Bond Landesbank Baden-Württemberg 4% ( DE000LB2CPE5 ) in EUR

Landesbank Baden-Württemberg

100 % ▲

Germany

DE000LB2CPE5 ( in EUR )

4% per year ( payment 1 time a year)

Perpetual

Prospectus brochure of the bond Landesbank Baden-Württemberg DE000LB2CPE5 en EUR 4%, maturity Perpetual

200 000 EUR

750 000 000 EUR

15/04/2026 ( In 354 days )

Landesbank Baden-Württemberg (LBBW) is a German public-sector bank headquartered in Stuttgart, offering a wide range of financial services to corporate and public sector clients, both domestically and internationally.

The Bond issued by Landesbank Baden-Württemberg ( Germany ) , in EUR, with the ISIN code DE000LB2CPE5, pays a coupon of 4% per year.
The coupons are paid 1 time per year and the Bond maturity is Perpetual

THIS BASE PROSPECTUS IS DISTRIBUTED ONLY TO AND DIRECTED ONLY AT PERSONS WHO ARE NOT CLASSIFIED AS A
RETAIL CLIENT AS DEFINED IN POINT (11) OF ARTICLE 4(1) OF MIFID II (AS DEFINED BELOW) OR EQUIVALENT
APPLICABLE LOCAL REGULATORY CLASSIFICATION.
BASE PROSPECTUS

Landesbank Baden-Württemberg
(a public law institution of the State of Baden-Württemberg in the Federal Republic of Germany)
as Issuer

Euro 1,500,000,000 Additional Tier 1 Notes Programme (the "Programme")
_______________

This base prospectus (the "Base Prospectus") constitutes a prospectus within the meaning of Article 8 of Regulation (EU)
2017/1129 of the European Parliament and of the Council of 14 June 2017 (the "Prospectus Regulation"). This Base Prospectus
will be published in electronic form together with all documents incorporated by reference on the website of the Luxembourg
Stock Exchange (www.bourse.lu). This Base Prospectus has been approved by the Commission de Surveillance du Secteur
Financier (the "CSSF") in its capacity as competent authority under the Prospectus Regulation. The CSSF is the Luxembourg
authority for the purposes of the Luxembourg law relating to prospectuses for securities of 16 July 2019 (Loi du 16 juillet 2019
relative aux prospectus pour valeurs mobilières), as amended, (the "Luxembourg Prospectus Law").
The CSSF only approves this Base Prospectus as meeting the standards of completeness, comprehensibility and consistency
imposed by the Prospectus Regulation. Such approval should not be considered as an endorsement of the economic or financial
opportunity of the operation or the quality and solvency of the Issuer or of the quality of the Notes that are the subject of this Base
Prospectus. Investors should make their own assessment as to the suitability of investing in the Notes.
Under this Programme, Landesbank Baden-Württemberg ("LBBW", the "Bank" or the "Issuer" or, LBBW together with its
consolidated subsidiaries, the "LBBW Group" or "Group") may issue Perpetual Resettable Additional Tier 1 Write-down Non-
cumulative notes in bearer form under German law (Inhaberschuldverschreibungen) ("Notes").
Application has been made for the Notes to be admitted during the period of twelve months after the date hereof to listing on the
official list of the Luxembourg Stock Exchange and to trading on the regulated market (Bourse de Luxembourg) of the
Luxembourg Stock Exchange and/or to listing on the regulated market of the Stuttgart Stock Exchange (each a "Regulated
Market"). These regulated markets are regulated markets for the purposes of Directive 2014/65/EU of the European Parliament
and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC, as amended or
superseded and Directive 2011/61/EU, as amended ("MiFID II"). Furthermore, application may be made for Notes to be admitted
to trading on the regulated market of the Frankfurt Stock Exchange or such other stock exchange and/or quotation system as the
Issuer and the relevant Dealer(s) (as defined below) may agree and as specified in the applicable Final Terms (as defined below).
The minimum denomination of each Note will be at least EUR 200,000 or at least USD 200,000 (if the Notes are denominated in
U.S. dollars) or at least SGD 250,000 (if the Notes are denominated in Singapore dollars) or at least AUD 200,000 (if the Notes
are denominated in Australian dollars).
The Notes have not and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") or the
securities laws of any state or other jurisdiction of the United States. The Notes are being offered and sold outside the
United States to or for the account or benefit of non-U.S. persons in accordance with Regulation S under the Securities Act
("Regulation S") and may not be offered, sold or delivered within the United States except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
_______________
Arranger for the Programme
J.P. MORGAN
Co-Structuring Agents to the Issuer
J.P. MORGAN
LANDESBANK BADEN-WÜRTTEMBERG
Dealers
BARCLAYS
BOFA MERRILL LYNCH
CITIGROUP
CRÉDIT AGRICOLE CIB
HSBC
J.P. MORGAN
LANDESBANK BADEN-WÜRTTEMBERG
UBS INVESTMENT BANK

