Pekao S.A. Derivative (equity II)

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Equity investment of €12.6 million in new issue of shares. The principal objectives of the project are: The project is expected to: PEKAO is one of the largest banking groups in Poland. The group comprises the parent bank, Bank Pekao S.A with headquarters in Warsaw, and three regional banks: Bank BDK based in Lublin in south-east Poland, Bank PBG based in Lodz in central Poland and Bank PBKS based in Szczecin in north-west Poland. PEKAO’s primary business is the provision of commercial banking services, including lending and deposit-taking, to large corporations and small and medium-sized enterprises. As at mid-year 2000, the bank has the second-largest branch network in the country (with 712 outlets, second only to PKO BP, plus branches in New York and Paris), ATM network and dominance in the plastic card business (with 35 per cent of those in issue). The bank employs 16 per cent of the total banking sector staff. Equity investment of €12.6 million in newly issued shares to maintain the EBRD's 5.29 per cent stake of PEKAO’s enlarged capital. This increase follows combined offering of newly issued PEKAO shares to domestic and international investors. The EBRD's initial stake was acquired in September 1998, when the Bank subscribed to 7,690,000 shares, providing a 5.29 per cent holding. €12.6 million. The proceeds will be used to support PEKAO’s ongoing strategy of business expansion and operational enhancement. PEKAO will carry out its operations in accordance with the EBRD's Environmental Procedures for Local Banks. These provide for the integration of environmental due diligence into PEKAO's credit appraisal processes and a requirement that borrowers comply, at a minimum, with national and local health, safety and environmental regulations and standards and public consultation requirements. PEKAO will submit annual environmental reports to the EBRD. None.