Unofficial Translation* Notification of the Bank of Thailand Re: Instruments Qualified to be included in Capital Funds of Commercial Banks ______________________ By virtue of the provisions of Section 4 of the Commercial Banking Act B.E. 2505 as amended by the Commercial Banking Act (Number 3) B.E. 2535, the Bank of Thailand hereby issues regulations to domestic banks, specifying types of and calculation methodology for inclusion of debt instruments, which have maturity of greater than 5 years and subordinated to general creditors, in the capital funds, as follow; Article 1. The Bank of Thailand circulation Tor Por Tor. Nor Vor. (Vor) 1237/2535, dated 30th June B.E. 2535 Re: Capital instruments that can be included in the capital funds, shall be repealed. Article 2. Domestic banks may include the proceeds only from issuing hybrid debt capital instruments or subordinated debt in the capital funds according to rules, methodology and conditions as stated in Articles 3 to 5. Article 3. Domestic banks shall submit the requests to the Bank of Thailand for approval to include the proceeds from issuing the above-mentioned capital instruments as tier 2 capital. The money shall be included in tier 2 capital only when permission is granted. Article 4. Hybrid debt capital instruments must have the following characteristics: (1) They must be unsecured; (2) They must have maturity of at least 10 years, and during the last 5 years, an amortization factor of 20% per annum must be applied; (3) They cannot be redeemed prior to maturity, except with prior approval from the Bank of Thailand; (4) They must be subordinated to all depositors and general creditors; (5) Domestic banks have the right to defer interest payments if there is no current-year profit, and are unable to make dividend payments to common and preferred stock holders; (6) Principal and interest payments on hybrid debt capital must be deferred if such payment will result in negative capital of the issuing bank, or if the Bank of Thailand has intervened by ordering capital write down and recapitalisation. The instruments may be included in tier 2 capital once they are fully paid. Article 5. Subordinated debts must have the following characteristics: (1) They must be unsecured; (2) They must have maturity of greater than 5 years, and during the last 5 years, an amortization factor of 20 % per annum must be applied; (3) They cannot be redeemed prior to maturity, except with prior approval from the Bank of Thailand; (4) They must be subordinated to all depositors and general creditors, but ranked senior to the hybrid debt capital instruments holders, as specified in Article 4. The instruments may be included in the capital funds once they are fully paid. Subordinated debts can be included in bank's capital up to 50% of their tier 1 capitals. Article 6. This notification shall come into force on and from date of its publication in the Government Gazette. Given on 22nd August B.E. 2543 M.R. Chatumongkol Sonakul Governor Bank of Thailand_______________________________________________________________________*This translation is for convenience of those who are not familiar with Thai language. For official purpose, only Thai texts are relevant. -YK-