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C O N T E N T S

Chairman Statement 2 Shareholders 4 Board of Directors 4 Audit & Risk Committee 5 Management 5 Directors’ Report 7 Financial Statements External Auditors’ Report 21 Balance Sheet 24 Income Statement 26 Statement of Changes in Equity 27 Cash Flow Statement 30 Notes to the Financial Statements 31

Additional Information Proposal of profit distribution 73 Contact Information 74

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CHAIRMAN’S STATEMENT

(THIS CHAIRMAN’S STATEMENT IS FREE TRANSLATION OF THE ORIGINAL ISSUED IN SPANISH)

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CHAIRMAN’S STATEMENT Dear Shareholders and friends, Although the year that just ended has followed the path of previous years of an unfavorable international environment in relation to 2007 financial crisis, has highly conditioned the financial institutions of the European zone, the export sector has shown, once again, its strong influence in the apparent revival of the economy that, in our country, keep our confidence to overcome the challenges of the future years. The banking sector has continued being very cautious in their risk exposure and it has chosen to reduce the credit to customers and to allocate considerable amounts to cover possible doubtful loans, mainly in the mortgage and construction sectors. In 2010, Aresbank, S.A. has continued consolidating its markets financing foreign trade with North Africa and Middle East, as well as actively participating in the sale of Libyan oil to companies, both Spanish and from the rest of Europe, and acting, as a subsidiary Bank of a Libyan financial institution, as guarantor of the trade with this country and the important projects that Spanish companies are developing in it, whose expansion in recent years is highly notable. Also, the entity has remained open to the interbank market, putting the remainder cash flow in European solvent entities in the short term, although in lower volume than the previous years. Aresbank’s shareholders, Libyan Foreign Bank and Crédit Populaire d'Algerie, have contributed and effectively supported it to fulfill its objectives in the highly specialized activity of the bank. Year 2010 presents a negative result of EUR 40.9 million as a result of the allocation of provisions due to its exposure to the insolvency risk of the interbank market caused by the above mentioned financial crisis. The high liquidity of the entity on December 31, 2010 comfortably allows fulfilling its obligations. The solvency ratio of 47.04% is much higher than the legal minimum requirement. While the crisis is still present in our country with prospects of recovery which seem to be still far away in time, and despite the fact that from March 2011 until the end of this year, our main shareholder has been affected by the restrictive measures implemented by the International Community taking account of the situation in Libya, Aresbank, faces the new year with the hope that the situation in this country will successfully evolve to its inhabitants and in the belief that our highly trained personnel will remain very active in the consolidation of the business with our traditional markets. I would like to conclude this presentation of 2010 annual accounts, showing my most sincere gratitude to our shareholders for their unconditional support and confidence. I also want to express my gratitude to all those persons, entities, clients and correspondents that have trusted Aresbank, S.A. and with which we want to keep on collaborating, and to our staff for their dedication, effort and loyalty. Juan Carlos Montañola

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S H A R E H O L D E R S 2010 2009 Libyan Foreign Bank 99.86% 99.86% Crédit Populaire D´Algérie 0.14% 0.14% B O A R D O F D I R E C T O R S Mr. Juan Carlos Montañola (Executive Chairman) Mr. Hadi N. Coobar (Vice-Chairman) * Libyan Foreign Bank Mr. Abdulfah Sharif * Libyan Foreign Bank Mr. Milad Faraj El Sahli * Libyan Foreign Bank Mr. Regeb Abdallah Misellati * Libyan Foreign Bank Mr. Esam Mustafa Ibrahim Elrayas * Libyan Foreign Bank Crédit Populaire D´Algèrie (Mr. Mohamed Djellab) * Crédit Populaire D´Algèrie Independent Directors Mr. Julio Álvarez * Mr. Carlos Kinder * Mr. Amado Subh * Secretary Mr. Fernando Marqués * * Dismissed on March 16th, 2011. See Note 3.12

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A U D I T & R I S K C O M M I T T E E Mr. Julio Álvarez * Chairman of the Audit & Risk Committee

and Member of the Board of Directors Mr. Amado Subh *

Member of the Board of Directors

Mr. Esam Mustafa Ibrahim Elrayas *

Member of the Board of Directors

Secretary Mr. Fernando Marqués * * Dismissed on March 16th, 2011. See Note 3.12 M A N A G E M E N T Mr. Juan Carlos Montañola Executive Chairman Mr. Fekri Sinan Deputy General Manager- Corporate Division Mr. Abdulla Naama ** Deputy General Manager- Commercial Division Mr. Abdel Aziz Mohamed Systems Department Manager Mr. Hedi Ben Ali Aboukhris Treasury & Capital Markets Department Manager Mr. Fernando Marqués Head of Legal Department Mr. Manuel Grijota Head of Credit and Finance Department Mr. Martin Ruijmgaart Head of Foreign Trade Department Mr. Manuel Turanzas Head of Payments and Clients Services Department (Acting) Ms. Eva Marcos Head of Accounting Department Ms. Félix Lombao * Head of Risk Management Department Mr. Youssef Berbash Head of Research & Development Unit Mr. Alberto del Molino Head of Administration Department Mr. Manuel Poza Head of Internal Audit Department Mr. Antonio Calvo Corporate & Institutional Banking Mr. Pascual Cantos Barcelona Branch - Acting Manager

* Relieved on May 31, 2011 ** Relieved on September 20, 2011

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RESPONSIBILITY FOR THE INFORMATION CONTAINED IN THIS

ANNUAL REPORT The information contained in this annual report, including the annual accounts and the Directors' report as well as any additional data deemed necessary, has been drawn up by the members of the Board of Directors of Aresbank, S.A., in accordance with its accounting records. The members of the Board of Directors are responsible for establishing not only the accounting policies but for designing, implementing and maintaining the internal control systems to ensure a proper preparation of the annual accounts, the safeguarding of assets, and the reliability of the accounting records in compliance with the legal requirements, and specifically, with the regulations established by the Bank of Spain. Our external auditors PRICEWATERHOUSECOOPERS AUDITORES, S.L. examine the annual accounts of Aresbank, S.A. It is their responsibility to express a professional opinion on said accounts, by carrying out their work in accordance with generally accepted auditing principles, based on the evidence which they deemed necessary and to which they were given free access.

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DIRECTORS’ REPORT

(THIS DIRECTORS’ REPORT IS FREE TRANSLATION OF THE ORIGINAL ISSUED IN SPANISH COUNTERSIGNED BY ALL THE MEMBERS OF THE BOARD)

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DIRECTORS´ REPORT 1. THE ECONOMIC AND FINANCIAL SITUATION After the recession of 2008, the world economy is seen on a revival path since the second quarter of 2009. It is seen as an outcome of revised policies introduced in after the recession stepped in. Yet, the recovery is not uniform across the countries and is not robust enough to provide positive stimulus as of now. 1.1 World Economy In 2010, world output - and per capita income - began to recover from the 2008-09 recession, the first global downturn since 1946. Gross World Product (GWP) grew 4.6%, largely on the strength of rebounding exports, which rose about 20% from the level of 2009. Growth was not evenly distributed across countries, however. Lower income countries - those with per capita incomes below $30,000 per year - averaged 6.3% growth, while higher income countries - with per capita incomes above $30,000 - averaged just 2.8% growth. And countries with current account surpluses averaged 6.0% growth, while those with current account deficits averaged just 3.4% growth. Among large countries, China (+10.1%), Taiwan (+8.3%), India (+8.3%), Brazil (+7.5%), and South Korea (+6.1%) recorded the biggest GDP gains - China also became the world's largest exporter. Continuing uncertainties in mortgage and financial markets resulted in slower GDP growth in Japan (+3.0%), the US (+2.8%), and the European Union (+1.7%). In 2010, global unemployment continued to creep upwards, reaching 8.8% - underemployment, especially in the developing world, remained much higher. Global gross fixed investment stabilized at about 23% of GWP, after a significant drop in 2009. 1.2 World financial Markets The global money supply increased roughly 10%, as countries tried to keep interest rates low; the global budget deficit stabilized at roughly $3.5 trillion, as countries tried to rein in spending and slow the rise of public debt. The world economy faces a major new challenge, together with several long-standing ones. The fiscal stimulus packages put in place in 2009-10 required most countries to run budget deficits. To keep interest rates low, many central banks monetized that debt, injecting large sums of money into the economies. As the economic activity picks up, central banks will face the difficult task of containing inflation without raising interest rates so high they snuff out further growth.

