDQG$UW  RIWKH6WDWXWHUHPRYHGE\
WKH7UHDW\RI/LVERQ

 $UWLFOHVDQGRI3URWRFRO 1R RQWKHUROHRIQDWLRQDOSDUOLDPHQWVLQWKH(XURSHDQ8QLRQ

 $UWLFOHRI3URWRFRO 1R RQWKH(XURJURXS

 6HH&DOGHLUD  7KLVVSHHFKZDVPDGHOHVVWKDQGD\VDIWHUWKHSXEOLFDWLRQRIWKH&RPPLVVLRQ
SURSRVDORQWKHQHZVXSHUYLVRU\SRZHUVRIWKH(&%DQGFRQFHUQVDERXWSRVVLEOHDXGLWJDSVZHUH
DOUHDG\EHLQJH[SUHVVHG

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
JLYHQQHZWDVNVXQGHU DQGRXWVLGH WKHVFRSHRI(8ODZ7KHVHGHYHORSPHQWV
UDLVHGFRQFHUQVHVSHFLDOO\IURPWKH(&%LWVHOI$VH[SODLQHGE\0DULR'UDJKLLQ0D\
³7KH(&%KDVEHHQDFXWHO\DZDUHWKDWDVLWVPRQHWDU\SROLF\KDVEHFRPH
PRUHIDUUHDFKLQJDQGLWKDVWDNHQRQDZLGHUUDQJHRISRZHUVLWFDQQRWMXVWLI\LWV
DFWLRQVVROHO\LQWHUPVRIRXWFRPHV:HKDYHQHHGHGDKLJKHUGHJUHHRI
WUDQVSDUHQF\DQGDFFRXQWDELOLW\VRWKDWFLWL]HQVFDQXQGHUVWDQGKRZZHPDNHRXU
GHFLVLRQVDQGVXEMHFWWKHPWRJUHDWHUVFUXWLQ\´ 7KLVFRQFHUQH[SODLQVWKH(&%¶V
GHFLVLRQWRSXEOLVKWKHDFFRXQWVRIWKHPRQHWDU\SROLF\PHHWLQJVRIWKH*RYHUQLQJ
&RXQFLO,WDOVRVKHGVOLJKWRQWKH(&%¶VZLOOLQJQHVVWRVXSSRUWDQ\VWUHQJWKHQLQJRI
DFFRXQWDELOLW\PHFKDQLVPVIRUWKHSHUIRUPDQFHRILWVQHZSUXGHQWLDOVXSHUYLVLRQ
WDVNV 7KLVFRQFHUQZDVVKDUHGE\WKH(XURSHDQOHJLVODWRU±UHFLWDORIWKH660
5HJXODWLRQFDOOVIRUDQDSSURSULDWHGHYHORSPHQWRIWKH(&%¶VSRZHUVDQGLWV
DFFRXQWDELOLW\UHJLPH³$Q\VKLIWRIVXSHUYLVRU\SRZHUVIURPWKH0HPEHU6WDWHWRWKH
8QLRQOHYHOVKRXOGEHEDODQFHGE\DSSURSULDWHWUDQVSDUHQF\DQGDFFRXQWDELOLW\
UHTXLUHPHQWV´7KHTXHVWLRQLVZKHWKHUWKLVREMHFWLYHLVDFKLHYHGE\WKH660
5HJXODWLRQ$UHWKHDFFRXQWDELOLW\UHTXLUHPHQWVVXIILFLHQWWRJXDUDQWHHWKH(&%¶V
OHJLWLPDF\ZLWKUHVSHFWWRWKHDGRSWLRQRIGHFLVLRQVWKDWFRXOGEHVHQVLWLYHIURPD
SROLWLFDOSHUVSHFWLYHVXFKDVWKHZLWKGUDZDORIDEDQNLQJOLFHQFHIURPDPDMRU
(XURSHDQFUHGLWLQVWLWXWLRQ"1RWZLWKVWDQGLQJWKHVHSDUDWLRQEHWZHHQPRQHWDU\DQG
SUXGHQWLDOVXSHUYLVLRQ ZKDWHIIHFWPLJKWVXFKDGHFLVLRQKDYHRQWKH(&%¶V
UHSXWDWLRQLQWKHDUHDRIPRQHWDU\SROLF\")URPWKLVSHUVSHFWLYHZRXOGDQRYHUO\
UHVWULFWLYHLQWHUSUHWDWLRQRIWKH(&$¶VPDQGDWHRYHUWKH(&%QRWEHFRPHDVRXUFHRI
ZHDNQHVVIRUWKH)UDQNIXUWEDVHGLQVWLWXWLRQ"$VWKHVD\LQJJRHVWKHURDGWRKHOOLV
SDYHGZLWKJRRGLQWHQWLRQV

:HKDYHVHHQWKDWWKH(&$¶VPDQGDWHRYHUWKH(&%LVGHILQHGLQFOHDU
XQDPELJXRXVWHUPVWKDWOHDYHQRGRXEWDVWRLWVVFRSH:KHQLWFRPHVWRWKH
PDQGDWHVRIQDWLRQDO6$,VWKH(8KDVQRDXWKRULW\WRLPSRVHDQH[WHQVLRQRIWKHLU
DXGLWSRZHUVRYHUORFDOVXSHUYLVRU\DXWKRULWLHV7REDFNRXWRIWKLVFRUQHU<YHV
0HUVFKD0HPEHURIWKH(&%([HFXWLYH%RDUGKDVVXJJHVWHGUHYLVLWLQJWKH
SULQFLSOHRILQGHSHQGHQFHDSSOLFDEOHWRWKH(&% +LVDUJXPHQWFDQEHVXPPHG
XSE\WKHIROORZLQJV\OORJLVPWKHLQGHSHQGHQFHUHJLPHLVDQH[FHSWLRQWRWKH


