**NB
      FINANCE, LTD.**


**CODE
      OF BUSINESS CONDUCT AND ETHICS**





**Appendix**





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





**NB
      FINANCE, LTD.**


**CODE
      OF BUSINESS 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 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 Business 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, the regulations promulgated thereunder, and
      the
      requirements for a code of business conduct and ethics under the listing
      standards of the New York Stock Exchange. For purposes of this Code, “employee”
and “employees” mean all of NB Finance’s agents, service providers and all other
      persons working on NB Finance files pursuant to various service
      agreements.





This
      Code
      prescribes the minimum legal 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.





**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 may 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 may any director, officer or employee assist any third party in
      violating any law, rule or regulation applicable to that third party, whether
      or
      not such assistance constitutes 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 may be directed to NB Finance’s
      Assistant Secretary.





**3.**  **Conflicts
      of Interest**


Each
      director, officer and employee must avoid any situation or transaction in which
      a conflict of interest exists or may develop. A “conflict of interest” exists
      any time the individual interest of a director, officer or employee interferes,
      or appears to interfere, with the interest of NB Finance. A conflict of interest
      can also exist when a director, officer or employee takes an action or has
      an
      interest that makes it difficult to perform his or her duties on behalf of
      NB
      Finance objectively, effectively and fairly. A conflict of interest may also
      arise if a director, officer or employee, or a member of his or her immediate
      family, receives improper benefits as a result of the director, officer or
      employee’s position with NB Finance.


2


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 (other than the Bank or any of its affiliates). NB Finance will
      not make loans to, or guaranty the obligation of, any director, officer or
      employee, or the immediate family member of any director, officer or employee.
      Any questions about whether a conflict of interest exists or develops may be
      addressed to the Assistant Secretary, at the contact information mentioned
      below. 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.





A
      director or executive officer must report any actual or potential conflict
      of
      interest between the director or executive officer to the Assistant Secretary,
      at the contact information mentioned below. Any other officer or employee of
      NB
      Finance must report any actual or potential conflict of interest involving
      the
      employee to the Assistant Secretary, at the contact information mentioned below.
      A waiver from the prohibition on conflicts of interest contained in this Code
      may be requested (and, if applicable, reported publicly) pursuant to Section
      16
      of this Code.





**4.**  **Confidentiality**


During
      and subsequent to the term of directorship, office or employment, no director,
      officer or employee may disclose, release, describe, communicate or use for
      any
      purpose other than NB Finance’s corporate purposes any confidential information
      entrusted to him or her by NB Finance, except when disclosure is authorized
      or
      legally mandated. “Confidential information” includes all non-public information
      (including electronic information) about NB Finance or any other person,
      including any of NB Finance’s business partners or employees, as well as the
      Bank and its subsidiaries, that, if disclosed, might be of use to competitors
      of, or harmful to, NB Finance, its business partners or employees or the Bank
      or
      its subsidiaries. Even within NB Finance, confidential information may only
      be
      disclosed to those who have a business-related “need to know”. Directors,
      officers and employees also may not disclose confidential information that
      they
      obtained at a previous company or employer, including, but not limited to,
      trade
      secrets.





**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.


3


NB
      Finance will not, and no director, officer or employee may, retaliate against
      an
      individual for bringing a complaint of discrimination or for participating
      in an
      investigation or proceeding involving a complaint of
      discrimination.





NB
      Finance will not, and no director, officer or employee may, discriminate or
      retaliate against any person who provides information to a regulatory or law
      enforcement agency, a government official or a supervisor concerning conduct
      which the person reasonably believes constitutes a violation of securities
      laws
      or any provision of federal law relating to fraud.





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


All
      directors, officers and employees must 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 must be immediately reported to NB Finance’s President, Chief Financial
      Officer or the Assistant Secretary, at the contact information mentioned below.
      Directors, officers and employees may not use property or disclose or use
      confidential information belonging to NB Finance, or use business opportunities
      discovered in the performance of their duties or through the use of NB Finance’s
      property or confidential information, for personal gain or for the benefit
      of
      any third party.





The
      obligation of directors, officers and employees to protect NB Finance’s assets
      includes the obligation to protect NB Finance’s 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. Directors, officers and
      employees may not use or distribute proprietary information except for NB
      Finance’s corporate purposes.





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


Computerized
      data are important NB Finance assets. 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 must promptly inform NB Finance’s President or Chief Financial
      Officer.





