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.