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FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to rule 13a-16 or 15d-16 of

The Securities Exchange Act of 1934

For the month of March, 2016

National Bank of Greece S.A.

(Translation of registrant’s name into English)

86 Eolou Street, 10232 Athens, Greece

(Address of principal executive offices)

[Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.]

Form 20-F x  Form 40-F o

[Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to rule 12g3-2(b) under the Securities Exchange Act of 1934.]

Yes o  No x

[If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-               ]

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Certification of the Board of Directors

on the financial statements as at 31 December 2015

Certifications of the Board of Directors

Certification by the Chairman of the Board of Directors, the Chief Executive Officer and the Deputy Chief Executive Officer pursuant to Article 4 of Law 3556/07

We, the members of the Board of Directors of National Bank of Greece S.A. certify that to the best of our knowledge:

(1)         The financial statements for the annual period ended 31 December 2015 have been prepared in accordance with the applicable accounting standards and present a true and fair view of the assets, liabilities, equity and results of operations of the Bank and of the companies included in the consolidation.

(2)         The Board of Directors annual report fairly presents the evolution, the performance and the position of the Bank and of the companies included in the consolidation, including the description of the main risks and uncertainties they face.

Athens, 14 March 2016

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Board of Directors Report

for the period ended 31 December 2015

Board of Directors’ Annual Report

on the consolidated financial statements of National Bank of Greece S.A.

for the financial year 2015

Financial & Macroeconomic environment

International Financial and Macroeconomic environment

The global economic recovery lost steam in 2015, mostly reflecting a recessionary environment in some emerging economies, notably Brazil and Russia, due to inter alia, lower commodity prices. Meanwhile, the gradual transition of the Chinese economy toward a more sustainable, albeit lower, pace of growth continued. Specifically, Chinese real Gross Domestic Product (“GDP”) growth moderated to 6.9% year-over-year (“y-o-y”), from 7.3% y-o-y in 2014. In the United States (“US”), activity remained resilient with real GDP increasing by 2.4% y-o-y, the same pace as in 2014, mainly driven by private consumption amid an improving labour market. In the euro area, the economy continued to recover steadily as domestic demand found support from lower oil prices and improving bank credit conditions amid accommodative monetary policy by the European Central Bank (“ECB”). For 2015, real GDP accelerated to 1.6% y-o-y from 0.9% y-o-y in 2014. Growth in Japan picked up pace supported by the gradual improvement in labour market income and accommodative financial conditions, with real GDP increasing to 0.5% y-o-y in 2015, from 0.0% y-o-y in 2014. As a consequence of the slower growth in emerging markets and the moderate pace of recovery in advanced economies, global growth is expected to decelerate to 3.1% y-o-y in 2015, from 3.4% y-o-y in 2014 (according to International Monetary Fund (“IMF”) World Economic Outlook, January 2016).

Financial market conditions remained constructive during the first half of 2015, as extremely accommodative monetary policies, mainly from the ECB and the Bank of Japan (“BoJ”), initially supported risk appetite. However, global financial markets conditions deteriorated in the second half of 2015 mainly by the unexpected depreciation of the renminbi by the People’s Bank of China (“PBOC”) in August 2015, which intensified concerns vis-à-vis the pace of its growth slowdown. These concerns contributed to a sharp decline in energy and industrial prices that in turn, took its toll on the currencies of commodity exporting economies. Developed markets equity indices edged significantly lower since the beginning of the summer, whereas nominal long-term government bond yields declined in major advanced economies (US, Germany, and Japan) due to renewed deflation concerns that more than offset the first interest-rate increase by the US Federal Reserve (“Fed”).

The beginning of 2016 saw a sudden surge in risk aversion, albeit moderating lately, with equity markets falling significantly (Nikkei225: -11.5%, Eurostoxx50: -9.1%, S&P500: -2.7%, as of 10 March 2016 year-to-date) as the PBOC allowed the renminbi to depreciate further against the US Dollar and concerns were mounting that tighter financial conditions could signal a significant slowing in the US and euro area economy. Alongside rising worries over net interest margins and profitability due to negative deposit rates by the ECB, and more recently, by the BoJ, developed markets banks underperformed with the Stoxx600 banking equity market sector down by 17% year-to-date. At the same time, European bank senior and, mainly, subordinated credit default swap (“CDS”) spreads widened considerably. In an environment of increasing safe-haven demand, nominal long-term government bond yields edged lower. Since the beginning of 2016, the US 10-Year Treasury yield declined by 34 basis points (“bps”) to 1.93% and the German 10-Year Bund yield by 32 bps to 0.31%, while the 10-Year Japanese Government bond yield fell by 28 bps to -0.02%. The prospect of delaying monetary policy normalization by the Fed and expectations that the ECB and the BoJ will expand further their accommodative stance contributed to the yield decline.

Fed increased the target for the federal funds interest rate by 25 bps to 0.25%-0.5% in December 2015, whereas it communicated a gradual and data-dependent tightening path going forward. However, the recent market turmoil and signs of decelerating US growth is expected to keep Fed on hold in the short-term. Moreover, the Fed will continue the policy of reinvesting principal payments and to roll-over maturing Treasuries (USD 1.7 trillion) and agency MBSs (USD 1.7 trillion) thus maintaining an accommodative monetary policy stance. On the other side of the Atlantic, the ECB decided, in January 2015, to expand the eligibility of its asset purchase program in order to include euro-denominated sovereign, agency and European Union “EU” institution bonds, on top of asset-backed securities and covered bank bonds. Under this expanded program, the ECB has started purchasing, effectively from March 2015, €60 billion bonds per month. In March 2016, amid heightened deflationary pressures, the ECB cut its main refinancing rate by 5 bps to 0.0%, its marginal lending facility rate by 5 bps to 0.25% and its deposit rate by 10 bps to -0.4%. In addition, the monthly purchases under the asset purchase program will be expanded to €80 billion until at least March 2017, including also investment grade euro-denominated bonds issued by non-bank corporations. At the same time, the ECB announced a new series of four targeted long-term refinancing operations (“TLTROs”) conducted quarterly between June 2016 and March 2017 with a 4-year maturity in order to revive bank lending toward the private sector (excluding mortgages). Finally, the BoJ continued the aggressive expansion of its balance sheet mainly through purchases of Japanese Government bonds at an annual pace of JPY 80 trillion. In January 2016, the BoJ cut interest rates into negative territory, adopting a three-tiered interest rate structure which determines the amount of banks’ reserves subject to negative rates.

Greece — reasonably resilient under very adverse conditions

The Greek economy has proved resilient in 2015, to a combination of several adverse factors that included: i) heightened uncertainty related to prolonged negotiations with official lenders; ii) an intensifying liquidity squeeze of the public and private sector due to significant external financing shortages and capital flight, which have been compounded by a revival of Grexit scenarios in the second quarter 2015. The effective termination of the Grexit scenario following the agreement on a new Financial Support program for Greece in July 2015 (Source: EU Summit, 12 July 2015) and the activation of the latter in August 2015 (the “Program”) with the disbursement of €13 billion of funding (Source: European Stability Mechanism statement) did not directly translated into an improvement of sentiment as the imposition

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of capital controls since 29 June, and the announcement of snap elections in September 2015 delayed the transmission of confidence and liquidity effects to the economy.

In this very challenging environment, economic activity expanded by 0.6% in the first half of 2015 and contracted by -1.2% in the second half of 2015, with full year contraction of real GDP of -0.3% (Source: EL.STAT.) being significantly milder than the gloomy forecasts published in the third quarter of 2015 (Source: European Commission, Debt Sustainability Analysis, July 2015) following the imposition of capital controls and the three week bank holiday in July 2015. This resilience reflected, to a significant extent, the fact that capital controls had been anticipated by Greek households and firms, permitting them to pre-emptively draw up contingency plans to cushion their near-term impact (i.e., about €41 billion of domestic private sector deposits had been withdrawn between November 2014 and June 2015, Source: Bank of Greece). Furthermore, it reflected the advanced stage of economic rebalancing in Greece following a painful multi-year economic adjustment, which made it far more resilient to external shocks. Moreover, the upsurge in cashless transactions (an almost 100% increase in terms of value, Source: Hellenic banks Association data) following the imposition of capital controls, has also supported official economic activity — mainly private consumption — prompting a shift of activity from the shadow to the official economy. This shift reflected an increase in demand for goods and services provided by business entities operating in the official economy, in conjunction with increasing compliance by a number of firms formerly operating in the shadow economy, and included a shift in activity to larger enterprises, to the detriment of SMEs. The progress in loosening of capital control restrictions for businesses since August 2015 has ameliorated their negative impact, especially for medium-to-large sized enterprises (Source: NBG, Greece Macro View, October 2015 and February 2016).

Lower oil prices (-36.4% y-o-y in euro terms, Source: Federal Reserve Economic Data - FRED database) have also supported activity by pushing domestic energy prices to low levels -13.9% y-o-y, (Source: EL.STAT), while tourism activity remain solid with arrivals increasing by 7.1% y-o-y in FY:2015, and revenue by 6.0% in FY:2015 (Source: Bank of Greece). Private consumption received significant support from resilient labor market conditions, lower oil prices, higher cashless transactions which had offset a significant part of the uncertainty and liquidity shock (private consumption increased by 0.3% in FY:2015 (Source: EL.STAT.). Nonetheless, increasing fiscal pressure from the back-loaded structure of tax obligations and new fiscal measures implemented in the second half of 2015 (such as the shift of about ⅕ of goods and services to the higher VAT rate of 23% from 13%, in effect since July 2015) are expected to weigh on private consumption in 2016 (Source: NBG, Greece Macro View, February 2016).

Fixed capital formation increased by 0.9% in FY:2015 (Source: EL.STAT.), mainly supported by the resilient momentum of business investment in the first semester of 2015 and higher public investment in the fourth quarter of 2015. In this regard, business investment increased by 3.3% y-o-y in FY:2015, whereas residential construction decreased by 23.3% y-o-y in FY:2015; however, they evidently weakened in the second half of 2015 (-0.7% y-o-y and -26.3% y-o-y, respectively, in the second semester of 2015, Source: EL.STAT.). Similarly, pressures on house price valuations intensified -5.1% in FY:2015 compared with -4.5% in the first half of 2015 (Source: Bank of Greece), with a sizeable supply of unsold houses weighing further on valuations.

Labor market trends remained positive in FY:2015, with employment expanding by 3.2% y-o-y and unemployment declining to a three and a half-year low of 24.0% in December 2015 from 24.9% in June 2015 and 25.9% in January 2015 (Source: EL.STAT). The improved flexibility of the labor market and secondary effects of tourism supported employment in key sectors such as retail-wholesale trade and manufacturing (+7.4% y-o-y and +9.9% y-o-y, respectively, in the third quarter of 2015), with wage earners accounting for almost 100% of new jobs (Source: EL.STAT.).

Consumer Price Index (“CPI”) inflation declined by 1.7% y-o-y, on average, in 2015 on the back of falling energy prices (-13.9% y-o-y in 2015). However, deflationary trends showed a notable deceleration in the second half of 2015 and especially in the fourth quarter of 2015, with CPI declining by 0.6% and core inflation (excluding energy and volatile foods components) increasing by 0.3%, for the first time in three years, mainly due to the inflationary impact of the VAT rate increase since July 2015 (Source: EL.STAT.).

The external balances have improved notably, with the current account heading to a broadly balanced position in FY:2015. The contraction of trade deficit on the back of declining oil and non-oil imports (-9.8% y-o-y in total, Source: EL.STAT.) and solid tourism revenue (+6.0% y-o-y in FY:2015, Source: Bank of Greece) more than compensated for the sharp drop in non-tourism services and income revenue. Capital controls appear to discourage the repatriation of income from business activity abroad (e.g. shipping) and private capital inflows into the country. Non-oil goods exports increased by a healthy +7.6% in FY:2015 (Source: EL.STAT.), in this very challenging environment, supported mainly by higher demand in EU markets.

Fiscal trends showed a notable improvement in the second half of 2015, following a stressed first half of 2015, along with a decline in uncertainty and the imposition of new fiscal measures in July 2015. The State budget primary balance overperformed compared with the revised targets for 2015 (included in the 2016 Government Budget) by 1.5% of GDP (excluding the impact of SMP/ANFA revenue) supported by a pick-up in revenue in the second half of 2015 (an increase in tax revenue of +3.7% y-o-y in the second half of 2015, Source: Ministry of Finance, December 2015) and further spending restraint. According to EU Commission estimates, this overperformance appears sufficient to meet the 2015 Program targets for a small primary deficit of 0.3% despite the deterioration in the financial position of some government entities and the accumulation of new arrears of €1.6 billion in the private sector. The debt-to-GDP ratio is estimated by the EU Commission to reach 179% in 2015 and peak at 185% in 2016 (Source: EU Commission, Winter forecasts, February 2016). These figures are lower than estimates contained in the preliminary debt sustainability analysis (“DSA”) published in July (Source: IMF, Greece: Preliminary Draft Debt Sustainability Analysis, 26 June 2015), since the actual costs of bank recapitalization were only €5.4 billion versus an earmarked envelope of €25 billion (Source: European Stability Mechanism “ESM” December 2015).

The Greek banking system remained in deleveraging mode with the pace of annual contraction in lending to private sector accelerating moderately in the second half of 2015 to 2.0% y-o-y in December 2015, with loans to households contracting by 3.1% y-o-y (compared with

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a decline of total credit to private sector of 1.7% y-o-y in June 2015). In this vein, corporate credit declined by 1.2% y-o-y in December 2015 compared with -0.7% y-o-y in June 2015 (Source: Bank of Greece).

Total bank deposits have been stabilised since the imposition of capital controls in July 2015 and increased by €1.2 billion in December 2015, supported by a normalization in government spending, which had been partly transmitted to the private sector, inflows of EU funds and favorable seasonal factors. However, total bank deposits remain €46.4 billion lower than their level of December 2014. Accordingly, the Greek banking system’s financing from the Eurosystem decreased to €107.5 billion in December 2015 and by €19.1 billion cumulatively since June 2015, with the Emergency Liquidity Assistance (“ELA”) dependence contracting by €17.9 billion, in this period (Source: Bank of Greece).

After the successful evaluation of Greece’s progress in implementing agreed actions and reforms and the concomitant approval by the Eurogroup and the Board of Governors of the ESM of a new Financial Assistance Facility Agreement (“FFA”) and the related Memorandum of Understanding (“MoU”) with Greece on 19 August 2015, the ESM disbursed the first sub-tranche of €13 billion of the first installment of the Program. This funding has been used for covering budget financing and debt servicing needs of the Hellenic Republic. Moreover, €10 billion of ESM notes, have been made available since August 2015 for bank recapitalization and resolution purposes (Source: ESM, December 2015).

Following the agreement and legislation of two additional sets of prior actions, the Greek government received another €3 billion related to the first Program installment, in two sub-tranches in November and December 2015. This funding has been used to cover external debt servicing needs and contributed to a normalization of government spending and to the clearance of about €0.5 billion of Government arrears to the domestic private sector (Source: ESM and Ministry of Finance, December 2015).

The completion of the comprehensive assessment of Greek systemic banks on 31 October 2015 identified a system-wide shortfall of €4.4 billion in the baseline scenario and €14.4 billion in the adverse scenario of the stress test. The official sector has participated in the recapitalization through the Hellenic Financial Stability Fund (“HFSF”) with only €5.4 billon — compared with initial estimates of up to €25 billion — with the participation of private investors limiting further the use of earmarked program funding (Source: ESM, December 2015).

As regards, developments in the Greek sovereign bond yields, the intensifying international headwinds since end-2015 and rumors of a delayed completion of the pending first Program review in late-2015 and early 2016 pushed the yields on Greek 10-year sovereign bond yields higher in January-February 2016 (by 143 bps to 10.4% on average, in February 2016), following a steady decline between July and December 2015 (a cumulative fall in 10-year GGB yields of 520 bps) (Source: Bloomberg database).

The above developments resulted in the upgrade of Greek sovereign debt by the main rating agencies: S&P raised their rating by two notches to ‘CCC+’ on 21 July 2015, while Fitch upgraded Greek debt by one notch to ‘CCC’, on 18 August 2015. On 25 September 2015, Moody’s maintained Greece’s sovereign rating at ‘Caa3’ but changed the outlook to stable from negative as it had placed the country’s rating on review for further downgrade since 1 July 2015. Finally, S&P Ratings upgraded Greek debt by one notch to ‘B-’ on 22 January, 2016 with a stable outlook, referring to the milder than expected recession and progress made in fiscal and reform targets of the Program as the key determinants of its rating decision (Source: Bloomberg).

The economies and banking sectors of Turkey and South Eastern Europe-5 (“SEE-5”, comprising Albania, Bulgaria, FYROM, Romania, and Serbia) performed well in 2015

There was a broad-based improvement in the macroeconomic picture in Turkey in 2015. Economic activity accelerated, external adjustment gained steam, fiscal consolidation continued, and profitability of the banking sector improved, while inflation accelerated and Foreign Exchange (“FX”) reserves receded.

Economic growth is estimated to have accelerated to 3.8% in 2015 from 2.9% a year earlier, despite strong domestic and global headwinds, including: i) protracted political uncertainty ahead and after the June 2015 general elections, as the inconclusive outcome and the collapse of discussions on the formation of a coalition government led to the call for snap elections in November 2015; ii) increasing security concerns, following the collapse of a two-year ceasefire with the Kurdistan Workers’ Party militant group and the country’s involvement in the war against ISIS; iii) tighter global liquidity conditions ahead of the normalization of the Fed interest rates in late 2015; as well as iv) adverse geopolitical developments, which resulted in reduced trade with some key trading partners (Russia and Iraq). The acceleration was driven by a significant rebound in private domestic demand, with private consumption and private investment rising by 4.5% y-o-y and 4.3% y-o-y, respectively, in the first nine months of 2015 from 1.0% and 0.4% in the same period a year earlier.

The external adjustment continued in 2015, despite the shift of the composition of economic growth towards domestic demand, with the current account deficit moderating to 4.5% of GDP from 5.5% in 2014. Note, however, that the current account deficit would have reached 7.0% of GDP in 2015 had the energy and gold balances not improved. Unsurprisingly, amid lingering domestic and global uncertainty, the quality of capital inflows deteriorated, with unrecorded operations together with a withdrawal from Foreign Exchange (“FX”) reserves covering 66.8% of the current account deficit in 2015. As a result and including valuation effects, FX reserves declined by USD 14.0 billion in 2015 to the still comfortable level of USD 92.9 billion, covering 5.0 months of imports of goods and non-factor services.

Importantly, the fiscal performance improved in 2015, despite an election year, with the fiscal deficit easing to 1.2% of GDP from 1.3% of GDP in 2014, helping the public debt-to-GDP ratio reach a multi-year low of 32.6% — comparing favourably with that calculated by the IMF for “Emerging market and developing economies” (44.4%).

On a negative note, end-year headline inflation stood at a four-year high of 8.8% y-o-y in 2015, surpassing the Central Bank of the Republic of Turkey’s (“CBRT”) target of 5.0% and forecast of 7.9%. This negative performance was driven by a surge in food prices and strong pass-through from weaker TRY. It would have been worse had global oil prices not declined sharply and the CBRT had not kept tight liquidity

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conditions (the CBRT’s average effective funding rate stood at 8.4% and the past years’ macro-prudential measures, aiming at containing credit activity growth at 15.0%, were maintained).

