1. 1 European Covered bonds : the French Flair… Stockholm Thursday, March 29, 2007

2. 2 History 1767 : Introduction in Prussia (Landschaften) 1900 : Codification of the modern Pfandbriefe market (“Hypotehkenbankgesetz”) 1988 : European UCITS Directive: Definition of “Covered Bonds” The issuer must be a credit institution The issuance of covered bonds has to be governed by a special legal framework The issuance of covered bond must be subject to special prudential public supervision The set of eligible cover assets must be defined by law The cover assets pool must provide sufficient collateral to cover bondholder claims throughout the whole term of covered bond Bondholders must have priority claim on the cover assets pool in case of default of the issuer 1999 : Enforcement of the French Law  For over 200 years, no defaults have been documented

3. 3 Globalisation of the covered bond market 1999 Legislation in countries of the EU/EEA/CH European credit institutions liquidity gap bn

4. 4 2004 2007 A strong predominance of specific domestic legislations 23 29 2 4 Legislation in countries of the EU/EEA/CH Legislation under consideration Legislation in future EU member and further countries in 4 Concrete legislation in preparation 19 Structured covered bonds 2006 2007 bn

5. 5 Mortgage assets via RMBS senior tranches Outstanding€14bn 2006 issuance €2.5bn 2007 plan€3 bn Public sector/Local authorities assets Outstanding€48bn 2006 issuance €12.1bn 2007 plan€16 bn Mixed assets: Public/Mortgage Outstanding€64bn 2006 issuance €17.2bn 2007 plan€20/25bn The French flair…. And 2 structured Bonds models As of today, three existing « Société de Crédit Foncier »: Assets: Mortgage Outstanding€26bn 2006 issuance €7.2bn Assets: Mortgage Outstanding€4.5bn 2006 issuance €2.5bn 2007 plan€5/6 bn Structured covered bonds Obligations foncières

6. 6 The French model has proven its robustness Performance against the others covered bonds assets classes The OFs are the most expensive notes among European bonds Strong stability in credit crisis or market volatility contexts German banking crisis Flight to quality paper in case of credit crisis (GM) US and UK structured bonds suffered from US sub-prime market turmoil

7. 7 The French Legal Framework: the best survivor Exclusive purpose of SCF Geographical zone of the eligible assets: EEA countries, Specialisation Protection No ALM Position Strong Controls Permanent mandatory over- collateralization Bankruptcy remoteness from the parent company and a legal Privilège Satisfactory level of congruence of rate Satisfactory level of congruence of maturities Contrôleur spécifique (special external auditor) + Commission Bancaire Legal Auditors Rating Agencies 1999

8. 8 the French Legal Framework: a Darwinian model 2001 2003 2006 Enlargement of eligible assets (both public sector loans and mortgage / guaranteed housing loans to USA, Canada, Japan and Switzerland The transfer of receivables (including future receivables) on public debtors to an SCF is enforceable against third parties "notwithstanding the opening of insolvency proceedings against the originator". The law will change soon with the implementation of the "equity capital" directive (revised EC directive 2000/12), as the implementation text further extends  the definition of eligible public receivables to all types of "exposures to or guaranteed by" public entities.  and the share of guaranteed housing loans raise from 20 to 35% of SCF

9. 9 A covered bond along UCITS directive definition Regulated covered bonds (Société de Crédit Foncier) Structured Covered Bonds Specific control / fiduciary supervision organized by law YesNo - no specific controller/trustee and no special regulatory supervision Eligible assets defined by a specific framework Yes strict legal framework No – pure contractual creation sui generis between the SPV and the borrower Legal priority and preferential payment YesNo – no specific provision in the law

10. 10 Annex

11. 11 European Covered Bonds Mix (1/3)

12. 12 European Covered Bonds Mix (2/3)

13. 13 European Covered Bonds Mix (3/3)

14. 14 Disclaimer This document has been prepared by Société Générale for information purposes only. Société Générale does not guarantee the accuracy or completeness of information which is contained in this document and which is stated to have been obtained from or is based upon statistical services or other third party sources.