18 October 2019

LBBW accepts responsibility for the information contained in this Base Prospectus. To the best of the
knowledge of LBBW who has taken all reasonable care to ensure that such is the case, the
information contained in this Base Prospectus is in accordance with the facts and does not omit
anything likely to affect the import of such information.
LBBW has confirmed to the dealers named under "Subscription and Sale" (together, the "Dealers")
that this Base Prospectus is true, accurate and complete in all material respects and not misleading;
that there are no other facts in relation to the information contained or incorporated by reference
herein the omission of which would, in the context of the issue of the Notes, make any statement
herein misleading in any material respect; and that all reasonable enquiries have been made to verify
the foregoing. LBBW has further confirmed to the Dealers that this Base Prospectus when read
together with relevant final terms (each, the "Final Terms") referred to herein contains all such
information as investors and their professional advisers would reasonably require, and reasonably
expect to find, for the purpose of making an informed assessment of the assets and liabilities, financial
position, profits and losses, and prospects of the Issuer and of the rights attaching to the relevant
Notes.
LBBW has not authorised the making or provision of any representation or information regarding
itself or the Notes other than as contained or incorporated by reference in, or is consistent with any
such representation or any such information in, this Base Prospectus, the Dealer Agreement (as
defined herein) or any Final Terms or as approved or provided for such purpose by the Issuer or (in
the case of the provision of any information regarding the Issuer or the Notes) as is already in the
public domain. Any such representation or information must not be relied upon as having been
authorised by the Issuer, the Dealers or any of them.
Save for LBBW, no person has authorised the whole or any part of this Base Prospectus. No
representation or warranty is made or implied by the Dealers (acting in their capacity as such) or any
of their respective affiliates, and neither the Dealers (acting in their capacity as such) nor any of their
respective affiliates makes any representation or warranty or accepts any responsibility, as to the
accuracy or completeness of the information contained herein.
This Base Prospectus should be read and understood in conjunction with any supplement hereto and
with any other documents incorporated by reference herein and in relation to any Series and Tranche
of Notes, should be read and construed together with the relevant Final Terms. Potential investors
should be aware that any website referred to in this document does not form part of this Base
Prospectus and has not been scrutinised or approved by the CSSF.
Each person contemplating making an investment in the Notes must make its own investigation,
analysis and appraisal of the financial condition, creditworthiness and other affairs of the Issuer and
its own determination of the suitability of any such investment, with particular reference to its own
investment objectives and experience, and any other factors which may be relevant to it in connection
with such investment.
Neither the delivery of this Base Prospectus or any Final Terms nor the offering, sale or delivery of
any Note shall, in any circumstances, create any implication that the information contained in this
Base Prospectus is true subsequent to the date hereof or the date upon which this Base Prospectus has
been most recently supplemented or that there has been no adverse change, or any event reasonably
likely to involve any adverse change, in the prospects or financial or trading position of the Issuer
since the date hereof or, as the case may be, the date upon which this Base Prospectus has been most
recently supplemented or the balance sheet date of the most recent financial statements which are
deemed to be incorporated into this document by reference or that any other information supplied in
connection with the Programme is correct at any time subsequent to the date on which it is supplied
or, if different, the date indicated in the document containing the same.
The distribution of this Base Prospectus, any Final Terms and the offering, sale and delivery of the
Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Base
Prospectus and any Final Terms comes are required by the Issuer and the Dealers to inform