 ,QWKHILHOGRIPDFURSUXGHQWLDOVXSHUYLVLRQYLDLWVUHVSRQVLELOLW\WRSURYLGHWKHVHFUHWDULDWRIWKH
(XURSHDQ6\VWHPLF5LVN%RDUG &RXQFLO5HJXODWLRQ (8 1RRI1RYHPEHU
FRQIHUULQJVSHFLILFWDVNVXSRQWKH(XURSHDQ&HQWUDO%DQNFRQFHUQLQJWKHIXQFWLRQLQJRIWKH(XURSHDQ
6\VWHPLF5LVN%RDUG 2-/'HFHPEHU LQWKHILHOGRIPLFURSUXGHQWLDOVXSHUYLVLRQ 660
5HJXODWLRQHVSHFLDOO\$UWDQG DQGILQDOO\LQWKHILHOGRIHFRQRPLFSROLF\LQLWVFDSDFLW\DVDQ
H[SHUW 5HJXODWLRQ (8 1RRIWKH(XURSHDQ3DUOLDPHQWDQGRIWKH&RXQFLORQWKH
VWUHQJWKHQLQJRIHFRQRPLFDQGEXGJHWDU\VXUYHLOODQFHRI0HPEHU6WDWHVLQWKHHXURDUHDH[SHULHQFLQJ
RUWKUHDWHQHGZLWKVHULRXVGLIILFXOWLHVZLWKUHVSHFWWRWKHLUILQDQFLDOVWDELOLW\ 2-/0D\ 

 2QWKHQHJRWLDWLRQVIRUWKHILQDQFLDODVVLVWDQFHSURJUDPPHVHHIRUH[DPSOH(XURJURXS6WDWHPHQW
%UXVVHOV-XQHRQWKHLPSOHPHQWDWLRQRIWKH(607UHDW\'HFLVLRQRIWKH5HSUHVHQWDWLYHVRI
WKH*RYHUQPHQWVRIWKH0HPEHU6WDWHVRIWKH(XURSHDQ8QLRQRI-XQH%UXVVHOV-XQH
(&2),1$UWLFOH    DQG  $UWLFOH  $UWLFOH  (607UHDW\

 'UDJKL  

 2SLQLRQRIWKH(&%RI1RYHPEHURQDSURSRVDOIRUD&RXQFLOUHJXODWLRQFRQIHUULQJVSHFLILF
WDVNVRQWKH(XURSHDQ&HQWUDO%DQNFRQFHUQLQJSROLFLHVUHODWLQJWRWKHSUXGHQWLDOVXSHUYLVLRQRIFUHGLW
LQVWLWXWLRQVDQGDSURSRVDOIRUDUHJXODWLRQRIWKH(XURSHDQ3DUOLDPHQWDQGRIWKH&RXQFLODPHQGLQJ
5HJXODWLRQ (8 1RHVWDEOLVKLQJD(XURSHDQ6XSHUYLVRU\$XWKRULW\ (XURSHDQ%DQNLQJ
$XWKRULW\  &21  2-&)HEUXDU\ SW

 $UW6605HJXODWLRQ

 0HUVFK  

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
JHQHUDOUXOHVRISXEOLFDGPLQLVWUDWLRQZKLFKFDQEHMXVWLILHGE\WKHVSHFLILFQDWXUHRI
PRQHWDU\SROLF\DVDQH[FHSWLRQWKLVUHJLPHPXVWEHLQWHUSUHWHGVWULFWO\7KH(&%¶V
RWKHUILHOGVRIDFWLRQUHIOHFWLWVRZQREMHFWLYHVDQGFDQMXVWLI\LQGHSHQGHQFHUHJLPHV
WKDWGLIIHUIURPWKRVHDSSOLFDEOHLQWKHPRQHWDU\ILHOG7KH(&%¶VDFFRXQWDELOLW\
UHJLPHLVWKHIOLSVLGHRILWVLQGHSHQGHQFHUHJLPH7KH(&%FDQWKHUHIRUHEHERXQG
E\DFFRXQWDELOLW\REOLJDWLRQVWKDWYDU\GHSHQGLQJRQLWVILHOGVRIDFWLRQDQG
UHTXLUHPHQWVLQWHUPVRILQGHSHQGHQFH³>$@VWKH(&%DVDVXSHUYLVRUHQMR\VD
GLIIHUHQWNLQGRILQGHSHQGHQFHWKDQWKH(&%DVPRQHWDU\DXWKRULW\WKHUHLVLQ
SUDFWLFHDGLIIHUHQWLDWHGDSSOLFDWLRQRIWKHFRQFHSWRIWKH³DXGLWRIWKHRSHUDWLRQDO
HIILFLHQF\RIWKHPDQDJHPHQWRIWKH(&%´PHDQLQJWKDWLWLVSRVVLEOHIRUWKH(&%WR
KDYHGLIIHUHQWREOLJDWLRQVYLVjYLV(&$´ 

