I am pleased to confirm that Novo Banco reaffirms its support of the Ten Principles of the United Nations Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption.

In this annual Communication on Progress, we describe our actions to continually improve the integration of the Global Compact and its principles into our business strategy, culture and daily operations. We also commit to share this information with our stakeholders using our primary channels of communication.

Sincerely yours,
Eduardo Stock da Cunha

Novo Banco CEO

In this respect we point out that Novo Banco shows unconditional respect for the United Nations Universal Declaration of Human Rights and for the requirements of the International Labour Organisation, in Portugal and all Countries where Novo Banco has operations. The Bank’s Human Rights Policy is revealed through the commitments assumed towards the Global Compact principles.

Novo Banco assumes full and unconditional respect for the United Nation’s Declaration of Human Rights and for the requirements of the International Labour Organization. NOVO BANCO has a Human and Labour Rights Policy, publicly available at the company’s website ( http://www.novobanco.pt/cms.aspx?srv=207&stp=1&id=742441&fext=.pdftarget= and http://www.novobanco.pt/cms.aspx?srv=207&stp=1&id=699268&fext=.pdf) which further reinforced its internal regulations, labour practices and overall corporate culture of protection and respect for people and human rights in all the geographies where it operates. NOVO BANCO’ policy for Human Rights is expressed through the commitment established with the Global Compact principles, and therefore there is no risk of incidents of child labour, forced or compulsory labour occurring, discrimination and operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk.
First and foremost, NOVO BANCO promotes the respect for the national legislation and regulations, while also stressing the need to abide by the United Nations Universal Declaration of Human Rights, the OECD Guidelines for Multinational Enterprises and the International Labour Organisation’s principal conventions.
• http://www.novobanco.pt/cms.aspx?srv=207&stp=1&id=699187&fext=.pdf
• http://www.novobanco.pt/cms.aspx?srv=207&stp=1&id=742439&fext=.pdf
This policy covers all the Employees of the Novo Banco.

Novo Banco activities are mostly developed in countries where local legislation ratifies the International Labour Organization Conventions, namely in Portugal where the headquarters of Novo Banco are located and where policies and principles applicable to all companies are defined. In countries outside the OECD, Novo Banco acts in compliance with the same labour laws regarding Human Rights codes and standards and non-discrimination policies rules and standards. The Banco has nonetheless published the Universal Declaration of Human Rights on its intranet.

Novo Banco relationship with all its employees is based on a of equal opportunity behaviour. To establish this behaviour Novo Banco has a Non Discrimination Policy. This Policy holds a crucial and indispensable role in the safeguarding of the principle of equal opportunity and the duty of non discrimination in all countries was it operates. The essential purpose of Novo Banco non-discrimination policy, available in company website (http://www.novobanco.pt/cms.aspx?srv=207&stp=1&id=699258&fext=.pdf and http://www.novobanco.pt/cms.aspx?srv=207&stp=1&id=742440&fext=.pdf)
is to safeguard the principle of equal opportunities and the duty of non-discrimination. In the recruitment process of its employees, Novo Banco observes the principles of non-discrimination by reason of gender, race, skin colour, socioeconomic conditions and sexual orientation, it ensures adequate working conditions to handicapped employees and makes sure that practices which may lead to instances of discrimination in any possible form are prevented and monitored.

In 2015 Novo Banco takes one step further, in order to communicate and spread compliance and good practices, to all employees, and to all stakeholders , by publishing its code of conduct. In 2015, Novo Banco has provided a code of conduct training session, promoting the principles, and the values that shape Novo Banco Conduct.

The Code of Conduct of Novo Banco (available in Portuguese, English and French) ensures the compliance with all the applicable labour rules, which are considered in the national labour legislation that ratifies the International Labour Organisation Conventions. The Code of Conduct is applicable to all Novo Banco Group, including non-OECD countries, where these principles are also applied. In the cases where the violation of the principles addressed in the Code of Conduct is also a violation of a law, regulation or internal rule, the latter are the ones to be primarily considered and invoked for the purposes of disciplinary action. The function of compliance, audit and the mechanisms for the anonymous reporting of irregularities, minimise the risk of occurrence of child labour or forced or compulsory labour in the Bank´s operations, whether among Employees or in the Bank’s service providers.
Up till 31 December 2014, 10 violations were detected vis-à-vis the internal regulations of the bank, which resulted in the following sanctions:
• 5 Dismissals without any indemnity or compensation;
• 1 Temporary suspension with loss of pay and seniority;
• 4 Reproaches registered.

