The present policy is based on the current legislation and the Safeguarding Clients’ Assets and Custodian Selection Policy of National Bank of Greece S.A.

This Policy may be a basis for other internal acts containing detailed regulations or procedures.

United Bulgarian Bank AD - member of the NBG Group of Companies (hereinafter “the Bank”) strives to provide its clients with investment and / or ancillary services, which cover fully their requirements, provided with the highest level of security and transparency and compliant with regulatory and statutory requirements, achieving the best interest of the clients and safeguarding their rights in relation to financial instruments and funds possessed by them.

 

The present Policy applies respectively to the Bank in its capacity of a bank-custodian within the meaning of the Social Insurance Code and a bank-depositary within the meaning of the Public Offering of Securities Act, and it is in compliance with the local legislation concerning these activities and the contracts with the respective clients.

The policy for safeguarding clients’ assets by the Bank or by any third parties (sub-custodians) includes:

This policy sets out the framework for safeguarding Bank’s client assets and sub-custodian selection procedure. This Policy does not refer to all the activities performed by the Custody Unit, since there are also other internal acts covering activities not within the scope of this Policy.

 

The Senior Management of the Bank is responsible for setting written rules and establishing adequate controls and appropriate procedures for the provision of the services according to this policy, as well as for the oversight of implementation.

The directors of the respective divisions, executive or representative staff members, the persons working under contract for the Bank, as well as the Personnel of the Bank are responsible for the sound implementation of this policy. They should immediately report to the responsible bodies of the Bank any case of non-implementation brought to their attention or reported to them by clients and they should act jointly with the authorized divisions, in line with the pre set remedial actions stated in this policy.

Operations Division, Investment Banking Division and Treasury Division respectively are responsible for the establishment of this policy.

The policy is reviewed at least on an annual basis, or more frequent if necessary, in order to incorporate the changes in the current regulatory and statutory requirement, the changes in the Bank’s or the Group’s strategic objectives or in the internal (organizational – business) and external (market) environment of the Bank or the Group. The Policy is approved by NBG Group Compliance Division before approval from UBB Board of Directors.

The Bank has established Compliance mechanisms and integrated Internal Audit systems.

 

The Bank in order to preserve its clients’ rights on safeguarding their assets and funds, maintains records and separate accounts for its clients that enable the Bank to distinguish each client portfolio from another or from its own portfolio at any time and without delay.

The records and the accounts are maintained in a manner ensuring their accuracy and correspondence to the financial instruments and funds held for the clients.  

The Bank reconciles, on a regular basis, the records and accounts maintained by it with those maintained by third parties holding client’s assets.

The Bank has established the necessary mechanisms and procedures and undertakes the appropriate measures during the accounting reconciliation or physical count in order to:

The Bank controls and continuously improves its services regarding the safeguarding of clients’ assets, as well as its operational procedures in relation to the above, where possible and according to the regulatory and statutory requirements.

The Bank informs its retail clients, or potential retail clients of the third person by which and where the funds and /or financial instruments provided to the Bank may be kept. This information includes also the responsibility of the Bank as per its national legislation for any action or inaction by the person holding the client’s funds and /or financial instruments and the consequences for the client in case of insolvency of that person. 

The Bank informs its retail clients, or potential retail clients of the possibility their financial instruments to be held in a omnibus account with a third person if the national legislation allows it. The Bank informs its retail clients, or potential retail clients, of the cases where the national legislation does not allow the client’s financial instruments, held by the third person to be segregated from the financial instruments of that third person or of the financial instruments of the Bank. The information explicitly defines the risks for the client resulting from the above circumstances.  

The Bank explicitly informs its retail clients, or potential retail clients when the accounts comprising of its funds and /or financial instruments are or will be a subject to regulation of the law of a country which is not a member state. The information should define that the rights of the client, related to the funds or financial instruments, may differ due to the application of a third country law.

The Bank explicitly informs the client regarding:

a.    the potential risks related to provision of services regarding safeguarding clients’ assets in case a third party sub-custodian is involved,

b.    their rights and obligations regarding the safeguarding of their assets, as well as for all costs or associated charges, taxes or other costs, if any;

c.    its obligations in cases of use of clients assets, as well as for the related risks in those cases,

d.    the existence of possessory lien or retention right over the client’s funds or financial instruments for the Bank, as well as of the conditions on which these rights arise or may arise;

e.    the existence and the conditions on which the Bank has or may have an offsetting right over the client’s funds or financial instruments;

f.     the possibility of the depositary institution to have possessory lien, right to retention or of set-off over the client’s funds or financial instruments.  

g.    other special cases (e.g existence of collateral security etc).

The Bank ensures that the client has fully understood the terms and conditions of the provision of safeguarding assets and takes his written consent when needed.

The Bank ensures that the Personnel involved in the assets safeguarding services, has the necessary knowledge and expertise. Furthermore, the Bank ensures that all the necessary security standards regarding the safeguarding of clients’ assets are followed.

 

The Bank, apart from providing custodian services itself, safekeeps the financial instruments of its clients in a depositary institution on client accounts to the account of the Bank or on accounts opened to the account of a third person (sub-custodian) on the grounds of a written agreement for the provision of investment and ancillary services and in compliance with the conditions envisioned therein, as well as with the conditions and procedures set out in the present policy and the current legislation.