Against a background of strong economic growth and despite tight liquidity conditions, the Turkish banking sector posted a relatively good performance in 2015. Specifically, the profitability rose by 6.0% to TRY 26.0 billion (€7.9 billion) in 2015. Moreover, the loans +90 days past due-to-total loans ratio inched up to a still very low level, by emerging market standards, of 3.1% at end-2015 from 2.9% at end-2014. Finally, the capital adequacy ratio eased slightly to 15.6% at end-2015 from 16.3% a year ago, well above the statutory threshold of 12.0%.

The performance of the economies and banking sectors of SEE-5 improved across the board in 2015. Indeed, economic activity gained momentum, inflation retreated, fiscal deficit receded, external adjustment continued, and banking sector profitability strengthened.

Real GDP growth is estimated to have accelerated to a seven-year high of 3.2% in 2015 from 2.1% a year earlier, despite a tighter fiscal stance (the fiscal deficit narrowed to 2.2% of GDP in 2015 from 3.0% a year earlier). The acceleration was supported by private consumption and, to a lesser extent, by fixed investment. Stronger real disposable income, reflecting, inter alia, improving labour market conditions and weaker inflation (down to -0.4% y-o-y in 2015 from 0.6% a year earlier) along with favourable global oil prices boosted private consumption, while better absorption of EU funds, especially in Romania and Bulgaria, strengthened further investments.

On another positive note, despite the rebound in domestic private demand, the current account deficit remained at the appropriate low level of 1.6% of GDP for the third successive year in 2015, well below the pre-crisis all-time high of 15.0% of GDP. In fact, a narrowing energy bill offset the negative impact of rebounding non-energy related-imports on the current account. Encouragingly, the quality of financing of the current account deficit remains sound, with non-debt generating foreign direct investments more than covering the current account deficit for the third year in a row in 2015 (172.9%).

Amid a favourable operating environment, the fundamentals and the performance of the SEE-5 banking sector improved in 2015. Indeed, the bottom line rose sharply to an estimated €1.8 billion (annualised) in the first nine months of 2015 from an estimated €0.3 billion (annualised) in the same period a year earlier; underpinned by lower provisions for bad loans, in line with the moderation of the ratio of problematic loans to total gross loans (ranging between 11.7% in FYROM and 22.0% in Serbia at end-September 2015 versus 11.3% in FYROM and 22.8% in Albania at end-2014). Moreover, the capital adequacy ratio strengthened at high levels (ranging between 15.8% in Albania and 22.5% in Bulgaria at end-September 2015 versus 15.7% in FYROM and 21.9% in Bulgaria at end-2014), boding well for a strong rebound in lending activity in the near future, in view of the region’s low penetration rate (loan-to-GDP ratios in SEE-5 ranged between 31.3% and 60.8% at end-2015), especially in the retail segment (retail lending-to-GDP ratios in SEE-5 ranged between 10.7% and 21.6% at end-2015) and adequate liquidity ratios (the SEE-5 average loan-to-deposit ratio eased to 90.0% at end-2015 from 96.0% at end-2014, after having remained above the 100% threshold for eight years).

Anticipated developments (risk and uncertainties)

Looking forward in 2016, the growth rate of the global economy is expected to pick up only gently, mainly underpinned by a milder recession in several emerging market countries. In advanced economies, economic activity is expected to remain broadly on track, mainly due to strong private consumption, a slightly supportive fiscal policy following years of consolidation in most advanced economies, as well as an accommodative monetary policy stance by most major central banks. For 2016, the global economy is expected to advance by 3.4%, from 3.1% in 2015 (according to IMF World Economic Outlook, January 2016).

However, risks to the global economic outlook are tilted to the downside. Specifically, a sharper-than-expected slowdown of the Chinese economy, triggered by ineffective policy efforts to curb excess credit and manage the transition of the economy towards a more balanced growth mix could have negative repercussions on global financial markets. Indeed, financial conditions could tighten further (lower equity prices, wider corporate bond spreads and stronger exchange rates), in the United States and the Euro area and weigh on respective economic growth prospects, if sustained. Specifically, the Euro area economic growth continues to be constrained by a still stubbornly high unemployment rate, as well as elevated private and public debt levels. Thus, adverse geopolitical (refugees crisis) and/or political (Portugal, Spain, the UK referendum) risks —if they were to materialize- could harm business and consumer confidence rapidly and derail the fragile euro area recovery. In the context of rising global risk aversion, emerging markets, particularly those with sizable external imbalances, are exposed, as they could face a sharp reversal in capital flows. Finally, any further escalation of geopolitical tensions in the Middle East and in the Ukraine/Russian clash could adversely affect to global economic prospects.

In 2016, economic activity in Greece will continue to be affected by the downside pressures related to the negative carry on growth from GDP trends in 2015, and the additional fiscal drag from the implementation of new fiscal measures to support the achievement of a targeted primary surplus in Government budget of 0.5% of GDP in 2016 (Source: State Budget 2016). Accordingly, GDP is estimated to decline further (-0.7% y-o-y in FY:2016, in constant prices, EU Commission, Winter Forecast 2016) with the economy returning in positive growth in the second half of 2016 supported by: i) lower energy prices; ii) improving sentiment compared to the previous year; iii) positive tourism and export trends, iv) a gradual normalization of liquidity conditions (reflecting, inter alia, a gradual clearance of government arrears) and v) a further easing of capital controls.

The timely completion of the pending first review of the Program for Greece, in the first months of 2016 is expected to unlock about €5 billion of official funding and contribute to sustainable recovery in economic sentiment and a faster improvement in liquidity conditions especially if compounded by a reinstatement of the ECB waiver on Greece’s financial assets and, eventually, the eligibility in the ECB’s QE — quantitative easing. On the other hand, a significant delay in the completion of the review could give rise to negative confidence and liquidity effects, delay the relaxation of capital controls and exert additional downward pressures on collateral valuations and ultimately create debt servicing tensions for the Hellenic Republic and the private sector, and impose significant downside risks for economic activity.

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The macroeconomic outlook and the performance of the banking sector is expected to improve further in SEE-5 in 2016. Real GDP should expand at a faster pace, on the back of stronger domestic demand, supported inter alia by improving labour market conditions, an expansionary fiscal policy, favourable global commodity prices, and a buoyant credit activity. We expect real GDP growth to rise to an 8-year high of 3.6% in 2016 from an estimated  3.2% in 2015. This benign operating environment, along with banks’ improved liquidity and asset quality, should boost the profitability of the banking sector.

There are, however, downside risks to the SEE-5 positive outlook, stemming from renewed political uncertainty and policy slippage, mainly due to a heavy election calendar in 2016 (in Romania: local elections (June) and legislative elections (December); in Bulgaria: presidential elections (October); in Serbia: local elections and legislative elections (April); and in FYROM: legislative elections (April)) and weaker-than-expected economic activity in the region’s main trading partner — the euro area.

2015 Comprehensive Assessment

In accordance with the Euro Summit Statement of 12 July 2015 and ECB Decision of 5 August 2015, the ECB conducted a comprehensive assessment (“CA”) of the four systemic Greek banks. The CA consisted of an Asset Quality Review (“AQR”) and a Stress Test (“ST”) including a baseline and an adverse scenario. The AQR exercise was conducted by reference to a static balance sheet as of 30 June 2015. The ST was a forward looking exercise, following AQR adjustments, assessing the resilience of NBG’s financial position to further significant deterioration of the economic environment from June 2015, until the end of 2017.

The AQR identified a capital shortfall of €2,337 million, resulting in a stressed CET1 ratio of 8.1% relative to the minimum CET1 ratio threshold set by the, Single Supervisory Mechanism (“SSM”) at 9.5% for the AQR and therefore a capital shortfall of €831 million.

Under the Baseline Scenario (including AQR adjustments), the ST generated an additional negative impact on NBG’s regulatory capital, resulting in a stressed CET1 ratio of 6.8% relative to the minimum CET1 ratio threshold set by the SSM at 9.5% for the Baseline scenario. Therefore the Baseline ST implies a capital shortfall of €1,576 million. Taking into account the positive impact stemming from the third quarter results, the SSM reduced the capital needs under both the adverse and the baseline scenarios by €120 million. Consequently, the capital shortfall for the baseline scenario has been reduced to €1,456 million.

More specifically, the significant cumulative losses for NBG’s domestic business projected in the baseline scenario, stem both from the reduced expectations for pre-provision income as well as increased credit losses beyond those identified in the AQR, arising from the projected weak economic environment during the 30-month period to 2017. In addition, the baseline scenario incorporates a reduction of the expected capital generated from the capital actions outlined in NBG’s Restructuring Plan, approved on 23 July 2014 (“2014 Restructuring Plan”).

Under the adverse scenario, the ST (including AQR adjustments) identified a capital shortfall of €4,482 million after the reduction of €120 million (an additional €3,026 million compared to the Baseline) relative to a CET1 ratio threshold of 8.0% (compared with 5.5% in the adverse scenario of the 2014 ST).

The adverse scenario represents NBG’s financial position under severe stress conditions, assuming an impairment of the Greek sovereign exposure, an increase in domestic credit losses, more conservative pre-provision income and stress on NBG’s international operations, which were broadly unaffected in the baseline scenario.

The Capital Plan

As noted above, the 2015 Comprehensive Assessment, by taking into account the positive impact of the third quarter results of 2015, identified a €1,456 million Baseline Scenario Shortfall and a €4,482 million Adverse Scenario Shortfall.

To address these capital shortfalls, the Bank undertook a number of capital actions to raise its CET1 capital. These capital actions were set out in a Capital Plan, which has been submitted to the SSM and approved on 13 November 2015.

Actions contemplated by the Capital Plan were required to be completed by 11 December 2015 for the capital created thereby to qualify to address the Baseline Scenario Shortfall or Adverse Scenario Shortfall, as applicable.

The Capital Plan included the following actions that were completed in December 2015 (see 2015 Recapitalisation below):

·                  the Liability Management exercise (“LME”) Offers to eligible holders of seven series of its outstanding debt and capital securities;

·                  the International Offering and;

·                  the Greek Public Offer.

Due to the fact that the above measures in the aggregate did not fully address the Adverse Scenario Shortfall, the Bank applied for State aid (“State Aid”).  As such State Aid was approved and provided to the Bank, the HFSF subscribed for contingent convertible securities (“CoCos”) (in a principal amount equal to 75% of the amount of State Aid provided) and new shares (in respect of the remaining 25%).  Consistent with the EU State aid rules, State Aid was provided after the application of the Burden Sharing Measures (as described below).

Additionally, the Capital Plan includes the sale of the Group’s entire stake in Finansbank (although the sale was not required to be, and the Bank did not expect to be completed by 11 December 2015). On 21 December 2015, Bank’s Board of Directors approved the divestiture to Qatar National Bank (“QNB”) of NBG’s 99.81% stake in Finansbank A.Ş. together with other minor direct and indirect interests (see Sale of Finansbank A.S. to Qatar National Bank S.A.Q. below).

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2015 Recapitalisation

In the context of the implementation of the Capital Plan, as stated above, on 17 November 2015, the Extraordinary General Meeting of the Bank’s shareholders approved:

a) the reverse split of the ordinary shares at a ratio of 15 existing shares of 0.30 Euro per share to be exchanged for 1 new share of 4.50 Euro per share and the reduction of the number of shares from 3,533,149,631 to 235,543,309,

b) the reduction in the nominal value from 4.50 Euro per share to 0.30 Euro per share, with the formation of a special reserve of an equal amount for offsetting losses, and

c) the share capital increase by €4,482 million in the context of recapitalization of the banks pursuant to the provisions of Greek Law 3864/2010, as amended, and Cabinet Act 36/02.11.2015 through cancellation of the pre-emptive rights to existing shareholders, by issuing new ordinary shares, through In-Cash Contribution and/or In-Kind Contribution including the issuance of a convertible bond loan through the issuance of unsecured, perpetual and subordinated bonds, contingently convertible into ordinary shares of the Bank.

On 9 December 2015 the Bank’s Board of Directors confirmed that the total share capital increase was partially covered, in accordance with art. 13a of Company Law 2190/1920, i.e. it was covered by €2,192,372,169.30 through the issuance of 7,307,907,231 new shares. In the same meeting the Bank’s Board of Directors further certified that the aforementioned partial coverage is divided as follows:

A.            increase by the amount of €457,455,543.30 that was covered in cash by issuing 1,524,851,811 new shares in the context of the International Offering;

B.            increase by the amount of €299,955,738.30 that was covered in cash by issuing 999,852,461 new shares in the context of the Greek Public Offer,

C.            increase by the amount of €694,906,185 that was covered in cash by the participants in the LME offering— Securities Exchange Offer and issuing thereby 2,316,353,950 new shares,

D.            increase by the amount of €63,593,954.70 that was covered by contribution in kind that entailed the mandatory conversion to new shares of liabilities of the Bank pursuant to the Cabinet Act no 45/7.12.2015 and the issuance thereunder in favour of the relevant beneficiaries of the aforementioned liabilities (excluding the beneficiaries of the preference shares of the Bank existing at that time) of 211,979,849 new shares;

E.             increase by the amount of €676,460,748 that was covered by the HFSF contributing to the Bank notes of the European Stability Mechanism (the ESM Notes) and issuing 2,254,869,160  New Shares, in accordance with art. 7 of Greek Law 3864/2010 and Cabinet Act no 36/2.11.2015.

It should also be noted that due to the issuance of Cabinet Act no 45/7.12.2015 all of the Bank’s preference shares were mandatorily converted (in accordance with the relevant provisions of article 6a of Greek law 3864/2010) to 1,603,700,987 common shares of the Bank. More specifically, all the outstanding non-cumulative, non-voting, redeemable preference US shares (i.e. 12,639,831) were converted into 298,700,987 ordinary shares and all the 270,000,000 outstanding preference shares issued in favour of the Hellenic Republic, in accordance with the Greek Law 3723/2008 were converted into 1,305,000,000 ordinary shares.

Furthermore, the Bank’s Board of Directors in its meeting on 8 December 2015, decided, acting within the context of the relevant decision of the 17 November 2015 Extraordinary General Meeting of the Bank’s shareholders, the issuance of a convertible bond loan of a total amount of €2,029,200,000 by issuing 20,292 contingent convertible bonds, of nominal value and subscription price of €100,000 each, (the COCOs) which were all acquired by the HFSF, in accordance with par. 2 and 5c of Greek Law 3864/2010, Cabinet Act no 36/2015 and Greek Law 3156/2003, each as currently applicable. Following the execution of the relevant Subscription Agreement and the Bond Loan Program concluded between the Bank and the HFSF, the Bank’s Board of Directors in its meeting on 9 December 2015 certified the contribution of ESM Notes valued at €2,029,200,000 that fully covered the amount of the aforementioned bond loan, pursuant to the evaluation of such notes, in accordance with art. 7 par. 3 of Greek Law 3864/2010, as applicable.

Following all the above, if the amount by which the total share capital increase has been partially covered as above, in accordance with the relevant rules of Company Law 2190/1920, is added to the amounts by which the Group’s regulatory capital of Common Equity Tier 1 has been enforced, namely by means of: (a) the mandatory conversion of the Bank’s preference shares of article 4 indent xlvii of the Bank’s Articles of Association, (b) the capital gain deriving from the Securities Exchange Offer and (c) the issuance and full coverage of the COCOs by the HFSF, the resulting total amount is higher than the Bank’s capital shortfall under the Adverse Scenario, in accordance with the relevant decision of the SSM (i.e. €4,482 million).

Sale of Finansbank A.S. to Qatar National Bank S.A.Q.

National Bank of Greece S.A. enters into a definitive agreement with Qatar National Bank S.A.Q. to sell its 99.81% stake in Finansbank A.Ş for total consideration of €2,750 million (the “Transaction”).

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On 21 December 2015, Bank’s Board of Directors approved the divestiture to Qatar National Bank of NBG’s 99.81% stake in Finansbank A.Ş. together with other minor direct and indirect interests(1). Furthermore, on 18 January 2016, the Extraordinary General Meeting of the Bank approved the transaction. The agreed consideration for the transaction amounts to €2,750 million. In addition, QNB will repay upon closing the USD 910 million of subordinated debt that NBG has extended to Finansbank, which is expected to increase the post-closing liquidity position of the NBG group by approximately €3.5 billion.

Following the decision to dispose its entire stake in Finansbank, the Group, based on the agreed consideration, assessed for impairment the carrying amount of the CGU and concluded to recognize an impairment loss of €1,861 million during the period ended 31 December 2015 of which €1,082 million related to the goodwill recognized in the Group’s consolidated financial statements. Furthermore, the Bank recognized an impairment loss on the cost of its investment in Finansbank in its separate financial statements of €1,694 million.

The capital enhancement will pave the way to the repayment (following approval by the SSM of the European Central Bank) of the €2.0 billion State Aid received in the form of ESM bonds in consideration of CoCos issued by NBG on 9 December 2015.

While maintaining its leading liquidity position among Greek banks with a domestic Loan-to-Deposit ratio of 90.1% as of 31 December 2015, NBG intends to utilize the liquidity generated by the transaction to reduce significantly its cost of funding through the repayment of costly Pillar II bonds and the associated reduction of the Bank’s exposure to the ELA.

The sale of Finansbank reaffirms the commitment of NBG’s management to the successful implementation of NBG’s restructuring plan and its long-term strategy to successfully redeploy capital towards the Greek economy and play a leading role in the country’s economic recovery.

Closing of the Transaction is subject to the approval from: (i) the Banking Regulation and Supervision Agency; (ii) the Qatar Central Bank; (iii) the Turkish Competition Board; (iv) the Turkish Capital Markets Board and (v) the Turkish Treasury.

Sale of NBGI Private Equity Funds

On 21 December 2015, the Bank’s Board of Directors approved the plan to proceed with the disposal of its entire stake in eleven Limited Partnerships (“the Funds”) located in UK and held directly or indirectly by NBG and managed by NBGI PE Limited. On 2 February 2016 the Bank entered into a definitive agreement to sell the 100% of its interests in Funds to funds managed by Deutsche Bank Private Equity and Goldman Sachs Asset Management. The agreed consideration for the transaction amounts to €288 million. The disposal is consistent with the Group’s capital action plan to address the capital shortfalls identified from the 2015 Comprehensive Assessment carried out by the ECB and satisfies the relevant commitment in the Restructuring Plan approved by DGComp on 4 December 2015. Closing of the transaction is expected within the first semester of 2016, subject to the approval from the Financial Contact Authority, and antitrust and competition authorities. As a result, the investment in Funds qualifies to be classified as a disposal group held for sale on 21 December 2015.

Following the decision to dispose its entire stake to the Funds, the Group, based on the agreed consideration, assessed for impairment the carrying amount of the goodwill recognized in the Group’s consolidated financial statements and concluded to recognize an impairment loss of €106 million during the period ended 31 December 2015. Furthermore, in 2015 the Bank recognized an impairment loss on the cost of its investment in Funds in its separate financial statements of €131 million.

