Hamagin Tokai Tokyo Securities

Advantages

• ✓The Bank of Yokohama and Higashi-Nippon Bank business integration is structured as a joint share transfer establishing Concordia Financial Group as the holding company.
• ✓Share transfer ratio fixed: 1 share of Concordia Financial issued for each Bank of Yokohama share; 0.541 shares for each Higashi-Nippon Bank share.
• ✓Former Bank of Yokohama shareholders to hold approximately 92.8%, and Higashi-Nippon Bank shareholders approximately 7.2%, of Concordia Financial post-transfer.
• ✓Concordia Financial common stock expected to be listed on the Tokyo Stock Exchange upon the joint share transfer in April 2016.
• ✓Both banks have strong regional bases: Bank of Yokohama dominates Kanagawa Prefecture with 197 branches and Higashi-Nippon Bank operates mainly in central Tokyo with 80 branches.
• ✓The business integration aims to realize synergies by combining complementary regional banking strengths and customer bases, enhancing retail and corporate banking services.
• ✓The joint share transfer and new holding company formation follow thorough legal procedures including extraordinary shareholder meetings and required regulatory approvals.
• ✓Financial statements are prepared under IFRS, audited by reputable independent firms, with consolidated total assets of approximately ¥17.5 trillion pro forma.
• ✓Robust governance structure planned for Concordia Financial with appointed directors and audit supervisory board members.
• ✓Shareholder rights in Concordia Financial closely follow Japanese Companies Act with unit share systems, dividend restrictions, and appraisal rights for dissenting shareholders.
• ✓The share transfer is qualified as a non-recognition transaction for Japanese and US tax purposes; gains generally not recognized upon exchange.
• ✓Dividend payments planned by constituent banks prior to integration with specified amounts per share.
• ✓Banks demonstrated stable capital adequacy and liquidity positions subject to Japanese FSA Basel III regulations, with capital adequacy ratios above regulatory minimums.
• ✓Comprehensive risk management frameworks are in place addressing credit, market, liquidity, operational, and reputational risks.
• ✓Proxy voting and electronic voting systems implemented to facilitate shareholder decision making.
• ✓Investment portfolios diversified, with provisions for impairment reflected in financials.
• ✓Transparency ensured through public disclosure, regulatory filings, and legal opinions for transaction fairness.