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The Currency markets were very volatile in 2010. The European Central Bank reference exchange rate of the Euro fell against the US dollar from its maximum of 1.5120 on December 3rd, 2009 to its minimum of 1.1942 on June 8th, 2010 to bounce back 1.3362 on December 31st, 2010. By end of December 2009, the spot rate was 1.4406 compared to 1.3917 by the end of December 2008. The Euro vs. U.S dollar forecast according to one source takes into account the euro zone sovereign debt crisis which continues to weigh on the Euro and What is more, the expected stronger US growth. 1.3 North Africa and Middle East Economy The International Monetary Fund estimated that the Middle East and North Africa (MENA) region will grow 4.1 percent in 2010 and 5.1 percent in 2011, compared with just 2 percent in 2009. The report said MENA’s economic growth remains strong, stressing that the regions reliance on oil revenues leaves it vulnerable should crude prices again collapse. The strength of the recent economic recovery in the MENA region is largely underpinned by the rebound in oil prices from their trough in 2009. Mideast oil exporters, such as Saudi Arabia, were largely able to weather the worst of the global meltdown by tapping oil revenues to spend on infrastructure development and social services. Other countries, such as Egypt and Lebanon, withstood the decline largely because their banking and financial sectors were not as exposed as those in the West to the crisis. The rebound in oil prices played a key role in boosting the regions economies. Oil prices jumped above $90 a barrel for the first time in more than two years in December 2010 (Dec. 7), a key milestone for analysts. 1.4 The Spanish Economy The year 2010 was the year in which the Government’s praised “Austerity plan” kicked in to decrease the national debt and reach the assumed target required for European Union countries. After a couple of months into the year, the debt reduction plan and its effectiveness were under scrutiny of many doubting observers. In July 2010, Spain’s sale of 3 billion Euros ($3.8 billion) of 15-year government bonds was a much needed boost for the country. However, there are still fears by the end of the year that Spain could be one of the countries that could need a “bail out” after Greece and Ireland; especially, that the possibilities for the neighbouring and main partner, Portugal, are increasing. The total volumes of Spanish exports decreased by about 6.22% in 2010 compared to its level in 2009. However, this decline is less sharp than in 2009 which embarked a decline of about 20% from its level in 2008, which provided an encouraging signs of economic recovery. Spanish exports to MENA region represented 2.28% in 2010 compared 8% in 2009 from the total Spanish exports worldwide. This decrease can be seen as the result of a tougher competition for Spanish exporters as well as the harder domestic economic situation in some importing markets.

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1.5 The Spanish Banking sector Spanish banks did not have sizable exposure to toxic assets. However, seven of the 91 European banks that underwent stress tests in July 2010 have failed the health checks. These included five Spanish banks “cajas” - Diada, Espiga, Banca Civica, Unnim and Cajasur. These were mostly regional savings banks. The Spanish government through Bank of Spain had announced plans to consolidate the County’s 47 cajas into 17 more solid regional entities. The Spanish units of Deutsche Bank and Barclays were among several banks to fail tests set by Bank of Spain, with Barclays the worst hit by a demand to inject 552 million Euros to reach a core capital ratio of 8%. 2. TRENDS IN ARESBANK’S BUSINESS Aresbank’s main activities during 2010 remained focused on intensifying the financial transactions and banking services related to foreign trade between Spain and the countries in the MENA region, which constitutes the traditional markets of Aresbank. However, for most of year, the activities were generally pursued with focus on improving market share while adhering to the demands of prudent risk mitigation. The fragile stability in the financial markets that was apparent demanded that the bank to be cautious. Nevertheless, the bank reacted favourably to several foreign trade related credit business opportunities, and in its interbank placement activities. 2.1 Aresbank annual performance overview The Bank’s Capital Adequacy ratio climbed to 47.04% in 2010 from 43.50% in 2009. The total assets saw a substantial decrease of 40.38%, reflecting the conservative stand of the Bank with respect to the uncertainty in the markets. This translated into significant decease in loans and receivables and cash and balances with Central banks. The loans and advances to other debtors decreased by 25.16% compared to its amount by the end of 2009. The net interest income decreased by 29.32% from 4,188 Thousands Euros in 2009 to 2,960 Thousands Euros in 2010. By the year end, the contingent exposures of Aresbank marked 306,493 Thousands Euros in 2010 compared to 399,945 Thousands Euros by end of 2009. The gross margin decreased in 2010 by 7.31% in comparison to the gross margin in 2009. Provisions to cover for the interbank placements with Icelandic banks had a net negative impact of 45,527 Thousand Euros on the bank’s earnings in 2010 (45,853 Thousand Euros in 2009). This third and last allocation of these provisions results in fulfilling the 100% coverage for this exposure. Aresbank still operated at a good level of liquidity with a composition of liquid assets ratio of 85% by year end in 2010 compared to 58% for 2009 and 83% for 2008. This is due to the conservative and cautious stand of the bank by keeping most of the assets in

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short term maturity interbank placements (30 days or less). Aresbank continues to have the support of its main shareholder, Libyan Foreign Bank. The operating expenses in 2010 increased only by about 1.1% in over its level in 2009, mainly as a result of increase in expenses other than ones related to personnel which saw some reduction. General expenses included legal and lawyer expenses amounting to 768 Thousand Euros compared to a total of 471 Thousand Euros in 2009. This was a result of the bank’s dedication to protect its interests and rights. Extraordinary recoveries amounted to 1,093 Thousands Euros in 2010 compared to 289 Thousands in 2009. The bank was very active in pursing defaulting debtors. In 2010, the bank has recovered 4.5 million Euros, mainly in relation with enforcement of guarantees and written-off debts, noting that in 2009, the bank recovered written-off debts amounted to 250 Thousand Euros. 2.2 Results of Business activities Foreign Trade Over the past years, Aresbank business measured by the number of countries and banks whom we dealt with has considerably increased. In 2010, the volume of the foreign trade business, mainly due to letter of credits, guarantees, loans and credits resulted in an increase of fees and commissions’ income by 19.53% over fees and commissions’ income in the year 2009. Aresbank issued L/Cs increased in number by 568.75%; however, the volume of business in total monetary value decreased by 15.85%. This reflects Aresbank’s efforts and objectives to gain better market share. However, the noticed decrease in the volume of the export foreign trade business when comparing 2009 and 2010 is mainly due to a drop in business with Tunisia (-91,147%) and Syria (-82,63% ). Aresbank Business in import L/Cs, which were mainly dominated by companies related mainly to European Oil imports, has slightly decreased in number of deals by 6.89% from last year; however, the total monetary value increased by 147.23%, due to strengthening the business relation with the bank’s sisters and financial partners. As, in last year, Libya followed by Algeria held the top positions of countries in doing business with Aresbank. In particular, the business volume in export L/c´s and collections increased with Algeria in 2010 by 23.80% over its level in 2009.

The competition landscape for Aresbank in MENA region is considered difficult with the presence of large international banks operating in the region and some Spanish banks which are aggressive in pursuing business in the region. However, there is a quite ample opportunity in the region for Aresbank because of its stronger ties and older presence. For example, Aresbank for the year 2010 transacted an equivalent of 1.12 times the monetary value of Spanish Exports to Libya. As in 2009, this year the marketing activities of the bank increased to seek new business opportunities and options for revenue diversification. The Bank marketing team conducted several trips to strengthen relations with Financial Institutions in MENA region and to promote the bank. Preparation work is under way to establish a

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representative office to assert Aresbank presence in Algeria. Aresbank is continuing the efforts to raise the profile of its trading company “ARESCO”, which was established to broker trade and investment deals in Aresbank’s traditional markets and in Spain. Treasury & Money Markets As in 2009, Aresbank this year continued to be cautious in interbank activities due to the credit crunch and uncertainties about the financial health of some institutions. Interbank deposits decreased as a result of the smaller activities of Aresbank in Money Markets. As such, the total deposits placed in 2010 with financial institutions decreased by 24.68% compared to its level in the year 2009. 2.3 Business support activities Governance & Compliance The bank had enhanced the Risk Management function through developing tailored Risk policies over the last two years. It will continue to complete the third phase of the Risk Management project, devoted to operational risk components, after the new core banking system enters active service. The bank is in the process of acquiring an automated Anti money laundering solution to enhance the capacities of the bank to carry an effective “know your customer” types of work and to satisfy compliance and regulations requirements. Systems & Human Resources The work in the new core banking system project is continuing at different levels. The bank hired one of the most recognized companies in field to implement the project. The project is expected to be finalized by the end of the year. Aresbank saw an increase in its workforce in 2009. Eight new staff members and secondments joined the bank during 2010. Currently, Aresbank has 69 on staff. The bank conducted some language and technical training for some staff members. With the objectives of enhancing both the image and work place environment in the bank carried out an overall renovation project. The Bank purchased a new office for Barcelona. The branch staff moved the new location in May 2010 after renovations were completed. Renovations started at Madrid head office by mid 2010. The work will be completed in the early months of 2011. 2.4 Aresbank focus in the coming year Aresbank’s main objective in the coming year is to strengthen its market share in the foreign trade between Spain and the Arab countries, with special focus on building relations and business links in several countries. Moreover, Aresbank will continue to work with the Spanish exporters who are targeting new markets. The bank will be also exploring opportunities to start other types of finance activities. In particular, the bank

