**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**





**Washington
      D.C. 20549**


**FORM
      20-F**




o
            Registration
                Statement pursuant to Section 12(b) or 12(g) of the Securities
                Exchange Act of 1934





or





x
            Annual
                Report pursuant to Section 13 or 15(d) of the Securities Exchange Act
                of 1934 for the fiscal year ended December 31,
                2006




or





o
            Transition
                Report pursuant to Section 13 or 15(d) of the Securities Exchange Act
                of 1934.





or





o
            Shell
                Company Report pursuant to Section 13 or 15(d) of the Securities
                Exchange
                Act of 1934.


Date
                of event requiring this shell company report
                ____________________.


For
                the transition period from _______________ to
                _______________.




Commission
      file number 333-49153-02.




**NB
      FINANCE, LTD.**


(Exact
      name of Registrant as specified in its charter)





**Bermuda**


(Jurisdiction
      of incorporation or organization)





**Clarendon
                House**
              **2
                Church Street**
              **Hamilton
                HM 11**
              **Bermuda**


(Addresses
      of principal executive offices)





Securities
      registered or to be registered pursuant to Section 12(b) of the Act:
      None





Securities
      registered or to be registered pursuant to Section 12(g) of the Act:
      None





Securities
      for which there is a reporting obligation pursuant to Section 15(d) of the
      Act:
      None





Indicate
      the number of outstanding shares of each of the issuer’s classes of capital or
      common stock as of the close of the period covered by the annual
      report:





12,000
      shares of common stock, par value $1.00 per share





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days :


Yes
x No
o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and larger accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      one):





Large
      accelerated filer o Accelerated
      filer o Non-accelerated
      filer x




Indicate
      by check mark which financial statement item the registrant has elected to
      follow:


Item
      17
x Item
      18
o





If
      this
      is an annual report, indicate by check mark whether the registrant is a shell
      company (as defined in Rule 12b-2 of the Exchange Act):


Yes
o No
x










FORWARD-LOOKING
      STATEMENTS





From
      time
      to time, NB Finance, Ltd. (the "Company" or "NB Finance") makes written and
      oral
      forward-looking statements, included in this annual report on form 20-F for
      filling with the U.S. Securities and Exchange Commission (“SEC”), in reports to
      shareholders, in press releases and in other communications. All such statements
      are made pursuant to the “safe harbor” provisions of the United States Private
      Securities Litigation Reform Act of 1995. These forward-looking statements
      include, among others, statements with respect to the economy, market changes,
      the achievement of strategic objectives, certain risks as well as statements
      with respect to our beliefs, plans, expectations, anticipations, estimates
      and
      intentions. These forward-looking statements are typically identified by the
      words “may”, “could”, “should”, “would”, “suspect”, “outlook”, “believe”,
“anticipate”, “estimate”, “expect”, “intend”, “plan”, and words and expressions
      of similar import.





By
      their
      very nature, such forward-looking statements require us to make assumptions
      that
      involve inherent risks and uncertainties, both general and specific. There
      is
      significant risk that express or implied projections contained in such
      statements will not materialize or will not be accurate. A number of factors
      could cause actual future results, conditions, actions or events to differ
      materially from the targets, expectations, estimates or intentions expressed
      in
      the forward-looking statements. Such differences may be caused by factors,
      many
      of which are beyond the Company’s control, which include, but are not limited
      to, changes in North American and/or global economic and financial conditions
      (particularly fluctuations in interest rates, currencies and other financial
      instruments), liquidity, market trends, regulatory developments and competition
      in geographic areas where the Company operates, technological changes, the
      possible impact on our businesses of international conflicts and other
      developments including those relating to the war on terrorism and the Company’s
      anticipation of and success in managing the risks implied by the
      foregoing.





The
      Company cautions that the foregoing list of important factors is not exhaustive.
      Investors and others who intend to base investment decisions on the Company’s
      forward-looking statements should carefully consider the above factors as well
      as the uncertainties they represent and the risk they entail. The Company
      therefore cautions readers not to place undue reliance on these forward-looking
      statements. The Company does not undertake to update any forward-looking
      statements, whether written or oral, that may be made from time to time by
      or on
      behalf of the Company.




2


**PART
      I**





ITEM
      1:
      IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS





Not
      Applicable.





ITEM
      2: **** OFFER
      STATISTICS AND EXPECTED TIMETABLE





Not
      Applicable.





ITEM  3:
      KEY
      INFORMATION





**Selected
      Financial Data**





(Per
      Canadian GAAP)





**Year
                Ended**
              **December
                31, 2006**
            
            **Year
                Ended**
              **December
                31, 2005**
            
            **Year
                Ended**
              **December
                31, 2004**
            
            **Year
                Ended**
              **December
                31, 2003**
            
            **Year
                Ended**
              **December
                31, 2002****Statement
                of Income Data:**Operating
                revenues
            
            $
            43,917,560
            
            $
            67,190,810
            (*)
            $
            95,211,882
            
            $
            44,484,134
            
            $
            43,385,203Income
                (loss) from Continuing Operations
            
            $
            11,884,249
            
            $
            4,010,926
            
            
            ($7,937,023
            )
            $
            6,915,778
            
            $
            6,117,624Net
                income (loss)
            
            $
            11,884,249
            
            $
            4,010,926
            
            
            ($7,937,023
            )
            $
            6,915,778
            
            $
            6,117,624Income
                (loss) from Continuing Operations per Common Share
            
            $
            990.35
            
            $
            334.24
            
            
            ($661.42
            )
            $
            576.32
            
            $
            509.80**Balance
                Sheet Data:**Total
                assets
            
            $
            607,930,510
            
            $
            671,047,829
            
            $
            675,579,983
            
            $
            700,113,693
            
            $
            635,586,789Total
                liabilities
            
            $
            441,822,214
            
            $
            516,823,782
            
            $
            525,366,862
            
            $
            541,963,549
            
            $
            484,352,423Shareholder’s
                Equity
            
            $
            166,108,296
            
            $
            154,224,047
            
            $
            150,213,121
            
            $
            158,150,144
            
            $
            151,234,366Capital
                Stock
            
            $
            12,000
            
            $
            12,000
            
            $
            12,000
            
            $
            12,000
            
            $
            12,000Number
                of Shares
            
            
            12,000
            
            
            12,000
            
            
            12,000
            
            
            12,000
            
            
            12,000Cash
                Dividends Declared per Common Share
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A




3


ITEM  3:
      KEY
      INFORMATION (continued)





(Per
      U.S.GAAP)




**Year
                Ended**
              **December
                31, 2006**
            
            **Year
                Ended**
              **December
                31, 2005**
            
            **Year
                Ended**
              **December
                31, 2004**
            
            **Year
                Ended**
              **December
                31, 2003**
            
            **Year
                Ended**
              **December
                31, 2002****Statement
                of Income Data:**Operating
                revenues
            
            $
            42,700,646
            
            $
            66,556,625
            (*)
            $
            94,420,042
            
            $
            44,484,134
            
            $
            43,385,203Income
                (loss) from Continuing Operations
            
            $
            10,667,335
            
            $
            3,376,741
            
            
            ($8,728,863
            )
            $
            (3,860,503
            )
            $
            6,117,624Net
                income (loss)
            
            $
            10,667,335
            
            $
            3,376,741
            
            
            ($8,728,863
            )
            $
            (3,860,503
            )
            $
            6,117,624Income
                (loss) from Continuing Operations per Common Share
            
            $
            888.95
            
            $
            281.40
            
            
            ($727.41
            )
            
            ($321.71
            )
            $
            509.80**Balance
                Sheet Data:**Total
                assets
            
            $
            607,930,510
            
            $
            671,047,829
            
            $
            675,579,983
            
            $
            700,113,693
            
            $
            635,586,789Total
                liabilities
            
            $
            440,498,358
            
            $
            514,283,012
            
            $
            522,191,907
            
            $
            537,996,754
            
            $
            484,352,423Shareholder’s
                Equity
            
            $
            167,432,152
            
            $
            156,764,817
            
            $
            153,388,076
            
            $
            162,116,939
            
            $
            151,234,366Capital
                Stock
            
            $
            12,000
            
            $
            12,000
            
            $
            12,000
            
            $
            12,000
            
            $
            12,000Number
                of Shares
            
            
            12,000
            
            
            12,000
            
            
            12,000
            
            
            12,000
            
            
            12,000Cash
                Dividends Declared per Common Share
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A




(*) Restated. See financial statements.


**Exchange
        Rate**


References
      to $ are to United States dollars; references to C$ are to Canadian dollars.
      As
      of December 31, 2006, the Canadian dollar exchange rate was C$1.1654 = $1.00
      and
      certain amounts stated herein reflect such exchange rate. The exchange rates
      were obtained from the Bank of Canada. All financial statements are denominated
      in United States dollars.


**Exchange
                  Rate in $C to $1**High
              
              LowJuly
                  2006
              
              
              1.1413
              
              
              1.1068August
                  2006
              
              
              1.1307
              
              
              1.1053September
                  2006
              
              
              1.1287
              
              
              1.1045October
                  2006
              
              
              1.1404
              
              
              1.1152November
                  2006
              
              
              1.1473
              
              
              1.1290December
                  2006
              
              
              1.1654
              
              
              1.1403
  Year
                  Average in $C to $1December
                  2001
              
              
              1.54841633December
                  2002
              
              
              1.57035976December
                  2003
              
              
              1.40146175December
                  2004
              
              
              1.30152024December
                  2005
              
              
              1.21163240December
                  2006
              
              
              1.13409360





4




ITEM  3:
      KEY
      INFORMATION (continued)





**Risk
      Factors**





There
      are
      no risk factors relevant to the Company other than those associated with
      servicing and administering Mortgage Loans insured by Canada Mortgage and
      Housing Corporation, an agency of the Government of Canada
      ("CMHC").