(i)

themselves about and to observe any such restrictions. For a description of certain restrictions on
offers, sales and deliveries of Notes and on the distribution of this Base Prospectus or any Final Terms
and other offering material relating to the Notes see "Subscription and Sale". In particular, the Notes
have not been and will not be registered under the Securities Act or the securities laws of any state or
other jurisdiction of the United States and the Notes may be in bearer form, which are subject to
U.S. tax law requirements. Subject to certain exceptions, Notes may not be offered, assigned,
transferred, sold, pledged, encumbered or otherwise delivered within the United States or to or for the
account or benefit of U.S. persons. Notes may be offered and sold outside the United States in
reliance on Regulation S. Prospective purchasers are hereby notified that sellers of the Notes may be
relying on the exemptions from the provisions of Section 5 of the Securities Act provided by
Regulation S. Neither this Base Prospectus nor any Final Terms may be used for the purpose of an
offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorised
or to any person to whom it is unlawful to make such an offer or solicitation.
MiFID II product governance / target market
The Final Terms in respect of any Notes may include a legend entitled "MiFID II Product
Governance" which will outline the target market assessment in respect of the Notes and which
channels for distribution of the Notes are appropriate and may outline further details in connection
therewith. Any person subsequently offering, selling or recommending the Notes (a "distributor")
should take into consideration the target market assessment; however, a distributor subject to
MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by
either adopting or refining the target market assessment) and determining appropriate distribution
channels.
A determination will be made in relation to each issue about whether, for the purpose of the MiFID
Product Governance rules under EU Delegated Directive 2017/593 (the "MiFID Product
Governance Rules"), any Dealer subscribing for any Notes is a manufacturer in respect of such
Notes, but otherwise neither the Arranger nor the Dealers nor any of their respective affiliates will be
a manufacturer for the purpose of the MiFID Product Governance Rules.
This Base Prospectus is distributed only to and directed only at persons who are not classified as
a retail client as defined in point (11) of Article 4(1) of MiFID II or equivalent applicable local
regulatory classification.
Singapore SFA Product Classification
Singapore Securities and Futures Act Product Classification Notification under Section 309B(1)(c) of
the Securities and Futures Act (Chapter 289) of Singapore, as modified or amended from time to time
(the "SFA") The Issuer has determined, and hereby notifies all relevant persons (as defined in
Section 309A(1) of the SFA), that the Notes are (i) prescribed capital markets products (as defined in
the Securities and Futures (Capital Markets Products) Regulations 2018 of Singapore) and (ii)
Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of
Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment
Products).
Benchmarks register
The rate of interest payable under the Notes will reset on each Reset Date (as specified in the Final
Terms) and be calculated, if so determined, by reference to the swap rate for swap transactions as
specified in the Final Terms or the relevant yield for United States Treasury Securities at constant
maturity, as the case may be, as set out in the relevant Final Terms (the "Original Benchmark
Rate"). As at the date of this Base Prospectus, ICE Benchmark Administration ("IBA"), who might
be the relevant provider of a benchmark, appears on the register of administrators and benchmarks
(the "Register") established and maintained by ESMA pursuant to Article 36 of the Benchmark
Regulation (Regulation (EU) 2016/1011) ("Benchmark Regulation"). The relevant Final Terms will