<YHV0HUVFK¶VDUJXPHQWLVSUHFLVHULJRURXVDQGDSSHDOLQJ+RZHYHUZHGRQRW
DGKHUHWRKLVDQDO\VLVRIWKH(&%¶VLQGHSHQGHQFHUHJLPH7KLVUHJLPHVHWRXWLQ
$UWLFOH7)(8LVGHVLJQHGWRJXDUDQWHHLWVEHQHILFLDULHV WKH(&%QDWLRQDO
FHQWUDOEDQNVDQGWKHUHVSHFWLYHPHPEHUVRIWKHLUGHFLVLRQPDNLQJERGLHV WKHIUHH
DQGUHVSRQVLEOHH[HUFLVHRISRZHUVDQGWRHQDEOHWKHPWRSHUIRUPWKHWDVNVDQG
GXWLHVWKDWWKH7UHDWLHVDQGWKHLU6WDWXWHFRQIHURQWKHP7KLVLQGHSHQGHQFHLV
UHIHUUHGWRDV³IXQFWLRQDO´VLQFHLWVHUYHVWKHH[HUFLVHRIWKHVHSRZHUVDQGWKH
SHUIRUPDQFHRIWKHVHWDVNVDQGGXWLHV1RGLVWLQFWLRQLVPDGHE\$UWLFOH7)(8
RUE\WKH&RXUWRI-XVWLFHLQLWV2/$)MXGJPHQWDVWRZKLFKSRZHUVWDVNVDQGGXWLHV
DUHSURWHFWHGWKHRQO\FRQGLWLRQLVWKDWWKH\PXVWEHHQVKULQHGLQWKH7UHDWLHV HJ
$UWLFOHVWRWR DQGWKH(6&%6WDWXWH&RQYHUVHO\LQGHSHQGHQFHLV
QRWJXDUDQWHHGIRUDQ\SRZHUVWDVNVDQGGXWLHVFRQIHUUHGRQWKH(&%DQGWKH
1&%VE\DQRWKHUOHJDOEDVLV HJLQWHUQDWLRQDODJUHHPHQW +RZHYHUWKH
HIIHFWLYHQHVVRIWKHLQGHSHQGHQFHUHJLPHZRXOGEHZHDNHQHGLIWKH(XURSHDQ
OHJLVODWRURUWKH0HPEHU6WDWHVZHUHSHUPLWWHGWRFRQIHUQHZIXQFWLRQVRQWKH(&%
RUWKH1&%VWKDWZRXOGMHRSDUGLVHWKHLUDELOLW\WRFRPSO\ZLWKWKHLUREOLJDWLRQVXQGHU
(8SULPDU\ODZ7KHSHUIRUPDQFHRIDQ\DGGLWLRQDOIXQFWLRQVRWKHUWKDQWKRVH
SURYLGHGXQGHUSULPDU\ODZLVRQO\SHUPLWWHGIRUWKH1&%VRQWKHFRQGLWLRQWKDW
WKHVHIXQFWLRQVGRQRW³LQWHUIHUHZLWKWKHREMHFWLYHVDQGWDVNVRIWKH(6&%´ 
7KLQJVDUHOHVVFOHDUZKHQLWFRPHVWRWKH(&%7KLVVKRXOGFRPHDVQRVXUSULVH
VLQFHLWDSSHDUVXQOLNHO\WKDWWKHGUDIWHUVRIWKH7UHDW\HQYLVDJHGWKDWWKH(&%ZRXOG
EHDVVLJQHGDQ\WDVNVRUGXWLHVRWKHUWKDQWKRVHDOUHDG\ODLGGRZQLQ7LWOH9,,,
(FRQRPLFDQGPRQHWDU\SROLF\RIWKH3DUW7KUHHRIWKHWUHDW\RQWKHIXQFWLRQLQJRI
WKH(8 7KH&RXUWRI-XVWLFHKDVLQWHUYHQHGRQWKLVPDWWHURQWZRRFFDVLRQV,QLWV
2/$)MXGJPHQWLWUXOHGWKDW(8OHJLVODWLRQZKLFKLPSRVHVREOLJDWLRQVRQWKH(&%LV
YDOLGDVORQJDVLWGRHVQRW³XQGHUPLQHLWVDELOLW\WRSHUIRUPLQGHSHQGHQWO\WKH



 LELG7KLVYLHZZDVDOUHDG\H[SUHVVHGIRXU\HDUVDJRE\<YHV0HUVFKLQDQLQWHUYLHZZLWKWKHPRQWKO\
(&$-RXUQDO6HH&DURWWL  ,WLVDOVRVKDUHGE\%DUQLHU  

 $UWLFOH  RIWKH(6&%6WDWXWH

 ,QWKLVUHVSHFWWKHOHJLVODWRU¶VREOLJDWLRQWRFRQVXOWWKH(&%LVUHVWULFWHGWRSURSRVHGDFWVLQWKH%DQN¶V
ILHOGRIFRPSHWHQFH±WKHUHE\H[FOXGLQJFRQVXOWDWLRQRQDFWVSURSRVHGRXWVLGHWKLVILHOGHYHQLIWKH\
DSSO\WRWKH(&%7\SLFDOO\WKHSURSRVDOIRUD&RXQFLO5HJXODWLRQ (&(XUDWRP HVWDEOLVKLQJD
(XURSHDQ)UDXG,QYHVWLJDWLRQ2IILFHZDVQRWVXEPLWWHGWRWKH(&%

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
VSHFLILFWDVNVFRQIHUUHGRQLWE\WKH(&7UHDW\´ 7KLVLQWHUSUHWDWLRQLVFRQILUPHGLQ
WKH3ULQJOHMXGJPHQWIRUREOLJDWLRQVLPSRVHGXQGHULQWHUQDWLRQDOODZ 

