Proposal for reinforced partnership with local and regional banks


Following negotiations between Nykredit/Totalkredit and representatives of
Danish local and regional banks, Nykredit/Totalkredit offers the banks a new
and broader partnership agreement extending the scope of the agreement entered
into in 2003 when Nykredit acquired Totalkredit. 

The partnership has developed satisfactorily and has led to significant growth
in Totalkredit's financial results and market share. 

The new offer provides a good platform for reinforcing and expanding the
partnership. The main points of the offer are: 

Final price for Totalkredit shares   
The original purchase agreement contained a back payment for Nykredit's
acquisition of Totalkredit depending on Totalkredit's market share as at 1
April 2010. The back payment amounts to DKK 158m after tax per percentage point
increase in Totalkredit's market share in excess of 25.75%. As an accurate
determination in 2010 will be complicated by the current structural development
in the mortgage market, Nykredit has offered to fix this share at 35% as at 1
April 2010 already now. 

The back payment will consequently amount to DKK 1,460m after tax for
settlement on 1 October 2012. In the financial statements for 2007, Nykredit
Realkredit provided DKK 750m for such liability. The provisions made for the
back payment are off-set by increased goodwill, etc which consequently reduces
Nykredit's core capital. 

Transition to new SDO legislation
Under the new agreement, the Nykredit Group offers the banks access to lending
funded by mortgage bonds, covered bonds (SDOs) or covered mortgage bonds
(SDROs) through Nykredit Bank, Nykredit Realkredit or Totalkredit. 

The banks' funding of new housing loans on their own balance sheets up to 1
April 2010 through SDO issuance will take place via Nykredit/Totalkredit. This
underscores the determination of the parties to transfer the housing loan
partnership established according to the old agreement to a corresponding
partnership under the new Danish covered bonds legislation. 

From guarantee to set-off model  
From 1 April 2008, all partnership banks will apply the so-called set-off model
under which any losses incurred on the loans arranged by the banks may
exclusively be offset against future commission payments from Totalkredit. The
current guarantees are limited to the first eight years of the term of a loan,
whereas the right of set-off and related payments may be enforced throughout
the term of a loan. 

The transition from the guarantee model to the set-off model increases the
capital requirement of Nykredit/Totalkredit. 

Totalkredit is system owner
Nykredit/Totalkredit has in recent years developed a new web-based integrated
advisory and production system, which will be key to the banks' housing
advisory services and sale of Totalkredit loans. In future, Totalkredit will
be the owner and developer of the system complex. This will imply a marked
system upgrade, which will further strengthen the competitiveness of the banks
and Totalkredit. Totalkredit was previously owner of the production system,
while the banks were owner of the advisory system, and the two systems have
not previously been integrated into one overall solution. 

Terms  
The revised partnership agreement will be implemented if adopted by at least
half the banks - in terms of number as well as share of loans arranged measured
by bond debt outstanding. 


For further information, please contact Peter Engberg Jensen, Group Chief
Executive, Niels Tørslev, Group Managing Director, or Nels Petersen, Head of
Corporate Com-munications, tel +45 44 55 14 70/+45 20 22 22 72.

Attachments

proposal for reinforced partnership with local and regional banks.pdf