Financial Results

Superior liquidity position

Group deposits (excluding Turkey, transferred to assets held-for sale and discontinued operations), on an annual basis, decreased by €7.6 billion to €43.0 billion at 31 December 2015 or 15.1% mainly due to the economic turbulence and the uncertainty in the Greek banking sector during the first half of 2015. However, Group deposits increased by 3.5% in the second half of 2015, reflecting mainly the domestic deposit stock increase of €793 million in Q4 and €345 million in the third quarter of 2015. In SE Europe and other counties, deposits were up 5.4% in the second half of 2015 to €6.3 billion (Q4 inflows of €277 million and €49 million in Q3).

As a result, NBG’s best-in-class Loan to Deposit ratio improved further to 90.1% in Greece as at 31 December 2015 (83.4% at 31 December 2014)) and 91.1% at the Group (excluding Turkey) level as at 31 December 2015 (85.1% at 31 December 2014), providing the basis for future credit growth.

Eurosystem funding increased from €14.2 billion at 31 December 2014 by €9.8 billion in 2015 and amounted to €24.0 billion at 31 December 2015 (of which ECB funding €12.5 billion and ELA funding €11.5 billion) due to the significant deposit outflows of €8.4 billion in the first half of 2015. NBG’s funding through ELA is the lowest in the sector, while Eurosystem over assets excluding European Financial Stability Facility (“EFSF”) and ESM bonds and discontinued operations stands at 17.1%. Exposure to costly Pillar II guarantees has already been reduced to €3.8 billion (cash value) compared to €12.3 billion at 30 June 2015 and €7.4 billion at 31 December 2014.  These developments do not take into account the €3.5 billion liquidity impact of the sale of Finansbank expected to be completed within the second quarter of 2016.

Since 31 December 2015(1), ELA funding further declined by €0.6 billion to €10.9 billion (Eurosystem funding: €23.4 billion), with this trend expected to continue throughout the rest of 2016, having a positive impact on net interest income (“NII”). The cash value of excess collateral amounts to €7.7 billion.

(1)  Data as at 10 March 2016.

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Sector-best 90 days past due (“dpd”) coverage at the Group level and in Greece

At the Group level (excluding Turkey), 90dpd formation dropped to €868 million in 2015 from €1,010 million in 2014, and to €54 million in the fourth quarter of 2015 from €406 million in the third quarter of 2015, reflecting the sharp decrease in Greece, as 90dpd formation declined to just €86 million in the fourth quarter in 2015 from €406 million the previous quarter. On an annual basis the 90dpd formation in Greece also dropped from €1,030 million in 2014 to €870 million in 2015. This reflects recoveries across the entire product range in the latter half of the fourth quarter of 2015, with 90dpd formation standing at firmly negative territory in December 2015. Encouragingly, this trend continues in early the first quarter of 2016 in the retail book, revealing a pattern of declining delinquency formation.

Group provisions increased to €3,670 million in 2015 from €2,102 million in 2014, reflecting the increased provisions in Greece which reached €3,528 million, bringing the 90dpd coverage ratio to a sector-high of 76.8% in Greece from 60.2% in 2014. (74.6% at the Group level at 31 December 2015, vs 59.3% at 31 December 2014). Domestic Non-performing exposures (“NPE”) coverage increased to 53.4% from 52.4% in the third quarter of 2015 and from 45.0% at 31 December 2014, (52.8% at the Group level, at 31 December 2015, vs 45.2% at 31 December 2014). Domestic provisions reached €671 million in the fourth quarter of 2015 from €232 million in the third quarter of 2015, over and above the residual AQR provision shortfall, as the Bank decided to adopt a more conservative approach further strengthening the balance sheet, in light of the current economic environment.

In SE Europe and other international activities, the 90dpd ratio dropped to 26.8% in the fourth quarter of 2015 from 28.3% the previous quarter and from 27.4% from 2014, on the back of write-offs at United Bulgarian Bank A.D.—Sofia (“UBB”). Coverage increased to 57.4% from 56.3% in the third quarter of 2015 and from 53.2% in 2014.

Profitability

Group

The Group recorded a net loss of €4,227 million for the year 2015, including the loss from discontinuing operations of €1,606 million, compared to net profit €66 million in 2014. The 2015 loss reflects the increased loan provisions of €3,670 million (2014: €2,102 million) and other impairments of €593 million (2014: €421 million).

Greece

During 2015, domestic segment reported a net loss of €3,605 million compared to €1,865 million loss in 2014 mainly due to the increased credit provisions and other impairment charges. However, in the fourth quarter of 2015 domestic core pre-provision profit(2) (“PPI”) recovered sharply to €153 million (up 10.1% q-o-q), after dropping by 10.4% q-o-q in the third quarter of 2015, reflecting early signs of expected NII and fee pick up in 2016. NII amounted to €392 million from €389 million in the third quarter of 2015 on the back of lower deposit costs (-14 bps q-o-q), driven by time deposit repricing (-19bps q-o-q) and deposit mix rebalancing (67.8% weight of lower margin core deposits compared to 52.3% in the fourth quarter of 2014), that counterbalanced a lower lending NII (at €407 million, down 4.5% q-o-q). NII was also aided by the sharp reduction in ELA, funding, albeit only for two weeks in the quarter. The positive impact of the lower ELA dependence will be fully reflected in the first quarter of 2016 and onwards.

Fee income before Pillar II costs rebounded to €51m in the fourth quarter of 2015 (+21.4% q-o-q) on the back of higher corporate lending, brokerage, custody and investment banking related fees. Nevertheless, Pillar II fees remained at high levels (€54 million in the fourth quarter of 2015 from €53 million the previous quarter), bringing the total cost at €197 million in 2015 (€161 million in 2014). The substantial reduction of senior debt guarantees exposure by almost €9 billion since the third quarter of 2015 (nominal value) will reduce annualized expenses to more than half the fourth quarter of 2015 levels in 2016. Including Pillar II costs, net fee income remained in negative territory in the fourth quarter of 2015 (-€3 million from -€10 million in the third quarter of 2015).

In 2015 operating expenses dropped by 2.2% y-o-y to €1,030 million and 38.0% since 2009. Personnel expenses stood at €665 million (-1.0% y-o-y), adding up to a total containment through the crisis of 43.5%.

The Bank recorded net loss of €857 million in the fourth quarter of 2015, negatively affected by high loan loss provisioning charges of €671 million and other impairments(3) of €242 million. The Bank has committed under the 2015 Revised Restructuring Plan approved by to the Directorate General for the Competition of the European Commission (“DG-Comp”) on 4 December 2015, to decrease its Total Full Time Equivalent personnel (“FTEs”) in Greece to a maximum of 10,250 at the end of 2017 and 9,950 at the end of 2018. Following the above commitment, the Group and the Bank recognized a provision of €118 million as of 31 December 2015.

SE Europe and other countries

During 2015, SE Europe and other countries reported a net gain of €7 million compared to €34 million in 2014 mainly due to the increased loan loss provisions in 2015.

The SE Europe and other countries recorded losses of €34 million in the fourth quarter 2015 against profits of €15 million in the third quarter of 2015, hit by a surge in loan loss provisions (at €68 million from €23 million in the third quarter of 2015)

Capital position

Excluding CoCos and pro-forma for the near completion disposals of Astir Palace Vouliagmenis S.A., NBGI Private Equity Limited and Finansbank A.S., Common Equity Tier 1 (“CET1”) ratio stood at 17.5% (including CoCos, CET1 at 22.7%). On a Basel III fully loaded basis and pro-forma for these divestments, CET1 settles at 16.8%.

(2)  The Group defines “PPI” as “total operating income”, plus the “share of the profit/loss of investments in subsidiaries, joint ventures and associates”, less “administrative expenses” and “depreciation”, with such measures prepared in accordance with IFRS. The Group uses the PPI measure to enhance the comparability of its financial performance between reporting periods by adjusting for items of a non-recurring nature. Not all companies use identical calculations to calculate pre-provision income. These presentations of pre-provision income may not be comparable to other similarly titled measures used by other companies.

(3)  Other domestic impairments include the €106 million capital loss arising from the agreed disposal of NBGI Private Equity Limited, provisions related to investment properties (€68 million), and international subsidiaries (€26 million) and other impairments (€42 million).

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Going concern

Liquidity

As a result of the negotiations between the new Greek government and the European Commission, the European Central Bank (“ECB”) and International Monetary Fund (“IMF”) (collectively the “Institutions”) towards reaching a permanent agreement regarding Hellenic Republic’s financing needs, the uncertainty regarding the financing needs of the Hellenic Republic increased and led to significant deposits outflows from the Greek banks. Liquidity in the Greek banking system has declined significantly, reflecting a sizeable contraction of the domestic deposit base between November 2014 and July 2015 of €52.7 billion, accompanied by a sharp increase in reliance on ECB and Emergency Liquidity Assistance (“ELA”) to above €125.3 billion in July 2015 from €56.0 billion in December 2014, although such funding obligations declined to €107.5 billion in December 2015.

In part as a response to the substantial contraction in deposits, on 28 June 2015, a bank holiday was declared for all credit institutions operating in Greece. This bank holiday was in place until 19 July 2015. The Greek government imposed numerous restrictions on financial transactions during and after this period, many of which currently continue to apply. The initial capital controls involved maximum daily withdrawal limits of 60 Euros from individual deposit accounts and limitations on transfers of funds abroad were imposed, with certain exceptions. The presently operational capital controls involve, among other limitations, a maximum cumulative weekly withdrawal limit of 420 Euros per depositor, per bank, continued certain prohibitions on the transfer of capital and cash outside of Greece, the prohibition on the opening of new accounts except for specified permitted purposes and a ban on the unwinding of certain financial arrangements (such as the prepayment of loans or accounts not established to serve certain specified purposes).

During the first half of 2015, the structure of the Bank’s liquidity position has changed substantially. The reasons for this change were the economic turbulence and the uncertainty in the Greek banking sector that was caused by the ongoing negotiations between the Greek government and the Institutions. More specifically, the Bank faced significant deposit outflows of €8.4 billion, as well as the non renewal of about €3.6 billion of repurchase agreements with financial institutions. This in turn caused an increased dependence on Eurosystem funding and a commensurate deterioration of the Bank’s counterbalancing capacity. Furthermore, in February 2015, ECB lifted the waiver on accepting notes issued or guaranteed by the Hellenic Republic as collateral for repurchase agreements, which forced the Bank to cover its increasing funding shortfall through the ELA. In the height of the liquidity crisis, on 29 June 2015 due to the termination of the negotiations and ECB’s decision to freeze the level of ELA, Greek authorities imposed capital controls, in order to prevent a widespread bank run and to preserve the sustainability of the Greek banking system. Moreover, on 7 July 2015, ECB raised the haircuts on the notes issued or guaranteed by the Hellenic Republic, which subsequently further lowered the Bank’s buffer for ELA refinancing. In order to mitigate all the above developments, the Bank’s Eurosystem funding increased in the first half of 2015 by €13.3 billion and reached €27.6 billion as at 30 June 2015. However, even at that point, the Bank retained adequate buffer of ELA eligible collateral, of around €5.5 billion, in order to cover further outflows.

During the second half of 2015, while the capital controls remained in force, the liquidity position of the Bank was improved. Eurosystem funding was reduced by about €3.5 billion and ELA funding decreased by about €6.1 billion. The main driver for these developments was the Bank’s successful share capital increase that was completed in December 2015. The Bank not only enhanced its capital base, but also increased the amount of its ECB eligible collateral by receiving an amount of €2.7 billion of ESM bonds, under the relevant subscription agreement. Additionally, the Bank further reduced its liabilities through the LME, by replacing all of its long-term debt, except for the covered bonds, with equity. Finally, the Bank’s liquidity profile was further strengthened by a moderate increase of about €1 billion in its customer deposits and by further deleveraging. In this context, on 31 December 2015, the ECB funding stood at €12.5 billion, while ELA funding was €11.5 billion, amounting to a total exposure to the Eurosystem of €24.0 billion, whereas the Bank’s liquidity buffer stood comfortably at €8.4 billion (cash value), of which €0.1 billion was collateral eligible for funding with the ECB and €8.3 billion was collateral that could be posted in order to draw liquidity from ELA. Total Eurosystem funding amounted to €14.2 billion at 31 December 2014, €20.7 billion at 31 December 2013 and €34.7 billion at 30 June 2012, when it reached the highest amount. Furthermore, as of 10 March 2016, Eurosystem funding has decreased to €23.4 billion, of which €10.9 billion through ELA, while additional financial assets of an estimated cash value €7.7 billion (cash value) were available for further liquidity, of which €0.2 billion was collateral eligible for funding with the ECB and €7.5 billion was collateral that could be posted in order to draw liquidity from ELA.

Macroeconomic developments

In view of the severe economic and financial disturbance that appeared to threat the participation of the country to the European Monetary Union (“EMU”) and the EU, the Greek government officially requested financial assistance from the European Union on 10 July 2015 with a view to restore confidence and enable the return of the economy to sustainable growth, and safeguarding the country’s financial stability. The Greek request received consent, in principle, from the Eurogroup for a new three-year loan program via the ESM.

Indeed, on 19 August 2015 — and following the Eurogroup Statement of 14 August 2015 — the Board of Governors of the ESM approved the proposal for a Financial Assistance Facility Agreement (“FFA”) with Greece, as well as adopted a Memorandum of Understanding (“MoU”) with Greece. On 20 August 2015, the first sub-tranche of €13 billion of the new Program (the “Program”) was disbursed for covering budget financing and debt servicing needs of the Hellenic Republic, €10 billion in ESM notes, have been made immediately available for bank recapitalization and resolution purposes. Following the agreement and legislation of two additional sets of prior actions, the Greek government received another €3 billion related to the first Program installment, in two sub-tranches in November and December 2015. This funding has been used to cover external debt servicing needs and contributed to a normalization of government spending and to the clearance of about €0.5 billion of Government arrears to the domestic private sector (Source: ESM, December 2015 and Ministry of Finance).

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The above developments resulted in the upgrade of Greek sovereign debt by the main rating agencies: S&P raised their rating by two notches to ‘CCC+’ on 21 July 2015, while Fitch upgraded Greek debt by one notch to ‘CCC’, on 18 August 2015. On 25 September 2015, Moody’s maintained Greece’s sovereign rating at ‘Caa3’ but changed the outlook to stable from negative as it had placed the country’s rating on review for further downgrade since 1 July 2015. Finally, S&P Ratings upgraded Greek debt by one notch to ‘B-’ on 22 January 2016 with a stable outlook, referring to the milder than expected recession and progress made in fiscal and reform targets of the Program as the key determinants of its rating decision (Source: Bloomberg).

As regards, developments in the Greek sovereign bond yields, the intensifying international headwinds since end-2015 and rumors of a delayed completion of the pending first review of the Program in late 2015 and early 2016 pushed the yields on Greek 10-year sovereign bond yields higher in January - February 2016 (by 143 bps to 10.4% on average, in February 2016), following a steady decline between July 2015 and December 2015 (a cumulative fall in 10-year GGB yields of 520 bps) (Source: Bloomberg database).

Capital adequacy

The Group’s Common Equity Tier 1 (“CET1”) ratio at 31 December 2015 increased to 14.6% (see Note 4.7). Furthermore, on 13 November 2015 the ECB approved the Bank’s Capital Plan targeted to address the Bank’s capital shortfall under both the Baseline and the Adverse scenarios of the ECB’s 2015 Comprehensive Assessment, as announced on 31 October 2015 (see Note 38). Part of the Capital Plan was the share capital increase completed in December 2015.

Going concern conclusion

Management concluded that the Bank is going concern after considering (a) its current access to the Eurosystem facilities, (b) agreement reached between the Institutions and the Hellenic republic in July/August 2015, (c) the Bank’s and the Group’s CET1 ratio of 31 December 2015 and (d) the expected positive impact on the Bank’s and the Group’s CET1 ratio from the remaining actions included in the Capital Plan, and in particular the completion of the disposal of Finansbank, expected by 30 June 2016.

Nevertheless, any significant deterioration of the economic environment due to, for example, adverse developments in the completion of the first review of the Program for the financing of the Hellenic Republic, could have a negative impact on the Bank, including its ability to raise funding through ELA, which may adversely affect the Group’s and the Bank’s ability to continue as a going concern.

The resolution of these material uncertainties depend, among other factors, on the successful completion of the first review of the Program, a solution for the financing needs of the Greek government, and the re-establishment of the waiver by the ECB to the use of Greek government bonds in the Eurosystem, which would likely result in a positive flow of deposits to the banking system, including NBG, and access to the international financial markets.

Implementation of the Bank Recovery and Resolution Directive

Greek Law 4335/2015, which was voted by the Greek Parliament on 23 July 2015, implemented in Greek law Directive 2014/59/EU of 15 May 2014, which provides for the establishment of an EU-wide framework for the recovery and resolution of credit institutions and investment firms (the “Bank Recovery and Resolution Directive” or “BRRD”). The BRRD is designed to provide authorities with a credible set of tools to intervene sufficiently early and quickly to avoid a significant adverse effect on the financial system, to prevent threats to market infrastructures, to protect depositors and investors and to minimize reliance on public financial support.

The BRRD contains a broad range of resolution tools and powers which may be used alone or in combination where the relevant resolution authority considers that certain required conditions are met, including, inter alia, that an institution is failing or likely to fail and no alternative private sector measure, or supervisory action, would prevent the failure of the institution within a reasonable timeframe. The resolution tools include the power to sell or transfer assets (or ownership thereof) to another institution and a general bail-in tool, which provides for the write-down or conversion of any obligations of the institution that meet relevant conditions. In cases of an exceptional systemic crisis, extraordinary public financial support may be provided in accordance with the EU state aid framework, as a last resort and subject to additional conditions

In addition to the general bail-in tool, the BRRD provides for resolution authorities to have the power to permanently write-down or convert into equity capital instruments such as subordinated notes at the point of non-viability and before any other resolution action is taken (non-viability loss absorption). These measures could be applied to certain of the Group’s debt securities. Furthermore, in circumstances where capital instruments are converted into equity securities by application of the mandatory write-down tool, those equity securities may be subjected to the bail-in powers in resolution, resulting in their cancellation, significant dilution or transfer away from the investors therein. Furthermore, Greek Law 4335/2015 designated the Resolution Leg of Hellenic Deposit and Investment Guarantee Fund (“HDIGF”) as the new National Resolution Fund.

Restructuring Plan

The Group is subject to European Commission rules on EU state aid in light of the aid received from the HFSF and the Hellenic Republic. These rules are administered by the Directorate General for the Competition of the European Commission. Under these rules, the Bank’s operations are monitored and limited to the operations approved in the 2015 Revised Restructuring Plan, which aims to ensure the Bank’s return to long-term viability.

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Revised Restructuring Plan approved by the Directorate General for Competition on 4 December 2015

In 2014, the European Commission approved a Restructuring Plan (the 2014 Restructuring Plan) regarding National Bank of Greece as a result of the State aid measures taken in favor of the Bank, after the severe losses it suffered due to its participation in the Private Sector Initiative (“PSI”) agreement. Further to the worsening of the economic climate in Greece during the first semester of 2015 resulting in NBG’s need for new State aid, NBG was required to submit to the Commission a Revised Restructuring Plan.

