**NB
      FINANCE, LTD.**


**CODE
      OF CONDUCT AND ETHICS**





**Appendix**





Purpose
                of Code
            2Compliance
                with Laws, Rules and Regulations
            2Conflicts
                of interest; Corporate Opportunities
            3Confidentiality
            3Discrimination,
                Harassment and Retaliation
            4Protection
                and Proper Use of Company Assets
            4Protecting
                Computerized Data and Using Electronic Networks
            5Respect
                for the Organization and Fair Dealing
            5Disclosure
                and Record-Keeping
            5Record
                Retention
            6Improper
                Influence of Auditors
            6Reporting
            6Discipline
            6Waivers
                or Amendment of the Code
            6Inquiries
            6Compliance
                with Code
            7Schedule
                - Code of Conduct and Ethics - Statement of Compliance
            8








**NB
      FINANCE, LTD.**


**CODE
      OF CONDUCT AND ETHICS**





**1.**  **Purpose
      of Code**




It
      has
      always been the policy of NB Finance, Ltd. (“NB Finance”) and its parent
      company, National Bank of Canada (the “Bank”), and the affiliates of the Bank,
      that all its activities should be conducted in accordance with the highest
      ethical standards and in compliance with all applicable governmental laws,
      rules
      and regulations. NB Finance believes that it is imperative that its directors,
      officers and employees act at all times in an honest and ethical manner in
      connection with their service to NB Finance and act at all times in the best
      interests of NB Finance in order to assure its future success.





The
      following information constitutes NB Finance’s Code of Conduct and Ethics (the
“Code”), which applies to all NB Finance directors, officers and employees and
      is intended to meet the requirements for a code of ethics under the
      Sarbanes-Oxley Act of 2002, regulations promulgated thereunder, and the listing
      standards of the New York Stock Exchange ("NYSE"). For purposes of this Code,
      “employee” and “employees” include all of NB Capital’s agents, service providers
      and all other persons working on NB Capital files pursuant to various service
      agreements.





This
      Code
      prescribes the minimum legal, moral and ethical standards required of all
      directors, officers and employees and is in addition to any other policies
      adopted by the Board of Directors from time to time. This Code cannot address
      every possible situation that may arise in conducting NB Finance’s business. In
      situations which are not expressly addressed in this Code, each director,
      officer and employee is expected to exercise his or her judgment to act in
      a
      manner consistent with the intent of the policies set forth herein. If a
      director, officer or employee has a question as to the application of this
      Code
      in any situation, such director, officer or employee should discuss the matter
      with the President, the Chief Financial Officer or the Assistant Secretary
      of NB
      Finance, at the contact information mentioned below.





**2.**  **Compliance
      with Laws, Rules and Regulations**




NB
      Finance is committed to conducting its business in strict compliance with the
      laws, rules and regulations that apply to it, including insider trading laws
      (“the Law”). No director, officer or employee of NB Finance is authorized to
      undertake any activities in the name of NB Finance, whether administrative,
      financial, operating or in any other capacity, that would violate, directly
      or
      indirectly, any Law. Nor should any director, officer or employee assist any
      third party in violating any Law, whether or not such assistance is itself
      a
      violation.





This
      Code
      does not summarize the Law that is applicable to NB Finance and its directors,
      officers and employees. Any questions on the Law should be directed to NB
      Finance’s Assistant Secretary, who will address such questions to the
      appropriate advisors.




2





**3.**  **Conflicts
      of interest; Corporate Opportunities**




Each
      director, officer and employee is expected to avoid situations where there
      could
      be, or could appear to be, a conflict of interest. A “conflict of interest”
exists any time directors, officers or employees face a choice between their
      personal interest and the interest of NB Finance. A conflict of interest also
      exists when a director, officer or employee takes actions or has interests
      that
      make it difficult to perform his or her duties on behalf of NB Finance
      objectively, effectively and fairly. Questions regarding any relationship or
      transaction that could give rise to a potential conflict of interest should
      be
      reported to NB Finance’s Assistant Secretary.