(ii)

specify whether IBA or the administrator of a successor reference rate to the relevant Original
Benchmark Rate appear in the Benchmarks Register as of the date of such Final Terms, if relevant. At
the date of this Base Prospectus, as far as the Issuer is aware, the transitional provisions in Article 51
of the Benchmark Regulation apply, such that the administrator of a particular benchmark may not
currently be required to obtain authorisation or registration.
AN INVESTOR INTENDING TO ACQUIRE OR ACQUIRING ANY NOTES FROM AN
AUTHORISED OFFEROR WILL DO SO, AND OFFERS AND SALES OF THE NOTES TO
AN INVESTOR BY AN AUTHORISED OFFEROR WILL BE MADE, IN ACCORDANCE
WITH ANY TERMS AND OTHER ARRANGEMENTS IN PLACE BETWEEN SUCH
AUTHORISED OFFEROR AND SUCH INVESTOR INCLUDING AS TO PRICE,
ALLOCATION, SETTLEMENT ARRANGEMENTS AND ANY EXPENSES OR TAXES TO
BE CHARGED TO THE INVESTOR (THE "TERMS AND CONDITIONS OF THE PUBLIC
OFFER"). THE ISSUER WILL NOT BE A PARTY TO ANY SUCH ARRANGEMENTS
WITH INVESTORS (OTHER THAN DEALERS) IN CONNECTION WITH THE OFFER OR
SALE OF THE NOTES AND, ACCORDINGLY, THIS BASE PROSPECTUS AND ANY
FINAL TERMS WILL NOT CONTAIN SUCH INFORMATION. THE TERMS AND
CONDITIONS OF THE PUBLIC OFFER SHALL BE PROVIDED TO INVESTORS BY
THAT AUHTORISED OFFEROR AT THE RELEVANT TIME. NONE OF THE ISSUER,
ANY OF THE DEALERS OR OTHER AUTHORISED OFFERORS HAS ANY
RESPONSIBILITY OR LIABILITY FOR SUCH INFORMATION.
THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
U.S. SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION IN THE UNITED STATES OR ANY OTHER U.S. REGULATORY
AUTHORITY, AND NONE OF THE FOREGOING AUTHORITIES HAVE PASSED UPON
OR ENDORSED THE MERITS OF THE OFFERING OF SECURITIES OR THE
ACCURACY OR THE ADEQUACY OF THIS BASE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE
UNITED STATES.
Neither this Base Prospectus nor any Final Terms constitutes an offer or an invitation by or on behalf
of the Issuer, the Arranger or any Dealer to subscribe for or purchase any Notes; and this Base
Prospectus, any Final Terms or any information supplied in connection therewith or in connection
with any Notes should not be considered as a recommendation by or on behalf of the Issuer, the
Arranger, the Dealers or any of them that any recipient of this Base Prospectus or any Final Terms or
such information should subscribe for or purchase any Notes. Each recipient of this Base Prospectus
or any Final Terms shall be taken to have made its own investigation and appraisal of the condition
(financial or otherwise) of the Issuer.
All references in this Base Prospectus to "dollars", "USD", "U.S. dollars", "U.S.$" "United States
dollars" or "$" are to the currency of the United States of America, references to "Euro" or "EUR" or
"" are to the single currency which was introduced at the start of the third stage of the European
Economic and Monetary Union pursuant to the Treaty establishing the European Community, as
amended (the "Treaty"), references to "SGD" or "S$" are to the currency of Singapore and references
to "AUD" or "AU $" are to the currency of the Commonwealth of Australia ("Australia").
STABILISATION
In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as
stabilisation manager(s) (each a "Stabilisation Manager" and together, the "Stabilisation
Manager(s)") in the applicable Final Terms (or persons acting on behalf of any Stabilisation
Manager(s)) may over allot Notes or effect transactions with a view to supporting the market
price of the Notes at a level higher than that which might otherwise prevail. However,
stabilisation may not necessarily occur. Any stabilisation action may begin on or after the date
on which adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is