More particularly, as part of the Program, the Comprehensive Assessment carried out by the SSM for the four systemic Greek banks, announced on 31 October 2015, identified a total capital shortfall under the adverse scenario of €4,482 million for NBG.

NBG succeeded in covering an amount of €1,776 million of its capital needs by private means (existing creditors, through voluntary and mandatory exchange of their notes for new shares, and new investors through international and Greek offerings). The remaining balance of its capital needs amounting to €2,705 million was covered by State Aid through the HFSF in the form of a combination of common shares and contingent convertible capital instruments. On 4 December 2015, the European Commission approved the additional State Aid of €2,705 million to National Bank of Greece under EU state aid rules, on the basis of a Revised Restructuring Plan (2015 Restructuring Plan).

The 2015 Restructuring Plan includes a number of commitments to implement certain measures and actions that have to be completed during the period 2015-2018 (the “Commitments”). The Commitments relate both to domestic and foreign operations of the Group. Differentiations to the restructuring plan approved in July 2014 relate to the deepening of the bank’s operational restructuring, some amendments on commitment’s deadlines, as well as a commitment to further dispose of foreign assets.

For the domestic operations, the Commitments relate to constraining operating expenses, including the number of personnel and branches. Other Commitments relate to monitoring the cost of deposits in Greece, maintaining a level of loans-to-deposits ratio below a maximum ratio, adhering to an investment policy and the divestment from certain domestic non-banking activities.

In particular, the Commitments relate to the following:

i.                  Number of branches in Greece: Restriction of the total number of branches in Greece to 540 at the end of 2017 (as of 31 December 2015: 526).

ii.               Total Full time equivalent personnel (“FTEs”) in Greece: Restriction of the total number of FTEs in Greece to a maximum of 10,250 at the end of 2017 and 9,950 at the end of 2018. It should be noted that the Group has proceeded to a significant reduction of FTEs in Greece, including the voluntary retirement program in 2013, through which approximately 2,500 employees left the Bank. As of 31 December 2015, the domestic FTEs were 12,019.

iii.            Total operating costs in Greece: Restriction of total operating costs in Greece to €961 million for the year 2017 (2015: €1,030 million).

iv.           Cost of deposits in Greece: NBG will have to follow its own projections with regards to the cost of domestic deposits, as this is depicted in the Revised Restructuring Plan, in order to regain its profitability in Greece. NBG has already achieved the reduction of its cost of deposits in Greece in line with forecasts in the Restructuring Plan.

v.              Loans/Deposits: Restriction of the Loan/Deposit ratio in Greece at a maximum of 115% at the end of 2018 (as of 31 December 2015: 90.1%).

vi.           Domestic non-banking activities: NBG will divest from certain domestic non-banking activities.

vii.        Reduction of securities portfolio: NBG will reduce its investments in shares, subordinated debt and hybrid securities.

viii.     Disposal of Private Equity Funds: NBG will proceed with the sale of its Private Equity Funds. The SPA has been signed while the closing of the transaction is expected to close by the first half of 2016.

Regarding its international operations, NBG’s Commitments mainly refer to the below:

i.                  Divestment from international operations: NBG will reduce its international activities, by disposing certain subsidiaries and branches. This process is at an initial stage.

ii.               Sale of Finansbank. NBG will proceed with the sale of 100% of its shareholding in Finansbank. The SPA has been signed while the closing of the transaction is expected by the first half of 2016. Following the closing, NBG will proceed to repay the CoCos, subject to regulatory approval.

Other Commitments refer to the following:

i.                  Investment policy: NBG will not invest in non-investment grade securities, except for specific cases.

ii.               Salary cap: Restriction of the total annual remuneration (including salary, pension contribution and bonus) of any of NBG’s employees to a certain amount.

iii.            Prolongation of Commitments: NBG will continue to implement the Commitments on Corporate Governance and Commercial Operations, as submitted by the Hellenic Republic on 20 November 2012, until the end of the Restructuring period.

The implementation of the commitments set out in the 2015 Restructuring Plan is monitored by the Monitoring Trustee.

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Events after the reporting period

Refer to the “Sale of NBGI Private Equity Funds” above.

Risk management

The Group operates in a fast growing and changing environment and acknowledges its exposure to banking risks as well as the need for effective risk management. Risk management and control forms an integral part of the Group’s commitment to providing continuously high returns to its shareholders.

Credit risk

Credit risk is the risk of financial loss relating to the failure of a borrower to honour its contractual obligations. It arises in lending activities as well as in various other activities where we are exposed to the risk of counterparty default, such as our trading, capital markets and settlement activities. The risk of counterparty default is the largest single risk we face. Our credit risk processes are conducted separately by the Bank and each of our subsidiaries. The credit risk procedures established by the subsidiaries are coordinated by the Group Risk Control & Architecture Division (“GRCAD”).

The Group’s credit granting processes include:

·                  Credit-granting criteria based on the particular target market, the borrower or counterparty, as well as the purpose and structure of the credit and its source of repayment.

·                  Credit limits that aggregate in comparable and meaningful manner different types of exposures, at various levels.

·                  Clearly established procedures for approving new credits as well as the amendment, renewal and re-financing of existing credits.

The Group maintains on-going credit administration, measurement and monitoring processes, including in particular:

·                  Documented credit risk policies.

·                  Internal risk rating systems.

·                  Information systems and analytical techniques that enable measurement of credit risk inherent in all relevant activities.

The Group’s internal controls that are implemented for the credit risk related processes include:

·                  Proper management of the credit-granting functions.

·                  Periodical and timely remedial actions on deteriorating credits.

·                  Independent, ongoing assessment of the credit risk management processes by Internal Audit, covering in particular the credit risk systems/models employed by the Group.

Active credit risk management is achieved through:

·                  The application of appropriate limits for exposures to a particular obligor, a group of associated obligors, obligors that belong in the same economic sector, etc.

·                  The use of credit risk mitigation techniques (such as collaterals and guarantees).

·                  The estimation of risk adjusted pricing for most products and services.

Since 2008, the Bank is following the Internal Ratings Approach (“IRB”) for the calculation of capital charges arising from credit risk in its corporate, SME Retail and mortgage portfolios which exceeds 80% of its risk weighted total loan portfolio on a standalone basis.

Market risk

Market risk is the current or prospective risk to earnings and capital arising from adverse movements in interest rates, equity and commodity prices and exchange rates, and their levels of volatility. The Group engages in moderate trading activities in order to enhance profitability and service its clientele. These trading activities create market risk, which the Group seeks to identify, estimate, monitor and manage effectively through a framework of principles, measurement processes and a valid set of limits that apply to all of the Group’s transactions. The most significant types of market risk for the Group are interest rate, equity and foreign exchange risk.

Interest rate risk is the risk related to the potential loss on the Group’s portfolio due to adverse movements in interest rates. A principal source of interest rate risk exposure arises from its trading and available-for-sale bond portfolios, as well as from the interest rate exchange traded and over-the-counter (“OTC”) derivative transactions.

More specifically, the Bank retains a portfolio of EFSF bonds, Greek T-Bills and government bonds and other EU sovereign debt, as well as moderate positions in Greek and international corporate bonds. Additionally, the Bank is active in the swap market and engages in vanilla and more sophisticated transactions for hedging and proprietary purposes and it maintains positions in bond and interest rate futures, mainly as a means of hedging and to a lesser extent for speculative purposes.

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Another entity that is a significant contributor to market risk in the Group is Finansbank, through its trading and available-for-sale portfolios. Finansbank is mostly exposed to interest rate risk that arises from the positions it retains in Turkish government bonds, denominated mainly in TRY, USD and EUR, and enters into swap transactions either for hedging the interest rate risk of its bond portfolio, or for proprietary trading.

Moreover, Finansbank draws liquidity in US dollars which are then converted into TRY through Cross Currency Interest Rate Swaps, in order to offer loans to its clientele. These Cross Currency Interest Rate Swaps also act as a hedge of the interest rate risk of Finansbank’s instalment loan portfolio.

Equity risk is the risk related to the potential loss due to adverse movements in the prices of stocks and equity indices. The Group holds a limited portfolio of stocks, the majority of which are traded on the ATHEX and retains positions in stock and equity index derivatives traded on the ATHEX, as well as, on international exchanges. The cash portfolio comprises of trading (i.e. short-term) and available-for-sale (i.e. long-term) positions. The portfolio of equity derivatives is used for proprietary trading, as well as, for the hedging of equity risk arising from the Group’s cash position and equity-linked products offered to its clientele. In the same context and to a lesser extent, the Group enters into OTC equity derivative transactions for trading and hedging purposes.

Foreign exchange risk is the risk related to the potential loss due to adverse movements in foreign exchange rates. The Open Currency Position (“OCP”) of the Bank primarily arises from foreign exchange spot and forward transactions. The OCP is distinguished between Trading and Structural. The Structural OCP contains all of the Bank’s assets and liabilities in foreign currency (for example loans, deposits, etc.), along with the foreign exchange transactions performed by the Treasury Division.

Foreign exchange risk on a Group level is mainly attributed to the Turkish Lira exposure, due to the investment in Finansbank, whereas the foreign exchange risk undertaken by the rest of the subsidiaries is insignificant.

The Group trades in all major currencies, holding mainly short-term positions for trading purposes and for servicing its institutional/corporate, domestic and international clientele. According to the Bank’s policy, the OCP should remain within the limits set by the Treasury Division and the Group Market & Operational Risk Management Division (“GMORMD”) at the end of each trading day. The same policy applies to all of the Group’s subsidiaries.

The Bank, in order to ensure the efficient management of market risk, calculates the Value at Risk (“VaR”) of its Trading and Available for Sale (“AFS”) portfolios on a daily basis, along with the VaR per risk type. This has been implemented through RiskWatch by Algorithmics (currently IBM). The VaR estimates refer to a 1-day holding period and a 99% confidence interval. The most significant types of market risk to which the Bank is exposed are interest rate, equity and foreign exchange risk.

On a Group level, Finansbank also calculates the VaR of its Trading and AFS portfolios on a daily basis, as well as the VaR per risk type (interest rate, equity and foreign exchange risk). These calculations are based on a 99% confidence interval and 1-day holding period. The engine used for all the calculations is the same as that of the Bank (i.e. RiskWatch).

The Bank has established a framework of VaR limits in order to control and manage more efficiently the risks to which it is exposed. These limits have been determined based on the Risk Appetite framework of the Bank; they refer not only to specific types of market risk, such as interest rate, foreign exchange and equity risk, but also to the overall risk of the Bank’s Trading and AFS portfolios. Finansbank has also established a framework of VaR limits, similar to the one that the Bank has in place.

In order to verify the predictive power of the VaR model, which is used for the estimation of market risk, the Bank conducts backtesting on a daily basis. Finansbank also performs back-testing on a daily basis, following a procedure similar to the one that the Bank has established.

The daily VaR estimations refer to “normal” market conditions. However, supplementary analysis is necessary for capturing the potential loss that might arise under extreme and unusual circumstances in the financial markets. Thus, the Bank conducts stress testing on a weekly basis, on both the Trading and Available for Sale portfolios, based on specific scenarios, depending on the type of risk factor (interest rates, stock index prices, exchange rates). Moreover, stress test analysis is performed by Finansbank on its Trading and Banking book, on a monthly basis.

Liquidity Risk

Liquidity risk is defined as the current or prospective risk to earnings and capital arising from the institution’s inability to meet its liabilities when they come due without incurring unacceptable losses.

It reflects the potential mismatch between incoming and outgoing payments, taking into account unexpected delays in repayments (term liquidity risk) or unexpectedly high outflows (withdrawal/call risk). Liquidity risk involves both the risk of unexpected increases in the cost of funding of the portfolio of assets at appropriate maturities and rates, and the risk of being unable to liquidate a position in a timely manner and on reasonable terms.

The Bank’s executive and senior management have the responsibility to implement the liquidity risk strategy approved by the Board Risk Committee (“BRC”) and to develop the policies, methodologies and procedures for identifying, measuring, monitoring and controlling liquidity risk, consistent with the nature and complexity of the relevant activities. The Bank’s executive and senior management is informed on a daily basis about current liquidity risk exposures ensuring that the Group’s liquidity risk profile stays within approved levels.

In addition, management receives a liquidity report on a daily basis, which presents a detailed analysis of the Group’s funding sources and counterbalancing capacity. Moreover, the Asset Liability Committee (“ALCO”) monitors the gap in maturities between assets and liabilities as well as the Bank’s funding requirements based on various assumptions, including conditions that might have an adverse impact on the

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Bank’s ability to liquidate investments and trading positions and its ability to access the capital markets. On a long term perspective, the Loans-to-Deposits ratio is monitored, which as of 31 December  2015, stood at 100.5% (excl. Finansbank 91.1%) and 90.1%, on a domestic (Greece) and a Group level respectively.

Since liquidity risk management seeks to ensure that the respective risk of the Group is measured properly and is maintained within acceptable levels then, even under adverse conditions, the Group must have access to funds necessary to cover customer needs, maturing liabilities and other capital needs, while simultaneously maintaining the appropriate counterbalancing capacity to ensure the above. In addition to the Bank’s liquidity pool, the rest of the Group’s subsidiaries maintain a ratio of available funds through repurchase agreements (AFTR) over total deposits at a minimum level of 9%.

The Bank’s principal sources of liquidity are its deposit base, Eurosystem funding in the form of repurchase agreements with the ECB and through the ELA mechanism and long term debt. ECB funding is collateralized mainly by EFSF/ESM bonds received from HFSF, whereas ELA funding is collateralized mainly by notes issued by the Bank and guaranteed by the Hellenic Republic, in the context of the Bank’s participation in the Hellenic Republic Bank Support Plan, as well as by Greek government bonds, T-Bills and loans.

During the first half of 2015, the structure of the Bank’s liquidity position has changed substantially. The reasons for this change were the economic turbulence and the uncertainty in the Greek banking sector that was caused by the ongoing negotiations between the Greek government and the Institutions. More specifically, the Bank faced significant deposit outflows of €8.4 billion, as well as the non renewal of about €3.6 billion of repurchase agreements with financial institutions. This in turn caused an increased dependence on Eurosystem funding and a commensurate deterioration of the Bank’s counterbalancing capacity. Furthermore, ECB lifted the waiver on accepting notes issued or guaranteed by the Hellenic Republic as collateral for repurchase agreements, which forced the Bank to cover its increasing funding shortfall through the ELA. In the height of the liquidity crisis, on 29 June 2015 due to the termination of the negotiations and ECB’s decision to freeze the level of ELA, Greek authorities imposed capital controls, in order to prevent a widespread bank run and to preserve the sustainability of the Greek banking system. Moreover, on 7 July 2015, ECB raised the haircuts on the notes issued or guaranteed by the Hellenic Republic, which subsequently further lowered the Bank’s buffer for ELA refinancing. In order to mitigate all the above developments, the Bank’s Eurosystem funding increased in the first half of 2015 by €13.3 billion and reached €27.6 billion as at 30 June 2015. However, even at that point, the Bank retained adequate buffer of ELA eligible collateral, of around €5.5 billion, in order to cover further outflows.

During the second half of 2015, while the capital controls remained in force, the liquidity position of the Bank was improved. Eurosystem funding was reduced by about €3.6 billion and ELA funding decreased by about €6.1 billion. The main driver for these developments was the Bank’s successful share capital increase that was completed in December 2015. The Bank not only enhanced its capital base, but also increased the amount of its ECB eligible collateral by receiving an amount of €2.7 billion of ESM bonds, under the relevant subscription agreement. Additionally, the Bank further reduced its liabilities through the LME, by replacing all of its long-term debt, except for the covered bonds, with equity. Finally, the Bank’s liquidity profile was further strengthened by a moderate increase of about €1 billion in its customer deposits and by further deleveraging. In this context, on 31 December 2015, the ECB funding stood at €12.5 billion, while ELA funding was €11.5 billion, amounting to a total exposure to the Eurosystem of €24.0 billion, whereas the Bank’s liquidity buffer stood comfortably at €8.4 billion (cash value), of which €0.1 billion was collateral eligible for funding with the ECB and €8.3 billion was collateral that could be posted in order to draw liquidity from ELA.

As far as the Group’s subsidiaries are concerned, they are mostly self-funded, except from Banca Romaneasca, which receives around €450 million from the Bank, through interbank transactions.

Counterparty Risk

Counterparty risk for the Group is due to OTC derivative transactions and other interbank secured and unsecured funding transactions and it arises from the obligor’s failure to meet its contractual obligations. For the efficient management of counterparty risk, the Bank has established a framework of counterparty limits. The GMORMD is responsible for setting and monitoring these limits.

Counterparty limits are based on the credit rating of the financial institutions as well as the product type. The credit ratings are provided by internationally recognized rating agencies, in particular by Moody’s and Standard & Poor’s. According to the Bank’s policy, if the agencies diverge on the creditworthiness of a financial institution, the lowest credit rating is considered.

Counterparty limits apply to all financial instruments in which the Treasury is active in the interbank market. The limits framework is annually revised according to the business needs of the Bank and the prevailing conditions in international and domestic financial markets. A similar limit structure for the management of counterparty risk applies across all of the Group’s subsidiaries.

The estimation of the exposure to each counterparty depends on the type of the financial product. In the case of money market placements, exposure is equal to the face amount of the transaction. In over-the-counter transactions, exposure is calculated based on Credit Equivalent Factors, according to the type of the transaction, its maturity, netting and collateralization.

The Group seeks to reduce counterparty risk by standardizing relationships with counterparties through International Swaps and Derivatives Association (“ISDA”) and Global Master Repurchase Agreement (“GMRA”) contracts, which encompass all necessary netting and margining clauses. Additionally, for almost all active counterparties that are financial institutions, Credit Support Annexes (“CSAs”) have been signed, so that net current exposures are managed through margin accounts on a daily basis, by exchanging cash or debt securities as collateral.

The Group avoids taking positions on derivative contracts where the values of the underlying assets are highly correlated with the credit quality of the counterparty (wrong-way-risk).

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Operational risk

Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

The Group, acknowledging the importance of operational risk, has established and maintained a firm wide and effective, high quality framework for its management, since 2006. Starting in 2009, the management of operational risk throughout the Group is supported by Algorithmic’s OpVar system. The specific software supports the overall operational risk management framework, which consists of the Loss Event Data Collection, the Risk and Controls Self Assessment annual process, the definition and monitoring of Key Risk Indicators, the Structured Scenario Analysis process and the determination and monitoring of Action Plans.

The Bank has adopted the Standardized Approach for the calculation of operational risk regulatory capital requirements, both on a solo and on a consolidated basis. In 2010 the Bank developed an internal model for calculating operational risk capital charges. Since this internal model assesses operational risk deriving from Group-wide operations in a more accurate way, it is used for assessing the “internal capital” required to cover operational risk under the Internal Capital Adequacy Assessment Processs.

Interest rate risk in the banking book

The Group systematically measures and manages the interest rate risk arising from its banking book items through:

·                  The analysis of re-pricing and liquidity gaps arising from its balance sheet structure.