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


All
      directors, officers and employees must 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 may 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 may not participate, directly
      or
      indirectly, in activities which may compromise NB Finance’s interest, image or
      reputation. If any director, officer or employee is or becomes aware of any
      wrongful acts or 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 must promptly inform NB Finance’s President, Chief
      Financial Officer or the Assistant Secretary.


4


**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.





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 may 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, must report the matter to the Assistant
      Secretary, at the contact information mentioned below.





**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 must retain all
      documents (including computer records) in his or her custody or control relating
      to the matter under investigation. If a director, officer or employee is not
      sure whether a document can be destroyed, or has any questions about NB
      Finance’s policies regarding the retention of records, the 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 must promptly report the matter to the Assistant
      Secretary.


5


**12.**  **Inquiries
      and Reporting**


Any
      director, officer or employee who becomes aware of a violation of this Code
      must
      promptly report the violation to any one of the persons listed below. If
      requested, the name of any person reporting a violation of this Code will be
      kept confidential.





Any
      question about the interpretation or application of this Code or any complaint
      or concern on any other matter relating to this Code should be addressed either
      to the President, the Chief Financial Officer or the Assistant Secretary.





The
      President, the Chief Financial Officer or the Assistant Secretaries may be
      contacted at:





**Martin
                Ouellet**
            **Jean
                Dagenais****President**
            **Chief
                Financial Officer**1155
                Metcalfe
            600
                De La Gauchetière Street West1st
                Floor
            7thFloorMontreal,
                Quebec
            Montreal,
                QuebecCanada,
                H3B 5G2
            Canada,
                H3B 4L2Tel:
                (514) 394-8974
            Tel:
                (514) 394-6233**Vanessa
                Fontana**
            **Valerie
                Pelletier****Assistant
                Secretary**
            **Assistant
                Secretary**600
                De La Gauchetière Street West
            to
                the attention of:27th
                Floor
            Corporate
                Secretary’s OfficeMontreal,
                Quebec
            600
                De La Gauchetière Street WestCanada,
                H3B 4L2
            27thFloorTel:
                (514) 394-8338
            Montreal,
                QuebecCanada,
                H3B 4L2Tel:
                (514) 297-7768





NB
      Finance will not retaliate against any person who provides information
      concerning a violation of any NB Finance policy or of this Code.





**13.** **Discipline**


Failure
      to comply with this Code can have substantial consequences. A failure to comply
      with this Code may render a director, officer or employee personally liable
      for
      the legal or ethical violation (which may result in fines or even jail time).
      NB
      Finance may subject any director, officer or employee who has failed to comply
      with this Code to disciplinary measures that will depend on the circumstances
      of
      the violation, including termination of employment.





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


Any
      waiver of this Code (including waivers of any actual or potential conflict
      of
      interest) for the directors or executive officers of NB Finance may be made
      only
      by the Board of Directors, in its discretion. Waivers of this Code for other
      officers or employees may be made by the President or the Chief Financial
      Officer, in their discretion. Any director, officer or employee seeking a waiver
      must make full disclosure in advance of the transaction in
      question.





Any
      waiver or amendment to this Code will also be promptly disclosed as required
      by
      Law.


6


**15.**  **Compliance
      with Code**


Each
      director, officer and employee of NB Finance will be provided with a copy of
      this Code upon election or at the commencement of employment. This Code may
      be
      revised or supplemented from time to time. Each director, officer and employee
      will receive copies of updates to this Code and must maintain a working
      knowledge and understanding of this Code. Upon election or at commencement
      of
      employment and each year thereafter, each director, officer and employee must
      sign an acknowledgement in the form attached hereto, 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, as an exhibit to NB Finance’s annual report on Form
      20-F.





Reviewed
      and Approved by the Board of Directors on: December 23, 2003


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


Reviewed
      and Approved by the Board of Directors on: June 14, 2007


Reviewed
      and Approved by the Board of Directors on: June 18, 2008


7


**NB
      FINANCE, LTD.**




**CODE
      OF BUSINESS CONDUCT AND ETHICS – STATEMENT OF
COMPLIANCE**





I,
      the
      undersigned, hereby acknowledge that I have read NB Finance’s Code of Business
      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 with or violates, or might appear to conflict with or violate, the
      Code.





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





Date:
                ___________________SIGNATURENAME (PLEASE PRINT)





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, 27 th Floor,
      Montreal, Quebec, Canada, H3B 4L2, to the attention of: Vanessa Fontana, for
      inclusion in NB Finance Ltd.’s official records.


8