,WUHPDLQVWREHGHWHUPLQHGZKHWKHURUQRWWKHVXSHUYLVRU\WDVNVSHUIRUPHGE\WKH
(&%FDQEHFRQVLGHUHGDVFRQIHUUHGE\SULPDU\ODZ$FFRUGLQJWR<YHV0HUVFKWKH
FRQFOXVLRQLVXQDPELJXRXVVSHFLILFSUXGHQWLDOVXSHUYLVLRQPLVVLRQVDUHFRQIHUUHG
RQWKH(&%E\D&RXQFLOUHJXODWLRQ$VWKH\DUHEDVHGRQVHFRQGDU\ODZWKHVHQHZ
WDVNVDUHQRWFRYHUHGE\$UWLFOH7)(8 7KLVLQWHUSUHWDWLRQVKRXOGEHUHMHFWHG
$UWLFOH  LVDQHQDEOLQJFODXVHQRWDUHYLVLRQFODXVH,WUHFRJQLVHVWKHSULQFLSOH
RI(8FRPSHWHQFHLQWKHDUHDRISUXGHQWLDOVXSHUYLVLRQDQGWKHSHUIRUPDQFHRIWKLV
VXSHUYLVLRQE\WKH(&%,QWKLVUHVSHFWWKH&RXQFLOGRHVQRWKDYHWKHDXWKRULW\WR
FRQIHUDFRPSHWHQFHLQWKLVDUHDRQWKH(8 RUWRGHWHUPLQHZKLFK(8LQVWLWXWLRQ
ERG\RUDJHQF\PD\EHDVVLJQHGWKLVFRPSHWHQFH+RZHYHULWLVXSWRWKH&RXQFLO
WRDFWLYDWHWKLVSURYLVLRQWRSURYLGHGHWDLOVRIWKH(&%¶VVSHFLILFWDVNVDQGWRLQVWUXFW
WKDWWKH\EHLPSOHPHQWHG7KHVHPLJKWEHVHFUHWDULDOWDVNVVXFKDVLQWKHFDVHRI
WKH(65%RUPRUHVXEVWDQWLYHPLFURSUXGHQWLDOVXSHUYLVRU\WDVNVVXFKDVLQWKH
FDVHRIWKH6605HJXODWLRQ,WVKRXOGDOVREHQRWHGWKDWGXULQJWKHQHJRWLDWLRQVRQ
WKH0DDVWULFKW7UHDW\WKH&RPPLWWHHRI*RYHUQRUVDGGHGSUXGHQWLDOVXSHUYLVRU\
SRZHUVWRWKHFRUHWDVNVRIWKH(6&%,WZDVRQO\XQGHUSUHVVXUHIURP)UDQFHDQG
*HUPDQ\LQSDUWLFXODUWKDWWKHVHSRZHUVZHUHUHOHJDWHGWRWKHYHU\HQGRI
$UWLFOH7KHFKRLFHRIDQHQDEOLQJFODXVHLQGLFDWHVWKDWWKHQHJRWLDWRUVKDG
GLIILFXOW\UHDFKLQJDJUHHPHQWRQDPRUHGHWDLOHGSURYLVLRQ ,WLVWKHUHIRUHXSWRWKH
&RXQFLOWRGHILQHWKHH[DFWQDWXUHRIWKH(&%¶VSRZHUVLQWKLVILHOGLQGXHFRXUVH6R
WKH7UHDW\FRQIHUVWDVNVRQWKH(&%EXWWKHSHUIRUPDQFHRIWKHVHWDVNVLV
SRVWSRQHGXQWLOWKH&RXQFLOH[HUFLVHVLWVUHJXODWRU\SRZHU$VH[SODLQHGE\WKHOHJDO
VHUYLFHRIWKH&RXQFLOLQDQRSLQLRQLVVXHGRQ2FWREHU³ZKLOHWKH&RXQFLO
PD\VHWPRGDOLWLHV>RXUHPSKDVLV@IRUWKHRSHUDWLRQRIWKRVHVSHFLILFVXSHUYLVRU\
WDVNVLQFOXGLQJRQFHUWDLQDVSHFWVUHODWHGWRWKHLQWHUQDORUJDQL]DWLRQRIZRUNZLWKLQ
WKH%DQNDWWKHWLPHRIFRQIHUULQJWKHPRQWKH(&%XQGHU$UWLFOH  7)(8
WKRVHPRGDOLWLHVFDQQRWJRDVIDUDVWRPRGLI\WKHGHFLVLRQPDNLQJERGLHVDQG
SURFHGXUHVDVVHWE\WKH7UHDWLHV>«@´ 

%XWLI$UWLFOH7)(8DSSOLHVWRWKH(&%ZKHQLWH[HUFLVHVWKHVHWDVNVRI
SUXGHQWLDOVXSHUYLVLRQZKDWSXUSRVHLVVHUYHGE\$UWLFOHRQLQGHSHQGHQFHLQWKH
6605HJXODWLRQ"7KHIDFWWKDWWKHJHQHUDOLQGHSHQGHQFHUHJLPHDSSOLHVWRWDVNV
FRQIHUUHGE\SULPDU\ODZGRHVQRWLQGLFDWHWKDWWKLVUHJLPHLVDSSURSULDWHIRUDOOWKH
(&%¶VWDVNV :KHQLWFRPHVWRWKH6XSHUYLVRU\%RDUG$UWLFOHDGGUHVVHVWZR
FRQFHUQVLWJXDUDQWHHVWKDWWKH6XSHUYLVRU\%RDUGVHWXSZLWKLQWKH(&%DQG


 -XGJPHQWRIWKH&RXUWRI-XVWLFH2/$)SW6HHDOVR$GDOLG  SSII=LOLROLDQG6HOPD\U
 SS

 -XGJPHQWRIWKH&RXUWRI-XVWLFH3ULQJOHSW$VVWDWHGE\WKH&RXUW³WKRVHWDVNVGRQRWDOWHUWKH
HVVHQWLDOFKDUDFWHURIWKHSRZHUVFRQIHUUHGRQWKRVHLQVWLWXWLRQVE\WKH(8DQG)(87UHDWLHV´