As regards the Portuguese society in general, the Global Compact Principles are already enshrined in the national legislation. The General Inspectorate for Labour and Social Security is the entity responsible for making sure these principles are followed, up to Novo Banco has been in compliance with the legislation and standards mentioned above.

Novo Banco Human Rights concerns are extensive to bank’s supply chain, therefore Novo Banco published, a set of principles of conduct of sustainable development which complement the contractual rules established with its Suppliers. Actually all the suppliers must to subscribe the “Principles for Suppliers of NOVO BANCO” based on Global Compact Principles. These Principles can be found in the Suppliers Portal, the regular channel for communication with this group of stakeholders, which may register in the portal as certified suppliers of Novo Banco companies. In the certification process suppliers must reply to a number of questions intended to assess their sustainability practices, namely concerning labour issues, ethics, hygiene, health and safety in the workplace, and environmental management.
• https://fornecedores.novobanco.pt/
• https://fornecedores.novobanco.pt/portalcompras/cms.aspx?plg=04e27e0d-9fb9-402e-a6ed-3a46839c850c~
• http://www.novobanco.pt/cms.aspx?labelid=SUPPLIER

Novo Banco has a scoring process that permits to rank suppliers in accordance with the practices reported in the certification process, with each supplier being subsequently informed of its score. This assessment mechanism not only permits to identify the suppliers with the best practices, but also fosters a better engagement with the suppliers and a sharing of recommendations and experiences about good environmental and social practices along the supply chain. Until December 31, 2014, from the universe of identified suppliers, 428 had submitted their registration request, of which 246 have already completed the relevant process. The degree of coverage in terms of invoicing for suppliers already registered or undergoing the registration (pre-registration) was 93.4% on December 31, 2014.

The respect for Human Rights is part of the Novo Banco value chain, including the main stakeholders: Clients, Employees, Shareholders and Suppliers.
Please consult this policy:
• http://www.novobanco.pt/cms.aspx?srv=207&stp=1&id=739229&fext=.pdf
• http://www.novobanco.pt/cms.aspx?srv=207&stp=1&id=742534&fext=.pdf

Novo Banco subscribes the Universal Letter on Human Rights, as a Portuguese company Novo Banco also subscribes the OECD guidelines for Multinational Corporation and the Global Compact Principles. All those principles are covered by Novo Banco code of conduct, our principles for sustainable development and other corporate values.
http://www.novobanco.pt/cms.aspx?srv=207&stp=1&id=699187&fext=.pdf
http://www.novobanco.pt/cms.aspx?srv=207&stp=1&id=742439&fext=.pd

The monitoring of the Code of Conduct and other internal rules, with regard to clarification of employees in respect to its content and application, is the responsibility of the Compliance Department. The Compliance Department reports regularly to the Audit Committee and to Board members all the violations to the code of conduct and other internal rules.

As to the internal regulations, up till December 2014, several notifications and issues related to same, mainly relating to conflict of interest and professional secrecy issues were received. Up till 31 December 2014, 10 violations were detected vis-à-vis the internal regulations of the bank, which resulted in the following sanctions:
• 5 Dismissals without any indemnity or compensation;
• 1 Temporary suspension with loss of pay and seniority;
• 4 Reproaches registered.

The Principles of Relationship with the Suppliers of NOVO BANCO is monitories by the Procurement (DNCC). To uphold these principles, the unit responsible for all Procurement at Novo Banco (DNCC) undertakes regular visits to suppliers in order to assure that the supplier has the capacity to comply with Novo Banco commercial demands. On these regular visits, DNCC provide information about the Principles of Conduct for Suppliers and verifies compliance from the supplier with these principles. DNCC is building a formal approach to these visits, in order to formalize Novo Banco procedures concerning non compliances, and further requirement to each of the visited suppliers.

The right to free association is enshrined in the Portuguese legislation and is a recognized right of all the Employees. Novo Banco has always followed a policy of freedom of association and effective recognition of the right to collective bargaining. Among these, we could refer our respect for and support to our employees’ trade union membership, the existence of a trade union secretariat and a procedure for Information and Consultation, in compliance with a community directive.

