Saving and investing

MiFID is an EU directive that aims to create more uniform rules for trading in financial instruments. The rules will provide increased transparency and higher investor protection.

MiFID will lead to more competition, since, once approval to provide investment advisory services in one of the EU countries has been given to a business, the approval will apply in all the EU countries. Moreover, among other non-EU countries, Norway has decided to implement the MiFID rules.

MiFID will lead to higher investment customer protection, as customers will be categorised as either retail customers, professional customers (for instance, large businesses) or eligible counterparties (banks, etc.), with specific rules applying to each customer category. The categorisation of customers is based on objective criteria. A customer may request to be placed in another category if specific criteria are met, but it is up to the Bank to decide whether it is appropriate to meet the request.

Yes. However, the aim of MiFID is to protect retail customers, and specific criteria must therefore be met. First of all, the customer must request to be treated as a professional customer, and, second, the customer must meet two of the following requirements:

• At least ten big transactions per quarter over the last four quarters;
• Negotiable assets in excess of EUR 500,000 (about 1,73 million LTL);
• Minimum one year's experience from a financial institution.

The MiFID rules follow in the wake of the global rules for best practice in the investment area, which the Bank has applied in recent years, both in connection with our investment product development and our advisory services.

Generally, MiFID is all about standardising rules. Financial institutions will be required to provide more documentation for advisory services provided to customers.

The increased documentation requirements help make it clear what has been agreed between the Bank and the customer and to avoid ambiguity.

The services provided in eBanking will be "execution-only" services, that is, customers are able to trade securities on their own. It will be up to the customer to decide whether a trade should be executed.

The investment profile will be extended, but a large part of it will remain the same. We will convert the existing profiles and add further information about experience, knowledge, recommended trading range and financial situation. The information will be stored as one document together with the recommendations generated on the basis of the profile.

• The existing investment profile, which provides information about the customer's attitude to risk and time horizon, will be extended to include information about the customer's experience in and knowledge of the risks related to the specific investment, as well as the customer's ability to bear losses resulting from the investment.
• On the basis of the customer's experience in and knowledge of various products, a trading range will be specified for the customer that defines the products in which he or she has the necessary qualifications to trade.
• If the customer wants to trade in a product which is outside his or her trading range, he or she will be warned. If the customer wants to execute the transaction anyway, he or she can decide to extend his or her trading range by being trained by the adviser to execute this type of transaction or to have the transaction executed as an execution-only transaction. The new rules will not ban the customer from executing the transaction.
• There are three order execution levels in connection with MiFID:
• Execution only: Only services provided in e-Banking relating to simple products, that is, bonds, shares and investment fund's units;
• Execution only, but with appropriateness test: Execution-only services, that is, without advice, but with an assessment of whether the customer understands the risks related to the product;
• Advisory services: Investment advisory services where our recommendation must meet the following requirements:
• The customer understands the risks related to the product (experience and knowledge);
• The customer is able to bear losses, if any (financial situation);
• The customer's investment objective, including time horizon and attitude to risk.
• The investment advisory process will take a little longer, especially at the first meeting after the introduction of MiFID as the extended investment profile must be created.
• The documentation will be better. The customer will be provided with a printout specifying the conclusions of the advisory services to make it clear what has been agreed between the Bank and the customer and to avoid ambiguity.
• The Bank covers costs incurred in relation to MiFID, and fees and charges will not be affected by MiFID.

The Bank will be obliged to provide all-encompassing advisory services and will regularly check that the customer's investment profile is up to date. When providing advisory services, we will also thoroughly assess the customer's ability to bear losses.

Therefore, the customer must provide us with information about his or her financial situation, including details of his or her shareholdings with and obligations to other financial institutions. In that way, we can ensure that the investments match the investment profile. If we do not have thorough insight into the customer's financial situation, we cannot provide all-encompassing advisory services. It would be the same as trying to do a puzzle with nine pieces of which four are missing.

Therefore, we must obtain an overview of the customer's financial situation and in connection with the provision of advisory services.to take account of the customer's loans, savings, pensions, home, etc.

The Bank will be obliged to provide all-encompassing advisory services and must therefore know the customer's financial situation. Advisers base their advice on the customer's requirements by means of the investment profile, and if their advice identifies further investment requirements, it may lead to a sale. The most important thing is that our advice creates value for the customer.

If the customer does not want to inform us about his financial situation, we cannot provide advisory services. But if the customer does not want any of the advisory services we will provide all the other investment services by making the client's order execution only.

In order for a customer to opt for our investment products and services instead of those of our competitors, we must provide the best products and services. This competition is an advantage for the customer. Just think of the price battle in relation to brokerage. If we recommend something to a customer, we must be able to document that it is appropriate for him or her; we cannot just "sell" when providing advisory services.

Advisers base their advice on the customer's requirements by means of the investment profile, and if their advice identifies further investment requirements, it may lead to a sale. The most important thing is that our advice creates value for the customer.

MiFID will produce more satisfied customers. Moreover, we have looked into every aspect of our investment concept, advisory process, documentation, etc. Our entire range of investment products and services has been improved, and we have spent a lot of resources on integrating the MiFID requirements in our IT systems. It is very important that the advisory process is smooth for both customers and the Bank. We have completed MiFID training for our advisers.

Yes.

No. Fees and charges will not be affected by MiFID. This means that all the expenses related with carring out MiFID will be funded out of the Bank's profits.

All conclusions will be printed and provided to the customer. Moreover, the customer can ask for a printout of the information at any time.