 6HH0HUVFK  

 8QGHU$UWLFOH  7)(8DQG$UWLFOH  RIWKH6WDWXWHWKHILHOGRIDSSOLFDWLRQRIFRPSHWHQFHLV
UHVWULFWHGWRWKHSUXGHQWLDOVXSHUYLVLRQRIFUHGLWLQVWLWXWLRQVDQGRWKHUILQDQFLDOLQVWLWXWLRQVZLWKWKH
H[FHSWLRQRILQVXUDQFHXQGHUWDNLQJV

 /RXLV E SDOVR6PLWV  SDQG6PLWV  SS

 ³/HDNHGOHJDORSLQLRQRQ(XUR]RQHEDQNLQJXQLRQ´)LQDQFLDO7LPHV2FWREHU

 $GDOLG  S

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
PDLQO\FRPSRVHGRIPHPEHUVIURPWKHHXURDUHD0HPEHU6WDWHVGRHVQRWSXWWKH
LQWHUHVWVRIWKHHXURDUHDDKHDGRIWKHLQWHUHVWVRIWKH8QLRQDVDZKROH DQG
WKHUHIRUHWKHSRWHQWLDOLQWHUHVWVRI0HPEHU6WDWHVQRWLQWKHHXURDUHD DQGLWJLYHV
WKHPHPEHUVRIWKH6XSHUYLVRU\%RDUGDGHJUHHRISHUVRQDOLQGHSHQGHQFHVLPLODUWR
WKDWHQMR\HGE\PHPEHUVRIWKH(&%¶VGHFLVLRQPDNLQJERGLHVJLYHQWKHLUPDMRU
UHVSRQVLELOLWLHVLQWKHSUHSDUDWLRQDQGLPSOHPHQWDWLRQRIWKH(&%¶VSUXGHQWLDO
GHFLVLRQV

$SSO\LQJWKHLQGHSHQGHQFHUHJLPHLQ$UWLFOH7)(8WRWKH(&%¶VSUXGHQWLDO
VXSHUYLVLRQWDVNVUXOHVRXWWKHLQWURGXFWLRQRIDQDXGLWV\VWHPRWKHUWKDQWKDW
SURYLGHGXQGHU$UWLFOH  RIWKH(6&%6WDWXWH2QWKHRWKHUKDQGDVZHKDYH
H[SODLQHGQRWKLQJSUHYHQWVWKHDGRSWLRQRIVSHFLILFDUUDQJHPHQWVIRUDFFRXQWDELOLW\
WRSROLWLFDODXWKRULWLHVWKH(XURJURXSDQGWKH(XURSHDQ3DUOLDPHQWHYHQLIWKLV
FUHDWHVDQDV\PPHWU\EHWZHHQWHFKQLFDOVXSHUYLVLRQDQGSROLWLFDOVXSHUYLVLRQ

%LEOLRJUDSK\
 ³/HDNHGOHJDORSLQLRQRQ(XUR]RQHEDQNLQJXQLRQ´)LQDQFLDO7LPHV
2FWREHU

 ³$FFRXQWDELOLW\´2[IRUG(QJOLVK'LFWLRQDU\2[IRUG

$GDOLG6  /D%&(HWO¶(XURV\VWqPHH[HPSOHG¶LQWpJUDWLRQYHUWLFDO7KHVLV


VXSHUYLVHGE\%ODQFKH6RXVLDQG0LFNDsO.DUSHQVFKLI/\RQ8QLYHUVLW\/\RQ

$OJHPHQH5HNHQNDPHU  /HWWHUIURP6DVNLD-6WXYHOLQJ3UHVLGHQWRIWKH


1HWKHUODQGV&RXUWRI$XGLWDQG(OOHQ0$YDQ6FKRWHQ6HFUHWDU\*HQHUDORIWKH
1HWKHUODQGV&RXUWRI$XGLWWR0V9DQ0LOWHQEXUJ6SHDNHURIWKH+RXVHRI
5HSUHVHQWDWLYHV7KH+DJXH)HEUXDU\

$OJHPHQ5HNHQNDPHU  7RH]LFKWRSEDQNHQLQ1HGHUODQG

$OOHPDQG)DQG0DUWXFFL)  ³/DPXWDWLRQGHODIRQFWLRQSDUOHPHQWDLUHOH


U{OHGHV3DUOHPHQWVGDQVODJRXYHUQDQFHpFRQRPLTXH´LQ$XE\-HDQ%HUQDUGDQG
,GRX[3DVFDOH HG /HJRXYHUQHPHQWpFRQRPLTXHHXURSpHQ%UX\ODQW%UXVVHOV
SS

$PWHQEULQN)DQG/DVWUD50  ³6HFXULQJ'HPRFUDWLF$FFRXQWDELOLW\RI


)LQDQFLDO5HJXODWRU\$JHQFLHV±$7KHRUHWLFDO)UDPHZRUN´LQ'H0XOGHU59 HG 
0LWLJDWLQJ5LVNLQWKH&RQWH[WRI6DIHW\DQG6HFXULW\±+RZ5HOHYDQWLVD5DWLRQDO
$SSURDFK"5RWWHUGDPSS

%DH]6HDUD'DQG/DPEULQRF6FKDQ]6  ³7KHH[WHUQDODXGLWRIWKH(&%±


DQDQDO\VLVRI$UWLFOHRIWKH6WDWXWHRIWKH(6&%´LQ(6&%/HJDO&RQIHUHQFH
)UDQNIXUWDP0DLQSS

%DUQLHU0LFKHO  ,QWHUYLHZZLWK-HDQ4XDWUHPHU³/¶8QLRQEDQFDLUHVHUD


FRPSOqWHHQ´&RXOLVVHVGH%UX[HOOHV$XJXVW

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
%LHEHU5  ³$UWLFOH$(89´LQYDQGHU*URHEHQ+6FKZDU]H-DQG
+DWMH$ HGV (XURSlLVFKHV8QLRQVUHFKW%DQG$UWELV$(89%DGHQ
%DGHQ