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is exploring the financial landscape in an effort to diversify incomes through building a robust investment portfolio. 3. RELEVANT EVENTS SUBSEQUENT TO DECEMBER 31ST, 2010 On February 18th, 2011 it was published the Royal Decree-law 2/2011, adopting extraordinary measures to strengthen the financial system, reinforcing the solvency of the credit entities and their capacity to resist, even before the most adverse and unlikely scenarios, and to facilitate their financing, ensuring the canalization of the credit to the real economy and, therefore, facilitating growth and employment. This Royal Decree-law imposes that credit entities should maintain a core capital ratio of, at least, 8% of their total risk weighted assets, calculated in accordance with the Law 13/1985, of May 25, on investment ratios, equity and reporting obligations of financial intermediaries. Additionally, this requirement increases up to 10% for those financial institutions having obtained financing in the wholesale markets in a ratio exceeding 20% and are not privately held by third parties in a percentage of at least 20%. On December 31st, 2010 the bank fulfils the requirements settled down by this Royal Decree-law. Given the current political situation of Libya, the European Council has issued the regulation's implementation (EU) 233/2011, dated March 10th, 2011 by which Libyan Foreign Bank (majority shareholder of Aresbank) has been included in annex III of the regulation 204/2011. Therefore, the restrictive measures contained in this regulation 204/2011 have been applicable to Libyan Foreign Bank. Such measures are included in the articles 2.3, 4 and 5, having as main effect for Aresbank the freezing of the funds and economic resources of Libyan Foreign Bank. On March 16th, 2011, based on the proposal from the Bank of Spain’s Executive Committee, the Ministry of Economy and Finance has agreed a temporary replacement of the administrators of Aresbank S.A., in compliance with the resolutions adopted by the European Union concerning the situation in Libya, in accordance with the Law on Discipline and Intervention. This measure does not raise any doubt about the careers of the managers replaced neither about the solvency of the bank. Therefore, The Ministry of Economy and Finance, as per Bank of Spain proposal, has constituted a new temporary Board of Directors, composed by Mr. Juan Carlos Montañola as Executive Chairman, Mr. Mohamed Djellab, Mr. Laudelino González, Mr. Antonio Perea and Mr. Oscar Meléndez as Secretary. On September 28, 2011, the European Council has issued the regulation’s implementation (EU) 965/2011 amending the regulation 204/2011 and deleting Libyan Foreign Bank from the annex II but keeping frozen the funds and economic resources owned by them on September 16, 2011. Moreover, on December 20, 2011, the European Council has issued the regulation's implementation (EU) 1360 / 2011 by which eliminates Libyan Foreign Bank from the entities whose capital and economic resources owned were frozen on September 16, 2011 in compliance with the above mentioned (EU) regulation 965/2011

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During the time period that the measures adopted by the European Council have been in place, Aresbank has continued with its activity, financing foreign trade between Spain and the Arab countries, with the exception of the restrictions imposed by the European Union. The Annual Accounts of the year 2010 and 2011 have been formulated by the Aresbank’s Board of Directors in the meeting held on February 2nd, 2012. 4. ACQUISITION OF OWN SHARES As in previous years and due to its equity capital structure, Aresbank has not acquired, held or performed operations with its own shares during 2010. 5. RESEARCH & DEVELOPMENT EXPENSES The Bank did not invest in projects related to R&D. 6. ENVIRONMENTAL INFORMATION The overall operations of Aresbank are subject to environmental protection legislation. The Bank has adopted appropriate measures with respect to environmental protection and enhancement and to the minimization, where appropriate, of the environment impacts, in compliance with the relevant current regulations. The Bank did not make environmental investments in 2010 and 2009, nor did it consider it necessary to record any provision for environmental risks and charges, and does not consider that there are significant contingencies relating to environmental protection and enhancement. 7. COMPLIANCE WITH AML REGULATIONS Aresbank has also set up a global policy to ensure strict compliance with current legal regulations and with the recommendations put forward both by the Financial Action Task Force on Money Laundering (FATF) and by the Spanish Supervisory Body for the Prevention of Money Laundering. The main objective of Aresbank anti-money laundering policy is to prevent the use of our commercial network for any activities related to Money Laundering and is based on the following points:

• The identification and knowledge of customers and their financial and economic activities.

• The existence of an internal control and active communication. • Written internal procedures. • The development of the culture of prevention among all the employees of

the bank through specific training activities. • Reporting to the competent authorities according to the procedures

established by the Regulator.

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8. RISK REPORT

8.1 Risk management The following key principles underpin the risk and capital management at Aresbank: • The General Management provides overall risk and capital management

supervision for the Bank. • The Audit and Risk Committee informs the Board of Directors about the

outstanding risks and operational performance. • The ongoing management of risk is supported by control procedures to

ensure compliance with the specified limits, the defined responsibilities, and the monitoring of indicators.

• The main goal is the management of the credit, market, liquidity, operational, business and reputational risks as well as the capital in a coordinated manner at all relevant levels within the organization.

• The risk management function is made independent of other departments.

8.2. Capital needs The following table provides an aggregation of the capital required for each risk faced by Aresbank, according to Pillar I of Basel II. (EUR ‘000)

Aggregation of Capital Needs Pillar I Capital Charge Credit Risk (1) 28,287 Market Risk (2) 671 Operational Risk (3) 2,103

31,061 Total Capital Needs (1+2+3)

For the risks covered under the Pillar I, the Bank adopted the following approaches as at December 31st, 2010: • Credit Risk – Standardized Approach. • Market Risk – Standardized Method. • Operational Risk – Basic Indicator Approach. 8.3 Credit Risk

The credit risk makes up the largest part of Aresbank’s risk exposures. The total credit risk weighted assets under Pillar I, using standard approach, is 353,585

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Thousand Euro. Aresbank calculates risk weighted assets as product of the exposure and relevant risk weight determined by its supervisor. Risk weights are determined by the category of the borrower and depend upon external credit assessments by ECAIs (Standard & Poor’s, Moody’s and Fitch) and also on the type of the banking product.

The Bank currently has a focussed business target market which caters to the trade finance business, primarily between Spain and the Arab world, and interbank market transactions. The total lending amounted as of December 31st, 2010 to 634,138 Thousand Euro, in comparison with 953,803 Thousand Euro in 2009. The key component of the total lending was “Loans and Advances to Credit Institutions”, for an amount of 462,659 Thousand Euro. Contingent exposures amounted on 306,493 Thousand Euro decreased from the previous year by 23.36%.

(EUR ‘000)

OVERALL CREDIT RISK EXPOSURE 2010 2009 Total Loans and Receivables (Gross) 634,138 953,803

Central Bank loan - 7,423 Contingent exposures 306,493 399,945

Unused portion of credit lines (Drawable by third parties)

330,244 211,555 Total credit risk exposure 1,270,875 1,572,726

8.4 Quality and Geographical Distribution of Interbank Placements

More than 80% of the Bank’s balance sheet is held in interbank market transactions. From the total money market transactions, 97% of interbank placements are set with banks characterized with investment grade ratings (or ratings from AAA to BBB+) and 3% of interbank deposits are placed at banks characterized with speculative grade ratings (or ratings less than BBB+ and not rated). In reference to geographical distribution, more than 96% of the interbank placements are made with European Union, and 41% of total placements are in Spain.

8.5 Risk weighted assets The composition of the portfolio exposure and its capital charge by assets class as of December 31st, 2010 is provided in the table below:

(EUR ‘000)

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Asset Class Credit RWA Capital Charge

Central Governments & Central Banks 382 310 Financial Institutions 149,066 11,925 Corporate 160,886 12,871 Retail 1,305 104 Mortgages 92 7 Past Due 2,387 191 Other Assets 39,467 3,158

Total 353,585 28,287

The following table breaks down the eligible Credit Risk Mitigation (CRM) used by the Bank:

Type of CRM Amount (EUR ‘000) Asset Class of Counterparty Real Guarantees 15,516 Financial Institutions Real Guarantees 17,481 Corporate Real Guarantees 14 Retail Guarantees Received 15,611 Financial Institutions Guarantees Received 25,957 CESCE

8.6 Doubtful Assets and Provisions The table below provides the classification by type of doubtful exposure, both on balance sheet and contingent exposures, and by type of provision, both specific and country risk provisions held as of December 31st, 2010.

(EUR ‘000) Classification Type Exposures Provisions Debt exposure 131,072 131,072 Contingent exposures 447 364

Total 131,519 131,436 Country Risk Debt exposure 262 219 Country Risk on Contingent exposures 50 11

Total 312 230 Additionally the bank has allocated generic provision for an amount of 123 Thousand Euro (for debt exposure) and 1,378 Thousand Euro (for contingent exposure).

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8.7 Market Risk

The Bank does not have a material trading book, it has only market capital charge due to forex positions amounted to 671 Thousand Euro. There is no risk pertaining to interest rate related instruments and equities in the trading book.

8.8 Operational Risk

The Operational Risk Capital charge, 2,103 Thousand Euro, is based on the average of positive gross income of the previous three years multiplied by 15%.