Novo Banco does not impose any restrictions at this level, either in Portugal or in the other countries where it operates. In NB Portugal, the percentage of unionized employees rounds 97%, in line with the average of the Portuguese banking sector.

Novo Banco has an active Workers Council, elected by the employees, with whom the HR Department meets on a monthly basis to discuss and analyze several HR issues: social wellbeing, employees’ labour conditions, strategic, organizational or functional improvements and all relevant facts impacting the Employees.

Finally, Novo Banco is represented on the Portuguese Association of Banks who takes part in the Financial Sector's collective bargaining discussions.

Novo Banco relationship with all its employees is based on a policy of equal opportunity (http://www.novobanco.pt/cms.aspx?srv=207&stp=1&id=699258&fext=.pdf and
http://www.novobanco.pt/cms.aspx?srv=207&stp=1&id=742440&fext=.pdf). This policy holds a crucial and indispensable role in the safeguarding of the principle of equal opportunity and the duty of non discrimination. With this aim NOVO BANCO has, a non discrimination policy, safeguarding the principle of equal opportunity and the duty of non discrimination.

In the scope of the Human Resources development policy, the focus on their training is a fundamental pillar in the development of the skills and careers of this group of stakeholders. The Novo Banco University offers all employees the possibility to apply for university degrees, post-graduate courses and seminars and thus benefit from Portugal’s most prominent experts in management, finance and economics. In the scope of its strategy of promoting, developing and retaining employees, NOVO BANCO makes it possible for its employees to attend NOVO BANCO University, a project based on partnerships with renowned universities and higher institutes and that relies on a significant number of bank employees to design and execute the programmes. NOVO BANCO University is open to young graduates with high potential and / or employees that, not being graduates, have significant professional experience. Hence, two distinct programmes have been developed:
• Executive Master in Management & Banking, in partnership with Universidade Católica Portuguesa;
• Support for the Degree in Bank Management.

The Novo Banco University has spread skills with added value for employees, giving them the right training for their careers.

In the scope of training programmes aimed at all its employees, NOVO BANCO realised an investment of Euros 369,049, having realised a total of 25 659 hours of training.

The right to free association is enshrined in the Portuguese legislation and is a recognized right of all the Employees. Novo Banco has always followed a policy of freedom of association and effective recognition of the right to collective bargaining. Among these, we could refer our respect for and support to our employees’ trade union membership, the existence of a trade union secretariat and a Procedure for Information and Consultation, in compliance with a community directive. Novo Banco does not impose any restrictions at this level, either in Portugal or in the other countries where it operates.

Novo Banco trade union meets 4 times a year with the Human Resources Committee, compose by the Head of Human Resources Department of all Novo Banco Group Enterprises. There are 3 bodies with a seat in trade unions that meet with the HR Management and with the Bank's Board of Directors. These parts discuss with trade unions issues, concerning social wellbeing, the climate in the organization, the improvement of the Employees' conditions, strategic, organic or functional reorganizations and all relevant facts impacting the Employees. 97% of our employees are trade union members and represented by an independent trade union or covered by collective bargaining agreements.

Finally, Novo Banco is represented on the Portuguese Association of Banks who takes part in the Sector's collective bargaining discussions.

Training also one of the Novo Banco Group’s main investments in the creation of competitive human capital.

The implementation of the Novo Banco Group’s training plans is based on two types of training:
1. General training for employees in general;
2. Specific training, structured and planned in accordance with the target public, or rather, business area, function and characteristics of the employee or even those arising from special projects like the introduction of a new product on the market.

The methodologies used in training vary between e-learning, classroom training, coaching or on-the-job training. In 2014, the average number of training hours per employee was 3.8 hours (The bank started its activity only at August 4). The training plan addressed the specific behavioural and technical requirements of the various businesses and functions within the Group.

Attracting and retaining the best professionals, providing a training plan, internal mobility and the assessment and compensation of merit are essential pillars in the career development and progression of employees in the Novo Banco Group.
The Bank continued to invest in training aimed at all groups of Employees in the Group. The Integrated Human Resources Management Model emphasises the implementation of measures to promote employee development and motivation and the reinforcement of skills through training plans, both specific and group-wide, thus consistently improving the Group’s capacity to attract and retain talent.