When the Bank opens an account for financial instruments of its clients with a third person (sub-custodian), it must take due care for the interests of its clients at the selection and appointment of that person (sub-custodian). Moreover, the Bank monitors the selection of the sub-custodian (if any) periodically but at least on annual basis. In the execution of the said duties (selection, evaluation and monitoring), the Bank takes into account the professional qualities and market reputation of the third person (sub-custodian), as well as the regulatory requirements connected to the holding of such financial instruments, which may impair the client’s rights. Additionally, third persons (sub-custodians) are selected, evaluated and monitored with the use of internationally accepted standards.

The Bank sets out measurable objectives regarding the security, transparency and effectiveness of safekeeping clients’ assets by the Bank itself or by third persons (sub-custodians), which are monitored and evaluated on an ongoing basis.

The Bank pays special attention in case of third person (sub-custodian) selection in a country outside European Union. The Bank deposits the financial instruments of its clients to a sub-custodian in a country outside the European Economic Area (E.E.A.) only if the third person is subject to specific regulations and supervision in that country.

If the Bank intends to deposit financial instruments of a client to a third person (sub-custodian) in a country whose legislation provides for special regulation and supervision with regard to safekeeping of financial instruments for the account of another person, the Bank does not deposit the client’s financial instruments to a sub-custodian of that country, which is not subject to the envisaged by the local legislation regulation and supervision.

The Bank does not deposit financial instruments held on behalf of its clients to a sub-custodian in a third country that does not regulate the holding and safekeeping of financial instruments for the account of another person unless one of the following conditions are met:

a.    The nature of the financial instruments or of the investment services connected with those instruments requires them to be deposited with a third party in that third country, or;

b.    The financial instruments are held on behalf of a professional client and that client requests in writing from the Bank to deposit them at a third party in that third country.

The Bank takes the necessary and appropriate measures to ensure that the keeping of financial instruments of its clients with a third person (sub-custodian) is performed in a manner which guarantees identification of the client’s financial instruments separately from the financial instruments of the Bank or the third person by the keeping of segregated accounts by that third person or by the application of some other measures ensuring the same level of protection.

In case that the applicable legislation to the operation of the third person does not allow compliance with the requirements of the previous paragraph, the Bank must undertake appropriate actions for guaranteeing client’s rights in relation to the deposited with the third person financial instruments, including opening accounts for clients’ financial instruments other than its own account, which the third person shall keep in the name of the Bank, but for other’s account. 

The Bank reviews and improves, on an ongoing basis, the specific characteristics of the services provided by the third party (sub-custodian), where possible and in accordance with the existing regulatory and relevant statutory requirements of the country where the third party operates.

 

The Bank may deposit the funds provided by clients or obtained as a result of investment services performed for their account, into one or more accounts opened at any of the following:

a.    a Central Bank,

b.    a credit institution in accordance with the Markets in Financial Instruments Act,

c.    a bank authorized in a third country, and

d.    a collective investment scheme which has obtained authorization to conduct business in accordance with Directive 85/611/EEC or another collective investment undertaking that is subject to supervision by a competent supervisory authority of a Member State provided that it satisfies the respective legal requirements. 

The Bank does not have a right to invest client’s funds in a collective investment scheme as per letter “d” above, if the client is opposed to it.

If the abovementioned institutions are connected persons to the Bank, the latter may deposit client’s funds into them only upon written agreement made by the client.

In cases where the Bank does not deposit client funds in a Central Bank, it should take due care for the interests of the client in determining the person and the depositing of the client’s funds therein and shall review periodically, but at least on an annual basis, with the same care the selection of this institution or collective investment scheme as well as the conditions in which it keeps the client’s cash.

In the execution of the said duties, the Bank takes account the professional qualities and market reputation of the person with a view to guaranteeing the client’s rights, as well as the statutory requirements and market practices related to the keeping of funds, which may impair the client’s rights. For that purpose the Bank follows specific procedures for the selection, appointment and monitoring of the institutions where the funds are deposited.

The Bank takes all appropriate measures to ensure that client’s funds deposited on their behalf to any of the abovementioned institutions are credited in separate account(s) from the accounts used for Bank’s funds.

In case that the legislation applicable to the activity of the institution, where the client’s funds are deposited, does not allow compliance with the said requirements in the previous paragraph, the Bank takes all appropriate measures for guaranteeing the client’s rights relating to the deposited funds, including by opening an omnibus account for clients’ funds, which such person will keep in the name of the Bank but for another’s account.

 

The Bank may use financial instruments of its clients for own account or use such financial instruments for the account of another client of the Bank, only upon client’s (who possess their financial instruments) express consent to the use of the instruments on specified terms and conditions. The consent should be given in writing if it refers to retail client certified by signing of all respective conditions.

The Bank may use financial instruments held on behalf of a client in an omnibus account maintained by a third party (sub-custodian) if:

and at least one of the following conditions are satisfied:

Prior to the conclusion of a transaction for securities financing with subject financial instruments held for the account of a retail client, or before using in another way such instruments for its own account or for the account of another client, the Bank shall provide the retail client on a durable medium and within a reasonable time prior to the use of the financial instruments, with clear, complete and accurate information about the Bank’s obligations and liabilities in relation to the use of the financial instruments, including the conditions for their refunding, if relevant to the transaction and the existing risks.

All the above mentioned are fully documented in the Bank’s systems and records.

 

Stricter rules than the ones set in this Policy apply when the Bank is acting in its capacity of a:

a.    depositary institution within the meaning of the Public Offering of Securities Act (POSA), as the respective relations will be settled in compliance with the restrictions of POSA (art. 173 and the following) and the clauses set out in the client’s contract;

b.    bank-custodian within the meaning of the Social Insurance Code (SIC), as the respective relations will be settled in compliance with the restrictions of SIC and the clauses set out in the client’s contract.