(EUR ‘000) 2010 2009 2008

Gross Income 10,508 11,624 19,930

8.9 Solvency (EUR ‘000)

2010 2009 Total computable own funds: 182,637 231,745 Tier I: 190,620 231,560 Tier II: 1,500 185 Capital requirements for Pillar I: 31,061 42,621 Deductions from own funds (according with Spanish Regulations) (9,483) - Surplus of Capital: 151,576 189,124 Total RWA for Pillar I: 353,585 503,498 Capital Adequacy Ratio: 47.04 % 43.50 % Capital Adequacy Ratio (of which Tier I) 46.65 % 43.56 %

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In accordance with Royal Decree-law 2/2011, adopting extraordinary measures to strengthen the financial system:

(EUR ‘000)

Core capital 300,001 Computable own funds ( RDL 2/2011) 300,001 Deductions from core capital:

(109,381)

Negative reserves from previous years

(68,441) Profit or loss for the period

(40,940)

Core Capital at December 31st, 2010 190,620 Capital requirements as per CBE 3/2008 31,061 Capital adequacy ratio (RDL 2/2011) 49.10%

8.10 Liquidity The analysis of the liquidity of the bank as of December 31st , 2010 shows that the Bank has a sufficient liquidity to meet its near term liabilities:

Time Buckets Assets Liabilities Gap Cumulative Gap

Up to 1 Month 466,229 335,050 131,179 131,179

1 Month to 3 Months 3,728 8,564 (4,836) 126,343

3 Months to 6 Months 1,637 430 1,207 127,550

6 Months to 12 Months 5,153 - 5,153 132,703

1 Year to 5 Years 17,831 - 17,831 150,534

Greater than 5 Years 138,807 - 138,807 289,341

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Below is the gap analysis as of December 31st, 2009:

Time Buckets Assets Liabilities Gap Cumulative Gap

Up to 1 Month 534,954 578,210 (43,256) (43,256)

1 Month to 3 Months 249,077 94,787 154,290 111,034

3 Months to 6 Months 10,735 6 10,729 121,763

6 Months to 12 Months 11,143 - 11,143 132,906

1 Year to 5 Years 14,830 - 14,830 147,736

Over 5 Years 139,640 - 139,640 287,376

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AUDITORS’ REPORT AND ANNUAL ACCOUNTS

(A FREE TRANSLATION FROM THE ORIGINAL IN SPANISH

SIGNED BY ALL MEMBERS OF THE BOARD OF DIRECTORS)

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BALANCE SHEETS FOR THE YEARS ENDED DECEMBER 31st, 2010 AND 2009 (EXPRESSED IN THOUSAND OF EURO)

ASSETS 2010 2009 Cash and balances with Central Banks (Note 6) 757 8,539 Trading Portfolio 69 1 Loans and receivables (Note 7) 502,724 867,863

Loans and advances to credit institutions 472,851 828,262 Loans and advances to other debtors 27,528 36,787 Other financial assets 2,345 2,814

Non-current assets held for sale (Note 8) 58 4,001

Equity instruments - 3,943 Tangible assets 58 58

Investments ( Note 9 ) 4,043 100 Tangible Assets (Note 10) 34,690 30,199

For own use 19,100 9,465 Investment property 15,590 20,734

Tax Assets (Note 11) 824 798

Current 789 763 Deferred 35 35

Other Assets (Note 12) 640 593 TOTAL ASSETS 543,805 912,094 OFF BALANCE SHEET ITEMS (Note 18) Contingent Exposures 306,493 399,945

Irrevocable documentary credits 193,678 313,537 Other bank guarantees and indemnities 109,506 80,892

Other contingent risks 3,309 5,516 Contingent Commitments 330,244 211,557

Drawable by third parties 330,244 211,555 Other commitments - 2

The accompanying Notes 1 to 31 are an integral part of the Annual Accounts as of December 31st, 2010 and 2009. The financial statements are originally issued in Spanish and prepared in accordance with Bank of Spain Circular 4/2004 and Circular 6/2008. In the event of a discrepancy, the Spanish-language version prevails.

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BALANCE SHEETS FOR THE YEARS ENDED DECEMBER 31st, 2010 AND 2009 (EXPRESSED IN THOUSAND OF EURO)

LIABILITIES 2010 2009 Trading Portfolio - 288 Financial liabilities at amortized cost (Note 13) 346,002 674,514

Deposits from credit institutions 299,068 590,252 Deposits from other creditors 44,783 82,517 Other financial liabilities 2,151 1,745

Provisions (Note 14) 4,160 2,563

Provisions for taxes 56 364 Provisions for contingent exposure and commitments

1,753

1,766

Other provisions 2,351 433 Tax Liabilities (Note 11) 219 336

Current 219 336 Other Liabilities (Note 12) 2,804 2,833 TOTAL LIABILITIES 353,185 680,534 SHAREHOLDERS EQUITY Total Equity (Note 15) 190,620 231,560

Capital (Note 16) 300,001 300,001 Reserves (Note 17) (68,441) (24,936) Profit or (loss) for the period (40,940) (43,505)

TOTAL SHAREHOLDERS EQUITY 190,620 231,560 TOTAL LIABILITIES AND EQUITY 543,805 912,094

The accompanying Notes 1 to 31 are an integral part of the Annual Accounts as of December 31st, 2010 and 2009. The financial statements are originally issued in Spanish and prepared in accordance with the Circular 4/2004 and Circular 6/2008, of the Bank of Spain. In the event of a discrepancy, the Spanish-language version prevails.

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INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31st, 2010 AND 2009 (EXPRESSED IN THOUSAND OF EURO) 2010 2009 Interest and similar income (Note 20) 3,804 10,620 Interest expenses and similar charges (Note 21) (844) (6,432)

A) NET INTEREST INCOME 2,960 4,188 Fees and commissions income (Note 22) 6,778 6,192 Fees and commissions expenses (Note 23) (304) (271) Gains and losses on financial assets and liabilities (Net) 357 (288) Exchange differences (Net) (774) 146 Other operating income (Note 24) 1,491 1,657 Other operating expenses (Note 3.11) (50) (8) B) GROSS MARGIN 10,458 11,616

Administrative Expenses (9,100) (9,001)

Personnel expenses (Note 25) (5,945) (6,030) Other administrative expenses (Note 26) (3,155) (2,971)

Depreciation and amortization (Note 28) (311) (242) Provisions expenses (Net) (Note 14) (1,964) (58) Impairment losses (Net) (Note 29) (41,116) (46,109)

Loans and receivables (41,124) (46,109) Non-current assets held for sale 8 0

C) OPERATING INCOME (42,033) (43,794) Other gains / Losses in the disposal of assets non classified as Non-current assets held for sale (Note 30)

1,093

289

D) PROFIT OR (LOSS) BEFORE TAXES (40,940) (43,505) Income Tax ( Note 19 ) - - E) PROFIT OR (LOSS) FROM ORDINARY ACTIVITY (40,940) (43,505) F) PROFIT OR (LOSS) FOR THE PERIOD (40,940) (43,505)

The accompanying Notes 1 to 31 are an integral part of the Annual Accounts as of December 31st, 2010 and 2009. The financial statements are originally issued in Spanish and prepared in accordance with Bank of Spain Circular 4/2004 and Circular 6/2008. In the event of a discrepancy, the Spanish-language version prevails.

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STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED ON DECEMBER 31st, 2010 AND 2009 (EXPRESSED IN THOUSAND OF EURO)

a) STATEMENT OF RECOGNIZED INCOME AND EXPENSE

2010 2009 Profit or (loss) for the period (40,940) (43,505)

Profit or (loss) published (40,940) (43,505)

TOTAL RECOGNIZED INCOME AND EXPENSE (40,940) (43,505)

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b) CHANGES IN EQUITY IN THE PERIOD (EXPRESSED IN THOUSAND OF EURO)

EQUITY

Issued capital Share

premium Accumulated Reserves (losses)

Other equity instruments

Less: Own shares

Profit / Loss of the period

Less: dividends payments

VALUATION ADJUSTMENTS

TOTAL EQUITY

1.Balance Sheet as of 31/12/09

300,001

(24,936)

(43,505)

231,560

a) Adjustments due to accounting policy change

b) Error adjustments 2. Adjusted balance sheet (1+a+b)

300,001

(24,936)

(43,505)

231,560

3. Total recognized income and expense

(40,940)

(40,940) 4.Other changes in equity (c+d+e)

(43,505)

43,505

-

c) Increase of capital d) Transfers between items (43,505) 43,505

-

e) Issuance (reduction) of equity instruments 5. Balance Sheet as of 31/12/10 (2+3+4)

300,001

(68,441)

(40,940) 190,620

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EQUITY

Issued capital Share

premium Accumulated Reserves (losses)

Other equity instruments

Less: Own shares

Profit / Loss of the period

Less: dividends payments

VALUATION ADJUSTMENTS

TOTAL EQUITY

1.Balance Sheet as of 31/12/08

300,001

(1,588)

(23,348)

275,065

a) Adjustments due to accounting policy change

b) Error adjustments 2. Adjusted balance sheet (1+a+b)

300,001

(1,588)

(23,348)

275,065

3. Total recognized income and expense

(43,505)

(43,505) 4.Other changes in equity (c+d+e)

(23,348)

