As announced in its annual reports, Sydbank has been working on the development and application of internal rating systems and models (IRB) to manage the credit risks of the Bank's corporate and retail client portfolios. In late 2006 the Bank filed an application with the Dan-ish Financial Supervisory Authority (FSA) for authorisation to apply these IRB models to de-termine the Bank's capital requirement as of 2008. Such authorisation requires, among other things, that the models are applied in the business management and give a precise description of the credit risk. Sydbank has just been informed by the Danish Financial Supervisory Authority that it has been granted approval to apply the internal rating models developed to determine the Bank's capital requirement according to the foundation approach as of 2008. The further development and application of the rating systems will also in future represent a focus area for Sydbank as it offers a significant potential to rationalise credit treatment and to minimise credit risks. Yours faithfully Mogens Asmund Group Executive Vice President