(iii)

made and, if begun, may cease at any time, but it must end no later than the earlier of 30 days
after the issue date of the relevant Tranche of Notes and 60 days after the date of the allotment
of the relevant Tranche of Notes. Any stabilisation action or over-allotment shall be conducted
in accordance with all applicable laws and rules by the relevant Stabilisation Manager(s) (or
persons acting on behalf of any Stabilisation Manager(s)).
The validity of the Base Prospectus will expire on 18 October 2020. Any obligation to
supplement a prospectus in the event of significant new factors, material mistakes or material
inaccuracies does not apply when a prospectus is no longer valid.
FORWARD LOOKING STATEMENTS
This Base Prospectus contains certain forward-looking statements. A forward-looking statement is a
statement that does not relate to historical facts and events. They are based on analyses or forecasts of
future results and estimates of amounts not yet determinable or foreseeable. These forward-looking
statements are identified by the use of terms and phrases such as "anticipate", "believe", "could",
"should", "estimate", "expect", "intend", "may", "plan", "predict", "project" and similar terms and
phrases, including references and assumptions. This applies, in particular, to statements in this Base
Prospectus containing information on or relating to, among other things, future earning capacity, plans
and expectations regarding the Issuer's business and management, its growth and profitability, and
general economic and regulatory conditions and other factors that affect it.
Forward-looking statements in this Base Prospectus are based on current estimates and assumptions
that the Issuer makes to the best of its present knowledge. These forward-looking statements are
subject to risks, uncertainties, assumptions and other factors which could cause actual results,
including the Issuer's financial condition and results of operations, to differ materially from and be
worse than results that have expressly or implicitly been assumed or described in these forward-
looking statements. The business of the Issuer is also subject to a number of risks and uncertainties
that could cause a forward-looking statement, estimate or prediction in this Base Prospectus to
become inaccurate. Accordingly, investors are strongly advised to read the following sections of this
Base Prospectus: "Risk Factors" and "Landesbank Baden Württemberg". The sections "Risk Factors",
and "Landesbank Baden Württemberg" include more detailed descriptions of factors that might have
an impact on the Issuer's business and the markets in which it operates.
In light of these risks, uncertainties and assumptions, future events described in this Base Prospectus
may not occur. In addition, neither the Issuer nor the Arranger or the Dealers assume any obligation,
except as required by law, to update any forward-looking statement or to conform these forward-
looking statements to actual events or developments.
TOTAL LOSS
INVESTING IN THE NOTES INVOLVES CERTAIN RISKS. PROSPECTIVE INVESTORS
SHOULD CONSIDER THAT CERTAIN FACTORS MAY AFFECT THE ABILITY OF THE
ISSUER TO FULFIL ITS OBLIGATIONS UNDER THE NOTES AND/OR ARE MATERIAL
FOR THE PURPOSE OF ASSESSING THE MARKET RISKS ASSOCIATED WITH NOTES
ISSUED UNDER THE PROGRAMME. IF ONE OR MORE OF THE RISKS DESCRIBED IN
THIS BASE PROSPECTUS MATERIALISIS, THIS MAY RESULT IN MATERIAL
DECREASES IN THE PRICE OF THE NOTES OR, IN THE WORST-CASE SCENARIO, IN
TOTAL LOSS OF INTEREST AND CAPITAL INVESTED BY THE INVESTOR, HENCE,
INVESTORS IN THE NOTES MUST BE PREPARED TO LOSE ALL OF THE CPAITAL
INVESTED.