%LQL6PDJKL/  ,QGHSHQGHQFHDQGDFFRXQWDELOLW\RIVXSHUYLVLRQLQWKH


(XURSHDQILQDQFLDOPDUNHW6SHHFKGHOLYHUHGDWWKH&RQIHUHQFHRQ)LQDQFLDO
5HJXODWLRQDQG6XSHUYLVLRQLQ(XURSH%RFFRQL8QLYHUVLW\0LODQ0DUFK$QQH[
7DEOHRQLQGHSHQGHQFHDQGDFFRXQWDELOLW\UHTXLUHPHQWVIRU(8VXSHUYLVRU\
DXWKRULWLHV

%RYHQVFKHQ:  ³7KHLPSDFWRIWKHHVWDEOLVKPHQWRIWKH660RQWKH


UHODWLRQVKLSEHWZHHQ'H1HGHUODQGVFKH%DQNDQGWKH1HWKHUODQGV&RXUWRI$XGLW´LQ
(6&%/HJDO&RQIHUHQFH)UDQNIXUWDP0DLQSS

%UDQGVPD*-  ³/¶LQIOXHQFHGHO¶LQIRUPDWLRQVXUODVXUYHLOODQFHODUpSRQVH


GX3DUOHPHQWHXURSpHQjODPXOWLSOLFDWLRQGHVLQIRUPDWLRQVVXUODFRPLWRORJLH´
5HYXHLQWHUQDWLRQDOHGHVVFLHQFHVDGPLQLVWUDWLYHV9RO1RSS

&DOGHLUD9  1HZ(XURSHDQ*RYHUQDQFH(8,QVWLWXWLRQVDQG$XGLW6SHHFK


GHOLYHUHGDWWKHWK&RQYHJQRGL6WXGL$PPLQLVWUDWLYL9DUHQQD6HSWHPEHU

&DOGHLUD9  7KH(XURSHDQ&RXUWRI$XGLWRUV¶DXGLWSRZHUVXQGHUWKH


SURSRVDOIRUD&RXQFLOUHJXODWLRQFRQIHUULQJVSHFLILFWDVNVRQWKH(XURSHDQ&HQWUDO
%DQNFRQFHUQLQJSROLFLHVUHODWLQJWRWKHSUXGHQWLDOVXSHUYLVLRQRIFUHGLWLQVWLWXWLRQV
>/HWWHU@/X[HPERXUJ)HEUXDU\

&DURWWL5  ³,QFRQYHUVDWLRQZLWK0U<YHV0HUVFKPHPEHURIWKH([HFXWLYH


%RDUGRIWKH(&%6HSWHPEHU´-RXUQDOGHOD&RXUGHVFRPSWHV
HXURSpHQQH1RYHPEHU1RSS

&ORRV-5HLQHVFK*DQG:H\ODQG-  /H7UDLWpGH0DDVWULFKW*HQqVH


$QDO\VH&RPPHQWDLUHV%UXVVHOV

&RPPLVVLRQ  *UHHQ3DSHU$XGLW3ROLF\/HVVRQVIURPWKH&ULVLV%UXVVHOV


&20  ILQDO

&RQWDFW&RPPLWWHHRIWKH6XSUHPH$XGLW,QVWLWXWLRQVRIWKH(XURSHDQ8QLRQ  
:RUNLQJ*URXSRQ3XEOLF$XGLW'HILFLWV&RQVXOWHGRQ6HSWHPEHU

&RQWDFW&RPPLWWHHRIWKH6XSUHPH$XGLW,QVWLWXWLRQVRIWKH(XURSHDQ8QLRQ  
,PSRUWDQFHRIDSSURSULDWHDXGLWDQGDFFRXQWDELOLW\DUUDQJHPHQWVLQWKH(FRQRPLF
DQG0RQHWDU\8QLRQDQG(8HFRQRPLFJRYHUQDQFH>6WDWHPHQW@/X[HPERXUJ
0D\

&RQWDFW&RPPLWWHHRIWKH6XSUHPH$XGLW,QVWLWXWLRQVRIWKH(XURSHDQ8QLRQ  
(QVXULQJIXOO\DXGLWDEOHDFFRXQWDEOHDQGHIIHFWLYHEDQNLQJVXSHUYLVLRQ
DUUDQJHPHQWVIROORZLQJWKHLQWURGXFWLRQRIWKH6LQJOH6XSHUYLVRU\0HFKDQLVP
>6WDWHPHQW@7DOOLQQ

&RQWDFW&RPPLWWHHRIWKH6XSUHPH$XGLW,QVWLWXWLRQVRIWKH(XURSHDQ8QLRQ  
6WDWXV2XWOLQHRI(86$,&RQWDFW&RPPLWWHH$FWLYLWLHV/X[HPERXUJ2FWREHU

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
'¶+XOVWHU.  ³&URVV%RUGHU%DQNLQJ6XSHUYLVLRQ,QFHQWLYH&RQIOLFWVLQ
6XSHUYLVRU\,QIRUPDWLRQ6KDULQJEHWZHHQ+RPHDQG+RVW6XSHUYLVRUV´:RUOG%DQN
3ROLF\5HVHDUFK:RUNLQJ3DSHU1R:361RYHPEHU