·                  The measurement of economic value of equity and net interest income sensitivity under normal and exceptional changes in interest rates.

Risk related to the recognition of the main part of deferred tax assets as regulatory capital or as an asset

The Group currently includes deferred tax assets (“DTAs”) calculated in accordance with IFRS as adopted by the EU in calculating the Group’s capital and capital adequacy ratios. As at 31 December 2015, the Group DTAs was €5.1 billion, compared to €3.3 billion as at 31 December 2014.

The Bank reviews the carrying amount of its DTAs at each reporting date, and such review may lead to a reduction in the value of the DTAs on the Bank’s statement of financial position, and therefore reduce the value of the DTAs as included in the regulatory capital.

CRD IV (EU Directive 2013/36 and European Parliament Regulation 575/2013) provides that DTAs recognized for IFRS purposes that rely on the future profitability of a credit institution and exceed certain thresholds must be deducted from its CET1 (Common Equity Tier 1) capital. This deduction is implemented gradually until 2024.

The deduction introduced by CRD IV has a significant impact on Greek credit institutions, including the Group. However, as a measure to mitigate the effects of the deduction, article 27A of Greek Law 4172/2013, as amended by paragraph 1 of article 23 of Greek Law 4302/2014 and further amended by article 4 of Greek law 4340/2015 (the “DTC Law”) allows, under certain conditions, credit institutions to convert DTAs arising from Private Sector Initiative (“PSI”) unamortized losses, as well as accumulated provisions and other losses due to credit risk recognized as at 30 June 2015, for IFRS purposes, (the “Eligible DTAs” or “DTCs”) to final and settled claims against the Hellenic Republic (the “Tax Credits”). As at 31 December 2015 Group’s eligible DTAs amounted to €4.9 billion (2014: €3.3 billion). Eligible DTAs may increase in future periods due to the recognition of unrecognized DTAs on accumulated provisions and other losses due to credit risk existing as of 30 June 2015. Eligible DTAs may increase in future periods due to increases in applicable income tax rates. The main condition for the creation of Tax Credits is the existence of an accounting loss for a respective year, starting from accounting year 2016 and onwards, for which Tax Credits can be created in the following year, i.e., from 2017. The Tax Credits will be calculated as a ratio of IFRS accounting losses to net equity (excluding the year’s losses) and such ratio will be applied to the remaining Eligible DTAs in a given year to calculate the Tax Credit that will be converted in that year, in respect of the prior tax year. This new legislation allows credit institutions, including the Group, to treat such Eligible DTAs as not “relying on future profitability” according to CRD IV, and as a result such Eligible DTAs are not deducted from CET1, thereby improving an institution’s capital position.

In April 2015, the European Commission announced that it had sent requests for information to Spain, Italy, Portugal and Greece regarding their treatment of deferred tax credits for financial institutions under national law. Even though the European Commission had not launched a formal investigation, there can be no assurance that the tax provisions implemented by the law as described above, which was fashioned after the Portuguese DTC regulation, will not be challenged by the European Commission as illegal state aid.

If the regulations governing the use of DTCs as part of the Group’s regulatory capital should change, this may affect the Group’s capital base and consequently its capital ratios. As at 31 December 2015, 54.7% of the Group’s CET1 capital was comprised of DTC. Additionally, there can be no assurance that any final interpretation of the amendments described above will not change or that the European Commission will not conclude the treatment of the DTCs under Greek law illegal and as a result Greek credit institutions will ultimately not be allowed to maintain certain DTCs as regulatory capital. If any of these risks materialize, this could have a material adverse effect on the Group’s ability to maintain sufficient regulatory capital, which may in turn require the Group to issue additional instruments qualifying as regulatory capital, to liquidate assets, to curtail business or to take any other actions, any of which may have a material adverse effect on the Group’s operating results and financial condition and prospects.

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Related party transactions

Based on the existing regulatory framework, the Group must disclose any transaction between the Bank and all its related parties as defined in IAS 24, which took place during the fiscal year. Management’s total compensation, receivables and payables must be also disclosed separately. The following table presents the transactions between the Bank and its subsidiaries, while there are no significant transactions with its associates.

Subsidiaries

For further details, see Note 45.

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The external auditors

The Board of Directors’ Audit Committee reviews the independence of the external auditors (or “auditors”), as well as their relationship with the Group, including monitoring mandates for non-audit services and the amount of audit and non-audit fees paid to the auditors.

Corporate social responsibility

NBG fully recognizes the value of Corporate Social Responsibility (“CSR”) as a key factor in generating sustainable growth for the Group, and has been applying increasingly systematic management techniques in its approach to the concept of Social Responsibility, an issue that has long been high on the Bank’s agenda.

Standing by its commitments, NBG continued in 2015—within the framework of its strategy—its wide ranging community actions, attaining the targets set to promote economic development, support actions designed to foster environmentally friendly growth, further enhance the quality of its workforce, offer even more efficient services to its customers, and contribute, in general, to the community.

Below are listed some of the key CSR actions carried out by the Bank:

·                  With initiatives to facilitate financing of enterprises, professionals and households, as well as measures to provide support to vulnerable social groups, the Bank has contributed to limiting the adverse impact of the financial crisis. Specifically:

·                  In the area of financing Small-Medium Enterprise’s (“SMEs”) (with turnover below €2.5 million), which are having to operate within a harsh economic environment, the Bank, recognizing the difficulties these companies are facing, continued to support healthy enterprises that have been put under strain by the domestic financial crisis, by providing essential liquidity, as well as enterprises facing difficulties in servicing their financial obligations, by offering favorable terms regarding their debts. In addition, NBG continued to support the liquidity of enterprises and subsequently their operation by enabling them to restructure debts that are in an early phase of default, while continuing to offer packages designed to facilitate the repayment of debts in arrears via rescheduling/restructuring. Rescheduling/restructuring of customer debts handled by the Small Business Lending (“SBL”) Division as at 31 December 2015 totaled €560 million. These do not include restructured/rescheduled debts that have in the meantime been transferred to bad debt.

·                  The Bank provided liquidity to SMEs through participation in «Co-funded Schemes» that extended loans/credit at particularly low interest rates and with remarkable results so far through:

·                  The JEREMIE General Entrepreneurship initiative aiming at meeting the needs for working capital of healthy micro, small and medium-size domestic enterprises or at financing the acquisition of fixed assets. Such loans are co-funded 50% by the European Investment Fund via the National Strategic Reference Framework (NSRF) 2007—2013 and 50% by NBG funds.

·                  ETEAN SA funding programs, and specifically:

·                  ACTION Z “TEPIX Business Restarting” aiming at meeting working capital needs of business growth and financing investment plans of micro, small and medium-size enterprises.

·                  Action H “TEPIX - Island Tourism Entrepreneurship” aiming at supporting micro and small enterprises which are active in the tourism sector in the Greek islands.

·                  Total new SME lending under ETEAN SA programs and the JEREMIE initiative in 2015 amounted to €14 million.

·                  In 2015 NBG continued to implement the assistance program for the cross-border commerce of healthy domestic SMEs and MidCap Businesses whose trading partners face problems accepting Greece country risk. This program is backed by the provision of European Investment Bank (“EIB”) guarantees in favor of NBG with selected foreign Correspondent Banks. At the same time, NBG offers to SMEs and freelancers the comprehensive “NBG Sight Account” platform, enabling them to carry out their bank transactions while enjoying a number of privileges and favorable terms.

·                  In addition, the Bank recognizes the dynamic and growth potential of agriculture as a key pillar of the primary sector of the Greek economy. Accordingly, it has been implementing over the last years an expanded action plan to support and develop the agricultural sector, through financing tools and solutions covering the whole range of banking operations. In this context, in 2015, by means of its Contract Farming financing program, farmers and livestock breeders were granted a total of €3 million to cover the production cost of their produce. More than 1,000 producers of agricultural or livestock produce have joined the said program, which is implemented in cooperation with 15 selected food processing or trading businesses of the agricultural and livestock sector.

·                  With a view to optimizing the handling of loans that require special management and providing real support to Greek businesses and the economy in general, NBG set up a number of Corporate Special Assets Divisions. In collaboration with companies that are facing operational and financial problems and are having difficulty paying their dues, the said Divisions seek to formulate effective rescheduling and restructuring programs that help place the companies back on a sustainable trajectory. The Corporate Special Assets Divisions carry out assessment of the firms in question by considering various data such as the viability of the firms, their ability to service their debts, market conditions, competition, the sector of activity and so on. Thereafter, they propose loan rescheduling solutions to the firms in the framework of their financial and operational restructuring efforts. Backed by the operation of these new units, the Bank is pursuing faster and more effective handling of its distressed loans, so as to remove obstacles to growth and development. At 31 December 2015, the total balance of rescheduled customer dues handled by the Corporate Special Assets Division was €1.8 billion.

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·                  With a view to creating value for the Bank and its employees through the enhancement of knowledge, competences and experience, 1,009 training sessions were carried out where attendance levels reached 24,241 (of which 6,614 participations concerned in-house training sessions, 641 were run by external providers, and 16,958 in-house e-learning courses and 28 e-learning courses run by external providers) equivalent to 259,490 training man-hours and a total investment of €4 million.

·                  In the context of the implementation of its Environmental Policy and Environmental Management Program in 2015, the Bank also carried out the following actions:

·                  The development of processes/transactions with a view to reducing operating costs, rationalizing printing and saving natural resources (paper) was continued in 2015.

·                  Recycling programs were implemented with the participation of employees. For example 116 tonnes of paper, 4,771 kg of small and large batteries, and approximately 79,3 tonnes of electronic and electrical equipment were recycled. In addition, 1,941.6 kg of low voltage lamps and lighting equipment were recycled through the expansion of recycling across the Bank’s branch network. All these recycling programs were implemented in cooperation with licensed contractors.

·                  As an additional measure aiming at reducing travel and commuting by the Bank’s staff and customers, the Bank continues to expand and upgrade its alternative networks that have been integrated under an umbrella of electronic services (i-bank) that provide round-the-clock services via five state-of-the-art banking services networks: the ATM network, Internet Banking, the APS network, Phone Banking and Mobile Banking. Indeed, in 2015 no less than 236,280 new users signed up for the Bank’s Internet, Phone and Mobile Banking.

·                  Despite the persistent, extremely adverse economic climate the Bank stood by its commitment to social support, implementing in 2015 a sponsorship program amounting to €9 million. The Bank supported a wide range of corporate social responsibility initiatives, both directly and indirectly via its funding of the activities of the NBG Cultural Foundation (MIET) and its Historical Archives. The three core lines of action focused on the Community, Cultural Heritage and Environment. Specifically:

Community

·             SOCIETY

·                  Strengthening of actions to upgrade health services.

·                  Development of social solidarity programs.

·                  Supporting the work of bodies and organizations with distinguished track records in the alleviation of social problems.

·                  Supporting vulnerable social groups and individuals (the elderly, children, individuals with special needs).

·             SCIENCE — RESEARCH — TRAINING

·                  Sponsorship for scholarship programs for bachelor and master’s degrees in Greece and abroad.

·                  Contribution to the enhancement of the education provided and support for educational programs.

·                  Sponsorship for research programs, awards, and support for innovative ideas.

·                  Support for scientific work and promotion of research, predominately in the form of sponsoring scientific meetings (conferences, summer schools, seminars, workshops) covering the entire spectrum of sciences.

·                  Sponsorship for the publication of books and special editions.

·             SPORTS

·                  Continuation of multiannual sponsorship to sports organizations.

Cultural Heritage

·             CULTURE — HISTORY —ART

·                  Sponsoring the preservation and showcasing of the historical and cultural heritage.

·                  Sponsoring the preservation and restoration of monuments, and sponsoring of archaeological excavations.

·                  Sponsorship support for initiatives involving publications of cultural and historical interest.

·                  Supporting actions and events that involve music and the performing arts.

·             MISCELLANEOUS

·                  Support for publications, conferences and other events dealing with investment and financial issues.

Environment

·                 Support for environmental training programs.

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·                 Participation in the rehabilitation of ecosystems in regions of Greece devastated by fire.

·                 Contribution to actions designed to support biodiversity.

·                 Support for the work of bodies that are involved in environmental preservation and sustainable development actions.

·                 The Bank, within the scope of its Environmental Policy launched in 2015 the following green banking products, which contribute to environmental protection:

·                  Loan for participation in the “Energy-Saving at Home” program, in collaboration with the National Fund for Entrepreneurship and Development (ETEAN S.A. - former TEMPME), with 383 approvals for 2015, amounting €2 million in total.

·                  “Green Loan”: a loan granted under favorable terms for financing the purchase and installation of energy-saving equipment.

·                  “Photovoltaic Home” loan for the installation of Photovoltaic Systems in homes.

·                  “Estia Green Home”: a loan for the purchase, repair or construction of energy upgraded homes.

·                  DELOS “Green Energy” Mutual Fund.

·                 The Bank participates in the JESSICA Program (Joint European Support for Sustainable Investment in City Areas) by managing the Urban Development Funds of Attica, Western Greece, the Ionian Islands and the Environment through an agreement with the European Investment Bank. The total assets under management for the Program amount to €83 million.

·                 For yet another year the Bank contributed to the country’s efforts to improve its environmental footprint by financing RES projects worth €126 million.

Awards and Distinctions

In recognition of its ongoing endeavor to meet the needs of its customers and shareholders, and to provide full and transparent information on its CSR actions, NBG received a number of important awards and distinctions in 2015.

·        NBG wins “BRAVO “ awards

The “Bravo Sustainability Awards” aim at highlighting and rewarding best practices developed in Greece to promote Sustainable Development, Social Cohesion, the creation of standards of responsible behavior and improvement of the quality of life. NBG submitted its participation files for assessment of its best practices developed in the context of CSR actions. The following actions were evaluated and awarded:

·                  In the BRAVO SOCIETY category, NBG’s multiannual sponsorship program for the construction of a New Surgical Wing at Evangelismos General Hospital;

·                  In the BRAVO MARKET category, NBG’s Ombudsman.

·        Platinum Award in the field of Business Ethics to NBG and award to NBG’s Ombudsman Office by the Hellenic Institute for Business Ethics

After a general review of various of its services, NBG was awarded certification by “EBEN GR”, the Greek Chapter of European Business Ethics in line with the SEE G model for 2015, earning the Platinum Prize for Business Ethics. Notably, NBG is the first Greek bank to get this certification for the second consecutive year and at the same time win this top prize for business ethics. The SEE G model evaluates businesses on the basis of the following key features: Social, Ethics, Environment and Governance, assessing the policies, procedures and systems implemented so as to encourage companies to align themselves with and actively support sustainable development and business responsibility. In the context of this award the Bank’s sponsorship program for the Construction of the New Surgical Wing at Evangelismos General Hospital, Athens, was assessed as a particularly innovative CSR action, and presented to the audience at the award ceremony. In addition, the NBG Ombudsman Office was evaluated as an independent body — for the second consecutive year — and found to meet all required specifications (policies, procedures and systems) enabling it to be certified by “EBEN GR” at the level of Basic Model for Small and Medium Companies for 2015 and to receive the award in the business ethics category.

·        Ethos Sustainability Premier Award 2015

The Gold Award, awarded within the framework of the “9th Ethos Sustainability Forum and Awards 2015”, serves yet again as recognition of NBG’s initiatives to integrate Corporate Social Responsibility in its business strategy, by fostering activities that generate benefit for the community, the environment, its employees, and the market in which it operates. As part of this ceremony, NBG received the Bronze Award in the “2015 CSR Campaign” category for the “Together for Children” program, an action that has now been running successfully for three consecutive years, and takes place three times a year in collaboration with SKAI media corp.

·        Global Business Excellence Awards

With two nominations for CSR actions and following the evaluation of the respective entries, NBG received two important international distinctions:

1.              Global Business Excellence Award for Outstanding HR Initiative for the “NBG + IKY (State Scholarships Foundation): Scholarship Program and Labor 2+2” sponsorship program rolling over several years.

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2.              Global Business Excellence Award for Outstanding Community Initiative for the “Construction of a New Surgical Wing at Evangelismos General Hospital” sponsorship program rolling over several years.

The Global Business Excellence Award is one of the world’s key business excellence awards. Winners are selected by independent experts in line with strict criteria for each category and area, focusing on economic outcomes, innovation, labor relations, investments and social benefits.

·        HR Community Awards 2015

In the context of HR Community Awards 2015, the Group Corporate Social Responsibility Division submitted five entry files and, following their assessment, NBG was awarded the following significant distinctions:

·                  Gold award in the “Health and Safety” category

·                  Silver award in the “Balance between Work and Private Life” category

·                  Silver award in the “HR Training and Development” category

·                  Silver award in the “Intranet as an HR Tool” category

·                  Silver award in the “Corporate Social Responsibility” category.

These significant distinctions for NBG’s HR programs confirm once again the consistent and long-lasting dedication of the Bank’s Management and bodies to the principles of social responsibility and respect and recognition for the efforts of its staff in enabling the growth of the organization and the achievement of its targets.

·        Hellenic Responsible Business Awards

These awards were established in 2015 to enable businesses from all Greek market sectors to communicate their CSR strategies and highlight those displaying a high level of responsibility and innovation. In this context, NBG was awarded with the following:

·                  Gold award in the “Corporate Responsibility/Society/Large Corporation” category for the rolling sponsorship program for the Construction of a new Surgical Wing at Evangelismos General Hospital.

·                  Gold award in the “Corporate Responsibility/Training-Scholarships/Large Corporation” category for the rolling sponsorship program for “IKY-NBG 2+2” scholarships.

·                  Silver award in the “Corporate Responsibility/Culture” category for the rolling sponsorship program for the archaeological excavation and restoration works in Ancient Messene.

·        Health and Safety Awards 2015

NBG received the WINNER award in the “Banking” business category for its action “NBG care for the staff’s Health and Safety” and the Gold Award for its action “Mandatory training of NBG staff on First Aid” in the “Training and Awareness initiatives” category.

·        HR Awards 2015

·                  Silver prize in the Effective Use of e-learning category for “Digital Skills Training”.

·                  Silver award in the Best Youth Employment Initiative category for the “IKY-NBG 2+2” program.

·                  Silver award in the Best Apprenticeship/Internship Program category for “NBG’s Summer Post-Graduated Internship Program”.

·                  Bronze award in the Best Internal Use of Academies category for NBG’s specialized training course “Credit Academy”.

·                  Bronze award in the Excellence in Employee Work-Life Balance category for “NBG Actions and Care for balance between Work and Private Life”.

Dividends

There were no distributable funds available by the end of 2014. Therefore, the Annual Ordinary General Meeting of the Bank’s shareholders held on 19 June 2015 took no decision on dividend distribution.

Corporate Governance

Introduction

In accordance with article 43a, section 3(d) of Company Law 2190/1920, as amended, the Bank is obliged to include the Corporate Governance Statement, as a specific part of the annual Board of Directors’ Report. As per the said article, the Bank’s Corporate Governance Statement includes the following sections:

A.                 NBG’s Corporate Governance Code (“CGC”);

B.                 NBG’s Corporate Governance Practices;

C.                 General Meeting of Shareholders and Shareholders’ rights;

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D.                 Board of Directors and other management, administrative and supervisory Bodies;

E.                  Internal Control System and Management of Risks.

It is noted that additional information in relation to public offers for acquisitions, as mandated by Article 10 of the European Directive 2004/25/EC, is included in a separate section of the Board of Directors’ Report, namely, the Supplementary Report to the Annual General Meeting of Shareholders.

