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Index-linked bond Sustainable Development

Basic and Extra

As a result of rapid population growth and increasing affluence, the global climate and natural resources will be put to a severe test in the future. In the wake of new innovations, companies will focus more on utilising natural resources in an ecological way. Consumers, producers and politicians have become increasingly aware of the vulnerability of the environment and climate change, and this has made it more necessary for companies to adjust their operations to a more environmentally-friendly direction.

By subscribing for the index-linked bond Sustainable Development you invest in the 40 largest companies in the euro area that best adhere to the sustainability principles. Nordea Bank Finland Plc’s index-linked bond Sustainable Development suits investors who want to diversify their investments into companies which operate in different sectors and are likely to benefit in the long term from their timely investment in sustainable development.

Index-linked bond Sustainable Development has two alternatives: Basic and Extra.

At maturity, the yield of the Basic index-linked bond, which is suitable for cautious investors, is 70% of the rise of the reference index in accordance with the issue terms. The alternative Extra suits investors who tolerate limited risk and seek a higher return. The yield of the Extra index-linked bond on the nominal principal at maturity is 135% of the rise of the reference index in accordance with the issue terms. If the reference index falls or remains unchanged, no yield is paid and the investor loses the amount paid above par value (in the Extra index-linked bond about 10%).

In both alternatives the maturity is approximately three years, and the nominal principal is repaid at maturity irrespective of the performance of the reference index. It is also possible to sell the investment before maturity. In such a case the repurchase price may be higher or lower than the nominal value depending on the market situation. Index-linked bonds involve a risk of the issuer’s repayment ability. Nordea’s credit rating is Aa1 (Moody´s) or AA- (Standard & Poor’s).

Reference index – Dow Jones EURO STOXX Sustainability 40 index

The Dow Jones EURO STOXX Sustainability 40 price index includes 40 biggest euro area companies that are leaders in sustainable development. The companies are selected from among the 600 biggest companies in the euro area in terms of market capitalisation. Sustainability is measured on the basis of the economic, social and environmental responsibility that companies bear. The companies selected in the index are top companies in their sector according to a systematic valuation method and also adhere best to the principles of sustainable development. Contrary to most capitalisation-weighted equity indexes, in the Dow Jones EURO STOXX Sustainability 40 index companies are weighted according to their sustainability scores. The composition of the index is checked annually. Further information on the index available at www.sustainability-indexes.com.

Product features

Investment period	Short	Medium	Long
Principal protection	Yes*	Partially**	No
Asset class Equity	Commodity	Credit risk	Currency Rate

* Sustainable Development Basic
** Sustainable Development Extra

Sectors and home countries of the reference index companies (source: SAM Indexes)

Historical performance of the reference indexes (9/2002 – 8/2008)
(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.

Yield table index-linked bond Sustainable Development Basic and Extra

Change in the reference index according to the terms of the issue	Sustainable Development Basic		Change in the reference index according to the terms of the issue	Sustainable Development Extra
	Issue price ca.	100 %		Issue price ca.	110 %
	Participation rate	70 %		Participation rate	135 %
	Value at maturity	Return p.a.		Value at maturity	Return p.a.
-50 %	100 %	0.0 %	-50 %	100 %	-3.1 %
-25 %	100 %	0.0 %	-25 %	100 %	-3.1 %
0 %	100 %	0.0 %	0 %	100 %	-3.1 %
25 %	118 %	5.5 %	25 %	134 %	6.7 %
50 %	135 %	10.5 %	50 %	168 %	15.0 %
75 %	153 %	15.1 %	75 %	201 %	22.3 %
100 %	170 %	19.3 %	100 %	235 %	28.8 %

Principles of sustainable development

In recent years the environmental effects caused by companies have been scrutinised more closely than before. A number of studies show that companies which adhere to the principles of sustainable development create more added value to their shareholders than companies not following the principles. The costs of investments in sustainable development are usually smaller than the sanctions arising from neglecting them. There are diverse sanctions – for instance, decrease in demand due to consumers’ increasing awareness or additional charges arising from large carbon dioxide emissions.