Risk,
      in
      all its form, must be rigorously managed. That means it must be identified,
      measured and controlled to ensure that the Company operations yield an adequate
      return for the level of risk assumed.





The
      Company uses derivatives in its own risk to manage the United States - Canadian
      dollar exchange rate risk by using derivatives financial instruments as cross
      currency swaps. All derivatives are recorded on the balance sheet at fair value.
      Derivative transactions are expressed in terms of notional amounts, which serve
      as a point of reference for calculating payments. Notional amounts are not
      presented on the balance sheet and do not reflect the credit risk related to
      the
      derivative financial instruments.




ITEM  4:
      INFORMATION ON THE COMPANY





**History
      and Development of the Company**





NB
      Finance is a wholly owned subsidiary of National Bank of Canada (the " Bank " ).
      There
      are no securities of the Company currently registered or expected to be
      registered pursuant to the Securities Act of 1933, as amended, or traded
      publicly on any exchange. The Bank owns and, pursuant to the OSFI Order (as
      defined below), will continue to own, all 12,000 issued and outstanding shares
      of common stock, par value $1.00 per share (the " Common
      Stock " )
      of the
      Company. The Common Stock is the only outstanding class of securities of the
      Company. The Company has issued no other securities.





The
      Company was incorporated on September 3, 1997 under the *Bermuda*  *Companies
      Act 1981* .
      The
      Company does not have any subsidiaries. The Company's business objective is
      to
      acquire residential first mortgages insured by CMHC, that are secured by real
      property located in Canada and to issue obligations secured by such real
      property (the "Promissory notes") and other similar obligations to NB Capital
      Corporation ( " NB
      Capital " ),
      an
      affiliated company. The Promissory notes currently consist of fifty-three
      hypothecation loans issued to NB Capital by the Company that have recourse
      only
      to the Mortgage Loans. Hypothecation loans are loans secured by the pledge
      of
      mortgages as security therefor. The Mortgage Loans consist of fifty-three pools
      of, at December 31, 2006, an aggregate of 10,036  CMHC-insured
      residential first mortgages. Pursuant to an order (the "OSFI Order"), dated
      September 2, 1997, of the Office of the Superintendent of Financial Institutions
      Canada, the Company is not permitted to incur any indebtedness or engage in
      any
      business activities other than ownership of Mortgage Loans and activities
      incidental thereto. The Company’s registered offices are located at Clarendon
      House, 2 Church Street, Hamilton HM 11, Bermuda.





As
      of
      December 31, 2006, the Company has issued Promissory notes to NB Capital in
      the
      aggregate principal amount of approximately $381 million. The proceeds from
      the
      issuance of the Promissory notes, in addition to a capital contribution from
      the
      Bank, have been used to acquire the Mortgage Loans from the Bank for
      approximately C$597 million ($512 million). Accordingly, as of December 31,
      2006, the Promissory notes were overcollateralized by $131 million. The Company
      has acquired all or substantially all of such Mortgage Loans from the Bank
      and/or affiliates of the Bank on terms comparable to those that could be
      obtained by the Company if such Mortgage Loans were purchased from unrelated
      parties. As of the date of this Form 20-F, the Company has not entered into
      any
      agreements with any third parties with respect to the purchase of Mortgage
      Loans.




5




ITEM  4:
      INFORMATION ON THE COMPANY (continued)





The
      Company and NB Capital have entered into separate Mortgage Loan Assignment
      Agreements (together, the "Mortgage Loan Assignment Agreements") (See Item
      19,
      Exhibits 10.45 to 10.48) pursuant to which the Company assigned its entire
      right, title and interest in, to and under the Mortgage Loans to NB Capital
      and
      permitted NB Capital to administer, perform and enforce the Mortgage Loans.
      Accordingly, no interest or principal payments with respect to the Mortgage
      Loans are made directly to the Company. Pursuant to a Servicing Agreement
      originally dated September 3, 1997 and all subsequent amendments, between NB
      Capital and the Bank (the "Servicing Agreement"), the Mortgage Loans are
      serviced by the Bank.




For
      information regarding the Company's revenue and operating profit, see the
      Company's financial statements, beginning on page F-1.





**Business
      Overview**





Description
      of the Mortgage Loans





All
      of
      the Mortgage Loans were originated in accordance with underwriting policies
      customarily employed by the Bank, or with underwriting policies acceptable
      to
      the Bank. With respect to its underwriting policies, the Bank will not make
      any
      residential mortgage loans that exceed a loan to value ratio of 75% unless
      such
      loan is insured. If the residential mortgage loan is CMHC-insured (i) a cash
      down payment of between 5% and 24.9% is required, (ii) the monthly payment
      for
      capital, interest, taxes and heating must not exceed 32% of the gross monthly
      revenue of the borrower and (iii) the monthly payment for capital, interest,
      taxes, heating and all other monthly payments (including, without limitation,
      personal loans, lease payments and credit card debt service) must not exceed
      40%
      of the net monthly revenue of the borrower. Additionally, for all Mortgage
      Loans, an external credit check must be positive. When a loan is insured, an
      additional amount may be added to the principal amount of the mortgage loan
      representing the premium related thereto. The premium rates vary in accordance
      with the principal amount of the loan. Generally, the greater the loan to value
      ratio, the greater the premium rate. As is generally the case in the Canadian
      residential mortgage business, such underwriting policies are derived from
      CMHC-approved underwriting criteria.





As
      a
      CMHC-approved lender, the Bank has access to the Canadian National Housing
      Act
      mortgage insurance program. All of the Mortgage Loans are insured by CMHC
      pursuant to that program. The bulk of those loans were insured at origination.
      Whether a loan is insured through the CMHC portfolio insurance program, at
      origination or during the term of the loan, the insurance is valid until the
      expiration of the loan.





All
      of
      the Mortgage Loans are balloon mortgages. Accordingly, the Mortgage Loans do
      not
      provide for the full amortization of the principal balance thereof equally
      over
      their term to maturity and a principal payment equal to the original balance
      less any principal amount paid will be due on each Mortgage Loan at maturity.
      Balloon mortgages are the most prevalent type of mortgage offered by Canadian
      mortgage lenders. At the expiration of the term, the mortgage is generally
      renewed, based on then current market conditions, for a new term. Although
      the
      Bank offers terms varying from 3 months to 10 years, terms exceeding 5 years
      are
      relatively rare. Moreover, although the Bank offers monthly, semi-monthly and
      weekly pay mortgages, most of the Mortgage Loans are monthly pay mortgages.
      In
      general, loans are amortized over a period not exceeding 25 years.





The
      Mortgage Loans provide for limited prepayment rights. For example, typically
      up
      to 10% of the original principal amount of a Mortgage Loan may be prepaid once
      annually without penalty. Moreover, a Mortgage Loan may also be prepaid without
      penalty if the mortgaged property is sold and the mortgagor enters into a new
      mortgage with the same terms and conditions as the Mortgage Loan. In most other
      circumstances, prepayments or renegotiations of either the interest rate or
      the
      term of a Mortgage Loan will be subjected to prepayment penalties. During the
      first five years following the most recent interest adjustment date, such
      penalties are a resultant of a yield maintenance clause. After five years,
      such
      penalties will be limited to three months of interest.




6





ITEM  4:
      INFORMATION ON THE COMPANY (continued)





Description
      of the Promissory notes





The
      Promissory notes issued by the Company to NB Capital are comprised of
      fifty-three hypothecation loans. As of December 31, 2006, the principal
      amount of the Promissory notes liability was approximately $381 million. Each
      of
      the fifty-three hypothecation loans comprising the Promissory notes issued
      by
      the Company is secured by a pool of Mortgage Loans. As of December 31,
      2006, there were 10,036 Mortgage Loans in an aggregate amount of approximately
      C$597 million ($512 million). The value of each pool of Mortgage Loans
      comprising the Mortgage Loans exceeds the principal amount of the hypothecation
      loan that it secures. Accordingly, the Mortgage Assets issued by the Company
      are
      overcollateralized by the Mortgage Loans. The aggregate amount of such
      overcollateralization is, as of December 31, 2006, approximately $131 million.
      NB Capital acquired the Promissory notes issued by the Company pursuant to
      the
      terms of certain loan agreements.





Each
      Promissory note issued by the Company is recourse only to the Mortgage Loans
      securing such Promissory note. Each pool of Mortgage Loans is comprised of
      entirely CMHC-insured residential first mortgages. Each Promissory note issued
      by the Company is further secured by the residential real properties underlying
      such CMHC-insured residential first mortgages. Such residential real properties
      are located primarily in Quebec, Ontario and New Brunswick. Since the Mortgage
      Loans are insured, the Company expects little or no loss of principal or
      interest. However, CMHC insurance does not guarantee timely payment of interest
      and principal. The Promissory notes have maturities ranging from January 2007
      to
      January 2015. The Promissory notes pay interest at rates ranging from 5.00%
      to
      10.15%, with an average rate of approximately 7.03% per annum.





Payments
      of interest are made monthly out of payments on the Mortgage Loans. Pursuant
      to
      the Mortgage Loan Assignment Agreements, NB Capital receives all scheduled
      payments made on the Mortgage Loans, retains a portion of any such payments
      equal to the amount due and payable on the Promissory notes issued by the
      Company and remits the balance, if any, to the Company. NB Capital also retains
      a portion of any prepayments of principal in respect of the Mortgage Loans
      equal
      to the proportion of such prepayments that the outstanding principal amount
      of
      the Mortgage Loan bears to the outstanding principal amount of the Promissory
      notes issued by the Company, which amount would be applied to reduce the
      outstanding principal amount of the Promissory notes issued by the Company.
      Repayment of the Promissory notes issued by the Company is secured by an
      assignment of the Mortgage Loans to NB Capital pursuant to the Mortgage Loan
      Assignment Agreements, which are governed by the laws of Bermuda.





