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Index-linked bond Asia

Basic and Extra

With China in the lead Asia has pulled the global economy up from the bottom of the economic crisis and the Asian consumers have become the engines of the global economy. In China the growth has accelerated again to nine per cent and it is expected to continue rising to over ten per cent. The strong economic growth in China has also reflected in the surrounding economies and the Asian countries have returned to the road of brisk growth. However, the economic growth in Asia involves risk such as tightening financial and fiscal policy.

Historically, rapid economic growth has also included a robustly rising equity market. With index-linked bond Asia you can benefit from the potential rise of the Asian equity market. At maturity the index-linked bond notional is returned irrespective of the development of the stock market.

Index-linked bond Asia Basic and Extra

Index-linked bond Asia is a 5-year bond issued by Nordea Bank Finland Plc. The maturity is approximately five years and the yield is based on the performance of a basket consisting of five Asian equity indices. There are two alternatives: Basic and Extra. The alternative Basic is suitable for a cautious investor. Its yield at maturity is 85 % of the increase in the value of the index basket in accordance with the index-linked bond terms. Alternative Extra suits investors who tolerate risk and seek a higher return. Its yield at maturity is 175% of the rise in the value of the index basket in accordance with the index-linked bond terms. Index value is calculated as an average of the whole period (semiannual observations) in accordance with the index-linked bond terms. If the value of the index basket falls or remains unchanged, no yield is paid.

Nordea repays the nominal capital of the index-linked bond at maturity. The index-linked index-linked bond involves the risk of the issuer Nordea Bank Finland Plc’s repayment ability. Nordea has been given a credit rating of Aa2 by Moody’s and AA- by Standard & Poor’s. The loan is unsecured.

The investor may lose the portion of capital invested exceeding the nominal value either partly or in full. For example in the Extra index-linked bond this premium risk is approximately 10%, as its subscription price is approximately 110%. The index-linked bond Asia can be sold before maturity. The repurchase price may be above or below the index-linked bond’s nominal value. Under normal market conditions Nordea quotes a secondary market price for the index-linked bond on all banking days when banks are generally open in Finland.

Reference assets

The index-linked bond's reference assets comprise five Asian equity indices which together form an index basket.

South Korea (in the index basket the weight is 1/5)
KOSPI 200 Index
KOSPI 200 is a capitalisation-weighted equity index, which reflects the performance of the 200 largest South Korean companies. Their market capitalisation corresponds to approximately 93% of the South Korean equity market. For further information on the index: www.kse.or.kr. 

Hong Kong (in the index basket the weight is 1/5)
Hang Seng Index
The Hang Send Index is a capitalisation-weighted index which includes the shares of the most liquid companies listed in Hong Kong with the largest market-capitalisation. The weight of one company in the index may not exceed fifteen per cent. For further information on the index: www.hsi.com.hk.

China (in the index basket the weight is 1/5)
Hang Seng China Enterprises
The Hang Seng China Enterprises Index is a freefloat capitalization-weighted index comprised of H-Shares listed on the Hong Kong Stock Exchange and included in the Hang Seng Mainland Composite Index. The weight of one company in the index may not exceed fifteen per cent. For further information on the index: www.hsi.com.hk.

Singapore (in the index basket the weight is 1/5)
MSCI Singapore Free
MSCI Singapore is a capitalisation-weighted index which reflects the performance of the biggest companies listed on the Singapore stock exchange. For further information on the index: www.mscibarra.com.

Taiwan (in the index basket the weight is 1/5)
Taiwan Stock Exchange Weighted Index
The TWSE or TAIEX equity index includes all equities listed on the Taiwan stock exchange. This capitalisation-weighted index was established in 1966. For further information on the index: www.tse.com.tw.

Performance of the index basket from April 2000 to April 2010
Starting level indexed at 100%. Source: Bloomberg

The presented figures describe previous yield or value performance, and no reliable assumptions on future yield or value can be made based on them.

