Division 3 In respect of the SPM bank (the renamed successor of WestLB), Germany undertakes that:

The restructuring will be supervised for the entire period up to the end of 2016 with the help of a monitoring trustee and the implementation will be reported on in quarterly reports. There will be a separate agreement between the Federal Government, the Land of NRW, WestLB and the Commission for appointing, and specifying the tasks of, the monitoring trustee as from 30 June 2012.

The SPM bank will focus exclusively on asset management, will no longer operate as a universal bank and will perform banking transactions only as part of its asset management activities.

In this context, asset management means that the SPM bank may offer the following services:

1. i..

   general portfolio management/control including workout management, liquidation and sale, credit risk analysis, credit risk processing and supervision;

2. ii..

   credit risk controlling, regulatory reporting, operational risk, management of market risks;

3. iii..

   credit administration, management and supervision of securities, general maintenance and administration of the securities database;

4. iv..

   back office (group operations) including collateral management;

5. v..

   funding, hedging, cash management;

6. vi..

   financial reporting, controlling;

7. vii..

   corporate centre functions, such as law, compliance, money laundering prevention, administration of holdings, safekeeping of relevant documents, auditing, project management tasks;

8. viii..

   management of the bond pool if no buyer is found for the planned transfer of the bond business in WestLB to the Verbundbank/WestImmo;

9. ix..

   IT services in the context of the above activities and as part of the provision of the operative platform;

10. x..

    similar asset management activities not expressly mentioned.

The business activities of the SPM bank do not include, in particular, proprietary trading, the issuing of any kind of certificate or other underwriting activities, the financing of projects and commercial transactions, asset-based finance, securitisation and syndicated loan activities, and international corporate banking. As part of its liquidation strategy, the first winding-up institution (EAA) may extend, sell or securitise the assets synthetically transferred to it. In such cases, the SPM bank will act exclusively on behalf of and under the authority of the EAA.

For the business activities of the SPM bank, on the basis of currently available information only the following partial authorisations will be required under the Banking Act (KWG):

1. i..

   the acceptance of funds from others as deposits or of other repayable funds from the public (Article 1(1)(1) KWG)^f1;

2. ii..

   the operations mentioned in the second sentence of Article 1(1) of the Pfandbrief Act (Article 1(1)(1a) KWG);

3. iii..

   the granting of money loans and acceptance credits (lending business; Article 1(1)(2) KWG)^f2;

4. iv..

   the purchase and sale of financial instruments in the credit institution’s own name for the account of others (Article 1(1)(4) KWG);

5. v..

   the safe custody and administration of securities for the account of others (Article 1(1)(5) KWG);

6. vi..

   the assumption of guarantees and other warranties on behalf of others (Article 1(1)(8) KWG);

7. vii..

   the execution of cashless payment and clearing operations (Article 1(1)(9) KWG);

8. viii..

   the activities of a central counterparty within the meaning of paragraph 31 (Article 1(1)(12) KWG).

The Commission will be informed immediately if other compulsory partial authorisations should be required under the KWG.

As soon as possible and by 31 December 2012 at the latest, the partial authorisations for the current universal banking licence that are no longer required will be returned or the current banking licence will be transformed into an appropriately limited banking licence^f3.

The need for banking licences for foreign operations and WestLB AG subsidiaries must still be analysed in connection with sub-project 3 on the ‘sale of sub-areas’ and the final means of transfer to the EAA of unsold portfolios.

With regard to third-party business: the Land of NRW will convert WestLB into a service and portfolio management bank ('SPM bank') for bank portfolios, which may consist of several companies. In addition, the servicing of third-party portfolios business may be hived off to a service company and sold. WestLB staff numbers will be reduced from the current 4 400 to a maximum of 1 000 in the service company by 31 October 2016.

To enable a subsequent sale, the SPM bank may during the period from 1 January 2012 to 31 December 2014 also take over servicing with regard to third-party portfolios (i.e. third-party business outside WestLB portfolios) up to a maximum of [40-60]% of the SPM bank’s gross revenues. Where this is the case, the servicing business must be hived off by 31 December 2014 to a subsidiary of the SPM bank, which will receive a substantive banking licence only to the extent necessary for servicing and which must be completely sold by 31 December 2016.

The named subsidiary of the SPM Bank, viz. the service company, may likewise carry out servicing for the EAA, the Verbundbank and other WestLB portfolios.

The sale of the service company must be notified in advance to the Commission and requires its approval. If no such sale is possible by 31 December 2016, the service company will be gradually wound up. In such a case, it will immediately cease to acquire further third-party business and will exclusively fulfil its remaining contractual commitments. The service company's business may not be transferred back to the SPM bank or to other subsidiaries or locations of the SPM bank. In the event of the service company being wound up, customers who had concluded a servicing contract with the service company before 31 December 2016 may take over the service company’s staff and infrastructure.

Service contracts of the service company which are valid beyond 31 December 2017 are permitted if the contract grants the customer a termination right, effective at 31 December 2017 at the latest, should the supplier (the service company) not have provided an adequate service or be unable to demonstrate the required capacity for the remaining period of the contract. If the planned sale is not successful, the service company will not have the required capacity for the remaining period of the contract. If privatisation fails, the German authorities will ensure that, with effect from 31 December 2017, either the service company ceases its activities or all shares are wound up, e.g. by means of a transfer.

The SPM bank/its subsidiaries will offer their services, including to third-parties, only at market prices. The price structure of the service company must also cover overall costs (full cost allocation). Overheads will be allocated to individual contracts in line with the business case for the service company sent to the Commission on 21 November 2011.

The SPM holding/SPM operating company will close its foreign operations as soon as possible, at the latest by 31 December 2016, unless regulatory requirements mean an operation must be maintained beyond 31 December 2016. The Commission's agreement to a location being maintained must be obtained without delay. The Commission may require an appropriate form of proof, for example a legal opinion, showing that regulatory requirements make this necessary. Irrespective of this, to fulfil its asset management function, the service company will be represented in New York, London and Asia for reasons of local expertise, coverage of time zones, reduction of operational risks and competitiveness.

The limitations specified for the service company will no longer apply in the case of a complete sale of the service company.