'RKHUW\-DQG/HQLKDQ1  ³&HQWUDO%DQN,QGHSHQGHQFHDQGUHVSRQVLELOLW\


IRUILQDQFLDOVXSHUYLVLRQZLWKLQWKH(6&%WKHFDVHRI,UHODQG´LQ/HJDO$VSHFWVRI
WKH(XURSHDQ6\VWHPRI&HQWUDO%DQNV/LEHU$PLURFXP3DROR=DPERQL*DUDYHOOL
)UDQNIXUWDP0DLQSS

'UDJKL0  7KH0RQQHWPHWKRGLWVUHOHYDQFHIRU(XURSHWKHQDQGQRZ


6SHHFKGHOLYHUHGDWWKHDZDUGFHUHPRQ\IRUWKH*ROG0HGDORIWKH-HDQ0RQQHW
)RXQGDWLRQIRU(XURSH/DXVDQQH0D\

(XURSHDQ&HQWUDO%DQN  ³$FFRXQWDELOLW\DVDFRUQHUVWRQHRIWKH(&%¶V


OHJLWLPDF\´(&%0RQWKO\%XOOHWLQ1RYHPEHU

(XURSHDQ&HQWUDO%DQN  &RQYHUJHQFH5HSRUW

(XURSHDQ&HQWUDO%DQN  &RQYHUJHQFH5HSRUW

(XURSHDQ&HQWUDO%DQN  (&%%DQNLQJ6XSHUYLVLRQ)HHGEDFNRQWKHLQSXW


SURYLGHGE\WKH(XURSHDQ3DUOLDPHQWDVSDUWRILWV³5HVROXWLRQRQ%DQNLQJ8QLRQ±
$QQXDO5HSRUW´$XJXVW

(XURSHDQ&RXUWRI$XGLWRUV  5HSRUWRQWKHDXGLWRIWKHRSHUDWLRQDOHIILFLHQF\


RIWKHPDQDJHPHQWRIWKH(XURSHDQ&HQWUDO%DQNIRUWKHILQDQFLDO\HDUWKH
V\VWHPVDQGSURFHGXUHVHVWDEOLVKHGE\WKH(&%IRUPDQDJLQJLWV%XVLQHVV$UHDV¶
DFWLYLWLHVWRJHWKHUZLWKWKHUHSOLHVRIWKH(XURSHDQ&HQWUDO%DQN/X[HPERXUJ

(XURSHDQ&RXUWRI$XGLWRUV D &RXUW$XGLW3ROLFLHVDQG6WDQGDUGV


/X[HPERXUJ

(XURSHDQ&RXUWRI$XGLWRUV E &RQVHTXHQFHVIRUSXEOLFDFFRXQWDELOLW\DQG


SXEOLFDXGLWLQWKH(8DQGWKHUROHRI(&$LQOLJKWRIWKHFXUUHQWILQDQFLDODQG
HFRQRPLFFULVLV/X[HPERXUJ3RVLWLRQ3DSHUV

(XURSHDQ&RXUWRI$XGLWRUV  /DQGVFDSHUHYLHZ*DSVRYHUODSVDQG


FKDOOHQJHVDODQGVFDSHUHYLHZRI(8DFFRXQWDELOLW\DQGSXEOLFDXGLWDUUDQJHPHQWV
/X[HPERXUJ6HSWHPEHU

(XURSHDQ&RXUWRI$XGLWRUV  3HUIRUPDQFHDXGLWPDQXDO/X[HPERXUJ(&$

(XURSHDQ&RXUWRI$XGLWRUV  6SHFLDO5HSRUW6LQJOH6XSHUYLVRU\0HFKDQLVP±


*RRGVWDUWEXWIXUWKHULPSURYHPHQWVQHHGHG/X[HPERXUJ1R

(XURSHDQ3DUOLDPHQW  5HVROXWLRQRI)HEUXDU\RQ%DQNLQJ8QLRQ±


$QQXDO5HSRUW  ,1, 

*RGHIUR\)  'LFWLRQQDLUHGHO¶DQFLHQQHODQJXHIUDQoDLVHHWGHWRXVVHV


GLDOHFWVGXHDXHVLqFOH3DULV

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
,QJKHOUDP-  ³7KH(XURSHDQ&RXUWRI$XGLWRUVFXUUHQWOHJDOLVVXHV´&0/
5HY9RO1RSS

