COREALCREDIT BANK AG

Operational Risks
Operational risk describes the risk of losses arising from insufficient or erroneous internal
processes, employees, and systems, as well as external events. It is caused by human errors,
systems failures and insufficient controls and processes. Legal risks are also part of the
operational risk; legal risks, in particular, arise from uncertainty as to the outcome of legal actions
or uncertainty in the applicability or interpretation of contracts, laws or regulations.
Regulatory Risk
The Issuer's business is subject to detailed, comprehensive laws and regulations as well as
supervision. Changes in existing laws and regulations may affect the way in which the Issuer
conducts its business and the products the Issuer may offer. Changes in regulations relating to
financial services, securities products and transactions may materially adversely affect its
businesses by restructuring the Issuer's activities, imposing increased costs or otherwise.
Real Estate Business, Business and Strategic Risk
As a credit institution, the Issuer is exposed to the creditworthiness of its customers and
counterparties. If the value of the collateral securing the loan portfolio declines, the Issuer will be
exposed to higher credit risk and increased risk of non-recovery in the event that any of its loans
fail to perform. The Issuer cannot assure that its level of risk provisioning will be adequate or that it
will not have to make significant additional provisions for possible bad and doubtful debts in future
periods.
The Bank's real estate business and business activities are solely focused on the German market.
It is therefore dependent to a particularly high degree on the development of the real estate market
in Germany and an economic rebound in the European economic and monetary union, and most
of all in Germany.
European Sovereign Debt Crisis
In view of the European sovereign debt crisis and the deteriorating market value of obligations of
certain European sovereign issuers, COREALCREDIT has made write-downs on Greek bonds
and has made further risk provisioning relating to Greek government bonds and bonds relating to
the so-called PIIG countries. However, should such risk provisioning prove not to be sufficient and
should further write-downs be necessary, this may materially adversely affect COREALCREDIT's
net assets, financial position and earnings performance.
Risk Factors regarding the Notes
Notes may not be a suitable investment
A potential investor should not invest in Notes which are complex financial Notes unless the
investor has the expertise (either alone or with a financial advisor) to evaluate how the Notes will
perform under changing conditions, the resulting effects on the value of the Notes and the impact
this investment will have on the potential investor's overall investment portfolio.
Market Conditions and Market Price Risk
The trading market for debt securities may be volatile and may be adversely impacted by various
events.
The holder of Notes is exposed to the risk of an unfavourable development of market prices of its
Notes which materialises if the holder sells the Notes prior to the final maturity of such Notes. In
such event, the holder may only be able to reinvest on less favourable conditions as compared to
the original investment.
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