NB
      Finance’s directors, officers and employees must plan personal relationships and
      business affairs so as to avoid situations that might lead to actual or
      perceived conflicts between the self-interest of such individuals and their
      obligations and duties to NB Finance and their shareholders. No director,
      officer or employee may work simultaneously for a direct or indirect competitor
      of NB Finance (excluding the Bank and any of its affiliates).





Conflicts
      of interest also arise when a director, officer or employee or a member of
      his
      or her family receives improper benefits as a result of his or her position
      with
      NB Finance. It is in particular forbidden to disclose or use personal or
      confidential information belonging to NB Finance and acquired in the performance
      of their duties for their own personal gain or that of someone else. It is
      also
      forbidden to take for themselves personally opportunities that are discovered
      through the use of corporate property, information, or position for personal
      gain.





In
      the
      event a director, officer or employee becomes aware of an actual or possible
      conflict of interest, that person is required to inform NB Finance’s President,
      Chief Financial Officer or Mr. Gil Cornblum, at the contact information
      mentioned below. NB Finance’s Board of Directors will determine if a proposed
      transaction or relationship would involve a conflict of interest. If it is
      appropriate to grant a waiver from this Code, the waiver will be promptly
      disclosed to the public as required by applicable Law, in the event such waiver
      is granted to one or more of NB Finance’s directors or executive officers. See
      Section 14 of this Code.





**4.**  **Confidentiality**




Each
      director, officer and employee has an obligation to safeguard NB Finance’s
      confidential information (including electronic information). Furthermore, all
      NB
      Finance directors, officers and employees are required to maintain the
      confidentiality of all non-public information (including electronic information)
      entrusted to them by NB Finance, except when disclosure is authorized or legally
      mandated. This obligation applies not only to confidential information about
      NB
      Finance, but also to confidential information about its business partners and
      employees, as well as its parent company, the Bank, and the latter’s
      subsidiaries. Directors, officers and employees are also prohibited from
      disclosing confidential information that they obtained at a previous company
      or
      employer, including, but not limited to, trade secrets.





3


During
      and subsequent to the term of directorship or employment of the director,
      officer or employee, respectively, each such director, officer and employee
      shall not directly or indirectly publish, disclose, describe or communicate
      confidential information, or authorize anyone else to do so for any purpose
      other than legitimate corporate purposes. Even
      within NB Finance, confidential information shall only be disclosed to those
      who
      have a business-related “need to know”. Directors,
      officers and employees are responsible for avoiding the release of non-public
      information. Should any questions regarding confidentiality obligations arise,
      NB Finance’s President, Chief Financial Officer or Assistant Secretary should be
      consulted.





**5.**  **Discrimination,
      Harassment and Retaliation**




NB
      Finance will not tolerate discrimination, harassment or retaliation. NB
      Finance’s policy against discrimination applies to any legally protected status,
      including race, color, gender, religion, national origin, disability and
      age.





No
      director or officer may retaliate against an individual for bringing a complaint
      of discrimination or for participating in an investigation or proceeding
      involving a complaint of discrimination.





This
      policy also prohibits discrimination and retaliation against any person who
      provides information to a federal regulatory or law enforcement agency, a member
      of Congress or any committee of Congress, or to a supervisor concerning conduct
      which the person reasonably believes constitutes a violation of securities
      laws
      or any provision of federal law relating to fraud, including a violation of
      any
      NB Finance policy or of this Code.





**6.**  **Protection
      and Proper Use of Company Assets**




All
      directors, officers and employees should protect NB Finance's assets and ensure
      their efficient use. Theft, carelessness, and waste have a direct impact on
      NB
      Finance's profitability. All suspected incidents of fraud, theft or significant
      waste should be immediately reported for investigation to NB Finance’s President,
      Chief Financial Officer or Mr. Gil Cornblum .
      All
      Company assets must be only used for legitimate business purposes.





The
      obligation of directors, officers and employees to protect NB Finance’s assets
      includes its proprietary information. Proprietary information includes, but
      is
      not limited to, intellectual property such as trade secrets, trademarks and
      copyrights, as well as business strategies, investment and acquisition
      strategies, market research, business information and analysis, ideas, contacts,
      projections, financial models, plans, proposals, designs, databases, records
      and
      any other unpublished financial data and reports and all internally developed
      information. Unauthorized use or distribution of this information is a violation
      of NB Finance policy. It could also be illegal and result in civil or even
      criminal penalties.