The
      assignment of the Mortgage Loans by the Company to NB Capital is without
      recourse. NB Capital has a security interest in the real property securing
      the
      Mortgage Loans and, subject to fulfilling certain procedural requirements under
      applicable Canadian law, is entitled to enforce payment on the Mortgage Loans
      in
      its own name if a mortgagor should default thereon. In the event of such a
      default, NB Capital has the same rights as the Company to force a sale of the
      mortgaged property and satisfy the obligations of the Company out of the
      proceeds. In the event of a default in respect of a Mortgage Loan, the amount
      of
      the Promissory notes issued by the Company will be reduced by an amount equal
      to
      the portion thereof allocable to the defaulting mortgage.





Following
      repayment of the Promissory notes issued by the Company, NB Capital will
      reassign any outstanding Mortgage Loans (without recourse) and deliver them
      to,
      or as directed by, the Company. All payments in respect of the Mortgage Loans
      are made in Canadian dollars. The amounts due (in US$) on the Promissory notes
      issued by the Company are retained by NB Capital free and clear of and without
      withholding or deduction for or on account of any present or future taxes
      imposed by or on behalf of Bermuda or any political subdivision thereof or
      therein.





7




ITEM  4:
      INFORMATION ON THE COMPANY (continued)





Advisory
      Agreement





The
      Company entered into the Advisory Agreement with the Bank to administer the
      day-to-day operations and affairs of the Company. The Bank shall, among other
      things, (i) monitor the credit quality of the real estate mortgage assets
      acquired, managed, financed, held and/or disposed of by the Company and (ii)
      advise the Company with respect to the acquisition, management, financing and
      disposition of the Company’s real estate mortgage assets. The Bank may, with the
      approval of a majority of the Board of Directors, subcontract all or a portion
      of its obligations under the Advisory Agreement to one or more related or
      unrelated third parties. The Bank will not, in connection with the
      subcontracting of any of its obligations under the Advisory Agreement, be
      discharged or relieved in any respect from any of its obligations under the
      Advisory Agreement. As of the date of this Form 20-F, the Bank has not
      subcontracted any of its obligations under the Advisory Agreement.





The
      Advisory Agreement was entered into on May 11, 2004 for an initial term of
      one
      year, and has been renewed every year for additional one-year periods. The
      last
      renewal was dated June 15, 2006 and its expiration date is June 14, 2007. The
      next renewal is expected to occur on June 14, 2007. The Company may terminate
      the Advisory Agreement at any time upon 60 days’ prior written notice. The Bank
      received an advisory fee equal to $50,000 for fiscal year 2006 and is entitled
      to receive $50,000 for fiscal year 2007, payable in equal quarterly installments
      with respect to the advisory and management services provided by it to the
      Company.





**Description
      of Property**





The
      registered offices of the Company are located at Clarendon House, 2 Church
      Street, Hamilton HM 11, Bermuda. The Company neither owns nor leases any
      properties.




ITEM  5:
      OPERATING AND FINANCIAL REVIEW AND PROSPECTS





**General**





The
      Company's sole business purpose is to acquire Mortgage Loans and to issue the
      Promissory notes, and other similar obligations, to NB Capital. Pursuant to
      the
      OSFI Order, the Company is not permitted to incur any indebtedness or engage
      in
      any business activities other than ownership of the Mortgage Loans and
      activities incidental thereto.





**Operating
      Results**





Net
      income from continuing operations for the year ended December 31, 2006 was
      $11,884,249, which represents an increase of $7,873,323 or 196.30% over the
      year
      ended December 31, 2005 when the gain from continuing operations was $4,010,926,
      which represented an increase of $11,947,949 or 150.53% over the year ended
      December 31, 2004. The increase for 2006 was principally attributable to a
      reduction of the change in fair value on derivative financial instruments of
      $27,055,670 which was offset by a reduction of the foreign exchange gain on
      mortgage loans transactions of $19,985,437 which were recognized in 2006.
      Revenues for the year ended December 31, 2006, December 31, 2005 and December
      31, 2004, were $43,917,560, $67,190,810 and $95,211,882, respectively. The
      decrease from year to year is due to the foreign exchange gain.





8




ITEM  5:
      OPERATING AND FINANCIAL REVIEW AND PROSPECTS (continued)





Ninety-two
      percent of revenues were derived from the Mortgage Loans. The Promissory notes
      issued by the Company are collateralized by the Mortgage Loans that consist
      of
      fifty-three pools of CMHC-insured residential first mortgages and which are
      secured by real property located in Canada. The remaining balance of the
      revenues for the year ended December 31, 2006, December 31, 2005 and December
      31, 2004 resulted from a foreign exchange gain on mortgage loans transactions
      of
      $231,898, $20,217,335 and $49,473,127 respectively, bank interest and
      amortization of the discount received on the purchase of mortgage loans of
      $3,245,721, $1,810,982 and $1,552,403 respectively.





Expenses
      for the year ended December 31, 2006, December 31, 2005 and December 31, 2004
      totaled $32,033,311, $63,179,884 and $103,148,905, respectively, of which
      $30,546,845, $33,995,506 and $35,811,136, respectively, represent interest
      on
      Promissory notes. As well, during the year ended December 31, 2006, December
      31,
      2005 and December 31, 2004, losses of $1,433,693, $28,489,363 and $67,287,163
      respectively were recorded related to the valuation of derivative financial
      instruments at their fair value.





During
      the year ended December 31, 2006, no dividend was authorized on the Company’s
      Common Stock.





**Liquidity
      and Capital Resources**





The
      Company's revenues are primarily derived from its Mortgage Loans. The Company's
      principal short-term liquidity needs are, with respect to the Promissory notes,
      to pay principal when due (maturity dates range between January 2007 to January
      2015) and monthly interest payments. Pursuant to the OSFI Order, the Company
      is
      not permitted to incur any indebtedness or engage in any business activities
      other than ownership of Mortgage Loans and activities incidental thereto.





As
      of
      December 31, 2006, approximately $381 million of Promissory notes issued by
      the
      Company were overcollateralized by approximately C$597 million ($512 million)
      of
      Mortgage Loans. The Company believes that the amounts generated from the payment
      of interest and principal on such Mortgage Loans will provide more than
      sufficient funds to make full payments with respect to the Promissory notes
      issued by the Company and sufficient funds to meet its operating expenses.
      Pursuant to the Mortgage Loan Assignment Agreements, all payments made in
      respect of the Mortgage Loans are made to NB Capital (through the Bank as
      servicer under the Servicing Agreement). Any such amount in excess of the amount
      due and payable on the Promissory notes is remitted to the Company and used
      to
      fund the acquisition of additional Mortgage Loans.





The
      Company does not require any capital resources for its operations and,
      therefore, it is not expected to acquire any capital assets in the foreseeable
      future.





**Critical
      Accounting Policies**





A
      summary
      of the significant accounting policies used by the Company is presented in
      Note
      2 to the financial statements included in this report. Certain of these
      accounting policies are considered significant because they are important to
      the
      presentation of the Company’s financial condition and operating results and
      require difficult, subjective and complex judgments and estimates because they
      relate to matters that are inherently uncertain. Any change in these judgments
      and estimates could have a material impact on the financial statements of NB
      Finance.





The
      Company records at fair value derivative financial instruments. Changes in
      unrealized gains and losses are recorded in the statement of income. Fair value
      is the amount at which a financial instrument could be exchanged in an arm’s
      length transaction between willing parties who are under no compulsion to act,
      based on quoted market prices.
      If quoted market prices are not available, fair value is determined using
      estimates. The valuation techniques used to make these estimates consider
      current market prices, the contractual prices of underlying instruments, the
      time value of money, yield curves and volatility factors. If necessary, fair
      value is adjusted to take market, model and credit risks into account, as well
      as the related costs.




9





ITEM  5:
      OPERATING AND FINANCIAL REVIEW AND PROSPECTS (continued)





**Off-Balance
      Sheet Arrangements**





Notes
      2,
      8 and 9 to the financial statements included in this form 20-F on pages F-1
      through F-9 discuss the Company’s off-balance sheet arrangements.





**Tabular
      Disclosure of Contractual Obligations**





The
      Promissory notes are issued to NB Capital, a wholly-owned subsidiary of the
      Bank.


Payments
                  due by periodLess
              
              
              
              
              
              Morethan
                  1
              
              1-3
              
              3-5
              
              than
                  5Total
              
              year
              
              years
              
              years
              
              yearsPromissory
                  notes
              
              $
              380,522,681
              
              $
              186,717,983
              
              $
              68,971,690
              
              $
              77,887,253
              
              $
              46,945,755





ITEM  6:
      DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES





**Directors
      and Officers**





The
      Board
      of Directors of the Company consists of the individuals set forth below. The
      Company currently has five executive officers, five officers and no employees.
      The Company does not anticipate that it will require any employees.





The
      following table sets forth the Company’s directors and executive officers as at
      December 31, 2006:





**Name**
            
            **Age**
            
            **Position
                and Offices Held**
            
            **Director
                Since**Donna
                Goral
            
            49
            
            Director,
                Vice-President
            
            May
                2001Martin
                Ouellet
            
            53
            
            Director,
                President
            
            November
                1997Monique
                Baillergeau
            
            48
            
            Director
            
            May
                2003Vincent
                Lima
            
            49
            
            Director
            
            May
                2006Jean
                Dagenais
            
            48
            
            Chief
                Financial Officer
            
            N/A




Allison
      L. Smith (Secretary), Michael Ashford (Assistant Secretary), Martin-Pierre
      Boulianne (Assistant Secretary), Vanessa Fontana (Assistant Secretary) and
      Valérie Pelletier (Assistant Secretary) are the other officers of the
      Company.