This strategic objective of consistently improving the capacity to attract and retain talent is pursued through the following tools:
• Programme of individually tailored traineeships to suit the needs and future functions of each employee;
• Identification and profound knowledge of the capacities of the employees, defining training profiles and tracking requirements in terms of technical and behavioural skills;
• Tracking the training needs of all the employees and monitoring and managing the training provided to fulfil these needs;

The management of employees’ health and safety enables the Novo Banco Group to create a healthy work environment with employees able to perform their duties in the best physical and psychological conditions. In this regard, the Novo Banco regularly carries out risk evaluations on the work places and of the employees. In 2014 the clinical services cover all the employees of Novo Banco and provide services in the area of occupational medicine, curative medicine and nursing.

In 2014, 1 556 occupational medical exams (entrance exams and regular), 11 799 medical procedures (appointments and prescriptions) and 2 414 nursing acts were carried out. Also, besides medical screening tests, the Bank will permanently provide psychiatry and psychology appointments for all employees. Furthermore, the Bank performs a series of screening checks (cardio-vascular, oncologic, eye tests and executive checkups, as part of the Risk Prevention and Control programs) psychiatry and psychology appointments are provided to all employees. In the 5 months of 2014, there were 311 psychiatry appointments, 141 psychology appointments and 10 appointments for stopping smoking, including the absenteeism due to stress, as well as other causes Novo Banco understands absenteeism is one of the problems the Bank faces and which very often is related to questions that go beyond mere illness or accident.

Being aware of this, Novo Banco, through its clinical services, namely psychiatry services sought to understand and assess the reasons behind long term absenteeism (exceeding 30 days) and together with the employees to find solutions for those who are on sick leave.

With the objective of achieving a balance between one’s professional life and family life, the work-life balance program helped 170 employees through the requisition of a number of such as auto services, ironing and laundry services, delivery of medicine and domestic repairs. The Novo Banco concerns with health and safety at work aim to minimise accidents at work and occupational illnesses, and to protect the integrity and
capacity for work of its employees. In this regard, the Novo Banco Group regularly carries out risk assessments of its work places through safety audits, ergonomic assessments of the work positions and Identification of Dangers and Risk Assessment of its Activities (IPAR). In the 5 months of 2014, 70 safety audits were carried out, 6 ergonomic assessments, 10 identification of Hazards and Assessments of the Activity’s Risks (HAAR) and 60 assessments of Thermal Conditions

NOVO BANCO has a policy concerning the attribution of allowances and assistance under its Internal Social Responsibility Programme that covers the following areas:

Allowances Performance in 2014
Education Support
1) Attribution of child benefits, school grants, scholarships and support to children and youths with special needs. - 311 child benefits worth Euros 51 ,400; 160 scholarships worth Euros 164,100,214 school grants worth Euros 37,500 and 59 special needs allowances worth Euros 37,500
2) Senior Support
Co-payment of expenses with senior residences, day-centres, home support, drugs and other staple goods.
47 allowances worth Euros 52,875;

3) Health Support and Co-payment of health expenses - 40 allowances worth Euros 60,261.

4) Support in conciliating Work–Family
Co-payment of transport expenses,Job Search Programme - 133 travel allowances worth Euros 20,833 and 40 employees covered by the Job Search Programme.

In January of 2015, NOVO BANCO conducted satisfaction surveys of its employees to assess their level of motivation concerning the projects and tasks in which they are involved, as well as their expectations and needs.3 810 employees responded to the questionnaire related to the evaluation of their satisfaction with their function and 3 787 responded to that related with their satisfaction with the Company. The results were as follows:
• average satisfaction classification with the function: 73.1%;
• average satisfaction classification with the bank: 71.4%;
• employees highly satisfied with the functions: 66%;
• employees highly satisfied with the bank: 58%

The financial sector is one of the main drivers of the economy, playing a fulcral role in the access to capital for diverse sectors, thereby performing an important function in sustainable development and in the problem of climate change, one of the burning issues of the day. One of the greatest challenges for the financial sector has been that of making sustainable development "climatically" possible.