(iv)

TABLE OF CONTENTS
Page
RISK FACTORS .................................................................................................................................... 6
DOCUMENTS INCORPORATED BY REFERENCE........................................................................ 41
ISSUE PROCEDURES ........................................................................................................................ 45
TERMS AND CONDITIONS OF THE NOTES ................................................................................. 46
FORM OF FINAL TERMS ................................................................................................................ 275
INTEREST PAYMENTS AND DISTRIBUTABLE ITEMS OF THE ISSUER ............................... 280
DESCRIPTION OF THE GERMAN BOND ACT ............................................................................ 283
LANDESBANK BADEN-WÜRTTEMBERG ................................................................................... 286
TAXATION ........................................................................................................................................ 309
GERMAN TAXATION ............................................................................................................. 309
LUXEMBOURG TAXATION .................................................................................................. 313
UNITED KINGDOM TAXATION ........................................................................................... 314
SUBSCRIPTION AND SALE ........................................................................................................... 317
GENERAL ................................................................................................................................. 317
UNITED STATES OF AMERICA ............................................................................................ 317
EUROPEAN ECONOMIC AREA ............................................................................................ 318
FRANCE .................................................................................................................................... 318
ITALY ........................................................................................................................................ 318
JAPAN ....................................................................................................................................... 320
THE PEOPLE'S REPUBLIC OF CHINA ................................................................................. 320
HONG KONG ............................................................................................................................ 320
SINGAPORE ............................................................................................................................. 321
UNITED KINGDOM ................................................................................................................. 321
COMMONWEALTH OF AUSTRALIA ................................................................................... 322
GENERAL INFORMATION ............................................................................................................. 323

(v)

RISK FACTORS
Words and expressions defined in the "Terms and Conditions of the Notes" or elsewhere in this Base
Prospectus have the same meanings, unless otherwise noted.
INVESTING IN THE NOTES INVOLVES CERTAIN RISKS. PROSPECTIVE INVESTORS
SHOULD CONSIDER THAT THE FOLLOWING FACTORS MAY AFFECT THE ABILITY OF
THE ISSUER TO FULFIL ITS OBLIGATIONS UNDER THE NOTES AND/OR ARE
MATERIAL FOR THE PURPOSE OF ASSESSING THE MARKET RISKS ASSOCIATED
WITH NOTES ISSUED UNDER THE PROGRAMME. IF ONE OR MORE OF THE RISKS
DESCRIBED BELOW OCCURS, THIS MAY RESULT IN MATERIAL DECREASES IN THE
PRICE OF THE NOTES OR, IN THE WORST-CASE SCENARIO, IN TOTAL LOSS OF
INTEREST AND CAPITAL INVESTED BY THE INVESTOR:
Risks relating to LBBW
The following descriptions of the risk factors relating to LBBW and the LBBW Group, as the case
may be, and their occurrence within a risk category with the most material risk factor presented first
in each category should be understood as a description of residual risks, i.e. of the remaining risks
following all counter measures taken in order to avoid such risks or limit their adverse effects.
Risks relating to LBBW are presented in the following three categories depending on their nature:

1. Risks relating to the Business of the LBBW Group;

2. Risks relating to Legal and Regulatory Environment;

3. Other substantial risks.

Any materialisation of the risks further specified below could have a material adverse effect on the
LBBW Group's business, financial condition and results of operations, which in turn will have a
negative impact on the Notes and is detrimental to Noteholders (including the risk of a total loss of
interest and capital invested by the Noteholders).
Risks relating to the Business of the LBBW Group
Risks relating to the business of the LBBW Group includes the following seven risks in each case as
further specified below:

(i)
Counterparty risks;

(ii)
Market price risks;

(iii)
Liquidity risk;

(iv)
Operational risks;

(v)
Development risks;

(vi)
Real estate risks; and

(vii) Investment risks.
Any materialisation of the risks further specified below could have a material adverse effect on the
LBBW Group's business, financial condition and results of operations, which in turn will have a

6

negative impact on the Notes and is detrimental to Noteholders (including the risk of a total loss of
interest and capital invested by the Noteholders).