Historical yield
The historical yield of the investment if the investment had been made in accordance with the terms of issue during April 2000 - April 2005 and the yield of a direct investment in the index basket. The investment would have matured during April 2005 - April 2010 (monthly observations). The yield of the direct investment has been calculated by using one starting value and one closing value without averaging of the final value.

The presented figures describe previous yield or value performance, and no reliable assumptions on future yield or value can be made based on them.

	Average maturity value	Average annual yield
Basic	146.1 %	7.6 %
Extra	192.2 %	11.1 %*
Direct investment	211.9 %	15.0 %

* A 10 % premium has been taken into account in yield calculation.

Yield table: Index-linked bond Asia Basic and Extra

Change in the index basket according to the terms of the issue	Asia Basic		Asia Extra
	Issue price ca.	100%	Issue price ca.	110%
	Participation rate	85%	Participation rate	175%
	Value at maturity	Return p.a.	Value at maturity	Return p.a.
-50 %	100 %	0.0 %	100 %	-1.9 %
-25 %	100 %	0.0 %	100 %	-1.9 %
0 %	100 %	0.0 %	100 %	-1.9 %
25 %	121 %	3.9 %	144 %	5.5 %
50 %	143 %	7.3 %	188 %	11.3 %
75 %	164 %	10.4 %	231 %	16.0 %
100 %	185 %	13.1 %	275 %	20.1 %

* A 10 % premium has been taken into account in yield calculation.

Issue terms in brief

Issuer	Nordea Bank Finland Plc; credit ratings Aa2 (Moody’s) and AA- (Standard & Poor’s)
Issue date	26 April 2010
Maturity date	4 June 2015
The subscription period is	26 September - 28 May 2010.
Subscription places	Nordea Bank Finland Plc branches, Nordea Private Banking and Nordea Customer Service with access codes, 0200 70 000 (local network charge/mobile call charge), Mon - Fri 10.00 - 16.30. If the customer uses Nordea’s portfolio service, they can also make a subscription in Netbank at www.nordea.fi.
Subscription price	Basic 4383A: variable, approximately 100% Extra 4383B: variable, approximately 110%
Minimum subscription	1,000 EUR
Yield at maturity	Basic 4383A: 85% of the rise of the index basket in accordance with the index-linked bond terms Extra 4383B: 175% of the rise of the index basket in accordance with the terms of issue
Reference assets	1/5 Hang Seng Index (Bloomberg: HSI Index) 1/5 Hang Seng China Enterprises (Bloomberg: HSCEI Index) 1/5 KOSPI 200 (Bloomberg: KOSPI2 Index) 1/5 MSCI Singapore Cash (Bloomberg: SGY Index) 1/5 Taiwan Weighted (Bloomberg: TWSE Index)
Starting price	The closing value of the reference asset on 9 June 2010
Closing price	The average of the semi-annual closing values of the reference assets from 19 November 2010 to 19 May 2015.
Repayment of capital	The issuer Nordea Bank Finland Plc repays the nominal capital of the index-linked bonds in full at maturity irrespective of the performance of the reference asset basket. The index-linked bonds involve the risk of the issuer’s repayment ability and of losing the premium (in Extra approximately 10%).
Security	The index-linked bonds are unsecured.
Structuring cost	The subscription price includes a structuring cost of about 0.8% p.a. (see index-linked bond terms for more details). No separate subscription or management fee is charged on the index-linked bonds.
Secondary market	Under normal market conditions the issuer Nordea Bank Finland Plc quotes a repurchase price for the index-linked bonds, which may be lower or higher than the nominal value.
Taxation	Possible index-linked yield is subject to tax at source on interest income for natural persons and Finnish death estates.
Safe custody	Free of charge with Nordea Bank Finland Plc.
Cancellation of the issue	The issuer has the right to cancel the issue based on changes in the economic circumstances or if the total amount of subscriptions is low, or if something should occur that the issuer considers might endanger the issue.
Listing	If the total amount of subscriptions is sufficient, an application will be made for index-linked bonds to be listed on NASDAQ OMX Helsinki.