4





**7.**  **Protecting
      Computerized Data and Using Electronic Networks**




Computerized
      data are important NB Finance assets which ensure that NB Finance is positioned
      competitively in the market. Should any director, officer or employee become
      aware of a breach of computer security measures or an attempt to gain
      unauthorized access to NB Finance’s computer systems, such director, officer or
      employee should inform NB Finance’s President or Chief Financial Officer
      promptly.





**8.**  **Respect
      for the Organization and Fair Dealing**




All
      directors, officers and employees shall at all times refrain from declaring
      any
      event or making any statement that may discredit the quality of the services
      or
      products of NB Finance or tarnish its image or reputation with the general
      public. Directors, officers and employees should not take unfair advantage
      of
      anyone through manipulation, concealment, abuse of privileged information,
      misrepresentation of material facts or any other unfair dealing practice. These
      obligations continue to apply after the term of directorship or termination
      of
      employment. Directors, officers and employees must avoid participating, directly
      or indirectly, in activities which may compromise NB Finance’s interest, image
      or reputation. If any director, officer or employee is aware of any wrongful
      acts or fraudulent offences or know of any circumstances, events, deeds or
      actions that could be detrimental to NB Finance’s interests or its reputation
      for integrity, such director, officer or employee is required to inform NB
      Finance’s President, Chief Financial Officer or Mr. Gil Cornblum
      accordingly.





**9.**  **Disclosure
      and Record-Keeping**




NB
      Finance is required
      to report its financial results and other information about its businesses
      to
      the Securities and Exchange Commission. NB Finance’s senior financial officers
      and other officers and employees working in financial management and reporting
      have a responsibility to ensure that all of NB Finance’s financial disclosures
      are full, fair, accurate, timely and understandable. Such directors, officers
      and employees must understand and comply with generally accepted accounting
      principles as adopted by NB Finance and all standards, laws and regulations
      for
      accounting and financial reporting of transactions, estimates and
      forecasts.





In
      addition, every director, officer and employee is required to follow prescribed
      accounting and reporting procedures. All of NB Finance’s accounting books,
      records, reports and financial statements, as well as supporting papers, must
      accurately reflect and describe corporate transactions and must conform both
      to
      applicable legal requirements and to NB Finance’s system of internal controls.
      The recordation of such data must not be falsified or altered in any way to
      conceal or distort assets, liabilities, revenues or expenses. No funds or assets
      may be maintained by NB Finance for any illegal or improper purpose and the
      creation and maintenance of undisclosed or unrecorded funds or assets is
      strictly prohibited. Any director, officer or employee having information or
      knowledge of any error,
      omission, inaccuracy or falsification in NB Finance’s books, records, financial
      statements or other documents, or of
      any conduct not in conformity with the established internal accounting controls
      of NB Finance, should report the matter to Mr.
      Gil
      Cornblum ,
      at the
      contact information mentioned below.





5


**10.**  **Record
      Retention**




NB
      Finance ensures that proper record retention policies are in place. Records
      must
      always be retained or destroyed according to those policies. If a director,
      officer or employee is aware of an imminent or ongoing investigation, audit
      or
      examination initiated by NB Finance, by NB Finance's auditors or by any
      governmental agency, that director, officer or employee should retain all
      documents (including computer records) in his/her custody or control relating
      to
      the matter under review. The destruction or falsification of a document in
      order
      to impede a governmental investigation, audit or examination may lead to
      prosecution for obstruction of justice. If a director, officer or employee
      is
      not sure if a document can be destroyed, or if that director, officer or
      employee has any questions on the retention of records, such director, officer
      or employee should contact NB Finance’s President
      or Chief Financial Officer .





**11.**  **Improper
      Influence of Auditors**




No
      director, officer or employee of NB Finance may take any action to fraudulently
      influence, coerce, manipulate or mislead the auditor of NB Finance’s financial
      statements for the purpose of rendering those financial statements materially
      misleading. Any director, officer or employee having information or knowledge
      of
      such behaviour should report the matter to Mr.
      Gil
      Cornblum .