10




ITEM
      6:
      DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES (continued)





As
      of
      March 21, 2006, Ms. Goral was elected President and Chairman of the Board of
      NB
      Capital Corporation. She is also a director of NB Finance and holds the position
      of Vice-President - Taxation, USA Operations for the Bank since 1992. Ms.
      Goral’s prior tax experience includes positions with KPMG Peat Marwick and Ernst
      & Whinney. She is a Certified Public Accountant (CPA) and a member of the
      American Institute of Certified Public Accountants and the New York State
      Society of CPAs.





Mr.
      Lima
      was appointed Director of NB Capital in March 2006 and Director of NB Finance
      in
      May 2006. He joined the Bank in December 1987, and over the years has held
      several positions such as Assistant Controller, Assistant Vice President/Credit
      Analyst - Commercial Financing Group, and Vice President - Cross Border
      Financing Group. He started his career in 1978 with a major international bank
      in the Money Transfer/Cash Management Dept., and over the years has held various
      positions in both operations and accounting with various international
      banks.





Ms.
      Baillergeau was appointed Director of NB Capital and NB Finance in May 2003.
      She
      has been with the Bank’s New York branch since February 1986. In 1998, she was
      assigned to manage the Operations of the London branch. In May 2003, she
      accepted the position of Vice President in charge of Operations and
      Administration in New York.





Mr.
      Dagenais joined the Bank in 1990 as Manager and Chief Accountant. In 1997,
      he
      was promoted to Vice-President. As such, he is responsible for the preparation
      of the Bank’s consolidated financial statements as well as other financial
      information presented to management, shareholders and regulatory authorities.
      He
      began his career in 1980 as external auditor with a major international
      accounting firm. From 1985 to 1990, he held various positions in accounting
      and
      financial reporting with large corporations. He studied at the University of
      Sherbrooke, where he obtained a Bachelor in Administration. He was admitted
      to
      the Order of Certified Management Accountants in 1982 and to the Order of
      Chartered Accountants in 1983.





Mr.
      Ouellet has been an employee of the Bank since 1980. He has held different
      positions within the Treasury and Financial Markets division of the Bank.
      Recently, he has acted as the Senior Vice-President and Treasurer, responsible
      for Asset and Liability Management, funding and liquidity management. He is
      a
      Director and the President of NB Finance.





**Compensation
      of Directors and Officers**





The
      Company is a wholly owned subsidiary of the Bank. Each Director and Officer
      of
      the Company is also an employee of the Bank, except for Michael
      Ashford  and  Allison
      L. Smith. The Company did not pay any form of compensation to its Officers
      or
      Directors for the year ended December 31, 2006. Any compensation paid to the
      Directors and Officers of the Company is paid to such individual by the Bank as
      compensation for all functions performed for the Bank and its subsidiaries.
      The
      Company did not set aside or accrue any amount during the year ended December
      31, 2006 to provide pension, retirement or similar benefits for Directors and
      Officers pursuant to any existing plan provided or contributed to by the
      Company. In addition, there are no benefits payable on termination for any
      directors and officers.





**Options
      to Purchase Securities from Registrant**





See " History
      and Development of the Company " under
      Item 4: INFORMATION ON THE COMPANY above. No options, warrants or rights were
      granted to any individual with respect to the Common Stock or other securities
      of the Company.





11




ITEM
      6:
      DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES (continued)





**Audit
      Committee**





The
      Company does not have an audit committee. As a result, all functions ordinarily
      performed by an audit committee are performed by the entire Board of Directors.
      There are no committees of the Board of Directors.





ITEM
      7:
      MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS





**Control
      of the Company**





The
      Company is a wholly-owned subsidiary of the Bank. Pursuant to the OSFI Order,
      the Bank will at all times continue to hold all outstanding shares of Common
      Stock. The Common Stock is the only outstanding voting security of the Company.
      The Common Stock is not registered with the SEC. There are no arrangements
      known
      to the Company the operation of which may at a subsequent date result in a
      change in control of the Company.





**Related
      Party Transactions**





On
      February 22, 2006 and August 17, 2006, the Company acquired from the Bank,
      its
      direct parent, nine pools of Mortgage Loans pursuant to nine Deeds of Sale
      of
      Mortgage Loans, dated February 22, 2006, and August 17, 2006 respectively,
      between the Bank and the Company. During the fiscal year ended December 31,
      2006, there were no other material transactions (completed or proposed) to
      which
      the Company and any director or officer of the Company, any relative or spouse
      thereof or the Bank had any direct or indirect material interest.





As
      of
      December 31, 2006, the Company has issued Promissory notes to NB Capital, an
      affiliated company, in the aggregate principal amount of approximately $381
      million. The proceeds from the issuance of Promissory notes, in addition to
      a
      capital contribution from the Bank, have been used to acquire the Mortgage
      Loans
      from the Bank for approximately C$597 million ($512 million). See " History
      and Development of the Company " under
      Item 4: INFORMATION ON THE COMPANY above.





On
      February 24, 2005 and August 29, 2005, the Company acquired from the Bank,
      its
      direct parent, nine pools of Mortgage Loans pursuant to nine Deeds of Sale
      of
      Mortgage Loans, dated February 24, 2005, and August 29, 2005 respectively,
      between the Bank and the Company. During the fiscal year ended December 31,
      2005, there were no other material transactions (completed or proposed) to
      which
      the Company and any director or officer of the Company, any relative or spouse
      thereof or the Bank had any direct or indirect material interest.





As
      of
      December 31, 2005, the Company has issued Promissory notes to NB Capital, an
      affiliated company, in the aggregate principal amount of approximately $410
      million. The proceeds from the issuance of Promissory notes, in addition to
      a
      capital contribution from the Bank, have been used to acquire the Mortgage
      Loans
      from the Bank for approximately C$682 million ($587 million).





On
      April
      28, 2004 and August 26, 2004, the Company acquired from the Bank, its direct
      parent, twelve pools of Mortgage Loans pursuant to twelve Deeds of Sale of
      Mortgage Loans, dated April 28, 2004, and August 26, 2004 respectively, between
      the Bank and the Company. During the fiscal year ended December 31, 2004, there
      were no other material transactions (completed or proposed) to which the Company
      and any director or officer of the Company, any relative or spouse thereof
      or
      the Bank had any direct or indirect material interest.





12




ITEM
      7:
      MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS (continued)





As
      of
      December 31, 2004, the Company has issued Promissory notes to NB Capital, an
      affiliated company, in the aggregate principal amount of approximately $410
      million. The proceeds from the issuance of Promissory notes, in addition to
      a
      capital contribution from the Bank, have been used to acquire the Mortgage
      Loans
      from the Bank for approximately C$721 million ($600 million).





ITEM
      8:
      FINANCIAL INFORMATION





**Consolidated
      Statements and Other Financial Information**





See
      page
      F-1 to F-9 hereto.


13
    *Financial
          statements of*
 
 **NB
          FINANCE, LTD.**
 
 *December
          31, 2006, 2005 and 2004*
 
  
 
  **NB
          FINANCE, LTD.**
 **Table
          of contents**
 
 
 
 Report
                    of Independent Registered Chartered AccountantsStatements
                    of income and retained earnings
                F-1Balance
                    sheets
                F-2Statements
                    of cash flows
                F-3Notes
                    to the financial statements
                F-4
                    to F-9
 
 
 
 Deloitte
&
Touche
                    LLP1
                    Place Ville MarieSuite
                    3000Montreal
                    QC H3B
                    4T9CanadaTel:
                    (514)
                    393-7115Fax:
                    (514) 390-4111www.deloitte.ca
  **Report
            of Independent Registered Chartered Accountants**
  To
            the
            Board of Directors and Shareholder ofNB Finance, Ltd. (the "Company")
   We have audited the accompanying
            balance sheets of NB Finance, Ltd. as of December 31, 2006 and 2005 and
            the
            related statements of income and retained earnings and cash flows for
            each of
            the three years in the period ended December 31, 2006. These financial
            statements are the responsibility of the Company’s management. Our
            responsibility is to express an opinion on these financial statements
            based on
            our audits.
  We conducted our audits
            in
            accordance with the standards of the Public Company Accounting Oversight
            Board
            (United States). Those standards require that we plan and perform the
            audit to
            obtain reasonable assurance whether the financial statements are free
            of
            material misstatement. The Company is not required to have, nor were
            we engaged
            to perform, an audit of its internal control over financial reporting.
            Our
            audits included consideration of internal control over financial reporting
            as a
            basis for designing audit procedures that are appropriate in the circumstances,
            but not for the purpose of expressing an opinion on the effectiveness
            of the
            Company's internal control over financial reporting. Accordingly, we
            express no
            such opinion. An audit also includes examining, on a test basis, evidence
            supporting the amounts and disclosures in the financial statements, assessing
            the accounting principles used and significant estimates made by management,
            as
            well as evaluating the overall financial statement presentation. We believe
            that
            our audits provide a reasonable basis for our opinion.
  In our opinion, the financial
            statements referred to above present fairly, in all material respects,
            the
            financial position of the Company as of December 31, 2006 and 2005, and
            the
            results of its operations and its cash flows for each of the three years
            in the
            period ended December 31, 2006, in conformity with accounting principles
            generally accepted in Canada.
  As described in Note 2c)
            to the
            financial statements, the accompanying financial statements for the year
            ended
            December 31, 2005 have been restated.
   /s/ Deloitte & Touche LLP
 Montreal, Canada
  June 14, 2007
  Member
            of Deloitte Touche Tohmatsu
  