Counterparty Risks
The LBBW Group is exposed to different counterparty risks, both from direct contractual
relationships as well as indirectly, which could negatively impact its operational results and financial
condition.
The LBBW Group defines counterparty risk as the risk that borrowers and other counterparties may
no longer be able to fully meet their contractual payment obligations. Counterparty risk may occur
both from direct contractual relationships (e.g. granting loans, buying a security) and indirectly, e.g.
from hedging obligations (especially issuing guarantees, selling hedging via credit derivatives).
Counterparty credit risk also appears in repurchasing agreements and other securities financing
contracts.
Many of these transactions expose the LBBW Group to the risk that the LBBW Group's counterparty
in a foreign exchange, interest rate, commodity, equity or credit derivative contract defaults on its
obligations prior to maturity when the LBBW Group has an outstanding claim against that
counterparty. Due to volatility in foreign exchange and fixed income markets during the past years,
counterparty credit risk has remained at an elevated level compared to the period preceding the
2008/2009 global financial and economic crisis.
Despite the measures and systems in place to minimize counterparty risk, there can be no guarantee
that counterparties never default on their obligations. Additionally, the value of the collateral securing
the LBBW Group's loan portfolio may fluctuate or decline due to factors beyond its control, including
macroeconomic factors affecting Europe and Germany in particular.
The value of the collateral securing the LBBW Group's loan portfolio may be adversely affected by
force majeure events, such as natural disasters, particularly in locations where a significant portion of
its loan portfolio is composed of real estate loans. The LBBW Group may also not have sufficiently
recent information on the value of collateral, which may result in an inaccurate assessment for
impairment losses of its loans secured by such collateral. If any of the above were to occur, the
LBBW Group may need to make additional provisions to cover actual impairment losses of its loans,
which may materially and adversely affect its results of operations and financial condition.
Additionally, the prolonged period of low interest rates since the 2008/2009 global financial and
economic crisis may have contributed to, and may continue to contribute to, excessive risk-taking by
financial market participants such as lengthening maturities of financings and assets held, more
lenient lending standards and increased leveraged lending. Certain of the market participants that may
have taken or may take additional or excessive risk are of systemic importance, and any unwinding of
their positions during periods of market turbulence or stress (and hence reduced liquidity) could have
a destabilizing effect on markets and could lead the LBBW Group to record operating losses or asset
impairments.
Any materialisation of the foregoing could have a material adverse effect on the LBBW Group's
business, financial condition and results of operations, which in turn will have a negative impact on
the Notes and is detrimental to Noteholders (including the risk of a total loss of interest and capital
invested by the Noteholders).

7

Market Price Risks
The LBBW Group is exposed to market price risks, including potential losses in portfolio value
caused by market factors such as changes in interest rates and credit spreads, the price of shares,
foreign currencies, commodities and market volatilities.
The net assets, financial position, results of operations, and risk position of the LBBW Group are
therefore particularly dependent on the following factors:

Fluctuations in interest rates (including changes in the ratio of the level of short-term and
long-term interest rates),

Fluctuations in credit spreads, and

Share prices and exchange rates as well as commodity prices.
The LBBW Group holds interest rate, credit, equity, currency, and a small portion of commodity
positions. The effects of fluctuations in the respective markets may result in consequences that have a
negative impact on the LBBW Group's financial position and results of operations.
Of particular importance to the LBBW Group are changes in interest rates with different maturities
and currencies in which the LBBW Group holds interest-rate sensitive positions. Fixed-income
securities play a significant role in the LBBW Group's financial assets. Accordingly, interest rate
fluctuations can have a strong impact on the value of financial assets. An increase in the level of
interest rates can substantially reduce the value of fixed-interest financial assets, and unforeseen
interest rate fluctuations can adversely affect the value of the LBBW Group's holdings of bonds and
interest rate derivatives. In addition, negative changes in credit spreads can lead to significant losses
in value for the LBBW Group's financial assets.
The aforementioned factors, the general market environment and trading activities, as well as general
market volatility, are beyond the control of the LBBW Group. Therefore, it cannot be ruled out that a
positive result will not be achieved from capital market business. This can have a negative impact on
the profitability of the LBBW Group.
Despite the variety of instruments and strategies used by the LBBW Group to economically hedge
exposure to market risk, there can be no assurance that they will prove effective against all losses.
Many of the LBBW Group's hedging strategies are based on historical trading patterns and
correlations. Therefore, unexpected market developments may adversely affect the effectiveness of
these hedging strategies.
Any materialisation of the foregoing could have a material adverse effect on the LBBW Group's
business, financial condition and results of operations, which in turn will have a negative impact on
the Notes and is detrimental to Noteholders (including the risk of a total loss of interest and capital
invested by the Noteholders).