23,348

-

c) Increase of capital d) Transfers between items (23,348) 23,348

-

e) Issuance (reduction) of equity instruments

5. Balance Sheet as of 31/12/09 (2+3+4)

300,001

(24,936)

(43,505) 231,560

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CASH-FLOW STATEMENTS FOR THE YEARS ENDED ON DECEMBER 31st, 2010 AND 2009 (EXPRESSED IN THOUSAND OF EURO) 2010 2009 A) CASH-FLOW FROM OPERATING ACTIVITIES Profit or (loss) for the period (40,940) (43,505) Adjustments: 47,835 47,090

Amortization of tangible assets 311 242 Impairment losses 45,252 46,790 Exchange rate differences 308 - Provisioning expense (net) 1,964 58

Adjusted Profit or loss 6,895 3,585 Net increase or decrease in operating assets (326,962) (132,822) Trading portfolio 68 1 Loans and receivables (326,625) (133,015) Other operating assets (405) 192

Net increase or decrease in operating liabilities (328,946) (507,750) Trading Portfolio (288) 288 Financial liabilities at amortized cost (328,918) (509,461) Other operating liabilities 260 1,423

B) CASH-FLOW FROM INVESTING ACTIVITIES Investments – Tangible assets (4,804) (1,274) Investments - Participations - (100) C) CASH-FLOW FROM FINANCING ACTIVITIES Issuance/Redemption of equity or endowment fund Other items related with financing activities

D) EFFECT OF THE EXCHANGE RATE FLUCTUATIONS

(466)

146

E) NET INCREASE OR DECREASE IN CASH AND CASH EQUIVALENTS (A+B+C+D)

(359)

(372,571)

F) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR

1,116 373,687 G) CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

757

1,116

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31st , 2010

1. GENERAL INFORMATION Aresbank, S.A. was established by public deed dated April 1st, 1975. The Bank is registered in the Mercantile Registry of Madrid, on page nº 28,537, sheet 18, 1st inscription of General Companies Volume 3,740. Since April 2nd, 1975, Banco Árabe Español, S.A. is registered at the Bank of Spain's Special Registry for Banks and Bankers under number 0136. Its fiscal identity number is A28386191. Aresbank is a joint stock company. Its corporate purpose per Article 3 of its bylaws is as follows: “The main object of the Bank is to contribute to the development of the economic cooperation between the Arab countries and Spain by financing foreign trade and promoting investment and attracting funds from Arab and International Financial Markets. Notwithstanding the above mentioned, the corporate object of the Bank consists of all activities relating to banking operations allowed by the Spanish legislation and not forbidden to banking entities except the reception of funds from individuals which will be limited to those who are involved in foreign trade transactions with the Bank. The activities included in the company’s object may be carried out by the company wholly or partly indirectly, by means of holding shares or interests in companies having identical or similar purpose. “ The Bank's registered address is Paseo de la Castellana 257, Madrid, where its Head Office is located. 2. GENERAL OBJECTIVES The Bank's general objectives can be summarized as follows: � To increase the economic cooperation between Spain and the Arab countries by

financing foreign trade and other investments and trying to increase its resources through the fundraising of deposits from Arab and international financial markets.

� To identify and evaluate investment opportunities and new projects. � To offer Spanish technical experience and know-how for the implementation of

economic and industrial projects in the Arab world. � To cooperate with Spanish Banks and other institutions channelling financial

resources coming from international or Arab monetary markets. � To strengthen relations and cooperation between Arab and Spanish businesses.

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3. BASIS OF PRESENTATION OF THE ANNUAL ACCOUNTS 3.1 Basis of presentation The accompanying financial statements of the years 2010 and 2009 were prepared from the accounting records of the Bank in conformity with the accounting criteria of the Circular 4/2004 and its subsequent amendments, issued by the Bank of Spain, and in accordance with the Commercial Law, Royal Decree 1/2010, of July 2nd, and other Spanish regulation applicable, and accordingly give a true and fair view of the Bank net worth and financial position as at December 31st, 2010 and 2009 and of the results of its operations, of the changes in its net worth and of the cash flows for the years then ended. The information in these Annual Accounts is the responsibility of the Directors of Aresbank. The Annual Accounts of the year 2010 have been formulated by the Board of Directors of the Bank in the meeting held on February 2, 2012 and they will be presented to the General Shareholders’ Assembly for approval, which is expected to adopt them without any significant changes. Except as otherwise indicated, these Annual Accounts are presented in Thousand Euro. 3.2 Accounting principles The Bank's Annual Accounts were prepared on the basis of the accounting criteria established by the Bank of Spain in its Circular 4/2004 and its amendments, as set forth in Note 5.

3.3 Comparison of information For comparative purposes, the Governing Board of the Entity presents, for each of the captions detailed in the accompanying annual accounts, both the figures for 2010 and those corresponding to the previous year. 3.4 Accounting estimates and errors The information included in the accompanying annual accounts is as mentioned, the responsibility of the directors of Aresbank. In these annual accounts strictly where appropriate the use of estimates in valuing certain assets, liabilities, incomes, expenses and commitments has been made by the senior management of the Bank and ratified by the Directors. These estimates are related to:

- The losses for impairment of certain assets. - The useful life adopted for tangible and intangible assets.

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These estimates were made in accordance with the best available information about the items concerned and it is possible that future events may make it necessary to modify them in some ways in the forthcoming years. Any such modification will in any case be made prospectively recognising the effects of that change on the related profit and loss account.

In these annual accounts there have been no corrections of errors or changes in accounting estimates.

3.5 Changes in accounting principles Circular 3/2010 of Bank of Spain has amended certain aspects of Circular 4/2004. Firstly it accepts the real state collaterals applying reductions to their value between 20% and 50%. Secondly it unifies the default schedule for the allowances of provisions for insolvency risk (considering the total amount of the default or the net amount after being deduced the value of the collateral) which allow the total coverage of the credit risk within the twelve month since the non-payment. Thirdly it sets out also principles of risk management, which affect some aspects such as the right assessment of the cash flow generation of the borrower, the role of the guarantees in the process of granting and management of the credit, as well as the conditions to be set out in financial restructuring. Finally it sets out some assumptions on provisions for assets acquired in payment of debts. These principles and criteria are aligned with the ones applied by the entity.

3.6 External Auditors The Annual Accounts of Aresbank, S.A. as of December 31st, 2010 have been audited by PriceWaterhouseCoopers Auditores, S.L. that also audited those of the previous year. By law, there has been tacit renewal of the external auditors for three years. At the date of the formulation of the annual accounts of 2010, this renewal is pending to be registered at the Mercantile Registry. In accordance with the additional provision 14th of the “Ley 44/2002 de Medidas de Reforma del Sistema Financiero” (Spanish law on amendment measures on the financial market), dated November 22nd, their fees for auditing the Annual Accounts of the year 2010 amounted to 75 Thousand Euro (74.3 Thousand Euro in 2009). The fees for other services rendered by the audit firm required by the Spanish regulator, amounted to 43 Thousand Euro (36 Thousand Euro in 2009). 3.7 Risk control According to the European Commission recommendations on the publication of information regarding financial instruments (risk management), Aresbank has included in the Directors’ Report and Risk report the most significant data. 3.8 Environmental information The overall operations of Aresbank are subject to environmental protection legislation. The Bank has adopted appropriate measures with respect to environmental protection

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and enhancement and to the minimization, where appropriate, of the environment impact, in compliance with the relevant current regulations. The Bank did not make environmental investments in 2010 and 2009, nor did it consider it necessary to record any provision for environmental risks and charges, and does not consider that there are significant contingencies relating to environmental protection and enhancement.

3.9 Customer Services Unit activity Ministry of Economy Order 734/2004 of March 11th, laid down the obligation for the Customer Services Departments to prepare a report on the conduct of their functions during the preceding year. In accordance with this legal requirement, the department in charge of the Customer Services prepared the report on its activities in 2010, which was submitted to the Bank’s Board of Directors at its meeting held on February 2th, 2011. This report stated that the Customer Services Department of Aresbank, S.A. had not received any claim during 2010, neither during 2009. 3.10 Solvency Spanish regulations The current solvency regulation is basically stipulated by Law 13/1992, of June 1st, as well as by Bank of Spain Circular 3/2008, which adapted the Spanish legislation into line with EC Directives 2006/48/EC relating to the taking up and pursuit of the business of credit institutions (recast) and 2006/49/EC on the capital adequacy of investment firms and credit institutions (recast). These Directives were amended by Directive 2009/27/EC and Directive 2009/83/EC amending certain Annexes to Directive 2006/49/EC as regards technical provisions concerning risk management, and adapted in the Spanish legislation by Circular 9/2010. The Directive 2009/111/EC of the European parliament and of the council amending Directives 2006/48/EC, 2006/49/EC and 2007/64/EC as regards banks affiliated to central institutions, certain own funds items, large exposures, supervisory arrangements, and crisis management, set measures to strengthen the internal organization, risk management and internal control of the entities. Bank of Spain Circular 3/2008 states that the financial institutions should maintain, at all times, enough volume of computable own resources, to cover the minimum requirements to cover credit risk, market risk and operational risk. As of December 31st, 2010 the capital requirements under Pillar I amounts to 31,061 Thousand Euro. As at December 31st, 2010 and 2009, Aresbank’s computable capital exceeded the regulatory required minimum under Pillar I by 151.576 and 189,124 Thousand Euro respectively.