A.             NBG’S CORPORATE GOVERNANCE CODE

The Bank’s corporate governance framework is aligned with the requirements of Greek and European legislation, the rules of the Hellenic Capital Market Commission (“HCMC”), the Corporate Governance Code, as well as the Bank’s Articles of Association and regulations. Furthermore since 2013, combined with the abovementioned, the specific regulatory framework with the stipulations of the RFA between the Bank and the HFSF, and the obligations of the Bank towards the Monitoring Trustee, which are currently incorporated in the approved by the European Commission Restructuring Plan of the Bank, is applied. Moreover, due to the fact that NBG remains registered with the US Securities and Exchange Commission (“SEC”), the Bank is also subject to US legal and regulatory framework (Sarbanes Oxley Act and SEC rules).

In February 2006, the Bank’s Board of Directors (“the Board”) adopted a directional framework that describes the Bank’s corporate governance structure and policy. This framework was based on international best practices and fosters continuity, consistency and efficiency in the modus operandi of the Board and also the governance of the Bank and the Group. In March 2011, in compliance with the provisions of the corporate governance framework, the Board adopted the Corporate Governance Code of the Bank, which was thereinafter amended in November 2013, with a view to bringing it into line with the RFA between the Bank and the HFSF as well as with the Bank’s obligations towards the Monitoring Trustee and in December 2014 in order to incorporate the changes in the regulatory framework (especially Law 4261/2014, which transposed CRD IV into Greek law), further adopt international best practices, such as the Senior Independent Director, as well as to better reflect the Bank’s organizational structure. In 2015, an annual review and update of the Bank’s Corporate Governance Code and specifically it was amended partly in September 2015. It is noted that a further amendment of the Bank’s Corporate Governance Code is already in about to be launched in compliance with the new provisions of Greek Law 3864/2010 and the updated RFA between the Bank and the HFSF.

The Bank is in compliance with the Corporate Governance Code and provides explanations for any exceptions identified in accordance with Greek Law 3873/2010. Within the context of its Corporate Governance Code, the Bank is in the process of developing a high level Chart of Authorities and Responsibilities of the Management at Group level, which is expected to be adopted by the Board in 2016, along with the relevant software.

In the context of the current Corporate Governance Code, the Board has in place a self-assessment system for its operation, as well as the operation of its Committees based on a methodology, which has been formed and approved by the Corporate Governance and Nomination Committee. Every three years, the assessment of the performance of the Board and its Committees, is carried out in-depth by an external advisor, the selection and monitoring of whom falls within the responsibilities of this Committee. The assessment is carried out with the use of a methodology based on the best practices and includes interviews with the Board members and the use of detailed questionnaires, covering all the activities of the Board and its Committees.

In July 2014 the Corporate Governance and Nomination Committee updated the assessment process of the Board, which covers the Annual self-assessment of the Board’s performance, the annual evaluation of the knowledge, abilities and experience of each Board member, as well as the assessment of the Board by an external advisor.

Furthermore, in 2015, the current composition of the Board was reviewed with respect to the current legal and regulatory framework and particularly to the Greek Law 3016/2002, Greek Law 4261/2014 as well as the RFA between the Bank and the HFSF and the internal regulations of the Bank’s corporate governance. Specifically, a complete analysis of the level of compliance of the Board’s and its Committees’ current composition in connection with the current legal and regulatory framework and particularly to the Greek Law 3016/2002, Greek Law 4261/2014 as well as the RFA between the Bank and the HFSF, was presented to the Corporate Governance and Nomination Committee. The results of this assessment pointed out the current high level of compliance in accordance the abovementioned regulatory framework.

Taking into consideration the amendments of Greek Law 3864/2010 and the revised RFA between the Bank and the HFSF the update of this process is already being launched and is expected to be finalized in the first quarter 2016.

The Corporate Governance Code can be viewed on the Bank’s website: www.nbg.gr (section: The Group / Corporate Governance / Regulations & Principles).

B.             NBG’S CORPORATE GOVERNANCE PRACTICES

In its endeavor to maintain corporate governance excellence and enhance its existing risk management framework, the Bank has adopted the following main corporate governance policies and practices, which are aligned with its activities and ensure the transparency and effectiveness of its operations.

·        Directors’ Nomination Policy

The Directors’ Nomination Policy is based on the Corporate Governance Code and the Corporate Governance & Nominations Committee Charter. In December 2014, the Director’s Nomination Policy has been updated, in order to incorporate the relevant provisions of Law 4261/2014, which transposed into Greek law Directive 2013/36/EU (CRD IV), the Bank of Greece Executive Committee’s Act No.

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22/12.7.2013 “Procedures (a) for the authorization of credit institutions in Greece and (b) for the acquisition of a holding in an existing credit institution — Prudential assessment of the liable persons”, as well as international best practices, taking into account the EBA Guidelines on the assessment of the suitability of members of the management body and key function holders (EBA / GL / 2012/06), while it also reaffirms the important role of the Board’s Corporate Governance and Nomination Committee (“CGNC”) and its Chairman in the selection of candidate members for the Bank’s Board. The policy is to be updated in 2016 in the context of the new provisions of Law 3864/2010 and the new Relationship Framework Agreement with the HFSF.

·        Conflict of Interest Policy for Senior Executives

The Conflict of Interest Policy for Senior Executives aims at enhancing the Bank’s Internal Controls System, as well as preventing and managing potential conflicts of interest between the Bank and its Senior Executives, which could potentially have an adverse impact on the reputation and interests of the Bank as well as its clients, shareholders and employees.

Reference of the Conflict of Interest Policy for Senior Executives on the Bank’s website: www.nbg.gr (section: Compliance Division).

·        Connected Borrowers

In alignment with the provisions of the RFA with the HFSF and the contractual obligations that the Bank has undertaken towards the Monitoring Trustee, taking into account the current legal and regulatory framework, the Policy for Connected Borrowers of the Bank and the Group in Greece has been adopted.

The Policy aims to ensure that Connected Borrowers are not treated preferentially in comparison to non-Connected Borrowers, i.e. the same criteria as those stipulated by the relevant Credit Policies of the Bank shall apply for Connected Borrowers. The Policy establishes the basic rules applying in extending credits and in the treatment of forbearance and restructuring requests concerning loans of Connected Borrowers, while monitoring of appropriate implementation of the Policy is facilitated through special functionality that has been developed in the Bank’s system for this purpose.

·        Code of Ethics

The Code of Ethics has been formulated on the basis of the fundamental values that the Bank upholds in its business activities and the provisions of national, European and international legislation and regulations which, accordingly, concern management and employees throughout the Bank and its Group in order to protect the interests of their employees, clientele and shareholders, ensure the proper operation of the financial environment, and maintain and enhance the reliability, solvency and goodwill of the Bank and its Group. The Code was updated in December 2015.

The Code of Ethics is available on the Bank’s website www.nbg.gr (section: The Group / Corporate Governance / Regulations & Principles).

·        Code of Ethics for Financial Professionals

The Code of Ethics for Financial Professionals aims at preventing situations where conflict of interest may arise where the interests of the Covered Persons are not aligned with those of the Bank and the Group, as well as in the cases of unauthorized disclosure of confidential information obtained or created in connection with the Covered Persons’ duties. Furthermore, it stipulates that the information contained in public announcements and in official reports and documents is complete, accurate, timely and comprehensive, and that all such information is presented in accordance with applicable rules and regulations.

The Code of Ethics for Financial Professionals is available on the Bank’s website www.nbg.gr (section: The Group / Corporate Governance / Regulations & Principles).

·        Whistleblowing Policy

The Bank, in compliance with the U.S. legal and regulatory framework and SEC rules as well as the relevant provisions of Bank of Greece Governor’s Act 2577/09.03.2006, as amended, has established a Whistleblowing Policy that sets out procedures for the submission of confidential reports or comments by any party, whether anonymously or not. These reports mainly relate to behaviors employed by the Bank’s and the Group’s executives and employees that raise concerns about irregular or illegal actions related to accounting and auditing matters, which are inconsistent with international practices and regulations. The policy covers also the provisions of Greek Law 4261/2014.

The Audit Committee of the Bank is responsible for the adoption and ongoing monitoring of the implementation of these procedures, which safeguard the confidentiality and anonymity of the received reports or comments.

The Bank’s website, at www.nbg.gr (section: The Group / Corporate Governance / Contact / Contact Audit Committee), provides the contact information for the submission of confidential reports.

·        Bank and Group Anti-Bribery Policy

The Bank and Group Anti-Bribery Policy aims at further enhancing the current corporate governance procedures of the Bank and Group, and in particular, the current framework that sets out the various rules adopted in order to address bribery issues, as stipulated in the relevant provisions of the Code of Ethics and the Bank’s Labour Regulation.

The Bank’s website www.nbg.gr (section: NBG Group Compliance) provides additional information on the Anti-Bribery Policy.

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·        Bank and Group Remuneration Policy

The Bank’s and Group’s Remuneration Policy was amended in 2012 to become fully aligned with the provisions of Bank of Greece Governor’s Act 2650/19.01.2012. Additionally, the new Policy is consistent with Greek Laws 3723/2008 and 3864/2010, the RFA between the Bank and the HFSF and the Bank’s obligations towards the Monitoring Trustee. In any case, remuneration of the Chairman, the Chief Executive Officer (“CEO”) as well as other members of the Board of Directors, the General Managers and their deputies should not exceed the Bank of Greece Governor’s remuneration. Any other type of additional remuneration (bonus) of the aforementioned persons is abolished for the period during which the institution participates in the Recapitalization Plan of Greek Law 3864/2010, and as far as dividend is concerned, the provisions of the Article 1, (par. 3) of the Greek Law 3723/2008 apply proportionally. Additionally, the Bank’s remuneration practices are in compliance with all applicable regulatory framework (especially Greek Law 4261/2014, which transposed European Directive 2013/36/EU (CRD IV)), while also complying with the new Commitments towards the Bank’s Monitoring Trustee. The amendment of the Policy has already been scheduled to be completed within 2016, taking into consideration the developments that have taken place considering the amendments to the RFA between the Bank and the HFSF, the relevant European regulatory framework, as well as based on new regulatory texts, which are expected to be published in 2016.

Information on the Bank and Group Remuneration Policy and general remuneration practices is available on the Bank’s website at www.nbg.gr (section: The Group / Investor Relations / Annual Reports and Offering Circulars).

·        Corporate Social Responsibility Policy

The Bank has adopted a Corporate Social Responsibility Policy that reflects the keystones of the CSR framework, determines the CSR Action framework for the Bank and the Group and provides guidelines to NBG and its subsidiaries for the delegation of authorities and responsibilities for the planning, implementation and control of these Actions. In 2016 its amendment has been programmed in the context of international best practices and principles.

The CSR policy is posted on the Bank’s website, at www.nbg.gr (section: The Group / Corporate Social Responsibility / CSR framework).

·        Insurance Cover for members of the Board of Directors of the Group companies

In compliance with the provisions of the CGC, the Bank has entered into a multi-insurance contract in order to cover the civil liability of the Directors and Executives of all the Group entities, the civil liability for claims against the Bank and its subsidiaries arising from negligence, error or oversight by Executives and employees, and damages arising from fraud, including electronic fraud.

C.       GENERAL MEETING OF SHAREHOLDERS AND SHAREHOLDERS’ RIGHTS

The Bank’s Articles of Association (articles 7-17 and 31-36) describe the modus operandi of the General Meeting of Shareholders (“GM”), its key responsibilities and authorities as well as the Shareholders’ rights, taking into consideration especially the provisions of Company Law 2190/1920, Greek Law 3864/2010 and the RFA between the Bank and the HFSF. The Bank’s Articles of Association are available on the Bank’s website www.nbg.gr (section: The Group / Corporate Governance / Regulations & Principles).

·        General Meeting (“GM”) of Shareholders functioning and responsibilities

The GM is the Bank’s supreme, collective body. Its lawful resolutions are binding to all Shareholders, even to those absent or dissenting. All of the Bank’s Shareholders are entitled to participate in the GM. Shareholders may be represented at the GM by other, duly authorised persons, in line with the applicable provisions of law. Each share entitles the holder to one vote as stipulated by law. The Bank ensures the equal treatment of Shareholders who are in the same position.

The GM is the sole corporate body vested with authority to decide on:

·             amendments to the Bank’s Articles of Association. Such amendments shall be deemed to include share capital increases or decreases, except the share capital increase for which the Board decides as per the relevant legislation and the Articles of Association;

·             election of the members of the Board and the auditors;

·             approval of the Group and the Bank’s annual financial report;

·             appropriation of the annual profits;

·             merger, split-off, transformation, revival, extension of duration or dissolution of the Bank;

·             appointment of liquidators; and

·             any other matter provided for by law.

The provisions of the previous paragraph do not apply to:

a)             capital increases by Board resolution pursuant to paragraphs 1 and 14 of Article 13 of the Company Law 2190/1920 as well as capital increases imposed by provisions of other laws;

b)             amendments to the Articles of Association introduced by the Board under para. 5 of Article 11, pars 2 and 13 of Article 13 and para. 4 of Article 17b of the Company Law 2190/1920;

c)              the election of Directors in replacement of Directors resigned, deceased or having forfeited their office for whatever reason,

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in line with the provisions of the Articles of Association pursuant to para. 7 of Article 18 of the Company Law 2190/1920;

d)             the absorption of a company fully owned by another company as per Article 78 of the Company Law 2190/1920; and

e)              the option for distribution of profits or non-mandatory reserves within the current financial year by resolution of the Board, subject to prior GM authorisation.

The GM decides on all Board proposals included in the agenda. It is convened by the Board, or as otherwise provided for by law, regularly at least once a year, always within six months of the end of each financial year. Ordinarily, it is held at the Bank’s registered office or in the region of another municipality within the prefecture where the Bank’s registered office is located. The GM may also be convened extraordinarily whenever deemed necessary, at the discretion of the Board. Moreover, at the auditors’ request, the Board is obliged to convene a GM within ten (10) days as of the date such request was submitted to the Chairman of the Board, determining the agenda thereof as per the auditors’ request. Furthermore, the representative of the HFSF to the Board has the right to convene the GM In line with para.4 of article 7 of Greek Law 3864/2010, as amended by Greek Law 4340/2015 and 4346/2015. The minimum time limits for the calling of the General Assembly is seven days and the deadline for the convocation of the GM that will decide the share capital Increase for the issuance of common shares, convertible bonds or other financial instruments, is ten (10) calendar days. The deadline for the convocation of every repeat or adjourned is reduced to the one third (1/3) of the deadlines stipulated in Company Law 2190/1920, as in force. The previous subparagraph is applied in every GM convened in the context of Greek Law 3864/2010 or related thereto.

The Annual General Meeting (“AGM”) reviews and approves the annual financial report. The AGM elects at least one auditor and one substitute auditor, as specifically provided for under par. 1 of Article 33 of the Articles of Association. Following approval of the annual financial report, the AGM, by special voting, by roll call and as per the Articles of Association, decides on the discharge from personal liability of the Board and the auditors. Discharge is invalid in the cases provided for under Article 22a of the Companies Act 2190/1920. Entitled to participate in the voting process on the discharge are the members of the Board as well as Shareholders - Bank employees only by shares, of which they are holders or as other Shareholders’ representatives, provided that they have received relevant authorization that includes express and specific voting directions.

With the exception of repeated GMs and GMs deemed similar thereto, the GM shall be called at least 20 days before the date set for it. The said 20-day period shall be inclusive of non-business days, but exclusive of the date the invitation is published and the date the GM is held.

The invitation to the GM, including the information provided for by law from time to time, including inter alia the place where the GM is to be held, i.e. the premises along with the exact address, the date and time thereof, the items on the agenda, clearly specified, and the shareholders entitled to participate therein, along with precise instructions as to the method of participation and exercise of the rights thereof in person or by legally authorized proxy or even by distance participation, is displayed in a conspicuous place at the Bank’s Head Office and published as per the legal stipulations. In addition, the Bank, at its own discretion and without being under relevant obligation by law, is also entitled to publish specific invitation to the GM in other media as well. In that case, the publication must be carried out 20 full days before.

Any person appearing as a Shareholder (i.e. holder of ordinary registered shares of the Bank) in the registry of the Dematerialized Securities System managed by Hellenic Exchanges S.A. (“HELEX”), in which the shares of the Bank are being held, as on the record date stipulated in Article 28a.4 of the Company Law 2190/1920, and timely and duly complying with the formalities of Article 28a of the Company Law 2190/1920 and the relevant invitation to the GM and of article 7 of Greek Law 3864/2010in case of a GM that decides the share capital Increase for the issuance of common shares, convertible bonds or other financial instruments as well as every GM convened the context of Greek Law 3864/2010 or related thereto.

Under article 1 of Greek Law 3723/2008, the Bank’s preference shares entitled the representative of their holder (the Hellenic Republic) to attend the Meeting and to exercise its veto right regarding specific matters as per the provisions of art. 1 of Greek Law 3723/2008. This right is still in force also for the period of time for which the collaterals of Hellenic Republic are provided in line with article 2 of Greek Law 3723/2008.The HFSF exercises its voting right in the GM as stipulated in article 7a of Greek Law 3864/2010 and the RFA between the Bank and the HFSF.

The procedure and deadline for submitting the legalization documents of proxies and representatives of the Shareholders are set out in par. 1 to 3 of Article 28a of the Company Law 2190/1920. In particular, shareholder status should be confirmed (e.g. via written certification from HELEX) at the latest by the third (3rd) day prior to the GM. The said deadline shall also apply to Shareholders’ representatives’ or proxies’ legalization documents being deposited at the Bank. Specifically, the shareholder capacity must be in effect during the registration date, as this is defined in the Notice of the General Meeting. Shareholders that have not adhered to the above provisions, may participate in and vote at the GM subject to permission thereof. Shareholders that are legal entities may participate in the GM by up to three (3) representatives each.

Upon relevant decision of the Board, the shareholders may participate in the GM by electronic means without attending the Meeting in person at the place where it is held. In addition, following relevant decision of the Board the shareholders may vote at the GM by distance voting, either by exercising their voting rights by electronic means or by mail, as per the applicable provisions of law.

The annual financial report which incorporates a) the Certifications of the Board of Directors, b) Board of Directors’ Report, c) Supplementary Report, d) Independent Auditor’s Report, e) the financial statements and the notes thereto, f), Summary Financial Data, g) Information required by article 10 of Law 3401/2005 and h) Availability of the Annual Financial Report are available to Shareholders ten (10) days prior to the AGM, upon request.