 **NB
          FINANCE, LTD.**
 **Statements
          of** **Income
          and Retained Earnings**
 **years
          ended December 31, 200** **6,
          2005 and 2004**
 **(in
          U.S. dollars)**
 
 Restated**2006**
                
                **2005**
                
                **2004****$**
                ****
                **$**
                
                **$****Revenue**Interest
                    - mortgage loans
                
                
                40,439,941
                
                
                45,162,493
                
                
                44,186,352Foreign
                    exchange gain
                
                
                231,898
                
                
                20,217,335
                
                
                49,473,127Amortization
                    of the premium paid or thediscount
                    received on mortgage loans, net
                
                
                55,375
                
                
                -
                
                
                926,848Interest
                    - bank
                
                
                3,190,346
                
                
                1,810,982
                
                
                625,55543,917,560
                
                
                67,190,810
                
                
                95,211,882**Expenses**Interest
                    - promissory notes
                
                
                30,546,845
                
                
                33,995,506
                
                
                35,811,136Change
                    in fair value on derivative financialinstruments
                
                
                1,433,693
                
                
                28,489,363
                
                
                67,287,163Amortization
                    of the premium paid or thediscount
                    received on mortgage loans, net
                
                
                -
                
                
                510,494
                
                
                -Professional
                    fees
                
                
                25,000
                
                
                91,933
                
                
                47,010Advisory
                    fees to the parent company
                
                
                50,000
                
                
                83,333
                
                
                -Other
                
                
                (22,227
                )
                
                9,255
                
                
                3,59632,033,311
                
                
                63,179,884
                
                
                103,148,905**Net
                    income (loss)**
                
                
                11,884,249
                
                
                4,010,926
                
                
                (7,937,023
                )Retained
                    earnings, beginning of year
                
                
                21,876,489
                
                
                17,865,563
                
                
                25,802,586**Retained
                    earnings, end of year**
                
                
                33,760,738
                
                
                21,876,489
                
                
                17,865,563
 
 F-1
  **NB
          FINANCE, LTD.**
 **Balance
          S** **heets**
 **as
          at December 31, 200** **6
          and 2005**
 **(in
          U.S. dollars)**
 
 **2006**
                
                **2005****$**
                
                **$****Assets**Cash
                    and cash equivalents
                
                
                90,256,712
                
                
                75,953,975Mortgage
                    loans (Note 3)
                
                
                512,225,046
                
                
                586,807,311Premium
                    paid on mortgage loans (Note 4)
                
                
                3,759,545
                
                
                6,277,799Interest
                    receivable
                
                
                1,685,082
                
                
                2,004,617Prepaid
                    expenses
                
                
                4,125
                
                
                4,127607,930,510
                
                
                671,047,829**Liabilities**Promissory
                    notes (Note 5)
                
                
                380,522,681
                
                
                409,978,987Due
                    to an affiliated company (Note 6)
                
                
                8,800,848
                
                
                9,680,137Due
                    to the parent company
                
                
                12,500
                
                
                12,500Discount
                    received on mortgage loans (Note 4)
                
                
                4,042,931
                
                
                4,568,320Liabilities
                    related to derivative financial instruments
                
                
                47,094,398
                
                
                89,976,895Deferred
                    transition gain on derivative financial instruments
                
                
                1,323,856
                
                
                2,540,770Accounts
                    payable
                
                
                25,000
                
                
                66,173441,822,214
                
                
                516,823,782**Shareholder’s
                    equity**Capital
                    stock (Note 8)
                
                
                12,000
                
                
                12,000Contributed
                    surplus
                
                
                132,335,558
                
                
                132,335,558Retained
                    earnings
                
                
                33,760,738
                
                
                21,876,489166,108,296
                
                
                154,224,047607,930,510
                
                
                671,047,829
 
 F-2
 **NB
          FINANCE, LTD.**
 **Statements
          of Cash F** **lows**
 **years
          ended December 31, 200** **6,
          2005 and 2004**
 **(in
          U.S. dollars)**
 
 Restated**2006**
                
                **2005**
                
                **2004****$**
                
                **$**
                
                **$****Cash
                    flows from (used in) operating activities**Net
                    income (loss)
                
                
                11,884,249
                
                
                4,010,926
                
                
                (7,937,023
                )Item
                    not affecting cash resourcesAmortization
                    of the (discount received) or thepremium
                    paid on mortgage loans, net
                
                
                (55,375
                )
                
                510,494
                
                
                (926,848
                )Amortization
                    of deferred transition gainon
                    derivative financial instruments
                
                
                (1,216,914
                )
                
                (634,185
                )
                
                (791,840
                )Foreign
                    exchange gain
                
                
                (1,455,510
                )
                
                (20,234,501
                )
                
                (49,405,025
                )Change
                    in fair value on derivative financialinstruments
                
                
                (42,882,497
                )
                
                (10,731,752
                )
                
                31,363,757Changes
                    in non-cash operating working capital itemsInterest
                    receivable
                
                
                319,535
                
                
                56,130
                
                
                288,343Prepaid
                    expenses
                
                
                2
                
                
                (2
                )
                
                (4,125
                )Due
                    to an affiliated company
                
                
                (879,289
                )
                
                205,777
                
                
                (1,637,556
                )Accounts
                    payable
                
                
                (41,173
                )
                
                46,173
                
                
                (1,554
                )Due
                    to a parent company
                
                
                -
                
                
                12,500
                
                
                (3,117,446
                )(34,326,972
                )
                
                (26,758,440
                )
                
                (32,169,317
                )**Cash
                    flows from (used in) financing activities**Issue
                    of promissory notes
                
                
                174,603,983
                
                
                170,774,678
                
                
                170,612,901Reimbursements
                    of promissory notes
                
                
                (204,060,289
                )
                
                (170,701,502
                )
                
                (209,040,546
                )(29,456,306
                )
                
                73,176
                
                
                (38,427,645
                )**Cash
                    flows from (used in) investing activities**Increase
                    in mortgage loans
                
                
                (218,254,979
                )
                
                (213,468,347
                )
                
                (213,266,127
                )Repayments
                    of mortgage loans
                
                
                294,327,945
                
                
                247,110,114
                
                
                294,041,893Discount
                    (Premium) on mortgage loans
                
                
                2,013,049
                
                
                (320,845
                )
                
                (589,274
                )78,086,015
                
                
                33,320,922
                
                
                80,186,492Net
                    increase in cash and cash equivalents
                
                
                14,302,737
                
                
                6,635,658
                
                
                9,589,530Cash
                    and cash equivalents, beginning of year
                
                
                75,953,975
                
                
                69,318,317
                
                
                59,728,787**Cash
                    and cash equivalents, end of year**
                
                
                90,256,712
                
                
                75,953,975
                
                
                69,318,317Additional
                    cash flow informationInterest
                    paid
                
                
                30,968,200
                
                
                34,093,118
                
                
                36,189,578
 
 Cash
          and
          cash equivalents comprise cash on hand and temporary investments.
  F-3
 **NB
              FINANCE, LTD.**
 **Notes
              to the financial statements**
 **years
              ended December 31, 2006 and 2005**
 **(in
              U.S. dollars)**
 
   **1.**
                  **Incorporation
                      and nature of operations**
  NB
            Finance, Ltd. (the “Company”) is a wholly-owned subsidiary of National Bank of
            Canada and was incorporated in Bermuda on September 3, 1997. The Company’s
            principal activity is holding mortgage loans.
  **2.**
                  **a)
                      Summary of significant accounting
                      policies**
  *Financial
            statements*
  The
            financial statements are prepared in accordance with accounting principles
            generally accepted (“GAAP”) in Canada and are expressed in U.S.
            dollars.
 
 *Mortgage
            loans*
  Mortgage
            loans are recorded at their principal amounts less allowances for credit
            losses.
 
 *Estimates*
  The
            preparation of financial statements in accordance with accounting principles
            generally accepted in Canada requires management to make estimates and
            assumptions that affect the amounts reported in the financial statements
            and
            accompanying notes. The most important estimates are related to fair
            value of
            the mortgage loans, the promissory notes and the derivative financial
            instruments. Although these estimates are based on management’s best knowledge
            of current events and actions that the Company may undertake in the future,
            actual results could differ from the estimates.
 
 *Translation
            of foreign currencies*
  Monetary
            assets and liabilities denominated in foreign currencies are translated
            into
            U.S. dollars at year-end rates of exchange. Revenue and expense items
            are
            translated at rates prevailing at the transaction dates. Gains and losses
            resulting from translation are reflected in the statement of
            income.
 
 *Derivative
            financial instruments*
  The
            Company uses cross currency swaps to manage the currency risk exposure
            of the
            mortgage loans. Before 2004, the foreign exchange gains and losses of
            these
            instruments were recognized the same way as the foreign exchange gains
            and
            losses on the hedged assets in the statement of income. Since 2004, these
            derivative financial instruments do not qualify for hedge accounting
            and are
            carried at fair value as assets or liabilities with changes in fair value
            recorded in the statement of income. Fair value is determined using estimates.
            The valuation techniques used to make these estimates consider current
            market
            prices, the contractual prices of underlying instruments, the time value
            of
            money, yield curves and volatility factors. If necessary, fair value
            is adjusted
            to take market, model and credit risks into account, as well as the related
            costs.The resulting transitional gain is deferred and recognized in income
            at
            the same time as revenues related to the hedged items.
 