In the future, winners are likely to be companies that can increase their competitiveness with new innovations without burdening the environment. Good examples of progressive innovations to support sustainable development are Japanese car manufacturers, which continuously keep striving for energy efficiency in their vehicles. As fuel prices are increasing and legislation favours low consumption cars utilising pure energy, Japanese car manufacturers have gained considerable competitive edge over their American competitors. Going forward, this kind of development will make it necessary for companies to improve and merge their prevailing operating practices. New orders of the authorities and fulfilment of consumers’ ethical expectations will play a key role in this development.

For companies, ecological efficiency should mean cost savings, improved competitiveness and increasing market share. Ecological efficiency should also lift companies’ public image and facilitate their entry into new markets. The more efficient measures by legislators and the sanctions for the detrimental effects on the environment will have an increasing impact on companies’ operations. Companies that do not live up to the principles of sustainable development will face costs, such as higher taxes, fines and expenses arising from the acquisition of emission rights. Consequently, there is good reason to believe that companies investing in sustainable development will be financially more successful in the long term than companies focusing on obtaining a short-term yield and failing to observe the principles of sustainability.

Source: The Sustainability Yearbook 2008

Terms of issue in brief

Issuer	Nordea Bank Finland Plc
Issue date	18 August 2008
Maturity date	26 September 2011
Subscription period	18 August - 25 September 2008
Places of subscription	Nordea Bank Finland Plc’s branches, Nordea Private Banking, Nordea Customer Service, tel 0200 70 000 on banking days from 10.00 to 16.30 (access codes required; local network charge/mobile call charge), and Nordea’s Netbank at nordea.fi if the customer has the portfolio service.
Subscription price	Basic 4162A: variable, about 100% Extra 4162B: variable, about 110%
Minimum subscription	EUR 1,000
Yield at maturity	Basic 4162A: 70% of the rise of the reference index as provided by the issue terms Extra 4162B: 135% of the rise of the reference index as provided by the issue terms
Reference index	Dow Jones EURO STOXX Sustainability 40 price index (Bloomberg: SUBE Index)
Starting value	The starting value of the reference index is its official closing value on 30 September 2008.
Closing value	The closing value of the reference index is the average of monthly closing values from 12 March 2011 to 12 September 2011.
Repayment of the principal	The issuer Nordea Bank Finland Plc will repay the nominal principal of the index-linked bonds in full at maturity irrespective of the performance of the reference index. The index-linked bonds involve a risk of the issuer’s repayment ability.
Early redemption	Early redemption is possible only if a hedging instrument has to be dissolved due to amendments to law or legal praxis.
Security	The index-linked bonds are unsecured.
Structuring cost	The subscription price includes a structuring cost, which is about 0.9% p.a. (see the terms of issue). No separate subscription or management fee is charged on the index-linked bonds.
Secondary market	Nordea Bank Finland Plc quotes a repurchase price for the index-linked bonds, which may be lower or higher than the nominal value.
Taxation	The possible index bonus 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 subscribed amount is low, or if something should occur which the issuer considers might endanger the issue.

An application will be made for the index-linked bonds to be listed on OMX Helsinki.

Loans 4162A and 4162B under the MTN programme (a medium term note programme reported to the Finnish Financial Supervision Authority from Sweden in accordance with the Prospectus Directive) of Nordea Bank AB (publ) and Nordea Bank Finland Plc, dated 4 June 2008. The loan-specific terms are available at the places of subscription.

By virtue of a licence agreement, Nordea Bank Finland Plc is entitled to apply the index below in connection with this index-linked bond issue. According to the licence agreement, Nordea Bank Finland Plc is obliged to include the following text in the marketing material: “The Dow Jones EURO STOXX Sustainability 40 Index is proprietary and copyrighted material. The Dow Jones EURO STOXX Sustainability 40 Index and the related trademarks have been licensed for certain purposes by Nordea Bank Finland Plc."

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 as of the date of this document and are subject to change without notice. This notice 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 reproduced, distributed or published for any purpose without the prior written consent from Nordea Markets.