Index-linked bonds 4383A and 4383B under the Medium-Term Note Programme (an index-linked bond programme reported to the Finnish Financial Supervisory Authority from Sweden in accordance with the Prospectus Directive) of Nordea Bank AB (publ) and Nordea Bank Finland Plc dated 29 May 2009. The index-linked bond-specific terms and the prospectus are available at the places of subscription. Read the issue terms and the prospectus before subscription.

Nordea Markets is the name of the Markets departments of Nordea Bank Norge ASA, Nordea Bank AB (publ), Nordea Bank Finland Plc and Nordea Bank Danmark A/S.

The information provided herein is intended for background information only and for the sole use of the intended recipient. The views and other information provided herein are the current views of Nordea Markets on the date of this document and are subject to change without notice. This document is not an exhaustive description of the described product or the risks related to it, and it should not be relied on as such, nor is it a substitute for the judgement of the recipient.

The information provided herein is not intended to constitute and does not constitute investment advice nor is the information intended as an offer or solicitation for the purchase or sale of any financial instrument. The information contained herein has no regard to the specific investment objectives, the financial situation or particular needs of any particular recipient. Relevant and specific professional advice should always be obtained before making any investment or credit decision. It is important to note that past performance is not indicative of future results.

Nordea Markets is not and does not purport to be an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction.

This document may not be copied, distributed or published for any purpose without a prior consent in writing of Nordea Markets.

The growth of the global economy is focused on Asia

The global economy has risen from the recession under the lead of Asia and especially of China. After a short plunge the Asian countries returned to a growth track early in 2009 and the growth has accelerated briskly.

The rapid growth in Asia has a steady basis, as the countries have not built their growth on foreign debt. On the contrary, after the crisis in the 1990s the Asian countries have knowingly sought growth driven by exports and kept their current payments in surplus and increased their foreign currency reserves. In this way they have been able to support the recovery of the economy with public measures and with open-handed lending to domestic companies.

Now that the economy has returned to the growth track, the need for resuscitation measures has decreased. In China, for example, the credit granting is not quite so generous any more. However, the purpose is not to stop the economic growth, but to prevent the economy from overheating. Tightening of the economic policy may cause problems in certain sectors where the activities have been unreasonably boosted with cheap loans. This is not a big threat to the performance of the whole economy, funds are just transferred to other activities.

After the financial crisis the Asian countries have reason to rethink their growth strategy. It is not sensible to forever continue to gather surplus which is then lent to Western countries. The temptation to direct surpluses to the home country for the improvement of the citizens' living conditions is great especially as the financial crisis caused concern over the lenders' repayment ability. In China, for example, the outspoken political ambition is to increase the share of consumption in the GDP. This is quite possible for the Chinese, as at present the share of consumption in the GDP is very low.

Consequently, China is not only becoming the centre for the growth of global production, but increasingly also the centre for the growth of consumption.

Sources: Nordea Strategy Research

	South Korea		Hong Kong		China		Singapore		Taiwan
	2009	2010	2009	2010	2009	2010	2009	2010	2009	2010
GDP growth*	-1.0 %	3.6 %	-3.6 %	3.5 %	8.7 %	10.1 %	-3.3 %	4.1 %	-4.1 %	3.7 %
Unemployment*	3.8 %	3.6 %	6.0 %	6.5 %	4.5 %	4.2 %	3.6 %	3.7 %	6.1 %	5.9 %
Current account/BKT*	3.4 %	2.2 %	10.7 %	10.8 %	6.5 %	6.1 %	12.6 %	12.5 %	7.9 %	8.0 %
Currency reserves bn. USD	265		245		2399		187		348

Source: Nordea Economic Outlook January 2010, International Monetary Fund World Economic Outlook October 2009, Ecowin
* Figures are estimates

