Basel 2 - Obligation or Opportunity Basel 2 - Obligation or Opportunity ? What does it mean for Korean Corporations David Edwards Chief Executive Officer Standard Chartered First Bank, Korea, Limited

Standard Chartered First Bank, Korea, Limited Introductions Mr. David Edwards, Chief Executive Officer of SC First Bank Formerly CRO, Standard Chartered Bank Group Standard Chartered Bank, Group is a Basel 2 Compliant Advanced IRB Bank SCB Group has obtained Basel 2 A-IRB Compliance from the FSA, UK on its international operation spanning 57 countries. FSA reviews included portfolios owned by Standard Chartered First Bank, Korea, Limited November 14. 2007 Standard Chartered First Bank, Korea, Limited

What is the best thing to come out of Switzerland? 1 2 3 4 November 14. 2007 Standard Chartered First Bank, Korea, Limited

Standard Chartered First Bank, Korea, Limited The 3 key messages 1 Basel 2 will change the way banks run their businesses 2 SC First Bank as Korea’s International Bank leads the way 3 What Basel 2 means for you November 14. 2007 Standard Chartered First Bank, Korea, Limited

Standard Chartered First Bank, Korea, Limited Why Basel 2? Fine balance between Risks and Capital Concentrated Risks may lead to Systemic Losses or Market Disruptions November 14. 2007 Standard Chartered First Bank, Korea, Limited

Standard Chartered First Bank, Korea, Limited What is Basel 2 Financial Stability & Sound Banking Supervision 1 2 3 Minimum Capital Supervisory Review Market Discipline November 14. 2007 Standard Chartered First Bank, Korea, Limited

Standard Chartered First Bank, Korea, Limited Some more? Probability of Default (PD) (within 12 Months) Loss Given Default (LGD) (e.g. 80%) Credit Risk Operational Risk Exposure at Default (EAD) Market Risk November 14. 2007 Standard Chartered First Bank, Korea, Limited

How banks will change the way they run their businesses. Basel 2 All Banks may Reduce committed limits Request more security Risk Sensitive Approach To Capital Management Price for “Risk” Hide from you Swarm to you … November 14. 2007 Standard Chartered First Bank, Korea, Limited

What does this all mean? Bank Strategy More Security Risk based Pricing Bank Strategy Risk Insensitive Growth Models Short-term Facilities Bank Strategy Higher Limit Utilization Basel 1 Growth Strategy Basel 2 Growth Strategy Growth Strategy based on deals & transactions Growth Strategy based on the overall Customer Relationship November 14. 2007 Standard Chartered First Bank, Korea, Limited

SC First Bank is Korea’s International Bank What do we know about Basel 2?

What is Basel 2 to Standard Chartered Bank? The Basel 2 Machine Governance Models Data & Systems Rating Experts & Practitioners Pricing Policies & Standards In use since early 1990s Basel 2 In our “DNA” November 14. 2007 Standard Chartered First Bank, Korea, Limited

Standard Chartered First Bank, Korea, Limited The Basel 2 Journey Road to Basel II is a long journey… Over $100 million invested by Banks Stage 5: Basel 2 Compliant Stage 4: Application & Reviews Stage 3: Meet All Requirements Stage 2: Models in Use Stage 1: Organization Ready Base Camp: Data & Systems Ready $100,000,000 November 14. 2007 Standard Chartered First Bank, Korea, Limited

Basel 2 – The journey continues Final Destination: A Major Global Bank Stage 7: Models Refined Stage 6: Risk in “DNA” Stage 5: Basel 2 Compliant Northern Rock was Basel 2 Compliant Stage 4: Application & Reviews Stage 3: Meet All Requirements Stage 2: Models in Use Stage 1: Organization Ready Base Camp: Data & Systems Ready $100,000,000 November 14. 2007 Standard Chartered First Bank, Korea, Limited

Basel 2: What does it means to you? For Banks Good Risk Management Practices Less Reliance on External Ratings Sound Institutions Conscious of “Limits” For Regulators Financial Stability Progress on risk based banking supervision For Customers Transparency on Banks Products tailored for your risk profiles More collateral required Your risk profile = bargaining power For Korea Sound Banking Environment Internationally Competitive Market Supports “Financial Hub of North East-Asia” November 14. 2007 Standard Chartered First Bank, Korea, Limited

Standard Chartered First Bank, Korea, Limited The 3 key messages 1 Basel 2 will change the way banks run their businesses 2 SC First Bank as Korea’s International Bank leads the way 3 What Basel 2 means for you November 14. 2007 Standard Chartered First Bank, Korea, Limited

Standard Chartered First Bank, Korea, Limited Talk to us! 알리스테어 불록 기업금융 총괄 부행장 Phone: +82-2-3702-3120 Email: alistair.bulloch@scfirstbank.com Http: www.scfirstbank.com 김동진 글로벌기업부 부행장 Phone: +82-2-3702-4690 Email: dongjin.kim@scfirstbank.com 박도규 국내기업부 부행장 Phone: +82-2-3702-3145 Email: dokyu.park@scfirstbank.com 김광율 금융기관영업부 부행장 Phone: +82-2-3702-4101 Email: kwangyul.kim@scfirstbank.com 김진겸 글로벌마켓 본부 부행장 Phone: +82-2-3702-5001 Email: gene.kim@scfirstbank.com 김흥제 부동산 금융부 상무 Phone: +82-2-3702-4470 Email: heungje.kim@scfirstbank.com 원호남 커머디티기업부 상무 Phone: +82-2-3702-3675 Email: honam.won@scfirstbank.com November 14. 2007 Standard Chartered First Bank, Korea, Limited