 F-4
 
 **NB
                FINANCE, LTD.**
 **Notes
                to the financial statements**
 **years
                ended December 31, 2006 and 2005**
 **(in
                U.S. dollars)**
   **2.**
                  **a)
                      Summary of significant accounting policies
                      (continued)**
  *Income
            taxes*
  The
            Company is not subject to any income taxes on the Bermuda income.
 
 *Premium
            paid or discount received on mortgage loans*
  The
            premium paid or discount received on mortgage loans is amortized using
            the
            effective yield method on the residual term of mortgage pools.
 
 **b)
            Recent accounting standards not yet adopted**
 
 *Financial
            Instruments - Recognition and Measurement, Hedges and Comprehensive
            Income*
 
 In
            January 2005, the CICA issued three new standards: “Financial Instruments -
            Recognition and Measurement,” “Hedges,” and “Comprehensive Income.” The main
            consequences of implementing these standards are described below.
 
 All
            financial assets and liabilities will be carried at fair value in the
            Balance
            Sheet, except for items classified in the following categories, which
            will be
            carried at amortized cost: loans and receivables, held-to-maturity securities
            and financial liabilities not held for trading. Realized and unrealized
            gains
            and losses on financial assets and liabilities that are held for trading
            will be
            recorded in the Statement of income. Unrealized gains and losses on financial
            assets that are available for sale will be recorded in other comprehensive
            income until realized, at which time they will be recorded in the Statement
            of
            Income. All derivatives, including embedded derivatives that must be
            accounted
            for separately, will be recorded at fair value in the Balance
            Sheet.
 
 For
            fair
            value hedges, changes in the fair value of the derivatives and corresponding
            changes in fair value of the hedged items attributed to the risk being
            hedged
            will be recognized in the Statement of Income. For cash flow hedges,
            the
            effective portion of the changes in the fair values of the derivative
            instruments will be recorded in other comprehensive income until the
            hedged
            items are recognized in the Statement of Income.
 
 These
            new
            standards will apply to the Company effective January 1, 2007. The new
            accounting standards for financial instruments require that all financial
            assets
            and liabilities be classified according to their characteristics, management’s
            intention, or the choice of category in certain circumstances. All financial
            assets must be classified as either held for trading, held to maturity,
            available for sale or as loans and receivables. Financial liabilities
            must be
            classified as held for trading or not held for trading. The Mortgage
            loans and
            the Promissory notes will be classified as available for sale and recorded
            at
            fair value on the Balance Sheet. The impact will be reflected under Other
            Comprehensive Income. The reversal of the deferred transition gain on
            derivative
            financial instruments of $1,323,856 in 2007 will be recorded as an adjustment
            to
            the opening balance of the Accumulated Other Comprehensive Income.
 
 F-5
 **NB
              FINANCE, LTD.**
 **Notes
              to the financial statements**
 **years
              ended December 31, 2006 and 2005**
 **(in
              U.S. dollars)**
 **c)
            Restatement**
 
 The
            Company restated its Statement of Income and Retained Earnings and its
            Statement
            of Cash Flows to correct a misclassification for the year ended December
            31,
            2005. In the Statement of Income and Retained Earnings, the foreign exchange
            gain and change in fair value on derivative financial instruments were
            decreased
            for an amount of $2,784,147. In the Statement of Cash Flows, the variation
            of
            the foreign exchange gain and change in fair value on derivative financial
            instruments were adjusted from $(23,018,648) to $(20,234,501) and from
            $(7,947,605) to $(10,731,752) respectively.
  **3.**
                  **Mortgage
                      loans**
  The
            Company acquired mortgage loans expressed in Canadian dollars from National
            Bank
            of Canada. The mortgage loans are secured by residential first mortgages
            and
            insured by the Canada Mortgage and Housing Corporation.
 
 The
            mortgage loans have maturity dates varying from January 2007 to January
            2015. These loans bear interest at rates ranging from approximately 4.23%
            to
            8.42% with a weighted average rate of 6.33% per annum.
 
 Cross
            currency swaps with the parent company convert the Canadian dollars exposure
            of
            the mortgage loans to U.S. dollars. These swaps are not eligible under
            the hedge
            accounting guideline AcG-13.
  2006
                  
                  2005$
                  
                  $Mortgage
                      loans, beginning of year
                  
                  
                  586,807,311
                  
                  
                  600,229,408Acquisitions
                  
                  
                  218,254,979
                  
                  
                  213,468,347Principal
                      repayments
                  
                  
                  (294,327,945
                  )
                  
                  (247,110,114
                  )Foreign
                      exchange difference
                  
                  
                  1,490,701
                  
                  
                  20,219,670Mortgage
                      loans, end of year
                  
                  
                  512,225,046
                  
                  
                  586,807,311
 
 The
            scheduled principal repayments are as follows:
 
 $
                  
                  
                  
                  $2007
                  
                  
                  236,249,333
                  
                  2012
                  
                  42,037,1402008
                  
                  
                  54,831,607
                  
                  2013
                  
                  8,926,7452009
                  
                  
                  41,647,950
                  
                  2014
                  
                  4,990,8522010
                  
                  
                  42,403,785
                  
                  2015
                  
                  11,370,8972011
                  
                  
                  69,766,737
 
 The
            mortgage loans are insured by the Canada Mortgage and Housing Corporation
            so
            that the credit risk is negligible. Moreover, based on the current financial
            structure, the exposure to interest rate risk is minimal.
  F-6
 
 **NB
                  FINANCE, LTD.**
 **Notes
                  to the financial statements**
 **years
                  ended December 31, 2006 and 2005**
 **(in
                  U.S. dollars)**
 **4.**
                  **Premium
                      paid or discount received on mortgage
                      loans**
  The
            premium paid or discount received is amortized using the effective yield
            method
            on the residual term of mortgages acquired. The amortization amounts
            to a
            revenue of $55,375 in 2006 (expense of $510,494 in 2005 and a revenue
            of
            $926,848 in 2004).
  **5.**
                  **Promissory
                      notes**
  The
            promissory notes are issued to NB Capital Corporation, a wholly-owned
            subsidiary
            of the parent company.
  2006
                  
                  2005$
                  
                  $Promissory
                      notes, interest rate ranging between 5.00%and
                      10.15%, repayable by monthly variableinstallments
                      until January 2015
                  
                  
                  380,522,681
                  
                  
                  409,978,987
 
 The
            scheduled principal repayments for the next nine years are as
            follows:
  $
                  
                  
                  
                  $2007
                  
                  
                  186,717,983
                  
                  
                  2012
                  
                  
                  27,898,2772008
                  
                  
                  40,644,501
                  
                  
                  2013
                  
                  
                  6,723,6902009
                  
                  
                  28,327,189
                  
                  
                  2014
                  
                  
                  3,759,1462010
                  
                  
                  29,213,021
                  
                  
                  2015
                  
                  
                  8,564,6422011
                  
                  
                  48,674,232
  **6.**
                  **Transactions
                      with affiliated
                      compan****ies**
  During
            the year, the Company incurred interest expenses to NB Capital Corporation
            in an
            amount of $30,546,845 ($33,995,506 in 2005 and $35,811,136 in
            2004).
 
 The
            amount due to an affiliated company as at December 31, 2006 and 2005
            represents interest and principal reimbursements due on the promissory
            notes to
            NB Capital Corporation.
 
 The
            Company received $3,190,346 ($1,810,982 in 2005 and $625,555 in 2004)
            in
            interest on bank accounts held with National Bank of Canada (International)
            Limited.
 
 The
            Company paid $50,000 ($83,333 in 2005, nil in 2004) in advisory fees
            to National
            Bank of Canada.
  **7.**
                  **Derivative
                      financial instruments**
  The
            company use cross currency swaps to manage the currency risk.
 
 The
            cross
            currency swaps have maturity dates ranging from January 2007 to January
            2015 and
            exchange rates ranging from ($C/$US) 1.1170 to 1.6118.
 F-7
 **NB
                FINANCE, LTD.**
 **Notes
                to the financial statements**
 **years
                ended December 31, 2006 and 2005**
 **(in
                U.S. dollars)**
 **7.**
                  **Derivative
                      financial instruments
                      (continued)**
  The
            following table presents the notional amount of the cross currency swap
            contracts according to their maturity date:
 
 Notional
                      Amount$2007
                  
                  
                  140,895,1462008
                  
                  
                  89,719,8752009
                  
                  
                  19,364,9192011
                  
                  
                  55,692,0502012
                  
                  
                  111,486,9352015
                  
                  
                  58,494,425
 
 **8.**
                  **Capital
                      stock**
  Authorized
 12,000 common
            shares, $1 par value
  2006
                  
                  2005$
                  
                  $Issued
                      and fully paid12,000
                      common shares
                  
                  
                  12,000
                  
                  
                  12,000
 
 **9.**
                  **Fair
                      value of financial
                      instruments**
  The
            following table presents the fair value of balance sheet financial instruments,
            except for instruments whose fair value is estimated to be equal to their
            carrying value. This fair value is determined using the valuation methods
            and
            assumptions described below.
 
 Fair
            value represents the amount at which a financial instrument could be
            exchanged
            in an arm’s length transaction between willing parties. The fair values
            presented are estimates derived using present value or other valuation
            techniques and may not be indicative of the net realizable value.
  2006
                  
                  2005Carrying
                      Value
                  
                  Fair
                      Value
                  
                  Carrying
                      Value
                  
                  Fair
                      Value$
                  
                  $
                  
                  $
                  
                  $**Assets**Mortgages
                      loans
                  
                  
                  512,225,046
                  
                  
                  522,734,732
                  
                  
                  586,807,311
                  
                  
                  600,898,338**Liabilities**Promissory
                      notes
                  
                  
                  (380,522,681
                  )
                  
                  (388,258,533
                  )
                  
                  (409,978,987
                  )
                  
                  (422,649,877
                  )
  F-8
 **NB
                FINANCE, LTD.**
 **Notes
                to the financial statements**
 **years
                ended December 31, 2006 and 2005**
 **(in
                U.S. dollars)**
 **10.**
                  **Reconciliation
                      of Canadian and United States
                      GAAP**
  The
            financial statements of the Company are prepared in accordance with Canadian
            GAAP. The principal differences resulting from the application of U.S.GAAP
            on
            net income are presented below.
 