The Novo Banco Group, following the guidelines of the World Bank, and Global Compact Principles recognises that climate change is one of the main concerns in the world, causing an undeniable direct impact on health and on economic growth. Therefore Novo Banco has established an environmental management system, where Novo Banco Group reinforce its commitment to conduce its business in an environmentally responsible manner. This commitment is inherent to its assessment of the environmental risks and impacts arising from the activity of the Novo Banco Group and also resulting from the provision of financial products and services to its clients.

Novo Banco assumes responsibility for the promotion of environmental protection in the exercise of its business. In this regard and in order to reduce its direct environmental impacts, the Bank assumed a commitment regarding efficient consumption, waste reduction and minimization of emissions, framed within an Environmental Management Program which besides promoting alterations in the standards of consumption, in the medium term it will enable a reduction in costs in terms of the consumption of electricity, water and paper.

Both employees and management are motivated to reduce the bank's environmental footprint and to make its operations increasingly eco-efficient. In order to meet the reduction objectives set for 2014-2018, Novo Banco has an environmental management programme. This involves the definition of objectives, the implementation of specific actions that are monitored and evaluated against implemented measures.

2014 – 2018 NOVO BANCO Reduction Objectives:
• Energy (2014: -5%; 2015: -8% e 2018:-10%)
• CO2 Emissions (2014: -7%; 2015: -11% e 2018:-14%)
• Paper (2014: -2%; 2015: -5% e 2018:-7%);
• Water (2014: -5%; 2015: -8% e 2018:-10%)

The information’s are available in NOVO BANCO Website
http://www.novobanco.pt/cms.aspx?plg=4C5059B8-B92A-4B2D-B504-11DDD85B9FA5

In compliance with the 7th Global Compact Principles Novo Banco has developed products and services that support a precautionary approach to environmental challenge, NOVO BANCO launched the first Portuguese neutral emission Account - 18.31, to the retail segment. The 18.31 account was conceived to make the whole process inherent to its production and use as efficient and green as possible, with non avoidable carbon dioxide emissions (CO2) being offset. Each 18.31 account has an estimated carbon footprint of 1.6 kg CO2 equivalent per year, which corresponds to the energy consumption of one light filament during five days. A total of 6,460 new 18.31 accounts were opened in 2014 (some are new contracts and others are conversions into 18.31). The number of non carbon neutral accounts is 18,534 (214 tonCO2). Non avoidable carbon emissions are offset through the support provided to a project to replace the fuel used by ceramics industries in the state of Rio de Janeiro, Brazil. Located in the Atlantic Forest, close to mangrove swamps, these industries are traditional polluters that burn heavy fuel oil in their kilns, endangering the region’s fragile ecosystems. This project has enabled these industries to convert their kilns to burn waste from the timber industry, with the double benefit of using a sustainable fuel and avoiding the release of methane, a powerful greenhouse gas. At the end of ten years, the project will have avoided the emission of more than 420 tonnes of CO2 into the atmosphere. The project follows the Clean Development Mechanism methodology and it is verified by independent auditors accredited with the United Nations, in accordance with the VCS and Social Carbon international standards, to ensure the highest quality standards and contribution to sustainability.

Under its commitment to reduce paper consumption, NOVO BANCO promoted the dematerialisation of communications sent to customers, providing the respective documents online.

Between 4 August and 31 December 2014, about 15 000 new account statements became digital, ceasing to be sent out on paper. Between August and December of the same year ca. 5 million digital documents were issued.

Novo Banco has a commitment to reduce electricity consumption and it's indirect emissions. Novo Banco started a project on energy efficiency, investing about approximately EUR 1.5 million in the implementation of these “Internal Energy Efficiency Programme that continuously monitors power consumption of its 19 buildings and also the 50% of its agencies, selected according to their profile of consumption and savings potential. Rational management of energy ensures profitable use of energy resources while maintaining quality of services provided by Novo Banco or comfort of employees and customers.

For NOVO BANCO Group the existence of a framework of values and principles that lead to all actions is fundamental, having for this purpose identified 10 guiding commandments.

According to what is established in these commandments the Group focuses its activity on a set of values and principles – of which ethics and transparency are a part – that are materialised in compliance with laws, internal rules and codes of conduct, seeking to guarantee a transparent management free from conflicts of interest.