**12.**  **Reporting**




Any
      complaints or concerns on any matter, including a violation of any NB Finance
      policy or of this Code, should be addressed either to the President, the Chief
      Financial Officer, the Assistant Secretary or to Mr. Gil Cornblum. There will
      be
      no retaliation against any person who provides information concerning a
      violation of any NB Finance policy or of this Code, as described in Section
      5 of
      this Code.





**13.** **Discipline**


Failure
      to follow this Code can have substantial consequences. A failure to follow
      this
      Code may not only render a director, officer or employee personally
      liable for the legal or ethical violation (which may result in fines or even
      jail time), but may also subject such director, officer or employee to
      disciplinary proceedings, including termination.





**14.**  **Waivers
      or Amendment of the Code**




Any
      waiver of this Code for the directors
      or executive officers of NB Finance may be
      made only by the
      Board of Directors and will be promptly disclosed as required by Law. Any
      amendment to this Code will also be promptly disclosed as required by
      Law.





**15.**  **Inquiries**




Any
      inquiries concerning the application or interpretation of this Code should
      be
      addressed to NB Finance’s President, Chief Financial Officer, Assistant
      Secretary or to Mr. Gil Cornblum.





6


**16.**  **Compliance
      with Code**




Each
      director, officer and employee of NB Finance will be provided with a copy of
      this Code at the commencement of appointment or employment. This Code may be
      revised or supplemented from time to time to reflect changing Laws and ethical
      standards. Each director, officer and employee will receive periodic updates
      of
      this Code and is responsible for maintaining a working knowledge and
      understanding of this Code. At commencement of appointment or employment and
      each year thereafter, each such director, officer and employee will be required
      to sign an acknowledgement in the form attached hereto as a schedule, stating
      that he or she has read, understands and agrees to comply with the most recent
      version of this Code, which will be retained by the Assistant Secretary of
      NB
      Finance. A copy of this Code, as periodically updated, will also be available
      to
      directors, officers and employees, in NB Finance’s annual report on Form
      20-F.





Any
      questions regarding this Code can be forwarded to:




**Martin
                Ouellet**
            **Jean
                Dagenais****President**
            **Chief
                Financial Officer**1155
                Metcalfe
            600
                De La Gauchetière Street WestGround
                Floor
            7th
                FloorMontreal,
                Quebec
            Montreal,
                QuebecCanada,
                H3B 5G2
            Canada,
                H3B 4L2Tel:
                (514) 394-8974
            Tel:
                (514) 394-6233**Vanessa
                Fontana**
            **Gil
                Cornblum****Assistant
                Secretary**
            **Attorney**600
                De La Gauchetière Street West
            Dorsey
                & Whitney LLP4th
                Floor
            Canada
                Trust TowerMontreal,
                Quebec
            BCE
                PlaceCanada,
                H3B 4L2
            161
                Bay Street, Suite 4310Tel:
                (514) 394-8338
            Toronto,
                Canada, M5J 2S1Tel:
                (416) 367-7373





Reviewed
      and Approved by the Board of Directors on: June 15, 2006


7





**NB
      FINANCE, LTD.**





**CODE
      OF CONDUCT AND ETHICS - STATEMENT OF COMPLIANCE**





I,
      the
      undersigned, hereby acknowledge that I have read NB Finance’s Code of Conduct
      and Ethics (the “Code”) and have become familiar with its content.





I
      hereby
      agree to comply with the Code, as the same may be modified or supplemented
      from
      time to time.





To
      the
      best of my knowledge, I am not involved in any situation or position that
      conflicts or might appear to conflict with the Code.





I
      also
      agree to notify the President
      or the Chief Financial Officer of NB
      Finance, Ltd., or Mr. Gil Cornblum or such other appropriate person identified
      in the Code, immediately of any change that might adversely affect my compliance
      with the Code.








Date:
      ___________________








__________________________________





Note:
      All
      Directors, Officers and Employees must complete this Statement of Compliance
      and
      forward the completed version to the Corporate Secretary’s Office on 600 De La
      Gauchetière Street West, 4 th Floor,
      Montreal, Quebec, Canada, H3B 4L2, to the attention of: Vanessa Fontana, for
      inclusion in NB Finance Ltd’s official records.





8