May 10, 2011
SMBC Nikko Securities Inc.

Submission of Business Improvement Plan by SMBC Nikko Securities Inc.

SMBC Nikko Securities Inc. (Hereafter, SMBC Nikko) submitted today its Business Improvement Plan
to the Financial Services Agency, complying with the Business Improvement Order dated April 15,
2011 (FSA Supervisory Bureau Memorandum, No. 932).
We sincerely apologize to our customers, especially to those who were directly affected by the fraud,
all of our valued customers, as well as any concerned parties, for the misconduct by one of ourprofessional employees in charge of sales in Japan – where he defrauded certain customers of theirmoney through means not connected to their accounts at SMBC Nikko.
We have taken this incident very seriously, and drafted preventive measures under the leadership of
the top management, based on a careful study and discussion of the root cause of the incident, inorder to prevent future recurrence of similar incidents.
We will promptly implement the measures described in the Business Improvement Plan, enhance
management supervision, and establish sufficient internal control systems in accordance with thesubmitted Plan. All the executives and employees at SMBC Nikko will do our best to recover theconfidence of customers and continue to deal in good faith with the customers affected by themisconduct.
Outline of Business Improvement Plan and our self-disciplinary actions for Persons Responsible are
as described below.

1. Outline of the measures to prevent recurrence of similar incidents as specified in Business
Improvement Plan
(1)

Enhance monitoring of any irregular activities in the customers’ accounts which demonstratefrequent and continuous withdrawals(2)

Enhance Branch managers’ management over private life of employees and improve their
daily practice guidance provided for employees(3)

Establish management and control system applicable to sales persons who have beenstationed for many years at the same branch officeA) Establish a rule to rotate human resources regularlyB) Verification of customer data with customers of sales persons who have been stationed
many years at the same branch offices

This material is an English translation of Japanese announcement made on May 10, 2011. Although the company
intended to faithfully translate the Japanese document into English, the accuracy and correctness of this translation are
not guaranteed and thus you are encouraged to refer to the original Japanese document.

C) Enhancement of management and control (Implement a mandatory leave protocol that

requires a sales person to leave the stationed office for certain period of time with noadvance notice)(4)

Familiarize and inform customers
A) Distribute notices to all customers alerting them of potential risksB) Post reminders on our website(5)

Implement company-wide training programs to foster awareness of employees andexecutives towards compliance with relevant rules and regulations(6)

Clarify management commitment toward compliance with relevant laws and regulationsA) Establish the Misconduct Prevention CommitteeB) Include the enhancement program for preventive measures into our Compliance
Program(7)

Reevaluate and ensure effectiveness of internal audit function(8)

Other mattersA) Enhancement of self assessment procedures at each branch levelB) Formulating Manuals for Prevention of Misconducts

2. Description of the self-disciplinary actions
Shigenobu Aikyo

Chairman

30% cut of compensation for four months

Eiji Watanabe

President & CEO

30% cut of compensation for four months

Naoyuki Kawamoto

Executive Deputy President 25% cut of compensation for four months

Seven other executives

5% to 25% cut of compensation for three months###This material is an English translation of Japanese announcement made on May 10, 2011. Although the company
intended to faithfully translate the Japanese document into English, the accuracy and correctness of this translation are
not guaranteed and thus you are encouraged to refer to the original Japanese document.

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