3.11 Deposit Guarantee Fund The entity is integrated in the Deposit Guarantee Fund. The contributions made by the entity in 2010 to this Fund amount to approximately 50 Thousand Euro (8 Thousand

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Euro in 2009). The contributions are booked in “Other operating expenses” account in the Income Statement. 3.12 Subsequent Events On February 18th, 2011 it was published the Royal Decree-law 2/2011, adopting extraordinary measures to strengthen the financial system, reinforcing the solvency of the credit entities and their capacity to resist, even before the most adverse and unlikely scenarios, and to facilitate their financing, ensuring the canalization of the credit to the real economy and, therefore, facilitating growth and employment. This Royal Decree-law imposes that credit entities should maintain a core capital ratio of, at least, 8% of their total risk weighted assets, calculated in accordance with the Law 13/1985, of May 25, on investment ratios, equity and reporting obligations of financial intermediaries. Additionally, this requirement increases up to 10% for those financial institutions having obtained financing in the wholesale markets in a ratio exceeding 20% and are not privately held by third parties in a percentage of at least 20%. On December 31st, 2010 the bank fulfils the requirements settled down by this Royal Decree-law. Given the current political situation of Libya, the European Council has issued the regulation's implementation (EU) 233/2011, dated March 10th, 2011 by which Libyan Foreign Bank (majority shareholder of Aresbank) has been included in annex III of the regulation 204/2011. Therefore, the restrictive measures contained in this regulation 204/2011 have been applicable to Libyan Foreign Bank. Such measures are included in the articles 2.3, 4 and 5, having as main effect for Aresbank the freezing of the funds and economic resources of Libyan Foreign Bank. On March 16th, 2011, based on the proposal from the Bank of Spain’s Executive Committee, the Ministry of Economy and Finance has agreed a temporary replacement of the administrators of Aresbank S.A., in compliance with the resolutions adopted by the European Union concerning the situation in Libya, in accordance with the Law on Discipline and Intervention. This measure does not raise any doubt about the careers of the managers replaced neither about the solvency of the bank. Therefore, The Ministry of Economy and Finance, as per Bank of Spain proposal, has constituted a new temporary Board of Directors, composed by Mr. Juan Carlos Montañola as Executive Chairman, Mr. Mohamed Djellab, Mr. Laudelino González, Mr. Antonio Perea and Mr. Oscar Meléndez as Secretary. On September 28, 2011, the European Council has issued the regulation’s implementation (EU) 965/2011 amending the regulation 204/2011 and deleting Libyan Foreign Bank from the annex II but keeping frozen the funds and economic resources owned by them on September 16, 2011. Moreover, on December 20, 2011, the European Council has issued the regulation's implementation (EU) 1360 / 2011 by which eliminates Libyan Foreign Bank from the

- 36 -

entities whose capital and economic resources owned were frozen on September 16, 2011 in compliance with the above mentioned (EU) regulation 965/2011. During the time period that the above measures have been in place, Aresbank has continued with its activity, financing foreign trade between Spain and the Arab countries, with the exception of the restrictions imposed by the European Union. The Annual Accounts of the year 2010 and 2011 have been formulated by the Aresbank’s Board of Directors in the meeting held on February 2nd, 2012. The Balance Sheet and the Income Statement included in the annual accounts of 2011 as well as the ones of 2010, for comparative purpose, are the following: BALANCE SHEETS FOR THE YEARS ENDED DECEMBER 31st, 2011 AND 2010 (EXPRESSED IN THOUSAND OF EURO) ASSETS 2011 2010 Cash and balances with Central Banks 7,691 757 Trading Portfolio - 69 Loans and receivables 535,191 502,724

Loans and advances to credit institutions 428,741 472,851 Loans and advances to other debtors 104,499 27,528 Other financial assets 1,951 2,345

Non-current assets held for sale 58 58 Tangible assets 58 58

Investments 4,043 4,043 Tangible Assets 34,696 34,690

For own use 19,935 19,100 Investment property 14,761 15,590

Tax Assets 486 824 Current 451 789 Deferred 35 35

Other Assets 832 640 TOTAL ASSETS 582,997 543,805

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OFF BALANCE SHEET ITEMS Contingent Exposures 206,143 306,493

Irrevocable documentary credits 106,382 193,678 Other bank guarantees and indemnities 96,452 109,506

Other contingent risks 3,309 3,309 Contingent Commitments 201,121 330,244

Drawable by third parties 201,121 330,244

LIABILITIES 2011 2010 Financial liabilities at amortized cost 382,426 346,002

Deposits from credit institutions 354,939 299,068 Deposits from other creditors 26,205 44,783 Other financial liabilities 1,282 2,151

Provisions 2,310 4,160 Provisions for taxes 56 56 Provisions for contingent exposure and commitments 733 1,753 Other provisions 1,521 2,351

Tax Liabilities 498 219 Current 498 219

Other Liabilities 2,348 2,804 TOTAL LIABILITIES 387,582 353,185 SHAREHOLDERS EQUITY Total Equity 195,415 190,620

Capital 300,001 300,001 Reserves (109,381) (68,441) Profit or (loss) for the period 4,795 (40,940)

TOTAL SHAREHOLDERS EQUITY 195,415 190,620 TOTAL LIABILITIES AND EQUITY 582,997 543,805

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INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31st, 2011 AND 2010 (EXPRESSED IN THOUSAND OF EURO) 2011 2010 Interest and similar income 6.836 3,804 Interest expenses and similar charges (2.348) (844) A) NET INTEREST INCOME 4.488 2,960 Fees and commissions income 6.790 6,778 Fees and commissions expenses (423) (304) Gains and losses on financial assets and liabilities (Net) (69) 357 Exchange differences (Net) 171 (774) Other operating income 1.308 1,491 Other operating expenses (27) (50) B) GROSS MARGIN 12.238 10,458 Administrative Expenses (8.676) (9,100)

Personnel expenses (6.226) (5,945) Other administrative expenses (2.450) (3,155)

Depreciation and amortization (358) (311) Provisions expenses (Net) 1.994 (1,964) Impairment losses (Net) (28) (41,116)

Loans and receivables (28) (41,124) Non-current assets held for sale - 8

C) OPERATING INCOME 5.170 (42,033) Other gains / Losses in the disposal of assets non classified as Non-current assets held for sale

(114)

1,093

D) PROFIT OR (LOSS) BEFORE TAXES 5.056 (40,940) Income Tax (261) - E) PROFIT OR (LOSS) FROM ORDINARY ACTIVITY 4.795 (40,940) F) PROFIT OR (LOSS) FOR THE PERIOD 4.795 (40,940) 4. PROFIT / LOSS DISTRIBUTION The proposed distribution of 2010 results and the ones previously approved for 2009 are as follows: 2010 2009 Net profit / loss for the Year (40,940) (43,505) Distribution

• Other reserves (40,940) (43,505)

5. ACCOUNTING PRINCIPLES AND VALUATION METHODS APPLIED The significant accounting principles and standards and valuation methods applied in preparing the accompanying Annual Accounts are described below. They basically meet those set forth in the Bank of Spain Circular 4/2004 and its amendments.

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5.1 Going concern principle The Annual Accounts have been formulated considering that Aresbank will continue to operate for a limitless period. Consequently the application of accounting standards is not intended to determine the value of the net worth in the event of liquidation. 5.2 Accrual basis of accounting Interest income and expenses are recognized on accrual basis using the effective interest rate method. In accordance with standard banking practices, transactions are recorded on the date they take place, which may differ from their value date, which is the basis for computing interest income and expenses. However, following the Bank of Spain regulations, accrued interests related to doubtful debts, including those from country risk transactions, are recorded as income when collected. Income from financial commissions related to the opening of documentary credits or granting of loans that do not correspond to expenses directly incurred in the execution of the transactions are apportioned over the life of the transaction, as another component of the effective profitability of the documentary credit or loan. 5.3 Financial Assets Financial Assets are classified in the Balance Sheet with the following criteria:

a) Cash and Balances with Central Banks relating to the Cash balances and the balances held at the Bank of Spain and other Central Banks (Note 6).

b) Loans and Receivables, which includes financial assets that are not traded in an

active market and are not required to be valued at fair value, which cash flows are of a determined or determinable amount, and in which all the disbursement made by the entity will be recovered, absent reasons imputable to the debtor’s solvency. This category includes both the lending arising from the typical credit activity and the amounts of cash drawn and pending repayment by the customers as loans or the deposits placed with other companies, however legally instrumented, financial guarantees, unlisted debt securities, and the debts of purchasers of goods or users of services that form part of the Bank’s business (Note 7).

c) Held-to-maturity investments, which includes debt securities with fixed

maturity and cash flow of determined amount that the entity has decided to hold until redemption, basically because it has the financial capability to do so or has related financing.

d) Non-current assets held for sale, corresponding to the book value of those

items, whether individually or integrated in a disposal group or being part of a group of units that will be disposed of together (discontinued operations), whose sale is highly probable, given the current conditions of these assets, within one year from the reporting date of the Annual Accounts. Moreover, investments in jointly controlled entities and associates will be considered as

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“Non-current assets held for sale” when they meet the requirements above mentioned. Therefore, the recovery of the book value of these items will foreseeably occur through the price obtained in disposal of them (Note 8).