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Twenty-four (24) hours before each GM, a list of the names of the Shareholders entitled to vote thereat, along with each Shareholder’s number of shares and votes, the names of their proxies, where applicable, and the said Shareholders’ and proxies’ addresses is displayed in a conspicuous place at the Bank’s Head Office. The Board includes in the said list all the Shareholders that have adhered to the above provisions. As of the date the invitation to the GM is published until the day the GM is held, the Bank is required to have the information provided under article 27 par. 3 of the Company Law displayed on its corporate website, and to inform the Shareholders through its website of the way the relevant material can be provided in case access to such information via the internet is impossible due to technical reasons. Should a Shareholder or proxy thereof object to the list, such objection may be raised only at the commencement of the GM and prior to the deliberation on the agenda.

The Chairman of the Board provisionally chairs the GM. Should s/he be unable to attend the GM, s/he will be replaced by her/his substitute as per par. 2 of Article 21 of the Articles of Association or by the CEO. Should such substitute be also unable to attend, the GM will be provisionally chaired by the Shareholder that owns the largest number of shares, or by the proxy thereof. Two of the Shareholders or proxies present, designated by the Chairman, act as provisional secretaries. Following the ratification of the list of Shareholders, the GM promptly elects the Chairman and two (2) secretaries, the latter also acting as vote counters.

The GM forms a quorum and validly deliberates on the items on the agenda when Shareholders owning at least 1/5 of the paid-up capital are present or represented thereat. Should there be no such quorum, the GM must reconvene within twenty (20) days as of the date of the meeting that was cancelled, by at least ten (10) full days’ prior invitation to this effect; at such repeat meeting, the GM forms a quorum and validly deliberates on the original agenda irrespective of the portion of the paid-up share capital represented. In the event that no quorum is formed, if the place and time of the repeat meetings prescribed by law are specified in the original invitation, no further invitation is required, provided the repeat GM takes place at least (10) full days after the cancelled GM.

Exceptionally, with respect to resolutions concerning:

a)             a change in corporate nationality;

b)             a change in corporate activities;

c)              an increase in Shareholder liability;

d)             a share capital increase, not provided for by the Articles of Association, as per para. 1 and 2 of Article 13 of the Company Law 2190/1920, as amended, or unless imposed by law or implemented through capitalization of reserves;

e)              a decrease in share capital, unless carried out in accordance with par. 6 of Article 16 of the Company Law 2190/1920;

f)               a change in the profit appropriation method;

g)              a corporate merger, split-off, transformation, revival, extension of duration or dissolution;

h)             delegation or renewal of powers to the Board to decide for the share capital increase as per para. 1 of Article 13 of the Company Law 2190/1920, as amended; and

i)                 in any other case provided for by law;

the GM forms quorum and validly deliberates on the agenda when Shareholders representing 2/3 of the paid-up share capital are present or represented thereat. Should no quorum be formed at the first meeting, as described in the preceding paragraph, a first repeat meeting must convene within twenty (20) days as of the first meeting, with at least ten (10) full days’ prior invitation, and forms quorum and validly deliberates on the original agenda when at least 1/2 of the paid-up share capital is represented thereat. If, again, no quorum is formed, a second repeat meeting must convene within twenty (20) days, with at least ten (10) full days’ prior invitation, and forms quorum and validly deliberates on the original agenda when at least 1/5 of the paid-up share capital is represented thereat. In the event that no quorum is formed, if the place and time of the repeat meetings prescribed by law are specified in the original invitation, no further invitation is required, provided that the repeat GM takes place at least (10) full days after the cancelled GM.

Resolutions are adopted by absolute majority of the votes represented at the GM. Exceptionally; resolutions on items that require increased quorum are adopted by a majority of 2/3 of the votes represented at the GM.

Specifically for the resolutions for the share capital increase mentioned in para. 2 of article 7 of Greek Law 3864/2010, including the resolutions for the issuance contingently convertible bonds or other convertible financial instruments, are taken by the GM, representing at least 1/5 of the paid-up share capital and with absolute majority of the votes represented in the GM. If this is not the case, para. 2 of article 29 of Company Law 2190/1920 is applied.

·                  Minority Rights

The shareholders’ rights of minority are in accordance with the applicable provisions of the Company Law 2190/1920 as amended and also with the relevant Articles of Association.

At the request of Shareholders representing 1/20 of the paid-up share capital, the Board is obliged to convene an extraordinary GM setting the date thereof not later than forty-five (45) days as of the date on which the request was submitted to the Chairman of the Board. The request indicates the items on the agenda.

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At the request of Shareholders representing 1/20 of the paid-up share capital, the Board shall add to the agenda of the GM that has been convoked additional items, provided the respective request is submitted to the Board at least 15 days prior to the said GM and meets the requirements of Article 31 par.2 of the Articles of Association.

By request of shareholders representing one 1/20 of the paid-up share capital, the Board shall, pursuant to article 27 par.3 of the Company Law 2190/1920, provide shareholders at least 6 days prior to the date of the General Meeting draft resolutions on the items included in the initial or the revised agenda, provided the respective request has been submitted to the Board at least 7 days prior to the date of the General Meeting. The Board is under no obligation to take any of these steps if the content of the respective request by shareholders clearly infringes the law and decent conduct. Specifically for the GMs convened in accordance with article 7 of Greek Law 3864/2010, the 6 and 7 days that are stipulated above, are reduced to 3 and 4 days respectively.

At the request of Shareholders representing 1/20 of the paid up share capital, the Chairman of the GM shall postpone, only once, decision-making by the GM, whether it is annual or extraordinary, for a new GM to be held on the date indicated in the Shareholders’ request, but not later than thirty (30) days as of the said postponement. Specifically for the GMs convened in accordance with article 7 of Greek Law 3864/2010, the above 30 days are reduced to 3 days.

The GM held following such postponement, being a continuation of the previous GM, is not subject to publication requirements as regards the invitation to Shareholders, and new Shareholders may also participate therein subject to the provisions of articles 27.2, 28 and 28a of the Company Law 2190/1920.

At the request of Shareholders representing 1/20 of the paid-up share capital, decision-taking on the GM agenda shall be by roll-call.

At the request of any Shareholder filed to the Bank at least five (5) full days before the date of the GM, the Board provides the GM with any such specific information on the Bank’s business as may be requested, insofar as it serves for real assessment of items on the agenda. Specifically for the GMs convened in accordance with article 7 of Greek Law 3864/2010, the above 5 days are reduced to 3 days. The Board may provide a single answer to shareholders’ requests that are of similar content. No such obligation to provide information applies in the event that the said information is already available on the company’s website, particularly in the form of questions and answers. Moreover, at the request of Shareholders representing 1/20 of the paid up share capital, the Board informs the GM, provided it is an annual one, of the amounts paid by the Bank to each Director or the Managers of the Bank over the last two years, and of any benefits received by such persons from the Bank for whatever reason or under any agreement with the Bank. In all of these cases the Board is entitled to decline the provision of the information requested, for good reasons, which are recorded in the minutes. Depending on the circumstances, one such good reason may be the requesting Shareholders’ representation on the Board as per para. 3 or 6 of Article 18 of the Company Law 2190/1920.

At the request of Shareholders representing 1/5 of the paid-up share capital, filed with the Bank at least five (5) full days before the GM, the Board shall provide the GM with information on the current status of corporate affairs and assets. Given the fact that the deadline of at least five (5) full days before the GM of para. 4 of article 39 of Company Law 2190/1920 is applied, especially for the GMs convened in accordance with para.7 of Greek Law 3864/2010 the above deadline of three (3) days will be applicable. The Board may decline to supply the information requested for good reasons, which are recorded in the minutes.

In the cases of subparagraph 5 of par. 6, and of subparagraph 2 of par. 7 of Article 39 of the Bank’s Articles of Association, any dispute as to the validity of the reason for declining to provide the Shareholders with the information requested shall be settled by a judgment rendered by the competent court of the place of the Bank’s registered office. By virtue of the said judgment, the Bank may be required to provide the information it had declined.

Under all circumstances, when requesting shareholders exercise their rights as above, they are required to produce proof of their shareholder capacity and number of shares. A certificate to this effect from the organization where the relevant securities are held or verification of shareholder status through direct electronic link-up between the records held by such organization and the Bank may also serve as such proof.

The Shareholders representing at least 1/20 of the paid-up share capital are entitled to file with the competent court a petition for an audit of the Bank in accordance with the procedure provided for by law. The said audit is ordered if the acts alleged by the petitioners are deemed likely to contravene provisions of the law, or of Articles of Association, or of GM resolutions. Under all circumstances, audit requests as above must be filed within three (3) years of approval of the annual financial statements for the year in which such acts allegedly occurred.

Shareholders representing 1/5 of the paid up share capital may file with the competent court a petition for an audit if the overall corporate performance suggests that the management of corporate affairs has not been based on sound or prudent practices.

Shareholders requesting an audit as above shall provide the court with proof of ownership of the shares entitling them to the audit request.

·                  Other Shareholder Rights

Additional information on the Shareholder rights and their exercise is included in the Supplementary Report for the annual GM, as required by article 4 of Greek Law 3556/2007, which is part of the Bank’s Annual Board of Directors’ Report.

·                  Enhancement of procedures concerning convocation of General Meetings and Shareholder Services

With the purpose of further enhancing procedures relating to convocation of General Meetings of shareholders and Shareholder services, the Bank has proceeded with development of a special application that facilitates carrying out General Meetings of shareholders, and further enhances Shareholder Services and monitoring of the Bank’s Shareholder Register. The new application will enable faster and more

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efficient provision of information to interested shareholders, more effective monitoring of the Bank’s shareholder structure and automation of monitoring procedures with regards to compliance with the applicable Capital Market regulatory framework, through incorporation of relevant control mechanisms in the Bank’s Shareholder Register.

D.             BOARD OF DIRECTORS AND OTHER MANAGEMENT, ADMINISTRATIVE AND SUPERVISORY BODIES

·                  Board of Directors of the Bank

The Bank is managed by the Board of Directors, which is responsible for ensuring strategic direction, management supervision and adequate control of the Bank, with the ultimate goal of increasing the long-term value of the Bank and protecting the corporate interest at large, in compliance with the current legislation and regulatory framework, including the provisions of the RFA between the Bank and the HFSF and the obligations of the Bank towards the Monitoring Trustee.

The Board’s tasks, key responsibilities and authorities are stated specifically in Company Law 2190/1920, Greek Law 4261/2014, EU Regulation 468/2014, Greek Law 3016/2002, Greek Law 3864/2010, as in force, Greek Law 3723/2008 and the RFA between the Bank and the HFSF and as described in detail in the Bank’s Articles of Association and Corporate Governance Code which are available on the Bank’s website, at www.nbg.gr (section: The Group / Corporate Governance / Regulations and Principles).

·                  Board of Directors’ Operation

The members of the Board of Directors are elected by the Bank’s General Meeting of Shareholders for a term that cannot exceed three years and ends at the ordinary General Meeting of Shareholders of the year in which such term expires. All members are eligible for re-election. The General Meeting of Shareholders determines each time the exact number of the members of the Board of Directors (the Board of Directors may consist of a minimum of nine (9) up to a maximum of 15 members and must always be an odd number) and its independent members. A representative of the Hellenic Republic, and an HFSF Representative also participate in the Bank’s Board of Directors, in line with Greek Laws 3723/2008 and 3864/2010 respectively, as in force. In accordance with the new RFA between the Bank and the HFSF, a further representative of the HFSF will be appointed as observer (HFSF Observer) to the Board of Directors of the Bank.

The Board of Directors’ members can be revoked anytime by the GM. In the event that a member ceases to participate in the Board of Directors, due to resignation, disease or having forfeited their office for whatever reason, and in case its replacement by deputy members, that have potentially been elected by the GM is impossible, the rest of the members may either temporarily elect another member to cover the unoccupied seat for the period of time that remains until the replaced member’s term of office ends, or may continue the Bank’s management and representation without replacement of the said members, on condition that the remaining members are at least nine. In the event of temporary election of a new member, the election remains in force for the period of time that remains until the replaced member’s term of office ends and fulfillment of the position is announced by the Board of Directors in the following GM, which is able to replace elected members, even in the case where the relevant issue is not included as an item on the GM agenda. In any case, the remaining members, regardless of their number, are able to proceed to convocation of a GM, with the sole purpose of electing a new Board of Directors.

The Board of Directors elects, by absolute majority from its members, the Chairman and the Chief Executive Officer who manages the Bank. Moreover, the Board of Directors may elect one or more Vice Chairmen and Deputy Chief Executive Officers. The Bank constantly monitors developments internationally in the field of corporate governance and adopts best practices and continuously updates its corporate governance framework, in which context, as well as in accordance with the current regulatory framework, it distinguishes the role of the Chairman from that of the Chief Executive Officer.

Constitution of the Board of Directors into a body takes place in its first meeting, which is convoked after every election of Board of Directors’ members by the GM, as well as in each case that the place of the Chairman or the Chief Executive Officer becomes unoccupied for whatever reason. Until the election of a new Chairman or Chief Executive Officer by the Board, the relevant duties are carried out by their Deputies.

The Board of Directors convenes as prescribed by the Greek legislation, the Bank’s Articles of Association and the Corporate Governance Code, as well as according to the provisions of the RFA between the Bank and the HFSF and the obligations of the Bank towards the Monitoring Trustee. The Board is convened (a) by the Chairman, upon invitation send by the Board of Directors Secretary to the Board members at least three (3) business days before the meeting. The invitation shall mention with clarity the items on the Agenda, otherwise decisions cannot be reached unless all Board of Directors’ members are present or represented at the meeting and no member objects to decision-making or (b) by the Chairman or his/her deputy upon request by two (2) members, within seven (7) days from the submission of the written request and including all proposed items on the Agenda to the Chairman or his/her deputy or (c) by the Chairman upon request of the HFSF representative within seven (7) days from the submission of the request to the Chairman. In case the Board of Directors Chairman does not proceed with convocation of the Board upon request of two (2) members or the HFSF representative within the above deadline or does not include in the invitation all proposed items on the Agenda, then the two (2) members or the HFSF representative respectively are able to convene the Board within five (5) days from termination of the above deadline of seven (7) days. The invitation shall be notified to all Board of Directors members.

Any member may request from the Chairman to include one or more items on the Agenda of the next Board meeting. Two (2) or more members may demand from the Chairman to include one or more items on the Agenda of the next Board meeting. The HFSF representative also has the right to include items on the Agenda and, to that end, must send to the Chairman of the Board of Directors in writing the proposed/additional items at least two (2) business days before the meeting. The Chairman of the Board of Directors must include those items on the Agenda of the scheduled Board meeting.

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The Board of Directors forms a quorum and validly deliberates when ½ plus one of the Board of Directors members are present or represented at the Board of Directors meeting. The number of members attending shall in any case not be less than five (5). The conditions applying for representation of Board of Directors members and validity of decision-making, are stated in the Bank’s Articles of Association.

In the context of further enhancing the efficient operation of the Board of Directors, in 2015 the Bank proceeded with the acquisition of a special system which supports operation of the Board of Directors. The use of this system is expected to enhance procedures for providing Board of Directors members with appropriate information and notifications, and facilitate exchange of opinions and commenting on issues placed under consideration of the Board of Directors and Board Committees and better monitoring of issues discussed at the level of the Board of Directors and its Committees.

·                  Responsibilities of the Board of Directors

The Board is, indicatively, responsible for:

·             reviewing and approving the strategic direction of the Bank and the Group, including the business plan, the annual budget and the key strategic decisions as well as providing guidance to the Bank’s and the Group’s Management;

·             reviewing the Group’s corporate structure, monitoring its embedded risks and ensuring the cohesiveness and effectiveness of the Group’s corporate governance system;

·             acquiring shareholdings in other banks in Greece or abroad, or divestment thereof;

·             establishing Branches, Agencies, and Representation Offices in Greece and abroad;

·             establishing associations and foundations under Article 108 and participating in companies falling under Article 784 of the Greek Civil Code;

·             approving the Bank’s internal labour regulations;

·             nominating General Managers and other executives of the Bank, as appropriate in line with the applicable framework and accordingly following proposals by the Bank’s responsible bodies;

·             reviewing and approving the Group and the Bank’s annual and interim financial report;

·             issuing Bonds of any type, with the exception of those for which the Bank’s GM is exclusively responsible in accordance with Greek law;

·             approving and reviewing a Code of Ethics for the employees of the Bank and the Group and the Code of Ethics for financial professionals;

·             approving the Bank’s and the Group’s Corporate Social Responsibility (CSR) Policy; and

·             approving and reviewing the NBG Group Remuneration Policy upon decision of its non-executive members, following recommendation by the Human Resources & Remuneration Committee of the Board.

The Bank’s Board is supported by competent Committees, which have been established and operate for this purpose, the operation of which is in accordance with legislation and the regulatory framework, including the provisions of the RFA between the Bank and the HFSF and the obligations of the Bank towards the Monitoring Trustee.

Moreover, pursuant to article 1 of Greek Law 3723/2008, article 10 of Greek Law 3864/2010, and the RFA with the HFSF, the representatives of the Hellenic Republic and the HFSF can, inter alia, veto the decision making process of the Board in relation to dividend appropriation and remuneration of the Chairman of the Board and Board members, the Chief Executive Officer, the Deputy Chief Executive Officer as well as the General Managers and their substitutes.

·                  Directors Nomination

The nomination procedure and the qualification criteria for Directors (excluding the HFSF and Hellenic Republic Representatives) are subject to specific rules that are set out by Greek Laws 4261/2014, 3016/2002, 3864/2010, the Executive Committee Act No 22/12.7.2013 of the Bank of Greece, the EU Regulation 468/2014, the RFA between the Bank and the HFSF, the Bank’s Articles of Association, the Corporate Governance Code and the Directors’ Nomination Policy. Each nominee shall fulfil such criteria that ensure the appropriate governance and guidance of the Bank’s strategy in respect of economic, business and policy issues, so as to insure the required approval of the supervisory authorities in national and European level.

According to para. 1(b) of Article 9 of the Bank’s Articles of Association, the GM is the sole corporate body vested with the authority to decide on the election of the members of the Board of Directors and their substitutes, as well as for the definition of independent non-executive members. Exceptionally, according to the provisions of para. 3 of Article 18 of the Bank’s Articles of Association and para. 7 article 18 of Company Law 2190/1920 on Companies Limited by Shares, in the event that as a result of resignation, death or having forfeited their office for whatever reason a director ceases to be on the Board and his replacement by substitute directors elected by the GM is not feasible, the remaining directors may, either provisionally elect another director to fill the vacancy for the remaining term of office of the director replaced, or continue to manage and represent the Bank without replacing the missing director(s), provided that the number of the remaining directors shall be at least nine.

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Moreover, according to Company Law 2190/1920 on Companies Limited by Shares, each shareholder can propose to the GM one candidate for Board of Directors membership and this right (to propose one candidate to the GM), is also given to the Board of Directors. To this end, according to the Bank’s Corporate Governance Code, the Board of Directors, assisted by the Corporate Governance and Nominations Committee (“CGNC”), proposes to the GM candidate Directors on the basis of the Nominations Policy which requires them to meet the “fit and proper” criteria and not have systematic conflict of interests with the Bank. It is not necessary for the Board of Directors to submit a separate proposal for the positions of Chairman of the Board and Chief Executive Officer.