Present in 15 countries and 4 continents and focused on regions with high economic and cultural affinity with Portugal, NOVO BANCO Group has a set of principles and policies governing its relationships with its employees, namely:

• Policy for Prevention and Detection of Money Laundering and terrorism financing;
• Code of Conduct
• Human Rights Policy;
• Policy of Non-discrimination.

With regard to the last Global Compact principle, Novo Banco has a Code of Conduct for Employees available in Portuguese, English, Spanish and French translated, whith several rules that for example stipulates that they should not accept any kind of offer or benefit liable of compromising their impartiality and loyalty to the Bank.

The Code of Conduct aims:
a) To disclose the principles by which NB Group companies shall steer their
activities;
b) To promote an ethical conduct aligned with the values of the NB Group by the Employees;
c) To promote respect and compliance with all applicable laws and regulations;
d) To create a transparent system of relationships of Employees with the outside.

The Code of Conduct is not of an exhaustive nature and specifically addresses the need to comply with applicable laws, regulations and internal rules, such as:
- Money Laundering
- Confidenciality of Information;
- Conflict of interest prevention
- Discrimination
- Insider trading/dealing and other matters (Internal Regulation)

In situations of violations of the principles addressed in the Code of Conduct that consist also in a violation of a law, regulation or internal rule, disciplinary actions are applicable.
For the employees to be fully acquainted with the Code of Conduct, a training course Code was held in 2015.

Novo Banco has also an Anti-Money Laundering and Terrorism Financing System and Conflict Prevention. Novo Banco Group is totally committed to opposing any practice that may involve fraud and/or that may be included in the classification of money laundering, and terrorism financing undertaking, to report it to the competent authorities. Fraud, money laundering and terrorism financing are a threat to the financial system in general and to the banking activity in particular. The Novo Banco is dedicated to continuing to develop prevention and internal control mechanisms which help to combat this illegal activity.

The ability to detect and prevent activities capable of constituting money laundering and terrorism financing, stems directly from the knowledge from banks of certain key elements relating to their counterparts and respective transactions.
Given the growing importance that the fight against phenomena such as money laundering and terrorism financing has assumed, is necessary a greater care in identifying weaknesses and areas of greater exposure to ensure the existence of adequate methods to control and mitigate the risks inherent to transactions and counterparties.

To that end, NOVO BANCO Group, using software tools with internationally recognised results to complement the experience of its human capital, has created and developed valuation models that will ensure that greater scrutiny is applied where this proves more necessary.

NOVO BANCO Group has in place an automated risk assessment model that, based on the mandatory characterising elements, ranks the counterpart as to the potential risk it poses, whilst screening the prospective counterparties against exception lists.

The risk assessment model and screening is applied as soon as the account is opened, minimizing the likelihood of the Bank inadvertently starting a business relationship with persons or entities recognisably suspect of involvement in money laundering or terrorism financing. Entities that present increased risk are subject to further review by the Compliance Department that must approve the final acceptance of the counterparty.
The model of risk assessment and filtering is also applied on the inclusion of new persons in existing accounts.

Additionally the entire database of existing clients is regularly screened.

Not limiting itself to the analysis of statistical data the bank also looks at behaviour, monitoring the daily transactional activity.
This transaction monitoring being a responsibility of financial institutions becomes more complex as the volumes in question increase.

To this end the Bank has a software tool that, based on risk principles, analyses the transactional profiles of the accounts, generating automatic triggers for situations that appear not to match the pattern expected for each contract.

International transactions are further monitored for possible violation of international embargoes or sanctions, through an online screening process against the exception lists, covering the full contents of the operations support message, with doubtful situations being suspended for verification.

After analysis and detailed investigation, situations detected that confirm the existence of sustained grounds for suspicion, are duly communicated to the competent authorities who will take the steps they deem appropriate, in strict compliance with the legally established duties.

NOVO BANCO Group, complying with its regulatory obligations, develops training exercises in preventing money laundering and terrorism financing for all its employees (commercial and central structures, including senior management). Training can be online or in person, the latter mainly directed to new employees, in order to equip them with skills that enable them to collaborate with the control functions in mitigating the risks inherent to the execution of their functions. From the 4 August to the 31 December, there were 2,054 hours of online training and 112 hours of classroom training, with a total of 1,628 attendances. Training is a key tool for a correct identification by the employees of potential situations with indications of money laundering and terrorism financing. On the other hand it is also useful for compliance with the legal and regulatory duties to which the bank is subjected.