Financial assets are generally initially recorded at cost. Subsequent valuations at each accounting close are made as follows:

i) Financial assets are valued at fair value, except for Loans and Receivables, the Held-to-maturity Investments portfolio, Equity Instruments whose fair value cannot be reliably determined, Investments in Associates, Jointly Controlled Entities, Group Entities and the financial derivatives whose underlying asset are such equity instrument and are settled by delivery thereof.

ii) Loans and Receivables and Held-to-maturity Investments portfolio are valued

at their amortized cost, using for determining this cost the effective interest rate method. Amortized cost is the cost of acquisition of a financial asset adjusted by the repayments of principal and the portion allocated to the income statement, using the effective interest method, of the difference between the initial cost and the related repayment value at maturity, minus any reduction of value for impairment directly recognized as a decrease in the amount of the asset or through a value adjustment account.

iii) The investments in the capital of other entities, whose fair value cannot be

determined with sufficient objectivity, are maintained at their cost, adjusted, if appropriate, by the losses for impairment that may have occurred.

The variations in the book value of financial assets are generally recorded with a contra-item in the Income Statement, separating those arising from the accrual of interest and similar items which are recorded under the “Interest and similar income” caption, from those arising for other causes, which are recorded at the net amount in the “Gains and Losses of Financial Assets and Liabilities” caption in the Income Statement. However, the variations in the book value of the items included under the “Non-Current Assets held for sale” caption that met certain conditions are recorded with a contra-item under the “Equity Valuation Adjustments” caption. Impairment losses are recognized in the Income Statement as well as any subsequent increase in value up to the amount of any impairment losses previously recognized. 5.4 Non-current assets held for sale Property assets or other non-current assets foreclosed by the Bank in full or partial fulfilment of the payment obligations of its debtors will be considered “Non-current assets held for sale”, except those that the Bank decides to hold for continuing use. “Non-current assets held for sale” are generally measured at the lower of their fair value less the costs of their sale and their book value calculated at the date of their classification as held for sale. “Non-current assets held for sale” shall not be depreciated or amortized during the time they remain in this category (Note 8).

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5.5 Financial Liabilities Financial Liabilities are recognized in the Balance Sheet as “Financial Liabilities at Amortized Cost”. These financial liabilities are not included in any of the other captions of the Balance Sheet, which relate to typical fund-raising activities, regardless of how instrumented and of their maturity (Note 13). 5.6 Impairment of value of financial assets The book value of financial assets is generally adjusted with a charge to the Income Statement when there is objective evidence that a loss has arisen by impairment, which occurs:

i) In case of debt instruments (credit and securities representing debt), if after their initial recognition an event occurs or the combined effect arises of several events with a negative impact on their future cash flows.

ii) In case of equity instruments, if after their initial recognition an event occurs or the combined effect arises of several events signifying that it will not be possible to recover their book value.

As a general rule, the adjustment of the book value of financial instruments for impairment is charged to the Income Statement of the period in which such impairment is disclosed, and the recovery of the previously recorded losses for impairment, if it arises, is recognized in the Income Statement of the period in which the impairment is eliminated or reduced. If the recovery of any recorded amount for impairment is considered remote, it is eliminated from the Balance Sheet. Nonetheless the entity may take the necessary action to attempt to achieve collection until the statute of limitations of its rights has definitively expired, they are forgiven or for other reasons. In the case of debt instruments valued at amortized cost, the amount of the losses incurred for impairment is equal to the negative difference between their book value and the present value of their estimated future cash flows. In the case of listed debt instruments, instead of the present value of future cash flows, their market value is used, provided that it is sufficiently reliable to be considered representative of the value, which the entity might recover. The estimated cash flows of a debt instrument are all the amounts of principal and interest that the entity estimates it will obtain during the life of the instrument. Consideration is given in this estimate to all relevant information available at the date of preparation of the Annual Accounts, which provides data about the possibility of future collection of the contractual cash flows. Also, in estimating the future cash flows of secured instruments, regarding the flows that would be obtained from realization thereof, less the amount of the cost necessary to obtain and subsequently sell them, regardless of the probability of execution of the guarantee. In calculating the present value of the estimated future cash flows, the discount rate used is the original effective interest rate of the instrument, if the contractual rate is fixed. If the contractual rate is floating, the discount rate used is the effective interest

- 42 -

rate at the date of the financial statements determined in accordance with the contract conditions. The portfolios of debt instruments, contingent exposures and contingent commitments, regardless of by whom they are owned, of how instrumented or how guaranteed, are analysed to determine the Bank’s credit risk exposure and to estimate the coverage requirement for impairment of value. For preparation of the financial statements, the entity classifies its operations based on its credit risk, analyzing separately the risk of insolvency attributable to the customer and the country risk, if any, to which the operations are exposed. Objective evidence of impairment is individually determined for all significant debt instruments and individually or collectively for groups of debts instruments, which are not individually significant. If a specific instrument cannot be included in any group of assets with similar risk characteristics, it is analysed exclusively on an individual basis in order to determine whether it is impaired and, if appropriate, to estimate the loss for impairment. The collective evaluation of a group of financial assets to estimate their losses for impairment is performed as follows:

i) Debt instruments are included in groups which have similar credit risk characteristics, indicating the capability of the debtors to pay all the amounts of principal and interest in accordance with the contract conditions. The credit risk characteristics considered for grouping the assets include the type of instrument, the debtor’s activity sector, the geographical area of the activity, the type of guarantee, the age of the past due amounts and any other relevant factor for estimating the future cash flows.

ii) The future cash flows of each group of debt instruments are estimated on the

basis of past experience of losses in the sector as calculated by the Bank of Spain for instruments with credit risk characteristics similar to those of the group concerned, after making the necessary adjustments to adapt the historical data to current market conditions.

iii) The loss for impairment of each group is the difference between the book value of all the debt instruments in the group and the present value of their estimated future cash flows.

Debt instruments not valued at fair value through profit or loss, contingent exposures and contingent commitments are classified on the basis of the risk of insolvency attributable to the customer or to the transaction in the following categories: standard risk, substandard risk, doubtful risk due to customer arrears, doubtful risk for reasons other than customer arrears and write-off risk. In the case of debt instruments not classified as standard risk, an estimate is made, based on the experience of the entity and of the sector, of the specific coverage required for impairment, taking into account the age of the unpaid amounts, the guarantees provided and the economic situation of the customer and, if appropriate, of the guarantors. This estimate is generally based on arrears schedules based, in turn, on the experience of the entity and the information it has of the sector.

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Similarly, debt instruments not valued at fair value through profit or loss and contingent exposures, regardless of who the customer may be, are analysed to determine their credit risk attributable to country risk. Country risk is deemed to arise with customer resident in a given country because of circumstances other than habitual commercial risk. Bank of Spain Circular 4/2004 and Circular 6/2008 bring in the obligation to make a provision for inherent losses incurred, determined individually or collectively, that are those held by all the risk transactions assumed by the entity since the moment it grants the risk. It also sets forth maximum and minimum limits that shall be, at all times, between 10% and 125%, and a mechanism for the annual allowance of this provision that provide the risk variation in the year, and the specific allocations taken during the year for specific doubtful risks. 5.7 Transactions and balances in foreign currency The Bank’s functional currency is the Euro and, therefore, all balances and transactions denominated in currencies other than the Euro are deemed to be denominated in foreign currency. Monetary assets and liabilities denominated in foreign currency are translated into Euro at the year-end average spot exchange rate on the date of the financial statements, as published by the European Central Bank. The exchange differences arising in the translation are recorded, generally, for their net amount in the caption “Exchange Differences” of the Income Statement. The counter value in Euro of the assets and liabilities denominated in foreign currency (US dollars mainly) as of December 31st, 2010 amounts, respectively, to 223,822 and 223,841 Thousand Euro (423,747 and 413,535 Thousand Euro, respectively, as of December 31st, 2009). 5.8 Tangible fixed assets “Tangible Assets for Own Use” are the property items of which the entity considers it will make ongoing use of, and the property items acquired for finance lease purposes. These assets are valued at cost minus accumulated depreciation and, if appropriate, minus any loss for impairment disclosed by comparing the net value of each item with its recoverable amount. Depreciation is calculated systematically by the straight-line method, applying the years of estimated useful life of the items to the acquisition cost of the assets minus their residual value. In the case of the land on which the buildings and other structures are located, the land is deemed to have an indefinite life and therefore, it is not depreciated. The annual provisions for depreciation of tangible assets are charged to the Income Statement and are calculated on the basis of the following averaged years of estimated useful life of the various groups of items. All assets are depreciated according to the Royal Decree 537/1997 of April 14th. The annual depreciation coefficients used are the following:

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Coefficient Property 2% Furniture and installations 8% to 12% Office and EDP equipment 12% to 25%

The cost of upkeep and maintenance of the “Tangible Assets for Own Use” are recognized as an expense of the period in which they are incurred. The investment property included in the caption “Tangible Assets” comprises the net values of the land, buildings and other structures which the Bank holds for rental or for obtaining a capital gain on their sale as a result of future increases in their respective market prices. The methods applied by the Bank to recognize the cost of assets assigned in operating lease transactions, to determine their depreciation and to estimate their respective useful lives and to record their losses for impairment, are the same as those described for “Tangible Assets for Own Use”. 5.9 Leases Lease contracts are presented on the bases of the economic substance of the transaction regardless of their legal form and are classified from the outset as finance or operating leases. The Bank has not carried out any financial lease agreement as of December 31st, 2010 or 2009. In the operating leases contracts, when the Bank is the lessor, the acquisition cost of the assets leased is recorded under the “Tangible Assets” caption. These assets are depreciated in accordance with the policies applied for similar tangible assets. Income from lease contracts is recognized in the Income Statement using a straight-line method. On the other hand, when the Bank is the lessee, the lease expenses, including incentives, if any, granted by the lessor, are recorded on a straight-line basis in the Income Statement. 5.10 Contingent Assets Contingent assets are possible assets that arise from past events and whose existence is conditional on, and will be confirmed only by the occurrence or non-occurrence of events beyond the control of the Bank. Contingent assets are not recognized in the Balance Sheet or in the Income Statement. The Bank informs of their existence provided that it is probable that these assets will give rise to an increase in resources embodying economic benefits. 5.11 Provisions and contingent liabilities Provisions are present obligations of the entity arising from past events whose nature at the balance sheet date is clearly specified but whose amount or settlement date is

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uncertain and that the entity expects to settle on maturity through an outflow of resources embodying economic benefits. The entity recognises in the Balance Sheet all the significant provisions when it forecasts that it is more likely that the obligation might have to be settled. Provisions are measured taking into account the best available information on the consequences of the event that gives rise to the obligation, and are reviewed at each closing date and adjusted in the Balance Sheet. They are used to meet the specific obligation for which they were originally recognized, and are fully or partially released when these obligations cease to exist or decrease. Provisions are classified according to the obligations covered (Note 14). As of December 31st, 2010 and 2009, there were several legal proceedings and claims brought against the entity arising from the habitual performance of its activities. The legal advisors and the Directors of the Bank consider that the outcome of these legal proceedings and claims will not have any significant negative effect additional to that included as a provision in the annual accounts of the years in which they are concluded. Contingent liabilities are possible obligations of the entity that arise as a result of past events and whose existence is conditional on the occurrence or non-occurrence of one or more future events beyond the control of the entity. They include the present obligations of the entity when it is not probable that an outflow of resources embodying economic benefits will be required to settle them or when, in extremely rare cases, their amount cannot be measured with sufficient reliability. Information regarding the aforementioned contingent liabilities, if any, is disclosed in the Notes to the Financial Statements. 5.12 Pension commitments As of December 31st, 2010 and 2009, Aresbank’s pension commitments with the serving employees were externalised by means of defined contribution pension plan and an insurance contract with Allianz Seguros. These pension fund commitments cover the rights derived from: a) The Collective Agreement. b) The agreements approved by the Board of Directors in 1991 for the Management

and certain employees, extending the latter agreement to all of the employees, without exception, by means of an agreement approved by the Board of Directors on October 18th, 2002.

As a result of these operations, Aresbank has no actuarial or financial risk by reason of the mentioned commitments. The total amount contributed in 2010 amounted to 184 Thousand Euro. In 2009, it amounted to 167 Thousand Euro.

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Aresbank outstanding balance with the pension fund management company (BanSabadell Pensiones) amounts to a total of 2,388 Thousand Euro as of December 2010 and 2,411 Thousand Euro as of December 2009.

5.13 Income tax The Bank recognises as expenses the Income Tax that is calculated based on the annual results, taking into account possible timing differences between book profit and taxable income, as well as applicable deductions. The difference between corporate tax payable and the amount actually charged to the Income statement due to timing differences is recorded as either deferred tax assets or liabilities. The Rule 42 of the Circular 4/2004 establishes that the quantification of the assets and liabilities for deferred taxes is done by applying the tax rate that it is expected to be recovered or settled to the timing differences or tax credit. As of December 31st, 2010, the entity has deferred tax assets (Note 11). In accordance with the prudent criteria, the Bank has not recognized any tax assets derived from the negative taxable bases pending to be offset for the years ending December 31st, 2010 and 2009 (Note 19). 5.14 Severance payments In accordance with the Labour Laws in force, the entities must pay an indemnity to those employees that under certain circumstances must be laid-off. These indemnities will be charged against results as soon as there is a plan that obliges to carry out their payment. 5.15 Financial Guarantees Financial guarantees are contracts whereby the Bank undertakes to pay certain specific amounts to a third party if the obligor does not do so, regardless of their legal form, which may include, inter alia, that of a bond, guarantee, irrevocable documentary credit issued or confirmed. 5.16 Off- Balance Sheet items Off-balance sheet items shall include balances representing rights, obligations and other legal situations that in the future may have an impact on net assets, as well as any other balances needed to reflect all transactions entered into by entities although they may not impinge on their net assets. The category “Contingent Exposures” shall include all transactions under which the entity guarantees the obligations of a third party and which result from financial guarantees granted by the entity or from other types of contract. This category comprises: a) “Other financial guarantees” not included as Financial Bank guarantees, credit derivatives sold or risk arising from derivatives acquired on behalf of third parties b) Irrevocable documentary credits: include the amount of the risk derived from irrevocable commitments to make payment upon delivery of documents. They shall be

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recorded at the maximum amount that at the balance sheet date the entity would have committed to third parties. c) Other bank guarantees and indemnities provided: guarantee contracts and deposits were the entity is committed to compensate to a beneficiary in case of non compliance of a specific commitment other than the obligation of payment ( such as deposits given to ensure the participation in actions, tenders, irrevocable formal undertakings to provide bank guarantees, letters of guarantee to the extent that they may be legally enforceable and any other type of technical guarantees and import/export guarantees). d) Other contingent exposures: This shall include the amount of any contingent exposures not included in other items. The maximum guaranteed amount for the transactions with accrual interest shall include, in addition to the guaranteed principal, the interest due and payable. The guaranteed amounts may only be reduced or removed from off-balance sheet items when there is duly documented evidence that the guaranteed exposures have decreased or ceased or when those amounts are paid to third parties. The category “Contingent Commitments” shall include those irrevocable commitments that could give rise to the recognition of financial assets. This category comprises: i) Drawable by third parties: balances drawable by third parties at the balance sheet date, within the limit or principal of the credit contracts granted by the entity, whatever their type, distinguishing the amounts immediately drawable by the holder from those that will only be drawable if certain future events occur. ii) Other contingent commitments: This shall include the amount of any remaining commitments not included in other items that may result in the recognition of financial assets in the future. 5.17 Cash-Flow Statement The concepts used in the Cash-Flow Statement have the following definitions: a) Cash-flows that are inflows and outflows of cash and cash equivalents, the latter

being defined as highly liquid short-term investments with low risk of alternation in value.

b) Operating activities that are typical activities and other activities that cannot be classified as lending or funding.

c) Investing activities, relating to the acquisition, sale or disposal by other means of long-term assets and other investments not included in cash and cash equivalents.

d) Financing activities which are activities giving rise to changes in the size and composition of net worth and of liabilities that do not form part of operating activities and long-term financial liabilities.

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6. CASH AND BALANCES WITH CENTRAL BANKS This caption on the Balance Sheet reflects available cash as well as deposits maintained in the Bank of Spain in accordance with the compulsory reserves ratio. The caption breakdown as of December 31st, 2010 and 2009 is as follows: 2010 2009 Cash 115 141 Bank of Spain - Nostro Account 642 975 Other Central Banks - 7,423 757 8,539 7. LOANS AND RECEIVABLES The detail of this caption as of December 31st, 2010 and 2009 is as follows:

2010 2009 Loans and advances to credit institutions 603,347 913,004 Loans and advances to other debtors 28,446 37,985 Other financial assets 2,345 2,814 634,138 953,803 Impairment adjustments Loans and advances to credit institutions (130,496) (84,742) Loans and advances to other debtors (918) (1,198)

502,724 867,863

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The breakdown by currency, residual maturity and sectors of the caption “Loans and Receivables” as of December 31st, 2010 and 2009 is as follows:

2010 2009 By currency Euro 282,878 448,100 Other currencies 219,846 419,763

502,724 867,863 By residual maturity Up to 3 months 469,878 831,246 Over 3 months to 1 year 6,609 14,490 Over 1 year to 5 years 542 14,246 Over 5 years 25,695 7,881 502,724 867,863

By sector Residents 191,491 368,185 Non residents 311,233 499,678

502