After the election of the new members of the Board of Directors by the GM, the Board of Directors in its first meeting elects its Chairman and the Chief Executive Officer who manages the Bank, by absolute majority among its members. According to the Bank’s Corporate Governance Code, the Bank distinguishes the role of the Chairman of the Board and the role of the Chief Executive Officer. Moreover, the Board of Directors has the authority to elect Vice Chairman(men) and Deputy Chief Executive Officer(s).

In selecting and proposing to the GM potential members of the Board, or in appointing new members in replacement of members who for whatever reason cease to be on the Board, the Board shall endeavor to propose candidates who meet the fit and proper requirements, as set out in the Directors’ Nomination Policy, who do not have any systematic conflict of interest with the Bank and whose nomination ensures that the Board as a collective body presents especially the following basic profile:

·             has in-depth knowledge of the financial industry, counting amongst its members individuals who are or have been active in leadership positions in financial institutions;

·             possesses significant business and professional experience and is socially distinguished, including, among its members, individuals that are serving or have served as Chairmen, CEOs or senior managers of large organizations and have built a reputation that demonstrates the ability to form judgments over important and sensitive matters upon which the Board is called to decide;

·             has a full understanding of the Bank’s client base structure and dynamics, and of the main geographic markets in which the Bank is currently active;

·             has considerable international experience and is able to contribute to NBG’s aspirations in the geographical region in which the Bank is active;

·             has the financial expertise required to provide effective oversight of a diversified financial services Group that operates on an international scale;

·             ensures, as far as possible, an adequate representation of the two genders.

The Bank’s Corporate Governance Code, as well the Nomination policy describe specific suitability criteria that shall be met by candidates as regards professional competencies that are incompatible with the position of Board member at the Bank, criteria concerning independence of non-executive members, participation of candidates in other Boards, as well as other cases that are incompatible with the position of Board member. All the above aim to ensure exceptional composition of the Board of Directors.

Further, the amendment of the Bank’s Corporate Governance Code and the Director’s Nomination Policy, in compliance with the new provisions of Greek Law 3864/2010 and the revised RFA between the Bank and the HFSF, are currently underway and are expected to be completed within the first quarter of 2016.

·                  Evaluation of the Board of Directors and its Committees

According to the Bank’s Corporate Governance Code, the Board of Directors has a self-assessment system to evaluate the effectiveness of its work and the work of its Committees, based on a methodology formulated and approved by the Corporate Governance and Nominations Committee.

Further, the amendment of the Bank’s Corporate Governance Code in compliance with the new provisions of Greek Law 3864/2010 and the revised RFA between the Bank and the HFSF is currently underway and is expected to be completed within the first quarter of 2016.

Finally, according to Greek Law 3864/2010, as amended, the HFSF, with the assistance of an independent advisor, will evaluate the Bank’s corporate governance arrangements. In particular, the evaluation will involve the size, organization, structure, and allocation of tasks and responsibilities within the board and its committees in view of the business needs of the credit institutions. The evaluation will extend also to the individual members of the boards and the committees concerned. The HFSF, with the assistance of the independent advisor, will also determine the criteria for the evaluation of the corporate governance framework and the evaluation of members of the Board and its Committees, in line with the international best practices. Based on that assessment, the HFSF, may make proposals for improvement and modifications of the Bank’s corporate governance framework.

·                  Directors Remuneration

The Board formulates a proposal on the remuneration of its members for the services they provide, which is submitted to the GM. This proposal is formulated in compliance with the applicable regulatory framework and the relevant undertakings of the Bank vis-à-vis the Monitoring Trustee and in line with the Bank’s Remuneration Policy, the regulation of the Human Resources & Remuneration Committee of the Board, as well as industry best practices, in a way that adequately reflects the time and effort the members are expected to contribute to the work of the Board, while at the same time promoting effectiveness of the Board’s operations. The remuneration of the Board’s Chairman, the Chief Executive Officer and the Deputy Chief Executive Officers are determined by non-executive members of the Board.

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According to para. 3c of Article 1 of Greek Law 3723/2008 and para. 3b of Article 10 of Greek Law 3864/2010, the representatives of the Hellenic Republic and the HFSF can, inter alia, exercise their veto right in the Board decision making process with regards to the distribution of dividends and the remuneration policy for the Chairman, the Chief Executive Officer, the Deputy Chief Executive Officers and other members of the Board of Directors and the General Managers and Assistant General Managers. According to the Greek banks recapitalization program as amended, it is prohibited for the Bank to award variable remuneration to Board of Directors members, the Chief Executive Officer, the Deputy Chief Executive Officers, General Managers or Assistant General Managers. Compensation of the aforementioned persons shall in no case exceed compensation of the Governor of the Bank of Greece. With regards to executive members of the Board, the Bank has, as mentioned below, adopted a Remuneration Policy which determines their remuneration within the broader context of determining senior executives’ remuneration, and with the aim of promoting meritocracy and creating a culture and mentality of focusing on performance. Furthermore, it is noted that remuneration of Board members is in line with the commitments of the Bank towards the Monitoring Trustee and the RFA between the Bank and the HFSF.

During 2015, no variable remuneration was granted to the Chairman and the executive members of the Board, while the remuneration of non-executive directors does not include bonuses in accordance with the Remuneration Policy of the Bank.

On 19 June 2015, following a proposal by the Board after relevant recommendation of the Board’s Human Resources and Remuneration Committee, the Annual General Meeting of Shareholders approved the remuneration of the members of the Board of Directors of the Bank for financial year 2014, according to para. 2 of Article 24 of Company Law 2190/1920, and determined the remuneration of the Chairman of the Board, the Chief Executive Officer, the Deputy Chief Executive Officers and non-executive Directors until the Annual General Meeting of 2016. Additionally, the Annual General Meeting approved the remuneration of the Bank’s Directors in their capacity as members of the Bank’s Audit Committee, Corporate Governance & Nominations Committee, Human Resources & Remuneration Committee, Board Risk Committee, and Strategy Committee for financial year 2014, and determined their remuneration until to the AGM of 2016, as per the relevant regulatory framework.

·                  Continuous education and training of Board members

The Bank offers to the new Board members an introductory informative program concerning issues of risk governance, monitoring of the Bank’s business plan, financial and accounting, compliance and corporate governance, Code of Conduct, organizational structure and governance, as well as matters of internal and external audits. Furthermore, the new Board members are provided with informational material that includes the basic rights and obligations of Board members in the Bank. The introductory program includes visits to the main branches of the Bank and Group subsidiaries. The Bank provides all Board members with business training in order to improve the Board’s supervisory level, which are continuous and concern the above customary operational areas of the Bank.

·                  Board of Directors - Structure

Pursuant to the Bank’s participation in the Hellenic Republic Bank Support Plan as per Greek Law 3723/2008, the Hellenic Republic has the right to participate in the Board through the appointment of a representative, who has veto powers on corporate decisions relating to executives and senior management compensation and dividend policy. The Hellenic Republic representative may also influence the Group’s strategic decisions. Mrs. Angeliki Skandaliari was appointed as the Hellenic Republic representative on the Bank’s Board in accordance with the said law, in replacement of Mr. Alexandros Makridis.

Furthermore, pursuant to Greek Law 3864/2010 and the RFA between the Bank and the HFSF, the HFSF appointed Mr. Charalampos Makkas as its representative to the Bank’s Board. The HFSF representative is entitled to participate in the Board Committees and committees which do not solely comprise executive members.

In the context of overseeing the implementation of the restructuring plan of the banking sector, and specifically, the implementation of any other commitments undertaken by the Greek Government relating to the Bank’s operations, Grant Thornton has been appointed as “Monitoring Trustee” with a view to ensuring compliance of the Bank with the aforesaid commitments. More specifically, the Monitoring Trustee is responsible for monitoring the implementation of the commitments concerning an effective internal control system, the implementation of the appropriate credit, deposit and risk management policies, scaling down Government assistance, control over payment of dividends, interest payments and the acquisition of own financial instruments. The Monitoring Trustee does also have access to all the relevant files and records and is entitled to interview credit analysts and risk officers.

The current Board, whose term expires in 2018, constituted into a body on 19 June 2015.

It is noted that, on 26 January 2016, Mr. Andreas Boumis submitted his resignation, whereas during 2015, the following changes took place as regards composition of the Board:

·             Mrs. Alexandra T. Papalexopoulou-Benopoulou submitted her resignation as independent non-executive Board member, on 17 July 2015.

·             Mr. Andreas Boumis was elected as independent non-executive Board member, on 19 June 2015.

·             Mrs. Paula Hadjisotiriou submitted her resignation as executive Board member and Deputy CEO, on 28 May 2015.

·             Mr. Petros Christodoulou submitted his resignation as non-executive Board member, on 30 April 2015.

·             Mrs. Louka T. Katseli was elected as non-executive Chairman of the Board in replacement of Mr Georgios Zanias, who submitted his resignation as non-executive Chairman of the Board, at the meeting of the Board of Directors held on 23 March 2015.

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·             Mr. Leonidas Fragkiadakis was elected as Chief Executive Officer in replacement of Mr Alexandros Tourkolias, who submitted his resignation as CEO, at the meeting of the Board of Directors held on 23 March 2015.

·             Mr. Stefanos Vavalides, submitted his resignation as independent non-executive Board member, on 23 March 2015.

·             Mr. Alexandros N. Makridis, submitted his resignation from the Board on 25 February 2015, which was approved by the Minister of Finance on 2 March 2015. In his replacement, Mrs. Angeliki Skandaliari was appointed as the Hellenic Republic’s representative to the Bank’s Board, pursuant to Greek Law 3723/2008, which was published in the Government Gazette on 4 March 2015 (Board of Directors meeting on 23 March 2015).

The following table sets forth the current Board of Directors:

Board of Directors of the Bank

During 2015, the Bank’s Board convened twenty seven times in total.

During 2015, the BoD Committees convened forty four times in total.

18.2% (2 out of 11) of the Board Members are women.

A budget exists for the Board and no advisors were hired by the Board for the year 2015.

Directors’ short CVs have been posted on the Bank’s website, at www.nbg.gr (section: The Group / Corporate Governance / Board of Directors).

·                  Board Committees

Five Committees have been set up and operate at Board level. Respective charters have been posted on the Bank’s website, at www.nbg.gr (section: The Group / Corporate Governance / Board of Directors / Committees). The Committee’s members are remunerated annually for

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their participation in each. Furthermore, in the context of Greek Law 3864/2010, as in force, a Board of Directors Committee responsible for monitoring of Non-Performing Loans (“NPL’s”) will be established.

It shall be noted that, an update of the aforementioned Committees’ Charters in line with the new provisions of Greek Law 3864/2010 and the revised RFA between the Bank and the HFSF is in progress and is expected to be completed within the first quarter of 2016.

Board Risk Committee

The Board Risk Committee (“BRC”) was established by Board decision (meeting no. 1308/20.7.06) in accordance with the requirements of Bank of Greece Governor’s Act No. 2577/9.3.2006.

The BRC convenes regularly at least on a monthly basis, as well as extraordinarily, whenever deemed necessary by its Chairman.

During 2015, the BRC convened eleven times. In 2015 the Committee was informed in detail on a regular basis, and consulted, concerning the risk appetite of the Bank, reviewed the Risk Appetite Statement & Metrics for the year 2015, as well as the Risk Strategy of the Group and provided relevant information to the Board of Directors. Furthermore, the Committee approved the Risk Management Report concerning the Internal Capital Adequacy Assessment Process” (ICAAP) 2014, as well as the Internal Liquidity Adequacy Assessment Process (“ILAAP”) 2014 , which were approved by the Board meeting held on 30 April 2015.

Since 19 December 2013 the Committee has been composed exclusively of non-executive Board members, at least three in number, the majority of which (including the Chairman) are independent members of the Board, in accordance with the definition of independence specified in the Bank’s Corporate Governance Code. The members and the Chairman of the Committee are elected by the Board of the Bank, following recommendation by the Board’s Corporate Governance & Nominations Committee. All members should have adequate knowledge and prior experience in banking and financial services, while at least one member as an expert (Mr Sabatacakis and Mr Makkas) should have significant experience in risk and capital management, as well as knowledge of the local and international regulatory framework.

Detailed information on the responsibilities, composition and modus operandi of the Committee are included in the Charter of the Committee available on the Bank’s website at www.nbg.gr (section: The Group / Corporate Governance / Board of Directors / Committees).

Human Resources & Remuneration Committee

The Human Resources & Remuneration Committee (“HRRC”) was established by Board decision (meeting no. 1259/ 5.5.2005).

The Committee solely consists of non-executive members of the Board, which are at least three in number, and in their majority (including the Chairman) are independent Board members, in accordance with the definition of independence specified in the Bank’s Corporate Governance Code. The Committee composition includes members possessing experience in the financial sector, while at least one member possesses significant expertise, skills and professional experience in risk management and audit activities, in order to be able to contribute to the alignment of remuneration with the risk and capital profile of the Bank.

The members and Chairman of the Committee are elected by the Board of the Bank, following recommendation by the Board’s Corporate Governance & Nominations Committee. The Committee members shall be selected on the basis of their competence and experience.

The Committee convenes at least three times a year and keeps minutes of its meetings.

In 2015, the HRRC convened four times. During the year, the HRRC approved the Board of Directors and Board of Directors Committee members’ remuneration for fiscal year 2014 and determined remuneration of the Chairman, the Chief Executive Officer, Deputy Chief Executive Officers and non-executive members of the Board until the General Meeting of 2016. Further, the Committee dealt with the contracts, renewals, promotions and appointments of General Managers and Assistant General Managers of the Bank.

Detailed information on the responsibilities, composition and modus operandi of the Committee are included in the charter of the Committee posted on the Bank’s website, at www.nbg.gr (section: The Group / Corporate Governance / Board of Directors / Committees).

Corporate Governance & Nominations Committee

The Corporate Governance & Nominations Committee (“CGNC”) was established by Board decision (meeting no. 1259/ 5.5.2005). The Committee is composed of at least three Board members. The members and Chairman of the Committee are elected by the Board of the Bank. All members of the Committee are non-executive Board members, and in their majority independent members of the Board, in accordance with the definition of independence specified in the Bank’s Corporate Governance Code. They are appointed for a one-year term of office, which can be renewed indefinitely. The Committee convenes at least three times per annum and keeps minutes of its meetings.

In 2015, the CGNC convened seven times. During the year, the Committee updated the Bank’s Corporate Governance Code as regards the procedures for convocation of the Board and its Committees, which was approved by the Board at its meeting held on 24 September 2015. Furthermore, the Committee reviewed the current composition of the Board in line with the existing legal and regulatory framework, especially with Greek Law 3016/2002, 4261/2014 and the RFA between the Bank and the HFSF, as well as in line with the internal regulations of the Bank on corporate governance.

Detailed information on the responsibilities, composition and modus operandi of the Committee are included in the Committee’s charter posted on the Bank’s website, at www.nbg.gr (section: The Group / Corporate Governance / Board of Directors / Committees).

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Strategy Committee

The Strategy Committee was established by Board decision (meeting no. 1387/ 29.9.2009). The Committee supports the executive Board members in developing the Group’s strategic options, assists the Board in taking decisions on all issues related to NBG Group strategy and regularly reviews the implementation of the Group’s strategy by the Group’s management team. The Committee is composed of seven members, of which three are independent non-executive Board members. The Chief Executive Officer participates ex officio as a member in the Committee. The Committee is chaired by the Chair of the Board of Directors.

The Committee members are appointed by the Board upon recommendation of its Chairman, who consults with the Corporate Governance & Nominations Committee to this effect. The Committee members shall be selected on the basis of their competence and experience and appointed for a one-year term of office, which can be renewed indefinitely. The Committee convenes at least three times per annum and as regularly as deemed necessary in order for matters to be discussed prior to their assessment by the Board and reports regularly to the Board.

In 2015, the Strategy Committee convened six times. During the year, the Committee was involved in matters such as strategic restructuring, decisions concerning NBG Group companies, and the 2015 budget. Furthermore, the Committee was involved in matters such as organization and management of IT projects, the IT Master Plan, IT projects of subsidiaries, compliance with the Capital Controls framework, and in further designing and project planning. The Committee reviewed and updated the Group’s strategic pillars in connection to the recapitalization of Greek banks in 2015. Lastly, in accordance with current developments, the Committee proceeded with strategic planning of the Management’s next actions.

Detailed information on the responsibilities, composition and modus operandi of the Committee are included in the Committee’s charter posted on the Bank’s website, at www.nbg.gr (section: The Group / Corporate Governance / Board of Directors / Committees).

Audit Committee

The Audit Committee was established in 1999 and operates in accordance with the provisions of the Bank of Greece Governor’s Act No. 2577/2006, Law 3693/2008 (article 37) and the Sarbanes-Oxley Act (“SOX”).

The members of the Committee are elected by the GM upon recommendation of the CGNC to the Board Chairman. The Chairman and the Vice Chairman of the Committee are appointed by the Board. The Committee is currently composed of three non-executive Directors, two of whom are independent and one of whom (Mr Petros Sabatacakis) is the financial expert, advisor on issues related to the US Securities and Exchange Commission. The Committee’s members are appointed for a one-year term of office, which can be renewed indefinitely. The Committee employs a specialised consultant who reports directly to the Chairman of the Committee. The Committee convenes regularly at least six times per annum or extraordinarily, whenever deemed necessary, keeps minutes of its meetings and reports to the Board every three months or more frequently if deemed necessary.

The election of the members of the Committee in accordance with the provisions of Greek Law 3693/2008 was carried out by decision of the GM of 19 June 2015, following recommendation by the Board’s Corporate Governance & Nominations Committee and the Board. The members were appointed for a one-year term of office.

During 2015, the Audit Committee convened sixteen times. During the course of the year, the Committee updated its Charter, which was submitted and approved by the Board on 29 January 2015. In June 2015, the Committee reviewed the Annual NBG Group Compliance Report, in accordance with the provisions of the Bank of Greece Governor’s Act No. 2577/2006, while the Audit Committee was also informed about the activities of the Audit Committees of NBG Group subsidiaries, in compliance with the Sarbanes-Oxley Act (“SOX”). Furthermore, the Committee reviewed the quarterly and annual financial statements of the Bank and the Group, monitored on a quarterly basis and evaluated on an annual basis the operations of the NBG Group Internal Audit and Compliance Divisions, and assessed the adequacy of the Internal Control System in line with Bank of Greece Governor’s Act No. 2577/2006. Furthermore, the Committee was informed concerning developments in the International Accounting Standards, the US Securities and Exchange Commission, the PCAOB principles as well as the SOX controls process. The Committee approved the Internal Audit Division Work Programme for 2016. Lastly, the Committee made recommendations to the Board regarding the appointment of the Bank’s external auditors for the annual and semi-annual Financial Statements for the year ended 2015, approved their audit and non-audit fees and had regular meetings with them in order to discuss their audit findings.

Detailed information on the responsibilities, composition and modus operandi of the Committee are included in the Committee’s charter posted on the Bank’s website, at www.nbg.gr (section: The Group / Corporate Governance / Board of Directors / Committees).

Attendance of each member of the Board and the Board Committees’ meetings (times) in 2015 and respective compensation

The table below sets out the attendance of each member of the Board and the Board Committees’ meetings in 2015 as well as the respective compensation.

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