 Starting
            January 1, 2004, under Canadian GAAP, derivative financial instruments
            that do
            not qualify for hedge accounting are carried at fair value on the balance
            sheet
            with changes in fair value recorded in income. Any resulting transitional
            gain
            (loss) is deferred and recognized in income at the same time as revenues
            related
            to the hedged item. According to U.S.GAAP, derivative financial instruments
            that
            do not qualify for hedge accounting are carried at fair value on the
            balance
            sheet with changes in fair value recorded in earnings. The following
            table
            reconciles net income (loss) according to Canadian GAAP with net income
            (loss)
            according to U.S. GAAP.
  **2006**
                  
                  **2005**
                  
                  **2004****$**
                  
                  **$**
                  
                  **$****Net
                      income (loss) per Canadian GAAP**
                  
                  **11,884,249**
                  
                  **4,010,926**
                  
                  **(7,937,023)**Amortization
                      of transitional gain
                  
                  
                  (1,216,914
                  )
                  
                  (634,185
                  )
                  
                  (791,840
                  )**Net
                      income (loss) per U.S. GAAP**
                  
                  
                  **10,667,335**
                  
                  
                  **3,376,741**
                  
                  
                  **(8,728,863**
                  **)****Other
                      comprehensive income**
                  
                  
                  **-**
                  
                  
                  **-**
                  
                  
                  **-****Comprehensive
                      income**
                  
                  
                  **10,667,335**
                  
                  
                  **3,376,741**
                  
                  
                  **(8,728,863**
                  **)**
 
 
 The
            following table reconciles shareholder’s equity according to Canadian GAAP with
            shareholder’s equity according to U.S. GAAP.
 
 
 **2006**
                  
                  **2005**
                  
                  **2004****$**
                  
                  **$**
                  
                  **$****Shareholder’s
                      equity per Canadian GAAP**
                  
                  
                  **166,108,296**
                  
                  
                  **154,224,047**
                  
                  
                  **150,213,121**Transition
                      gain on derivative financial instruments
                  
                  
                  1,323,856
                  
                  
                  2,540,770
                  
                  
                  3,174,955**Shareholder’s
                      equity per U.S. GAAP**
                  
                  
                  **167,432,152**
                  
                  
                  **156,764,817**
                  
                  
                  **153,388,076**
   F-9
  **Legal
            Proceedings**





The
      Company is not the subject of any material litigation. The Company is not
      currently involved in nor, to the Company's knowledge, is it currently
      threatened with any material litigation. In the event routine litigation arises
      in the ordinary course of business, most of it is expected to be covered by
      liability insurance.





**Significant
      changes**





There
      have been no significant changes since the date of the Financial Statements
      included in this report.





ITEM
      9:
      THE OFFER AND LISTING





**Nature
      of Company’s Securities**





See " History
      and development of the Company " under
      Item 4: INFORMATION ON THE COMPANY above. No trading market exists with respect
      to the securities of the Company. All Common Stock of the Company is held by
      the
      Bank.





ITEM
      10:
      ADDITIONAL INFORMATION





**Memorandum
      of Association**





NB
      Finance's Memorandum of Association and Bye-laws both became operational on
      September 3, 1997 and are previously filed on the S-4/F-9
      Registration Statement.





**Material
      Contracts**





See
      Item
      4: INFORMATION ON THE COMPANY





**Exchange
      Controls and other Limitations Affecting Security Holders**





See " History
      and Development of the Company " under
      Item 4: INFORMATION ON THE COMPANY above. There are no governmental laws,
      decrees or regulations in Bermuda or Canada that restrict the export or import
      of capital or that affect the remittance of dividends, interest or other
      payments to nonresident holders of the Common Stock. Pursuant to the OSFI Order,
      the Bank will at all times continue to hold all outstanding shares of Common
      Stock. None of the Company’s Memorandum of Association, Bye-laws or Bermuda law
      limit the right of nonresident or foreign owners to hold or vote
      securities.




14




ITEM
      10:
      ADDITIONAL INFORMATION (continued)





**Taxation**





See " History
      and Development of the Company " under
      Item 4: INFORMATION ON THE COMPANY above. United States security holders are
      not
      subject to any taxes under existing laws and regulations of Bermuda with respect
      to the Depository Shares of NB Capital Corporation. No tax treaty exists between
      the United States and Bermuda.





**Documents
      on Display**





The
      Company is subject to the informational requirements of the Securities Exchange
      Act of 1934, as amended. In accordance with these requirements, we file reports
      and other information with the SEC. These materials, including this report
      and
      the exhibits thereto, may be inspected and copied at prescribed rates at the
      SEC’s public reference room at 100 F. Street, N.E., Washington, D.C. 20549. The
      SEC also maintains a web site at http://www.sec.gov that contains reports and
      other information regarding registrants that file electronically with the SEC.
      NB Finance’s annual reports and some of the other information submitted to the
      SEC may be accessed through this web site.





ITEM
      11:
      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Any
      market risk to which the Company would be exposed would result from fluctuations
      in: (a) interest rates related to Mortgage Loans and (b) currency exchange
      rates
      related to Promissory notes, each affecting the interest payments made by the
      Company in respect of the Promissory notes. Since the Promissory notes are
      significantly over collateralized by the Mortgage Loans, interest rate
      fluctuations should not present significant market risk. The Company expects
      that the interest and principal generated by the Mortgage Loans should enable
      full payment by the Company of all of its obligations as they come due. Since
      the Mortgage Loans are guaranteed by a fixed ratio of exchange predetermined
      on
      the date of purchase and applicable until the maturity of the Mortgage Loans
      pursuant to the Mortgage Loan Assignment Agreements, fluctuations in currency
      exchange rates should not present significant market risk.





ITEM
      12:
      DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES





Not
      Applicable.





**PART
      II**




ITEM
      13:
      DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES





There
      have been no material defaults in the payment of principal, interest, a sinking
      or purchase fund installment or with respect to any indebtedness of the Company.
      There have been no material arrearages in the payment of dividends or any
      material delinquency with respect to the Common Stock.





15





ITEM
      14:
      MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS





There
      have been no material modifications to any constituent instruments that define
      the rights of holders of the Common Stock. The rights evidenced by the Common
      Stock have not been materially limited or qualified.





ITEM
      15:
      CONTROLS AND PROCEDURES





Based
      on
      their evaluation as of the end of the period covered by this report, the
      Company’s President and Chief Financial Officer have concluded that the
      Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under
      the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), are
      effective to ensure that information required to be disclosed by the Company
      in
      reports that it files or submits under the Exchange Act is recorded, processed,
      summarized and reported within the time periods specified in the Securities
      and
      Exchange Commission’s rules and forms.





There
      were no changes in our internal control over financial reporting (as defined
      in
      Rule 13a-15(f) under the Securities Exchange Act of 1934) during the period
      covered by this annual report that materially affected, or are reasonably likely
      to materially affect, our internal control over financial reporting.





ITEM
      16A:
      AUDIT COMMITTEE FINANCIAL EXPERT





The
      Company does not have an audit committee. The entire Board of Directors performs
      all functions ordinarily performed by an audit committee. The Board of Directors
      has reviewed the definition of “audit committee financial expert” under item 16A
      of Form 20-F and determined that each of Donna Goral and Martin Ouellet
      satisfies the criteria for an audit committee financial expert under the
      Securities Exchange Act of 1934, as amended. The SEC has indicated that the
      designation of Ms. Goral and Mr. Ouellet as audit committee financial experts
      does not make such persons an “expert” for any purpose, impose any duties,
      obligations or liability on such persons that are greater than those imposed
      on
      members of the Board of Directors who do not carry this designation or affect
      the duties, obligations or liability of any other member of the Board of
      Directors.




ITEM
      16B:
      CODE OF ETHICS





On
      December 23, 2003, the Company adopted a Code of Conduct and Ethics (the “Code”)
      that applies to all of the Company’s directors and officers (as defined in the
      Code). A revised version of the Code was put in place effective June 14, 2007
      (as an exhibit to this Form 20-F Report). The
      Company undertakes to provide a copy of this Code without charge, upon request.
      Investors may send a request for a copy of the Code in writing to the Company’s
      assistant secretary at 600 rue De La Gauchetiere West, 27th floor, Montreal,
      Québec, Canada, H3B 4L2, by certified mail with a self-addressed envelope
      attached to such request.




ITEM
      16C:
      PRINCIPAL ACCOUNTANT FEES AND SERVICES





**Audit
      Fees**





Deloitte
      & Touche LLP’s aggregate fees billed for professional services rendered for
      the audit services for the 2006 fiscal year were $25,000 compared to $23,000
      for
      2005. The engagement of Deloitte & Touche LLP for the 2006 fiscal year and
      the scope of audit were pre-approved by our Board of Directors.




16





ITEM
      16C:
      PRINCIPAL ACCOUNTANT FEES AND SERVICES (continued)





**Audit-Related
      Fees**





Deloitte
      & Touche LLP’s aggregate fees billed for audit-related services amount to $0
      for the 2006 fiscal year (7,500$ for the 2005 fiscal year). These audit-related
      services were pre-approved by our Board of Directors.