In the last five months of 2014, NOVO BANCO examined 4,148 contracts, which resulted in 244 participations to the competent authorities, 1,405 account investigations and in rejecting 17 account opening requests.

The prevention of money laundering and terrorism financing is one of the foundations of confidence in the financial system and as such this issue will continue to receive the ongoing attention of NOVO BANCO Group.

The monitoring of the implementation of the Code of Conduct in NB shall be of the responsibility of the Compliance Department, which, to this end, may use other structures, including the Internal Audit Department and the Human Resources Department.

The contacts of the structure and the identification of the person responsible is disclosed to all Employees of the entity and to the NB Compliance Department.

From the 4 August to the 31 December, Novo Banco develop a new online training exercise on the prevention of money laundering and the financing of terrorism addressed to all the employees (commercial and central structures, including management staff) there were 2,054 hours of online training. This was complemented by a face to face training designed to provide the employees with the skills required to cooperate with the control functions in the mitigation of the risks inherent to the exercise of their jobs. This training was attended by several employees and involved a total of 112 hours of training

The main pillars of Novo Banco AML policy are KYC, KYT, and KYP. On a very high-level approach, these involve (among other things): customer identification, customer assessment through risk scoring (countries where it operates, its shareholding structure, etc.), list matching (OFAC, EU, FINCEN, etc), and transaction monitoring. For all this, Novo Banco follows a risk based approach, to ensure the adequate attention is directed to where it is most needed. As a result, customers and accounts which are deemed to be of a higher risk (such as PEPs, for example), are subject to deeper scrutiny (EDD) and Senior Management approval, and transactions are monitored more closely. Any situation where there may be grounds for suspicion, and for which no sound explanation can be found, is promptly reported to the proper authorities, in strict compliance with all applicable laws and regulations. Compliance matters, particularly AML, have been receiving a great deal of attention from the highest levels of management and have been embedded in the culture of the whole organization.

In addition the new Code of Conduct has a specific paragraph concerning Money Laundering. Novo Banco external audit is exercised by the independent and External Auditor, PricewaterhouseCoopers, SROC, and the authorities of Supervisors that the Novo Banco is subject: Bank of Portugal, Committee on Securities Market (CMVM) and the Insurance Institute of Portugal. The External Auditor has, within its jurisdiction and beyond the statutory audit, to rule before the Bank of Portugal on the efficiency and functioning of mechanisms of Internal Control (Notice No. 5 / 2008, Bank of Portugal) and to issue before CMVM an annual report on the adequacy of procedures and measures taken by NOVO BANCO, as a financial intermediary, to safeguard the assets of clients (article 304 º C-4 and 306 and following of the Securities Code).

Besides Novo Banco compliance with legal requirements - all cash deliveries amounting to 10 000 Euros or more are subject to identification and to declare the origin of funds. If client is considered a high risk client, the declaration of origin of funds is mandatory for all values equal or above 5 000 Euros.

Novo Banco uses FISERV’s AML Manager, intelligent tool, using the most important standards used in the European risk system, based in transactional risk and client profile risk.

The establishment of strategic policies is done centrally, and applicable throughout Novo Banco Group, in conjunction with local requirements. Transaction monitoring is done centrally for all Portuguese branches, and most subsidiaries. International units have their own compliance teams which perform their analysis locally, in close contact with the central Compliance team.

Additionally, all SWIFT, TARGET2 and SEPA transactions are filtered on-line against international lists (OFAC, EU, FINCEN, UN and HMT for the UK and GAFI/FTF), and may be blocked for scrutiny by the Compliance Department in case a close match is found. The message will only be allowed to proceed after it has been approved by Compliance. As mentioned previously, all suspicious activity for which no reasonable explanation can be found are duly reported to the proper authorities for further investigation.

The type of training used at NOVO ABNCO improves the internal supervision exercised by all employees and therefore contributes to reducing risk. Thanks to the extra training provided all employees are now better prepared to identify potential cases of money laundering and terrorism financing.