Hang Seng Index and Hang Seng China Enterprises Index
The mark and name "Hang Seng Index” and “Hang Seng China Enterprises Index” are proprietary to Hang Seng Data Services Limited ("HSDS") which has licensed its compilation and publication to Hang Seng Indexes Company Limited ("HSIL"). HSIL and HSDS have agreed to the use of, and reference to, the Hang Seng Index and/or Hang Seng China Enterprises Index by Nordea Bank Finland Plc ("the Issuer") in connection with the 4383 index linked note Asia (the "Product"). However, neither HSIL nor HSDS warrants, represents or guarantees to any person the accuracy or completeness of the Hang Seng Index and/or “Hang Seng China Enterprises Index its computation or any information related thereto and no warranty, representation or guarantee of any kind whatsoever relating to the Hang Seng Index and Hang Seng China Enterprises Index are given or may be implied. Neither HSIL nor HSDS accepts any responsibility or liability for any economic or other loss which may be directly or indirectly sustained by any person as a result of or in connection with the use of and/or reference to the Hang Seng Index and/or Hang Seng China Enterprises Index by the Issuer in connection with the Product, or any inaccuracies, omissions or errors of HSIL in computing the Hang Seng Index and Hang Seng China Enterprises Index. Any person dealing with the Product shall place no reliance whatsoever on HSIL and/or HSDS nor bring any claims or legal proceedings against HSIL and/or HSDS in any manner whatsoever. For the avoidance of doubt, this disclaimer does not create any contractual or quasi-contractual relationship between any broker, holder or other person and Hang Seng Indexes Company Limited and/or Hang Seng Data Services Limited and must not be construed to have created such relationship.

KOSPI 200 Index The Product(s) is not sponsored, endorsed, sold or promoted by Korea Exchange("KRX"), the successor of Korea Stock Exchange who calculated KOSPI 200 and owned the intellectual propertarial rights over it. KRX makes no representation or warranty, express or implied, to the owners of the Product or any member of the public regarding the advisability of investing in securities generally or in the Product particularly or the ability of the KOSPI Indexes to track general stock market performance. KRX's only relationship to the Licensee is the licensing of certain trademarks and trade names of KRX and of the KOSPI Indexes which is determined, composed and calculated by KRX without regard to the Licensee or the Product. KRX has no obligation to take the needs of the Licensee or the owners of the Product into consideration in determining, composing or calculating the KOSPI Indexes. KRX is not responsible for and has not participated in the determination of the prices and amount of the Product or the timing of the issuance or sale of the Product or in the determination or calculation of the equation by which the Product is to be converted into cash. KRX has no obligation or liability in connection with the administration, marketing or trading of the Product. KRX DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE KOSPI INDEXES OR ANY DATA INCLUDED THEREIN AND KRX SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. KRX MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE PRODUCT, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE KOSPI INDEXES OR ANY DATA INCLUDED THEREIN. KRX MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE KOSPI INDEXES OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL KRX HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

MSCI Singapore Cash Index The MSCI indexes are the exclusive property of MSCI Inc. ("MSCI"). MSCI and the MSCI index names are service mark(s) of MSCI or its affiliates and have been licensed for use for certain purposes by Nordea Bank Finland Plc. The financial securities referred to herein are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such financial securities. The terms of the 4383 index linked note Asia contains a more detailed description of the limited relationship MSCI has with Nordea Bank Finland Plc and any related financial securities. No purchaser, seller or holder of this product, or any other person or entity, should use or refer to any MSCI trade name, trademark or service mark to sponsor, endorse, market or promote this product without first contacting MSCI to determine whether MSCI's permission is required. Under no circumstances may any person or entity claim any affiliation with MSCI without the prior written permission of MSCI.

Taiwan Stock Exchange Weighted Index
“FTSE®” is a trade mark of the London Stock Exchange plc and the Financial Times limited, “TSEC” and “TAIEX” are trade marks of the Taiwan Stock Exchange Corporation and both are used by FTSE International Limited (“FTSE”) under licence. The TSEC Taiwan Stock Exchange Weighted Index is calculated by FTSE. Neither FTSE or TSEC sponsor, endorse or promote this product and are not in any way connected to it and does not accept any liability. Nordea Pankki Suomi Oyj HSI110 04.10