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Q3/ 2005
Kommunalkredit Covered Bond(KACB)
THE SPECIALIST BANK FOR THE PUBLIC SECTOR
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PresentationKommunalkredit Covered Bond
AGENDA

• I Legal Aspects
  3
• II Instrument
  6
• III Summary
  15
• IV Annex 17

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• KOMMUNALKREDIT COVERED BOND (KACB)
• Legal Aspects

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Secured Instruments in Austria since 1874
Law concerning Covered Bonds of Banks from 1905
Covered Bonds ("Fundierte Anleihe") Mortgage
Bond Acts ("Pfandbriefgesetz" 1927 und
"Hypothekenbankgesetz" 1938) Mortgage Bonds
("Pfandbriefe") Public Sector Pfandbriefe ("Komm
unalschuldverschreibungen") Railways Financing
Acts from 1874 and 1910 "Eisenbahnprioritätsanlei
he" "Lokalbahnschuldverschreibungen" )
Amendment in progress
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Regulations ILaw concerning Covered Bond from
1905

• Collateralization by defined cover pool
• Over collateralisation minimum 2 (additional
  O.C. for the compensation for the market risks is
  legally protected) )
• Segregated account of the cover pool
• Governmental authority (Regierungskommissär) as
  trustee has to agree to every change of the
  cover pool

) changed by amendment in June 2005
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Regulations IILaw concerning Covered Bond from
1905

• In the case of insolvency the Covered Bonds don't
  become due and an administrator will be appointed
  until the settlement of claims or the redemption
  at present value
• The settlement process of secured instruments is
  conducted
• separately and independently from the common
  insolvency
• proceedings
• Consideration of insolvency proceeding costs is
  required by the law

No defaults of Austrian Covered Bonds during
nearly 100-years-history
) changed by amendment in June 2005
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Regulations IIILaw concerning Covered Bond from
1905
Event of insolvency Bankruptcy remoteness of
Covered Bonds
Transmission to Administrator
Transmission to suitable Bank
Administration of Cover Pool
Redemption at present value (avoid investors
worst case)
Settlement of claims
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Eligible Assetsaccording to 1 Act from 1905
By law accepted assets
Improved cover pool for KACB
Cash
Cash
Securities and loans to the Public Sector
Securities and loans to the Public Sector
Securities and loans guaranteed by the Public
Sector
Securities and loans guaranteed by the Public
Sector
Mortgage Bonds
Trustee securities and Covered Bonds
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• KOMMUNALKREDIT COVERED BOND
• Instrument

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Advantages ofKommunalkredit Covered Bond

• Only loans and securities issued or guaranteed
  by the Public Sector are
• eligible assets
• Nominal and market value coverage
• For the period of insolvency proceedings the
  interest rate, currency risks
• and spread widening will be compensated )
• Additionally to the claims of creditors the
  costs of insolvency
• proceeding will be covered )
• Independent supervisory and control mechanism

Instrument with the quality of a Public Sector
Covered Bond (Aaa rated by Moodys)
) now legally protected by new amendment
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Cover PoolCover Assets and Liquidity
11 of the cover pool consists of bonds 89
consists of loans whereof the bulk was already
part of the public tender Aim to provide a
liquid cover pool
Other Germany Spain France Belgium

91.9
Austria
12.3
A-Rating
47.5


AA-Rating
37.7
AAA-Rating
45
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Coverage Process IComparison of Assets and
Liabilities
Assets
Coverage Requirement
Marketvalue
Safety Cover Value (SCV)
OC 2
Insolvency proceeding costs
gt
Interest and redemption amounts

Nominal coverage and coverage on the basis of
risk-adjusted SCV
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Coverage Process II

• The cover pool will be calculated at least
  monthly and in the event of new issues
• or an increase of existing issues
• Calculation of the Safety Cover Value (SCV) of
  the cover pool
• ( market value in consideration of the
  statistical spread widening of public sector
• risk)
• Calculation of the interest rate sensitivity of
  the cover pool with Value-at-Risk
• models
• Determination of the currency gap and the
  inherent currency sensitivity regarding
• the asset-liability position
• Risk-adjusted SCV will be calculated (SCV
  including interest rate and currency
• risk)
• Nominal and market (risk-adjusted SCV) coverage
  of outstanding covered bonds is
• checked, and additional collateral added to the
  cover pool, if necessary

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Covered Bond market development
KACB EUR Benchmarks on Asset Swap Basis
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• SUMMARY

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Why invest inKommunalkredit Covered Bond?

• Opportunity to acquire AAA rated investment
• The cover pool consists of Public Sector assets
  only
• (the bulk refers to Austria which represents
  strong AAA credit)
• During the history (since 1905) of Austrian
  Covered Bonds no
• default occurred
• Special Coverage process ensures additional
  protection of investors claims and is
  now fully protected by new amendment
• Several independent supervision of cover pool
  (authority, auditor and rating agency)
• Excellent senior unsecured rating of
  Kommunalkredit (Aa3/AA-)

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• CONTACT LIST

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Contact List
Phone
431/ 31 6 31-
CEO Chairman of the Executive Board
Reinhard Platzer
100
fax
505
Kommunalkredit Austria AG
e-mail
funding_at_kommunalkredit .at
Tuerkenstraße 9, A-1092 Vienna
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www.kommunalkredit.at
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