,QWHUQDWLRQDO0RQHWDU\)XQG  ³(83XEOLFDWLRQRI)LQDQFLDO6HFWRU


$VVHVVPHQW3URJUDP'RFXPHQWDWLRQ±7HFKQLFDO1RWHRQ,VVXHVLQ7UDQVSDUHQF\
DQG$FFRXQWDELOLW\´,0)&RXQWU\5HSRUW1R0DUFK

,1726$,  7KH/LPD'HFODUDWLRQ,66$,>,1726$,3 @

,1726$,  ,66$,6WDQGDUGVDQGJXLGHOLQHVIRUSHUIRUPDQFHDXGLWLQJ


EDVHGRQ,1726$,¶V$XGLWLQJ6WDQGDUGVDQGSUDFWLFDOH[SHULHQFH

,1726$,  ,66$,)XQGDPHQWDO3ULQFLSOHVRI3HUIRUPDQFH$XGLWLQJ


9LHQQD

.URSSHQVWHGW&  ³,QWURGXFWLRQ&HQWUDOEDQNV¶UHODWLRQVZLWKDXGLWRUV VFRSH


RIFRQWURODXGLWJDSDFFRXQWDELOLW\ ´LQ(&%(6&%/HJDO&RQIHUHQFH
)UDQNIXUWDP0DLQSS

/RXLV-9 GLU  D %DQNLQJ6XSHUYLVLRQLQWKH(XURSHDQ&RPPXQLW\


,QVWLWXWLRQDO$VSHFWV5HSRUWRID:RUNLQJ*URXSRIWKH(&8,QVWLWXWHXQGHUWKH
&KDLUPDQVKLSRI-HDQ9LFWRU/RXLV%UXVVHOV

/RXLV-9 E ³/¶8QLRQpFRQRPLTXHHWPRQpWDLUH´HHGLQ&RPPHQWDLUH


0pJUHW9RO8QLRQpFRQRPLTXHHWPRQpWDLUH&RKpVLRQpFRQRPLTXHHWVRFLDOH
3ROLWLTXHLQGXVWULHOOHHWWHFKQRORJLTXHHXURSpHQQH%UXVVHOV

0pJUHW-:DHOEURHFN0/RXLV-9HWDO  /HGURLWGHOD&RPPXQDXWp


pFRQRPLTXHHXURSpHQQH9RO%DQTXHHXURSpHQQHG¶LQYHVWLVVHPHQW%UXVVHOV

0HUVFK<  &HQWUDO%DQNLQGHSHQGHQFHUHYLVLWHG6SHHFKGHOLYHUHGDWWKH


6\PSRVLXPRQ³%XLOGLQJWKH)LQDQFLDO6\VWHPRIWKHVW&HQWXU\$Q$JHQGDIRU
(XURSHDQGWKH8QLWHG6WDWHV´)UDQNIXUWDP0DLQ0DUFK

0LWFKHOO*  $FFRXQWDELOLW\IRUFULVLVDQGSRVWFULVLVVWUXFWXUHV&RPPHQWV


6SHHFKGHOLYHUHGDWWKH(8$FFRXQWDELOLW\&RQIHUHQFH(XURSHDQ&RXUWRI
$XGLWRUV%UXVVHOV2FWREHU

1DWLRQDO$XGLW2IILFHRI)LQODQG  %DQNLQJ8QLRQ&RQVLGHUHGIURPWKH


3HUVSHFWLYHRI6XSUHPH$XGLW,QVWLWXWLRQV1DWLRQDO$XGLW2IILFH¶V:RUNLQJSDSHU
+HOVLQNL1R'QUR)HEUXDU\

1RUJUHQ&  ³$FFRXQWDELOLW\RIFHQWUDOEDQNVDQGVXSHUYLVRU\ERGLHV±ZKDW


VKRXOGEHWKHUHPLWRIDXGLWRUVDW(8DQGQDWLRQDOOHYHO"´.H\QRWHVSHHFKGHOLYHUHG
DWWKHVHPLQDU³$FFRXQWLQJIRU(XURSH±LVVXHVLQDFFRXQWDELOLW\DQGDXGLWVWUXFWXUHV
LQWKH(8´(XURSHDQ&RXUWRI$XGLWRUV%UXVVHOV2FWREHU

1RX\'  /HWWHUWR0U-HURHQ'LMVVHOEORHP)UDQNIXUWDP0DLQ)HEUXDU\

2(&'  ³&HQWUDO%DQN$XGLW3UDFWLFHV´6,*0$3DSHUV1R

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 
3HWHUVRQ-  ³7KH(XURSHDQ8QLRQSRROHGVRYHUHLJQW\GLYLGHG
DFFRXQWDELOLW\´3ROLWLFDO6WXGLHV9RO;/9SS

6DQFKH]%DUUXHFR0/  ³7KH&RQWULEXWLRQRIWKH(XURSHDQ&RXUWRI


$XGLWRUVWR(8)LQDQFLDO$FFRXQWDELOLW\LQ7LPHVRI&ULVLV´5RPDQLDQ-RXUQDORI
(XURSHDQ$IIDLUV9RO1R0DUFKSS

6FKDUSI)  *RYHUQLQJLQ(XURSH(IIHFWLYHDQG'HPRFUDWLF"2[IRUG1HZ


<RUN

6LNND3  ³)LQDQFLDOFULVLVDQGWKHVLOHQFHRIWKHDXGLWRUV´$FFRXQWLQJ


2UJDQL]DWLRQVDQG6RFLHW\9RO1RSS

6PLWV5  7KH(XURSHDQ&HQWUDO%DQN,QVWLWXWLRQDO$VSHFWV7KH+DJXH

6PLWV5  ³7KHUROHRIWKH(6&%LQ%DQNLQJ6XSHUYLVLRQ´LQ/HJDO$VSHFWVRI


WKH(XURSHDQ6\VWHPRI&HQWUDO%DQNV/LEHU$PLFRUXP3DROR=DPERQL*DUDYHOOL
)UDQNIXUWDP0DLQSS

9HVHO7  ³:K\FDQ¶WZHVXSHUYLVHZKDW&HQWUDO%DQNVDUHGRLQJLQRXU


QDPH"7URXEOLQJJDSVLQ6WDWHDXGLWLQJRI&HQWUDO%DQNVLQWKH(XUR]RQH´/H[
/RFDOLV±-RXUQDORI/RFDO6HOI*RYHUQPHQW9RO1R$SULOSS

=LOLROL&  ³7KH,QGHSHQGHQFHRIWKH(XURSHDQ&HQWUDO%DQNDQG,WV%DQNLQJ


6XSHUYLVRU\&RPSHWHQFHV´LQ5LWOHQJ' HG ,QGHSHQGHQFHDQG/HJLWLPDF\LQWKH
,QVWLWXWLRQDO6\VWHPRIWKH(XURSHDQ8QLRQ2[IRUGSS

=LOLROL&DQG6HOPD\U0  ³5HFHQWGHYHORSPHQWVLQWKH/DZRIWKH(XURSHDQ


&HQWUDO%DQN´<(/SS

$FFRXQWDELOLW\DQGDXGLWUHTXLUHPHQWVLQUHODWLRQWRWKH660 

You might also like