Liquidity Risk
Liquidity risk is the inability to meet payment obligations as they fall due (liquidity risks in a
narrower sense) and to raise the required funds at the expected cost (funding (spread) risks).
The main risk for the LBBW Group's liquidity situation is a potential loss of investor confidence and
consequently a deterioration of its funding potential.

8

Although the LBBW Group maintains a diversified funding base, including both institutional
investors from in- and outside the savings banks financial group (Sparkassen Finanzgruppe) as well
as private customers, a loss of confidence by some or all of these investor groups could endanger the
LBBW Group's liquidity position.
The LBBW's cost of funds could increase in the future and it may need to seek funds from a greater
variety of sources than has been the case historically. In the highly competitive market in which
LBBW competes, this could have a significant impact on earnings.
The LBBW Group's liquidity situation could also be materially adversely affected by factors the
LBBW Group cannot control, such as a continued general disruption of financial markets or a
negative standing of the financial services industry in general, which could restrict the LBBW
Group's access to capital markets and limit its ability to obtain funding on acceptable terms. In
addition, the LBBW Group's ability to raise funding could be impaired if lenders develop a negative
perception of the short-term or long-term financial prospects, or a perception that the LBBW Group is
experiencing greater liquidity risk. Further, the LBBW Group's cost of obtaining long-term unsecured
funding is directly related to its credit spreads in both the bond and derivatives markets. Also, LBBW
is subject to ratings requirements under various derivatives transactions, structured finance
transactions and deposit and liquidity facilities. In addition, turbulence in the global financial markets
and economy may adversely affect the LBBW Group's liquidity and the willingness of certain
counterparties and customers to do business with the LBBW Group, which may result in a material
adverse effect on the LBBW Group's business and results of operations.
A downgrade of the LBBW Group's credit ratings or even the possibility of a downgrade could have a
detrimental impact on the LBBW Group's ability to conduct the aforementioned transactions and
facilities or other lines of business as well as the LBBW Group's relationship with its customers and
on the sale of products and services and thereby adversely affect its financial condition or results of
operations as well as its liquidity situation, widen its credit spreads or otherwise increase its funding
cost, or limit its access to capital markets (as further set out in the risk factors "Risk of a reduction in
the LBBW Group's credit ratings").
Any materialisation of the foregoing could have a material adverse effect on the LBBW Group's
business, financial condition and results of operations, which in turn will have a negative impact on
the Notes and is detrimental to Noteholders (including the risk of a total loss of interest and capital
invested by the Noteholders).

Operational Risk
The LBBW Group is exposed to various operational risks. Operational risks are inextricably linked to
any business activity of the LBBW Group.
The LBBW Group defines operational risks ("OpRisk") as the risk of losses arising due to the
unsuitability or failure of internal processes and systems, people, or due to external events. This
definition also includes legal risks.
The LBBW Group's banking business is based on highly developed information technology and is
therefore subject to IT risks. IT-systems are exposed to threats e.g. external cyber- and insider attacks,
data theft and coding through Trojans. In addition, software or hardware problems can cause delays or
mistakes in the ongoing business.
The changing environment in the banking industry requires great demands on the employees and their
qualification. The LBBW Group's ability to attract and retain qualified personnel is critical to its
success and failure to do so could negatively affect its performance. Human mistakes in working
processes and risks of internal fraud can never be eliminated completely.

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