**Tax
      Fees**





There
      were no tax fees for the fiscal years 2006 or 2005.





The
      Company’s Board of Directors pre-approves the services - both permitted audit
      services and permitted non-audit services - of the external auditor before
      the
      external auditor is engaged by the Company to render such permitted audit
      services or permitted non-audit services. The Board of Directors evidences
      its
      pre-approval by resolution of the Board of Directors.





ITEM
      16D:
      EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES





Not
      applicable.





ITEM
      16E:
      PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS





Not
      applicable.





ITEM
      17:
      FINANCIAL STATEMENTS





The
      Financial Statements contained herein were prepared in accordance with
      accounting principles generally accepted in Canada and are expressed in United
      States dollars. The Financial Statements are contained on pages F-1 through
      F-9
      of this Form 20-F.





ITEM
      18:
      FINANCIAL STATEMENTS





See
      Item
      17.





ITEM
      19:
      EXHIBITS





The
      following documents are filed as part of this report:





**Exhibit
              Number**
            **Description**





1.1
            Memorandum of Association of NB Finance,
              Ltd.*





1.2
            By-laws of NB Finance,
              Ltd.*





10.3
            Loan Agreement dated as of September 3, 1997 between
              NB
              Finance, Ltd. and NB Capital Corporation*




17




10.5
            Deed
                of Sale of Mortgage Loans dated September 3, 1997 between National
                Bank of
                Canada and NB Finance, Ltd.*





10.6
            Mortgage
                Loan Assignment Agreement dated September 3, 1997 among National
                Bank of
                Canada, NB Capital Corporation and NB Finance,
                Ltd.*





10.7
            Promissory
                Notes representing the sixteen hypothecation loans executed by NB
                Finance,
                Ltd. in favor of NB Capital
                Corporation*





10.10
            Loan
                Agreement dated as of December 4, 1998 between NB Finance, Ltd. and
                NB
                Capital Corporation*





10.12
            Deed
                of Sale of Mortgage Loans dated December 4, 1998 between National
                Bank of
                Canada and NB Finance, Ltd.*





10.13(i)
            Mortgage
                Loan Assignment Agreement dated as of December 4, 1998 among NB Finance,
                Ltd., NB Capital Corporation and National Bank of
                Canada*





10.13(ii)
            Mortgage
                Loan Assignment Agreement dated as of December 4, 1998 among NB Finance,
                Ltd., NB Capital Corporation and National Bank of
                Canada*





10.14(i)
            Promissory
                Note representing $25,836,597.23 executed by NB Finance, Ltd. in
                favor of
                NB Capital Corporation*





10.14(ii)
            Promissory
                Note representing $29,880,126.51 executed by NB Finance, Ltd. in
                favor of
                NB Capital Corporation*





10.15
            Mortgage
                Loan Assignment Agreement dated as of September 7, 1999 among NB
                Finance,
                Ltd., NB Capital Corporation and National Bank of
                Canada*





10.16
            Promissory
                Note representing $85,989,203.22 executed by NB Finance, Ltd. in
                favor of
                NB Capital Corporation*





10.17
            Mortgage
                Loan Assignment Agreement dated as of April 14, 2000 among NB Finance,
                Ltd., NB Capital Corporation and National Bank of
                Canada*





10.18
            Promissory
                Note representing $98,836,341.23 executed by NB Finance, Ltd. in
                favor of
                NB Capital Corporation*





10.19
            Mortgage
                Loan Assignment Agreement dated as of September 28, 2000 among NB
                Finance,
                Ltd., NB Capital Corporation and National Bank of
                Canada*





10.20
            Promissory
                Note representing $67,323,437.74 executed by NB Finance, Ltd. in
                favor of
                NB Capital Corporation*





10.21
            Mortgage
                Loan Assignment Agreement dated as of January 30, 2001 among NB Finance,
                Ltd., NB Capital Corporation and National Bank of
                Canada*





10.22
            Promissory
                Note representing $107,179,964.89 executed by NB Finance, Ltd. in
                favor of
                NB Capital Corporation*




18




10.23
            Mortgage
                Loan Assignment Agreement dated as of June 12, 2001 among NB Finance,
                Ltd., NB Capital Corporation and National Bank of
                Canada*





10.24
            Promissory
                Note representing $121,357,226.22 executed by NB Finance, Ltd. in
                favor of
                NB Capital Corporation*





10.25
            Mortgage
                Loan Assignment Agreement dated as of September 24, 2001 among NB
                Finance,
                Ltd., NB Capital Corporation and National Bank of
                Canada*





10.26
            Promissory
                Notes representing a total of $55,963,732.07 executed by NB Finance,
                Ltd.
                in favor of NB Capital Corporation*





10.27
            Mortgage
                Loan Assignment Agreements dated as of January 29, 2002 among NB
                Finance,
                Ltd., NB Capital Corporation and National Bank of
                Canada*





10.28
            Promissory
                Notes representing a total of $71,866,079.87 executed by NB Finance,
                Ltd.
                in favor of NB Capital Corporation*





10.29
            Mortgage
                Loan Assignment Agreements dated as of June 20, 2002 among NB Finance,
                Ltd., NB Capital Corporation and National Bank of
                Canada*





10.30
            Promissory
                Notes representing a total of $64,221,362.98 executed by NB Finance,
                Ltd.
                in favor of NB Capital Corporation*





10.31
            Mortgage
                Loan Assignment Agreements dated as of December 16, 2002 among NB
                Finance,
                Ltd., NB Capital Corporation and National Bank of
                Canada*





10.32
            Promissory
                Notes representing a total of $52,054,168.88 executed by NB Finance,
                Ltd.
                in favor of NB Capital Corporation*





10.33
            Promissory
                Notes representing a total of $70,420,135.45 executed by NB Finance,
                Ltd.
                in favor of NB Capital Corporation*





10.34
            Mortgage
                Loan Assignment Agreements dated as of May 27, 2003 among NB Finance,
                Ltd., NB Capital Corporation and National Bank of
                Canada*





10.35
            Promissory
                Notes representing a total of $106,552,720.44 executed by NB Finance,
                Ltd.
                in favor of NB Capital Corporation*





10.36
            Mortgage
                Loan Assignment Agreements dated as of October 21, 2003 among NB
                Finance,
                Ltd., NB Capital Corporation and National Bank of
                Canada*





10.37
            Promissory
                Notes representing a total of $76,053,456.93 executed by NB Finance,
                Ltd.
                in favor of NB Capital Corporation*





10.38
            Mortgage
                Loan Assignment Agreements dated as of April 28, 2004 among NB Finance,
                Ltd., NB Capital Corporation and National Bank of
                Canada*





10.39
            Promissory
                Notes representing a total of $94,559,444.49 executed by NB Finance,
                Ltd.
                in favor of NB Capital Corporation*




19




10.40
            Mortgage
                Loan Assignment Agreements dated as of August 26, 2004 among NB Finance,
                Ltd., NB Capital Corporation and National Bank of
                Canada*





10.41
            Promissory
                Notes representing a total of $73,037,930.00 executed by NB Finance,
                Ltd.
                in favor of NB Capital Corporation
                *





10.42
            Mortgage
                Loan Assignment Agreements dated as of February 24, 2005 among NB
                Finance,
                Ltd., NB Capital Corporation and National Bank of Canada
                *





10.43
            Promissory
                Note representing $97,736,747.47 executed by NB Finance, Ltd. in
                favor of
                NB Capital Corporation *





10.44
            Mortgage
                Loan Assignment Agreement dated as of August 29, 2005 among NB Finance,
                Ltd., NB Capital Corporation and National Bank of Canada
                *





10.45
            Promissory
                Notes representing a total of $82,898,199.20 executed by NB Finance,
                Ltd.
                in favor of NB Capital Corporation(1)


10.46
            Mortgage
                Loan Assignment Agreements dated as of February 22, 2006 among NB
                Finance,
                Ltd., NB Capital Corporation and National Bank of Canada(2)





10.47
            Promissory
                Notes representing a total of $91,705,784.05 executed by NB Finance,
                Ltd.
                in favor of NB Capital Corporation(3)





10.48
            Mortgage
                Loan Assignment Agreements dated as of August 17, 2006 among NB Finance,
                Ltd., NB Capital Corporation and National Bank of Canada(4)





11.1
            NB
                Finance, Ltd. Code of Business Conduct and Ethics
                **





12.1
            President’s
                certification pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002**





12.2
            Chief
                Financial Officer’s certification pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002**





13.1
            Written
                Statement of Chairman and President Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002 (18 U.S.C. Section
                1350)**





13.2
            Written
                Statement of Chief Financial Officer Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002 (18 U.S.C. Section
                1350)**





*
            As
                previously filed. **
            As filed herewith. (1)
            Incorporated herein by reference to Exhibit 10.47
              to Form
              10-K filed with the SEC by NB Capital Corporation on March 31, 2007. (2)
            Incorporated
                herein by reference to Exhibit 10.46 to Form 10-K filed with the
                SEC by NB
                Capital Corporation on March 31, 2007. (3)
            Incorporated herein by reference to Exhibit 10.49
              to Form
              10-K filed with the SEC by NB Capital Corporation on March 31,
              2007. (4)
            Incorporated
                herein by reference to Exhibit 10.48 to Form 10-K filed with the
                SEC by NB
                Capital Corporation on March 31,
                2007.


20


**SIGNATURES**





The
      Registrant hereby certifies that it meets all of the requirements for filing
      on
      Form 20-F and that it has duly caused and authorized the undersigned to sign
      this annual report on its behalf.


NB
              FINANCE,
              LTD.By:
            /s/Martin
              OuelletName:
                Martin Ouellet
              Title:
                President


Dated:
      June 29, 2007






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