In 2004, the Basel Committee on Banking Supervision revised the regulatory framework concerning the capital adequacy for internationally active banks. The concept of the new capital accord ("Basel II") is based on three mutually supporting pillars to sustainably ensure the stability of the national and international banking systems.

On January 1st, 2007, the regulation on the capital adequacy of institutions, groups of institutions and financial holding groups (German solvency regulation — SolvV^[1]) came into effect. This regulation represents the national implementation of the banking directive (2006/48/EC) and the capital adequacy directive (2006/49/EC) as well as the corresponding guidelines of "Basel II" on capital adequacy. The regulation replaces the previous Principle I and in doing so specifies the capital adequacy required by institutions in §10 of the German Banking Act (KWG) with guidelines for establishing regulatory capital requirements.

In accordance with § 26a paragraph 1 of the German Banking Act (KWG), State Street Bank GmbH is obliged to regularly publish qualitative and quantitative information concerning own funds, the risks taken, the risk management processes used including the internal methodologies used in accordance with § 10 paragraph 1 p. 2 of the German Banking Act (KWG), the methods used to mitigate credit risk and the securitization transactions. The nature and scope of the information to be published are specified in part 5 of the SolvV. The information required in accordance with the supervisory regulation is the subject matter of this report.

The disclosure report of State Street Bank GmbH, Munich, meets the disclosure requirements of Basel II Pillar 3 and the requirements of part 5 of the SolvV. The aim of the report is to allow market participants to assess the information contained with regard to the Bank’s risk positions, risk-assessment processes and capital adequacy. The report refers to all relevant and material risks which have an impact on the capital adequacy of the Bank.

^[1] Meanwhile amended by Article 2a of the Act Amending the German Investment Act (Investmentänderungsgesetz) dated December 21st, 2007