BNK Financial : Decision on Issuance of Bail-in Contingent Capital Securities

– No interest (dividend) is paid on these security once it matures. However, if The maturity falls on a day The bank is closed, interest (dividend) is paid for The period up to The day preceding The next business day, and if this security is prepaid, The issuer does not pay interest (dividend) after The prepayment.

– Interest (dividends) on this security is paid from the profits available for dividends in accordance with (Criteria for calculating equity capital ratio for credit and operational risk risk-weighted assets (Basel III) – 6. Other basic capital – B. Other basic capital recognition requirements) of the Banking Supervision Enforcement Regulations.

– Conditions on which interest (dividend) payment is suspended
(1) If the issuer falls under any of the following, interest (dividend) payment is suspended until the cause is resolved, and all interest (dividend) payment obligations during that period are extinguished.
① When the issuer receives a management improvement recommendation, management improvement request, or management improvement order falling under Articles 34 to 36 of the Banking Supervision Regulations from the Financial Services Commission
② When the Financial Services Commission takes emergency measures pursuant to Article 38 of the Banking Supervision Regulations in relation to the issuer
③ When the issuer is designated as an insolvent financial institution as stipulated in the 「Act on Structural Improvement of the Financial Industry」
④ When the capital ratio including capital reserve buffer capital in accordance with Article 26 Paragraph 4, Article 26-2 Paragraph 6, and Article 26-3 Paragraph 5 of the Banking Supervision Regulations falls short of the capital ratio specified in , as a measure in accordance with Article 34, Paragraph 4 of the Banking Act, dividends or interest payments may be partially or entirely restricted if necessary to comply with the minimum internal reserve ratio of profit dividends, etc. set forth in .

(2) The issuer is entitled to full discretion over the revocation of the payment of interest (dividend) for this security, and the revocation of the interest (dividend) payment does not operate as any form of constraint to the Bank other than the relevant dividend related to the common share holders.

(3) Cancellation of the above interest (dividend) is not considered as a cause of default or bankruptcy. The issuer will have full rights to use the canceled amount to meet its due obligations.

(1) Where the securities are replaced by a condition which is sufficient or bearable in consideration of the issuer’s profitability, etc. as a capital of quality or same quality ?

(2) When the ratio related to capital adequacy exceeds the ratio related to capital adequacy specified in Paragraph 4 of Article 26 of the Banking Supervision Regulations even after the prepayment of this securities

– The interim redemption of this case at the issuer’s option may be made in line with the terms and conditions specified at the time of issuance of this bond only if a prior approval is secured from the Governor of the Financial Supervisory Service after five or ten years have elapsed from the date of issuance. If the maturity falls on a holiday of the issuer, the principal will be paid on the next business day. If the maturity falls on a closed day of the issuer, the principal shall be paid on the next business day.

– Furthermore, no terms and conditions are added to the bond of this case by which any expectation is caused for the investor that redemption will be made, nor are any burdens imposed to cause the issuer to make the redemption thereby.

– “2. Total face amount of bonds” will be determined according to the results of the demand forecast within the issuance amount decided by the board of directors.

– The coupon rate and yield to maturity of “4. Interest rate” will be determined by reflecting the market rate at the time of issuance according to the demand forecast results.

– “5. Maturity date of bonds” is not specified, and it shall be assumed to have matured on the earlier of the following dates:
(1) The date on which bankruptcy procedures or equivalent procedures are commenced after the issuer is declared bankrupt under the Debtor Rehabilitation and Bankruptcy Act or a statute replacing the Act
(2) The date on which liquidation procedures other than bankruptcy or rehabilitation procedures are commenced for the issuer

– Although “5. Maturity date of bonds” is in a permanent form, it is issued on the condition that a five- or ten-year prepayment option is granted, and prepayment is possible at the option of the issuer at every interest (dividend) date (three months) after the option’s maturity.

– “5. Maturity date of bonds,” “10. Date of subscription,” and “11. Date for payment of subscription money” will be decided according to the schedule of consultation with the regulatory authority and the conditions of the primary market.

– “12. Managing underwriter” has not yet been confirmed, and will be selected around one month prior to the date of subscription within the permissible range of related laws and regulations.

– For other details related to these securities, please refer to the Bank’s securities declaration reports which will be submitted in the future.

– Disclosure on material management matters of subsidiary
Name of subsidiary: Busan Bank Co., Ltd. Share of total asset value: 46.59% (as of December 31, 2020)